Today's Overview. I took a nice piece out of the Phillip Morris (PM) bounce but chose not to hold the position overnight. I cannot wait for September.

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Marcus Gray
5 years ago
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1 Today's Overview Sellers remained in control overnight, with risk adversity growing in response to a flood of European sound bites about the fate of Greece and European Central Bank bond buying. The euro sold off from 1.26 to , while the S&P 500 cut through psychological support at 1400 and pulled into the 20-day SMA. The Nasdaq 100 busted yesterday's low near 2755, but failed to expand to the downside in the U.S. premarket. Despite overseas pressure, the broad market held firm after Friday's opening bell and drifted higher in the first hour. A fast and furious short squeeze then hit the tape, lifting index prices back into yesterday's gaps. The S&P 500 stalled at that level into the midafternoon, and then posted two higher highs into the close. Bullish outside days abound this evening, signaling a notable low and a likely trip back to the rally highs. The Jackson Hole rumor mill is in full control, with algorithms reacting to every speck of central bank chatter. It is a ridiculous situation that human traders cannot do anything about, except to exercise risk management and not get caught in the chaotic spikes and dips. The good news is that things will come to a head at the end of next week, when we will find out if Federal Reserve Chairman Bernanke is ready to ignite a pre-election controversy. I predict that he is not likely to do so. The ECB's decision to delay bond action until after a German court ruling in mid- September kicks the can down the road even further. If Bernanke encourages hope about the Federal Open Market Committee meeting on September 12, the market will experience a central bank extravaganza that could set the trend for the entire fourth quarter. The following week will be triple-witching options expiration, so bets are already being placed on the outcome. I took a nice piece out of the Phillip Morris (PM) bounce but chose not to hold the position overnight. I cannot wait for September. PLEASE SEE IMPORTANT LEGAL DISCLAIMER ON LAST PAGE

2 Random Notes: Bullet Points on the Market The Dow Jones Transportation Average underperformed, grinding in the red until the final hour. Bearish divergence: The Russell 2000 index failed to take out the early high in the afternoon follow-through rally. ECB President Mario Draghi will speak at the Jackson Hole conference on Saturday September 1, one day after Bernanke. Crude oil closed lower after a morning bounce. Coal hit a three-week low and looks ready to test the downtrend low. Raw materials, with the exception of energy, failed to respond to the morning squeeze. The ishares FTSE China 25 Index Fund (FXI) fell to a four-week low. 2

3 Daily Spotlight Whole Foods Market (WFM) has been threatening to break out for the last month but cannot seem to find the energy to do it. The stock rallied above the 2005 high near $80 in February of this year and entered a steady uptrend that stalled at $97.25 in June. It collapsed in July, falling 11 points in three days, and then gapped back to within three points of the high on July 26. WFM has been pushing toward resistance in a rising channel, but accumulation is lagging badly, thanks to the thin summer market. It closed Friday below the breakout level after nosing to an all-time high for two sessions. The price action early next week will be instructive because a rally above $98 could start a positive feedback loop that lifts the price into triple digits and confirms a breakout. * * * (Spotlight presents updated index analysis, quick takes on reader favorites and fresh views of active picks. The section belongs to our subscribers, so let Alan know what charts you would like to see by sending him your requests at trader@hardrightedge.com. Please note that Alan can t answer all of your requests due to time and space restrictions. Spotlight stocks are not recommendations to buy or sell, and will not be placed on the Watch List.) (See Watch List on the next page) 3

4 Watch List Engility Holdings (EGL) pushed toward resistance over $18. (long - 8/22/12) Medivation (MDVN) bounced at support in a quiet session. (long - 8/20/12) Dillard's (DDS) retraced Thursday's range. (long - 8/16/12) Ixia (XXIA) posted another low. See my notes. (long 8/7/12) Mellanox Technologies (MLNX) bounced at the trend line once again. (long - 8/6/12) Philip Morris (PM) bounced strongly after tagging the 78.6% retracement. (long - 8/3/12) Hershey (HSY) is testing the breakout level. (long - 8/3/12) Xenoport (XNPT) ticked lower in a quiet session. (long - 8/2/12) CoreLogic (CLGX) retraced Thursday's range. (long - 7/30/12) Conns (CONN) ground sideways in a tight triangle and could break out early next week. See my notes on page 5. (long - 7/30/12) Watson Pharmaceuticals (WPI) exploded to a new high on heavy volume after a drug approval. (long -7/27/12) Alexion Pharmaceuticals (ALXN) had a strong session and is testing the rally high. (long - 7/9/12) 4

5 Watch List Ticker Confirmation of ALXN support over $100 is in place. The stock could move very well after it takes out the July high XXIA remains in a big trading range. It busted the small triangle but can easily morph into a larger one PM ended the day right at 50-day resistance. Let us see if we get gap or reversal on Monday. A gap may be good for another 1 or 2 points CONN looks tightly wound in an ascending triangle. A breakout opens up $24. 5

6 Infinity ay s Close: Pharmaceuticals [Up.86] (INFI) Today's Close: $17.48, down $0.30 Infinity Pharmaceuticals (INFI) is a $481 million market-cap biotech company that came public at $15 in The stock topped out immediately at $17.05 and settled near $5. It then traded along that support level for more than four years, finally turning higher in February. The rally reached six-year resistance in July, with the stock grinding sideways in a 4-point range since that time. It has been trading near the high for the entire week and could break out soon. Buy the breakout. We will watch for a higher low if it breaks down from the four-day range. The 50-day EMA, currently near $15.80, has aligned with the rising lows trend line and will offer support. The stock will trade at an all-time high after it clears resistance. This could set up a momentum rally, as long as research data cooperates. As usual with these small drug companies, keep close watch of research release dates and avoid trading halts that can trigger big gaps. (See second chart on the next page) 6

7 Infinity Pharmaceuticals (INFI) 7

8 Guidelines and Frequently Asked Questions For guidelines about the best way to use The Daily Swing Trade and for answers to the questions readers ask most often, a guide, "Your Questions Answered About Swing Trading," has been created. For the guide, click here: Farley s latest book, The Master Swing Trader Toolkit: The Market Survival Guide, was released in April

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PLEASE SEE IMPORTANT LEGAL DISCLAIMER ON LAST PAGE

PLEASE SEE IMPORTANT LEGAL DISCLAIMER ON LAST PAGE Today's Overview The S&P 500 ground sideways overnight into Wednesday and turned higher after the start of the U.S. session, rising to 1160 over the lunch hour. The Nasdaq 100 underperformed in the morning