That should do it...

Well I hope everyone didn't mind a side of market smackdown with their coffee this morning. Several big names released earnings yesterday and the top line revenue took a serious fall on just about everyone. The theme across the board was to lower guidance heading into the next quarter. They decided to oblige us with a very controlled gap down to shake out all the week hands in the market. Shortly after the open it was obvious that the On Balance Volume was climing when the market had just dropped down considerably, it's classic robbing mom and pop investor shares and then take off with the market routine that Wall Street is so loathed for. Anytime there is such a serious OBV divergence on the 30min chart intraday, you can pretty much count on the market climbing all day long and it did causing the 5 EMA to turn back up so quickly that it is beginning a ramp retest that actually looks pretty nice and the 5/21 is pancaked up nicely right below the 50 which is typically a strong propellant to the up side.

Today's success in making the turn is occuring on the 106 support resistance line on the SPY ETF which has been used multiple times in the past few years, mid Nov 2003, AUG 2004, & FEB 2010 and three times during May 2010 which means it's really a pretty strong support level. Today's move also breaks us out of the downtrend line that began on April 26 of this year. Also, this morning's low was a perfect touch down to the 38% Fibonacci level measuring up from the Jun 21 to Jul 1st decline. While we did break out of the mother downhill channel from the past 4 months, there is still a smaller channel within it that we will need to break out of tomorrow morning. While all the traders are no doubt happy with the Daily 5/10 & 5/21 as they morphed into nice setups today, we still have the issue of the monthly 5 is skimming slightly below the 10 now not on top of it.

As far as the breadth of the market, the advance decline chart is starting to get up into the rafters on an intraweek basis but if the market follows thru on good volume tomorrow it will stay up there for a few days and not come back down to the bottom until the rally pulls back. The biggest test if this rally is for real will be if we can cross the 50 day moving average tomorrow on good volume which is just above where we are at right now.

I talk about the SPY alot even though it is not one of my 10 favorite trading symbols. The reason is that when WallStreet is going long hundreds of millions of dollars per hour, the SPY is the only vehicle liquid enough for them to get into with such large amounts. Watching the block trades on the SPY really gives you a feel on what the big firms are doing. It's not a leveraged ETF like the SSO is 2x leveraged, QLD is also 2x leveraged and the FAS is 3x leveraged. Anyone wanting to trade a massive amount of money in a lower risk/reward ETF, you can get in and out of the SPY easily no matter how deep your pockets are.

While I was out today, my system triggered my standard limit/buy order when we passed yesterday's high at 35.06 on the SSO. On the QLD my limit/buy order triggered as we passed its high yesterday at 55.57. I'm refraining from entering the FAS for a day or two. I won't set a buy/limit order on it until the next 5/10 or 5/21 retest starts curving up (While the SSO & QLD did curve up, the FAS punctured to the southside and it will take a few days to recover from that).

I'm not trading AAPL even though it is climbing with a broken down 5/10 & 5/21, it is not going to look appealing until a daily 13/43 starts to form and it looks like it might in a few days.

GOOG gave an intraday start signal at noon today but I didn't have a buy limit order on it so I missed it ($475 was the entry point for those who caught it intraday).

AMZN is lagging behind the other three. I am going ahead and placing a limit/buy on it at 120.87 which is once again just above yesterday's high.

RIMM's daily setup is actually the best of the four but I am just now putting a limit/buy on it tonight even though its daily chart setup has started quite nicely and it surpassed yesterday's high quickly today. It has the issue remaining that it needs to go about another .50 higher to break out of its 4 month down channel. By the way, RIMM has a really nice tight OBV divergence on its weekly chart coming across from its July 6 lows. If this diversion gains steam it might have the best run of the four. Since it broke yesterday's high without breaking out of its down channel, I have decided to put a limit/buy at 56.30. One could argue that it is a late entry but with its nice weekly OBV divergence, I don't think the dollars missed on the front end will be that high of a percentage of the total move if the market starts gaining steam here.

These trades that triggered an entry still feel fairly high risk but unfortunately, the entire market is pretty high risk right now and the only real money that will be made will be those that catch the start of a market short squeeze - that takes off so fast that the late entries lose out on too much up front. As always I have all triggered trades protected with a 4% trailing stop.

Overall, this market is walking on thin ice more so than I have seen it in the past 12 years. Anyone entering a trade without stop loss protection is asking for trouble. There are always opportunities for money to be made no matter how schizophrenic the market is. My 4% trailing stops should be tighter but I've learned that in recent months the stocks get knocked around so much intraday that it's easy to get stopped out of a move just from intraday oscillations and then miss out on the into the bell ramp up.

It's going to get really interesting because the technical analysis is really trying to sell the idea of a rally up from here but all the economic reports, earnings, unemployment numbers, etc. say this market should be in a steep nosedive...we will see...