The market is continuing it’s roaring bull market. It seems as if nothing can get in the way of it, no Jobs Number, no FED chairmen, nothing can stop a bull market like this one; or at least that is how it seems. As technical traders know, the market moves based on supply and demand (support and resistance), as traders we analyze the important supply/demand levels and make trades based on the patterns that are created when price interacts with these levels. As the charts morphs, so do we, as the patterns form, we trade. As the patterns begin to fail, we slow down our trading. That is what traders do. Part of being a trader is reading a chart based on your own process you subscribe to. To me, this involves using Bollinger Bands on multiple timeframes to measure the extent in which is an entity is overbought or oversold, paired with the recognition of the number of high quality set ups that are currently showing up on the scans.

Currently $SPY is sitting above the daily Bollinger Band and tagging the weekly band. Along with this, the number of high quality set ups have also decreased. Later in this post you will find three long set ups I am watching, the only three I really have on my watchlist right now. This could of course change but as of now, $SPY is extended and the quality/number of set ups is lacking. Combine all this information and it leads me to believe that the probability of a pullback via time or price is likely here more so than it would have been this time last week.

Below are some annotated charts showing what I am talking about as well as some set ups I am watching, both long and short (click to enlarge charts).

SPY Daily: Extended outside upper Bollinger Band generally means market is in an ‘overbought’ state.
7-6-14 spy daily

SPY Weekly: Similar to the daily, the weekly chart is tagging the upper Bollinger Band. 7-6-14 spy weeklySPY Monthly: No where near the upper Bollinger Band but nevertheless, it is important to examine all the timeframes.

7-6-14 spy monthly

 

FISV: Consolidating well within a triangle, as long as the 21 day holds this stock looks to be setting up for higher prices. 7-6-14 fisv

GDX: Gold and the gold miners have been on fire lately. GDX currently bull flagging above the 21 day, looks like it wants higher. 7-6-14 gdx

MWA: Strong looking bull flag within a lower level base, 21 day needs to hold. 7-6-14 mwa

 

 

DAL: A short set up. A bear flag is forming after a fake breakout last week. A hold below the 21 day would make a move lower more likely. 7-6-14 dal

MTOR: After a steep uptrend this one is bear flagging and showing relative weakness. Stop would go above the recent pivot high created last week. Look for a move lower below last week’s low. 7-6-14 mtor

Market Thoughts & Set Ups (7/6)