Bounce to Resistance Might Signal Head and Shoulders Pattern

By Quint Tatro  APR 18, 2012 9:40 AM

Now it is much more important to build a watch / trading list than it is to run in and get cut up trying to guess which way we will trend from here.

 


The Dow (^DJI) bounced right at our third support level and now may be putting in a bigger head-and-shoulders pattern, which means we must be patient and see how this area plays out. During this time it is much more important to build a watch / trading list than it is to run in and get cut up trying to guess which way we will trend from here.

During earnings season I like to build a list around names that have already reported and may present post-earnings trading opportunities. For example, Goldman Sachs (GS) was red after what was perceived to be a positive earnings report and would trigger a short trade for me on a move below $114. On the other hand, Alcoa (AA), which showed a strong earnings report and had a positive reaction, would be an interesting long to me over last week’s high of $10.24.

Today I’ll be watching IBM (IBM), which was heavy before yesterday and is trading pre-market back to a key 202 level, which, if broken, may provide a short trade as well.

This and more in this morning’s video found below.
 
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No positions in stocks mentioned.