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Jeff Cooper: The Bull Whisperers


The last two days in the SPX epitomize the rinse and wash of the entire year

Editor's Note: On Tuesday, April 14, Jeff Cooper is hosting a FREE webinar, showing you how he nailed 66% of his swing trades in Q1. Click here to register now!

The last two days in the SPX epitomize the rinse and wash of the entire year. Its been like trying to grab a snake by the ears.

Despite Wednesday's SPX chop festival, there were many notable moves out setups that look poised for follow through.

For example, Tuesday night's stock report had QLYS as a long swing candidate that triggered us long on the open at 50. We sold the half as is our swing method and remain long the balance.

QLYS popped based on a well-timed upgrade and is a good example of how stocks telegraph moves.

Why? QLYS had a large range gainer on Monday leaving it perched just below a series of prior highs.

Tuesday traced out an inside day in the spirit of TNT setup -- a Thrust, Pause and Thrust pattern. Day 3 typically sees continuation in the direction of the underlying thrust. In this case, it looked like QLYS was coiled for follow through above triple tops triggering a Rule of 4 Breakout.

That's exactly how things played out on a gap on Wednesday.

Like it or not, as traders, we're in the pattern recognition business in an arena where  anticipating the anticipators is how get an edge.

Intraday we sent an alert to initiate a long swing in our old friend XON which was a nice play for us last week.

We got stopped out of XON for a small loss on a long swing on Tuesday (our stop was tighter than normal) and XON turned up with the strong action in many of the bios and pharmas on Wednesday.

What captured my interest in XON again was that the pattern mirrored that of CYBR's little pattern of 3 higher lows which put subscribers long near Monday's lows. CYBR was sold near Tuesday's highs.

PANW, in the same space as CYBR also looks poised to for a breakout over triple tops. Whether it will follow through from a Rule Of 4 Buy as it did in early February or prove to be a late stage failed breakout remains to be seen. That said the pattern looks like what W.D. Gann called a M A Top in the making.

The early March and late March pivot highs resemble the peaks of an 'M'. An ensuing relatively short-lived breakout could prove to be an 'A'. A sell signal is given if and when the item stabs back below the peaks of the 'M' and a trend change is indicated if the feet of the 'M' are violated.

A successful breakout may target 168ish which is 360 degrees up from the 120 base.

Several bio glamours had notable moves on Wednesday.

IBB turned up sharply leaving a 180 buy signal. Why? Tuesday's close was at/near session lows while Wednesday's close was at/near session highs in tandem with IBB trading above its 50 and 10 day moving averages. IBB looks like it has eyes for 360ish which ties to the low of the high bar day. Those of you who are regular readers will remember our square-out at 370ish slatted for March 20/21. IBB left a large range signal reversal bar on March 20th so we must be mindful of a possible reversal from a test of the low of the high bar day.

BLUE left a 180 buy setup. Follow through above 128 suggests higher prices. However, if it makes a nominal new high and stabs back through the prior swing high it could be a test failure and leave a Soup Nazi sell signal.

CELG is a bio glamour that has shown weak relative strength and the behavior on follow through from Wednesday's rally to its overhead 50/20 Bowtie will be crucial to observe. Note CELG's bearish Train Tracks on 3/20-3/21 which were followed by a series of distribution days.

Conclusion. There are many nice long setups from Wednesday whispering higher if follow through could come out of hibernation.

We will continue our approach of Hit & Run and grabbing quick profits on swing and day trade ideas based on the trendlessness of the market until it shows its hand.

Be that as it may, if the SPX fails to make a new high above our 2088 inflection point and turns down below 2070 and then Monday's lows, the indication would be for a washout of some degree this month.

One cautionary note is AAPL. It broke out of a pennant formation on Monday. Trade below Monday's lows and the low of the pennant will trigger a Triangle Pendulum sell signal which probably leaves AAPL vulnerable to the gap around 115.

Editor's Note: On Tuesday, April 14, Jeff Cooper is hosting a FREE webinar, showing you how he nailed 66% of his swing trades in Q1. Click here to register now!
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No positions in stocks mentioned.

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