And the answer is . . .

no bullish tail for FAS. Earlier today I posted the bullish tail candle forming and wanted to see if it could hold into the close. It did not.

Bulls can hold on to the close off the lows and volume that could lead to a "capitulation" selloff.

I sold half my FAS position for a nice profit at $14.50 (entry at $12.77).

Watch for the Bullish Tail

If FAS closes as it looks right now on the chart, a bullish tail will have printed and we will be setup for a strong bounce. Keep an eye on the close . . .



The market indexes are acting similar to FAS.

Chart: DIG

There's a lot to like about the DIG chart:

1.   Postive RSI divergence

2.  Successful test of bottom support

3.  Long tail price bar at support

4.  Oversold stochastic turning up

5.  Strong obv and volume action

SPY Prints Possible Reversal Candle

Believe it or not, although SPY was down almost 4 percent today, technically it was a good day. The index printed a bullish "long tail" candle on massive volume, while the Worden T2108 indicator at extreme oversold levels. Generally, this ia a clear reversal signal, at least short term.

The index recovered right after I was stopped out of the SPY trade (via SSO) and closed over 2 points above my entry . Looking back, it's easy to say I should have used a wider stop. However, my main concern was limiting risk.

While I am disappointed that I got stopped out of SSO, the X and K trades were gems. X closed up over 6 points from entry and both printed bullish candles.

DIG Confirmation

DIG confirmed the bullish tail candle at support. I may add positions tomorrow if there is a slight pullback. I am already holding SWN.

Do I Have the Guts to Buy Financials?

I'm scared as hell to buy a financial, even with a small position size. However, if I didn't know the name of the company behind this chart (Morgain Stanley), I would be buying. We have price breakout over the 50 day moving average after the stock printed a bottoming long tail on heavy volume a few days ago. RSI is breaking out. Stochastics show strength. OBV is improving. This is damn near a text book reversal play.

I may enter on a small position later today.

A Bullish Divergence in AAPL?

Frequent e-mailer and one of my most loyal readers, Hal B., asked about a bullish divergence setup in AAPL. I don't have annotation capabilities from my current locale, so bear with me as I explain the chart.

I do see a slight divergence that might be used for an extremely short term play. We measure the divergence by taking a look at the two february lows, both of which printed long tail candles. If you measure both RSI and Stochastic readings at those levels, you will see a "higher low" readings. This creates a bullish divergence.

While the divergence could be used for a short term play, the overall trend in both price and volume is still down. OBV stinks. Volume is not diverging with RSI and Stochastics. Today's nice up move was not on "bottoming" type volume.

Thus, until AAPL mounts a major resistance level and has an uptick in upside volume, I'll stay out of the divergence trade.

Can We Buy CNX's Pullback?

Ronald wants to know if I consider the 3.7% drop in CNX, a stock I highlighted earlier in the week, a buyable pullback.

While I would not buy just yet, the stock is still technically sound. Support has not broke and volume on today's decline was within the stocks normal range. OBV still looks good. Ideally I like to see pullbacks head to support slowly and with small price bars, so I won't buy until I see more evidence that backs the idea that today's decline is nothing to be concerned about.

Another concern for this stock is the negative RSI divergence. This is a sign that momentum is waning. I don't use divergences as a primary tool, but they do go into the overall analysis and let me know that I must exercise caution.

This analysis does not cause me to discard the stock from my watchlist. As long as support holds, it's still a bull candidate. However, it does effect my entry. I enter stocks in one of two ways on pullbacks. When I am supremely confident in a stock, I will enter during the pullback, before a confirmation move like a bullish engulfing or long tail candle at support. My other method, when there are more queston marks, is to wait for confirmation.

Bullish Chart Setup: DVN

Independent oil and gas stocks have been on fire since bottoming late January (that long tail provided a good entry point), and few have done better than DVN (Devon Energy Corp). I like the stock on a pullback to what looks like new support at $95. The stock exhibits a nice accumulation pattern and could make another move higher.

Chart: APPL

Earlier today, I mentioned that I felt there was a good chance AAPL would hold it's rebound from the lows of the day and print a long tail at the close. Sure enough, the stock closed near it's high and looks ready for another leg higher, assuming we get confirmation tomorrow. If the stock closes above today's high, I may go long again. However, if the stock does not confirm today's close, the bullish implications of the close will be nullified, a hanging man could print, and we could see a top form.