Update: Intel ($INTC) earnings release tomorrow

We discussed a possible H&S top forming in Intel. Intel is set to release its second-quarter earnings tomorrow. I almost always exit my position before the earnings report no matter how promising the set-up. Staying with a position hoping for a favorable reaction to an unknowable earnings report is unnecessary gambling. Sometimes I stay with a small position if I have a favorable entry point or, more likely, my emotions have gotten the better of me. Remember, there will always be other opportunities.

Wells Fargo $WFC: bearish ascending wedge?

Let's look at the daily chart of Wells Fargo:

I interpret this chart as a possible 7-month bearish ascending wedge with a 1-month H&S top in the last part of the wedge. A smaller pattern within a larger pattern can often launch a breakout from the larger pattern. Also, I sometimes see prices trade above the upper boundary of an ascending wedge, as they did here, before they return inside the pattern and break down.

These are mere possibilities and never guarantees. That said, I always find interesting the pattern-within-a-pattern as it can provide an early entry point or additional support for a particular interpretation. But there is a risk to such fascination: I must be careful not to obsess over a particular outcome and ignore the actual price action. I will re-evaluate my interpretation should prices close above the right shoulder high of the H&S top.

Massive H&S top in Intel (INTC)? QQQ SPY DIA

Here is a weekly chart of Intel (INTC):

Intel is testing a 2.5 year trendline support and may be also trying to break down from a massive H&S top. The meeting of two major technical development is always interesting. That doesn't mean that the H&S top is guaranteed to work and produce a significant epic decline. Prices may recover and stay above the multi-year trendline and invalidate the H&S top interpretation. We have to avoid being obsessed with a certain outcome. Instead, we must accept the actual price action. Believe what we see, not what we want to believe.

Let's end with the daily chart of INTC:

Again, traders must focus on protecting our trading capital. We need not chase a breakout if it means risking more than prudent. There will always be other trader.

It's also interesting to consider the implications for the broader market should this H&S top interpretation prove correct. But remember, we must not get too attached to a particular interpretation. Focus on entering a trader at an advantageous spot that limits risk. If we miss a breakout, so be it. Let it go and confidently and calmly wait for the next attractive set-up.

SPY: Was that a Head & Shoulders Top?

Last week, we discussed various bearish possibilities for the U.S. stock indices, including a possible H&S top in SPY.

The following chart shows SPY forming a possible bear flag after the initial decline:

Whatever our interpretation of the current market, remember that our priority is protecting our capital and not making money. There will always be other set-ups to trade.

Reversal symmetrical triangle completed in Nasdaq 100 (QQQ)?

The U.S. stock indices dropped over 2% today. Let's examine the charts. First, the QQQ:

As indicated on the chart, today's drop may start a significant decline. But the market does not follow a script. Stocks can and will do anything. As traders, we can only evaluate the potential rewards against the risks of trading a set-up.

Let's look at SPY:

SPY also possibly completed a bearish pattern today: a 3-month Head and Shoulders top. It now rests on its 200-day simple moving average.

Finally, let's look at a 1-year chart of the NYSE index:

What seemed like attempts to break out (up) of a 9-month continuation H&S bottom has now turned into something else. Yes, stocks can still go up from here, but let's consider another possibility. The next chart focuses on the last 6 months:

We see a possible bearish broadening top (megaphone) and today's decline may have completed the pattern. But remember that classical charting is about possibilities and never predictions or guarantees. Stocks may recover quickly from today's decline and invalidate this broadening top interpretation. Keep an open mind.

Chart analysis of Ford Motor

We discussed last month a possible bearish chart pattern in Ford:

The price target of the 3-month Head & Shoulders Top was met in early June:

So what now? The next chart offers a possible bullish interpretation for Ford:

Remember, this breakout from the channel is only a possibility. Also, channel breakouts are tricky to trade. The stock can decline and stop us out of our position yet stay above the descending upper boundary. When I trade a breakout from a channel, I use a smaller-than-usual position and set a wider stop.

Where stocks stand today

SPY has traded within a tight range throughout 2015 and especially since February:

Let's see what QQQ is doing:

 

So stocks are range bound and possibly coiling, which is what stocks have been doing throughout the year. We could do much worse than staying patient until the market declares its intention.