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First, let’s take a quick look at the Qs overlaid with one of the best indicators on earth- Dave Landry’s Big Blue Arrows (and if you want to laugh your butt off, here’s Dave and his Blue Arrows featuring his Top Analyst):

There’s no long-term trade here without a break out of this range, say above 45 or below 43, plus or minus.

Now let’s look at a couple of our most favoritest regular visitors, Boss Google and Boss Cisco. They’re important not only as potential trades, but also because of the effect they have on the NDX and consequently the overall market. They’re both at very crucial points where they need to get off their bee-hinds and show us some strength, or throw in the towel and slide on down the slippery slope. First, GOOG:

Nice, precise “to the penny” double-top action there. We failed out of that second top on big volume, and now the volume’s tapered off. Here’s a closer zoom:

A resumption of the downtrend tomorrow would be a perfect opportunity to move our stops down to today’s high 474.35, (since today’s high will then qualify as a minor pullback top). For someone not short, a resumption would be an opportunity to enter, set a nice tight stop, and join the rest of us shorties.

Google also has the option of breaking out to the upside, which will see many a pretty little 3-day swinger stopped out.

And Cisco. Oh, Cisco. How about that good news?

Stocks inched higher Wednesday after Wall Street welcomed a robust sales forecast from Cisco Systems Inc. and a stronger-than-expected productivity reading.

***

In corporate news, Cisco rose $1.07, or 3.9 percent, to $28.35 after the networking equipment maker predicted its third-quarter revenue would rise 19 to 20 percent.

from an AP article entitled Stocks Rise on Cisco, Productivity News and reprinted by virtually every news organization

So, Cisco rose 3.9 percent, eh? Close- to- close, yeah. But what does the chart say?

It opened way up, then pulled an OGRe (Opening Gap Reversal) and went down, down, down all day. The OGRe would have been a perfect point to get short (anytime a stock gaps way up and pulls an OGRe on you, it’s begging to be shorted). However, I must note that the failure of the OGRe happened at about 0934 at approx. 28.60, and most of us mere mortals like to let things shake out for 30 minutes or more, so it wasn’t that much of an opportunity.

Today could be the failed second top to that 1/11 “highest high.” Since we have a gap below it and it was such a high-volume bar, it’s a pretty straightforward trade: short a break of today’s low with a stop just above the big resistance at 29.00. We either make money or lose a buck. If we lose a buck, that means it’s broken to a new high, and that’s an opportunity to look for trades in the other direction. Sweet.

• Accomplished Today: Worked at the Cancer Center; tore up my in-dash CD changer; pulled the battery on my VFR800, it's old and drained and I plan to go through 2 sets of tires this year

Of course I’ve gotta post this:

And do a little of this:

The weak resistance from Jan 23 didn’t even slow it down. This is an opportunity to trail a stop rapidly (in case of reversal), and prepare to sell at least half of the position if we approach the significant resistance below 455.

First, let’s take a look at that huge Bearish Engulfing candle on Google:

And it’s not just a long black line (which would be a potent signal in itself), it’s a Marubozu, one of the strongest of signals. Imagine you’re playing p*ker, and you get a suited Ace-King as your hole cards, and you’ll get the picture. The odds are stacked very (very) heavily in our favor.

How to “play” this “hand”? I can only speak for me (and remember, I’m the pro-est of pros when it comes to finding creative ways to lose money), but with the bottom of this big boy at 481.53, and the only near-term support (and wimpy, at that) is the 1/23 bottom of 477.29, I’m crossing all my fingers and toes and hoping for a sucker retrace tomorrow, preferably a nice little candle whose bottom is around 480 and whose range doesn’t top 490 or so — that thar’s a Fib retracement of the Marubozu, for you Fibonacci fans.

If such a candle does form, I’ll be shorting a break of its low with great vigor, as my friend Glenn would say.

If tomorrow opens up, then fails through the bottom of today’s range, I’ll probably look to short at the break of that 1/23 low.

I’ve been horribly busy and tired lately, but have spent a few minutes toying around some more with Ameritrade’s StrategyDesk 1.0. It’s got to be one of the most poorly documented pieces of software I’ve ever seen that wasn’t produced by Microsoft. I did have one funny, and somewhat tragic, moment with it. I was working on coding one of my old spreadsheet- based strategies into it, and thought I had it close enough for a dry run, so I selected September ‘06 thru January ‘07, and told it to backtest.

I was agape… aghast… dumbstruck… dumbfounded… there in front of me were the results: 80 trades triggered for a total gain of over 75% in four months. My first thought (since I have teenagers) was OMFG! … but it only lasted about 3 seconds. You see, I’ve churned out hundreds of formulas and strategies over the last 18 years or so, and some looked so promising I thought I’d need to trademark them and hide them in a vault somewhere. But in practice, the most valuable purpose any of them has served has been when I folded up the paper they were scribbled on and used it as a coaster for a cold beer.

So I began to look closer. Sure enough, I had failed to click the correct button. “Save” or “Add” or “Apply” or whatever this one said, and the backtest that had run was on a formula they included as a sample. Want to know what this magical super-secret formula was? Buy above the 10-day moving average, sell below it. And the test stock just happened to be one that’s been trending very strongly the last few months: Apple. Dammit. However, this is another great example of how, given the right circumstances, a simple strategy can kick some serious ass while we’re all out in the briars and brambles getting cut up looking for an overly complex one.

But this StrategyDesk program has potential, although it’s very much like receiving a big grill with five hundred parts and no assembly instructions. Please, AMTD, get to v1.01 ASAP! Also, as I know Ameritrade has a habit of buying other people’s software and renaming it (see Advanced Analyzer and remember BigEasy Investor), if this is a program someone recognizes, please let me know what it used to be called– maybe those people still have a functional user’s manual.

Any other Jungle Book fans out there? Well, either way, an Elephant Never Forgets. Last November I wrote a couple of pleasant little articles on Genentech (ticker: DNA). In the first one, I noted that a break of the 85-86 area could provide an entry for longer-term, um, investors. (If you’re reading ‘em, check out the follow-up post, as well.)

Well, over the past three weeks we’ve seen a nice gap-up breakout, then a rise and retrace:

Nice place for a tight stop if this kind of slow-moving behemoth trade is what blows your skirt up. Give it a look, see what ya think.

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