In Wednesday's market wrap I alerted traders to some 60-minute interval reverse head/shoulder patterns with a focus on the DiskDrive Index (DDX.X).
Here this morning, I want to update traders on how they might look to continue to play this pattern.
On Thursday morning, we started to look at some of the various DDX.X components and noted that shares of SanDisk (NASDAQ:SNDK) $10.28 +8.09% also showed the pattern and had some of the VOLUME characteristics a h/s pattern (bottom/top) look for.
SanDisk / DDX.X - 60-minute intervals
On Thursday morning, I thought shares of SanDisk (SNDK) were worth investigating as the stock actually "gapped down" to what I interpreted as the neckline of potential reverse h/s bottoming pattern on its 60-minute chart as the DDX.X itself slipped back under its neckline.
On Friday, I did suggest traders sell a portion of their bullish position into the close, just to be safe, and book a nice short-term gain in the OptionInvestor.com market monitor.
Here this morning, I'm suggesting again that SNDK bulls take further gains as the stock nears its 60-minute interval h/s pattern objective.
As we begin to see some of these patterns "play out" and we see profits/gains from the pattern, this will bring other market participants to the table as they also begin to recognize what we saw Wednesday evening, and here this morning.
I just wanted to give traders an update as to how things were playing out as it relates to Wednesday's market wrap and how our little Guinea Pig can hopefully put some green in our pocket into the holiday season.
On a broader note, stocks opened mixed to lower, but have started to track higher.
The Semiconductor HOLDRs (SMH) $17.84 +6.58%, which have been lagging of late, are atop this morning's list of sector winners, suggesting at a minimum that bears are hard at work and becoming more aggressive at protecting some gains as they start to evaporate.
The action in the SMH bodes well for NDX/QQQQ bulls with the QQQQ $30.73 +2.16% as I type at 10:48 AM ET.
The QQQQ also shows the potential reverse h/s bottom pattern on its 60-minute interval. I've got a "head" at $26.00 with a DESCENDING neckline drawn with midpoint at $29.79. This would give a pattern objective of $33.58.
The S&P 500 Index (SPX.X) 914.51 +0.52% slipped just below the 900.00 level momentarily this morning and traded a morning low of 894.46, but have whipped back higher. This action begins to look similar to what we saw/see in SanDisk's technicals from Thursday morning.