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Market Structure and a Freebie - Bob Byrne

|Includes:Mentor Graphics Corporation (MENT)

 Before I get to the freebie pick of the day, let’s take a look at charts of the EminiOSX, and BKX.

Since late March, the Emini has been supported time and time again by the 25 day EMA (in purple).  The only time the bears had any luck crashing the 25 EMA was in mid June…and after a few weeks of moderate weakness, the bulls re-entered the market and flicked the bears away like little gnats.

Emini daily

 The bulls are likely to ramrod this market back to (and through) highs if they are able to sustain a trade above 1027.75.  If Prechter, Roubini and the boys are able to thwart the current advance, watch for support near 1012.50 and again at 991/990.

The markets will have a rough time plowing higher without the help of the energy and banking sectors. The OSX has strong resistance at 179.10 and support back near 162.90. In all likelihood, a break of the lows from last week sends this index tumbling towards the 162.90 area in a hurry.

OSX 60 Min

The BKX broke its up-trend line from late July early last week…but it still has a longer term trendline in the low to mid 40’s. I will be watching how the index acts as it approaches either 46.25 on the upside or 43.20 on the downside.  I would imagine the broad markets will break in which ever direction the banks do.

$BKX Daily

Ok, now for the FB Freebie. MENT gapped up huge in late August and has spent the better part of the last two weeks pulling back. I would be interested in taking a long position in MENT on a break above 8.60 with an initial stop back under 8.25.

MENT Daily

MENT 60 Min

Remember to read about the launch of my trading chat room.

Disclosure: None at the time of writing but positions may change at any time.

Stocks: MENT