#$onnn

Coming into this week Semi-conductors looked great, ready to break out to the upside and make long holders a good bit of money.  Well we know how that worked out.  Almost right out of the starting gate Monday they started falling.  strong bearish Marubozu candles Monday, followed by longer one's Tuesday and Wednesday.  The 3 together forming a bearish three Black crows candlestick pattern, indicating a reversal and continuation lower.  

That pattern does not tell you how much lower though.  And with a further drop Thursday many names are forming Hammer candles.  These are possible reversal candles for a move higher.  So Three Black Crows tell you more downside, and it lasts about 4 market hours?  Technically that still fits the definition.  So now you are all confused.  Just last night you were ready to sell everything and go short.  Now there is a possible reversal?  Isn't the stock market fun?

Well, here is a a low risk simple way to take a stab at that turn around without losing your shirt.  One of the names I was watching was On Semiconductor ($ONNN).  It was running toward resistance Friday, but printed one of those 3 Black Crows patterns, followed by a Hammer Thursday.  What makes the possibility of a reversal a bit more interesting is that it reversed intraday at the 50 day SMA, and it is well below the lower Bollinger Band®.  

Since you are a bit skittish one way to trade a possible reversal is through the options market.  Risking just 2.5% of the stock price ($11.69) you can buy the April 12 Calls (30 cents).  If the reversal happens you make money as it rises and penny for penny as the price moves over 12.30.   If it falls the most you can lose is the premium you paid.  

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers.

Intercontinental Exchange, Ticker: $ICE

Intercontinental Exchange, $ICE, has gone through a long pullback and reversal, creating a Cup, in 2014. The last 2 months may be the Handle to go along with it. This is a bullish pattern on a break of the Handle higher, but offers a downside trade as well on a new low under 215. The The RSI is holding in the bullish zone for now, but the MACD is running to the downside.

Marathon Oil, Ticker: $MRO

Marathon Oil, $MRO, was hit hard. like all oil names, before finding a bottom in mid-December. It is holding under resistance now with the 20 day SMA above and a gap to fill above that. The RSI is pushing against the mid line and the MACD is rising.

ON Semiconductors, Ticker: $ONNN

ON Semiconductors, $ONNN, is trading at 3 and a half year highs as it consolidates. A break higher could look to the 2011 highs and beyond. The RSI is strong and bullish while the MACD is leveling as the price churns. Watch the Golden Cross form as a possible catalyst.

Och-Ziff Capital, Ticker: $OZM

Och-Ziff Capital, $OZM, bounced off of the October low and ran up to its 200 day SMA. It took a small pullback from there before reversing higher. The Measured Move targets 13.25 and has support from a rising and bullish RSI and a MACD crossing up.

Vertex Pharmaceuticals, Ticker: $VRTX

Vertex Pharmaceuticals, $VRTX, had been moving higher since August until it started to consolidate in a range in November. It is now peeking above the top of that range. A continuation has no resistance higher. The RSI is bullish and rising and the MACD is crossed up ( a buy signal) and running higher as well.

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the first full week of 2015 week, sees the equity index ETF's looking as though they may continue to the downside.

Elsewhere look for Gold to continue in its tight range while Crude Oil continues lower. The US Dollar Index looks strong and should continue higher while US Treasuries are biased higher, and on the edge of a breakout. The Shanghai Composite continues to look strong but very overbought while Emerging Markets are weak and biased to the downside. Volatility looks to remain subdued keeping the bias higher for the equity index ETF's SPY, IWM and QQQ, despite the moves lower this week.

Their charts show a downside bias with the QQQ leading the way and the IWM the strongest, possibly confirming a rotation from one to the other. The possible reversal candles Friday could always kick in and the indexes move higher though. Use this information as you prepare for the coming week and trad'em well.

U.S. stocks fell early, taking out lows of Friday, as the S&P Index traded below its 200-day average (1905) for the first time in two years (selling exacerbated into the end of the day).

Transport stocks were lower (outside of rails) led by weakness in airlines (Ebola fears/slowing economy overseas); financials were stronger into earnings this week (most of the major banks/regionals report this week), while health-care shares slumped…groups that stood out to downside today: airlines (Bloomberg airline index falls over 6% most since August last year…6th straight daily shop), energy as oil prices keep falling with Saudi Arabia saying earlier they were comfortable with markedly lower oil prices for an extended period…chemicals fall, led by WLK, LYB, HUN and EMN…(it was broad based selling into the close) – VIX up 8% over 23.