Cray Inc. (NASDAQ:CRAY) collapsed 30% today on the back of earnings results. The company missed expectations by $0.06. Today the price target was cut Stifel Nicolaus to $40.00. The drop is nasty but their is a glimmer of hope and a chance of profit. Cray Inc. fell straight into a HUGE level of support. At the $21.90 level, therei s a major gap fill and pivot highs. It would not be a stretch to expect a bounce off this level over the next few trading days.

McDonald's Corporation (NYSE:MCD) has a head and shoulder pattern on the daily chart. This is a bearish chart pattern with a calculated target down to $102.00. The current price of McDonald's is $117.44, -0.26 (-0.22%). The key is it MUST break the neck line first. This has yet to happen which means the pattern has not triggered. If you are looking to short McDonald's stock, don't do it until you get a close on the daily chart below $116.50.

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Amazon, Inc.(NASDAQ:AMZN) has been a rockstar for years. As analysts and investors have underestimated it, the stock has always found a way to climb dramatically higher. What has changed? Analysts and investors are finally cheering and believing. This changes everything. It now means shorts are a minority and longs are a majority. Once everyone is bullish, a stock enters a bear phase.

Amazon has a beautiful, clean, crisp trend line stretching from February 2016 at a price of $475 to its current highs of $770. The key is to wait for a break of that trend line. Meaning the stock must close below it. When that happens, there will be a mega bear market on Amazon stock that takes it all the way back to $600, a key gap fill on teh stock chart. This leve is also near a Fibonacci 61.8% retrace of the move that started in February 2016. I am looking to short the stock or buy puts on that break.

When I’m analyzing charts to find the most attractive trades, I’m looking for a number of different factors. Here are my top three I always pay attention to: 

1. VOLUME: I look for equities trading over 1 million shares each day. At lesser volume, support and resistance levels tend to overshoot significantly adding more risk to a trade than I’m typically comfortable with. I look to see if recent trading volume has increased. When it is higher than normal, I expect support and resistance levels to be pierced (typically no more than 1%). If it is significantly higher, i.e. several times its average trading volume, this can signal a turning point in price movement, especially at extreme highs or lows of a chart.