Futures and BIDU Pointing to a Higher Open...

BMO – ES +4.50 and NQ +6.75 futures are up about two hours before the market open pointing to a higher open. AAPL +1.25, GOOG +2.56 and BIDU +41.99 are higher in pre-market trading.

BIDU reported better than expected earnings and raised guidance after the close. The stock is up over $40 in pre-market trading and could give more lift to the current support bounce.

Take a look at UAUA and the airline stocks: UAUA, AMR, CAL, DAL, LCC

The SPX rallied on Tuesday although it did close off about 10 points off its high of the day at 1,070 in the middle of its trading range. You’ll notice that Tuesday’s high was right at horizontal resistance. Along with the other positive technical evidence we have mentioned since Friday’s post there is a bullish divergence forming in the SPX and other broad indexes which is further evidence that the current support bounce could continue. See Tuesday night’s post.

The Euro is down 12 pips in overnight trading. Oil is up 15 cents in electronic trading.

Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning.

Follow your rules in any trading actions today. Be logical.

SPX
Support = 1,050 – 1,044
Resistance = 1,071, 1,079, 1,087

Trading Down:
Trading Up: AAPL, BIDU, FAS, CAT, BAC, GS, SPG, USO

Look at these Charts…
(click image to enlarge)


At the Open on Wednesday
SPY –
QQQQ –
FAS –
BA –
CF –
DOW –
UAUA –
ALGT –
ALTR –
GMCR –
SHLD –
CREE –
STX –
ZION –
STT –
NTRS –
DECK –
ISRG –
BAC –
INFY –
X –
AAPL –
AKAM –
AMZN –
NVDA –
SNDK –
BUCY –
PCLN –
ACN –
AGU –
DE –
DHR –
MA –
PCP –
POT –

SPX Continues Supports Bounce...

DJIA 9,908.39 +150.25 +1.52%
SP500 1,070.52 +13.78 +1.30%
COMPQ 2,150.87 +24.82 +1.17%
Russell 2000 595.17 +8.68 +1.48%

Exchange NYSE NASD
Advancing 2,398 1,918
Declining 667 763

Oil $73.75 +1.86
Gold $1,076.70 +11.00
SOX 323.41 +4.55
VIX 26.00 -0.51

Index Direction Confirmation
VIX Down Yes – SPX
SOX Up Yes – COMPQ

Strongest Sectors: XLB +2.43%…XLE +2.10%...XLI +1.93%
Weakest Sectors: XLV +0.78%...XLD +0.86%...XLU +1.01%

All nine sectors moved higher on Tuesday. Materials, Energy, Industrials and Consumer Discretionary were stronger than the SPX +1.30%.

Sector Watch
Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU
Horizontal Breakout:
Sideways: XLF, XLE
Down Trending:

Key Resistance Levels:
1,075 = 875 Breakout Chart Target
1,082 = Nov 9 S1 level
1,087 = Nov 10 Channel low

Key Support Levels
1,044 - 1,050 = Oct 08 High

The SPX regained Monday’s losses, formed a higher high and higher low, had it highest closing level since last Wednesday and confirmed Friday’s hammer. In addition to being at horizontal support, forming a hammer on Friday that was confirmed on Tuesday, forming a potential W bottom pattern, all four broad indices are forming a bullish divergence on the MACD histogram. We know this market can’t go up J, but some positive technical evidence is beginning to accumulate.

Look at these Charts…
(click image to enlarge)


The rally was broad based as advancers led decliners by more than 3 to 1 on the NYSE. All nine sectors moved higher with Materials once again leading all sectors. Airline stocks literally took off today with XAL rising 7.74%. UAUA reported unit revenues that were more than double analyst estimates.

Look at these Charts…
(click image to enlarge)


Guidance:
The SPX closed higher and did confirm Friday’s hammer on Tuesday. See Friday’s post for a chart and explanation of Friday’s large hammer in comparison with June 2006.

Technical evidence is increasing for a support bounce continuation. Stay prepared however for a break of support.

The short term trend is neutral.
The four-month trend is sideways.
The twelve-month trend is up.

Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules.

There are more bearish setups than bullish at this time, however with the SPX at a strong support level, the 1,044 area; growing bullish technical evidence suggests it would be wise to prepare for a potential support bounce similar to the bounces in July and November of last year.

There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops.


AAPL +2.07
QCOM +0.40
GOOG +2.97
BIDU -8.22
NDX 100 stocks stronger than the NDX include: CTSH, RYAAY, INFY, STLD, MICC, NIHD, SIAL, URBN, SPLS, PCAR, FAST, JOYG, DTV, BRCM, CTXS, XRAY, FLEX, PCLN, BIIB, FWLT, LBYTA, LRCX, EXPE, NWSA, CERN, HSIC, ADSK, PDCO, FSLR, ORLY, DISH, CHKP, ORCL, CSCO, NTAP, KLAC, INTC, ALTR and EXPD.

Stocks to Watch on Wednesday
Holding Above 30 DMA
ALGT, CBST, ZION, FAZ, DLB, NFLX, AMED, CHL
Moving Above 30 DMA = 5
BA, GMCR, MCD, UAUA, VPRT
Moving Below 30 DMA = 0

Staying Below 30 DMA
CEDC, VAR, CREE, K, MYGN, TDG, WFC, WHR, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN

Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month
Short Term Market Trend: Neutral

Futures Point to a Higher Open...

BMO – ES +10.00 and NQ +16.50 futures are up about two hours before the market open pointing to a higher open. AAPL +1.58, AMZN +0.70, GOOG +3.54 and BIDU +2.27 are higher in pre-market trading.

Last night is speaking with more than 600 traders there seems to be only about 20% who thought Monday’s price was more bullish that Friday’s price action. Monday was a lower close but made a higher high and higher low. Generally higher highs and lows lead to a short term rally. With the SPX hitting a significant support level at 1,044 and institutions creating a 22 point rally in two hours, that seems to be pretty significant technical evidence that there is buying power around this level.

Again I refer you to Friday’s post on the June 8, 2006 hammer as a similar dramatic pull back over four weeks and the buyers creating a similar rally at a support level. Often when so many traders have turned bearish that is when the market finds at least a short term support because everyone that is going to sell has sold. That’s certainly the way 2006 was. We’ll see. Just stay prepared to trade in the down or up based on the technical action.

The Euro is up 75 pips in overnight trading. Oil is up 35 cents in electronic trading.

Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning.

Follow your rules in any trading actions today. Be logical.

SPX
Support = 1,050 – 1,044
Resistance = 1,071, 1,079

Trading Down:
Trading Up: AAPL, FAS, SPG, USO

Look at these Charts…
(click image to enlarge)


At the Open on Tuesday
SPY –
QQQQ –
FAS –
BA –
ALTR –
GMCR –
ALGT –
SHLD –
CREE –
STX –
ZION –
STT –
NTRS –
DECK –
ISRG –
BAC –
INFY –
X –
AAPL –
AKAM –
AMZN –
NVDA –
SNDK –
BUCY –
PCLN –
UAUA –
ACN –
AGU –
DE –
DOW –
DHR –
MA –
PCP –
POT –

SPX Pulls Back...Forms Higher Low and Lower Close

DJIA 9,908.39 -103.84 -1.04%
SP500 1,056.74 -9.45 -0.89%
COMPQ 2,126.05 -15.07 -0.70%
Russell 2000 586.49 -6.49 -1.09%

Exchange NYSE NASD
Advancing 1,080 944
Declining 1,963 1,722

Oil $71.89 +1.69
Gold $1,065.70 +13.50
SOX 318.86 -1.15
VIX 26.51 +0.40

Index Direction Confirmation
VIX Up Yes – SPX
SOX Down Yes – COMPQ

Strongest Sectors: XLP -0.12%…XLK -0.43%...XLV -0.49%
Weakest Sectors: XLF -2.01%...XLB -1.61%...XLU -1.14%

All nine sectors moved lower on Friday. Consumer Staples, Technology, Healthcare and Consumer Discretionary were stronger than the SPX -0.89%.

Sector Watch
Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU
Horizontal Breakout:
Sideways: XLF, XLE
Down Trending:

Key Resistance Levels:
1,075 = 875 Breakout Chart Target

Key Support Levels
1,044 - 1,050 = Oct 08 High

The SPX started higher but turned lower giving back some of Friday’s late gains. While index formed a lower close, each made both a higher high and higher low for the day.

Guidance:
The SPX is closed above 1,044 support and did NOT confirm Friday’s hammer. See Friday’s post for a chart and explanation of Friday’s large hammer in comparison with June 2006.

Look for confirmation of the hammer on Tuesday. Be prepared for either a short term rally or a break of support.

The short term trend is down.
The four-month trend is sideways.
The twelve-month trend is up.

Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules.

You are likely to see more bearish setups than bullish at this time, be willing to trade them according to your rules.

There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops.


AAPL -1.34
QCOM -0.53
GOOG +2.18
BIDU -5.57
NDX 100 stocks stronger than the NDX include: NIHD, PCLN, ERTS, XRAY, DELL, CERN, SBUX, STX, CEPH, CTXS, EXPE, CTAS, ILMN, NTAP, GOOG, INFY, ADP, TEVA, URBN, MICC, CTSH, PDCO, ADSK, LIFE, HOLX and BBBY.

Stocks to Watch on Tuesday
Leading Stocks
Holding Above 30 DMA
ALGT, CBST, ZION, FAZ, DLB, NFLX
Moving Above 30 DMA = 1
AMED
Moving Below 30 DMA = 3
CEDC, GMCR, MCD
Staying Below 30 DMA
BA, VAR, CHL, CREE, K, MYGN, TDG, UAUA, VPRT, WFC, WHR, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN

Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month
Short Term Market Trend: Down

Futures Point to a Flat Open...

BMO – ES -1.25 and NQ -2.75 futures are down slightly about two hours before the market open.

In addition to the hammer and 22 point rise in the last two hours of trading on the SPX, look at the key NDX stocks and how they held at or above their recent support level. They did not make a lower low on Friday like the SPX.

Look at these Charts…
(click image to enlarge) (the negative change number on the charts is incorrect)

The Euro is up 1 pip in overnight trading. Oil is up 5 cents in electronic trading.

Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning.

Follow your rules in any trading actions today. Be logical.

It looks as if the markets will open near flat. Watch 1,071 (Jan 29 low) and 1,079, Thursday’s R1 on the SPX if the index does begin to rally. Consider any intra-day pull backs that stay above Friday's low as positive base buidling.

SPX
Support = 1,050 – 1,044
Resistance = 1,071, 1,079


Look at these Charts…
(click image to enlarge) (the negative change number on the charts is incorrect)


At the Open on Monday
SPY –
QQQQ –
FAS –
BA –
ALTR –
GMCR –
ALGT –
SHLD –
CREE –
STX –
ZION –
STT –
NTRS –
DECK –
ISRG –
BAC –
INFY –
X –
AAPL –
AKAM –
AMZN –
NVDA –
SNDK –
BUCY –
PCLN –
UAUA –
ACN –
AGU –
DE –
DOW –
DHR –
MA –
PCP –
POT –

SPX...Stocks Rally Last Two Hours...Forms Hammer...

DJIA 10,012.23 +10.05 +0.10%
SP500 1,066.19 +3.08 +0.29%
COMPQ 2,141.12 +15.69 +0.74%
Russell 2000 592.98 +3.30 +0.56%

Exchange NYSE NASD
Advancing 1,321 1,458
Declining 1,752 1,224

Oil $70.20 -2.94
Gold $1,052.20 -10.20
SOX 320.01 +7.48 – bullish harami
VIX 26.11 +0.03

Index Direction Confirmation
VIX Up No – SPX
SOX Up Yes – COMPQ

Strongest Sectors: XLB +1.87%…XLF +1.16%...XLK +1.01%
Weakest Sectors: XLI -0.44%...XLY -0.28%...XLP -0.27%

Four of nine sectors moved higher on Friday. Materials, Financials and Technology were stronger than the SPX +0.29%.

Sector Watch
Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU
Horizontal Breakout:
Sideways: XLF, XLE
Down Trending:

Key Resistance Levels:
1,075 = Sep Resistance Area
1,079 = Feb 4 R1 level
1,087 = Nov 10 Channel low
1,101 = October High

Key Support Levels
1,044 - 1,050 = Oct 08 High

The SPX fell to the 1,044 horizontal support at 2 pm ET and buyers took over driving the index to a 1,066 close.

Check out these Charts...
(click image to enlarge)


Buyers came in at the major support level of 1,044, originally an important resistance area on October 14, 2008. Each of the four broad indices formed a hammer, bullish harami on Friday. The 1,044 support area would be a logical area for the three week down trend to attract buyers and potentially reverse in the short term. Although without confirmation it may be too soon to come to that conclusion.
(click image to enlarge)


Friday’s hammer reminds me of the hammer that occurred on June 8, 2006 after a dramatic sell off in May to June of that year. The hammer did not confirm the next day, but was followed by three more down days. That low three days later was just beyond the shadow of the June 8 hammer. While the hammer did not mark the low, it did mark the area where big money determined to be buyers. By July a double bottom was formed and the market moved higher from that support level.
(click image to enlarge)


Hammers and bullish haramis appeared on several of the sector charts.
(click image to enlarge)


Hammers also appeared on CREE and other watchlist stocks.
(click image to enlarge)


I mentioned we would discuss the virtual homework trade on CREE as it relates to stops. A trader can choose to put a stop in the machine and if it is touched it is sold. A trader can also choose to wait a certain amount of time before putting the stop in each day. For example a trader might decide that the first hour is too volatile and wait an hour before putting the stop in the machine each day. Also a trader can choose to only implement the stop at the end of the day.
Each approach has advantages and disadvantages. For example with a stop 20 cents below the low on Jan 29 at 55.25 with a stop in the machine would have been stopped out during the first hour. A trader who waits until after the first would have survived but only until shortly before 2 pm ET when that trader is stopped out only to see CREE go 17 cents lower and then rebound. The trader who waits until the end of the day survived being stopped out and ends up positive for the day. The disadvantage to using a stop at the end of the day is that if the stock doesn’t rebound the loss can be larger than planned.

So, does one look for a re-entry?
I would ask what do you think about the trend of CREE?
Do you still think it will continue up?

The long and intermediate term trends are still up. Friday’s low is higher than the support low on Jan 15. And it did form a hammer suggesting downward momentum may be coming to an end.

A hammer confirmation could be a re-entry for a virtual homework trade. But does anyone who got stopped out actually have the discipline to take a second trade? It could get stopped out too…then that would be two losers in a row.

Other bullish candle formations formed on many stocks in our watchlist on Friday as well as hundreds of other charts.
(click image to enlarge)


Guidance:
After falling to the next support level 1,044 the SPX bounced on Friday and rose 22 points while forming a hammer.

Look for confirmation of the hammer on Monday. Be prepared for a short term rally, but flexible to trade down if confirmation does not occur.

The short term trend is down.
The multi-week trend is sideways.
The multi-month trend is up.

Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules.

Many stocks have shifted to a down trend with a lower high and lower low pattern, be willing to trade them according to your rules.

There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops.


AAPL +3.41
QCOM -0.13
GOOG +4.51
BIDU +7.94
NDX 100 stocks stronger than the NDX include: BRCM, AMAT, LRCX, ALTR, RIMM, INTC, CSCO, NVDA, HANS, GENZ, IACI, ORCL, LINTA, LLTC, BIDU, AAPL, DELL, ROST, KLAC, ERTS, ADBE, NTAP, SHLD, XLNX, MXIM, STLD, ISRG, MCHP, CTSH, AMZN, SYMC, YHOO, EBAY, CERN and MRVL.

Stocks to Watch on Monday
Leading Stocks
Holding Above 30 DMA
ALGT, CBST, GMCR, ZION, FAZ, DLB, NFLX, MCD
Moving Above 30 DMA = 1
CEDC
Moving Below 30 DMA = 3
AMED, BA, VAR
Staying Below 30 DMA
CHL, CREE, K, MYGN, TDG, UAUA, VPRT, WFC, WHR, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN

Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month
Short Term Market Trend: Down

Futures Mixed After Unemployment Report...

1:33 pm ET - SPX hits next support level of 1,050...

11:25 am ET - our CREE virtual trade lesson became even more intriguing as it has rebounded from its first hour sell off...right now it is forming a hammer and bullish harami, the candle pattern may be entirely different by the end of the day...earlier I made reference to if a trader put the stop in the machine...some traders don't put stops in the machine at least for the first hour because of first hour volatility...I will explore this issue in more detail in the Friday after market post...

Look at this Chart…
(click image to enlarge)






10:30 am ET - a strong support bounce in the last 10 minutes bringing SPX back to its opening level and the NDX +9...

10:05 am ET - after 35 minutes - sectors XLF +0.04, XLV -0.08, XLK -0.09, XLB -0.13...XLE is weakest -0.75...

9:55 am ET - both the SPX -3 and NDX -6 have turned lower from their open...

9:53 am ET - ZION a support bounce setup?...

9:50 am ET - SPG +2.55, +3.64% is rising after reporting earnings and guidance this morning...

9:43 am ET - CREE virtual homework if a trader used 55.25, 20 cents below the Jan 29 low, as their virtual stop and they put their stops in the machine, they just got stopped out...

9:37 am ET - early decliners include HEAT, WCG, AMD, BA, FLS, NFLX, GMCR, BUCY, SYNA, DLB, WAB, GES, HDB, WHR...

9:35 am ET - early risers include UNG, CREE, ZION, CED, WFC, UAUA, SPG, ALGT...

9:30 am ET - SPX opens +1 and the NDX +7...

BMO – ES -2.00 and NQ +4.00 futures are mixed in pre-market trading pointing to a flat to lower open. AAPL +1.10, AMZN -0.14, GOOG +2.22 and BIDU +3.08 are mostly higher in pre-market trading.

The Unemployment report for January came in at 9.7% down from 10%, surprising many who had feared an increase. Futures rallied from lower levels before the report. It will make for an interesting morning to see if traders buy in response to better than expected news or if good news becomes bad news once again.

The Euro is down 40 pips in overnight trading. Oil is up 20 cents in electronic trading. XLE is up 7 cents in pre-market trading.

SPY is down 11 cents in pre-market trading. XLF is up 12 cents in pre-market trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning.

Follow your rules in any trading actions today. Be logical.

It looks as if the markets will open flat with some separation between the broad SPX and the tech NDX. Watch 1,071 (Jan 29 low) and 1,079, Thursday’s R1 on the SPX if the index does begin to rally.

SPX
Support = 1,050 – 1,044
Resistance = 1,071, 1,079

Trading Down:
Trading Up: ISRG, ESRX, NIHD, PCLN, CERN, HANS, AAPL, VRTX, BRCM, MA, MYGN, FAS, CREE, SPG, USO, UNP, CHL

At the Open on Friday
SPY –
QQQQ –
FAS –
BA –
ALTR –
GMCR –
ALGT –
SHLD –
CREE –
STX –
ZION –
STT –
NTRS –
DECK –
ISRG –
BAC –
INFY –
X –
AAPL –
AKAM –
AMZN –
NVDA –
SNDK –
BUCY –
PCLN –
UAUA –
ACN –
AGU –
DE –
DOW –
DHR –
MA –
PCP –
POT –