A Bearish Pivot Point?

DJIA - 108.27, -0.89% SP500 - 9.21, -0.68% NASDAQ Comp. - 17.05, -0.69% Russell 2000 - 4.17, -0.56% Oil closed at $134.01 down 60 cents If you didn't read our first post of the morning titled "Futures Trading Higher in Pre-Market," please take a moment to do so. In part we wrote, "Trade with the trend and watch at those key resistance areas if momentum turns to the downside." This is a real time example of the importance of maintaining mental flexibility even when the outlook for the day is bullish. The market is at a very intriguing pivot point. Strong stocks like POT, CF, MOS, MON and AGU are soaring while at the same time the broad indices are again looking weak. Today’s chart is a story of bear flags, bearish engulfing, dark cloud covers, lower highs and potential head and shoulder tops. Essentially a bear hunters paradise. Read on… The DJIA broke the low of the high day on Tuesday and penetrated to the S2 level of Friday’s large white candle. Today was a bear flag break for the DJIA and formed a truncated falling three methods candle pattern. The DJIA is below its 20, 30, 50 and 200 DMA. The S&P formed a bearish engulfing pattern and also broke Monday’s low. Tuesday was the actual high day as the S&P moved less than 2 points above Monday’s high. Today’s sell off sent the S&P to the S1 horizontal level of Friday’s large white candle. This was a slight penetration of the bear flag pattern. The S&P is below it 20, 30, 50 and 200 DMA. The Nasdaq formed a dark cloud cover pattern as sellers appeared the 20 and 30 DMA resistance. Today’s low was at the S1 level of Monday’s large white candle. The Nasdaq is below its 20, 30 and 200 DMA and above its 50 DMA. Is Tuesday a lower high to go with last week’s lower low? If so, look for the Nasdaq to fall back below the 2,430 double top support low and ultimately achieve the double top price target around 2,300. The Russell (RUT) came within 2 points of its 200 DMA before selling off to close on its 20 DMA and the S1 level of yesterday’s white candle. The RUT is still above its 30 and 50 DMA. Is Tuesday a lower high in a head and shoulders top? Oil is forming a text book pennant which generally is a short-term continuation pattern and occasionally a reversal pattern. There is also a bearish divergence forming in the 2-line MACD. CF moved big on Tuesday after Monday’s breakout of its 159 horizontal resistance area. The chart suggests a 37 point target over the next several weeks. POT, MOS and AGU continue to surge forward. Traders should follow the trend but be protective of profits achieved. A close look at each of these charts indicates that strong moves up are followed by dramatic pull backs. Be mindful of any break of support that may occur. MON had a small breakout on the chart today with a suggested price target of 148 – 149. Earnings are scheduled for June 25. AAPL which on Monday confirmed the hammer on Friday moved higher for the second straight day on Tuesday. We mentioned for a buy stop at 178.65 for a July option, in our audio commentary Monday night, triggered in the simulation account today and is now up 2.78 on the stock. The option rose approximately 15% today. GS formed a dark cloud cover. LEH formed a bearish engulfing pattern on a bear flag. MS formed a bearish engulfing pattern on a bear flag. MER formed a dark cloud cover on a bear flag. Today’s Action Moving Up: POT, CF, MOS, MON, DRYS, AGU, FSLR, AAPL, CLF, CNX, IPI, MTL, BTU, V, AMZN, RIMM, MEE Moving Down: STRA, BIDU, X, GS, GRMN, MA, LEH, PCLN, MS, IBM, ESRX, NUE, CELF, MER, SOHU, BRCM Intermediate Term Market Trend: Down (DJIA, S&P) Short Term Market Trend: Down (DJIA)