Bullish Harami Friday...Will it Confirm on Monday?

DJIA + 21.41, +0.19% SP500 + 5.22, +0.42% NASDAQ Comp. + 30.42, +1.33% Russell 2000 + 7.96, +1.13% Advancers & Decliners NYSE 1,761 1,339 NASD 1,760 1,111 Oil closed at $123.26 down $2.23 We have maintained our intermediate term trend down status during the past week and a half because the DJIA, SPX and Nasdaq each are still below their 30 and 50 DMA. Only the RUT is currently above its 30 DMA. The RUT closed on Wednesday above its 50 DMA and fell back below its 50 DMA on Thursday. Also, while each of the indices have formed a higher high, none have formed a higher low yet and since an up trend is made of higher lows and higher highs, it seems premature to call this an intermediate uptrend when the intermediate trend has not formed a higher low and trades below the 30 and 50 DMA. The Nasdaq did form a higher low of sorts when AAPL gapped lower on Tuesday and then bounced higher. This low is an anomoly of sorts as it was essentially formed due to the price action of one stock as opposed to a majority of the stocks in the index. Today each of the indices formed a potential bullish harami on Thursday's one day pull back. The question is will these haramis lead to a reversal on Monday or are they just a pause day until sellers push prices lower next week? Obviously no knows the answer to this question, however, the question does make us aware of what price action we need to look for on Monday. The DJIA and SPX haramis were quite weak closing near Thursday's low and spending the entire day Friday below the R1 level on Thursday's candle. The Nasdaq harami looks stronger closing above the R1 level of Thursday's candle. As you might expect the RUT harami strength is right in between the DJIA/SPX and Nasdaq harami. The RUT spent a portion of the morning above Thursday's R1 level and closed on Friday about 1 point below its Thursday R1 level. Thursday's R1 level is a key short-term resistance level and Thursday's low is a key short-term support level in each of the indices. If the indices break above short-term resistance of Thursday's candle and confirm Friday's bullish harami, the Thursday/Friday low could be viewed as a higher low to match with the recent higher high. If the price action falls below Thursday's low support then the trend will still need to find that higher low. Keep in mind our analysis of last weekend...good earnings, better than expected earnings from financial stocks and lower oil prices are lifting this market...if oil continues to fall expect indices to successfully break through resistance...if oil begins to rise again it is most likely the indices will stall. Index Commentary The DJIA traded and closed below the R1 of Thursday's large black candle...dowward momentum decreased on Friday...formed an inverted hammer, which with Thursday's candle forms a bullish harami following a one day pull back...traded and closed above its 20 DMA...formed a lower high and lower low on this narrow range day...watch for confirmation or non-confirmation of the bullish harami which is a close above the body of Friday's candle...on Monday watch if the DJIA trades above Friday's high or below Friday's low to determine if Friday is a short-term trend reversal or simply a day of rest for sellers. The SPX traded and closed below the R1 level of Thursday's large black candle...downward momentum decreased on Friday...formed a spinning top, which with Thursday's candle forms a bullish harami following a one day pull back...traded below and closed less than one point below its 20 DMA...formed a lower high and higher low, an inside day...watch for confirmation or non-confirmation of the bullish harami which is a close above the body of Friday's candle...on Monday watch if the SPX trades above Friday's high or falls below Friday's low...1,250 is a key support level...watching for short-term trend reversal or continuation to the downside. The Nasdaq traded and closed above the R1 level of Thursday's candle...downward momentum decreased and upward momentum increased on Friday...formed a bullish harami...traded in between its 20 and 30 DMA all day...formed a lower high and higher low, an inside day...watch for confirmation or non-confirmation of the bullish harami...look at the support structure in the 2,275 area...watch for confirmation or non-confirmation of the bullish harami...watch if the Nasdaq breaks above its 30 DMA or falls below its 20 DMA The RUT on Wednesday completed a 61.8% Fibonacci retracement of the June 5 to July 15 down trend...successfully pentrated its 50 DMA, the first of the broad indices to do so...fell on Thursday with the rest of the market...traded on Friday above Thursday's R1 but closed just below R1...also traded briefly above its 50 DMA on Friday...formed a bullish harami with a higher low and a lower high, an inside day...the fast line on the 2-line MACD has been above the 0-line for for four days, the slow is approachig the 0-line...watch for confirmation or non-conformation of the bullish harami and for a close above its 50 DMA...if the RUT closes above its 50 DMA the major test for this up trend is its 200 DMA which it has closed above only once since October 31, 2007...look at the 1 year chart and you can see a potential triple bottom that has been forming since January...key intermediate term reistance is 740...a successful breakout of 740 would give a chart target of 850...this is the most bullish of the broad indices at this moment, keep in mind however that a sustainable up trend in the RUT would likely be supported by the other indices trending up...which means, if a new up trend is in process of forming it is being led by the RUT this time around.. Earnings Watch Thursday AMC/ Friday BMO Earnings Moving Up: JNPR +4.00, MCHP +1.23, ACI +4.70, LM +1.30 Thursday AMC/ Friday BMO Earnings Moving Down: WDC - 2.68, WYNN -1.55, BDK -2,81, No Friday’s AMC Earnings ATM August Straddle Cost at Thursday's Close: 50 ACI 8.00, 60 BDK 6.40, 40 LM 7.18 Stock Commentary NIHD today confirmed its resistance breakout on Thursday of the 52.37 area...chart target is 64...time target is 2 to 8 weeks BUCY reached the resistance high between its recent double bottom...a successful breakout would give a chart target of 77 with a time target of 3 days to 3 weeks. SINA formed Dave's C-Entry as it closed above its 30 and 200 DMA. BAM this week formed Dave's C-Entry as it closed above its 30 and 200 DMA. POT, MOS and AGU formed bullish haramis and are below their 20, 30 and 50 DMA. CF formed an hammer and is trading beow its 20, 30 and 50 DMA. X formed a spinning top near the high of the low day in a down trend. BTU broke the high of the low day as it bounced off of its 200 DMA. CNX formed a morning star pattern as it bounced off its 200 DMA. MEE form a bullish engulfing pattern and is trading below its 20, 30 and 50 DMA. Friday’s Action Moving Up: POT, MEE, MA, X, CLF, ANR, CF, SCHN, MOS, BTU, MTL, MON, AAPL, RIMM, CNX, NIHD, FWLT, V, ESRX, AGU, CELG, EBAY, JASO, IPI Moving Down: BIDU, FSLR, USO, IBM, LEH, MER, SOHU, STRA, DECK, GS, MS Intermediate Term Market Trend: Down Short Term Market Trend: Up