Oil Falls Again, Financials and Broad Markets Rise

DJIA + 276.74, +2.52% SP500 + 30.45, +2.51% NASDAQ Comp. + 69.14, +3.12% Russell 2000 + 24.40, +3.68% Oil closed at $134.60 down $4.14 The CPI was reported as 1.1% for June and a 12-month 5%, the highest 12 month percentage since 1991. So what was the markets response? It responded with the largest one-day rally in over three months. The rally was broad with advancers leading decliners 2,426 to 739 on the NYSE and 2,283 to 675 on the Nasdaq. There were seven 52-week highs on the NYSE and 19 on the Nasdaq. 52-week lows fell to 26 on the NYSE and 24 on the Nasdaq.

Fed Chariman Bernanke told Congress that Fannie Mae (FNM) and Freddie Mac (FRE) are not in danger of failing. FNM rallied 30.83% and FRE rose 29.85%. Other financial stocks rose significantly including XLF, the financial ETF which gained 13.1%. Continue to be mindful of earnings for the stocks that you trade. Refer to our earnings list on Monday morning’s first post. July options expire this Friday July 18. Index Commentary The DJIA formed a bullish engulfing confirming Wednesday's hammer like pattern. The DJIA is trading under its 20, 30, 50 and 200 DMA so today's bounce should be viewed as a counter trend move at this time. The SPX also formed a bullish engulfing that should be considered a counter trend move. The Nasdaq's large white candle gapped above the body of Wednesday's spinning top past Tuesday's high and the R1 level of the July 9 large black candle. Watch to see if a break above the July 8 high occurs which would represent a higher high and a potential break through the short-term resistance of the 20 DMA. The SOX closed at the R2 level of its July 9 large black candle and less than four points below its 20 DMA. This is positive as it confirms the Nasdaq rally. The RUT which had been consolidating sideways while the other indices had been falling, broke above the R3 level of its July 9 large black candle. The breakout of this short--term resistance area is a higher high and is two points below the resistance of its 20 DMA. Stock Commentary Today’s was a strong support bounce in the broad indices. The following stocks are from the Nasdaq 100 (NDX) that have been down recently but enjoyed a support bounce today. These stocks could simply be potential bear flag patterns or could lead to trend reversal. Support Bounce in Down Trending Stocks from NDX: RIMM, AMZN, SHLD, MICC, WYNN, CHRW, FMCN PCAR, ALTR, EXPD, LAMR, INFY, FISV, BBBY ERTS, EXPE, PETM, MCHP, UAUA, PAYX, LRCX XRAY, CTAS, EBAY, WFMI, ADSK, LBTYA, PDCO SNDK, LOGI, SBUX, CA, JNPR

AMZN had a support bounce in a downtrend.

RIMM formed a bullish engulfing pattern in a downtrend.

C Pattern Setups - verify the earning release date before considering these potential setups: ADBE, FAST, IBM, GWW, BRE, EGLE, JBHT, CCK, IT, NSC

Dave's Insight: When trading always follow your rules, including risk management. Be wise and never trade a risk you can not afford to take. Wednesday’s Action Moving Up: MA, BIDU, GS, FSLR, ANR, DECK, PCLN, SOHU, RIMM, AMZN, MS, V, LEH, NUE, GRMN, MER, AAPL, STRA, IBM, IPI, MOS, EXPE, UAUA, DRYS, EBAY, BRCM, MON Moving Down: CLF, CNX, USO, BTU, SCHN, AGU, FWLT, POT, X, CELG Intermediate Term Market Trend: Down Short Term Market Trend: Down