Support Bounce Fades, Trend Wins Again

DJIA - 92.65, -0.84% SP500 - 13.39, -1.09% NASDAQ Comp. + 2.84, +0.13% Russell 2000 - 2.15, -0.32% Oil closed at $138.74 down $6.44 Following the lead of oil coal stocks fell. KOL, ANR, BTU, CNX and MEE all broke the low of the high day today coming off a lower high in what looks like a bear flag. KOL, BTU, CNX and MEE are closed below their 30 DMA. These are potential bearish C – Entry patterns. These stocks are highly correlated to the price of oil. Should oil rebound again these stocks would likely rebound also. The PPI numbers were mixed today as the PPI was higher than expected while the core PPI (excluding food and energy) was lower than expected. The June CPI numbers will be released tomorrow, Wednesday morning. Continued downtrends in financial stocks helped stocks mover lower. XLF moved down another 3% on Tuesday. JNJ reported better than expected earnings. INTC also reported strong numbers after the close on Tuesday. 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 had a 295 point range today as it moved down more than 200 points after the open and then rallied to the positive before closing down and forming a hammer pattern. The SPX also followed the same intraday pattern as the DJIA before closing down in a hammer like pattern. The Nasdaq fell more than 45 points intraday before finishing slightly up for the day and forming a high wave spinning top. The Nasdaq range was 81 points. The RUT fell below 650 before rebounding to close down slightly and forming a high wave doji pattern. The index candles all suggest the possibility of a short-term reversal which would be a counter trend move at this time. Watch closely tomorrow if a bounce follows to the upside or the trend takes over to the downside once again. Stock Commentary AAPL broke the support line on its bear flag pattern and is trading below its 20, 30 and 50 DMA and above its 200 DMA. RIMM made a lower high and lower low continuing its support break two days ago while forming a spinning top. It did achieve the 102.50 price target intraday today. FSLR broke below short-term support and formed a hanging man pattern. BIDU continued to move lower after breaking below support on Tuesday Ag-related stocks AGU, CF, IPI, MOS and POT, broke below low the low of the high day but recovered from their intraday lows. Watch the open and direction on Wednesday in these stocks. X, STLD, SCHN and NUE all broke below support in their bear flag pattern. GS, MER and MS all formed spinning tops with a lower high and lower low on Tuesday. This could be the second candle in a morning star pattern. LEH formed a bullish harami. Watch for potential confirmation on Wednesday. See our post just before today’s close for comments on DRYS, CELG, BRCM and IBM. Tuesday’s Action Moving Up: DRYS, CELG, NKE, STRA, IBM, BRCM, GRMN, LEH, AMZN Moving Down: BIDU, FSLR, MOS, MA, CF, X, CNX, MEE, USO, BTU, AAPL, V, PCLN, POT, ANR, AGU, FWLT, MON, SOHU, SCHN, IPI, RIMM, CLF, DECK, MER, GS, MS Intermediate Term Market Trend: Down Short Term Market Trend: Down