Markets Pull Back on Weaknesses in Financial Stocks

DJIA - 139.88, -1.19% SP500 - 15.73, -1.21% NASDAQ Comp. - 9.34, -0.38% Russell 2000 - 6.12, -0.81% NYSE NASD Advancing 1,039 1,217 Declining 2,058 1,646 Oil $113.01 -$1.44 Gold $814.60 -$13.70 $SOX 375.28 +1.14 Strongest Sectors: XLB +0.83...XLP +0.70%...XLK +0.21% Weakest Sectors: XLF -5.06%...XLY -1.31%...XLU -1.17% Oil and gold were down again on Tuesday while the dollar was slightlyhigher. Ag-related moved higher on Tuesday, a support bounce in a down trend. Coal and steel stocks were mixed with mostly small moves in price. Financial stocks were weak today with the XLF dropping over 5% and continuing their sideways trend of the past three and a half weeks. Financial stocks were led lower when UBS reported another quarterly loss, its fourth in a row, and J.P. Morgan (JPM) dropped over 9% due to an analyst downgrade. JPM is in the DJIA and was a major factor in its large move down on Tuesday. GS shares also fell when an analyst cut their third-quarter earnings estimate. Index Commentary The DJIA formed a lower high an lower low…closed below the low of the high day with a bearish engulfing pattern, right at its 50 DMA…the index did stay above the S1 level of Friday’s large white candle…for some short-term traders this could represent a short-term exit signal in DIA or stocks in the index that had the same chart patten…this is a counter trend move at this time and potentially is the beginning of a bull flag. The SPX formed a lower high and lower low…closed below the low of the high day with a bearish engulfing pattern, just below its 50 DMA…this is a counter trend move that could represent an exit point for some short-term traders on the SPY or stocks with the same pattern…is potentially the beginning of a bull flag. The Nasdaq was the strongest broad index of the day, closed just below it 200 DMA while forming a potential bearish harami…bounce up from Monday’s S1 level…index still in an up trend. The SOX moved up for the sixth straight day formed an inside day at just above horizontal resistance of 370…the SOX is pausing between its 50 and 200 DMA. The RUT formed a potential bearish harami above its 200 DMA…the index rallied at Mondays’ S1 level. Stock Commentary Up Trending RIMM confirmed Monday’s bearish harami moving near Friday’s S2 level…still above 20, 30, 50 and 200 DMA AAPL continued to move higher forming a higher low and higher high…a sell off did occur in the 180 horizontal resistance area AMZN formed a potential bearish harami well above Monday’s S1 level…a modest pullback consider it large move up on Monday Down Trending BIDU formed a bullish harami and still closed below its 20, 30, 50 and 200 DMA POT formed an inside day and closed above its 200 DMA FWLT broke horizontal support at 50…the stock did break report instead of bouncing BUCY formed a bullish engulfing pattern at horizontal support. AGU rallied above its 200 DMA…a counter trend move at this time PCLN formed a bearish harami after a one day bounce Sideways Trending FSLR formed a bullish harami in the area of horizontal support in a sideways trend Tuesday’s Action Moving Up: POT, BIDU, MON, SOHU, AAPL, AGU, FSLR, STRA, ANR, BUCY, X, CF, USUS, CLF, MOS SCHN, MTL Moving Down: GS, MA, FWLT, RIMM, MS, DECK, LEH, V, PCLN, IBM, DRYS, MER, USO, NUE, BTU, AMZN, GRMN, EBAY Intermediate Term Market Trend: Up Short Term Market Trend: Up