Oil Falls But Financials Take Broad Markets Lower

DJIA - 180.51, -1.55% SP500 - 19.60, -1.51% NASDAQ Comp. - 35.54, -1.45% Russell 2000 - 11.40, -1.51% Exchange NYSE NASD Advancing 881 891 Declining 2,215 1,961 Oil $113.77 -$0.90 Gold $805.70 +$13.60 $SOX 369.94 -6.49 Strongest Sectors: XLU +0.14%...XLP -0.41%...XLV -0.83% Weakest Sectors: XLf -3.84%...XLY -1.70%...XLE -1.27% Fresh concerns over the need for a bailout for Fannie Mae-FNM and Freddie Mac-FRE sent financial stocks lower today and the weakness in financial stocks took the broader market lower. FNM was down over 22% on volume that was about 70% above average while FRE was down over 24% on 50% above average volume. The question is the speculation in the news about failure and bailout accurate or are the bears just getting the media to buy in to the idea and spread the fear? Of course, only time will tell but there is an opportunity here if one can assume the risk. In the broader financial sector XLF was down 3.84%. XLF is currently in a sideways trend and Monday’s low held above lows of last week, which suggests that the concern in the broader sector is not as great as with FNM and FRE. Watch last week’s low as an important support level. The prior week support low of 19.75 is also important. Up trending sectors have maintained their intermediate term uptrend. In the broad indices we have changed our short-term trend status to neutra. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF, Down Trending: XLE, XLU, Index Commentary The DJIA broke down through its 50 and 20 DMA and bounced off its 30 DMA while forming a bearish engulfing pattern…a break below the 30 DMA and the August 8 S3 level of 11,388 would turn the intermediate term trend from up to neutral and the short-term trend down. The SPX broke down through its 50 DMA bounced off its 20 DMA while forming a bearish engulfing pattern…a break below the 30 DMA and August 8 S3 level would turn the intermediate term trend neutral and the short-term trend down. The Nasdaq fell back below its 200 DMA while forming an evening star like pattern…the short-term trend is neutral…a break below the 2,400 level would turn the short-term trend down. The SOX unable to break through its 200 DMA formed an evening star like pattern and bounced up from its 50 DMA…the short-term trend is neutral and a break below Monday’s low and its 50 DMA would turn the short-term trend down. The RUT formed an evening star pattern and turned the short-term trend neutral…a break below the August 11 S3 level of 732 would turn the short-term trend down…closed above its 200 DMA for seven consecutive days and 8 of the last 9 days. Stock Commentary Up Trending RIMM pulled back on Friday to its bull flag low and bounced watch for a break below its 125 support and 50 DMA for a failed bull flag AAPL formed a doji following Friday’s bearish engulfing AMZN broke below horizontal bull flag and August 11 S1 level…holding above Monday’s S2 and S3 levels NIHD pulled back to horizontal support at 52…closed below its 20 DMA…may be forming a potential head and shoulders formation ESRX held above the breakout of long term horizontal resistance in the 74 area…formed shooting star and bearish harami…watch if support holds UAUA bull flag breakout continued on Monday as oil falls…short-term chart target 16.67 NDAQ formed evening star pattern…watch the August 8 S3 support level WRC small spinning top at horizontal resistance ONXX formed shooting star and bearish harami in a horizontal bull flag…. HANS held above Thursday’s S1 level and above its 50 DMA Down Trending POT formed a bullish harami inverted hammer at its 200 DMA MOS formed a bullish engulfing and an inverted hammer X formed a bullish harami FWLT formed a bullish harami at its long term support area of 46 CNX formed a spinning top at its 60 – 61 support area AGU bounced up failing to follow through on Friday’s bear flag break with an inverted hammer that rose to its 20 DMA…potentially forming a head and shoulders bottom SCHN held at 66.50 support area of breaking its bear flag on Friday BTU formed shooting star inside its bear flag pattern Sideways Trending AMLN fell below its horizontal breakout on six times normal volume on negative FDA news on one of its drugs CF formed a doji FSLR formed a bearish engulfing pattern on Friday’s shooting star CLF formed a doji failing to confirm Friday’s bearish harami Monday’s Action Moving Up: FMCN, UAUA, ONXX, MOS, AEM, AGU, IPI, GDX, BUCY, CF Moving Down: DECK, AMLN, STRA, AMZN, PCLN, NDAQ, SNDK, RIMM, IBM, NIHD, MS, COH, INFY, FNM, SINA, FRE, MA, MEE, NUE, BIDU, FSLR, GS, MER, LEH, V, SOHU Intermediate Term Market Trend: Up Short Term Market Trend: Neutral