High Volatility Reversal

DJIA + 410.03, +3.86% SP500 + 50.12, +4.33% NASDAQ Comp. + 100.25, +4.78% Russell 2000 + 47.30, +6.99% Exchange NYSE NASD Advancing 2,373 2,195 Declining 563 778 Oil $97.88 +$0.72 Gold $897.00 +$46.50 $SOX 327.71 +15.64 Strongest Sectors: XLF +7.87%...XLK +4.27%...XLU +3.67% Weakest Sectors: XLB -0.03%...XLP +0.65%...XLV +1.29% Sector Watch Up Trending: Sideways: XLF, XLI, XLV, XLP, XLY Down Trending: XLE, XLU, XLB, XLK The DJIA had a trading range of 617 points and the RUT rose an unusual 47 points. The DJIA rose, then fell until 1 pm and then rose into the close in a unusually volatile day. News of changes to short sales rules in the US and the UK combined with efforts by the Fed to developed a solution to the challenges of major financial institutions seemed to give buyers the incentive to step into the market on Thursday. We noted yesterday that the SOX had formed an inverted hammer candle while failing to make a lower low…we alerted you to watch this index for clues to the direction of the Nasdaq. On Thursday the SOX formed an outside reversal day, confirmed its inverted hammer and closed above the high of the low day while rising 5.01%. Index Commentary The DJIA bounced back above its July 15 low…broke through the R1 level and closed near the R2 level of Wednesday’s large black candle…is still trading below its 20, 30, 50 and 200 DMA. The SPX closed above its July 15 low…closed above the R1 and near the R2 level of Wednesday’s large black candle…still below its 20, 30, 50 and 200 DMA. The Nasdaq rose 100 points on Wednesday closing above Wednesday’s R1, R2 and R3 levels while forming an outside day reversal price bar…closed above its July 15 low…trading below its 20, 30, 50 and 200 DMA. The RUT rose 6.99% blowing through Wednesday’s R1, R2 and R3 levels…closed above its 20, 50 and 200 DMA…the low in the RUT on Thursday was a 78.6% Fibonacci retracement…Thursday was a higher high by 0.10 point over the 723.58 on Sept. 12…watch for a break above its 30 DMA at 728.16 for confirmation of a new uptrend. It is not often that the markets have a reversal of the magnitude of Thursday’s reversal. On Wednesday only four stocks made our Moving Up list, on Thursday only one stock makes the Moving Down list. Thursday’s Action Moving Up: BIDU, MA, FSLR, PNRA, PCLN, AAPL, RIMM, AMZN, FMCN, NDAQ, HANS, SINA, MON, CNX, CLF, SOHU, X, ANR, BTU, POT, IBM, DECK, LDK, MTL, ESRX, SCHN, V, MER, BUCY, EBAY, SCHN, AGU, GRMN, IPI, NUE, FWLT, MEE, MOS, AMLN, SNDK, BRCM, ONXX, KMT, STRA, STRA, LAMR, COH, MS Moving Down: GS Intermediate Term Market Trend: Down Short Term Market Trend: Down