Bullish Harami...A Higher Low?

DJIA + 401.35, +4.68% SP500 + 38.59, +4.25% NASDAQ Comp. + 89.38, +5.49% Russell 2000 + 34.46, +6.86% Exchange NYSE NASD Advancing 2,187 1,973 Declining 1,297 947 Oil $69.85 -$4.69 Gold $804.50 -$34.50 $SOX 243.89 +10.30 Strongest Sectors: XLY +6.60%...XLK +5.23%...XLV +5.22% Weakest Sectors: XLB +0.89%...XLP +0.96%...XLI +2.03% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Thursday morning in our audio commentary we mentioned two industry indexes that looked more neutral to bullish that every other index; Airlines $XAL and Banks $BIX. We even showed charts on AMR, CAL, DAL, LCC and UAUA. We also mentioned how their fuel costs are falling as oil prices are falling. Later in the day as oil fell over $4 to a 14-month low the airlines took off in a big way: UAUA +40%, LCC +28%, AMR +23%, CAL +22%, DAL +18%. We also mentioned regional bank ETF KRE which finished +7%, bank ETF KBE +1.2% and regional banks ZION +6.9% and RF -1.8%. All 9 sector ETF’s were higher the exact opposite of Wednesday sector movement. XLF the strongest sector chart formed a hammer like candle and bullish harami candle pattern. The broad indices are still acting as if they are in a bottoming pattern forming higher than last Fridays low. This appears like a potential double bottom or W pattern bottom. As we have stated and posted recently, bottoms can only be identified once the pattern is formed and viewed after the fact, but we can observe that the current market action is acting consistent with the way a bottom performs while it is in the process of forming. Only time and price action will tell. The VIX did put in an intra-day higher high than last Friday’s high and managed to close lower than last Friday’s VIX close. This could be a bullish divergence (the VIX is an inverse index) since the VIX made a higher high while the SPX made a higher low. The intra-day swing from a record VIX reading of 81.17 to a close of 67.61 is a remarkable reversal of volatility in one day. Volatility is still extremely high so stay tuned. GOOG formed a double bottom support bounce…rose $13 on 16 million shares…rose almost $37 in after hours trading on almost 2 million shares after a positive earnings report. BIDU rose $28 in after hours trading after a positive earnings report from GOOG. IBM rose 3.6% and another 2.4% in after hours trading after a positive earnings report. ISRG rose 12.98% before the close with their earnings coming AMC. BK rose +6% after a positive earnings report this morning. Index Commentary The DJIA formed a bullish harami on a support bounce from a higher low…closed above Wednesday’s R1…today is the low day…watch for a break above today’s high. The SPX formed a bullish harami candle on a support bounce from a higher low the moved to the S1 level of Wednesday’s candle. The Nasdaq formed a bullish harami shaven head candle on a support bounce from a higher low. The RUT formed a bullish harami on a support bounce from a higher low that broke above Wednesday’s R1 level. Stock Commentary DECK formed an outside day on a support bounce from a higher low…resistance at 20 DMA. AAPL formed a hammer and bullish harami from a support bounce from a higher low on 70 million shares. BIDU moved down with a lower high and lower low. ORCL formed a bullish harami on a double bottom support bounce. WYNN formed a bullish harami. SHLD formed a lower high and lower low spinning top on a new intra-day low. CTSH formed a hammer and bullish harami on a support bounce from a higher low…a potential W bottom. HANS formed a lower low and lower high…an intra-day support bounce from a higher than last Friday’s low. C formed a spinning top with an intra-day support bounce forming a potential higher low W bottom. Thursday’s Action Moving Up: FSLR, STRA, DECK, ESRX, UAUA, ZION, KRE, LCC, NDAQ, ANR, BTU, NUE, X, MA, SCHN, CNX, MEE, GRMN, PCLN, AGU, SINA, CLF, V, CF, AMZN, KMT, INFY, COH, ONXX, EXPE, BRCM Moving Down: AEM, GDX, POT, HANS, IPI, BIDU, DRYS, MON, GS, MOS Intermediate Term Market Trend: Down Short Term Market Trend: Neutral