Markets Rise and Pull Back on Options Expiration Friday

DJIA - 127.04, -1.41% SP500 - 5.88, -0.62% NASDAQ Comp. - 6.42, -0.37% Russell 2000 - 10.14, -1.89% Exchange NYSE NASD Advancing 1,904 1,276 Declining 1,546 1,615 Oil $71.85 +$2.00 Gold $787.70 -$16.80 $SOX 239.13 -4.76 Strongest Sectors: XLB +2.67%...XLE +2.20%...XLY +2.02% Weakest Sectors: XLF -2.85%...XLI -2.16%...XLK -0.96% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Last Friday we posed the question, “Beginning of the End?” One week later what has occurred on the chart? - The market rallied and pulled back to a higher low on Thursday. - Today was a higher high and higher low even though the indices were down from yesterday. - Today was the smallest trading range day of the last seven trading days. - During the past week the short-term trend has shifted from down to sideways. - The DJIA rose 4.7%, the SPX rose 4.5%, the Nasdaq rose 3.7%, the RUT rose 0.7%. - Big money buyers again bought near the same horizontal support level as last Friday. As we stated last week a bottom can only be identified once it has occurred and is a historical fact. Generally major sell offs will take several weeks to build a base which is where buyers and sellers trade through a continually shifting battle before one of the groups emerges victorious and takes control of the trend. What can be observed based on the trading since last Friday is that so far the price action is acting like many bottoms in the past. A technical trend reversal signal needs at least a higher high above last Tuesday’s high to indicate potential trend reversal. If that occurs we may have a stronger sense that last Friday was indeed the beginning of the end. Q3 Earnings announcements continue on Monday. Index Commentary The DJIA did not confirm Thursday’s bullish harami…Friday was a higher low and higher high which held this week’s short-term support…watch for a close above Thursday’s high or an intra-day move above Friday’s high. The SPX formed a spinning top that barely missed confirming Thursday’s bullish harami…Friday was a higher high and higher low. The Nasdaq formed another bullish harami on Friday which did not confirm Thursday’s bullish harami…Friday did make a higher high and higher. The RUT formed a spinning top which is a bullish harami that did not confirm Thursday’s bullish harami…did also make a higher high and higher low. Stock Commentary DECK formed a higher high and higher low before closing down 62 cents.. AAPL formed a hammer for the second day in a row on 62 million shares. BIDU moved up after a strong earnings report from GOOG. ORCL barely confirmed Thursday’s bullish harami pattern. WYNN confirmed its bullish harami with a counter-trend support bounce. SHLD bounced slightly higher on Friday…still a down trend CTSH formed a bullish engulfing confirming Thursday’s bullish harami …still looking like a potential W bottom. HANS formed and inside day. C formed an inside day…still forming a potential higher low W bottom. Friday’s Action Moving Up: BIDU, SOHU, NIHD, NDAQ, BTU, PNRA, CNX, GS, ANR, NUE, DRYS, MON, UAUA, MEE, LKD, FWLT, CLF Moving Down: FSLR, ZION, KRE, PCLN, CF, V, X, IPI Intermediate Term Market Trend: Down Short Term Market Trend: Neutral