Four Weeks and Counting...

DJIA + 248.02, +2.85% SP500 + 26.11, +2.89% NASDAQ Comp. + 38.70, +2.41% Russell 2000 + 9.95, +2.01% Exchange NYSE NASD Advancing 2,386 1,781 Declining 1,046 1,074 Oil $61.04 +$0.27 Gold $734.20 +$2.00 SOX 219.44 +3.75 VIX 56.10 -7.58 Strongest Sectors: XLK +4.17%...XLF +1.27%...XLB +0.08% Weakest Sectors: XLY -1.21%...XLU -1.20%...XLI -0.86% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK It has been four weeks since the October 10 low and the market continues to build a base with buyers becoming more aggressive and sellers less aggressive during the past two weeks. The base building is not over and it is still not possible to say with certainty that October 10 is the bottom, but each day has been adding positive technical action on the chart. In our Thursday night webcast we pointed out that the short-term Momentum line was in the lower reversal zone for the second straight day and said that the indicator seldom spends more than two days, so don’t be surprised if the market moves up within a day or two. We also referred to our comments of the past four weeks regarding the October 10 low and how if that support level did hold that it would likely take at least four to eight weeks to build a base from which a new up trend could move. We also reiterated how the buying in the market had become more aggressive and the selling less aggressive last week until Tuesday of this week. We also said that if the market did bounce from a higher low that would be further indication that buyers were getting more aggressive. On Friday buyers stepped in and this time from the 8,640 level on the DJIA. If stocks follow through and continue to move higher on Monday watch the price action for strength or weakness at the 9,650 horizontal resistance level on the DJIA during the week. Either way Monday should prove to be an exciting day of market action as buyers and sellers continue to battle it out. Index Commentary The DJIA closed just below its 20 DMA after bouncing off the S1 level of the October 28 large white candle…formed a bullish harami. The SPX bounced off the S1 level of its October 28 large white candle at 900 and formed a bullish harami. The Nasdaq closed bounced off the S1 support level of its October 28 large white candle at 1,600 and formed a bullish harami. The RUT bounced off the 495 support level and formed a bullish harami…continues to form a potential head and shoulders bottom. Stocks to Watch on Monday Leading Stocks Breaking Above 30 DMA ANSS…BAP…BCR…BIIB…BLUD…CTSH…DNA…EZPW…FLR…GIS…KNL…LFL…MBT…OI…OSIP…QSII…RTN…SAY…TECH…TEVA…TKC…VIP…WMS Stock Commentary PCLN rose after better than expected earnings Thursday afternoon, watch for potential double bottom breakout. ONXX gapped up after better than expected earnings Thursday, broke out of head and shoulders bottom with price target of $34.50 NVDA rose after positive earnings on Thursday, bounced from higher low…watch for breakout above $9.11. RRGB after a gap down rose to form a large white candle after positive earnings on Thursday…broke through old support resistance at 13. HANS rose from a higher low after a positive earnings report on Thursday...forming higher low? FLR rose from a positive earnings report Thursday...forming a head and shoulders bottom…watch for potential breakout and chart price target of 58. DIS gapped lower and then rose on Friday after reporting 43 cents earnings below estimates of 49 cents a share on Thursday…potential triple bottom? Friday’s Action Moving Up: BIDU, PCLN, FSLR, CF, ONXX, MA, AEM, CNX, MOS, SCHN, STRA, ESRX, HANS, ZION, NUE, X, POT, BTU, AGU, MEE, AMZN, V, INFY, LDK, BUCY, LAMR, IPI, SINA, Moving Down: DECK, GS, NDAQ, DRYS Intermediate Term Market Trend: Down Short Term Market Trend: Down