Stocks Pull Back on Friday

DJIA - 337.94, -3.82% SP500 - 38.00, -4.17% NASDAQ Comp. - 79.85, -5.00% Russell 2000 - 34.71, -7.07% Exchange NYSE NASD Advancing 773 605 Declining 2,780 2,261 Oil $57.04 -$1.20 Gold $742.50 +$37.50 SOX 201.39 -13.76 VIX 66.31 +6.48 Strongest Sectors: XLY +2.98%...XLB +1.16%...XLI +0.86% Weakest Sectors: XLE -4.15%...XLK -4.57%...XLU -2.37% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK On Friday stocks opened and moved lower until mid-day when a rally drove the DJIA up 400 points to 8,900. Then the market began a 400 point sell off during the last 45 minutes of the day with the DJIA closing near 8,497. Decliners led advancers by a large margin and six of nine sectors moved lower. Since the October 10 low in the DJIA, the SPX, Nasdaq and RUT have all made intra-day lower lows. The DJIA so far has held above its October 10 low. As we posted on October 10, if support did hold building a new base would take at least four to eight weeks. The market is five weeks into that process and still looks like a new base building. Traders need to maintain mental flexibility and trade with the higher probability of a trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks. We returned Thursday night from teaching a two-day workshop to more than 200 traders on advanced and combination option strategies. The workshop was a succes and many of those in attendance let us know it made an important difference for them. One trader described it this way; "Great workshop in LA! I really enjoyed learning the strategies of combination options from you. I have learned many valuable lessons from this workshop but the lessons I value the most are your comments about a trader's mentality: attitude, discipline, and consistency. I know I struggle with this the most; it has always been a battle within. Your comments have inspired me to take a more disciplined approach to trading. Thank you for motivating and enlightenign me! I have learned so much about myself trading in the past 2 months trading. I never expected to be analyzing myself more than the stock charts." Index Commentary The DJIA formed a higher high and higher low with sellers appearing at the 30 DMA…pulled back to Thursday’s S1 support level while closing lower for the day. The SPX moved slightly above Thursday’s high before pulling back to the S1 level of Thursday’s large white candle…still above Thursday’s low. The Nasdaq formed a lower high and higher low…an inside day…closed near the open or mid-point of Thursday’s price bar. The RUT formed a lower high and higher low…an inside day…closed near Thursday’s open…still forming potential double or triple bottom.

Stocks to Watch on Monday Leading Stocks Holding Above 30 DMA EZPW…TEVA…ANSS…BLUD…CELG…DNA…ESRX…GIS…MMM…PRGO…RCI…RTN…SHW…VIVO Stocks Moving Above 30 DMA No new stocks listed for Friday. 23 of the 35 stocks that moved above their 30 DMA on Thursday fell below their 30 DMA on Friday…the 12 that stayed above are listed just above. Stock Commentary CELG higher high…higher low…lower close pullback ESRX higher high…higher low…lower close…inverted hammer at support GE inverted hammer…did not confirm bullish harami and hammer from Thursday MMM higher high…higher low…lower close doji UTX higher high…higher low…lower close inverted hammer Friday’s Action Moving Up: STRA, IPI Moving Down: BIDU, FSLR, MON, CF, DECK, AMZN, POT, MA, GS, AGU, BTU, MEE, NUE, CNX, NDAQ, ZION, ESRX, KRE, SOHU, FWLT, X, ANR, MOS, GRMN, SCHN, SINA, PCLN, MS, GDX, DRYS, CLF, INFY, NIHD, EBAY, COH, ONXX, FMCN, BRCM, HANS, UAUA, RF, LCC Intermediate Term Market Trend: Neutral – 5 weeks Short Term Market Trend: Neutral