Support Holds on Tuesday

DJIA + 151.17, +1.83% SP500 + 8.37, +0.98% NASDAQ Comp. + 1.22, +0.08% Russell 2000 - 3.79, -0.84% Exchange NYSE NASD Advancing 1,306 1,163 Declining 2,325 1,749 Oil $54.39 -$0.56 Gold $732.70 -$9.30 SOX 191.89 -3.83 VIX 67.64 -1.51 Strongest Sectors: XLE +2.80%...XLK +1.39%...XLP +0.69% Weakest Sectors: XLF -1.43%...XLB -1.12%...XLU -1.08% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Stocks rallied late Tuesday moving the DJIA and SPX into positive territory for the day. However market breadth was weak as the Nasdaq was essentially even and the RUT was down for the day. Decliners led advancers by almost a 2 to 1 margin. Five sectors were up for the day while four were lower. Oil moved fell another 56 cents hitting a new 52-week low and continuing the down trend since July. Gold was down $9.30. Continue to maintain mental flexibility and trade with the current trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks. Index Commentary The DJIA formed lower high and lower low …white spinning top bullish harami …held above Oct. 10 support. The SPX formed a hammer and bullish harami…closed at the S2 level of Thursday’s large white candle…closed above Thursday’s low. The Nasdaq formed a hammer and bullish harami…closed above Thursday’s intraday low. The RUT formed a hammer…made a new 52-week intraday and closing low…still forming potential double or triple bottom. Trend Reversal Strategy In our webcast Monday evening we demonstrated a a real-time virtual trade on RIMM because it met the criteria of our Trend Reversal Strategy that we shared in our October 25, 2008 post. We shared this strategy because we saw that several individual stocks were beginning to exhib it Trend Reversal characteristics at that time. We invite you to revistit that Strategy. Specificially RIMM's chart showed a potential double bottom pattern, a bullish engulfing candle pattern and a bullish divergence on the 14/5 stochastic. RIMM closed on Monday at 42.24 and we entered on Monday evening a Buy Stop to buy 10 December 55 calls if RIMM rose to 42.82 on Tuesday morning. A stop contingent on the order being filled was entered at a stock price of 37.72. The order was triggered at 7:31 am and filled at 2.09 per contract. RIMM rose $5.01 or 11.86% from Monday's close and the Dec 55 calls closed at 3.45, a gain of $1.36 or 65% from our Tuesday morning entry. The trailing stop is moved up to 44.70 after the first day. Stocks to Watch on Wednesday Potential Bull Flag GILD…forms low day hammer Potential Trend Reversal IBM Leading Stocks Holding Above 30 DMA TEVA…GIS…MMM…VIVO…AYE…FLIR…PSSI Stocks Moving Above 30 DMA ANSS…CERN…CHTT…CL…PCLN…PRGO…SHW Moving Below 30 DMA ASIA…ESRX…JCOM…LFL… Stock Commentary CELG lower high…lower low…lower close in sideways pattern ESRX lower high…lower low…lower close…holding support GE doji…no confirmation of hammer, inverted hammer or Monday’s bullish harami MMM piercing line patter on bounce off 30 DMA UTX lower high…lower low…piercing line pattern HPQ gaps higher forms dragonfly doji on strong than expected preliminary Q4 results and full year results Tuesday’s Action Moving Up: MA, PCLN, PNRA, V, SOHU, LDK, AEM, MS, POT, STRA Moving Down: DECK, BIDU, FSLR, ANR, BTU, FWLT, SCHN, MEE, NIHD, AMZN, DRYS, BUCY, CLF, ESRX, NDAQ, GRMN, CNX, NUE, Intermediate Term Market Trend: Neutral – 5 weeks Short Term Market Trend: Down