Stocks Break the High of the Low Day

DJIA + 141.53, +1.78% SP500 + 13.07, +1.58% NASDAQ Comp. + 21.87, +1.46% Russell 2000 + 3.29, +0.73% Exchange NYSE NASD Advancing 2,296 1,571 Declining 1,428 1,165 Oil $40.78 +$0.70 Gold $892.00 -$14.70 SOX 210.83 +0.31 VIX 43.06 -2.46 The VIX moved down confirming the rise in the SPX on Tuesday. Strongest Sectors: XLY +2.83%...XLV +2.58%...XLP +2.19% Weakest Sectors: XLF -1.64%...XLU +0.45%...XLE +1.73% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF We posted yesterday that “Monday could be the low day in the recent pullback so pay close attention on Tuesday for a potential break of the high of the low day.” Stock prices did break the high of the low day so if you were looking at the Chart Signals you found numerous entry opportunities on Tuesday. Downward momentum which reversed on Monday was followed by upward momentum today in many stocks and indices. The number of advancing stocks on both the NYSE and Nasdaq increased again on Tuesday. The RUT and SOX however did not fully participate as both indices made modest moves up today. Financial Sector XLF was the only sector moving down on Tuesday. AMZN moved up for the third straight day rising another $2.44 or 3.99% bringing its three day rise to $13.59 or 27%. Index Commentary The DJIA confirmed Monday’s hammer like pattern with a bullish engulfing pattern. The SPX formed the three candle morning star pattern as it broke the high of the low day. The Nasdaq confirmed Monday’s piercing line pattern and broke the high of the low day. The RUT confirmed Monday’s piercing line pattern. Stock Commentary Rail stocks BNI, CSX and UNP broke the high of the low day NSC formed a doji Steel stocks STLD, NUE and SCHN broke the high of the low day. X formed a bullish harami Semiconductor stocks NVLS, XLNX, ALTR are near the high of the low day MRVL at resistance…potential breakout NSM, LLTC broke the high of the low day TXN broke out Coal stocks KOL, BTU, JRCC CNX and FCL broke the high of the low day MEE moved lower in after-hours trading after reporting earnings below estimates WLT is near breaking the high of the low day Earnings Tuesday, Feb 3 Symbol Earnings Estimate ADM +0.91 beat +0.68 ADP +0.59 beat +0.56 AVP +0.54 below +0.59 CAM +0.75 beat +0.74 CME +3.58 beat +3.46 DOW -0.62 below +0.06 DHI -0.20 beat -0.52 MRO +1.44 beat +0.90 MRK +0.87 beat +0.74 MOT -0.01 below +0.00 MYGN +0.43 beat +0.32 NOC +1.57 beat +1.55 PRGO +0.46 below +0.50 SGP +0.39 beat +0.30 SMG -0.81 beat -0.92 UPS +0.83 below +0.85 BYI +0.59 beat +0.55 CTX -5.34 below -3.27 DIS +0.41 below +0.51 ERTS +0.56 below +0.88 FISV +0.85 below +0.86 ILMN +0.24 beat +0.17 MEE +0.63 below +0.79 MET +0.19 beat +0.14 NETL +0.30 beat +0.23 SLGN +0.69 beat +0.57 SOLR +0.30 beat +0.24 YUM +0.46 beat +0.45 Numbers exclude non-recurring items Wed Feb 4 BMO – AGN, BCO, CLX, ITT, KFT, NOV, PM, RL, SNA AMC – AKAM, CSCO, EXBD, XRAY, DLB, EOG, FMC, LVS, NVLS, PRU, PHM, RJECT, SPTN, SUN, V Thu Feb 5 Fri Feb 6 BMO – BIIB Learn the Discipline Three stocks ESRX, K and SLGN crossed their 30 DMA on Monday. Tuesday morning we entered a trade on ESRX and did not enter trades on K and SLGN. K has earnings on Feb 5 and SLGN reported better than expected earnings after the close today. Even though this strategy is designed to hold through earnings due to its intermediate term nature, we decided to hold off in taking a trade right in front of earnings since we are just starting the model portfolio. We did enter a virtual trade on GME. If time would have permitted we would have worked at entering other trades today on those stocks that have already crossed their 30 DMA during the past week. We will explain our rationale on this more over the next few days once we get the strategy explanation posted. Our goal again is this weekend. These decisions have more to do with logistics of starting the application of the strategy in a model portfolio format than with the actual implementation of the strategy over time. We will look to add positions in the eight stocks on Wednesday that crossed their 30 DMA on Tuesday. Stocks to Watch on Wednesday Leading Stocks: Holding Above 30 DMA NFLX, BDX, ESI, JW.A, MYGN, CLB, RIMM, SYNA, BLUD, APEI, DLTR, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, JCOM, WCG, VAR, BIDU, GILD, RCI, VPRT, FLS, ESRX, K, SLGN Moving Above 30 DMA = 8 AMED, ATW, CPLA, CTSH, DV, HLF, PPD, PSYS, Moving Below 30 DMA = 1 CAM Staying Below 30 DMA FSLR, BKC, JOSB, ORCL, PCR, BYI, CSCO, MUR, RBN, WMS, DLB, JEC, PCLN, PETS, NTLS, BAP, HDB, AMX, CBST, DECK, AFAM, CHL, EZPW, WAB, ALGT, ICE, SPTN, PRGO, AXYS Tuesday’s Action Moving Up: STRA, AFAM, MA, NUE, FSLR, SCHN, POT, PNRA, ESRX, CNX, ONXX, IPI, CF, MON, PCLN, DRYS, NDAQ, BTU, MOS, X, MEE, ANR, SOHU, COH, INFY, HANS Moving Down: V, ZION, KBE, GS Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Neutral