Groundhog Day...Nasdaq, RUT Move Higher

DJIA - 64.11, -0.80% SP500 - 0.44, -0.05% NASDAQ Comp. + 18.01, +1.22% Russell 2000 + 6.08, +1.37% Exchange NYSE NASD Advancing 1,637 1,489 Declining 2,122 1,286 Oil $40.08 -$1.60 Gold $906.70 -$20.60 SOX 210.52 +2.26 VIX 45.52 +0.68 The VIX moved up confirming the drop in the SPX on Friday. The VIX gapped up as the SPX gapped down and closed near its low as the SPX recovered. Strongest Sectors: XLK +1.57%...XLV +0.65%...XLU +0.55% Weakest Sectors: XLI -2.28%...XLE -1.60%...XLB -1.42% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Downward momentum reversed on Monday as indicated by the intra-day reversals in the DJIA, SPX, Nasdaq Composite, RUT and the SOX. The Nasdaq, RUT and SOX finished positive on Monday. Advancing stocks on both the NYSE and Nasdaq increased significantly on Monday as the number of declining stocks dropped. 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. After strong earnings Thursday evening AMZN which rose $8.82 or 17.64% on Friday rose another $2.33 or 3.96% on Monday, while staying above its horizontal breakout. Index Commentary The DJIA formed a hammer like pattern near horizontal support. The SPX formed a small white hammer that could be a potential morning star pattern. The Nasdaq and RUT formed a piercing line pattern. Earnings Monday, Feb 2 BEAV +0.53 beat +0.46 HUM +1.03 below +1.07 MAT +0.49 below +0.72 AFL +0.98 below +1.00 HOLX +0.19 below +0.29 SNDK – 1.65 below -0.60Numbers exclude non-recurring items Tues Feb 3 BMO – AFAM, ADM, AVP, BP, CAM, CME, DOW, DHI, MRO, MRK, MOT, MYGN, NOC, PRGO, UPS AMC – BYI, CTX, LIMN, MEE, MET, ERTS, USNA, DIS, YUM 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 Stock Commentary NTRS bullish engulfing support bounce Rail stocks BNI formed a hammer…potential low day CSX a white body candle potential low day UNP a hammer…potential low day NSC formed a black spinning top that did not confirm Friday’s hammer…potential low day Steel stocks STLD formed a piercing line pattern…potential low day NUE formed an inverted hammer…potential low day and evening star pattern SCHN formed a white candle…potential low day X formed a black candle closing just below horizontal support Semiconductor stocks NVLS formed a white spinning top that did not confirm Friday’s inverted hammer MRVL formed a white spinning top near resistance XLNX formed a high wave white spinning top NSM formed a piercing line pattern ALTR formed a bullish harami LLTC formed a bullish engulfing pattern TXN bullish engulfing flag bounce Coal stocks KOL, BTU, JRCC MEE, CNX, FCL and WLT formed potential low day moving higher from intra-day lows Learn the Discipline We told you change was coming and today is the beginning of some exciting changes that can help seriously minded traders to improve their trading skill. So stay tuned. Our Stocks to Watch On day of the week list has changed effective today. The list is smaller dropping in size from around 120 to 76. The financial ratings of some of the stocks in the original list, which was created on Nov. 2, have deteriorated and we felt it was time to modify the list. Stocks have been deleted and others have been added. We may modify the list further over the next month. If we do we will post any changes. Some of you are aware that the concept behind this list was a paper trading strategy we developed in 2004 to assist new traders with developing discipline in following a system. The strategy is designed for an uptrend but can produce some success in a sideways market. That is why we began posting it in November. We did not elaborate on the list and left it up to aware readers to decide how to apply the information. We are ready to now apply the strategy on a daily basis. We will likely post the exact parameters of the strategy by the weekend. We will demonstrate daily a model portfolio. It will be done in real-time but it will be a virtual electronic account. We expect the results to be modest in a sideways market. The entry signal is a price close above the 30 DMA. The stop will be 3% below the 30 DMA. This is an intermediate term trading style and that is why we expect modest results in a sideways market. What you can learn from it is the discipline in applying a consistent strategy. We will enter real-time virtual trades, as if we were managing a portfolio. We are going to start with a virtual account of $152,000 and open stock positions of $2,000 rounded to the nearest share. Since three stocks in the list crossed their 30 DMA we will enter virtual trades on Tuesday. Come back each day and learn the discipline. Stocks to Watch on Tuesday 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, CAM, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, JCOM, WCG, VAR, BIDU, GILD, RCI, VPRT, FLS Moving Above 30 DMA = 3 ESRX, K, SLGN Moving Below 30 DMA = 2 ATW, FSLR Staying Below 30 DMA BKC, CTSH, JOSB, ORCL, PCR, AMED, BYI, CPLA, CSCO, HLF, MUR, RBN, WMS, DV, DLB, JEC, PCLN, PETS, NTLS, BAP, HDB, AMX, CBST, DECK, AFAM, CHL, EZPW, PSYS, WAB, ALGT, ICE, SPTN, PPD, PRGO, AXYS Monday’s Action Moving Up: STRA, GS, ESRX, PCLN, MA, Moving Down: FSLR, AEM, DRYS, X, NDAQ, POT, GDX, PNRA, CLF, SOHU, NIHD Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down