Markets Break Low of the High Day

DJIA - 381.99, -4.62% SP500 - 42.73, -4.91% NASDAQ Comp. - 66.83, -4.20% Russell 2000 - 22.17, -4.74% Exchange NYSE NASD Advancing 620 511 Declining 3,175 2,253 Oil $37.55 -$2.01 Gold $913.70 +$21.30 SOX 217.33 -10.48 VIX 46.67 +3.03 The VIX moved up confirming the move down in the SPX on Tuesday. Strongest Sectors: XLU -2.84%...XLP -3.23%...XLV -3.33% Weakest Sectors: XLF -10.20%...XLI -5.25%...XLY -4.73% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Upward momentum which paused on Monday turned to downward momentum on Tuesday as traders did not like the lack of detail on the governments financial rescue plan. Experienced traders know that there are two things “big money” doesn’t like. One is uncertainty, the second is negative surprises. Apparently they felt like they got both relating to the financial rescue plan on Tuesday.

Ag-related stocks were mixed with AGU -5.01%, which reports earnings Wednesday morning, down more than the broad indices and MOS -3.22%, POT -1.38% and CF +0.39% holding up better. The Financial Sector XLF -10.20% led all sectors lower. Many bank stocks fell more than 10%: RF -30.17%, Key -25.58%, ZION -19.47%, BAC -19.30%, C -15.19%, WFC -14.22%, USB -13.82% and STT-12.84%. Technology stocks all moved lower: AAPL, GOOG, QCOM, MSFT, CSCO, RIMM, AMZN, INTC, ORCL, ADBE, EBAY and SYMC. AKAM which reported strong earnings last week fell -1.94% or 34 cents formed a bearish engulfing pattern on Monday’s doji but did stay above its recent horizontal resistance. AMZN formed an evening star pattern.

Index Commentary The DJIA, SPX, Nasdaq and RUT all formed large black candles and broke below the low of the high day on Tuesday. We hope you were prepared as we warned you to watch for this last night when we wrote; “…formed small spinning tops suggesting that upward momentum has weakened. Monday’s pullback and rally stayed above Friday’s S1 level. Watch for a break below the high of the low day on Tuesday or a break of Friday’s S1 level. This could be an exit signal from bullish trades for some short-term traders.”

The mid-section, R1, of Tuesday's large black candle is now a short-term resistance level. Stock Commentary We alerted you yesterday that…”Most of the stocks listed below formed potential short-term bearish patterns on Monday. Upward momentum clearly slowed. These bearish patterns are unconfirmed at this point. Tuesday may give bearish confirmation or these stocks could resume their short-term up trends. Just be mindful as you plan your trading for Tuesday.” We hope you were prepared. BNI, UNP, NSC, CSX, STLD, NUE, SCHN, X, XLNX, ALTR, NSM, MRVL LLTC, TXN, NVLS, KOL, BTU, JRCC, CNX, MEE and WLT all broke the low of the high day and confirmed Monday’s potentially bearish candle patterns. Only FCL did not break the low of the high day.

Earnings Tuesday, Feb 10 Symbol Earnings Estimate CVH +0.60 beat +0.59 DTV +0.32 below +0.33 EXPD +0.36 beat +0.35 ICE+0.82 below +0.83 MDC-1.92 below -1.22 OMC +0.88 beat +0.84 PBG+0.30 beat +0.25 Q +0.11 beat +0.10 TRA +1.65 beat +0.92 AMAT +0.00 inline +0.00 CERN +0.65 beat +0.61 CF +3.87 beat +2.11 CSC +1.06 beat +1.02 MVSN +0.09 below +0.21 NVDA -0.18 below -0.09 SWIR +0.36 beat +0.23 VFC +1.05 beat +1.02 Numbers exclude non-recurring items Wed Feb 11 BMO – AGU, AYE, CCE, GENZ, MMC, MICC, NICE, SKYW AMC – ATVI, CMG, CLB, RE, INSP, LVS, LOOP, MOH, NTAP, STR, RNR, TCO, TEX, TQNT Thur Feb 12 BMO - AET, CPLA, KO, ECA, GCL, CLI, MAR, MLM, NXY, NRG, NWN, ZEUS, PTEN, RSH, REV, STRA, TASR, ULBI, WMI AMC – ACAP, AGII, BIDU, COG, CEPH, CAKE, DRYS, ENH, GDI, MFE, NTGR, PNRA, RNWK, TK, WCLK, WYNN Fri Feb 13 BMO – ANF, ALE, BAM, CTSH, ENB, PEP, WYN Learn the Discipline The Model Portfolio entered no new positions on Tuesday. Two positions GME at $26.58, a profit of $1.38, and PPD $33.97, a loss of $1.35, were stopped out. The other seven positions did not hit their stops. Of the original $152,000 in the model portfolio, approximately $14,000 is invested. Stocks to Watch on Wednesday Leading Stocks: Holding Above 30 DMA NFLX, ESI, MYGN, MON, RIMM, SYNA, BLUD, APEI, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, WCG, VAR, BIDU, VPRT, FLS, AMZN, SLGN, ATW, FSLR, PCLN, RBN, SPWRA, AMED, CHL, DLB, ORCL, PCR, PSYS, AMX, DV, EBAY Moving Above 30 DMA = 0 Moving Below 30 DMA = 16 BDX, BYI, CAM, CPLA, CTSH, ESRX, GILD, JCOM, JW.A, MUR, PPD, RCI, ACN, NIHD, SNHY, JOYG Staying Below 30 DMA CLB, HLF, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, ICE, AXYS Tuesday’s Action Moving Up: None Moving Down: GS, STRA, MA, FSLR, CLF, SOHU, NUE, X, SCHN, ESRX, ZION, MS, MON, CNX, SINA, INFY, PCLN, KBE, AFAM, KRE, PNRA, V, RF, ONXX, NIHD, AGU, BTU, MOS, ANR, MEE, POT, NDAQ, FWLT, GRMN, LAMR, IPI, COH, KMT, HANS, DRYS Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down