Stocks Pause Above Support

DJIA - 115.65, -1.49% SP500 - 16.67, -2.03% NASDAQ Comp. - 39.25, -2.52% Russell 2000 - 16.94, -3.91% Exchange NYSE NASD Advancing 1,221 819 Declining 2,565 1,923 Oil $53.98 +$0.18 Gold $923.80 -$28.70 SOX 228.81 -5.64 VIX 42.93 -0.30 The VIX moved down and did NOT confirm the move down in the SPX on Tuesday. Strongest Sectors: XLB -0.40%...XLP -0.47%...XLI -0.80% Weakest Sectors: XLF -4.80%...XLU -2.16%...XLE -1.89% Sector Watch Up Trending: Sideways: XLE, XLY, XLV, XLK, XLB Down Trending: XLF, XLP, XLI, XLU Monday was a new high day with a close above the 50 DMA on the SPX and other broad indices. Tuesday was a day of profit taking creating a slightly higher high on the SPX and DJIA. The Nasdaq and RUT formed an inside day and there were higher lows on all four indices. We now have what Dave calls a Yellow Alert. The market can either continue higher after today's pause or roll over. These are the days were the mental flexiblility that Dave continually refers to becomes absolutely essential. You need to be prepared, in advance, to go in either direction, just like the master chess player who adjusts to a low probability move by their opponent. Today's close near the low of the day gives some weight to the idea that the market could finally be ready for a short term pull back. If the index, ETF or stock trades below either the low of the high day or the inside day that can be a potential exit signal for a short bullish trade. It can also be an entry signal for a short term bearish trade. The positive side to Tuesday’s pull back was that price levels stayed at or above Monday’s S1 level and the 50 DMA (intermediate term trend) on the SPX many other charts. The chart looks like the beginning of a bull flag formation. If prices either move up or stay above S1 on Wednesday, it can be a bullish continuation. The Financial sector was the weakest sector after being the strongest sector on Monday. XLF lost -4.80%. Financial stocks that outperformed XLF included: MS, RF, AFL, GS, PRU, PNC, MMC, AOC, STT, ICE, C, TRV and IVZ. We continue to favor financials and their corresponding ETF’S XLF, UYG and FAS watch for next support bounce. Index Commentary The DJIA pulled back and closed at its 50 DMA …formed a small black candle and held well above Monday’s S1 short term support The SPX pulled back and closed above its 50 DMA and its 800 horizontal support…formed a small black candle above Monday’s S1 short term support The Nasdaq formed a bearish harami…unconfirmed…above its 50 DMA…and above Monday’s S2 and its 1,500 horizontal support level The RUT forms bearish harami, unconfirmed, as it closes near Monday’s S1 At the Open on Wednesday – several stocks in this list moved higher on Tuesday even though the market moved lower SPY – bearish harami VNO – spinning top, consolidation at 30 DMA ARO – confirmed bullish harami/hammer MS – shooting star at horizontal resistance ESS – consolidation at 50 DMA GS – shooting star doji at 200 DMA resistance SNDA – breakout close above 37 horizontal resistance OSG – close below low of high day above low of bearish engulfing CTSH – moves lower in bull flag LEAP – white spinning top new high close X – 30 DMA breakout…double bottom target $25.08 Stocks to Watch on Wednesday Leading Stocks: Holding Above 30 DMA BIDU, CLB, BKC, NFLX, DLTR, HANS, ICE, ALGT, DLB, JEC, PWR, VPRT, AMZN, MON, AAPL, CTSH, FLS, JOYG, AMX, APEI, AXYS, BAP, CAM, GMCR, GPRO, JCOM, JOSB, MUR, PETS, WMT, ATW, GR, BIIB, SLGN, SWN, SYNA, ACN, SNHY, EBAY, GES, RCI, SNA, ORCL, WRC, DECK, HDB, MOS, PCP, UYG, BLUD, PCLN, RBN, FAS, FSLR, GME, ESI, WCG, RIMM, NIHD Moving Above 30 DMA = 1 X Moving Below 30 DMA = 6 BDX, CBST, WAB, NTLS, MCD, PPD Staying Below 30 DMA MYGN, CPLA, ESRX, PSYS, CHL, GILD, MHS, TDG, SPWRA, AMED, GXDX, DV, VAR, JW.A, MUR, HLF, STRA, PCR, BYI, K, AFAM, EZPW Tuesday’s Action (=> +$0.70 or -$0.70) Moving Up: BIDU, SINA, CF, SCHN, X, SOHU Moving Down: STRA, NDAQ, PCLN, ESRX, V, INFY, KRE, MON, FSLR, ZION, GS, GLD, GDX, KBE, CNX, BRCM, NEM Intermediate Term Market Trend: Neutral – SPX, Nasdaq, RUT Down – DJIA Short Term Market Trend: Up