Friday, January 22, 2010

SPX Falls to 1,090 Support...

DJIA 10,172.98 -216.90 -2.09% SP500 1,091.76 -24.72 -2.21% COMPQ 2,205.29 -60.41 -2.67% Russell 2000 617.12 - 11.24 -1.79% Exchange NYSE NASD Advancing 557 735 Declining 2,525 1,990 Oil $74.75 -$1.33 Gold $1,092.00 -$11.20 SOX 329.49 -18.42 VIX 27.31 +5.04 The VIX moved up and did confirm the move down in the SPX on Friday. The SOX moved down and did confirm the move down in the COMPQ. Strongest Sectors: XLP -0.23%…XLV -1.09%...XLI -1.52% Weakest Sectors: XLK -3.48%...XLF -3.26%...XLE -2.38% All nine sectors moved lower on Friday as selling continued from Thursday. Consumer Staples, Healthcare, Industrials, Consumer Discretionary, Materials and Utilities were stronger than the SPX -2.21%. SPX Chart Signals Target: 1,234 end of January. This is not a subjective forecast; rather it is the chart target price and time based on the mid July breakout at 950. With the combination of modest to negative earnings reaction this past week and the proposal to reform the banking industry, we consider extremely improbable that this target will be reached by the end of January. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLE, XLI, XLU Horizontal Breakout: XLF Sideways: Down Trending: Key Resistance Levels: 1,101 = October High 1,105 - 1,113 = November High 1,119 = December High 1,025 - 1,133 = 1,075 BO chart target - Sep 08 Low 1,145 = 1,133 BO chart target – Dec 31 Low 1,155 = chart target Key Support Levels 1,087 = Nov 10 Channel low 1,082 = Nov 9 S1 level 1,075 = 875 Breakout Chart Target 1,050 = Oct 08 High Downward momentum accelerated in the COMPQ, SPX and INDU on Friday, and while downward momentum in the RUT remained about the same. Semiconductor stocks which had been relatively strong on Thursday, sold off on heavy volume on Friday. AMD led the way down -1.11 or -12.35% after reporting a smaller than expected loss late Thursday. Apparently traders were concerned with the longer term outlook for AMD. AXP reported better than expected earnings by two cents of 59 cents per share. AXP fell -3.57 or -8.47% on Friday leading the INDU lower. Only INDU components PG, GE, MCD and WMT moved higher on Friday. GOOG fell -32.97 or -5.66% on Friday after reporting earnings of $6.79 vs. 6.50 estimates after the close on Thursday. GOOG along with JOYG and semiconductor stocks AMAT, MRVL, KLAC and LRCX led the COMPQ lower. Only seven NDX 100 stocks moved higher on Friday led by ISRG +35.86 or +11.78% which reported strong earnings after the close on Thursday. Continue to watch earnings reaction next week. Guidance: The SPX broke both the 1,115 and 1,105 support areas on Friday and fell to the next support level at 1,090. If 1,090 support area breaks, the next level of SPX support is 1,075 and then 1,050. Trade accordingly. If you have not yet been stopped out of your up trending positions, continue to raise your stops. Look for down trending setups on stocks that have shown reversal patterns or that are breaking support. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. AAPL -10.32 QCOM -1.31 GOOG -32.97 BIDU -23.07 NDX 100 stocks weaker than the NDX include: JOYG, AMAT, MRVL, KLAC,LRCX, GOOG, FSLR, STX, XLNX, DELL, BIDU, AAPL, NIHD, INTC, FWLT, ALTR, LLTC, MXIM, CSCO, AMZN, FLEX and ADBE. NDX 100 stocks stronger than the NDX include: ISRG, CELG, VRTX, GILD, APOL, PPDI, ORLY, AMGN, HOLX, GENZ, BIIB, SRCL, CEPH, MICC, CHKP, CHRW, SHLD and LIFE. Stocks to Watch on Monday Leading Stocks Holding Above 30 DMA ALGT, TDG, UAUA, CBST, SNDK, AMED, GMCR, HANS, ESI, JEC, VAR, ACN, WFC, BA, BYI, CEDC, ZION, FLS, K, MHS, MCD Moving Above 30 DMA = 2 FAZ, UNG Moving Below 30 DMA = 13 BUCY, CHL, DE, DECK, DLB, DOW, FAS, HLF, MA, SYNA, UNP, UYG, X Staying Below 30 DMA ATW, CAM, HDB, MHS, MOS, PCP, GR, URE, GS, HEAT, WHR, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, WMT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, MYGN, WCG, SPG, VPRT, GME, MELI, PCLN, NFLX Intermediate Term Market Trend: Up Short Term Market Trend: Down

6 comments:

Prasanna said...

Dear Dave:

Reading Chart Signals is part of our daily routine even during weekends! Thankyou for taking the time to post - we really appreciate it.

Best Regards,

Anonymous said...

Dave,
Very good wall street wrap up The last 5 min I thought was the most important and be ready for the down side if breaks,
Thanks 50 BDK

Scott Avery said...

Dave, I agree.. very good wall street wrap up and last Thurs. AI trading room. In the past when the market breaks, I have been trying to play stocks to the downside that have already been in strong downtrends. Interestingly enough they don't always seem to move down that much compared to stocks already in an uptrend that are countertrending down on those big down days! Surprising. But what I now understand is to find stocks that are in sideways channels near resistance and play them to the downside as the market breaks. That is Very Helpful. The one countertrend play you showed on the spy a short while ago was great. Would like to see and learn more of those to equipment myself for anything that happens.. Thanks

Brian McAllister said...

I'll echo Scott's comments Dave. Your commentary in the trading rooms, AI talk and weekly wrap as the market is lurching around is incredibly helpful! I did better this time on stop adjustments and preserving profits, but still have a long ways to go. With your help, I'm getting there. Look forward to seeing how we might position for some trades to the downside, assuming the market bounces to a lower high and starts to roll over (although I am not presuming that is necessarily the outcome, just a possibility). Thanks,

Brian

Brian McAllister said...

Dave,

Just some observations offered up (to be shot down or otherwise by Dave or the group . . . or the market over the next few weeks):

* the SPX pulled back to the 1090 support range on Friday, approx 5.3% from the high on 1/19;
* if you draw a Fibonacci from the last pullback on 11/02 to the high on 1/19, Friday's pullback stopped at the 50% level;
* the Market Forcast momentum and near-term lines are at the bottom of the oversold level and the intermediate term lines are still above 50%;
* earnings reports have generally been strong so far this quarter, it just appears that the earnings were already priced in, suggesting an improving economy regardless of the market's disappointment;
* and based on this, there is no reason, yet, to think this trend is broken (as so many of the pundits have been saying over the weekend) and we are at levels where a bounce is probable, although not guaranteed;
* and if we bounce, even if we get a lower high, it doesn't necessarily mean the trend has reversed as the same thing happened in the June-July period before the uptrend resumed.

So, while I have had numerous stops hit and allowed my longer term positions to pull back last week, I'm not yet convinced that this is anything more than a hiccup (maybe a large one that hasn't quite run its course yet--we pulled back 9% in the June-July period).

What say you Dave and Dave Johnson followers?

Brian

Anonymous said...

Brian, I just read your post (the one directly above mine) and checked the SPX myself and I think your analogies are spot on!

I don't know how long you've been trading, but I admire the way your post comes across suggesting that you are ready for a move either way (mental flexibility) and the detail you included-

Thank you for sharing your thoughts with the rest of us!

Laney