Tuesday, May 4, 2010

SPX Breaks Support...Falls to 50 DMA...

DJIA                            10,926.77 -225.06 -2.02%
SP500                           1,173.60   -28.66 -2.38%
COMPQ                        2,424.25   -74.49 -2.98%
Russell 2000                    709.70   -23.12 -3.15%

Exchange                   NYSE              NASD
Advancing                     441                  408
Declining                    2,666               2,352

Oil        $82.75           -3.44
Gold    $1,168.60      -14.10
SOX      368.48         -17.49
VIX          23.84         +3.65

Index  Direction       Confirmation
VIX      Up                Yes – SPX
SOX    Down            Yes – COMPQ

Strongest Sectors: XLV -0.58%…XLP -1.01%...XLU -1.72%
Weakest Sectors: XLB -3.47%...XLI -3.16%...XLY -2.92%

All nine sectors moved lower on Tuesday.  Healthcare, Consumer Staples and Utilities were stronger than the SPX -2.38%.

Sector Watch
Up Trending: XLY, XLI, XLP, XLF, XLK
Horizontal Breakout: XLE
Sideways: XLB, XLV, XLU
Down Trending:

Key Resistance Levels
1,178 = Fib extension
1,200 = Jul 2008 support
1,216 = Fib extension
1,220 = Sep 25, 2008 resistance
Key Support Levels
1,155 = 1,119 BO chart target – Dec 23
1,145 = 1,133 BO chart target – Dec 31 Low
1,125 - 1,133 = 1,075 BO chart target - Sep 08 Low

The SPX broke support as decliners led advancers 6 to 1. Most of our bull flag bounces and setups from Monday pulled back but did hold above support. The broad indexes fell to their 50 DMA where buyers stepped in all afternoon.

Look at these Charts
(click image to enlarge)

Our Tuesday morning highlight stocks TLT, MA, CRM and SH performed relatively well during the trading day.
Look at these Charts
(click image to enlarge)

Our bull flag stocks pulled back on Tuesday and continue to be in strong up trends: SNDK, URE, WHR, DHR, GR, AKAM, SBUX, AAPL, SHLD, CRM, FAST, WFC, PNC, ADSK, KLAC, NKE, FSLR, ZION, NFLX, ILMN and CMG.

Bull flag setups pulling back near their 30 DMA: BA, CAT, SYNA, LRCX, ACN, and SWK.

Up trending stocks falling below their 30 DMA: ATI, DECK, DOW and PCLN.

Stocks moving higher today on positive earnings NTRI, OSTK, EXBD, HLF and MA.
Look at these Charts
(click image to enlarge)

Look at bearish opportunities in inverse ETF's like SH and SDS and stocks below their 30 DMA and stocks near their 30 DMA if they break through to the downside. Check our watch list below.

Guidance:
The SPX broke short term support forming a large black candle and falling 28 points to 1,173. The short term trend is down the next support area is at 1,150. Traders should have shifted their focus to the short term down trend as the SPX broke support.

There are still stocks that are in strong up trends but a large number broke support with the broad averages today. More stocks below their 30 DMA than above in our watch list.

Continue to trade with the trend.  Your mentally flexibility helped you take advantage of the break of support.

The VIX rose +3.65 and did confirm the lower close on Tuesday.

The short term trend is down.
The four-month trend is up.
The twelve-month trend is up.

Continue to focus on and trade setups on the charts of the stocks you watch, trade with the trend and follow your rules.

Your stops should have taken you out of up trends breaking support on Tuesday. Adjust your stops according to your rules for up and down trending trades.

AAPL -7.67
QCOM -1.04
GOOG -24.23
BIDU -15.99
NDX 100 stocks stronger than the NDX include: COST, STX, CTSH, ESRX, ILMN, PPDI, HANS, HSIC, VRTX, AMGN, ADBE, PAYX, TEVA, CHRW, ATVI, ADP, GENZ, SPLS and SRCL.

Stocks to Watch on Wednesday
Holding Above 30 DMA
NFLX, WHR, CAT, URE, DHR, CRM, SNDK, ZION, MCD, GME, TSL, BYI, SYNA, SWK, ACN, HLF, ICE, PCLN, SPG, GR, HANS, WFC, MYGN, BA
Moving Above 30 DMA = 1
FAZ
Moving Below 30 DMA = 15
AMX, BKC, DE, DECK, DOW, FAS, FLS, JEC, PCP, TSL, UAUA, UNP, USD, USO, UYG
Staying Below 30 DMA
ATW, AMD, BAC, CREE, GES, MA, V, CAM, CHL, SWN, UNG, ATI, BUCY, WLT, CLF, MHS, WCG, ESI, GMCR, GS, FCX, X, WMT, PWRD, AGU, IPI, POT, MOS

Intermediate Term Market Trend: Up
Short Term Market Trend: Down

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