Yellow Alert Turns to Red...SPX Moves Lower...

DJIA                          10,097.90  -2.61.41  -2.52%
SP500                         1,064.88     -31.60   -2.88%
COMPQ                      2,179.05     -70.03   -3.11%
Russell 2000                  610.39     -24.23   -3.82%

Exchange                  NYSE             NASD
Advancing                    613                 325
Declining                   2,434              2,355

Oil           $76.27      -0.26
Gold   $1,188.00      -20.10
SOX        349.16      -11.93
VIX            26.25      +1.11

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

Leading stocks on Friday included FAZ, MOS, TSL, GS

The SPX broke the low of the high day on Friday as our Yellow Alert turned Red. Traders who use and intraday exit were likely stopped out on Thursday. Traders using and end of day exit may have exited near the close on Friday.

Check out these Charts

(click image to enlarge)

The YTD weekly candles show a clear picture of the sideways trading range on the broad indexes.

Check out these Charts

(click image to enlarge)

The first week of earnings season has come and gone and results were mixed with some excellent reports and some disappointments. AA and INTC reporting better than expected earnings and GE, BAC and C missing revenue expectations on Friday.  I have clearly stated that earnings, revenues and Q3 guidance that meets or exceeds expectations increases the probability of a positive stock reaction. When any of the three elements is a negative surprise it increases the probability of a negative stock reaction.

There are 12 Dow and 122 S&P companies reporting this next week. Earnings will continue to be a major factor driving the buying and selling of individual stocks.

Earnings of interest of leading companies include:
Monday – DAL, HAL, HAS, TROW, TXN, ZION
Tuesday – ALTR, AAPL, BIIB, CRUS, GILD, JNJ, LLTC, MICC, BTU, PEP, STLD, UAUA, UNH, WHR, YHOO
Wednesday – ALGT, AMR, AMLN, BIDU, CA, CHKP, KO, EBAY, FFIV, FCX, GENZ, NFLX, QCOM, SWK, SBUX, LCC, UTX, WFC, WDC, XLNX
Thursday – MMM, ALK, AMZN, AMX, AXP, T, BUCY, CAT, CMG, CAL, DHR, DECK, FLEX, FLIR, HSY, ESI, KEY, MHS, MSFT, MOS, NUE, PNC, PCP, SNDK, SIAL, STI, TRV, UNP, UPS
Friday – DLR, F, HON, MCD, OSTK, SLB, SKX, VZ

The inside day on the SPX on Wednesday did make an end of day confirmation on Friday.

Guidance:
SPX breaks and closes below the low of the high day.
The SPX closed below its 30 DMA.
The VIX did confirm the lower close in the SPX.
The magnitude of the lower VIX did not confirm the magnitude of the lower SPX.
The VIX closed well below its high while the SPX closed near its low. The VIX closed at 22% of its daily range while the SPX closed at 95% of its daily range.
Breadth was weak as decliners led advancers 4 to 1 on the NYSE.

Trade strong stocks up if a support bounce and break above the high of the low day occurs.

Weak stocks gave an intraday entry on Thursday and an end of day entry on Friday. Trade weak stocks down.

The VIX rose +1.11 and closed at 26.25. Volatility closed above the important 25 level on Friday, but not as high as would be expected given the magnitude of the move in the SPX.

The short term 3 day trend is down.
The two-month trend is neutral.
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 of the chart and follow your rules.

AAPL -1.55
QCOM -0.92
GOOG -34.41
BIDU -2.11
NDX 100 stocks stronger than the NDX include: APOL, JBHT, WCRX, RTAAY, NTAP, AAPL, NIHD, AMGN, LINTA, ESRX, CHKP, INFY, MXIM, ATVI and FLIR.

Stocks weaker than the NDX: GILD, GOOG, NVDA, RIMM, CERN, NWSA, CSCO, SPLS, LRCX, BBBY, SHLD, ERTS, EBAY, PCAR and FAST.

Stocks to Watch on Monday
Holding Above 30 DMA
TLT, CRUS, GMCR, HANS, TSL, ACN, HSY, BUCY, CAT, CREE, CRM, DLR, FFIV, HLF, NETL, NFLX, PCLN, TIE, VMW, AGU, MCD, NTRI, DE, GS, IPI, AKS, MOS, POT
Moving Above 30 DMA = 1
FAZ
Moving Below 30 DMA = 29
AIV, AMX, ATW, BAC, CAM, CHL, CSTR, DOW, FAS, FLS, GES, GR, MA, MHS, PCP, PNC, SPG, STI, UAUA, UCO, UNP, USD, URE, USO, VECO, WFMI, WMT, X, ZION
Staying Below 30 DMA
BA, FCX, HAS, SWK, V, WHR, SNDK, FAZ, UNG, CLF, CMG, DECK, LVS, NYX, SKX, SWN, ICE, A, AMD, LXK, ATI, DHR, WLT, ESI, BYI, JEC, GME

Intermediate Term Market Trend: Neutral
Short Term Market Trend: Down