SPX Closes at 1,071 Support Level...Forms Hammer Candle...

DJIA             10,213.62   -57.59   -0.56%
SP500            1,071.69     -3.94   -0.37%
COMPQ          2,179.76   +0.81  +0.04%
Russell 2000     610.78     -0.18   -0.03%

Exchange      NYSE     NASD
Advancing     1,240       1,284
Declining       1,733      1,318

Oil             $73.46   -0.89
Gold     $1,227.20   -6.60
SOX          327.88  +1.46
VIX             25.49   -0.95

Index      Direction     Confirmation
VIX          Down            No – SPX
SOX         Up                Yes – COMPQ

Leading stocks on Friday included CRM, VMW, RMBS, RVBD, FFIV, NTES, GES, DECK, NETL, NFLX, CMG, HSY, CHL, PCLN, WFMI, GS, TSL, USD, FAZ, POT, NTRI, AGU, HANS, WMT, AMX, BUCY, MCD, MOS

The SPX moved below Monday’s low before buyers took over at 1,063 on expiration Friday and rallied the SPX to close at its 1,071 support area. The SPX was down just 7 points from last Friday’s close.

Look at these Charts

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As I said in the Weekly Wrap on Friday, the lack of selling conviction to the downside despite plenty of economic reasons for the market to go down big, suggests that sellers are limited at these price levels. Big money is apparently still viewing a stronger economic environment six to nine months in the future.

Additionally the VIX did NOT confirm the SPX’s lower close on Friday.

On the daily chart the SPX formed a hammer and on its weekly chart it formed an inverted hammer, both bullish candle patterns. The SPX and many individual stocks are in a sideways trend, trading range or non-trending consolidation and at support on Friday.

Look at these Charts

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INDU = hammer like candle
SPX = hammer
COMPQ = hammer
RUT = dragon fly doji

The question is what move is most probable in a sideways trend with price at support? The most probable development is a price bounce at support in a sideways trend.

CRM and INTU broke through horizontal resistance on Friday after reporting earnings and NTES which broke through resistance on Thursday also following earnings continued higher. MRVL also broke through short resistance after earnings but it formed a trend reversal rather than a new high. AKAM broke through horizontal resistance on above average volume joining CRM, INTU and NTES making new highs.

Look at these Charts

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Bullish Engulfing - RVBD, CMG and HSY all formed bullish engulfing patterns on a support bounce and NFLX confirmed Thursday’s piercing line pattern.

Look at these Charts

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Piercing Line Patterns - BIDU, DECK, AGU and MOS formed piercing line patterns, each in bull flag support bounce. Look for confirmation on Monday.

Look at these Charts

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Hammers - GMCR, CLF, LVS, X, CAT, PCP, GR, WYNN, NYX, FCX, FDX and UPS all hammers in consolidation pull backs. Look for potential confirmation on Monday.

Look at these Charts

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Stay focused on and trade according to the chart on Monday.

Guidance:
SPX
Resistance: 1,086, 1,100, 1,115
Support: 1,071, 1,056

Friday’s trading found support and formed a bullish hammer and a bullish inverted hammer on the weekly chart.  There is a MACD bullish divergence in the MACD Histogram on the daily chart.  Look for confirmation of the hammer and support bounce on Monday.  If support does not hold look for the SPX to move to the next support level of 1,056.

Look to enter bullish trades when a new bounce off support and a break above the high of the low day or a breakout above horizontal resistance occurs. This could occur on Monday and occurred for some stocks on Friday.

Adjust stops on bearish trades for a potential exit if they bounce above the high of the low day. Enter bearish setups with a new bounce down from resistance or break of support

The VIX fell -0.95 to 25.49 holding above the benchmark 25 level.

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 -0.24 – inverted hammer
QCOM +0.80 – bullish engulfing
GOOG -5.95 – three black crows
BIDU +0.98 – piercing line

NDX 100 stocks stronger than the NDX include: INTU, MRVL, AKAM, SYMC, CTXS, BRCM, QCOM, ADSK, GENZ, CHRW, FSLR, LLTC, WYNN, BIDU and RYAAY.

Stocks weaker than the NDX: ISRG, RIMM, AMAT, XRAY, WCRX, ERTS, LRCX, GILD, LOGI, LINTA, GOOG, FLIR, STX, ROST and MSFT.

Stocks to Watch on Monday
Holding Above 30 DMA
TLT, VOD, GMCR, HANS, BUCY, CAT, HLF, PCLN, RVBD, AGU, MCD, DE, IPI, SINA, MOS, POT, FCX, GES, PCP, WLT, X, CHL, CLF, FDX, FFIV, GR, LVS, NDAQ, SPG, UPS, HAS, LXK, NFLX, FAZ, VMW, CMG, A, BYI, UNP, TSL, NTES
Moving Above 30 DMA = 2
CRM, RMBS
Moving Below 30 DMA = 1
CSTR
Staying Below 30 DMA
AMX, CAM, FLS, GME, GS, MA, NYX, SNDK, SWK, URE, WMT, BA, CRUS, ACN, AIV, AKS, ATI, CREE, DECK, DHR, DOW, FAS, SNDK, STI, TIE, UAUA, UCO, USO, V, DLR, ICE, USD, PNC, SWN, ZION, UNG, VECO, WFMI, NETL, SKX, AMD, JEC, NTRI, ESI, HSY, BAC, MHS, WHR

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