SPX Breaks Low of the High Day...23% Fib Retracement...

INDU         10,340.69   -107.24   -1.03%
SPX           1,091.84     -12.67   -1.15%
COMPQ      2,208.89     -24.86   -1.11%
RUT              629.29     -14.04   -2.19%


Exchange     NYSE       NASD
Advancers       802           605
Decliners      1,505        2,063

Oil              $73.82   -0.52
Gold      $1,257.40  +9.20
SOX           322.31   -6.40
VIX              23.80  +2.49

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

Leading stocks on Tuesday included FAZ, X, NFLX, AKS, MHS, MCD, ICE, CMG, POT, LVS, HANS, JEC, WLT, CRM

Biggest losers included FAS, NTES, CRUS, WHR, ZION, RVBD, USD, CSTR, DOW, SKX, ESI, PNC, CREE, STI, MA, SINA, SWN, BYI, A, URE, NDAQ, WFMI, DECK, NYX, GES, GR, TIE, GMCR, RMBS, AMD, CHL, BAC, NTRI, ATI, SPG

The SPX broke the low of the high day as did the RUT and COMPQ. The SPX pullback was a 23% Fib retracement of last week’s support bounce. Each index after exceeding it short term breakout price target on Friday pulled back and closed near its original target listed below. SPY volume was just 142 million shares, so the selloff was more likely an absence of buyers in the face of short term profit taking.

INDU - large white candle breakout short term target 10,383
SPX - large white candle breakout short term target 1,091
COMPQ - large white candle breakout short term target 2,210
RUT - large white candle breakout short term target 638

All sectors moved lower with Financials, Consumer Discretionary and Energy the largest losers. Decliners led advancers 1.8 to 1 on the NYSE.

Many of our watch list stocks closed below the low of the high day giving and exit signal for short term traders or an entry signal for a short term bearish trades. Many other stocks moved higher or stayed above the low of the high day setting up a potential break below the low on Wednesday if the market follows through to the downside.

Close Below the Low of the High Day - AGU, NTES, SINA, SPG, VOD, AIV, CAM, DE, DOW, HSY, NYX, PCP, SWK, UPS, URE, A, BYI, GMCR, GR, UAUA, BAC, CHL, DECK, FAS, FDX, RMBS, V, GES, NDAQ, AMX, MA, BA, CRUS, ATI, CREE, STI, TIE, USD, PNC, SWN, ZION, WFMI, SKX, NTRI, ESI, WHR

Close Above the Low of the High Day - HANS, HLF, PCLN, RVBD, MCD, POT, FFIV, LVS, NFLX, VMW, CMG, CRM, TSL, CLF, FCX, BUCY, DHR, DLR, UNP, WLT, WMT, FLS, HAS, IPI, JEC, LXK, AKS, CAT, ICE, X, CSTR, GME, GS, SNDK, ACN, UCO, USO, UNG, NETL, MAD, MHS, VECO

FFIV, LVS, VMW, BUCY and UNP closed above horizontal resistance. URE closed just below horizontal resistance.

NFLX did breakout and close above horizontal resistance.

DE, SWK, PCP, VOD and UPS did NOT break out of horizontal resistance and closed lower below the low of the high day.

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

Guidance:
SPX
Resistance: 1,100, 1,115, 1,130
Support: 1,086, 1,071, 1,056

The market rested on Monday as short term profit takers moved the market lower on light volume. With only a 23% Fib retracement we will watch the 1,086 support to see if it holds and if buyers step in at this level on Wednesday.

Look to enter bullish trades with a breakout of horizontal resistance or a bounce off support and a break above the high of the low day.

Many stocks listed above gave bullish exit signals or bearish entry signals with a bounce down from resistance and a break of the low of the high day.  If the market breaks 1,086 support be alert for additional exit signals and bearish entry signals.

The VIX rose +2.49 to 23.80, staying below the benchmark 25 level which increases the probability of stability and continuation of the support bounce

The short term 3 day trend is up.
The three-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     -0.96 – bearish harami
QCOM +0.19 – white candle did not confirm potential hanging man
GOOG   -5.90 – doji break the low of the high day
BIDU     -2.03 – black candle break the low of the high day

NDX 100 stocks stronger than the NDX include: ORCL, TEVA, NTAP, AKAM, NVDA, INTU, MRVL, GENZ, WCRX, DTV, HANS, LOGI, SIAL, QCOM and INFY.

Stocks weaker than the NDX: KLAC, SHLD, LINTA, CHKP, FLEX, LRCX, RYAAY, STX, EXPE, NWSA, VRTX, HOLX, EBAY, SPLS, URBN and ERTS.

Stocks to Watch on Wednesday
Holding Above 30 DMA
TLT, HANS, HLF, PCLN, RVBD, AGU, MCD, POT, FFIV, LVS, NFLX, VMW, CMG, CRM, TSL, CLF, FCX, SINA, SPG, VOD, AIV, BUCY, CAM, DE, DHR, DLR, DOW, NYX, PCP, SWK, UNP, UPS, URE, WLT, WMT, A, BYI, GMCR, HAS, IPI, JEC, LXK, UAUA, AKS, CAT, ICE, X
Moving Above 30 DMA = 1
VECO
Moving Below 30 DMA = 11
BAC, CHL, DECK, FAS, FDX, FLS, GR, HSY, NTES, RMBS, V
Staying Below 30 DMA
FAZ, GES, CSTR, NDAQ, AMX, GME, GS, MA, SNDK, BA, CRUS, ACN, ATI, CREE, STI, TIE, UCO, USO, USD, PNC, SWN, ZION, UNG, WFMI, NETL, SKX, AMD, NTRI, ESI, MHS, WHR

Intermediate Term Market Trend: Neutral
Short Term Market Trend: Up