Bullish Engulfing Pattern Engulfs the Market on Last Day of 2012...

Do you believe that market action, price action factors in (discounts) everything?

Why did the SPY drop only -3.24% in the seven trading days leading up to Monday and the deadline for the so-called “Fiscal Cliff”?

Why did the market rally with huge bullish engulfing patterns on the broad index ETFs and many stocks on Monday?

The media continued to use a scary metaphor “Fiscal Cliff” and yet the SPY was down just -3.24%, how can that be?

All nine sectors moved higher on Monday… XLE, XLB, and XLI were the strongest sectors.   XLP was the weakest sector.  Many bullish engulfing patterns appeared as SPY volume exploded to 243.7 million shares on Monday as buyers became aggressive. The VIX collapsed -4.70, 20.69% to 18.02.   

Breadth strengthened on Monday as advancers led decliners…6.05 to 1 on the NYSE and 4.18 to 1 on the NASDAQ…

Monday- strengthened, advancers led

Friday – weakened, decliners led

Thursday – strengthened, decliners led

Wednesday – weakened, decliners led

Tuesday - closed

If short-term trades were exited through target or stop, continue to look for re-entry on a valid signal.  Many entry signals occurred on Monday.

SPY up 2.38 at 142.41...volume 243.7 million shares…

VIX down -4.70 at 18.02…
TNX up 0.45 at 17.56…

TLT down -2.13 at 121.18…
XLF up 21 cents at 16.39…volume 32 million shares

AAPL up 22.58 at 532.17…volume 23.5 million shares …

FB up 71 cents at`26.62…on volume of 60.4 million shares…

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2012 Performance – the SPX had its best year since 2009

NDX    +16.82%

RUT    +14.63%

SPX    +13.45%

DJIA     +7.29%

Leading NDX Stocks

EXPE   +115.6%

STX      +93.51%

GILD     +78.88%

EBAY    +68.14%

AMZN   +44.93%

PCLN    +32.70%

AAPL    +32.57%

GOOG    +9.52%

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95 of 100 NDX stocks closed higher and one was unchanged on Monday…

Leading NDX 100 stocks included:  SHLD, AAPL, FOSL, NWSA, SYMC, LINTA, GOLD, FB, SPLS, WYNN

Lagging NDX stocks included:  CTRX, MXIM, FISV, HSIC, SIRI, ADP, VIAB, GRMN

Leading stocks> +2% on Monday included:  HLF, CLF, AKS, CRUS, LDK, URI, DECK, VECO, ANR, ATI, ANF, SINA, TPX, NFLX, TBT, X, FLSR, LVS, FCX, PHM, MCP, CDE, RAX, SSYS, TSL, JDSU, WDC, GMCR, CIEN, CMG, CRM, CREE, COH, DE, BAC, SWKS, STI, SWI

Lagging stocks < -2.0% included:  FAZ, UNG

Stocks to Watch on Wednesday…

Holding Above 30 DMA = 48
YHOO, SBUX, CSCO, NTAP, VMED, SBAC, EXPD, LLTC, PCAR, XLNX, TXN, ADI, SIAL, FISV, ADSK, DELL, FFIV, ORCL, COST, MNST, ADBE, GOOG, GRMN, NWSA, DISCA, AMAT, CTSH, FOSL, KLAC, VIAB, NUAN, STX, LBTYA, WDC, AKAM, ALTR, CHKP, FAST, MCHP, SNDK, EQIX, LMCA, CTXS, CHRW, INTC, SIRI, BIDU, VRSK

Moving Above 30 DMA =22

ADP, AMZN, BRCM, CMCSA, DLTR, DTV, EBAY, ESRX, EXPE, FB, LINTA, MU, MXIM, MYL, NVDA, PRGO, SRCL, SYMC, VRTX, WFM, WYNN, XRAY

Moving Below 30 DMA = 0

Staying Below 30 DMA

INTU, CA, CELG, HSIC, ALXN, BIIB, BMC, CERN, LIFE, MAT, MSFT, REGN, MDLZ, AMGN, ORLY, PAYX, QCOM, SPLS, CTRX, BBBY, GILD, ISRG, ATVI, VOD, AVGO, PCLN, AAPL, SHLD, GOLD, ROST

Fifteen Week Intermediate Term Market Trend: Neutral

Short Term Market Trend: Up