Markets Break Low of the High Day

DJIA - 381.99, -4.62% SP500 - 42.73, -4.91% NASDAQ Comp. - 66.83, -4.20% Russell 2000 - 22.17, -4.74% Exchange NYSE NASD Advancing 620 511 Declining 3,175 2,253 Oil $37.55 -$2.01 Gold $913.70 +$21.30 SOX 217.33 -10.48 VIX 46.67 +3.03 The VIX moved up confirming the move down in the SPX on Tuesday. Strongest Sectors: XLU -2.84%...XLP -3.23%...XLV -3.33% Weakest Sectors: XLF -10.20%...XLI -5.25%...XLY -4.73% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Upward momentum which paused on Monday turned to downward momentum on Tuesday as traders did not like the lack of detail on the governments financial rescue plan. Experienced traders know that there are two things “big money” doesn’t like. One is uncertainty, the second is negative surprises. Apparently they felt like they got both relating to the financial rescue plan on Tuesday.

Ag-related stocks were mixed with AGU -5.01%, which reports earnings Wednesday morning, down more than the broad indices and MOS -3.22%, POT -1.38% and CF +0.39% holding up better. The Financial Sector XLF -10.20% led all sectors lower. Many bank stocks fell more than 10%: RF -30.17%, Key -25.58%, ZION -19.47%, BAC -19.30%, C -15.19%, WFC -14.22%, USB -13.82% and STT-12.84%. Technology stocks all moved lower: AAPL, GOOG, QCOM, MSFT, CSCO, RIMM, AMZN, INTC, ORCL, ADBE, EBAY and SYMC. AKAM which reported strong earnings last week fell -1.94% or 34 cents formed a bearish engulfing pattern on Monday’s doji but did stay above its recent horizontal resistance. AMZN formed an evening star pattern.

Index Commentary The DJIA, SPX, Nasdaq and RUT all formed large black candles and broke below the low of the high day on Tuesday. We hope you were prepared as we warned you to watch for this last night when we wrote; “…formed small spinning tops suggesting that upward momentum has weakened. Monday’s pullback and rally stayed above Friday’s S1 level. Watch for a break below the high of the low day on Tuesday or a break of Friday’s S1 level. This could be an exit signal from bullish trades for some short-term traders.”

The mid-section, R1, of Tuesday's large black candle is now a short-term resistance level. Stock Commentary We alerted you yesterday that…”Most of the stocks listed below formed potential short-term bearish patterns on Monday. Upward momentum clearly slowed. These bearish patterns are unconfirmed at this point. Tuesday may give bearish confirmation or these stocks could resume their short-term up trends. Just be mindful as you plan your trading for Tuesday.” We hope you were prepared. BNI, UNP, NSC, CSX, STLD, NUE, SCHN, X, XLNX, ALTR, NSM, MRVL LLTC, TXN, NVLS, KOL, BTU, JRCC, CNX, MEE and WLT all broke the low of the high day and confirmed Monday’s potentially bearish candle patterns. Only FCL did not break the low of the high day.

Earnings Tuesday, Feb 10 Symbol Earnings Estimate CVH +0.60 beat +0.59 DTV +0.32 below +0.33 EXPD +0.36 beat +0.35 ICE+0.82 below +0.83 MDC-1.92 below -1.22 OMC +0.88 beat +0.84 PBG+0.30 beat +0.25 Q +0.11 beat +0.10 TRA +1.65 beat +0.92 AMAT +0.00 inline +0.00 CERN +0.65 beat +0.61 CF +3.87 beat +2.11 CSC +1.06 beat +1.02 MVSN +0.09 below +0.21 NVDA -0.18 below -0.09 SWIR +0.36 beat +0.23 VFC +1.05 beat +1.02 Numbers exclude non-recurring items Wed Feb 11 BMO – AGU, AYE, CCE, GENZ, MMC, MICC, NICE, SKYW AMC – ATVI, CMG, CLB, RE, INSP, LVS, LOOP, MOH, NTAP, STR, RNR, TCO, TEX, TQNT Thur Feb 12 BMO - AET, CPLA, KO, ECA, GCL, CLI, MAR, MLM, NXY, NRG, NWN, ZEUS, PTEN, RSH, REV, STRA, TASR, ULBI, WMI AMC – ACAP, AGII, BIDU, COG, CEPH, CAKE, DRYS, ENH, GDI, MFE, NTGR, PNRA, RNWK, TK, WCLK, WYNN Fri Feb 13 BMO – ANF, ALE, BAM, CTSH, ENB, PEP, WYN Learn the Discipline The Model Portfolio entered no new positions on Tuesday. Two positions GME at $26.58, a profit of $1.38, and PPD $33.97, a loss of $1.35, were stopped out. The other seven positions did not hit their stops. Of the original $152,000 in the model portfolio, approximately $14,000 is invested. Stocks to Watch on Wednesday Leading Stocks: Holding Above 30 DMA NFLX, ESI, MYGN, MON, RIMM, SYNA, BLUD, APEI, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, WCG, VAR, BIDU, VPRT, FLS, AMZN, SLGN, ATW, FSLR, PCLN, RBN, SPWRA, AMED, CHL, DLB, ORCL, PCR, PSYS, AMX, DV, EBAY Moving Above 30 DMA = 0 Moving Below 30 DMA = 16 BDX, BYI, CAM, CPLA, CTSH, ESRX, GILD, JCOM, JW.A, MUR, PPD, RCI, ACN, NIHD, SNHY, JOYG Staying Below 30 DMA CLB, HLF, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, ICE, AXYS Tuesday’s Action Moving Up: None Moving Down: GS, STRA, MA, FSLR, CLF, SOHU, NUE, X, SCHN, ESRX, ZION, MS, MON, CNX, SINA, INFY, PCLN, KBE, AFAM, KRE, PNRA, V, RF, ONXX, NIHD, AGU, BTU, MOS, ANR, MEE, POT, NDAQ, FWLT, GRMN, LAMR, IPI, COH, KMT, HANS, DRYS Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down

Still Drinking Pepsi...

10:10 ET - Nasdaq Composite, NDX and SPX have turned positive this morning...support holding...gold stocks GDX, AEM, GG, GOLD are moving higher...FSLR, MA, CF, POT and FWLT also moving higher in early trading.. Stay alert if the market turns lower and breaks the low of the high day. 9:39 ET - Looks like CVH, DTV, PBG and Q are trading up after earnings this morning in the early going...The SPX and Nasdaq opened lower and holding for the moment... BMO - The economy is tough but apparently based on this morning’s numbers people are still buying lots of Pepsi…Check out PBG below...oh yes and there is some ICE this morning to go with that drink as you call long distance on Q and watch your favorite show on DTV... Futures indicate a lower open so watch closely this morning to see if stocks and indices break below the low of the high day or not and follow through to the downside. Remember there were a lot of potentially bearish candles on Monday but they need to be confirmed. Earnings BMO Tuesday, Feb 10 Symbol Earnings Estimate CVH +0.60 beat +0.59 DTV +0.32 below +0.33 ICE+0.82 below +0.83 MDC-1.92 below -1.22 OMC +0.88 beat +0.84 PBG+0.30 beat +0.25 Q +0.11 beat +0.10 TRA +1.65 beat +0.92 Numbers exclude non-recurring items

Momentum Slows Down on Monday

DJIA - 9.72, -0.12% SP500 + 1.29, +0.15% NASDAQ Comp. - 0.15, -0.01% Russell 2000 - 2.76, -0.59% Exchange NYSE NASD Advancing 2,051 1,221 Declining 1,701 1,526 Oil $39.56 -$0.61 Gold $892.40 -$21.50 SOX 227.81 -1.37 VIX 43.64 +0.27 The VIX moved up slightly failing to confirm the move up in the SPX on Tuesday. Strongest Sectors: XLI +1.89%...XLF +1.12%...XLE +0.36% Weakest Sectors: XLP -0.98%...XLU -0.56%...XLB -0.35% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Upward momentum in stocks paused on Monday as traders took some profits on last weeks rise in prices. Traders awaiting the final structure on the Stimulus Bill may have also been a factor. Some of biggest examples of momentum reversal on Monday were the Ag-related stock which started strong and ended weak. Check out the charts on AGU, CF, MOS and POT. Early white candles turned into black spinning tops by the end of trading. SOHU gained 7.78% on earnings that beat expectations by 19 cents. BIDU which reports earnings on Wednesday rose 12.81% in sympathy. Index Commentary The DJIA, SPX, Nasdaq and RUT all formed small spinning tops suggesting that upward momentum has weakened. Monday’s pullback and rally stayed above Friday’s S1 level. Watch for a break below the high of the low day on Tuesday or a break of Friday’s S1 level. This could be an exit signal from bullish trades for some short-term traders. Stock Commentary Most of the stocks listed below formed potential short-term bearish patterns on Monday. Upward momentum clearly slowed. These bearish patterns are unconfirmed at this point. Tuesday may give bearish confirmation or these stocks could resume their short-term up trends. Just be mindful as you plan your trading for Tuesday. Rail stocks BNI, UNP and NSC formed hanging man doji inside day patterns, CSX formed a cross like doji. Short-term traders watch for potential reversal here Steel stocks STLD, NUE and SCHN formed potential short-term bearish reversal patterns as price moved slightly lower. X was up and formed a doji which could be the second candle in a potential evening star pattern. Semiconductor stocks XLNX, ALTR, NSM, MRVL LLTC, TXN, NVLS all moved down slightly forming doji, bearish harami and other bearish patterns indicating a potential Coal stocks KOL, BTU, JRCC, CNX, MEE and WLT moved higher and FCL was down 11 cents. The candle patterns on these stocks also indicate slowing momentum and possible short-term reversal. Check these charts as most formed a spinning top or doji. Earnings Monday, Feb 9 Symbol Earnings Estimate BZH -2.08 below -1.83 CNA -0.15 below +0.30 ENER +0.33 beat +0.31 HAS +0.62 below +0.75 SOHU +1.35 beat +1.16 WHR +0.60 below +0.78 LNCR +0.79 beat +0.77 LNC -0.48 below +0.10 PFG +0.69 beat +0.66 VRTX -0.96 below -0.93 Numbers exclude non-recurring items Tues Feb 10 BMO – CVH, DTV, ICE, MDC, OMC, PBG, Q, TRA AMC – AMX, AMAT, CERN, CF, CSC, EXPD, MVSN, NVDA, SWIR, SIAL, VFC Wed Feb 11 BMO – AGU, AYE, CCE, GENZ, MMC, MICC, NICE, SKYW AMC – ATVI, CMG, CLB, RE, INSP, LVS, LOOP, MOH, NTAP, STR, RNR, TCO, TEX, TQNT Thur Feb 12 BMO - AET, CPLA, KO, ECA, GCL, CLI, MAR, MLM, NXY, NRG, NWN, ZEUS, PTEN, RSH, REV, STRA, TASR, ULBI, WMI AMC – ACAP, AGII, BIDU, COG, CEPH, CAKE, DRYS, ENH, GDI, MFE, NTGR, PNRA, RNWK, TK, WCLK, WYNN Fri Feb 13 BMO – ANF, ALE, BAM, CTSH, ENB, PEP, WYN Learn the Discipline We entered positions on CAM, EBAY, HLF and NIHD on Monday. AMED was stopped out on a trailing stop when the stock pulled back early Monday. We originally put a trailing stop 3% the 30 DMA to keep the risk constant so as the stock rose the stop followed. Saturday’s post showed the stop at 44.95. The stop filled at 44.91, AMED fell to 44.85 and then reversed and closed at 46.81. We choose the trailing stop on this stock since the ERD (Earnings Release Date) was Feb 17. We wanted to avoid the potential of having too few stocks being held over earnings and one bad earnings report having an undue negative influence as we build the portfolio. In this case, using the original stop amount proved to be too tight of a trailing stop to stay in the trade. The trade did produce a profit of $1.20 or 2.74% in 6 days. Of the original $152,000 in the model portfolio, approximately $18,000 is invested. Stocks to Watch on Tuesday Deletions: CSCO, PRGO, SPTN, WMS Additions: ACN, AMZN, GR, MON, NIHD, SNA, SNHY, SPWRA, EBAY, JOYG Stocks to Watch on Tuesday Leading Stocks: Holding Above 30 DMA NFLX, BDX, ESI, JW.A, MYGN, MON, RIMM, SYNA, BLUD, APEI, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, JCOM, WCG, VAR, BIDU, GILD, RCI, VPRT, FLS, ESRX, SLGN, ATW, CPLA, CTSH, FSLR, PCLN, RBN, AMED, CHL, DLB, ORCL, PCR, PSYS, CAM, DV, EBAY, JOYG, NIHD, PPD, Moving Above 30 DMA = 2 BYI, MUR Moving Below 30 DMA = 2 CLB, HLF Staying Below 30 DMA DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, ICE, AXYS Monday’s Action Moving Up: SOHU, FSLR, SINA, IPI, KMT, ANR, GS, ADM, STRA, MS, FWLT Moving Down: AEM, POT, NDAQ, CF, GDX, ONXX, COH Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Up

Markets Rally During Last Hour

3:30 ET - Indices are rallying during the last hour of trading...the CoSPX, NDX, DJIA, Nasdq Composite have all turned positive...the RUT is down 2 points 30 minutes before the close. 2:30 ET - Indices have turned down again...still holding above Friday's S1 level. Semiconductor stocks ALTR, MRVL, LLTC, TXN, XLNX are down this afternoon...watch for a break below the low of the high day for short-term traders. Coal stocks KOL, BTU, CNX, FCL, JRCC, MEE, WLT are forming a shooting star at this time...just be aware these are still live candles and can change before the close. Ag-related stocks AGU, CF, MOS, POT are also forming shooting star like patterns at this time...these are also live candles. 12:10 ET - Indices are bouncing below and above breakeven this morning. Ag-related and coal stocks contine to be strong this morning. JRCC has picked momentum during the morning. As of mid-day support is holding quite well as the market is absorbing any short-term profit taking. SOHU is maintaining its gap from this morning. 10:18 ET Ag-related stocks AGU, CF, MOS and POT are moving higher having recently broken through horizontal resistance. Coal stocks KOL, BTU, JRCC, CNX, FCL, MEE and WLT are also moving higher. 9:35 ET The SPX, DJIA, Nasdaq and RUT are trading -1/4% to -1/2% lower 5 minutes after the open. A pause after the strong rise on Friday is typical. Watch the S1 levels of Friday’s large white candle as a key short-term support level on Monday. SOHU gaps up $4 to horizontal resistance at 50 after reporting earnings that beat expectations Monday morning. Symbol Earnings Estimate BZH -2.08 below -1.83 CNA -0.15 below +0.30 ENER +0.33 beat +0.31 HAS +0.62 below +0.75 SOHU +1.35 beat +1.16 WHR +0.60 below +0.78 numbers exclude non-recurring items

Model Portfolio Recap

Starting Monday we will post early morning each day to give you insight to opportuniteis for the day ahead... Learn the Discipline (see our posts beginning Monday Feb. 2 under Learn the Discipline) Almost five years ago we developed a paper trading strategy referred to as One Green Arrow. The strategy was taught as a paper trading and not as a real money strategy because it generates a lot of trades. Generally the strategy generates more potential trades than a trader trading real money wants to take. The purpose of the strategy was to help a trader identify trades in a mechanical-like process and give them a large number of practice trades because the skill of trading is learned by trading. Just like any other skill repetition is the key to skill development. The strategy starts with a watchlist of fundamentally sound stocks. Those fundamentally sound stocks were selected using a scoring system with a Phase 1 and Phase 2 score. The stocks are monitored each day for price crossing above the 30 DMA. That is the buy signal. The stop is placed 3% below the 30 DMA. As the 30 DMA moves up the stop is moved staying 3% below. If the stock started trending the trailing stop became the ultimate exit. In past up trends, some of the stocks have run for 3 to 6 months before falling 3% below the 30 DMA and generated significant percentage gains. If the stock failed to trend then the position would stop out within in several days. Since the strategy is an intermediate term strategy it produces small losses in a very short period of time while a good trending winner will take four to six weeks or longer to develop. The strategy is not for impatient traders who want instantaneous results. The strategy is an intermediate term strategy, looking for stocks that have the potential to run in an uptrend for four weeks or longer. Of course not all buy signals lead to such a trend. The strategy works best when the market is in an uptrend. In a sideways trend it will still generate plenty of practice trades but those trades will not lead to as many intermediate term up moves. We have been publishing our Stocks to Watch on Day of the Week list since early November when the market established its current uptrend. We had offered no explanation of how to use that list and provided it for those who were already aware of the strategy or who might use a 30 DMA entry signal with some other strategy. Starting on Tuesday we are taking the 30 DMA signals in our watchlist and creating a model portfolio for readers to follow. We will be using the core concept of the One Green Arrow Strategy but will do so with modification since the purpose is not just to generate a lot of paper trades. Since the market is in a sideways trend we will use some discretion on our entry and exits. We may use limit orders on entry and initially miss an entry, we may postpone entry until after earnings and we may wait for the first pullback after the signal as a potential entry. We will also adjust the watchlist and include some other highly liquid stocks from time to time even though they may not have met the traditional One Green Arrow fundamental screen. We will report through out the week on entries and then summarize where the portfolio is each weekend. We want to reiterate that this is an intermediate term strategy and we would expect mixed results while the market stays in a sideways trend and for the first few weeks of operation until any good trends we get into have a chance to develop. If you are a hyper-short-term trader this will be a lot like the old fable of the tortoise and the hare. Just remember the tortoise didn’t look that good in the beginning but in the end won the race. We are beginning with a $152,000 account balance and looking to make stock trades only and will put approximately $2,000 amount in each trade in the beginning. Entry and exit trades will be placed in a real-time virtual account so it will simulate the placement of real trades.

Stocks Rise as Stimulus Bill Over Powers Weak Unemployment

DJIA + 217.52, +2.70% SP500 + 22.75, +2.69% NASDAQ Comp. + 45.47, +2.94% Russell 2000 + 15.62, +3.43% Exchange NYSE NASD Advancing 3,113 2,061 Declining 696 703 Oil $40.17 -$1.00 Gold $913.90 +$0.30 SOX 229.18 +7.87 VIX 43.37 -0.36 The VIX moved down confirming the move up in the SPX on Tuesday. Strongest Sectors: XLF +7.46%...XLF +3.43%...XLB +3.00% Weakest Sectors: XLU +0.64%...XLV +0.81%...XLP +1.72% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Stocks made large gains on Friday driven in part by the expectation of the Stimulus Bill that is currently before the Senate. As we stated earlier the market looked past the worst unemployment report in over 30 years. An excellent example of how the market is a futures market and not a histories market. The Financial Sector XLF +7.46%, and Technology XLK +3.43%, were clearly the leaders in Friday’s market. Strong financial stocks included BAC, WFC, KEY, JPM, C, STT, ZION, PNC, USB, TROW, CME, SPG and AXP. Strong tech stocks included AAPL, GOOG, QCOM, MSFT, CSCO, RIMM, AMZN, INTC, ORCL, ADBE, EBAY and SYMC. AKAM rose 4% and formed a doji which could be a potential evening star after rising 18% breaking out of horizontal resistance on Thursday. A pullback to a higher low could represent an entry point. AMZN broke out of a horizontal flag and its 200 DMA on Friday. Index Commentary The DJIA formed a large white candle on Friday that closed above its 20 DMA…watch the 20 DMA and S1 of Friday’s candle as short-term support areas. The SPX formed a large white candle on Friday that closed above its 20 and 30 DMA and less than one point under its 50 DMA…watch the S1 level as short-term support on Monday. The Nasdaq formed a large white candle that broke through the horizontal resistance area of 1,568…next horizontal resistance 1,665…is above its 20, 30 and 50 DMA. The RUT which had been relatively weak on Thursday was the strongest of the four indices of Friday…formed a large white candle that closed above its 20, 30 and 50 DMA…horizontal resistance area at 475. Stock Commentary Rail stocks... BNI, UNP and NSC broke out of horizontal resistance. CSX broke out of a double bottom. Steel stocks... STLD, NUE and SCHN broke out of horizontal resistance. X rose to horizontal resistance. Semiconductor stocks... continued to rise as XLNX, ALTR, NSM, MRVL moved to horizontal resistance LLTC and TXN rose above horizontal resistance NVLS support bounce Coal stocks... KOL, BTU, JRCC, CNX, FCL, MEE and WLT moved higher Earnings Symbol Earnings Estimate Friday, Feb 6 BIIB +0.93 inline +0.93 Numbers exclude non-recurring items Mon Feb 9 BMO – BZH, CAN, ENER, HAS, SOHU, WHR AMC – LNC, PFG, PKY, VRTX Tues Feb 10 BMO – CVH, DTV, ICE, MDC, OMC, PBG, Q, TRA AMC – AMX, AMAT, CERN, CF, CSC, EXPD, MVSN, NVDA, SWIR, SIAL, VFC Wed Feb 11 BMO – AGU, AYE, CCE, GENZ, MMC, MICC, NICE, SKYW AMC – ATVI, CMG, CLB, RE, INSP, LVS, LOOP, MOH, NTAP, STR, RNR, TCO, TEX, TQNT Thur Feb 12 BMO - AET, CPLA, KO, ECA, GCL, CLI, MAR, MLM, NXY, NRG, NWN, ZEUS, PTEN, RSH, REV, STRA, TASR, ULBI, WMI AMC – ACAP, AGII, BIDU, COG, CEPH, CAKE, DRYS, ENH, GDI, MFE, NTGR, PNRA, RNWK, TK, WCLK, WYNN Fri Feb 13 BMO – ANF, ALE, BAM, CTSH, ENB, PEP, WYN Stocks to Watch on Monday Leading Stocks: Holding Above 30 DMA NFLX, BDX, ESI, JW.A, MYGN, CLB, RIMM, SYNA, BLUD, APEI, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, JCOM, WCG, VAR, BIDU, GILD, RCI, VPRT, FLS, ESRX, SLGN, ATW, CPLA, CTSH, FSLR, PCLN, RBN, AMED, CHL, CSCO, DLB, ORCL, PCR, PSYS Moving Above 30 DMA = 5 AMX, CAM, DV, HLF, PPD Moving Below 30 DMA = 0 Staying Below 30 DMA DLTR, K, BKC, JOSB, BYI, MUR, WMS, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, AFAM, EZPW, WAB, ALGT, ICE, SPTN, PRGO, AXYS Friday’s Action Moving Up: POT, GS, MOS, X, CLF, SOHU, MA, CNX, CF, INFY, AGU, SCHN, KBE, FWLT, NDAQ, ANR, BTU, KRE, V, NUE, MON, ZION, RF, KMT, NIHD, PCLN, HANS, ADM, AEM, GDX, COH, ONXX, LAMR, MEE Moving Down: FSLR, STRA Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Up

Market Looks Past Weak Unemployment to Stimulus Bill

1:40 pm ET Update - Stocks are moving higher as financials bounce. Financial ETFs XLF and UYG are breaking the high of the low day. Airline stocks are also taking off today with DAL, CAL, RJET and LUV breaking the high of the low day. AMR, LCC and UAUA are close to a break above the high of the low day. ALK is moving higher. Financial stocks BAC, KEY, WFC, ZION, C, PNC, JPM, RF and many others are breaking the high of the low day on Friday. 11:00 am ET The market is up in the first 90 minutes of trading even though the Labor Deptmartment reported 598,000 lost jobs for January more than the 524,000 than had been forecast. Unemployment rose to 7.6 %. The reason for this is the markets are looking beyond what was essentially already known, that the economy is weak, to the future and the stimulus package that is currently being considered in the Senate. Another way to view this is a piece of bad news which likely was already discounted or priced into the market is being superseeded by another piece of perceived positive news that apparently isn't already priced into the market. So the market is rising to price or factor in the positive perception of the stimulus package. Earnings BIIB +0.93 inline +0.93 MA is pausing after Thursday's 19 point rise after a positive earnings report yesterday morning. Friday's Early Action Moving Up: POT, X, SCHN, MOS, CLF, CF, SOHU, CNX, V, NUE, KRE, ZION, MON, COH, GS, AGU, BTU, KBE, NDAQ, PCLN, AEM, RF, KMT, MS, ONXX, INFY, FWLT, ANR Moving Down: STRA, FSLR

Nasdq 100 Stronger/Weaker Stocks Review

In our Thursday evening Active Investor Talk we reviewed the charts of the Nasdaq 100 stocks. We found 28 stronger than the index and 10 to be weaker. It was asked if we would post the list of the stronger and weaker stocks. Here they are: Stronger: ADP, AKAM, AMZN, APOL, BIIB, CEPH, CHKP, DISH, EXPE, GENZ, GILD, GOOG, HANS, ILNM, JAVA, LIFE, LLTC, MRVL, MXIM, NTAP, NVDA, ORLY, RIMM, RYAAY, STLD, SYMC, VRTX, XLNX Weaker: COST, FLIR, ISRG, JBHT, LOGI, MSFT, NWSA, SRCL, STX, WYNN

MA, V, Semiconductors Lead Market Higher

DJIA + 106.41, +1.34% SP500 + 13.62, +1.64% NASDAQ Comp. + 31.19, +2.06% Russell 2000 + 6.60, +1.47% Exchange NYSE NASD Advancing 2,432 1,787 Declining 1,306 950 Oil $41.17 +$0.85 Gold $913.60 +$12.00 SOX 221.31 +8.56 VIX 43.73 -0.27 The VIX moved down confirming the move up in the SPX on Tuesday. Strongest Sectors: XLB +2.66%...XLE +2.45%...XLY +1.87% Weakest Sectors: XLU +0.71%...XLV +0.85%...XLI +1.18% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Big moves on Thursday led by MA, V and semiconductor stocks propelled this market higher. Rail, coal and gold stocks were also rose. All nine sector ETFs closed higher led by XLF and XLE. AKAM jumped 18% after beating earnings expectations after the close on Wednesday. AMZN regained Wednesday loss as it bounces in its earnings flag pattern. . Index Commentary The DJIA, SPX and RUT bounced off support forming white spinning tops The Nasdaq formed a bullish engulfing pattern as it closed above its 20, 30 and 50 DMA. Stock Commentary Rail stocks BNI, CSX, UNP, NSC moved higher forming white candles Steel stocks STLD, NUE, SCHN, X moved forming white candles Semiconductor stocks XLNX, ALTR, NSM, LLTC, TXN formed large white candles MRVL moved up 40 cents as it broke out of horizontal resistance…new high close NVLS closed down 5 cents Coal stocks KOL, BTU, JRCC CNX, FCL, MEE, WLT moved higher forming white candles Earnings Thursday, Feb 5 Symbol Earnings Estimate ANR -0.07 below +0.22 CAH +0.93 beat +0.90 CI +0.49 beat +0.41 DO +2.11 below +2.34 EL +0.80 beat +0.77 FLIR +0.41 beat +0.38 K +0.53 beat +0.50 MA +1.87 beat +1.61 MCO +0.37 beat +0.28 NCR +0.58 beat +0.54 COHU -0.17 below -0.16 HIG -0.72 below +1.30 MCRS +0.37 beat +0.35 PNSN +-0.43 below +0.26 SRCL +0.45 inline +0.45 VRSN +0.28 below +029 Numbers exclude non-recurring items Fri Feb 6 BMO – BIIB Stocks to Watch on Friday Leading Stocks: Holding Above 30 DMA NFLX, BDX, ESI, JW.A, MYGN, CLB, RIMM, SYNA, BLUD, APEI, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, JCOM, WCG, VAR, BIDU, GILD, RCI, VPRT, FLS, ESRX, SLGN, ATW, CPLA, CTSH, FSLR, PCLN, RBN Moving Above 30 DMA = 7 AMED, CHL, CSCO, DLB, ORCL, PCR, PSYS, Moving Below 30 DMA = 1 HLF Staying Below 30 DMA DLTR, DV, K, PPD, CAM, BKC, JOSB, BYI, MUR, WMS, JEC, PETS, NTLS, BAP, HDB, AMX, CBST, DECK, AFAM, EZPW, WAB, ALGT, ICE, SPTN, PRGO, AXYS Thursday’s Action Moving Up: MA, POT, FSLR, GS, V, MON, STRA, AEM, CLF, ANR, MOS, AGU, NDAQ, BTU, X, SOHU, CF, CNX, NUE, ESRX, MS, PCLN, ADM, AFAM, BRCM, SINA, MEE, SCHN Moving Down: DRYS Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Up

V and MA Better Than Expected Earnings

Last night V reported better than expected earnings. This morning MA does the same. Expect upward movement in these two stocks. Thursday - BMO ANR -0.07 below +0.22 CAH +0.93 beat +0.90 CI +0.49 beat +0.41 DO +2.11 below +2.34 EL +0.80 beat +0.77 FLIR +0.41 beat +0.38 K +0.53 beat +0.50 MA +1.87 beat +1.61 MCO +0.37 beat +0.28 NCR +0.58 beat +0.54

Stocks Rise and Sell Off

DJIA - 121.70, -1.51% SP500 - 6.28, -0.75% NASDAQ Comp. - 1.25, -0.08% Russell 2000 - 4.42, -0.98% Exchange NYSE NASD Advancing 1,674 1,092 Declining 2,082 1,650 Oil $40.32 -$0.46 Gold $901.60 +$9.60 SOX 212.75 +1.92 VIX 43.85 +0.79 The VIX moved up confirming the move down in the SPX on Tuesday. Strongest Sectors: XLB +1.83%...XLE +0.94%...XLU +0.75% Weakest Sectors: XLP -2.72%...XLY -2.19%...XLF -1.10% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Stocks rose to short-term resistance near mid-day when sellers took over and prices fell. The broad indices finished lower on Wednesday. DIS and KFT weighed on the Dow after releasing earnings below expectations. Consumer Staples XLP was the weakest sector. After the close CSCO released earnings above expectations but gave lower guidance for the current quarter and year. CSCO was down 69 cents in after-hours trading. V reported better than expected earnings after the close and rose 3.87 or 7.88% in after-hours trading. MA reports earnings BMO Thursday morning. AMZN cools off after rising 27 % as it formed a three white soldiers candle pattern…watch for a potential entry from an earnings flag pattern. . Index Commentary The DJIA formed a large black candle closing near its low of the day. The SPX after rising early pulled back and closed near Tuesday’s S1 level. The Nasdaq also rose early and formed a potential shooting star closing near Tuesday’s close. The RUT gave back all of Tuesday’s modest gains in forming a shooting star like black candle. Stock Commentary Rail stocks BNI, CSX and UNP moved higher and pulled back at horizontal resistance NSC broke the high of the low day Steel stocks STLD, NUE and SCHN moved higher and pulled back at horizontal resistance X confirmed Tuesday’s bullish harami and broke the high of the low day Semiconductor stocks NVLS, XLNX, ALTR still near the high of the low day MRVL moved up 19 cents at resistance…potential breakout…new high close NSM, LLTC moved to horizontal resistance TXN moved higher Coal stocks KOL, BTU, JRCC CNX and FCL formed small spinning tops MEE moved lower after reporting earnings below estimates Tuesday evening WLT is still near the high of the low day Earnings Wednesday, Feb 4 Symbol Earnings Estimate AGN +0.76 beat +0.73 BCO +0.83 beat +0.57 CLX +0.62 beat +0.57 ITT +0.82 beat +0.77 KFT +0.43 below +0.44 NOV +1.44 beat +1.33 RL +1.05 beat +0.86 SNA +1.01 beat +1.00 PM +0.71 beat +0.62 AKAM +0.44 beat +0.40 ATW +1.22 beat +1.15 CSCO +0.32 beat 0.30 EXBD +0.50 below +0.57 DLB +0.56 beat +0.43 EOG +0.74 below +1.04 FMC +1.02 beat +0.86 NVLS -0.21 below -0.17 PRU -2.69 below -1.19 PHM -1.33 below – 0.71 SPTN +0.40 beat +0.39 SUN +2.69 beat +2.15 V +0.78 beat +0.66 Numbers exclude non-recurring items Thu Feb 5 BMO – ANR, CAH, CI, DO, EL, FLIR, K, MA, MCO, NCR AMC – AMX, COHU, HIG, MCRS, NFS, PENS, SRCL, VRSN Fri Feb 6 BMO – BIIB Learn the Discipline We entered positions on AMED and CPLA on Wednesday. Our HLF limit order did not fill. So we now have four positions including ESRX and GME entered on Tuesday. FSLR, PCLN and RBN crossed above their 30 DMA on Wednesday. We will look to enter positions here on Thursday based on market conditions. Of the original $152,000 in the model portfolio, approximately $8,000 is invested. Stocks to Watch on Thursday Leading Stocks: Holding Above 30 DMA NFLX, BDX, ESI, JW.A, MYGN, CLB, RIMM, SYNA, BLUD, APEI, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, JCOM, WCG, VAR, BIDU, GILD, RCI, VPRT, FLS, ESRX, SLGN, ATW, CPLA, CTSH, HLF Moving Above 30 DMA = 3 FSLR, PCLN, RBN Moving Below 30 DMA = 6 AMED, DLTR, DV, K, PPD, PSYS Staying Below 30 DMA CAM, BKC, JOSB, ORCL, PCR, BYI, CSCO, MUR, WMS, DLB, JEC, PETS, NTLS, BAP, HDB, AMX, CBST, DECK, AFAM, CHL, EZPW, WAB, ALGT, ICE, SPTN, PRGO, AXYS Wednesday’s Action Moving Up: GS, FSLR, POT, MOS, MON, CF, SOHU, MS, AEM, DRYS, AGU, X, SCHN, PCLN, SINA, CLF, IPI, V, KMT, GDX, Moving Down: STRA, ADM, MEE, AFAM, Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Neutral

Stocks Break the High of the Low Day

DJIA + 141.53, +1.78% SP500 + 13.07, +1.58% NASDAQ Comp. + 21.87, +1.46% Russell 2000 + 3.29, +0.73% Exchange NYSE NASD Advancing 2,296 1,571 Declining 1,428 1,165 Oil $40.78 +$0.70 Gold $892.00 -$14.70 SOX 210.83 +0.31 VIX 43.06 -2.46 The VIX moved down confirming the rise in the SPX on Tuesday. Strongest Sectors: XLY +2.83%...XLV +2.58%...XLP +2.19% Weakest Sectors: XLF -1.64%...XLU +0.45%...XLE +1.73% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF We posted yesterday that “Monday could be the low day in the recent pullback so pay close attention on Tuesday for a potential break of the high of the low day.” Stock prices did break the high of the low day so if you were looking at the Chart Signals you found numerous entry opportunities on Tuesday. Downward momentum which reversed on Monday was followed by upward momentum today in many stocks and indices. The number of advancing stocks on both the NYSE and Nasdaq increased again on Tuesday. The RUT and SOX however did not fully participate as both indices made modest moves up today. Financial Sector XLF was the only sector moving down on Tuesday. AMZN moved up for the third straight day rising another $2.44 or 3.99% bringing its three day rise to $13.59 or 27%. Index Commentary The DJIA confirmed Monday’s hammer like pattern with a bullish engulfing pattern. The SPX formed the three candle morning star pattern as it broke the high of the low day. The Nasdaq confirmed Monday’s piercing line pattern and broke the high of the low day. The RUT confirmed Monday’s piercing line pattern. Stock Commentary Rail stocks BNI, CSX and UNP broke the high of the low day NSC formed a doji Steel stocks STLD, NUE and SCHN broke the high of the low day. X formed a bullish harami Semiconductor stocks NVLS, XLNX, ALTR are near the high of the low day MRVL at resistance…potential breakout NSM, LLTC broke the high of the low day TXN broke out Coal stocks KOL, BTU, JRCC CNX and FCL broke the high of the low day MEE moved lower in after-hours trading after reporting earnings below estimates WLT is near breaking the high of the low day Earnings Tuesday, Feb 3 Symbol Earnings Estimate ADM +0.91 beat +0.68 ADP +0.59 beat +0.56 AVP +0.54 below +0.59 CAM +0.75 beat +0.74 CME +3.58 beat +3.46 DOW -0.62 below +0.06 DHI -0.20 beat -0.52 MRO +1.44 beat +0.90 MRK +0.87 beat +0.74 MOT -0.01 below +0.00 MYGN +0.43 beat +0.32 NOC +1.57 beat +1.55 PRGO +0.46 below +0.50 SGP +0.39 beat +0.30 SMG -0.81 beat -0.92 UPS +0.83 below +0.85 BYI +0.59 beat +0.55 CTX -5.34 below -3.27 DIS +0.41 below +0.51 ERTS +0.56 below +0.88 FISV +0.85 below +0.86 ILMN +0.24 beat +0.17 MEE +0.63 below +0.79 MET +0.19 beat +0.14 NETL +0.30 beat +0.23 SLGN +0.69 beat +0.57 SOLR +0.30 beat +0.24 YUM +0.46 beat +0.45 Numbers exclude non-recurring items Wed Feb 4 BMO – AGN, BCO, CLX, ITT, KFT, NOV, PM, RL, SNA AMC – AKAM, CSCO, EXBD, XRAY, DLB, EOG, FMC, LVS, NVLS, PRU, PHM, RJECT, SPTN, SUN, V Thu Feb 5 Fri Feb 6 BMO – BIIB Learn the Discipline Three stocks ESRX, K and SLGN crossed their 30 DMA on Monday. Tuesday morning we entered a trade on ESRX and did not enter trades on K and SLGN. K has earnings on Feb 5 and SLGN reported better than expected earnings after the close today. Even though this strategy is designed to hold through earnings due to its intermediate term nature, we decided to hold off in taking a trade right in front of earnings since we are just starting the model portfolio. We did enter a virtual trade on GME. If time would have permitted we would have worked at entering other trades today on those stocks that have already crossed their 30 DMA during the past week. We will explain our rationale on this more over the next few days once we get the strategy explanation posted. Our goal again is this weekend. These decisions have more to do with logistics of starting the application of the strategy in a model portfolio format than with the actual implementation of the strategy over time. We will look to add positions in the eight stocks on Wednesday that crossed their 30 DMA on Tuesday. Stocks to Watch on Wednesday Leading Stocks: Holding Above 30 DMA NFLX, BDX, ESI, JW.A, MYGN, CLB, RIMM, SYNA, BLUD, APEI, DLTR, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, JCOM, WCG, VAR, BIDU, GILD, RCI, VPRT, FLS, ESRX, K, SLGN Moving Above 30 DMA = 8 AMED, ATW, CPLA, CTSH, DV, HLF, PPD, PSYS, Moving Below 30 DMA = 1 CAM Staying Below 30 DMA FSLR, BKC, JOSB, ORCL, PCR, BYI, CSCO, MUR, RBN, WMS, DLB, JEC, PCLN, PETS, NTLS, BAP, HDB, AMX, CBST, DECK, AFAM, CHL, EZPW, WAB, ALGT, ICE, SPTN, PRGO, AXYS Tuesday’s Action Moving Up: STRA, AFAM, MA, NUE, FSLR, SCHN, POT, PNRA, ESRX, CNX, ONXX, IPI, CF, MON, PCLN, DRYS, NDAQ, BTU, MOS, X, MEE, ANR, SOHU, COH, INFY, HANS Moving Down: V, ZION, KBE, GS Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Neutral

Markets Move Higher Early Tuesday

Stock indices are moving higher after the first 90 minutes of trading with the SPX +5, Nasdaq +7 and the RUT +1. Oil are gold are up slightly. ADP and MYGN gapped higher on better than expected earnings. AVP moved higher coming in below expectations. Earnings BMO - Tuesday, Feb 3 ADM +0.91 beat +0.68 ADP +0.59 beat +0.56 AVP +0.54 below +0.59 CAM +0.75 beat +0.74 CME +3.58 beat +3.46 DOW -0.62 below +0.06 DHI -0.20 beat -0.52 MRO +1.44 beat +0.90 MRK +0.87 beat +0.74 MOT -0.01 below +0.00 MYGN +0.43 beat +0.32 NOC +1.57 beat +1.55 PRGO +0.46 below +0.50 UPS +0.83 below +0.85 Numbers exclude non-recurring items Tuesday's Early Action Moving Up: FSLR, MA, POT, STRA, SCHN, CNX, NUE, PNRA, CF, X, DRYS, AEM, MON, BTU, ANR Moving Down: GS, ZION

Groundhog Day...Nasdaq, RUT Move Higher

DJIA - 64.11, -0.80% SP500 - 0.44, -0.05% NASDAQ Comp. + 18.01, +1.22% Russell 2000 + 6.08, +1.37% Exchange NYSE NASD Advancing 1,637 1,489 Declining 2,122 1,286 Oil $40.08 -$1.60 Gold $906.70 -$20.60 SOX 210.52 +2.26 VIX 45.52 +0.68 The VIX moved up confirming the drop in the SPX on Friday. The VIX gapped up as the SPX gapped down and closed near its low as the SPX recovered. Strongest Sectors: XLK +1.57%...XLV +0.65%...XLU +0.55% Weakest Sectors: XLI -2.28%...XLE -1.60%...XLB -1.42% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Downward momentum reversed on Monday as indicated by the intra-day reversals in the DJIA, SPX, Nasdaq Composite, RUT and the SOX. The Nasdaq, RUT and SOX finished positive on Monday. Advancing stocks on both the NYSE and Nasdaq increased significantly on Monday as the number of declining stocks dropped. Monday could be the low day in the recent pullback so pay close attention on Tuesday for a potential break of the high of the low day. After strong earnings Thursday evening AMZN which rose $8.82 or 17.64% on Friday rose another $2.33 or 3.96% on Monday, while staying above its horizontal breakout. Index Commentary The DJIA formed a hammer like pattern near horizontal support. The SPX formed a small white hammer that could be a potential morning star pattern. The Nasdaq and RUT formed a piercing line pattern. Earnings Monday, Feb 2 BEAV +0.53 beat +0.46 HUM +1.03 below +1.07 MAT +0.49 below +0.72 AFL +0.98 below +1.00 HOLX +0.19 below +0.29 SNDK – 1.65 below -0.60Numbers exclude non-recurring items Tues Feb 3 BMO – AFAM, ADM, AVP, BP, CAM, CME, DOW, DHI, MRO, MRK, MOT, MYGN, NOC, PRGO, UPS AMC – BYI, CTX, LIMN, MEE, MET, ERTS, USNA, DIS, YUM Wed Feb 4 BMO – AGN, BCO, CLX, ITT, KFT, NOV, PM, RL, SNA AMC – AKAM, CSCO, EXBD, XRAY, DLB, EOG, FMC, LVS, NVLS, PRU, PHM, RJECT, SPTN, SUN, V Thu Feb 5 Fri Feb 6 BMO – BIIB Stock Commentary NTRS bullish engulfing support bounce Rail stocks BNI formed a hammer…potential low day CSX a white body candle potential low day UNP a hammer…potential low day NSC formed a black spinning top that did not confirm Friday’s hammer…potential low day Steel stocks STLD formed a piercing line pattern…potential low day NUE formed an inverted hammer…potential low day and evening star pattern SCHN formed a white candle…potential low day X formed a black candle closing just below horizontal support Semiconductor stocks NVLS formed a white spinning top that did not confirm Friday’s inverted hammer MRVL formed a white spinning top near resistance XLNX formed a high wave white spinning top NSM formed a piercing line pattern ALTR formed a bullish harami LLTC formed a bullish engulfing pattern TXN bullish engulfing flag bounce Coal stocks KOL, BTU, JRCC MEE, CNX, FCL and WLT formed potential low day moving higher from intra-day lows Learn the Discipline We told you change was coming and today is the beginning of some exciting changes that can help seriously minded traders to improve their trading skill. So stay tuned. Our Stocks to Watch On day of the week list has changed effective today. The list is smaller dropping in size from around 120 to 76. The financial ratings of some of the stocks in the original list, which was created on Nov. 2, have deteriorated and we felt it was time to modify the list. Stocks have been deleted and others have been added. We may modify the list further over the next month. If we do we will post any changes. Some of you are aware that the concept behind this list was a paper trading strategy we developed in 2004 to assist new traders with developing discipline in following a system. The strategy is designed for an uptrend but can produce some success in a sideways market. That is why we began posting it in November. We did not elaborate on the list and left it up to aware readers to decide how to apply the information. We are ready to now apply the strategy on a daily basis. We will likely post the exact parameters of the strategy by the weekend. We will demonstrate daily a model portfolio. It will be done in real-time but it will be a virtual electronic account. We expect the results to be modest in a sideways market. The entry signal is a price close above the 30 DMA. The stop will be 3% below the 30 DMA. This is an intermediate term trading style and that is why we expect modest results in a sideways market. What you can learn from it is the discipline in applying a consistent strategy. We will enter real-time virtual trades, as if we were managing a portfolio. We are going to start with a virtual account of $152,000 and open stock positions of $2,000 rounded to the nearest share. Since three stocks in the list crossed their 30 DMA we will enter virtual trades on Tuesday. Come back each day and learn the discipline. Stocks to Watch on Tuesday Leading Stocks: Holding Above 30 DMA NFLX, BDX, ESI, JW.A, MYGN, CLB, RIMM, SYNA, BLUD, APEI, DLTR, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, CAM, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, JCOM, WCG, VAR, BIDU, GILD, RCI, VPRT, FLS Moving Above 30 DMA = 3 ESRX, K, SLGN Moving Below 30 DMA = 2 ATW, FSLR Staying Below 30 DMA BKC, CTSH, JOSB, ORCL, PCR, AMED, BYI, CPLA, CSCO, HLF, MUR, RBN, WMS, DV, DLB, JEC, PCLN, PETS, NTLS, BAP, HDB, AMX, CBST, DECK, AFAM, CHL, EZPW, PSYS, WAB, ALGT, ICE, SPTN, PPD, PRGO, AXYS Monday’s Action Moving Up: STRA, GS, ESRX, PCLN, MA, Moving Down: FSLR, AEM, DRYS, X, NDAQ, POT, GDX, PNRA, CLF, SOHU, NIHD Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down

Ground Hog Day...

Punxsutawney Phil saw his shadow this Groundhog Day which predicts six more weeks of winter. The markets opened lower from Friday's close and then found support. The SOX which is an important index for Nasdaq stocks opened lower and traded down for the first five minutes. Then at 9:36 ET the index started moving higher and then rallied over 9 points over the next 40 minutes. The SPX which didn't bottom until 9:41 ET also did not really begin to bounce until almost 10 ET has moved to 822 after being as low as 813 this morning. Early Morning Action: AET, AKAM, APOL, BDK, BLUD, BRCM, CF, ESRX, GILD, GS, HUM, POT, SCHN, TXN, UNH, WLP FLS opened lower this morning, found support, started moving higher and is down just 45 cents.

SPX It's Worst January...Barometer or Not...You've Been Misled

DJIA - 148.15, -1.82% SP500 - 19.26, -2.28% NASDAQ Comp. - 31.42, -2.08% Russell 2000 - 9.71, -2.14% Exchange NYSE NASD Advancing 986 916 Declining 2,722 1,837 Oil Gold SOX 208.26 -4.07 VIX 44.84 +2.21 The VIX moved up confirming the drop in the SPX on Friday. Strongest Sectors: XLV -1.06%...XLE -1.39%...XLU -2.00% Weakest Sectors: XLB -3.92%...XLP -3.06%...XLK -2.97% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF The SPX finished the month of January down -8.6%. The SPX closed Friday at 825.88 down from 903.25 on December 31. So what does that tell us? We are regularly asked about the “January Barometer” and what do we think about it? Sometimes the questioner is even equipped with a statistic from some source that makes it sound like all a trader needs to do is look at January and then wah-la the odds are in trader’s favor for the rest of the year. We respond with something like, “you can’t trade the market based on past statistics because if you don’t know the range, the mean, the deviation, the R2, the drawdown, the draw-up, the correlation coefficient” and a few other terms we throw in for clarity, “you don’t really know what the statistic you just cited actually means.” By the time we complete the answer, the questioner is often disappointed because they thought they had found the “holy grail” to trading successfully for the rest of the year and our response correctly destroyed any confidence they had in a worthless statistic. Yes, you are reading correctly “a worthless statistic." Actually, it’s not worthless to a financial writer, because someone who doesn’t really know what the he_ _ they are talking about, but wants to sound like they do, loves to bring up the January Barometer. Why? Because it makes them sound like they know what they are talking about. (In case you are wondering the blank fill in is he c k.) What too many people and traders are not aware of is the old adage, “there are lies, there are damn lies and then there are statistics.” You see a good statistician or quantitative analyst can take a numerical state and create whatever leading or misleading impression they want depending on what they choose to focus on and what they choose to delete. Having spent many years doing quantitative analysis we could run a least a couple dozen statistical variations on the “JB” and help you reach any conclusion we wanted. Not that it would help you trade better, but it certainly would impress you. Just to prove the point we will share with you one statistical variation that we have never seen in print or heard mentioned before about the “JB.” Did you know, and we suspect that you didn’t, that since 1960 when the SPX was down in January, 53% of the time the SPX is higher at the end of the year than it closed at the end of January! What that means is that it is more probable that the SPX will close higher than the January close, when January produces a negative return. Now how does that help you trade in 2009? The reality is, it doesn’t and neither does the January Barometer. The reality is regardless of what the market does in January you had better focus on Dave’s Insight: To trade profitably focus on trend, support and resistance and momentum. In fact what does the “JB” tell you about trend, support and resistance and momentum for the balance of 2009? Absolutely nothing! “Say it again, one, two what is it good for? Absolutely nothing,” as it relates to the trend, support and resistance and momentum for the balance of the year. So help your friends pull their head out of the “JB” and trade the trend! The broad indices fell for the second consecutive day on Friday. The downward momentum slowed from Thursday as the number of advancing stocks rose by 300 on the Nasdaq. SOX momentum also slowed on Friday. After strong earnings Thursday evening AMZN rose $8.82 or 17.64% closing above horizontal resistance for a breakout. Index Commentary The DJIA, SPX, Nasdaq and RUT which moved below the low of the high day on Thursday all moved lower towards horizontal support on Friday. Stock Commentary Rail stocks BNI, CSX and UNP moved lower while NSC formed a hammer, potential bullish harami. The chart patterns on steel, semiconductor and coal stocks which weakened on Thursday STLD rolled over NUE, SCHN and X confirmed Thursday’s bearish harami NVLS formed an inverted hammer MRVL formed a white spinning top XLNX formed a bearish engulfing pattern NSM, ALTR, LLTC moved lower TXN formed a black hammer KOL, BTU, JRCC MEE, CNX, FCL and WLT followed Thursday’s bearish candles by moving lower. Earnings Friday, Jan 30 AME +0.66 inline +0.66 estimates ACI +0.44 beat +0.39 est. CVX +2.44 beat +1.81 est. XOM +1.55 beat +1.45 est. HON +0.97 inline +0.97 est. IVZ +0.17 inline +0.17 est. KLIC -0.37 below -0.26 est. FSTR +0.55 beat +0.49 est. PCAR +0.31 beat +0.30 est. PG +1.58 inline +1.58 Numbers exclude non-recurring items Mon Feb 2 BMO – HUM AMC – AFL, HOLX, MSTR, SNDK Tues Feb 3 BMO – AFAM, ADM, AVP, BP, CAM, CME, DOW, DHI, MRO, MRK, MOT, MYGN, NOC, PRGO, UPS AMC – BYI, CTX, LIMN, MEE, MET, ERTS, USNA, DIS, YUM Wed Feb 4 BMO – AGN, BCO, CLX, ITT, KFT, NOV, PM, RL, SNA AMC – AKAM, CSCO, EXBD, XRAY, DLB, EOG, FMC, LVS, NVLS, PRU, PHM, RJECT, SPTN, SUN, V Thu Feb 5 Fri Feb 6 BMO – BIIB Stocks to Watch on Monday Leading Stocks: Holding Above 30 DMA BCO…ESI…JW.A…MYGN…BCR…MON…RIMM…SYNA…BLUD…AME…APH…DLTR…STRA…AYE…PCP…AET…GES…GME…IIVI…NE…RIO…SWN…URBN…POT…ATW…CAM…MOS…NOV…RIG…AAPL…BIIB…JCOM…WCG…VAR…CELG…GILD…RCI..CL…ICLR Moving Above 30 DMA = 4 AMZN…CHTT…FLS…RTN Moving Below 30 DMA = 10 CTSH, DNA, GIS, JOSB, K, MMM, MTD, NIHD, PCR, ROST Staying Below 30 DMA AGN, AMED, ATK, BYI, CIR, ESRX, HLF, HP, MCRS, NDAQ, NEU, NGS, PSSI, SPN, WMS, DV, LAYN, CCC, TEVA, CERN, FLIR, QSII, JEC, KEX, OSIP, PCLN, PETS, SHW, TECH, UTX, BAP, ACL, FWLT, HDB, LNN, OI, ADBE, AMX, CBST, DECK, FLR, MBT, SNA, VMI, AFAM, EPR, FSTR, HAS, LFC, MTW, SOHU, VIP, NDAQ, ANSS, CHU, EZPW, NILE, PSYS, VIVO, WAB, ENDP, IRIS, ISRG, SPTN, PPD, PRGO, SINA, AXYS Friday’s Action Moving Up: MA, FSLR, V Moving Down: SCHN, X, POT, FWLT, NUE, MON, DRYS, STRA, HANS, ESRX, BRCM, ZION, CNX, CF, MS, UAUA, CLF, GS, AGU, BTU, ANR, GRMN, INFY, PNRA, SOHU, KMT, LCC, LAMR, IPI, KRE, AEM Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down

Market Wrap 4:30 ET

Dave Johnson will be joining Tom Sosnoff and Ben Watson in the Market Wrap today at 2:30 pm MT/4:30 pm ET. Please join us if you have access!

Stocks Retreat on Rising Unemployment, Weak Housing

DJIA - 226.44, -2.70% SP500 - 28.95, -3.31% NASDAQ Comp. - 50.50, -3.24% Russell 2000 - 19.78, -4.18% Exchange NYSE NASD Advancing 708 616 Declining 3,046 2,168 Oil $41.44 -$0.72 Gold $905.10 +$16.90 SOX 212.33 -10.26 VIX 42.63 +2.97 The VIX moved up confirming the drop in the SPX on Thursday. Strongest Sectors: XLU -0.74%...XLP -0.87%...XLV -1.41% Weakest Sectors: XLF -7.86%...XLY -4.03%...XLI -3.66% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF All sectors moved lower on Thursday as the broad market indices gave back Wednesday’s gains as unemployment claims reached a record high and new home sales reached a record low. Many stocks pulled back from Wednesday’s high over continued concerns about economic weakness. After the close AMZN reported earnings of 52 cents above estimates of 39 cents. AMZN which closed at 50 rose over $6 on 5.9 million shares in after-hours trading. Stock Commentary Rail stocks BNI, CSX, NSC and UNP appear to be in a bear flag pattern. The chart patterns on steel, semiconductor and coal stocks weakened on Thursday: STLD may be rolling over at resistance NUE, SCHN and X formed a bearish harami NVLS, MRVL, XLNX, NSM, ALTR, LLTC, TXN bounced down at resistance KOL, BTU, JRCC MEE and WLT bounced down at resistance. CNX formed a bearish engulfing and FCL formed a bearish harami. Index Commentary The DJIA formed a large black candle that fell back through short-term resistance at 8,250 The SPX formed a large black candle that fell back through short-term support at 860. The Nasdaq formed a large black candle that fell back through new short-term support at 1,525…closed below its 20, 30 and 50 DMA. The RUT formed a large black candle that closed below the new support of 468…closed below its 50 DMA. Earnings Thursday, Jan 29 MMM +0.97 beat +0.93 AMZN +0.52 beat +0.39 ALK, BUD, AZN, BDK, CELG, CHTT, CL, CNX, CAL, EK, LLY, F, HP, JBLU, LLL, ERIC, OXY, RTN, TROW, UA, LCC, BRCM, BCR, CA, DRIV, JNPR, KLAC, MXIM, MCHP, VAR Friday, Jan 30 BMO – AME, ACI CVX, XOM, HON, IVZ, KLIC, FSTR, PCAR, PG Stocks to Watch on Friday Leading Stocks: Holding Above 30 DMA JOSB…BCO…ROST…ESI…JW.A…MYGN…BCR…MON…RIMM…SYNA…BLUD…AME…APH…DLTR…STRA…AYE…K…PCP…AET…GES…GME…IIVI…NE…RIO…SWN…URBN…POT…ATW…CAM…CTSH…MOS…NIHD…NOV…RIG…AAPL…BIIB…GIS…JCOM…WCG…DNA…VAR…CELG…GILD…MTD…PCRI…RCI Moving Above 30 DMA = 3 CL…ICLR…MMM Moving Below 30 DMA = 17 AGN, AMED, ATK, BYI, CHTT, CIR, ESRX, FLS, HLF, HP, MCRS, NDAQ, NEU, NGS, PSSI, SPN, WMS Staying Below 30 DMA DV, LAYN, RTN, CCC, TEVA, CERN, FLIR, QSII, JEC, KEX, OSIP, PCLN, PETS, SHW, TECH, UTX, BAP, ACL, AMZN, FWLT, HDB, LNN, OI, ADBE, AMX, CBST, DECK, FLR, MBT, SNA, VMI, AFAM, EPR, FSTR, HAS, LFC, MTW, SOHU, VIP, NDAQ, ANSS, CHU, EZPW, NILE, PSYS, VIVO, WAB, ENDP, IRIS, ISRG, SPTN, PPD, PRGO, SINA, AXYS Thursday’s Action Moving Up: AEM, GDX, STRA Moving Down: FSLR, MA, GS, DRYS, AFAM, PCLN, CLF, KMT, MS, SOHU, ZION, NUE, ESRX, PNRA, KRE, UAUA, SINA, LAMR, X, MOS, BTU, ANR, NDAQ, FWLT, KBE, POT, MEE, GRMN, AGU, NIHD, V, BRCM, CF, LCC, IPI, ONXX Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Neutral

Stocks Bounce With Momentum

DJIA + 200.72, +2.46% SP500 + 28.38, +3.36% NASDAQ Comp. + 53.44, +3.55% Russell 2000 + 17.44, +3.83% Exchange NYSE NASD Advancing 3,247 2,165 Declining 563 615 Oil $42.16 +$0.58 Gold $888.20 -$11.30 SOX 222.59 +5.31 VIX 39.66 -2.59 The VIX moved down confirming the rise in the SPX on Wednesday. Strongest Sectors: XLF +12.80%...XLY +4.25%...XLI +2.87% Weakest Sectors: XLU +0.64%...XLP +1.01%...XLV +1.55% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Stocks finally bounced off of support with some force on the news of the proposal for the government to buy bad assets from banks. All sectors gained on Wednesday with financial gaining three times more than the second strongest sector. The financial sector has been the one sector recently down trending and the proposal certainly brought fresh buying into the sector. Regional bank ZION gained 27.56% after rising +15.5% on Tuesday. BAC +13.69%c, C +18.59%, WFC +30.88% JPM +10.38%, USB +11.61% Watch the chart patterns on steel stocks: STLD, NUE, SCHN, X and semiconductor stocks: NVLS, MRVL, XLNX, NSM, ALTR, LLTC, TXN Coal stocks bounced on Wednesday: KOL, BTU, CNX, FCL, JRCC, MEE, WLT

Index Commentary The DJIA formed a large white candle that broke through short-term resistance at 8,250 The SPX formed a large white candle that broke through short-term resistance at 860. The Nasdaq formed a large white candle that broke through short-term resistance at 1,525…closed above its 20, 30 and 50 DMA. The RUT formed a large white candle that broke through short-term resistance at 468…closed above its 50 DMA at its 20 and 30 DMA. Earnings Wednesday, Jan 28 T +0.64 below +0.65 estimates BHI +1.41 beat +1.26 est. BDX +1.26 beat +1.15 est. BA +0.62 below +0.78 est. COP +1.28 beat +1.22 est. GD +1.62 beat +1.59 est. HES -0.23 below +0.33 est. PX +1.01 beat +0.96 est. WLP +0.65 below +1.36 est. WFC -0.79 below +0.33 est. ARG +0.76 beat +0.75 est. ALL +0.97 below +1.35 est. CTXS +0.48 beat +0.47 est. KEX +0.72 below +0.79 est. LRCX -0.09 below -0.05 est. OTEX +0.64 beat +0.57 est. OI +0.45 beat 0.39 est. QCOM +0.31 below +0.47 est. SEPR +0.92 beat +0.56 est. SBUX +0.15 below +0.17 est. SYMC +0.42 beat +0.32 est. WDC +0.55 beat +0.31 est. Numbers exclude non-recurring items. Thursday, Jan 29 BMO – MMM, ALK, BUD, AZN, BDK, CELG, CHTT, CL, CNX, CAL, EK, LLY, F, HP, JBLU, LLL, ERIC, OXY, RTN, TROW, UA, LCC AMC – AMZN, BRCM, BCR, CA, DRIV, JNPR, KLAC, MXIM, MCHP, VAR Friday, Jan 30 BMO – AME, ACI CVX, XOM, HON, IVZ, KLIC, FSTR, PCAR, PG Stocks to Watch on Thursday Leading Stocks: Holding Above 30 DMA JOSB…BCO…ROST…ESI…JW.A…MYGN…AMED…BCR…MON…RIMM…SYNA…BLUD…AME…APH…DLTR…STRA…AYE…K…PCP…AET…GES…GME…HP…IIVI…NE…RIO…SWN…URBN…POT…ATW…CAM…CTSH…MOS…NIHD…NOV…RIG…AAPL…BIIB…GIS…JCOM…WCG…ATK…CHTT…DNA…HLF…VAR Moving Above 30 DMA = 17 AGN…BYI…CELG…CIR…ESRX…FLS…GILD…MCRS…MTD…NDAQ…NEU…NGS…PCR…PSSI…RCI…SPN…WMS Moving Below 30 DMA = 1 DV Staying Below 30 DMA LAYN, RTN, CCC, ICLR, TEVA, CERN, FLIR, QSII, JEC, KEX, OSIP, PCLN, PETS, SHW, TECH, UTX, BAP, ACL, AMZN, CL, FWLT, HDB, LNN, OI, ADBE, AMX, CBST, DECK, FLR, MBT, SNA, VMI, AFAM, EPR, FSTR, HAS, LFC, MMM, MTW, SOHU, VIP, NDAQ, ANSS, CHU, EZPW, NILE, PSYS, VIVO, WAB, ENDP, IRIS, ISRG, SPTN, PPD, PRGO, SINA, AXYS Wednesday’s Action Moving Up: GS, MA, SCHN, FSLR, NUE, ZION, SOHU, MS, V, X, POT, KBE, CF, PCLN, ESRX, CLF, KRE, CNX, SINA, COH, AGU, NDAQ, FWLT, ANR, MOS, GRMN, BTU, MEE, INFY, ONXX, NIHD, KMT, DRYS Moving Down: STRA, AFAM, GDX Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Up

This Was Posted Last Night

"Such detail. All the earnings and stocks that will be announcing in the next few days. It is great to put the stocks staying above or below the 30 MA in a watch list and see how they behave each day. Don't know when you find the time to post all this GREAT INFO. Maybe in your "spare time"!! That serves as a good example for all of us, who in general are much less busy then you, Dave, proving that it all CAN be done.. Thanks again......." Scott Avery Dave's Insight: We all have 24 hours a day. And almost everyone of us fills those 24 hours with something. The only question is with what do we fill those 24 hours? It comes down to our priorities for all of us. If we make reviewing the charts, looking for our setups, wait for the buy signal and then buy when we are supposed to buy a priority then anyone of us can do this consistently and expect consistent results over a series of trades. Thanks Scott for your comment and insight. Look for more benefis to come here at Chart Signals over the next few weeks... Fed Announcement today at 2:15 ET - Keep this in mind as you plan your trading for today.