RUT and NASDQ Rises While SPX Pulls Back...

DJIA 10,099.14 -45.05 -0.44% SP500 1,075.51 -2.96 -0.27% COMPQ 2,183.53 +6.12 +0.28% Russell 2000 610.72 +5.26 +0.87% Exchange NYSE NASD Advancing 1,614 1,576 Declining 1,393 1,076 Oil $74.13 -1.15 Gold $1,089.50 -4.70 SOX 332.84 +1.80 VIX 22.73 -1.23 Index Direction Confirmation VIX Down Yes – SPX SOX Up Yes – COMPQ Strongest Sectors: XLK +0.19%…XLF +0.07%...XLE +0.04% Weakest Sectors: XLI -0.79%...XLU -0.38%...XLV -0.23% Three of nine sectors moved higher on Friday. Technology, Financials, Energy, Consumer Discretionary, Consumer Staples, Materials and Healthcare were stronger than the SPX -0.27%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU Horizontal Breakout: Sideways: XLF, XLE Down Trending: Key Resistance Levels: 1,075 = 875 Breakout Chart Target 1,082 = Nov 9 S1 level 1,087 = Nov 10 Channel low 1,101 = October High Key Support Levels 1,044 - 1,050 = Oct 08 High This past saw wide daily trading ranges on the SPX and other indexes while at the same time bouncing off support and heading higher. On the weekly chart the SPX formed a bullish harami after four straight black candles or down weeks. Look at these Charts… (click image to enlarge) We like the look of these charts going into options expiration week. Watch for continued support bounces from these stocks. (click image to enlarge) Guidance: The SPX closed just below its 10 DMA, while both the COMPQ and RUT closed above. The short term trend is up. The four-month trend is sideways. The twelve-month trend is up. Growing bullish technical evidence suggests it would be wise to prepare for a support bounce continuation. A support bounce following a four week down trend is going to look like a bear flag pattern, however keep in mind that many stock charts have been forming reversal patterns including a short term double bottom. Continue to focus on and trade setups in the direction of the trend on the charts of the stocks you watch and follow your rules. Stay prepared however for a break of support. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL +1.71 QCOM +0.83 GOOG -3.28 BIDU +0.54 NDX 100 stocks stronger than the NDX include RIMM, NIHD, QCOM, INTC, APOL, STLD, MRVL, NWSA, NVDA, FSLR, ILMN, LINTA, TEVA, BRCM, ALRT, AAPL, GENZ, DISH, LRCX, VRTX, MXIM,ORLY, KLAC, ISRG, HSIC, GILD, LIFE, ROST and XLNX. Stocks to Watch on Tuesday Holding Above 30 DMA ALGT, CBST, ZION, FAZ, DLB, NFLX, AMED, CHL, BA, GMCR, MCD, UAUA, AGU, BKC, CAM, CEDC, CREE, V, VPRT, WHR, WLT Moving Above 30 DMA = 1 POT Moving Below 30 DMA = 0 Staying Below 30 DMA VAR, K, MYGN, TDG, WFC, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, FUQI, ICE, IPI, SWN, USO, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Up

Futures Point to a Lower Open....

10:30 am ET - X is moving above Thursday's high... 10:15 am ET - after an early sell that has NOT yet created an entry signal on the SPX bear flag, prices are ralliying from this morning's low but still well below Thursday's close...all sectors are lower...advancing issues are growing...the NDX 100 which only had five positive stocks 30 minutes ago now has 16 stocks in positive territory including: RIMM, NIHD, QCOM, MRVL, NVDA, BRCM, GENZ, BIDU and STLD...X has turned positive and many stocks which opened lower and are still negative for the day are above their open and their candles have turned white.... 9:42 am ET - Apparently China hiked it deposit-reserve ratio over night in an effort to slow growth, which caught traders by surprise. Traders are selling stocks and buying dollars. The Euro is down 135 pips. SPY -1.44 is approaching the low of Thursday which is the high day in the recent bear flag and could generate an entry signal if it continues to go down. Watch for a potential bearish entry signal... BMO – ES -11.50 and NQ -19.00 futures down before the market open pointing to a lower open. AAPL -0.90, AMZN -1.19, GOOG -3.38 and BIDU -3.86 are lower in pre-market trading. The SPX which has been in a down trend for the past four weeks has been in a bear flag rally this week. After a strong up day Thursday futures point to a lower open which if pushes lower after the market opens could create and entry signal for a bear flag…we’ll see how cash markets trade. Follow your rules in any trading actions today. Be logical. SPX Support = 1,050 – 1,044 Resistance = 1,071, 1,079 At the Open on Friday SPY – QQQQ – FAS – BA – CF – DOW – UAUA – ALGT – ALTR – GMCR – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – ACN – AGU – DE – DHR – MA – PCP – POT –

SPX Rises...

DJIA 10,144.19 +105.81 +1.05% SP500 1,078.47 +10.34 +0.97% COMPQ 2,177.41 +29.45 +1.38% Russell 2000 605.46 +9.64 +1.62% Exchange NYSE NASD Advancing 2,343 1,989 Declining 696 686 Oil $75.28 +0.76 Gold $1,094.20 +18.40 SOX 331.04 +7.64 VIX 23.96 -1.44 Index Direction Confirmation VIX Down Yes – SPX SOX Up Yes – COMPQ Strongest Sectors: XLB +1.70%…XLE +1.70%...XLI +1.50% Weakest Sectors: XLF +0.22%...XLU +0.59%...XLV +0.68% All nine sectors moved higher on Thursday. Materials, Energy, Industrials, Consumer Discretionary and Technology were stronger than the SPX +0.97%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU Horizontal Breakout: Sideways: XLF, XLE Down Trending: Key Resistance Levels: 1,075 = 875 Breakout Chart Target 1,082 = Nov 9 S1 level 1,087 = Nov 10 Channel low 1,101 = October High 1,105 - 1,113 = November High Key Support Levels 1,044 - 1,050 = Oct 08 High The question I posed on Wednesday was who is expecting a strong rally now? What a difference a day a day can make. Many stocks in our watch list had strong gains bouncing up from support on Thursday. Guidance: The SPX bounced up from support and crossed its 10 DMA on Thursday and had in highest close in more than week. The SPX formed a bullish engulfing pattern on Wednesday’s spinning top. The short term trend is up. The four-month trend is sideways. The twelve-month trend is up. With Thursday’s support bounce more stocks are beginning to cross above their 30 DMA and resume their up trend. Continue to focus on and trade setups in the direction of the trend on the charts of the stocks you watch and follow your rules. Stay prepared however for a break of support. Growing bullish technical evidence suggests it would be wise to prepare for a potential support bounce similar to the bounces in July and November of last year. See the above charts. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL +3.55 QCOM +0.58 GOOG +1.95 BIDU +5.33 NDX 100 stocks stronger than the NDX include: ATVI, WYNN, JOYG, MRVL, NVDA, STLD, FSLR, NIHD, LRCX, RIMM, ILMN, YHOO, ALTR, PPDI, NWSA, NTAP, TEVA, ADSK, CHRW, ISRG, CERN, BIIB, FLEX, AMZN, PCAR, BRCM,KLAC, BBBY, INFY, XLNX, ESRX, LLTC, MICC, VRSN, LINTA, FISV, MCHP, ROST, AMAT, WCRX, INTC, FWLT, AAPL, CTSH, GILD, AKAM, GRMN, SPLS and VRTX. Stocks to Watch on Friday Holding Above 30 DMA ALGT, CBST, ZION, FAZ, DLB, NFLX, AMED, CHL, BA, GMCR, MCD, UAUA, AGU Moving Above 30 DMA = 8 BKC, CAM, CEDC, CREE, V, VPRT, WHR, WLT Moving Below 30 DMA = 0 Staying Below 30 DMA VAR, K, MYGN, TDG, WFC, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, FUQI, ICE, IPI, SWN, USO, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Up

Futures Point to a Slightly Higher Open...

BMO – ES +4.00 and NQ +6.50 futures are up about two hours before the market open pointing to a slightly higher open. AAPL +0.63, GOOG +1.35 and BIDU +0.89 are higher in pre-market trading. The SPX held above its support again on Wednesday while closing slightly lower -0.22%. The SPX did fail to make a daily higher high and higher low. At this moment Tuesday is the high day and be aware the SPX could be forming a bear flag. Even though we have pointed out since Friday’s post the positive technical evidence developing on the SPX chart, if the short term price action rolls over you should be prepared to trade the actual market direction according to your rules. The Euro is down 16 pips in overnight trading. Oil is up 60 cents in electronic trading. SPY is up 22 cents. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. SPX Support = 1,050 – 1,044 Resistance = 1,071, 1,079 Trading Down: Trading Up: AAPL, BIDU, FAS, CAT, BAC, GS, USO, FCX, UNG, URE, X, AMD Look at these Charts… (click image to enlarge) At the Open on Thursday SPY – QQQQ – FAS – BA – CF – DOW – UAUA – ALGT – ALTR – GMCR – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – ACN – AGU – DE – DHR – MA – PCP – POT –

SPX Closes Near Even on Wednesday...

DJIA 10,038.38 -20.26 -0.20% SP500 1,068.13 -2.39 -0.22% COMPQ 2,147.87 -3.00 -0.14% Russell 2000 595.82 +0.65 +0.11% Exchange NYSE NASD Advancing 1,505 1,301 Declining 1,517 1,380 Oil $74.52 +0.77 Gold $1,075.80 -0.90 SOX 323.40 -0.01 VIX 25.40 -0.60 Index Direction Confirmation VIX Down Yes – SPX SOX Down Yes – COMPQ Strongest Sectors: XLF +0.80%…XLP -0.11%...XLI -0.15% Weakest Sectors: XLB -0.68%...XLV -0.61%...XLU -0.45% Only on of nine sectors moved higher on Wednesday. Financials, Consumer Staples and Industrials were stronger than the SPX -0.22%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU Horizontal Breakout: Sideways: XLF, XLE Down Trending: Key Resistance Levels: 1,075 = 875 Breakout Chart Target 1,082 = Nov 9 S1 level 1,087 = Nov 10 Channel low 1,101 = October High 1,105 - 1,113 = November High Key Support Levels 1,044 - 1,050 = Oct 08 High

BIDU +47.12, +10.83% and MICC +4.96, +6.79% led NDX 100 on Wednesday after reporting strong earnings. The SPX, INDU and COMPQ were just below even for the day while the RUT was just above even. Advancers and decliners were nearly even on both the NYSE and NASDAQ. While eight sectors were lower they were only moderately lower while the leading positive sector for the day was Financials. In addition to the positive technical evidence we shared last night each of the major indexes are near a 10 DMA breakout. A down sloping 10 DMA, a second 10 DMA breakout within three weeks combined with a MACD bullish divergence at a major support level (875) led to a strong rally in July when almost no one expected it. Who is expecting a strong rally now?

Look at these Charts… (click image to enlarge) Guidance: The SPX stayed above support on Wednesday. Technical evidence is increasing for a support bounce continuation. Stay prepared however for a break of support. The short term trend is neutral. The four-month trend is sideways. The twelve-month trend is up. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. Growing bullish technical evidence suggests it would be wise to prepare for a potential support bounce similar to the bounces in July and November of last year. See the above charts. There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL -1.07 QCOM -0.48 GOOG -1.99 BIDU +47.12 NDX 100 stocks stronger than the NDX include: BIDU, MICC, JBHT, CELG, NVDA, EXPE, FWLT, RIMM, BRCM, DELL, ADBE, FLEX, MXIM, COST, MCHP, STX, SBUX, PPDI, AMAT, XLNX, LLTC, BIIB, PCLN, ATVI, ALTR, ORLY, INTU, IACI, INTC, SYMC, ADSK, HSIC, FISV, MRVL and APOL. Stocks to Watch on Thursday Holding Above 30 DMA ALGT, CBST, ZION, FAZ, DLB, NFLX, AMED, CHL, BA, GMCR, MCD, UAUA Moving Above 30 DMA = 1 AGU Moving Below 30 DMA = 1 VPRT Staying Below 30 DMA CEDC, VAR, CREE, K, MYGN, TDG, WFC, WHR, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Neutral

Futures and BIDU Pointing to a Higher Open...

BMO – ES +4.50 and NQ +6.75 futures are up about two hours before the market open pointing to a higher open. AAPL +1.25, GOOG +2.56 and BIDU +41.99 are higher in pre-market trading. BIDU reported better than expected earnings and raised guidance after the close. The stock is up over $40 in pre-market trading and could give more lift to the current support bounce. Take a look at UAUA and the airline stocks: UAUA, AMR, CAL, DAL, LCC The SPX rallied on Tuesday although it did close off about 10 points off its high of the day at 1,070 in the middle of its trading range. You’ll notice that Tuesday’s high was right at horizontal resistance. Along with the other positive technical evidence we have mentioned since Friday’s post there is a bullish divergence forming in the SPX and other broad indexes which is further evidence that the current support bounce could continue. See Tuesday night’s post. The Euro is down 12 pips in overnight trading. Oil is up 15 cents in electronic trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. SPX Support = 1,050 – 1,044 Resistance = 1,071, 1,079, 1,087 Trading Down: Trading Up: AAPL, BIDU, FAS, CAT, BAC, GS, SPG, USO Look at these Charts… (click image to enlarge) At the Open on Wednesday SPY – QQQQ – FAS – BA – CF – DOW – UAUA – ALGT – ALTR – GMCR – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – ACN – AGU – DE – DHR – MA – PCP – POT –

SPX Continues Supports Bounce...

DJIA 10,058.64 +150.25 +1.52% SP500 1,070.52 +13.78 +1.30% COMPQ 2,150.87 +24.82 +1.17% Russell 2000 595.17 +8.68 +1.48% Exchange NYSE NASD Advancing 2,398 1,918 Declining 667 763 Oil $73.75 +1.86 Gold $1,076.70 +11.00 SOX 323.41 +4.55 VIX 26.00 -0.51 Index Direction Confirmation VIX Down Yes – SPX SOX Up Yes – COMPQ Strongest Sectors: XLB +2.43%…XLE +2.10%...XLI +1.93% Weakest Sectors: XLV +0.78%...XLK +0.86%...XLU +1.01% All nine sectors moved higher on Tuesday. Materials, Energy, Industrials and Consumer Discretionary were stronger than the SPX +1.30%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU Horizontal Breakout: Sideways: XLF, XLE Down Trending: Key Resistance Levels: 1,075 = 875 Breakout Chart Target 1,082 = Nov 9 S1 level 1,087 = Nov 10 Channel low Key Support Levels 1,044 - 1,050 = Oct 08 High The SPX regained Monday’s losses, formed a higher high and higher low, had it highest closing level since last Wednesday and confirmed Friday’s hammer. In addition to being at horizontal support, forming a hammer on Friday that was confirmed on Tuesday, forming a potential W bottom pattern, all four broad indices are forming a bullish divergence on the MACD histogram. We know this market can’t go up J, but some positive technical evidence is beginning to accumulate. Look at these Charts… (click image to enlarge) The rally was broad based as advancers led decliners by more than 3 to 1 on the NYSE. All nine sectors moved higher with Materials once again leading all sectors. Airline stocks literally took off today with XAL rising 7.74%. UAUA reported unit revenues that were more than double analyst estimates. Look at these Charts… (click image to enlarge) Guidance: The SPX closed higher and did confirm Friday’s hammer on Tuesday. See Friday’s post for a chart and explanation of Friday’s large hammer in comparison with June 2006. Technical evidence is increasing for a support bounce continuation. Stay prepared however for a break of support. The short term trend is neutral. The four-month trend is sideways. The twelve-month trend is up. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. There are more bearish setups than bullish at this time, however with the SPX at a strong support level, the 1,044 area; growing bullish technical evidence suggests it would be wise to prepare for a potential support bounce similar to the bounces in July and November of last year. There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL +2.07 QCOM +0.40 GOOG +2.97 BIDU -8.22 NDX 100 stocks stronger than the NDX include: CTSH, RYAAY, INFY, STLD, MICC, NIHD, SIAL, URBN, SPLS, PCAR, FAST, JOYG, DTV, BRCM, CTXS, XRAY, FLEX, PCLN, BIIB, FWLT, LBYTA, LRCX, EXPE, NWSA, CERN, HSIC, ADSK, PDCO, FSLR, ORLY, DISH, CHKP, ORCL, CSCO, NTAP, KLAC, INTC, ALTR and EXPD. Stocks to Watch on Wednesday Holding Above 30 DMA ALGT, CBST, ZION, FAZ, DLB, NFLX, AMED, CHL Moving Above 30 DMA = 5 BA, GMCR, MCD, UAUA, VPRT Moving Below 30 DMA = 0 Staying Below 30 DMA CEDC, VAR, CREE, K, MYGN, TDG, WFC, WHR, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Neutral

Futures Point to a Higher Open...

BMO – ES +10.00 and NQ +16.50 futures are up about two hours before the market open pointing to a higher open. AAPL +1.58, AMZN +0.70, GOOG +3.54 and BIDU +2.27 are higher in pre-market trading. Last night is speaking with more than 600 traders there seems to be only about 20% who thought Monday’s price was more bullish that Friday’s price action. Monday was a lower close but made a higher high and higher low. Generally higher highs and lows lead to a short term rally. With the SPX hitting a significant support level at 1,044 and institutions creating a 22 point rally in two hours, that seems to be pretty significant technical evidence that there is buying power around this level. Again I refer you to Friday’s post on the June 8, 2006 hammer as a similar dramatic pull back over four weeks and the buyers creating a similar rally at a support level. Often when so many traders have turned bearish that is when the market finds at least a short term support because everyone that is going to sell has sold. That’s certainly the way 2006 was. We’ll see. Just stay prepared to trade in the down or up based on the technical action. The Euro is up 75 pips in overnight trading. Oil is up 35 cents in electronic trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. SPX Support = 1,050 – 1,044 Resistance = 1,071, 1,079 Trading Down: Trading Up: AAPL, FAS, SPG, USO Look at these Charts… (click image to enlarge) At the Open on Tuesday SPY – QQQQ – FAS – BA – ALTR – GMCR – ALGT – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – UAUA – ACN – AGU – DE – DOW – DHR – MA – PCP – POT –

SPX Pulls Back...Forms Higher Low and Lower Close

DJIA 9,908.39 -103.84 -1.04% SP500 1,056.74 -9.45 -0.89% COMPQ 2,126.05 -15.07 -0.70% Russell 2000 586.49 -6.49 -1.09% Exchange NYSE NASD Advancing 1,080 944 Declining 1,963 1,722 Oil $71.89 +1.69 Gold $1,065.70 +13.50 SOX 318.86 -1.15 VIX 26.51 +0.40 Index Direction Confirmation VIX Up Yes – SPX SOX Down Yes – COMPQ Strongest Sectors: XLP -0.12%…XLK -0.43%...XLV -0.49% Weakest Sectors: XLF -2.01%...XLB -1.61%...XLU -1.14% All nine sectors moved lower on Friday. Consumer Staples, Technology, Healthcare and Consumer Discretionary were stronger than the SPX -0.89%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU Horizontal Breakout: Sideways: XLF, XLE Down Trending: Key Resistance Levels: 1,075 = 875 Breakout Chart Target Key Support Levels 1,044 - 1,050 = Oct 08 High The SPX started higher but turned lower giving back some of Friday’s late gains. While index formed a lower close, each made both a higher high and higher low for the day. Guidance: The SPX is closed above 1,044 support and did NOT confirm Friday’s hammer. See Friday’s post for a chart and explanation of Friday’s large hammer in comparison with June 2006. Look for confirmation of the hammer on Tuesday. Be prepared for either a short term rally or a break of support. The short term trend is down. The four-month trend is sideways. The twelve-month trend is up. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. You are likely to see more bearish setups than bullish at this time, be willing to trade them according to your rules. There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL -1.34 QCOM -0.53 GOOG +2.18 BIDU -5.57 NDX 100 stocks stronger than the NDX include: NIHD, PCLN, ERTS, XRAY, DELL, CERN, SBUX, STX, CEPH, CTXS, EXPE, CTAS, ILMN, NTAP, GOOG, INFY, ADP, TEVA, URBN, MICC, CTSH, PDCO, ADSK, LIFE, HOLX and BBBY. Stocks to Watch on Tuesday Leading Stocks Holding Above 30 DMA ALGT, CBST, ZION, FAZ, DLB, NFLX Moving Above 30 DMA = 1 AMED Moving Below 30 DMA = 3 CEDC, GMCR, MCD Staying Below 30 DMA BA, VAR, CHL, CREE, K, MYGN, TDG, UAUA, VPRT, WFC, WHR, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Down

Futures Point to a Flat Open...

BMO – ES -1.25 and NQ -2.75 futures are down slightly about two hours before the market open. In addition to the hammer and 22 point rise in the last two hours of trading on the SPX, look at the key NDX stocks and how they held at or above their recent support level. They did not make a lower low on Friday like the SPX. Look at these Charts… (click image to enlarge) (the negative change number on the charts is incorrect)

The Euro is up 1 pip in overnight trading. Oil is up 5 cents in electronic trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. It looks as if the markets will open near flat. Watch 1,071 (Jan 29 low) and 1,079, Thursday’s R1 on the SPX if the index does begin to rally. Consider any intra-day pull backs that stay above Friday's low as positive base buidling. SPX Support = 1,050 – 1,044 Resistance = 1,071, 1,079 Look at these Charts… (click image to enlarge) (the negative change number on the charts is incorrect) At the Open on Monday SPY – QQQQ – FAS – BA – ALTR – GMCR – ALGT – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – UAUA – ACN – AGU – DE – DOW – DHR – MA – PCP – POT –

SPX...Stocks Rally Last Two Hours...Forms Hammer...

DJIA 10,012.23 +10.05 +0.10% SP500 1,066.19 +3.08 +0.29% COMPQ 2,141.12 +15.69 +0.74% Russell 2000 592.98 +3.30 +0.56% Exchange NYSE NASD Advancing 1,321 1,458 Declining 1,752 1,224 Oil $70.20 -2.94 Gold $1,052.20 -10.20 SOX 320.01 +7.48 – bullish harami VIX 26.11 +0.03 Index Direction Confirmation VIX Up No – SPX SOX Up Yes – COMPQ Strongest Sectors: XLB +1.87%…XLF +1.16%...XLK +1.01% Weakest Sectors: XLI -0.44%...XLY -0.28%...XLP -0.27% Four of nine sectors moved higher on Friday. Materials, Financials and Technology were stronger than the SPX +0.29%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU Horizontal Breakout: Sideways: XLF, XLE Down Trending: Key Resistance Levels: 1,075 = Sep Resistance Area 1,079 = Feb 4 R1 level 1,087 = Nov 10 Channel low 1,101 = October High Key Support Levels 1,044 - 1,050 = Oct 08 High The SPX fell to the 1,044 horizontal support at 2 pm ET and buyers took over driving the index to a 1,066 close. Check out these Charts... (click image to enlarge) Buyers came in at the major support level of 1,044, originally an important resistance area on October 14, 2008. Each of the four broad indices formed a hammer, bullish harami on Friday. The 1,044 support area would be a logical area for the three week down trend to attract buyers and potentially reverse in the short term. Although without confirmation it may be too soon to come to that conclusion. (click image to enlarge) Friday’s hammer reminds me of the hammer that occurred on June 8, 2006 after a dramatic sell off in May to June of that year. The hammer did not confirm the next day, but was followed by three more down days. That low three days later was just beyond the shadow of the June 8 hammer. While the hammer did not mark the low, it did mark the area where big money determined to be buyers. By July a double bottom was formed and the market moved higher from that support level. (click image to enlarge) Hammers and bullish haramis appeared on several of the sector charts. (click image to enlarge) Hammers also appeared on CREE and other watchlist stocks. (click image to enlarge) I mentioned we would discuss the virtual homework trade on CREE as it relates to stops. A trader can choose to put a stop in the machine and if it is touched it is sold. A trader can also choose to wait a certain amount of time before putting the stop in each day. For example a trader might decide that the first hour is too volatile and wait an hour before putting the stop in the machine each day. Also a trader can choose to only implement the stop at the end of the day. Each approach has advantages and disadvantages. For example with a stop 20 cents below the low on Jan 29 at 55.25 with a stop in the machine would have been stopped out during the first hour. A trader who waits until after the first would have survived but only until shortly before 2 pm ET when that trader is stopped out only to see CREE go 17 cents lower and then rebound. The trader who waits until the end of the day survived being stopped out and ends up positive for the day. The disadvantage to using a stop at the end of the day is that if the stock doesn’t rebound the loss can be larger than planned. So, does one look for a re-entry? I would ask what do you think about the trend of CREE? Do you still think it will continue up? The long and intermediate term trends are still up. Friday’s low is higher than the support low on Jan 15. And it did form a hammer suggesting downward momentum may be coming to an end. A hammer confirmation could be a re-entry for a virtual homework trade. But does anyone who got stopped out actually have the discipline to take a second trade? It could get stopped out too…then that would be two losers in a row. Other bullish candle formations formed on many stocks in our watchlist on Friday as well as hundreds of other charts. (click image to enlarge) Guidance: After falling to the next support level 1,044 the SPX bounced on Friday and rose 22 points while forming a hammer. Look for confirmation of the hammer on Monday. Be prepared for a short term rally, but flexible to trade down if confirmation does not occur. The short term trend is down. The multi-week trend is sideways. The multi-month trend is up. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. Many stocks have shifted to a down trend with a lower high and lower low pattern, be willing to trade them according to your rules. There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL +3.41 QCOM -0.13 GOOG +4.51 BIDU +7.94 NDX 100 stocks stronger than the NDX include: BRCM, AMAT, LRCX, ALTR, RIMM, INTC, CSCO, NVDA, HANS, GENZ, IACI, ORCL, LINTA, LLTC, BIDU, AAPL, DELL, ROST, KLAC, ERTS, ADBE, NTAP, SHLD, XLNX, MXIM, STLD, ISRG, MCHP, CTSH, AMZN, SYMC, YHOO, EBAY, CERN and MRVL. Stocks to Watch on Monday Leading Stocks Holding Above 30 DMA ALGT, CBST, GMCR, ZION, FAZ, DLB, NFLX, MCD Moving Above 30 DMA = 1 CEDC Moving Below 30 DMA = 3 AMED, BA, VAR Staying Below 30 DMA CHL, CREE, K, MYGN, TDG, UAUA, VPRT, WFC, WHR, WMT, GR, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Down

Futures Mixed After Unemployment Report...

1:33 pm ET - SPX hits next support level of 1,050... 11:25 am ET - our CREE virtual trade lesson became even more intriguing as it has rebounded from its first hour sell off...right now it is forming a hammer and bullish harami, the candle pattern may be entirely different by the end of the day...earlier I made reference to if a trader put the stop in the machine...some traders don't put stops in the machine at least for the first hour because of first hour volatility...I will explore this issue in more detail in the Friday after market post... Look at this Chart… (click image to enlarge) 10:30 am ET - a strong support bounce in the last 10 minutes bringing SPX back to its opening level and the NDX +9... 10:05 am ET - after 35 minutes - sectors XLF +0.04, XLV -0.08, XLK -0.09, XLB -0.13...XLE is weakest -0.75... 9:55 am ET - both the SPX -3 and NDX -6 have turned lower from their open... 9:53 am ET - ZION a support bounce setup?... 9:50 am ET - SPG +2.55, +3.64% is rising after reporting earnings and guidance this morning... 9:43 am ET - CREE virtual homework if a trader used 55.25, 20 cents below the Jan 29 low, as their virtual stop and they put their stops in the machine, they just got stopped out... 9:37 am ET - early decliners include HEAT, WCG, AMD, BA, FLS, NFLX, GMCR, BUCY, SYNA, DLB, WAB, GES, HDB, WHR... 9:35 am ET - early risers include UNG, CREE, ZION, CED, WFC, UAUA, SPG, ALGT... 9:30 am ET - SPX opens +1 and the NDX +7... BMO – ES -2.00 and NQ +4.00 futures are mixed in pre-market trading pointing to a flat to lower open. AAPL +1.10, AMZN -0.14, GOOG +2.22 and BIDU +3.08 are mostly higher in pre-market trading. The Unemployment report for January came in at 9.7% down from 10%, surprising many who had feared an increase. Futures rallied from lower levels before the report. It will make for an interesting morning to see if traders buy in response to better than expected news or if good news becomes bad news once again. The Euro is down 40 pips in overnight trading. Oil is up 20 cents in electronic trading. XLE is up 7 cents in pre-market trading. SPY is down 11 cents in pre-market trading. XLF is up 12 cents in pre-market trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. It looks as if the markets will open flat with some separation between the broad SPX and the tech NDX. Watch 1,071 (Jan 29 low) and 1,079, Thursday’s R1 on the SPX if the index does begin to rally. SPX Support = 1,050 – 1,044 Resistance = 1,071, 1,079 Trading Down: Trading Up: ISRG, ESRX, NIHD, PCLN, CERN, HANS, AAPL, VRTX, BRCM, MA, MYGN, FAS, CREE, SPG, USO, UNP, CHL At the Open on Friday SPY – QQQQ – FAS – BA – ALTR – GMCR – ALGT – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – UAUA – ACN – AGU – DE – DOW – DHR – MA – PCP – POT –

SPX Breaks Support Falls to 1,063...

DJIA 10,002.18 -268.30 -2.61% SP500 1,063.11 -34.17 -3.11% COMPQ 2,125.43 -65.48 -2.99% Russell 2000 589.68 -20.98 -3.44% Exchange NYSE NASD Advancing 273 380 Declining 2,855 2,338 Oil $73.14 -3.14 Gold $1,062.40 -49.00 SOX 312.53 -15.22 VIX 26.08 +4.48 Index Direction Confirmation VIX Up Yes – SPX SOX Down Yes – COMPQ Strongest Sectors: XLP -2.03%…XLY -2.53%...XLI -2.62% Weakest Sectors: XLF -4.31%...XLE -4.10%...XLB -3.73% All nine sectors moved lower on Thursday. Consumer Staples, Healthcare, Utilities, Technology, Consumer Discretionary and Industrials were not as weak as the SPX -3.11%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU Horizontal Breakout: Sideways: XLF, XLE Down Trending: Key Resistance Levels: 1,075 = 875 Breakout Chart Target 1,082 = Nov 9 S1 level 1,087 = Nov 10 Channel low 1,101 = October High Key Support Levels 1,044 - 1,050 = Oct 08 High Sellers…sellers…sellers…sellers before the open, sellers at the open and sellers until the close; sellers were in control all day long. Indexes broke short term diagonal support of their recent rally and confirmed a bear flag pattern. Look at these Charts… (click image to enlarge) Decliners led advancers 10 to 1 on the NYSE and 6 to 1 on the Nasdaq. Financials, Energy and Materials stocks were the weakest sectors as oil and gold fell as well. Bonds and the dollar rose as interest rates and the Euro fell. TLT the 20-year bond ETF was up +1.43 or +1.58%. I told you we were going to learn something from the CREE virtual trade homework. The virtual trade entry was either Tuesday above the high of the inside day or Wednesday above the high of the low day. If entered as I teach a stop was set below the low of the low day. The first step is buying when you are supposed to buy. Set the stop and know the target. Next day what happens? An analyst downgrades CREE to Neutral from Buy, the stock falls 4.30 on 3.5 million shares above average volume. The drop doesn’t trigger the stop but does create an immediate virtual loss. This is real life trading and I could not have scripted this any better for a learning experience. The stop is in place and this will be a successful trade as long as the rules are followed. Dave’s Insight: It’s not whether you make money or lose money; it’s whether you follow your rules that makes a trade, a successful trade. Pick your stock and it was probably a bear flag today. Look at these Charts… (click image to enlarge) After Earnings MA -25.47 or -10.29% K -2.78 or -5.04%

Guidance: The SPX breaks support along with the other broad indexes and forms bear flags as we reminded you to watch for on Wednesday night, “watch for potential bear flags if Tuesday’s S1 is broken.” Look for the SPX to fall to the next level of support 1,044 to 1,050 area. The short term trend is down. The multi-week trend is sideways. The multi-month trend is up. The SPX and other broad indexes broke short term support on Thursday. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. Many stocks have shifted to a down trend with a lower high and lower low pattern. There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops.

AAPL closed just above its Jan 29 support QCOM penetrated its Jan 29 support GOOG closed at its Jan 29 support BIDU formed a bearish harami well above support but forming a potential lower low prior to its earnings on Feb 9 AAPL -7.18 QCOM -1.45 GOOG -14.04 BIDU -8.92 NDX 100 stocks weaker than the NDX include: STLD, JOYG, FWLT, NVDA, ALRT, WYNN, MRVL, GENZ, XLNX, NIHD, INFY, FSLR, LOGI, CTSH, VRTX, DISH, ADSK, MICC, STX, NWSA, CELG, MXIM, LBTYA, PCLN, FLEX, AMAT, AKAM, QOCM, NTAP, AAPL, MCHP, PCAR, URBN, EBAY, INTC, KLAC, LLTC and ISRG. Stocks to Watch on Friday Leading Stocks Holding Above 30 DMA ALGT, CBST, AMED, GMCR, VAR, BA, ZION, FAZ, DLB, NFLX, MCD, GR Moving Above 30 DMA = 0 Moving Below 30 DMA = 11 CEDC, CHL, CREE, K, MYGN, TDG, UAUA, VPRT, WFC, WHR, WMT Staying Below 30 DMA ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Down

Futures Point to a Lower Open...

BMO – ES -11.50 and NQ -14.50 futures are lower in pre-market trading pointing to a lower open. AAPL -2.63, AMZN -0.95, GOOG –3.32 and BIDU -5.77 are lower in pre-market trading. The Euro is down 76 pips in overnight trading. Oil is down 1.19 in electronic trading. XLE is down 50 cents in pre-market trading. SPY is down 90 cents in pre-market trading. XLF is down 12 cents in pre-market trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. It looks as if the markets will open lower this morning penetrating Tuesday’s S1 and opening near Tuesday’s S3 level. The selling pressure overnight is related to concerns of European debt in Greece, Spain and Portugal. CSCO reports strong earnings and guidance and the retails sales report is strong. It will be interesting to see if U.S. cash buyers will follow the European lead and trade lower or use this as a buying opportunity. 1,087 is S3 on Tuesday’s large white candle, if this breaks follow your rules for your stops and for bearish entry positions. SPX Support = 1,082, 1,175, 1,050 – 1,044 Resistance = 1,103 Trading Down: X, FCX, CAT, SNDK, POT, MOS, GS, CREE, USO, AGU, TSL, WMT, DOW, ZION, AKAM, IPI Trading Up: At the Open on Thursday SPY – QQQQ – FAS – BA – ALTR – GMCR – ALGT – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – UAUA – ACN – AGU – DE – DOW – DHR – MA – PCP – POT –

SPX Settles Back to Tuesday's S1 Level...

DJIA 10,270.55 -26.30 -0.26% SP500 1,097.28 -6.04 -0.55% COMPQ 2,190.91 +0.85 +0.04% Russell 2000 610.66 -3.39 -0.55% Exchange NYSE NASD Advancing 1,169 1,097 Declining 1,861 1,545 Oil $76.90 -0.33 Gold $1,111.40 -6.00 SOX 327.75 -0.95 VIX 21.60 +0.12 Index Direction Confirmation VIX Up Yes – SPX SOX Down No – COMPQ Strongest Sectors: XLK +0.23%…XLY +0.07%...XLI -0.60% Weakest Sectors: XLV -1.34%...XLB -1.15%...XLF -1.09% Only two of nine sectors moved higher on Wednesday. Technology and Consumer Discretionary were stronger than the SPX -0.55%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLE, XLI, XLU Horizontal Breakout: XLF Sideways: Down Trending: Key Resistance Levels: 1,101 = October High 1,105 - 1,113 = November High 1,119 = December High 1,025 - 1,133 = 1,075 BO chart target - Sep 08 Low 1,145 = 1,133 BO chart target – Dec 31 Low 1,155 = chart target Key Support Levels 1,087 = Nov 10 Channel low 1,082 = Nov 9 S1 level 1,075 = 875 Breakout Chart Target 1,050 = Oct 08 High Large Nasdaq stocks AAPL, QCOM, AMZN, GOOG, BIDU, PCLN, ISRG and FSLR all had an up day and were among leading NDX stocks. This is the first day in a while that this has happened. This lifted the COMPQ into positivie territory at the close. CREE broke the high of the on Wednesday. So if you took the homework challenge you are in a virtual trade. The first step is buying when you are supposed to buy. Set the stop and know the target. Material stocks including steel stocks ATI, FCX, X, AKS, TIE and AA pulled back on Wednesday. Financial stocks were also mostly lower with GS and ICE up slightly for the day. Semis MRVL, STM, NVLS and NSM also moved higher. Stocks in a support bounce pulling back to S1: GR, PCP Stocks rising after confirming a bullish harami: POT, MOS Stocks still above the High of the Low Day: AGU, CHL, FLS, IPI, MCD, PCLN, SPG, UNG, USO Stocks with earnings still to come include: DE, DECK, DLB, K, MA, NVDA, WLT After Earnings SWK +2.09 or +3.85% (BDK) MYGN +0.73 or +3.04% DLB +1.81 or +3.62% in after hours trading STLD -0.82 or -5.15% in after hours trading Guidance: The SPX paused at 1,103 the R1 of the Jan 22 large black candle. The positive here is that the pause stay above 1, 096 the S1 of Tuesday’s large white candle. Generally a pull back that stays above the recent S1 is positive for the short term trend. If the SPX gets through the Jan 22 R1 look for it to rise to the next resistance level of 1,113 to 1,119, which is also the area of the 30 DMA. The short term trend is neutral after Wednesday’s pause. The multi-week trend is sideways. The multi-month trend is up. The SPX and other broad indexes paused on Wednesday. If 1,103 is broken expect this support bounce to continue but watch for potential bear flags if Tuesday’s S1 is broken. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. Many stocks have shifted to a sideways trend and still offer support bounce trades just not from a higher low. There are still some up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL +3.37 QCOM +0.37 GOOG +9.70 BIDU +23.60 NDX 100 stocks stronger than the NDX include: NWSA, BIDU, RIMM, IACI, GENZ, ATVI, PCLN, YHOO, GOOG, AAPL, MRVL, JBHT, SRCL, FSLR, STX, MCHP, FISV, ERTS, APOL, XLNX, CELG, QCOM, NVDA, AMZN FLEX, KLAC, EBAY, CHKP, MSFT, ALTR, AKAM and DELL. Stocks to Watch on Thursday Leading Stocks Holding Above 30 DMA ALGT, CBST, AMED, GMCR, VAR, BA, CEDC, ZION, K, FAZ, DLB, WFC, NFLX, VPRT, CHL, MCD, CREE, GR, TDG, UAUA, WHR Moving Above 30 DMA = 2 MYGN, WMT Moving Below 30 DMA = 0 Staying Below 30 DMA ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Neutral

Look for a Slightly Lower Open...

9:37 am ET - it is very early so we will not jump to conclusiions yet, but if you did your virtual homework you have a paper position in CREE by now and CREE is on the run this morning inspite of the modestly lower open...one way or another we are going to learn something today... BMO – ES -3.00 and NQ -3.50 futures are lower in pre-market trading pointing to a higher open. AAPL -0.98, AMZN -1.13, GOOG -2.89 and BIDU +11.59 are mostly lower in pre-market trading. The Euro is down 24 pips in overnight trading. Oil is up 67 cents in electronic trading. XLE is down 4 cents in pre-market trading. SPY is down 56 cents in pre-market trading. XLF is down 5 cents in pre-market trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. It looks as if the markets will open slightly lower this morning. A pause at short term resistance is typical. What we be looking for is if U.S. traders become sellers too or if use the sell off overnight as a buying opportunity. So watch the trading action around SPX 1,103 after the open. 1,096 is S1 on Tuesday’s large white candle, if this holds watch for support bounce continuation. SPX Support = 1,082, 1,175, 1,050 – 1,044 Resistance = 1,103 Trading Down: WHR, X, FCX, CAT, SNDK Trading Up: POT, MYGN, MOS, GS, MCD, CREE,USO, AGU, TSL, WMT, UNG, DOW, ZION, AKAM, IPI Look at these Charts… (click image to enlarge) At the Open on Wednesday SPY – QQQQ – FAS – BA – ALTR – GMCR – ALGT – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – UAUA – ACN – AGU – DE – DOW – DHR – MA – PCP – POT –

SPX Support Bounce Continues on Tuesday...

DJIA 10,296.85 +111.32 +1.09% SP500 1,103.32 +14.13 +1.30% COMPQ 2,190.06 +18.86 +0.87% Russell 2000 614.05 +4.80 +0.79% Exchange NYSE NASD Advancing 2,349 1,509 Declining 700 1,170 Oil $76.20 +1.77 Gold $1,117.40 +13.10 SOX 328.70 +2.98 VIX 21.48 -1.11 Index Direction Confirmation VIX Down Yes – SPX SOX Up Yes – COMPQ Strongest Sectors: XLV +2.07%…XLI +1.91%...XLP +1.44% Weakest Sectors: XLB +0.32%...XLU +0.81%...XLF +0.96% All nine sectors moved higher on Tuesday. Healthcare, Industrials, Consumer Staples, Consumer Discretionary and Energy were stronger than the SPX +1.30%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLE, XLI, XLU Horizontal Breakout: XLF Sideways: Down Trending: SPX Key Resistance Levels: 1,101 = October High 1,105 - 1,113 = November High 1,119 = December High 1,025 - 1,133 = 1,075 BO chart target - Sep 08 Low Key Support Levels 1,087 = Nov 10 Channel low 1,082 = Nov 9 S1 level 1,075 = 875 Breakout Chart Target 1,050 = Oct 08 High CREE broke the high of the inside day but still has not broken the high of the low day. If you used the inside day you may have entered your homework virtual trade. If not you are still waiting for the break of the high of the low day. ATI, FCX, X, AKS, TIE and AA moved higher from their lower low. Financials IVZ, STT, GS, MS, TROW, ICE, PRU, KEY and SPG moved higher on Tuesday. ZION was flat down 1 cent. Semis MRVL, MU, WFR, LLTC, STM, SNDK, NVLS, TER and NSM also moved higher. Stocks continuing a support bounce: GR, PCP, ZION Stocks confirming bullish haramis: BA, DE, DHR, POT, MOS, SNDK Stocks moving above the High of the Low Day: AGU, AMED, CHL, FLS, IPI, MCD, PCLN, SPG, UNG Stocks with earnings still to come include: DECK, DLB, K, MA, MYGN and WLT. After Earnings WHR +6.17 or +8.11% HOLX +1.33 or +8.72% DOW -1.06 or -3.70% Guidance: The SPX broke through the 1,090 resistance and rose to 1,103 the R1 of the Jan 22 large black candle. This is a key short term resistance. If the SPX gets through R1 look for it to rise to the next resistance level of 1,113 to 1,119, which is also the area of the 30 DMA. The short term trend is up. The multi-week trend is sideways. The multi-month trend is up. The SPX and other broad indexes continued to bounce on Tuesday. You may have been stopped out today on certain down trending positions on the strength of the SPX and INDU rally. If 1,103 is broken expect this support bounce to continue but watch for potential bear flags if the two day rally can’t break through short term resistance. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. Many stocks have shifted to a sideways trend and still offer support bounce trades just not from a higher low. There are still some up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL +1.13 QCOM -0.51 GOOG -1.90 BIDU +0.50 NDX 100 stocks stronger than the NDX include: HOLX, FLEX, STX, FWLT, FAST, WCRX, MICC, CEPH, VRTX, NTAP, XRAY, GENZ, MXIM, RIMM, ORCL, GRMN, CMCSA, JOYG, SPLS, ISRG, LIFE, LINTA, PDCO, ERTS, BIIB, BRCM, NWSA, ALTR, HSIC, BBBY, STLD, ESRX, ATVI, TEVA, ORLY, ILMN and LRCX. Stocks to Watch on Wednesday Leading Stocks Holding Above 30 DMA ALGT, CBST, AMED, GMCR, VAR, BA, CEDC, ZION, K, FAZ, DLB, WFC, NFLX, VPRT, CHL, MCD, CREE Moving Above 30 DMA = 4 GR, TDG, UAUA, WHR Moving Below 30 DMA = 0 Staying Below 30 DMA ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, WMT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, MYGN, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Up

Futures Point to a Slightly Higher Open...

9:45 am ET - WHR is gapping up post earnings this morning...UAUA, CGA, FCX, TSL ICE, DE, BUCY, GES and X are moving higher... BMO – ES +2.50 and NQ +3.75 futures are higher in pre-market trading pointing to a higher open. AAPL +0.75, AMZN +0.33, GOOG +0.00 and BIDU +1.32 are higher in pre-market trading. The Euro is up 16 pips in overnight trading. Oil is up 67 cents in electronic trading. XLE is up 20 cents in pre-market trading. SPY is up 24 cents in pre-market trading. XLF is up 2 cents in pre-market trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. We will be looking for the short term technical support bounce to continue on Tuesday morning and will stay prepared if the bounce fails and support breaks, we will look for price to fall to the next support level. SPX Support = 1,082, 1,175, 1,050 – 1,044 Resistance = 1,103 Trading Down: ISRG, JEC, DOW, AMD Trading Up: WHR, FCX, X, CAT, X, HDB, TSL, GS, IPI, SNDK, POT, AKAM, USO Look at these Charts… (click image to enlarge) At the Open on Tuesday SPY – QQQQ – FAS – BA – ALTR – GMCR – ALGT – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – UAUA – ACN – AGU – DE – DOW – DHR – MA – PCP – POT –

Stocks Open Higher, Close Higher in Support Bounce...

DJIA 10,185.53 +118.20 +1.17% SP500 1,089.19 +15.32 +1.43% COMPQ 2,171.20 +23.85 +1.11% Russell 2000 609.25 +7.21 +1.20% Exchange NYSE NASD Advancing 2,414 1,726 Declining 650 991 Oil $74.43 +1.54 Gold $1,104.30 +21.30 SOX 325.72 +9.65 VIX 22.59 -2.03 Index Direction Confirmation VIX Down Yes – SPX SOX Up Yes – COMPQ Strongest Sectors: XLB +3.98%…XLE +3.30%...XLF +1.69% Weakest Sectors: XLV +0.58%...XLU +0.64%...XLP +0.76% All nine sectors moved higher on Monday. Materials, Energy, Financials and Industrials were stronger than the SPX +1.43%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLE, XLI, XLU Horizontal Breakout: XLF Sideways: Down Trending: Key Resistance Levels: 1,087 = Nov 10 Channel low 1,101 = October High 1,105 - 1,113 = November High 1,119 = December High Key Support Levels 1,082 = Nov 9 S1 level 1,075 = 875 Breakout Chart Target 1,050 = Oct 08 High Stocks, gold and oil rallied on Monday delivering the short term technical bounce that seemed probable looking at the charts at the end of last week. The rally was led by Material stocks that had fallen -14.8% over the past three weeks. More stocks have transitioned from up trending to sideways trending but there are still up trending stocks to trade should you choose. Remember the homework for a virtual trade on CREE. ATI, FCX, X, AKS, NEM, EMN, ARG, TIE and DOW all gained more than 5%. AA +4.95% just missed the cut. Financials which were relatively stronger last week were led by regional banks ZION, RF and followed by IVZ, NTRS, STT, GS, MS, TROW, ICE, PRU, KEY and SPG, all rose more than 2%. Semis also rallied led by AMD, MRVL, MU, WFR, LLTC, KLAC, STM, SNDK, NVLS, TER and NSM, all up more than 3%. Stocks continuing a support bounce: GR, PCP, ZION Stocks forming bullish haramis: BA, DE, DHR, POT, MON, MOS, SNDK Stocks above or near the High of the Low Day: AGU, AMED, BKC, CHL, CREE, FLS, HANS, IPI, MCD, PCLN, SPG, UNG Stocks with earnings still to come include: DECK, DLB, DOW, K, MA, MYGN, WHR and WLT. Guidance: The SPX bounced off the 1,075 support area and rose to the 1,090 resistance. The short term trend is neutral. The multi-week trend is sideways. The multi-month trend is up. The SPX and other broad indexes began their short term support bounce that we said was due in Friday’s post. Lower your stops on the chart on your down trending positions to protect profits if a support bounce continues. The 1,075 support area did NOT break on Monday. The next level of SPX support is still 1,044 - 1,050. Look for down trending setups on stocks that have shown reversal patterns or that are breaking support if the SPX breaks support. Also watch for potential bear flags if Monday’s rally leads to lower highs. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. Yes, there are still some up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops. AAPL +2.66 QCOM +0.58 GOOG +3.07 BIDU +13.97 NDX 100 stocks stronger than the NDX include: NVDA, STX, MRVL, AKAM, STLD, WYNN, RYAAY, PCLN, DISH, FLEX, FSLR, LLTC, DTV, KLAC, BIDU, NTAP, FWLT,EXPE, BRCM, URBN, JOYG, ERTS, AMAT, MCHP, CERN, ALTR, MICC, LBTYA, DELL, VRTX, MXIM, CTSH, SYMC, HANS, ESRX, SBUX, NIHD and LRCX. Stocks to Watch on Tuesday Leading Stocks Holding Above 30 DMA ALGT, CBST, AMED, GMCR, HANS, VAR, BA, CEDC, ZION, K, FAZ, DLB, WFC, NFLX, VPRT Moving Above 30 DMA = 3 CHL, MCD, CREE Moving Below 30 DMA = 0 Staying Below 30 DMA ESI, SNDK, DECK, HANS, JEC, MA, UAUA, BYI, ACN, FLS, TDG, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, GR, URE, GS, HEAT, WHR, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, WMT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, MYGN, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Neutral

Futures Point to a Higher Open...

3:00 pm ET - remember the virtual trade homework assignment from last week on CREE, 20 cents above the high of the low day...not there yet, but getting close... 1:20 pm ET - Stocks at or near High of the Low Day - AMED, AKAM, CREE, X, AGU, CBST, CHL, FLS, HANS, IPI, MCD, SPG, SWN, TSL, UNG, WAB Support Bounce Stocks - GR, PCP, ZION Monday's price action is continuing this morning's support bounce.... 10:40 am ET - AKAM is breaking above the high of the low day...CREE is still an inside day, bullish harami... 10:20 am ET - all sectors are moving higher led by Materials, Energy and Financials...FCX, X, AKS, NTRS, RF, MET, FAS, ZION are breaking or near breaking Friday's high... 9:45 am ET - Energy, Materials and semiconductor stocks are the early leaders Monday...since most charts are forming inside day, bullish harami type patterns and few are breaking the high of the low day at this moment, we'll wait to see if this support bounce holds....but our chart stocks AKAM, MA, X and CREE are up nicely at this time BMO – ES +6.75 and NQ +5.25 futures are higher in pre-market trading pointing to a higher open. AAPL -0.56, AMZN -2.15, GOOG +4.35 and BIDU +6.26 are mixed in pre-market trading. The Euro is up 58 pips in overnight trading. Oil is up 52 cents in electronic trading. XLE is up 65 cents in pre-market trading. SPY is up 83 cents in pre-market trading. XLF is up 9 cents in pre-market trading. Continue to watch XLF as a key to a support bounce rally in the SPX as it is doing this morning. Follow your rules in any trading actions today. Be logical. We will be looking for short term technical support bounce and prepared if support breaks look for price to fall to the next support level. SPX Support = 1,175, 1,050 – 1,044 Resistance = 1,085, 1,103 Trading Down: AMZN, AAPL, ESI, GOOG Trading Up: FAS, GS, POT, XLF, X, BUCY, CREE, CHL, CAT, MCD, USO, MSFT, VRTX, AKAM, CTXS Look at these Charts… (click image to enlarge) At the Open on Monday SPY – QQQQ – FAS – BA – ALTR – GMCR – ALGT – SHLD – CREE – STX – ZION – STT – NTRS – DECK – ISRG – BAC – INFY – X – AAPL – AKAM – AMZN – NVDA – SNDK – BUCY – PCLN – UAUA – ACN – AGU – DE – DOW – DHR – MA – PCP – POT –