Markets Pull Back on Weaknesses in Financial Stocks

DJIA - 139.88, -1.19% SP500 - 15.73, -1.21% NASDAQ Comp. - 9.34, -0.38% Russell 2000 - 6.12, -0.81% NYSE NASD Advancing 1,039 1,217 Declining 2,058 1,646 Oil $113.01 -$1.44 Gold $814.60 -$13.70 $SOX 375.28 +1.14 Strongest Sectors: XLB +0.83...XLP +0.70%...XLK +0.21% Weakest Sectors: XLF -5.06%...XLY -1.31%...XLU -1.17% Oil and gold were down again on Tuesday while the dollar was slightlyhigher. Ag-related moved higher on Tuesday, a support bounce in a down trend. Coal and steel stocks were mixed with mostly small moves in price. Financial stocks were weak today with the XLF dropping over 5% and continuing their sideways trend of the past three and a half weeks. Financial stocks were led lower when UBS reported another quarterly loss, its fourth in a row, and J.P. Morgan (JPM) dropped over 9% due to an analyst downgrade. JPM is in the DJIA and was a major factor in its large move down on Tuesday. GS shares also fell when an analyst cut their third-quarter earnings estimate. Index Commentary The DJIA formed a lower high an lower low…closed below the low of the high day with a bearish engulfing pattern, right at its 50 DMA…the index did stay above the S1 level of Friday’s large white candle…for some short-term traders this could represent a short-term exit signal in DIA or stocks in the index that had the same chart patten…this is a counter trend move at this time and potentially is the beginning of a bull flag. The SPX formed a lower high and lower low…closed below the low of the high day with a bearish engulfing pattern, just below its 50 DMA…this is a counter trend move that could represent an exit point for some short-term traders on the SPY or stocks with the same pattern…is potentially the beginning of a bull flag. The Nasdaq was the strongest broad index of the day, closed just below it 200 DMA while forming a potential bearish harami…bounce up from Monday’s S1 level…index still in an up trend. The SOX moved up for the sixth straight day formed an inside day at just above horizontal resistance of 370…the SOX is pausing between its 50 and 200 DMA. The RUT formed a potential bearish harami above its 200 DMA…the index rallied at Mondays’ S1 level. Stock Commentary Up Trending RIMM confirmed Monday’s bearish harami moving near Friday’s S2 level…still above 20, 30, 50 and 200 DMA AAPL continued to move higher forming a higher low and higher high…a sell off did occur in the 180 horizontal resistance area AMZN formed a potential bearish harami well above Monday’s S1 level…a modest pullback consider it large move up on Monday Down Trending BIDU formed a bullish harami and still closed below its 20, 30, 50 and 200 DMA POT formed an inside day and closed above its 200 DMA FWLT broke horizontal support at 50…the stock did break report instead of bouncing BUCY formed a bullish engulfing pattern at horizontal support. AGU rallied above its 200 DMA…a counter trend move at this time PCLN formed a bearish harami after a one day bounce Sideways Trending FSLR formed a bullish harami in the area of horizontal support in a sideways trend Tuesday’s Action Moving Up: POT, BIDU, MON, SOHU, AAPL, AGU, FSLR, STRA, ANR, BUCY, X, CF, USUS, CLF, MOS SCHN, MTL Moving Down: GS, MA, FWLT, RIMM, MS, DECK, LEH, V, PCLN, IBM, DRYS, MER, USO, NUE, BTU, AMZN, GRMN, EBAY Intermediate Term Market Trend: Up Short Term Market Trend: Up

Markets Pull Back...Oil Continues Down Trend

12:00 ET DJIA -76...SPX -7...Nasdaq -2...RUT -4...SOX +1...Oil -$1.90 Markets are pulling back Tuesday morning. The DJIA has formed a slightly lower high and low and is above its 50 DMA and well above Friday's S1 level. Appears to be price fluctuation at this moment. The SPX is forming an inside holding above its 50 DMA. The Nasdaq is forming an inside day at its 200 DMA. The RUT is forming an inside day well above its 200 DMA and above Monday S1 level. The SOX is forming an inside day well above its 50 DMA. It appears as of midday that the current price action is a typical pause or fluctuation of the market not a change is the current up trend. Watch key support levels to verify whether price action stays above support or breaks below. Tuesday's Action Moving Up: BIDU, POT, MON, AAPL, FSLR, SOHU, CF, CLF, MOS, X, STRA, AGU, UAUA, EXPE, MTL, SCHN, JASO Moving Down: GS, MA, FWLT, MS, RIMM, PCLN, IBM, V, DRYS, BTU, MER, AMZN, LEH, NUE, USO

RUT, Nasdaq, SOX Rise...Oil and Gold Fall Again

DJIA + 48.03, +0.41% SP500 + 9.00, +0.69% NASDAQ Comp. + 25.85, +1.07% Russell 2000 + 16.76, +2.28% NYSE NASD Advancing 1,940 2,012 Declining 1,163 877 Oil $114.45 -$0.75 Gold $828.30 -$36.50 DXY 76.35 +0.29% $SOX 374.14 +6.95 Strongest Sectors: XLY +3.06...XLF +1.69%...XLU +1.10% Weakest Sectors: XLE -0.04%...XLV +0.03%...XLB +0.13% As we have stated several times this market is being led by small caps. The Nasdaq and SOX have started moving up again over the past week. Oil and gold were down on Monday while the dollar was higher. Ag-related, coal and steel stocks also moved lower on Monday. Index Commentary The DJIA closed above its 50 DMA for the second day in a row...formed a spinning top...if a pull back occurs watch the S1 level of Friday's candle The SPX closed above its 50 DMA for the first time since June 5...if a pullback occurs watch the S1 level of Friday's candle The Nasdaq once again got support from a strong SOX index...closed two points above its 200 DMA...watch to see if sellers are able to push the index back with selling at 200 DMA

The RUT traded above its 200 DMA for the second day in a row...traded within 6 points of horizontal resistance at 763 before pulling back to 751...a successful breakout of 763, which has not happened yet, would give an intermediate term chart target of 870

Stock Commentary Up Trending RIMM formed potential bearish harami in up trend…above Friday’s S1…above 20, 30, 50 and 200 DMA AAPL closed above 50 DMA…nearing 180 horizontal resistance area AMZN broke through horizontal resistance on better than double average volume…intermediate term chart target 107 Down Trending BIDU closed below its 20, 30, 50 and 200 DMA…broke into earnings gap POT broke 170 horizontal support and closed below 200 DMA FWLT fell to horizontal support at 50…watch for support break or bounce BUCY moved down following Friday’s bear flag break AGU broke horizontal support and 200 DMA after Friday’s break of bear flag PCLN support bounce counter trend…below 200, 50, 30 and 20 DMA…beginning of earnings bear flag Sideways Trending FSLR fell into area of horizontal support in a sideways trend Monday’s Action Moving Up: AMZN, PCLN, AAPL, STRA, MA, V, GS, DECK, GRMN, UAUA, BRCM, CELG, EXPE Moving Down: BIDU, POT, FSLR, CF, X, MOS, ANR, CLF, AGU, SCHN, BTU, MEE, CNX, SINA, RIMM, IBM, IPI, FLWT, NIHD, NUE BUCY, FNM Intermediate Term Market Trend: Up Short Term Market Trend: Up

The Trend Is Your Friend Until the End

12:51 ET DJIA +76...SPX +12...Nasdaq +34...RUT +16...SOX +8...Oil -1.00 The broad indices are moving higher on Monday while oil is moving lower. A theme we have grown accustomed to over the past 3 and a half weeks. All sectors are higher except XLE and XLB. Monday's Midday Action Moving Up: AMZN, MA, GS, AAPL, PCLN, DECK, V, UAUA, STRA, DRYS, GRMN, MS, LEH, BRCM Moving Down: BIDU, POT, CF, MOS, ANR, FSLR, X, CLF, AGU, SCHN, CNX, MEE, BTU, IPI, USO, SINA, NUE, FWLT, MON, IBM, FNM, JASO We are on the road today, so we won't be posting again until later this evening...

Friday a Big Day as Sellers Push Oil Lower, Buyers Push Stocks Higher

DJIA + 302.89, +2.65% SP500 + 30.25, +2.39% NASDAQ Comp. + 58.37, +2.48% Russell 2000 + 20.89, +2.93% NYSE NASD Advancing 2,366 2,052 Declining 717 829 Oil $115.20 -$4.82 Gold $864.80 -$13.10 DXY 75.85 +1.22% $SOX 367.19 +7.54 Strongest Sectors: XLY +4.76...XLI +3.45%...XLF +3.44% Weakest Sectors: XLE -1.69%...XLB -0.41%...XLU +0.30% Oil and gold were down on Friday. Macro economic softness and a rising dollar seemed to behind the drop in oil and gold. Ag-related, coal and steel stocks also moved lower on Friday. With the new technical evidence on the chart of the RUT, Nasdaq, DJIA and SPX, we have changed our Intermediate Term trend status to Up. Keep in mind that the decline in oil prices has been a major factor underlying the strong rise in the broad indices over the last three weeks. Should the macro-economic factors, like weakness in demand, begin to change oil prices could reverse and that could lead to a reversal in stock prices. The technical evidence indicates a chart target of 98.50 for oil and we believe that a continuation of the down trend in oil prices is the more likely outcome. Short-term factors like weather or Middle East tensions could cause oil prices to fluctuate to the upside, but would seem unlikely to reverse the intermediate term down trend. Index Commentary The DJIA broke above its 50 DMA…after bouncing down from its 50 DMA yesterday, the break indicates buyers are becoming stronger and seller weaker than they were just yesterday…this is a higher high to go with the recent higher low…this is the second higher high and higher low since the market low three weeks ago…the 2-line MACD crossed above its zero-line today further confirming the new up trend. The SPX after a one-day pull back formed a bullish engulfing pattern that bounced off of its 20 and 30 DMA…formed a new high above Wednesday’s high and a point below its 50 DMA…broke out of it consolidation pattern with a short term chart target of 1,348. The Nasdaq on Thursday formed a shooting star and a potential bearish harami at its 50 DMA that did NOT confirm on Friday…bounced off its 50 DMA and moved over half the distance to its 200 DMA…short term chart target is 2,442. The SOX moved up for the fifth straight day approaching horizontal resistance of 370 and its 50 DMA at 368.9...a breakout of 370 gives a chart target of 410…the SOX continues to give strength to the strong move in the Nasdaq. The RUT broke out of its 200 DMA for the second time in three day a bullish sign with a bullish engulfing pattern after a one-day pullback,…short term chart target is 758. Stock Commentary MA bounced off 200 DMA with a bullish engulfing pattern RIMM breaks through 127.50 resistance...intermediate term chart target 152.50 DECK large white candle closes above 30 DMA after bullish engulfing on Thursday AAPL breaks through horizontal resistance and closes above 30 DMA...chart target 177.50 GS potential bullish harami at support in a sideways trend AMZN bullish engulfing pattern in horizontal earnings flag...new high close V large white candle outside day at support...potential double bottom with bullish divergence in 2-line MACD ESRX bullish engulfing pattern in horizontal earnings flag...new high close...resistance at 74 MS potential horizontal resistance breakout...at 200 DMA...60 chart target on breakout UAUA breakout horizontal resistance at 10.20...short-term chart target 13.60 Friday’s Action Moving Up: MA, RIMM, DECK, AAPL, GS, AMZN, V, ESRX, STRA, MS, UAUA, CELG, DRYS, LEH, EBAY, MER Moving Down: BIDU, FSLR, POT, MOS, X, CF, SCHN, USO, AGU, FWLT, CNX, BUCY, ANR, IPI, MEE, NUE, BTU, FNM Intermediate Term Market Trend: Up Short Term Market Trend: Up

Oil Down Almost $4, Stocks Rise Big

In out Tuesday August 5 post we wrote this support break gives a chart target in the area of $98.50. Some readers thought we had rolled off the barrel. Time will tell, but we hope you are not surprised to see oil down $3.97 to $116.o5. We are NOT. We hope you are also not surprised that the markets are up big today. If you are you've not been getting the point of what we have been posting over the past three weeks. Markets are up strong. This should be no surprise since we have been emphasizing the shift in trend over the past three weeks. Dave's Insight: One of the key responsiblilites of a trader is to determine the difference between price fluctuation and trend change. The DJIA is above yesterday's high and above its 50 DMA. The SPX is also above Thursday's high and approaching its 50 DMA. The Nasdaq is 20 points above Thursday's high and has bounced off its 50 DMA. The RUT is back above Wednesday's high and is breaking back above its 200 DMA. As we have been stating for weeks this is the area of the market, small cap, that is leading this market higher. The SOX is up over 7 points which bodes positive the technology, Nasdaq, stocks. Friday's Action Moving Up: MA, RIMM, AAPL, AMZN, STRA, GS, V, DECK, MS, CELG, SOHU, PCLN, LEH, UAUA, ESRX, EBAY, BRCM, MON, DRYS Moving Down: FSLR, POT, X, CF, MOS, BIDU, SCHN, AGU, USO, FWLT, NUE, MEE, IPI, BTU, BUCY, MTL, FNM, CNX

Futures Up in Pre-Market on Friday

Futures are up in pre-market trading about two hours before the open...DJIA +35...S&P +4...Nasdaq +7...Russell +2.90 We're teaching today so it we'll be back around mid-day for a brief recap. In the meantime trade the way you know you should trade...Focus on trend, key support and resistance levels and momentum. Review the posts from the past couple of days to be fresh on the index and stock technicals. What's the Intermediate Term Trend? Neutral What's the Short Term Trend? Up with a one day pull back. What are the key support levels? Tuesday's S1 and nearby Moving Averages. What are the key reistance levels? Highs this week and nearby Moving Averages that are above current levels. Stay Focuses and Best of Success today!

Oil Up, Down and Up...Stocks Down, Up and Down

DJIA - 224.64, -1.93% SP500 - 23.12, -1.79% NASDAQ Comp. - 22.64, -0.95% Russell 2000 - 12.49, -1.72% NYSE NASD Advancing 694 986 Declining 2,364 1,879 Oil $120.02 +$1.44 Gold $877.90 -$5.10 DXY 74.972 +1.15% $SOX 359.65 +5.45 Strongest Sectors: XLU -0.08%...XLK -0.17%...XLB -0.31% Weakest Sectors: XLF -4.93%...XLI -3.36%...XLY -1.96% Oil was up then down and then up and in that almost perfect correlation we have been posting about for the past three weeks, stocks did the opposite. As oil dropped to almost even for the day stocks rallied and the Nasdaq even went positive for a while. Notice there were about 300 more advancers on the Nasdaq than on the NYSE today. Then oil began rising and stocks fell again. Gold closed down again and the dollar was higher for the fifth straight day. The Strongest Sectors were lower on Thursday. The current sideways “choppy market” is exactly why we have not yet changed our Intermediate Term Trend status to Up. It keeps acting as if it is ready to breakout and then sellers over power buyers. Just keep looking for the break above resistance or below support for the next trend move. Index Commentary The DJIA bounce down from its 50 DMA, showing us that sellers are still at the resistance levels in this neutral market…pulled back to the S1 of Tuesday large white candle…still above its 20 and 30 DMA…so at least for now the break above 11, 600 does not hold and the sideways trading range continues to bounce between resistance and support...AIG down on reported losses was a major drap on the DJIA The SPX like the DJIA failed to penetrate its 50 DMA…traded down to the S1 level of Tuesday’s candle…the breakout of 1,284 fails to hold this time around…bouncing down in a sideways trading range. The Nasdaq actually made a slightly higher high today before trading down and forming a bearish harami…held above the 2,350 resistance, now support, level it broke through on Wednesday…traded back down to the 50 DMA and closed 0.40 points (a fraction of a point) below its 50 DMA. The SOX was up over 5 points on Thursday more than it Wednesday’s gain when the market was up…As we have pointed out for the past two days and in prior posts this gives bullish support to the Nasdaq. This was in large measure the result of INTC, AMD, SNDK, LLTC, XLNX BRCM, MRVL and TXN all trading higher today. Was big money buying semiconductors today? Check out the above average volume on several of these stocks. The RUT fell back below its 200 DMA to the S1 area of Tuesday’s large white candle…is still above its 20, 30 and 50 DMA…traded down from resistance in a sideways trading range. Stock Commentary BIDU pulled back from Wednesday’s bull flag support bounce POT formed a dark cloud cover in tis counter trend support bounce FWLT formed a dark cloud cover after its bounce at major support RIMM formed a potential bearish harami on a 5 cent pull back…stayed above its breakout and its 50 DMA BUCY formed a shooting star after its morning star pattern at support FSLR pulled back after Wednesday’s bullish engulfing pattern at support AGU formed a dark cloud cover after its morning star pattern following earnings AAPL formed a potential bearish harami and inside day after a two-day support bounce, bounced down from its 30 DMA and closing at its 20 DMA and just below its 200 DMA Thursday’s Action Moving Up: DECK, MTL, USO Moving Down: BIDU, GS, MA, SOHU, CLF, SINA, NIHD, DRYS, FSLR, CELG, LEH, MER, MOS, POT, BTU, MEE, MON, V, FWLT, FNM, AGU, ESRX, SCHN, PCLN, AMZN, IPI, GRMN, ANR, BAM, X, AAPL, FRE Intermediate Term Market Trend: Neutral Short Term Market Trend: Up

Markets Pull Back in Early Trading

Markets are pulling back from resistance in the first half hour of trading. Watch key S1 levels on Tuesday's candles and key MA support levels. FNM off on the open with earnings coming after the close. Thursday Early Action: Moving Up: BUCY, USO, STRA, POT, MOS MTL Moving Down: BIDU, MA, SINA, DECK, SOHU, X, DRYS, GS, FWLT, SCHN, ESRX, GRMN, MON, NIHD, LEH, MER, FSLR, CELG, IBM, V, AMZN, BAM, PCLN, FNM We are involved with unscheduled travel today so will not post until later. Stay focused and Best of Success!

Markets Inch Higher After Early Sell Off - Nasdaq Up Strong

DJIA + 40.30, +0.35% SP500 + 4.31, +0.34% NASDAQ Comp. + 28.54, +1.21% Russell 2000 + 4.86, +0.67% NYSE NASD Advancing 1,687 1,685 Declining 1,383 1,191 Oil $118.58 -$0.59 Gold $886.10 -$3.10 $SOX 354.20 +3.87 Strongest Sectors: XLE +2.28%...XLI +1.91%...XLK +1.91% Weakest Sectors: XLF -1.02%...XLY -0.50%...XLV +0.39% The markets opened down on weak earnings from Freddie Mac (FRE) which reported a larger than expected loss of $821 million. FRE was down 19.28%. PCLN had gapped down Tuesday evening on earnings. Broad markets rallied and closed positive for the day. Fannie Mae (FNM) reports earnings Thursday morning before the open Index Commentary The DJIA stayed above S1 of Tuesday large white candle and then moved higher closing near its 50 DMA…if Tuesday’s break above 11, 600 holds the new chart target is 11,951. The SPX also stayed above Tuesday’s S1 level and moved closer to its 50 DMA…if Tuesday’s breakout of 1,284 holds the new chart target is 1,321. The Nasdaq was the strongest of the broad indices and closed above it 50 DMA for the first time since early June…broke soundly above horizontal resistance at 2,350…new chart target is 2,440 The RUT formed another new high close and closed above its 200 DMA for the first time since early June…since the RUT has closed only two days above its 200 DMA since last November we will watch this breakout very closely to see if it holds…if it does it suggests higher prices…a successful break above 726 will suggest a new short-term chart target of 758. Stock Commentary BIDU a bull flag support bounce POT a counter trend support bounce FWLT a morning star pattern at major support RIMM breakout after bull flag support bounce yesterday BUCY a morning star pattern at support FSLR a bullish engulfing pattern at support in a sideways trend AGU a morning star pattern after earnings in a downtrend near its 200 DMA AAPL a breakout following a support bounce Tuesday, stalling at its 30 DMA and closing at its 20 and 200 DMA Wednesday's Action Moving Up: BIDU, POT, FWLT, RIMM, BUCY, FSLR, AGU, CNX, DRYS, AAPL, MTL, BTU, GRMN, ANR, MOS, MON, IPI, SOHU, NUE, SCHN, CF, X, CLF, IBM Moving Down: PCLN, MA, MEE, V, FNM, STRA, FRE, DECK, GS, AMZN, EXPE Intermediate Term Market Trend: Neutral Short Term Market Trend: Up

Marets Pause in Pre-market After Tuesday's Big Gains

Freddie Mac (FNM) reports larger than expected loss of 821 million...futures are down slightly in the Pre-market trading... Overnight trading in Tokyo was up and in London trading has been slightly positive... Since the broad indices and many stocks had large white candles yesterday...if markets pull back in early trading watch if price action stays above the mid-section or the S1 level of that large white candle...if it does that is bullish...as sellers are not able to retrace a significant portion of yesterday's buying...in other words net for the two days...buyers are still stronger than sellers... Other companies reporting this morning...Pre-market trading...AGU up...FWLT up... FTO unchng...LAMR down...NDAQ up...TTES down...RIG up Also keep your eye on the price action relative to its 30 DMA which the indices closed above yesterday... Dave's Insight: A savvy trader will determine the difference between price fluctuation and trend reversal. Stay focused...

Stocks Rally, Oil, Gold Fall, Fed Leaves Rates Unchanged

DJIA + 331.62, +2.94% SP500 + 35.87, +2.87% NASDAQ Comp. + 64.27, +2.81% Russell 2000 + 16.90,+2.40% NYSE NASD Advancing 2,365 1,960 Declining 709 909 Oil $119.17 -$2.24 Gold $886.10 -$21.80 $SOX 350.33 +10.63 Strongest Sectors: XLF +5.08%...XLY +4.46%...XLV +3.25% Weakest Sectors: XLE +0.53%...XLU +0.82%...XLB +1.16% The markets were strong from the open rising for the first two hours and then leveling out until the FOMC announcement at 2:15 ET. Once the announcement came out, no change in rates, just as the market expected, the typical Fed announcement intra-day volatility jumped up and down for a few minutes and then rose strong into the close. Look at an intra-day chart to see the pattern. The market was so strong that even the Weakest Sectors were up today. Advancers led decliners 3 to 1 on the NYSE and by 2 to 1 on the Nasdaq. The Sox moved higher for the second day in a row which gives underlying strength to the Nasdaq move. Oil fell further down $2.24 and gold dropped $21.80. The new chart target for oil is $98.50. We have changed our Short Term Trend status to Up due to the support bounce and the break through short-term resistance levels. We’ll change our Intermediate Trend when the markets break above intermediate resistance levels. Index Commentary The DJIA formed a bullish engulfing pattern that engulfed the prior three days and the five day pattern candle pattern is a rising three methods…support bounce in a higher low bull flag pattern…closed above 20 and 30 DMA…nearing 50 DMA…if today’s break above 11, 600 holds the new chart target is 11,951. The SPX formed a rising three methods candle pattern…this is a trend continuation pattern… closed above 20 and 30 DMA…if today’s breakout of 1,284 holds the new chart target is 1,321. The Nasdaq formed a new high close today as it closed above it 30 DMA and near its 50 DMA...formed a large white candle the mid-section forms an S1 short-term support level...a successful break above 2,350 would give a new chart target of 2,525 The RUT formed a new high close since breaking down through its head and shoulders neckline in June…formed a large white candle…broke above the falling resistance line of the pennant pattern that has been forming since July 23…closed above 50 DMA and just below 200 DMA…watch for a break and hold above the 200 DMA…if a successful breakout of the 200 DMA occurs that will be a major shift of the overall tone of this index. Earnings Watch Monday AMC / Tuesday BMO Earnings Moving Up: PFG, EXPD, LEAP, MGM, PG Monday AMC / Tuesday BMO Earnings Moving Down: APC, ADM, JRCC, MVL Tuesday AMC Earnings Moving Up: CSCO Tuesday AMC Earnings Moving Down: PCLN -$17.99 Stock Commentary In our audio commentary last night and in our first post this morning we mentioned NIHD +1.66, WLP +1.48, LNCR +18 cents, SYNA +3.23 and NSC +2.79. RIMM bounces above 30 DMA in a 2-day pullback bull flag pattern AMZN bounces above the high of the low day in an earnings bull flag pattern...closes above 50 and 200 DMA MA formed an inside day at its 200 DMA X formed a bullish harami and inside day following a 100% retracement from an earnings gap up CELG formed a morning star pattern after a 2-day pullback bull flag pattern bounce today SCHN formed a bullish harami after breaking below its 200 DMA yesterday...a counter trend move GS formed a hammer bouncing off of its 20, 30 and 50 DMA in a sideways trading range BA formed a large white candle on a support bounce through its 20 DMA to close at its 30 DMA...appears to be forming a W bottom pattern with a bullish divergence in the 2-line MACD AIG bounced above its 30 DMA after forming a higher low W bottom pattern UAUA formed a new high close after 2 weeks of consolidation breaking out of a horizontal bull flag pattern ESRX formed a hanging man pattern BRCM closed above its 200 DMA in what appears to be a bear flag pattern after gapping down on earnings Monday’s Action Moving Up: AAPL, MA, CECK RIMM, PCLN, AMZN, X, CELG, STRA, GS, SCHN, LEH, MER, MS, NIHD, GRMN, UAUA, IBM, MOS, ESRX, V, RBCM, NUE, EXPE Moving Down: CF, POT, CLF, FSLR, IPI, USO, CNX, ANR Intermediate Term Market Trend: Neutral Short Term Market Trend: Up

Oil Breaks Support...Indices Break Key DMA's

12:30 ET DJIA +216...SPX +22...Nasdaq +38...RUT +10...Oil -$2.61 Oil breaks the important support lows of July 29 and August 4 this morning. Measuring off the June 4 low, this support break gives a chart target in the area of $98.50. Stocks are gaining strength with advancers leading decliners on the NYSE 2,223 to 746 and on the Nasdaq 1,754 to 959. The DJIA, SPX and Nasdq have all moved back above their 30 DMA. The RUT has moved back above its 50 DMA. The SOX is also moving higher and is near is 20 DMA. Consider focusing in on my One Green Arrow Strategy as I suggested in my audio commentary last week for potential practice (paper) trading opportunities. Tuesday's Action Moving Up: PCLN, DECK, AAPL, RIMM, X, MA, FSLR, BIDU, STRA, SCHN, AMZN, CELG, MOS, MS, NIHD, MER, LEH, BTU, UAUA Moving Down: CLF, CF, POT, IPI, USO, MEE, FWLT

Markets Moving Up From Higher Low

11:15 ET DJIA +192 ...SPX +19 ...Nasdaq +33...Rut +9...Oil -41 cents A week ago we stated that our we thought there was now a 60% probability that the market was going into a new up trend. We do not know that, but a combination of what the chart tells us now and our experience with PC-based technical analysis charting systems over the past 18 years, we still conclude the probability to be 60% at this time. Yesterday one of our associates asked us about this statement and we reiterated it and the reasons we have shared continually for the past three weeks. Last night in our audio commentary, we restated this and reemphasized what is compelling right now. There are two factors on the charts right now that so significant in a historical perspective of trend change that those of lesser experience are not going to see until more technical evidence appears on the chart. The first is that the buying action of the big money has changed dramatically since July 16. Since the double top in the DJIA on May 19, there was not a single time they were willing to buy the market above a previous short-term high or buy it for more than three days and most of the times only one or two days straight. Since July 16 the big money buying has become more aggressive not only in the DJIA, but also in the SPX, Nasdaq Composite and most notablly in the RUT. The second aspect is that their selling has become less aggressive. Plain and simple, the indices are making high lows. It is this combination of more aggressive buying and less aggressive selling that is on the charts that led us to conclude last week that a new uptrend is a 60% probability. Remember 60% is not 100% and there is still a 40% probability that a new intermediate term trend won't emerge at this time. Dave's Insight: A savvy trader going to take the larger odds every time and adjust should the smaller odds materialize. One other point. When a less experienced trader doesn't get immediate satisfaction from their forecast, their conviction level oftens weakens. Ours has not done so. Why? Because the pause and base building in the indices over the past 10 to 15 trading days (depending on the index) is a confimation of the less aggressive selling and that reiterates the liklehood of a new intermediate term up trend. Last night in our audio commentary we pointed out technical evidence and told listeners to not be surprised if the markets moved higher today and they have from the open in a big way. Watch closely the price action, the horizontal support and resistance levels and the moving average support and resistance levels and the picture should become quite clear for you. We mentioned last night five stocks that are trading in either horizontal bull flags or the diagonal flag that caught our attention: NIHD, WLP, LNCR, SYNA, NSC. All are moving up and four of the five are moving very nicely in the first 90 minutes of trading. Stay focused on trend, support and resistance and momentum. Tuesdays' Early Action Moving Up: DECK, PCLN, AAPL, RIMM, STRA, X, SCHN, AMZN, MER, LEH, CELG, NIHD, BTU, MS, ESRX, MA Moving Down: CF, CLF, POT, IPI, MON, ANR, BUCY USO, MOS, MEE, AGU, DRYS, GS

Oil Falls Again, Stock Fall, Rise and Close Down

DJIA - 42.17, -0.37% SP500 - 11.30, -0.90% NASDAQ Comp. - 25.40, -1.10% Russell 2000 - 12.02, -1.68% NYSE NASD Advancing 1,048 968 Declining 2,065 1,906 Oil $121.41 -$3.69 Gold $907.90 -$9.60 $SOX 339.70 +1.52 Strongest Sectors: XLP +0.91%...XLV +0.85%...XLY +0.74% Weakest Sectors: XLE -4.70%...XLB -4.34%...XLU -1.08% The indices which fell at the open found support and rallied as oil prices broke support towards mid-day. Stocks retreated in the later part of the day and finished above the low of the day as traders looked for the Fed Announcement on Tuesday at 2:15 ET. Markets often have greater intraday volatility on Fed Announcement days, especially shortly before and after the announcement. Index Commentary The DJIA formed a spinning top just under its 20 DMA and in the area of last Tuesday S1 level. The SPX moved down just under its 20 DMA and in the area of last Tuesday's S1 level. The Nasdaq closed just above its 20 DMA and between the S1 and S2 levels of last Tuesday's large white candle. The RUT closed below its 50 DMA and in the area of last Tuesday's S1 support level...closed above its 20 and 30 DMA...closed at rising support line of its pennant pattern...still below its 200 DMA. Earnings Watch Monday BMO Earnings Moving Up: HUM, Monday BMO Earnings Moving Down: CMED, DISH, ICE, TM Monday AMC Earnings Moving Up: PFC Monday AMC Earnings Moving Down: APC, Stock Commentary Coal stocks continued their recent down trend KOL fell over $4 from its bear flag break on Friday to horizontal support BTU broke out of bear flag pattern on Friday...fell over $5 today and closed below its 200 DMA and horizontal support...if support break holds chart target 51 CNX continued it move from its support break on Friday...chart target is 59 MEE broke its bear flag pattern today moving down $9 Ag-related stocks accelerated their down trend on Monday POT broke support falling over $20 from its bear flag pattern on Friday AGU broke out of its bear flag pattern and fell over $7 to support MOS broke out of its bear flag pattern and fell over $13 through support CF fell over $13 from resistance in its sideways trend...chart target support at 135 to 140 X which the support of the top of its gap on Friday, fell over $11 on Monday through the bottom of its gap DECK formed a piercing line candle after just barely penetrating below 106 support on Friday MA formed an inside day and an inverted hammer at its 200 DMA SCHN fell over $10 on Monday after break below its bear flag pattern Friday...broke below horizontal support and its 200 DMA FSLR fell over $13 on Monday after breaking below the low of the high day on Friday MON fell below its 200 DMA DRYS broke support and fell over $6 to the next support level NUE moved lower toward its chart target is 49 BIDU fell over $13 and broke below Tuesday's S1 and S2 horizontal support RIMM move down over $3 after Friday's dark cloud cover AAPL broke below the support of its pennant pattern NIHD moved up to resistance in it's horizontal bull flag SINA formed a bearish engulfing pattern in its horizontal bull flag...watch for a break below short-term support and its 200 DMA or a support bounce towards the resistance of its bull flag Monday’s Action Moving Up: DECK, IBM, V, UAUA Moving Down: POT, BIDU, CF, FSLR, MOS, X, BUCY, SCHN, MEE, MON, AGU, DRYS, ANR, MA, FWLT, CLF, BTU, IPI, PCLN, CNX, GS, SOHU, RIMM, AAPL, USO, NUE, STRA, MTL, SINA, GRMN, CELG, LEH Intermediate Term Market Trend: Neutral Short Term Market Trend: Down

Markets Down on Monday...Rally from Lows as Crude Oil Falls

1:30 pm ET DJIA -24...SPX -8...Nasdaq -21...RUT -10...Oil -$3.80 Markets moved lower on Monday morning and found suppot around 11:22 ET coming in the area of the S1 short-term support of last Tuesday's large white candle. Oil, which is down $3.80, hit resistance and started to turn lower around 10:30 am ET, broke support around 11:30 am ET and fell to last week's lows on Tuesday and Wednesday. This seemed to help fuel the rally in stocks, which has been the theme we mentioned in detail over two weeks ago here in Chart Signals. Ag-related stocks POT, CF, MOS and AGU have not bounced but continued to move lower some of which appear to be breaking key support areas. We alerted readers to the bear flag pattern in POT, AGU and MOS and the two spinning tops at resistance on the CF chart in Friday's post. Coal stocks KOL, BTU, CNX and MEE also have been leaving a trail of smoke as they have fallen from bear flag or broke support patterns this morning. FOMC announcement tomorrow, Tuesday at 2:15 ET. The Fed is widely expected to leave rates unchanged. Monday's Action Moving Up: IBM, UAUA, V Moving Down: POT, CF, MOS, X, BIDU, BUCY, FSLR, SCHN, MEE, MON, AGU, DRYS, MA, CLF, CNX, ANR, PCLN, BTU, IPI, GS, GWLT, USO, SOHU, STRA, NUE, MTL, RIMM, CELG, SINA, GRMN, ESRX, DECK

Support and Resistance Review

Support and Resistance represent key turning or pivot points in the price action of an index, ETF or stock. Let's review the principles of support and resistance. Support is every low point on a chart. Buyers cause support. It is the point where buyers have more strength than sellers and prices go up as a result. Resistance is every high point on a chart. Sellers cause resistance. It is the point where sellers have more strength than buyers and prices go down as a result. When price drops to a support area two primary things can happen; price can bounce up or price can break through support. Price can pivot up or down...like a door hinge that swings both ways. A minor third possibility can occur and that is price can go sideways. In active markets this can occur for relatively short periods of time but will not usually continue for long. When price breaks support it is likely to fall to the next support level, at least that is the theory. A look at actively traded charts seem to support this concept most of the time. If a trader is long a market and price begins to break a support area, a trader should ask themselves if they are comfortable with the drawdown they would incur if price falls to the next support level. If they are not comfortable taking on that drawdown, the most logical course of action is to sell or take some other hedging action. The same theory applies to resistance. When price breaks through resistance it is likely to rise to the next resistance area. Again a look at actively traded charts seem to support this concept most of the time. If a trader is short a market and price begins to break through a resistance area, a trader should ask themselves if they are comfortable with the drawdown they would incur if price rises to the next resistance level. Again, if they are not comfortable with that drawdown, the logical course of action is to close the position or take some type of hedging action. As you watch the charts keep in mind these important aspects of support and resistance and trade accordingly. Don't take on more risk than your portfolio and good money management rules will allow. There will always be another opportunity or another good time for the opportunity now being watched.

Markets Continue Short Term Down Trend in Consolidation

10:44 ET DJIA -94...SPX -10...Nasdaq -26...RUT -13...Oil +20 cents Markets moved lower on Monday morning and may have found at least a temporary support level near Friday's lows. As we pointed out in Friday's post watch the S1 support levels of last Tuesday's large white candles. The markets continue in a consolidation pattern and at least in the first hour continue the short-term down trend of the past two days. FOMC announcement tomorrow, Tuesday at 2:15 ET. The Fed is widely expected to leave rates unchanged. Monday's Action Moving Up: MA, FSLR, V, AMZN, BRCM Moving Down: POT, SCHN, PCLN, GS, CLF, X, MOS, CF, BUCH, ANR, STRA, MEE, BIDU, AGU, DRYS, BTU, IPI, RIMM, SOHU, FWLT, CELG, NUE, MON, MER, SINA, ESRX, MTL, GRMN, LEH

Earnings for the Week of August 4 to August 8

Earnings season continues on Monday, August 4. If you have short-term option positions it is critical to be aware of the ERD (Earnings Release Date) and whether earnings come BMO (Before Market Open) or AMC (After Market Close). Also if you trade the Straddle or Strangle Strategies over earnings, you will need to know the ERD. We offer this information as a reminder only. Since companies can and do make changes to their release date, we can’t guarantee its accuracy. So make any trade decisions only after you have checked your data sources to verify the actual date. Here are some of the notable stocks releasing earnings this week: Monday, August 4 CMED BMO DISH BMO FNM BMO HUM BMO ICE BMO MSTR BMO TM BMO APC AMC PFG AMC Tuesday, August 5 ADM BMO DHI BMO EXPD BMO JRCC BMO LEAP BMO MVL BMO MGM BMO PG BMO CSCO AMC JCOM AMC TIE AMC Wednesday, August 6 AGU BMO FWLT BMO FRE BMO FTO BMO LAMR BMO NDAQ BMO TTES BMO RIG BMO AIG AMC RIO AMC EGLE AMC PRXL AMC SINA AMC SUN AMC TS AMC VRSN AMC Thursday, August 7 DTV BMO URBN BMO VG BMO ATW AMC DAR AMC DECK AMC HANS AMC Friday, August 8 MBI BMO

Oil Up, Gold Down...Markets Consolidate

DJIA - 51.70, -0.45% SP500 - 7.07, -0.56% NASDAQ Comp. - 14.59, -0.63% Russell 2000 + 1.64, +0.23% NYSE NASD Advancing 1,553 1,419 Declining 1,547 1,422 Oil $125.10 +$1.02 Gold $917.50 -$5.20 $SOX 338.18 -2.68 Strongest Sectors: XLF +0.24%...XLE +0.12%...XLI -0.09% Weakest Sectors: XLU -3.05%...XLB -2.53%...XLK -0.89%

Even though three of the four broad indices were down, the number of advancing issues increased for both the NYSE and Nasdaq on Friday from Thursday. Advancing issues on the NYSE increased by 343 and the Nasdaq by 66. On the NYSE advancers led decliners by 6 and on the NASD advancer only trailed decliners by 3. This suggests the broader market may have been a little stronger than the indices reflect.

Each of indices have been in a sideways consolidation pattern for the past 8 to 12 days...this type of trading action could accurately be described as "choppy"...if you are trading ETF's or stocks that are in this type of pattern, either think more intermediate term as they consolidate or shorten your time frames to the actual bounces between support and resistance which could be as short as one to three days. Some traders prefer to wait for a breakout of either support or resistance before commiting to a position in a consolidating market.

Index Commentary The DJIA found support at Tuesday's S1 level and rallied to close at its 20 DMA...formed a spinning top candle...watch for either a break of support or resistance for the next directional move. The SPX opened at its 30 DMA, bounced down and found support at its 20 DMA...closed about 5 points above its 20 DMA...formed a spinning top candle...consolidating in a rectangle type pattern. The Nasdaq found support at its 20 DMA...rallied and formed a hanging man pattern...closed above its 30 DMA for the fourth straight day...the past 12 days consolidation is forming a rectangle or horizontal flag. The RUT found support at Tuesday's S1 level...rallied and formed a hanging man pattern above the body of Thursday's doji...closed above its 50 DMA for the fourth straight day...below 200 DMA...the price action of the past 8 days is consolidating between its 30 and 200 DMA and forming a pennant type price pattern.

Earnings Watch Thursday AMC/ Friday BMO Earnings Moving Up: CTSH, MEE

Thursday AMC/ Friday BMO Earnings Moving Down: CA, KLAC, LDK, CI, NYX, JAVA Stock Commentary

Coal stocks have shifted trend to down and are forming lower highs and lower lows KOL and BTU broke out of bear flag patterns on Friday CNX broke support with a chart target of 59 MEE is still in a bear flag pattern...formed a shooting star type candle Ag-related stocks have also shifted trend to down and forming lower highs and lower lows POT broke out of a bear flag pattern AGU and MOS are at the support line of their bear flag pattern CF which is trending sideways is at resistance and has formed two spinning tops X which gapped on earnings on Tuesday is rolling over and broke the support of the top of its gap DECK just barely penetrated below 106 support...if the break holds chart target is 84 MA broke support hit and bounced off its 200 DMA forming a hammer candle SCHN broke below its bear flag pattern FSLR is in a sideways trend and broke below the low of the high day at resistance MON bounced down from resistance at its 30 DMA and is sitting on its 200 DMA DRYS in a narrow sideways trend bounced down from resistance and is near support NUE broke support...chart target is 49 BIDU has formed three spinning tops in a row and is holding above Tuesday's S1 support RIMM after three white soldiers has formed a dark cloud cover AAPL is in a five day pennant pattern NIHD is in a horizontal bull flag SINA is in a horizontal bull flag at its 50 DMA Friday’s Action Moving Up: ANR, SOHU, PCLN, MS, LEH, MEE, SINA, USO, NIHD Moving Down: X, DECK, MA, SCHN, CNX, MOS, FSLR, MON, DRYS, NUE, POT, BIDU, BTU, RIMM, CLF, IPI, AAPL, STRA, GS, CELG, IBM, V, MTL, CF, FWLT, BAM, AGU Intermediate Term Market Trend: Neutral Short Term Market Trend: Down