Stocks Give Back Wednesday's Gain

DJIA - 215.45, -2.51% SP500 - 21.93, -2.93% NASDAQ Comp. - 46.82, -3.14% Russell 2000 - 14.23, -3.14% Exchange NYSE NASD Advancing 1,059 855 Declining 2,775 2,017 Oil $43.67 -$3.12 Gold $763.80 -$5.00 SOX 186.64 -11.43 VIX 63.64 +2.92 Strongest Sectors: XLY +1.09%...XLF -1.08%...XLP -1.28% Weakest Sectors: XLE -6.93%...XLK -4.05%...XLU -3.61% Sector Watch Up Trending: Sideways: XLE, XLP, XLU Down Trending: XLF, XLY, XLV, XLI, XLB, XLK The DJIA and SPX continue in their intermediate term (8 weeks) sideways trading range. The Nasdaq and RUT are still below key October support, now resistance levels. Retail stocks were strong again on Thursday. The Retail Industry ETF, XRT, rose 3.21%, while AMZN added another 4.67%. Consumer Discretionary, XLY, was the only sector that moved higher on Monday. Financial ETF, XLF, -1.08%, was the second strongest sector Eight of nine sector ETFS moved lower on Thursday. Check out our Stocks to Watch on Friday list. Oil fell another $3.12 to continue its down-trend. Gold and gold stocks fell again on Thursday. Index Commentary The DJIA, SPX, Nasdaq and RUT fell back below Monday's R1 level while forming a pennant pattern with Monday as the base. Watch for a pennant pattern break on Friday for market direction. Stocks to Watch on Friday Leading Stocks: Holding Above 30 DMA AXYS…AYE…DV…EZPW…PCLN…PPD…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…TKC…JCOM…JEC…PCR…AME…AOB…ATK…B…IRIS…MIG…RTN…SNA…TEVA…WMS…GILD...HAS…JOSB…URBN Moving Above 30 DMA AGN…AMZN…ROST Moving Below 30 DMA AAPL…AME…ANSS…AOB…BCR…BYI…CL…CTSH…FWLT…IT…JW.A…LFC…MTD…PRGO…RCI…STRA…VIVO…WAB Staying Below 30 DMA MYGN…GIS…AMX…CERN…CHU……AFAM…CHTT…DGIT…ESRX…LAYN…NIHD…NOV…OSIP…RIO…SINA…SOHU…SWN…VMI…MMM…FLIR…PCP…PETS…PSSI…SPTN Thursday’s Action Moving Up: PNRA, NUE, ZION, MS, NDAQ, ESRX, ONXX Moving Down: STRA, FSLR, MA, BTU, POT, CNX, MON, FWLT, PCLN, AEM, CF, V, CLF, INFY, SOHU, KMT, BRCM, ANR, AGU, GS, MEE, SCHN, X, IPI Intermediate Term Market Trend: Neutral – DJIA, SPX, Down – Nasdaq, RUT Short Term Market Trend: Neutral

Stocks Continue to Rally and Confirm Bullish Harami

DJIA + 172.60, +2.05% SP500 + 21.93, +2.58% NASDAQ Comp. + 42.58, +2.94% Russell 2000 + 11.94, +2.70% Exchange NYSE NASD Advancing 2,548 1,736 Declining 1,297 1,112 Oil $46.79 -$0.17 Gold $768.80 -$12.50 SOX 198.07 +12.38 VIX 60.72 -2.26 Strongest Sectors: XLF +5.17%...XLY +3.58%...XLK +2.87% Weakest Sectors: XLB -0.18%...XLE +0.06%...XLP +1.21% Sector Watch Up Trending: Sideways: XLE, XLP, XLU Down Trending: XLF, XLY, XLV, XLI, XLB, XLK Stocks continued to rally on Tuesday in part due to strong double digit increase in online spending over the Friday to Monday Thanksgiving weekend. XRT, the Retail Industry ETF rose 4.17%, while AMZN jumped 9.76%. Financial ETF, XLF, was the strongest sector ETF for the second straight day. Eight of nine sector ETFS moved higher on Wednesday. The broad indices and many stocks confirmed Tuesday’s bullish harami pattern while also breaking through Monday’s R1 resistance level and in many cases regaining over Tuesday and Wednesday more than 75% of Monday’s losses. The VIX fell again confirming the rise in the SPX. The SOX rose significantly making up for Tuesday’s under performance providing solid support to today’s tech rise. The DJIA continues in its intermediate term (7 weeks) sideways trading range while the SPX intermediate term trend status changed to neutral after closing above its Oct. 10 low for the second straight day. The Nasdaq and RUT are still below key October support, now resistance levels. Check out our Stocks to Watch on Thursday list. Gold and gold stocks fell on Wednesday and oil slipped just 17 cents. AAPL: Head & Shoulders, Double Bottom, Fibonacci Retracement and Hammer Early this morning in our webcast we pointed out two intra-day patterns a head and shoulders from Tuesday and a potential double bottom in progress on Wednesday. We pointed out that Tuesday's head and shoulders (1) had a price target of $89.25(2) which was achieved just after 2 pm and just before a rally took AAPL to a close at $92.50. We pointed out this morning during the first hour that AAPL was forming a potential double bottom (2) and if it broke the resistance high of $92.50 that the intra-day price target for AAPL would be $96. AAPL then rallied to $94.50 where traders selling formed resistance and caused AAPL to retreat, interestingly enough to a 50% Fibonacci retracement (3), where quite amazingly a hammer and dragonfly doji were formed (3)...only to see buyers step in and drive AAPL to a touchdown at $96 (4) just before closing at $95.90. (click image to enlarge) ProphetCharts These types of occurences are only happening every day and people wonder why Dave believes so strongly in Chart Signals. Dave's Insight: "I know technical analysis is just an accident...but isn't it amazing how the accident keeps happening over and over and over again." Index Commentary The DJIA confirmed Tuesday’s bullish harami and closed above Monday’s R1 level and also above its 20 DMA…closed just below its 30 DMA…remained in sideways trading range…bounced off 50% Fibonacci support and rose above the 23.6% retracement level from the Nov. 21 low. (click image to enlarge) Stocks to Watch on Thursday Leading Stocks: Holding Above 30 DMA AXYS…AYE…DV…EZPW…PCLN…PPD…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…TKC…JCOM…JEC…PCR…AME…AOB…ATK…B…CL…CTSH…FWLT…IRIS…JW.A…MIG…RTN…SNA…TEVA…WMS Moving Above 30 DMA AAPL…ANSS…BCR…BYI…GILD...HAS…IT…JOSB…LFC…MTD…RCI…SHW…URBN…VIVO…WAB Moving Below 30 DMA FLIR…PCP…PETS…PSSI…SPTN Staying Below 30 DMA MYGN…GIS…AMX…CERN…CHU……AFAM…AGN…CHTT…DGIT…ESRX…LAYN…NIHD…NOV…OSIP…RIO…SINA…SOHU…SWN…VMI…MMM Wednesday’s Action Moving Up: FSLR, MA, GS, MON, V, ESRX, PNRA, MS, ZION, BRCM, ONXX, COH, BTU, KBE, KRE, KMT, AFAM Moving Down: STRA, POT, ANR, AEM, PCLN, CNX, ADM, CLF Intermediate Term Market Trend: Neutral – DJIA, SPX, Down – Nasdaq, RUT Short Term Market Trend: Up

A Bullish Harami Fibonacci Bounce

Tuesday, December 2, 2008 DJIA + 270.00, +3.31% SP500 + 32.60, +3.99% NASDAQ Comp. + 51.73, +3.70% Russell 2000 + 24.75, +5.93% Exchange NYSE NASD Advancing 2,842 2,038 Declining 990 830 Oil $46.96 -$2.32 Gold $781.30 +$6.70 SOX 185.69 +2.45 VIX 62.98 -5.53 Strongest Sectors: XLF +8.15%...XLY +4.65%...XLI +4.62% Weakest Sectors: XLP +1.45%...XLV +2.58%...XLU +2.60% Sector Watch Up Trending: Sideways: XLE, XLP, XLU Down Trending: XLF, XLY, XLV, XLI, XLB, XLK Stocks rebounded on Tuesday after being technically oversold on Monday. The broad indices bounced off of Fibonacci retracement levels, rose to the R1 levels of Monday’s large black candle and formed bullish harami patterns. Watch on Wednesday to see if stocks can break through Monday’s R1 resistance level. The VIX fell confirming the rise in the SPX. The SOX rose but by a smaller amount than the Nasdaq raising a question mark about the sustainability of the tech bounce. The DJIA continues in its intermediate term (7 weeks) sideways trading range while the SPX, Nasdaq and RUT are still below key support/resistance levels. Check out our Stocks to Watch on Wednesday list. Oil continued to fall while gold prices rose. All nine sectors ETFs were higher on Tuesday with Financial XLF leading the way. Index Commentary The DJIA formed a bullish harami that rallied to Monday’s R1 level…remained in sideways trading range…bounced off 50% Fibonacci support and rose above the 38.2% retracement level from the Nov. 21 low. (click image to enlarge) The SPX formed a bullish harami that rallied to Monday’s R1 level…closed above its Oct. 10 low…also bounced off its 50% Fibonacci level and rose above the 38.2% retracement from its Nov. 21 low. The Nasdaq formed a bullish harami and bounced from near its 61.8% Fibonacci retracement and rose above its 38.2% level. The RUT formed a bullish harami…rose to Monday’s R1 level and rallied from below its 50% Fibonacci retracement and rose above the 38.2% level from its Nov. 21 low. (click image to enlarge) ProphetCharts Stocks to Watch on Wednesday Leading Stocks: Holding Above 30 DMA AXYS…AYE…DV…EZPW…PCLN…PPD…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…TKC…JCOM…JEC…MTD…PCR (click image to enlarge) JEC = A Bullish Harami

Moving Above 30 DMA AME…AOB…ATK…B…CL…CTSH…FLIR…FWLT…IRIS…JW.A…MIG…PCP…PETS…PRGO…PSSI…RTN…SNA…SPTN…TEVA…WMS Moving Below 30 DMA MMM…MTD…RCI Staying Below 30 DMA MYGN…GIS…AMX…BCR…CERN…CHU…GILD…HAS…LFC…URBN…RCI…AFAM…AGN…ANSS…CHTT…DGIT…ESRX…LAYN…NIHD…NOV…OSIP…RIO…SHW…SINA…SOHU…SWN…VIVO…VMI…WAB Tuesday’s Action Moving Up: STRA, FSLR, CNX, MA, MON, FWLT, KRE, CLF, NIHD, CF, NUE, V, EBAY, GDX, SCHN, FWLT, X, MOS, ANR, KBE, NDAQ, BTU, AFAM, HANS, ONXX, LCC, INFY, GRMN, MEE, RF, UAUA Moving Down: POT, AGU, IPI, PCLN, GS

(click image to enlarge) PCLN = A Bull Flag?

Intermediate Term Market Trend: Neutral – DJIA, Down – SPX, Nasdaq, RUT Short Term Market Trend: Neutral

Stocks Give Back Gains on Economic Weakness

Monday, December 1, 2008 DJIA - 679.95, -7.70% SP500 - 80.03, -8.93% NASDAQ Comp. - 137.50, -8.95% Russell 2000 - 56.07, -11.85% Exchange NYSE NASD Advancing 502 466 Declining 3,329 2,445 Oil $49.28 -$5.15 Gold $774.60 -$41.60 SOX 183.24 -15.00 VIX 68.51 +13.23 Strongest Sectors: XLV -5.14%...XPI -5.53%...XLU -6.64% Weakest Sectors: XLF -16.67%...XLE -10.64%...XLY -8.74% Sector Watch Up Trending: Sideways: XLE, XLP, XLU Down Trending: XLF, XLY, XLV, XLI, XLB, XLK Concerns over weak retails sales over the Thanksgiving Holiday weekend had sellers in control from the opening and a series of economic reports kept the selling pressure up all day long as the broad indices gave back half of the gains the achieved over the past week. The SPX and RUT fell back below their Oct. 10 low and the Nasdaq which failed to close on Friday above its Oct. 10 low, fell below its Nov. 13 low. As we pointed out in our weekend post, each of the four indices had formed a bullish engulfing pattern on their weekly charts. In an intermediate term sideways trend, DJIA and SPX, a trader should be ready to close long positions as the market falls from resistance and initiate short positions. This is also true for intermediate term down trends with the Nasdaq and RUT. All sectors were lower on Monday. Oil and gold were also down big today and energy related and gold stocks fell with the rest of the market. The VIX confirmed today’s down move as it moved significantly higher. The broad indices and many stocks in down trends or trading ranges formed classic bullish exit signals and classic bearish entry signals on Monday. Review our Stocks to Watch on Tuesday list for current ideas. Index Commentary The DJIA gave formed a bearish engulfing patter and made a 50% Fibonacci retracement fro its recent low. ProphetCharts The SPX formed a evening star pattern and moved down to a 50% Fibonacci retracement. The Nasdaq formed a bearish engulfing pattern and moved down to the mid point between its 50% and 61.8% Fibonacci retracement. The RUT formed an evening star pattern and moved down to the mid point between its 50% and 61.8% Fibonacci retracement. Stocks to Watch on Tuesday Leading Stocks: Holding Above 30 DMA AXYS…AYE…DV…EZPW…MMM…PCLN…PPD…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…TKC…JCOM…JEC…MTD…PCR Moving Above 30 DMA RCI Moving Below 30 DMA AFAM…AGN…AME…ANSS…AOB…ATK…B…CHTT…CL…CTSH…DGIT…ESRX…FLIR…IRIS…JW.A…LAYN…MIG…NIHD…NOV…OSIP…PCP…PETS…PRGO…RIO…RTN…SHW…SINA…SNA…SOHU…SWN…TEVA…VIVO…VMI…WAB…WMS Staying Below 30 DMA MYGN…GIS…AMX…BCR…CERN…CHU…GILD…HAS…LFC…PSSI…URBN Monday’s Action Moving Up: None Moving Down: BIDU, STRA, FSLR, MA, GS, CF, MON, DECK, PCLN, ZION, ESRX, AEM, SINA, POT, KRE, MOS, CNX, X, ANR, NUE, SCHN, GDX, CLF, SOHU, V, NIHD, MER, AGU, BTU, MS, MEE, KBE, NDAQ, HANS, UAUA, IPI, BUCY, ONXX, AMZN, RF, LDK, KMT, INFY, LAMR, DRYS, BRCM, COH, FWLT, GRMN, LCC, EBAY Intermediate Term Market Trend: Neutral – DJIA, Down – SPX, Nasdaq, RUT Short Term Market Trend: Neutral

Happy Thanksgiving...What a Great Week

DJIA + 102.43, +1.17% SP500 + 8.56, +0.96% NASDAQ Comp. + 3.47, +0.23% Russell 2000 + 4.28, +0.91% Exchange NYSE NASD Advancing 2,267 1,787 Declining 1,133 911 Oil $54.43 -$0.01 Gold $816.20 +$7.70 SOX 198.24 -3.06 VIX 55.28 +0.36 Strongest Sectors: XLF +2.51%...XLI +2.17%...XLU +1.76% Weakest Sectors: XLE -1.60%...XLK +0.13%...XLB +0.43% Sector Watch Up Trending: Sideways: XLE, XLP, XLU Down Trending: XLF, XLY, XLV, XLI, XLB, XLK Friday was a holiday shortened trading day and trading volume was light. The broad indices moved up for the fifth straight day producing the one of the largest weekly gains for 2008: Weekly Gain ending Nov. 28, 2008 DJIA +9.7% SPX +12.0% Nasdq +10.9% RUT +16.5% For some traders this past week could represent an entire year's worth of gain. While a pull back in the first week of December is not out of the question, the strength of stocks this past week is indeed making the past 7 weeks since Oct. 10 look like consolidating basing action and emphasizes the need for traders to stay focused on and trade the short-term trend, whether that trend is up or down. Index Commentary A bullish engulfing pattern on the DJIA weekly chart. (click image to enlarge) A bullish engulfing pattern on the SPX weekly. (click image to enlarge) A bullish engulfing pattern on the Nasdaq weekly. (click image to enlarge) A bullish engulfing patten on the RUT weekly. (click image to enlarge) Stocks to Watch on Monday Leading Stocks: Holding Above 30 DMA TEVA…AXYS…AYE…CL…DV…EZPW…MMM…PCLN…PPD…ANSS…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…PRGO…SHW…TKC…WMS…AME…JCOM…JEC…NOV…AOB…ATK…CHTT…CTSH…DGIT…FLIR…JW.A…MIG...MTD…OSIP…PCP…PCR…RIO…SINA…SOHU…SWN…VIVO…VMI Moving Above 30 DMA AFAM…AGN…B…ESRX…IRIS…LAYN…NIHD…RTN…SNA…WAB (click image to enlarge) ProphetCharts Moving Below 30 DMA AMX…BCR…CERN…CHU…GILD…HAS…LFC…PSSI…RCI…URBN Staying Below 30 DMA MYGN…GIS Friday’s Action Moving Up: MON, GS, AEM, PCLN, STRA, LDK, MER, INFY, LAMR, ONXX, AGU, MOS, SINA, NUE, ZION, KBE Moving Down: BIDU, FSLR, DECK, AMZN, CNX, MEE, BTU, BRCM Intermediate Term Market Trend: Neutral – DJIA, SPX, Down – Nasdaq, RUT Short Term Market Trend: Up

Happy Thanksgiving Eve

DJIA + 247.14, +2.91% SP500 + 30.29, +3.53% NASDAQ Comp. + 67.37, +4.60% Russell 2000 + 25.68, +5.79% Exchange NYSE NASD Advancing 3,100 2,273 Declining 581 595 Oil $54.44 +$3.67 Gold $808.50 -$10.00 SOX 201.30 +14.28 VIX 54.92 -5.98 Strongest Sectors: XLY +5.88%...XLE +5.60%...XLF +4.66% Weakest Sectors: XLU -0.34%...XLP +1.28%...XLV +1.57% Sector Watch Up Trending: Sideways: XLE, XLP, XLU Down Trending: XLF, XLY, XLV, XLI, XLB, XLK What a great way to set up Thanksgiving with a continuation of the short-term up trend which began last Friday. Markets are closed on Thursday and will be open for half a day on Friday. Friday after Thanksgiving is traditionally the lightest daily volume of the year. Trading should return in earnest on Monday. Not only did the broad indices and sectors move up strong on Wednesday, many individual stocks flashed entry signals on Wednesday. Be sure to review the charts in our Stocks to Watch on Friday section. Index Commentary The DJIA formed a large white candle…buyer were able to push through the 8,600 resistance level of the past two days…closed just above its 20 and 30 DMA…closed above its Oct. 10 intraday low for fourth straight day…9,000 continues as an important intermediate resistance level. The SPX formed a large white candle…closed above Oct. 10 low for the third straight day…buyers were able to push the SPX through the 865 resistance area …840 continues as a key support area and 915 a key resistance area. The Nasdaq formed a large white candle…buyers broke through the1,500 resistance area…closed just 10 points below its Oct. 10 low and above the Oct. 24 low. The RUT formed a large white candle and Tuesday’s a potential hanging man pattern was negated…closed one point above its Oct. 10 low…broke through the 450 key resistance area…the 20 and 30 DMA’s are the next resistance area. Stocks to Watch on Friday Leading Stocks: Holding Above 30 DMA TEVA… AXYS…AYE…CL…DV…EZPW…MMM…PCLN…PPD ANSS…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…PRGO…RCI…SHW...TKC…WMS… AME…JCOM…JEC…NOV Moving Above 30 DMA AMX…AOB…ATK…BCR…CERN…CHTT…CHJ…CTSH…DGIT…FLIR…GILD…HAS…JW.A…LFC…MIG...MTD…OSIP…PCP…PCR…PSSI…RIO…SINA…SOHU…SWN…URBN…VIVO…VMI Moving Below 30 DMA None Staying Below 30 DMA RTN…AFAM…MYGN…GIS Wednesday’s Action Moving Up: BIDU, FSLR, SOHU, MA, DECK, PCLN, GS, STRA, CF, CLF, SCHN, POT, SINA, NUE, CNX, FWLT, X, MEE, AGU, BTU, ANR, V, BUCY, NDAQ, ESRX, HANS, MOS, IPI, MON, NIHD, AMZN, KMT, LDK, ONXX, INFY, EXPE, DRYS, LAMR, BRCM, MER, EBAY, GRMN, AEM, PNRA, KBE Moving Down: None Intermediate Term Market Trend: Neutral – DJIA, SPX, Down – Nasdaq, RUT Short Term Market Trend: Up

Rally Slows Down on Tuesday

DJIA + 36.08, +0.43% SP500 + 5.58, +0.66% NASDAQ Comp. - 7.67, -0.50% Russell 2000 + 6.38, +1.46% Exchange NYSE NASD Advancing 2,505 1,597 Declining 1,195 1,255 Oil $50.77 -$3.73 Gold $819.50 +$0.00 SOX 187.02 -4.18 VIX 60.90 -3.80 Strongest Sectors: XLF +5.83%...XLB +3.67%...XLU +1.99% Weakest Sectors: XLP +0.56%...XLV +0.66%...XLY +1.26% Sector Watch Up Trending: Sideways: XLE, XLP, XLU Down Trending: XLF, XLY, XLV, XLI, XLB, XLK The DJIA, SPX and RUT moved higher on Tuesday, however, upward momentum slowed down. With the Thanksgiving holiday on Thursday and a half trading day on Friday, which is traditionally the lightest trading volume day of the year, this is not overly surprising. Many traders will close positions out on Wednesday and not return until next week. The fact that profit taking did not push the indices below Monday’s S1 level shows that buyers are still in control. If markets move below Tuesday’s low or Monday’s S1 level, some traders will view this as an opportunity to take profits on short-term bullish trades. The Financial Sector, XLF, was the strongest sector again on Tuesday gaining more than 20% over the past two days. Airline stocks had positive gains on Tuesday with LCC and DAL gaining more than 14% and UAUA up over 24%. The SPX closed above its Oct. 10 low for the second straight and is trading in its sideways trend of the past 6 weeks once again. The Nasdaq and RUT are still trading below their October lows. Index Commentary The DJIA formed a white spinning top…sellers appeared at 8,600 level for the second day in a row…closed above its Oct. 10 intraday low for third straight day…watch R3 from Wednesday…8,500 continues as an important intermediate resistance level. The SPX formed a white spinning top…closed above Oct. 10 low for the second straight day…sellers appeared the 865 area for the second day…840 continues as a key support area and 915 a key resistance area. The Nasdaq formed a black spinning top…sellers came in at the 1,486 level…1,500 continues as a key resistance area…still trading below Oct. 10 and 24 lows. The RUT formed a potential hanging man pattern…closed above its Oct. 28 low…450 is still a key resistance area…still trading below Oct. 10 low. Stocks to Watch on Wednesday Leading Stocks Holding Above 30 DMA TEVA… AXYS…AYE…CL…DV…EZPW…MMM…PCLN…PPD ANSS…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…PRGO…RCI…SHW...TKC…WMS Stocks Moving Above 30 DMA AME…JCOM…JEC…NOV Stocks Moving Below 30 DMA MIG…OSIP…SWN Stocks Staying Below 30 DMA RTN…AFAM…MYGN…VIVO…AOB…CERN…CHTT…FLIR…GILD…GIS…PSSI Tuesday’s Action Moving Up: STRA, BIDU, MA, FSLR, MON, GS, PNRA, HANS, UAUA, CNX, CF, LAMR, AEM, FWLT, ANR, PCLN, NUE, GDX, COH, ONXX, SINA, MS, SCHN, ZION, KBE, LCC Moving Down: ESRX, INFY Intermediate Term Market Trend: Neutral – DJIA, SPX, Down – Nasdaq, RUT Short Term Market Trend: Up

Markets in Moderate Pullback on Tuesday

1:23 ET DJIA -83...SPX -6.5....Nasdaq -28...RUT -5.6....Sox -5.5....Oil -$3.58 VIX -0.05 After an 1,150 point rally in the DJIA on Friday and Monday stock indices are taking a breather. From a traders perspective this is healthy. The key becomes where does the pullback stop? If support on this pullback becomes a higher low that is positive and becomes a potential entry point for short term bullish trades. Keey your eye on key support levels. For the indices that is the S1 and S2 levels of Monday's large white candle. If those levels hold and buyers step into the market at higher lows that will be a buying opportunity for traders. For the DJIA S1 is the 8,250 area and S2 is the 8,050 area. Since the DJIA has risen above its Oct. 1o low, that 7,882 level is significant relative to the direction of its 6-week intermediate term trend; neutral or down. At this moment the SPX is barely above its Oct. 10 low of 839, which is a key level for the index. Monday's S1 level is 826 and the S2 is 801. So watch the pullback in context of these key support levels. As of this moment only the DJIA has an Intermediate Term Trend reading of Neutral. The Nasdaq and RUT can not change today as they are still trading below their October lows. Airline, Financial, Utility, Basic Material and Healthcare stocks are showing some strength this morning. Tuesday's Early Action Moving Up: BIDU, STRA, UAUA, HANS, PNRA, MA, MON, FWLT, CNX, CF Moving Down: ESRX, ZION, PCLN, POT, AEM, X, BTU, GDX, FSLR, INFY, AMZN, DECK, NIHD, CLF, SOHU

DJIA and SPX Back Above October 10 Low

DJIA + 396.97, +4.93% SP500 + 51.78 +6.47% NASDAQ Comp. + 87.67, +6.33% Russell 2000 + 30.26, +7.44% Exchange NYSE NASD Advancing 3,261 2,211 Declining 489 724 Oil $54.50 +$4.57 Gold $819.50 +$27.70 SOX 191.20 +10.98 VIX 64.70 -7.97 Strongest Sectors: XLF +15.19%...XLY +7.85%...XLE +7.23% Weakest Sectors: XLU +1.01%...XLP +1.26%...XLV +1.99% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK The rally that began on Friday broadened as the SPX, Nasdaq and RUT had larger point and percentage gains on Monday than they did on Friday. On the NYSE the number of advancing issues increased by 56% and the number of declining issues fell by 54%. The Nasdaq advancers also increased while decliners fell. The Financial Sector, XLF, was the strongest sector up 15.19% on news of a government rescue plan for C which rose $2.18 or 57%. Our Intermediate Term Trend reading on the DJIA changed to Neutral because the index closed for the second straight day above the Oct. 10 low support area. The Intermediate Term Trend on the SPX, which closed above its Oct. 10 low today, will change to Neutral on Tuesday if the index stays above the Oct. 10 support tomorrow. Index Commentary The DJIA followed Friday’s bullish engulfing pattern with a large white candle that closed above Thursday’s R3, Wednesday’s R1 and R2…closed above its Oct. 10 intraday low for second straight day…watch R3 from Wednesday…8,500 important intermediate resistance level. The SPX confirmed Friday’s bullish harami with a large white candle…closed above Thursday’s R2 and R3 and R1 from Wednesday…closed above Oct. 10 low…840 is key support area and 915 a key resistance area. The Nasdaq confirmed Friday’s hammer with a large white candle…closed above Thursday’s R3 and Wednesday’s R1…1,500 is a key resistance area…still trading below Oct. 10 low. The RUT confirmed Friday’s bullish harami with a large white candle…closed above Thursday’s R2 and R3 and Wednesday’s R1…450 is a key resistance area…still trading below Oct. 10 low. Stocks to Watch Of the 31 stocks we listed to watch for the next trading day only one was negative on Friday or Monday. This is to point out the importance of mental flexibility and being prepared for a support bounce when the Chart Signals suggest a strong probability of a move occuring. Some of the gains on just the stocks were equal to more than some traders' annual gains. Read Thursday's post and look at Monday's gains below. We were expecting this technical bounce as we had posted this Thursday evening: "Stocks continue to be technically oversold in the short-term, so be alert for a potential short-term bounce Friday or Monday. This could provide a bullish move on the few leading stocks or a counter bounce on the many down trending stocks." The emphasis was as originally posted Thursday night. Stocks to Watch Posted on Thursday for Friday Support Bounce AXYS +5.21% Potential Support Bounce SRCL +1.74%...CHRW +4.49%...TEVA +0.50%...SHLD +16.06%...FAST +5.03% VMW +3.22%...WYNN +17.93% Stocks to Watch Posted on Weekend for Monday Potential Double Bottom VRTX +6.86%...MBT +27.96%...UA +7.94% ...FSYS +16.77%...DGX +2.53%...ESRX +5.94%...UTX +5.23%...ARG +2.62% Morning Star Patterns FAST +5.03%...PRE +4.74%...FMC +8.61% Potential Support Bounce TDS +11.73%...CMP +10.48%...OTEX +2.04%...AMAG +4.71%...ESI +8.92%...MHS +7.72%...RIMM +1.03% Support Bounce URS +34.42%...MMM +3.20%...AMGN +1.99% Potential Bull Flag ADM +7.53%...CBST +6.13%...MYGN +1.36% Stocks to Watch on Tuesday Support Bounce and Potential Double Bottom MBT...TDS...WYNN...CBST...ICE...HSC...NFLX...RIMM...WFC...USB...ZION...KEY...UYG...DE...PCP Leading Stocks Holding Above 30 DMA TEVA… AXYS…AYE…CL…DV…EZPW…MMM…PCLN…PPD Stocks Moving Above 30 DMA ANSS…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…MIG…OSIP…PRGO…RCI…SHW…SWN…TKC…WMS Stocks Moving Below 30 DMA RTN Stocks Staying Below 30 DMA AFAM…MYGN…VIVO…AOB…CERN…CHTT…FLIR…GILD…GIS…PSSI

Monday’s Action Moving Up: FSLR, GS, STRA, MA, CNX, SOHU, AMZN, NIHD, V, MER, SCHN, PCLN, MS, ZION, ESRX, PNRA, KBE, KRE, NDAQ, X, BTU, NUE, MON, FWLT, SINA, MOS, CLF, BIDU, DECK, INFY, COH, KMT, BRCM, LDK, JASO, ONXX, GDX, MEE, IPI, ANR, AGU, GRMN, AEM, RF, UAUA, HANS, DRYS, BUCY, EBAY, EXPE Moving Down: POT Intermediate Term Market Trend: Neutral – DJIA, Down – SPX, Nasdaq, RUT Short Term Market Trend: Up

Rally Follows Through on Monday

As of 3 pm ET, the rally that began on Friday has continued to move higher. A quick look at key resistance areas to pay attention to: The DJIA which on Friday's close had moved back into the sideways trading range that started on October 10, is continuing to rise and has penetrated Thursday's R3 and Wednesday's R1...currently just below Wednesday's open...watch Wendesday's R2 and R3. Key resistance areas are 8,500 and 9,000. The SPX has moved back above its October 10 low and risen above Thursday's R2 and R3 levels as well as Wednesday's R1...840 is a key resistance/support area that the SPX is currently above...915 is the next key resistance area. The rally is broad with NYSE advancers leading decliners 3,168 to 545 and on the Nasdaq 2,111 to 810.

A Rally From Down Under

DJIA + 494.13, +6.54% SP500 + 47.59 +6.32% NASDAQ Comp. + 68.23, +5.18% Russell 2000 + 21.23, +5.51% Exchange NYSE NASD Advancing 2,049 1,777 Declining 1,161 1,170 Oil $49.93 +$0.51 Gold $791.80 +$43.10 SOX 180.22 +8.90 VIX 72.67 -8.19 Strongest Sectors: XLE +11.16%...XLU +10.00%...XLY +6.86% Weakest Sectors: XLV +0.13%...XLB +1.11%...XLI +2.95% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Stocks rallied from down under support on Friday with the DJIA regaining more than Thursday’s loss and closing above support. The SPX, Nasdaq and RUT regained most of Thursday’s loss but closed just below Thursday’s close. Advancers led decliners by about a 2 to 1 margin which was a respite from Wednesday’s and Thursday’s 9 to 1 margin in favor of decliners. All nine sectors moved higher on Friday. We were expecting this technical bounce as we had posted this Thursday evening: "Stocks continue to be technically oversold in the short-term, so be alert for a potential short-term bounce Friday or Monday. This could provide a bullish move on the few leading stocks or a counter bounce on the many down trending stocks."

The emphasis was as originally posted Thursday night.

Maybe Chart Signals do work.

This is a counter trend rally and only the DJIA has moved above its recent support for a potential breakout and reversal. The DJIA barely broke through so it is too early to conclude that Friday is anything more that a short term technical bounce and counter trend move. Watch the short term resistance areas as stated below in Index Commentary for clues if this counter trend bounce sets up a potential reversal point.

Index Commentary The DJIA formed a bullish engulfing pattern…breaks above below its Oct. 10 intraday low…watch R3 from Thursday and R1 from Wednesday…8,500 important intermediate resistance level. The SPX formed a bullish harami…watch R2 and R3 from Thursday and R1 from Wednesday. The Nasdaq formed a hammer…watch R3 from Thursday and R1 from Wednesday. The RUT formed a bullish harami…watch R2 and R3 from Thursday and R1 from Wednesday.

Stocks to Watch Posted on Thursday for Friday Support Bounce AXYS +4.50% Potential Support Bounce SRCL +0.36% CHRW +9.38% TEVA +0.00% SHLD +1.23% FAST +10.05% VMW -3.42% WYNN +2.46

Stocks to Watch on Monday Potential Double Bottom VRTX...MBT...UA...FSYS...DGX...ESRX...UTX...ARG... Morning Star Patterns FAST...PRE...FMC Potential Support Bounce TDS...CMP...OTEX...URS...AMAG...ESI...MHS...RIMM Support Bounce URS...MMM...AMGN Potential Bull Flag ADM...CBST...MYGN Leading Stocks Holding Above 30 DMA TEVA Stocks Moving Above 30 DMA AXYS…EZPW…MMM…PCLN…PPD…RTN Stocks Moving Below 30 DMA None to report Stocks Staying Below 30 DMA AFAM…CL…DLTR…DV…MYGN…VIVO…ANSS…AOB…AYE…CBST…CERN…CHTT…ESI…FLIR…FSTR…GILD…GIS…PRGO…PSSI…SHW…SWN Friday’s Action Moving Up: CF, DECK, FSLR, AEM, MA, ;POT, PCLN, GDX, ESRX, CLF, X, AGU, ANR, NUE, MOS, BTU, FWLT, SINA, MEE, STRA, SOHU, AMZN, BIDU, KRE, NDAQ, PNRA, CNX, SCHN, IPI, GS, MON, INFY, BUCY, NIHD, COH, LDK, KMT, EBAY, MS Moving Down: V, ONXX, Intermediate Term Market Trend: Down Short Term Market Trend: Down

A Record Bear Market Pecentage Drop

DJIA - 444.99, -5.56% SP500 - 54.14, -6.71% NASDAQ Comp. - 70.30, -5.07% Russell 2000 - 27.07, -6.56% Exchange NYSE NASD Advancing 334 426 Declining 3,414 2,526 Oil $48.70 -$4.92 Gold $748.70 +$12.70 SOX 171.32 -5.78 VIX 80.86 +6.60 Strongest Sectors: XLI -2.68%...XLV -2.85%...XLP -3.48% Weakest Sectors: XLE -12.37%...XLF -10.74%...XLY -5.86% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Thursday was a record day setting, a new record post WWII bear market percentage drop. The prior worst bear market was the 1973-1974 bear market which fell from high to low -46.5%. As of the close today, the DJIA was down from its October 9, 2007 high -46.68%. A new bear market record. All four broad indices have broken support and are again in an intermediate term downtrend.

Decliners again led advancers by a 9 to 1 margin. All nine sectors moved lower. Stocks experienced a technical bounce in the morning that faded as concerns over the auto industry and jobless data weighed on the market as sellers gained the upper hand sending stocks lower. Stocks continue to be technically oversold in the short-term, so be alert for a potential short-term bounce Friday or Monday. This could provide a bullish move on the few leading stocks or a counter bounce on the many down trending stocks. Oil dropped $4.92 sending the Energy ETF (XLE) down over 12%. Gold rose $12.70.

Index Commentary The DJIA large black candle…new 52 week closing low…breaks below its Oct. 10 intraday low. The SPX large black candle breaks support…new 52-week intraday and closing low. The Nasdaq formed a large black candle breaks support…new 52-week intraday and closing low. The RUT formed a large black candle breaks support…new 52-week intraday and closing low.

Trend Reversal Strategy RIMM stopped out at $44.70 today. The options closed out at 2.50 with a 41 cent gain or 19% gain. We stated in our Wednesday morning webcast that it would be valid to move the stop even higher in the current volatile market to lock in the strong one day gains, but that we would follow the strategy rules for illustrative purposes.

Stocks to Watch on Friday Support Bounce AXYS Potential Support Bounce SRCL, CHRW, TEVA, SHLD, FAST, VMW, WYNN Broke Support from Wednesday Stocks to Watch GILD…JNJ…IBM…BCR…CELG At Support PCP Below Support BA formed an inverted hammer…watch for a potential counter trend bounce Leading Stocks Holding Above 30 DMA TEVA Stocks Moving Below 30 DMA AFAM…CL…DLTR…DV…MYGN…VIVO Stocks Staying Below 30 DMA ANSS…AOB…AYE…CBST…CERN…CHTT…ESI…FLIR…FSTR…GILD…GIS…MMM…PCLN…PRGO…PSSI…SHW…SWN Thursday’s Action Moving Up: None in our Watchlist Moving Down: FSLR, POT, MA, MOS, AGU, CF, BTU, X, BUCY, MON, ANR, GS, ESRX, V, LDK, SOHU, CLF, NIHD, SCHN, FWLT, CNX, NUE, PCLN, IPI, STRA, KBE, KRE, NDAQ, ZION, RF, UAUA, MEE, SINA, MS, KMT, MER, DRYS, BIDU, LAMR, INFY, ONXX, AMZN, GRMN, PNRA Intermediate Term Market Trend: Down Short Term Market Trend: Down

SPX, Nasdaq and RUT Break Support

DJIA - 427.47, -5.07% SP500 - 52.54, -6.12% NASDAQ Comp. - 96.85, -6.53% Russell 2000 - 35.13, -7.85% Exchange NYSE NASD Advancing 303 336 Declining 3,390 2,568 Oil $53.62 -$0.77 Gold $736.00 +$3.30 SOX 177.10 -14.79 VIX 74.26 +6.62 Strongest Sectors: XLU -2.14%...XLP -2.57%...XLV -4.04% Weakest Sectors: XLF -10.47%...XLI -6.46%...XLY -6.42% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Wednesday was a good old fashioned down day with all broad indices, sectors and most stocks moving lower. Decliners led advancers by a 9 to 1 margin. Concerns over the auto industry played a major role in the tone for the day. The price of GM and F indicates the market is not expecting much for these companies, but the real concern is the economic impact and the potential for more lost jobs should government help not be forth coming. Oil moved fell another 77 cents hitting a new 22 month low. Gold rose $3.30. The SPX, Nasdaq and RUT made new closing lows and can be considered to have broken support today. The SPX is 4% below its Oct. 10 low. The Nasdaq is 7% below its Oct. 24 low. The RUT is 6.6% below its Oct. 28 low. Only the DJIA closed above its Oct. 10 low today. Index Commentary The DJIA formed a large black candle…new 52 week closing low…holds above Oct. 10 intraday support low. The SPX large black candle breaks support…new 52-week intraday and closing low. The Nasdaq large black candle breaks support…new 52-week intraday and closing low. The RUT large black candle breaks support…new 52-week intraday and closing low. Trend Reversal Strategy RIMM stop was moved to $44.70 this morning. RIMM fell to 45.33 and did not stop out. Stocks to Watch on Thursday Potential Support Bounce or Break GILD…at support with a potential 5 point target JNJ…at support with a potential 4 point target IBM…at support with a potential 9 point target PCP…at support with a potential 6 point target BCR…at support with a potential 7 point target CELG…at support with a potential 6 point target Broke Support BA Leading Stocks Holding Above 30 DMA TEVA…VIVO Stocks Moving Below 30 DMA ANSS…AOB…AYE…CBST…CERN…CHTT…ESI…FLIR…FSTR…GILD…GIS…MMM…PCLN…PRGO…PSSI…SHW…SWN Stock Commentary CELG lower high…lower low…lower close at support ESRX large black candle…break support…target 49 GE large black candle…new 52-week low MMM large black candle…near support in sideways move…watch for bounce or break UTX large black candle no confirmation of Tuesday’s piercing line pattern HPQ shooting star after Tuesday’s gap up Wednesday’s Action Moving Up: None in our Watchlist Moving Down: BIDU, MA, FSLR, GS, POT, CF, SOHU, AEM, MON, ESRX, X, BTU, SCHN, V, DRYS, AMZN, BUCY, CLF, NUE, AGU, MOS, MEE, SINA, CNX, NDAQ, PNRA, UAUA, KBE, KRE, ZION, LCC, HANS, MS, PCLN, ANR, FWLT, GRMN, IPI, LDK, MER, DECK, INFY, KMT, ONXX, COH, LAMR, FMCN, GDX, RF Intermediate Term Market Trend: Down SPX, Nasdaq, RUT Short Term Market Trend: Down

Support Holds on Tuesday

DJIA + 151.17, +1.83% SP500 + 8.37, +0.98% NASDAQ Comp. + 1.22, +0.08% Russell 2000 - 3.79, -0.84% Exchange NYSE NASD Advancing 1,306 1,163 Declining 2,325 1,749 Oil $54.39 -$0.56 Gold $732.70 -$9.30 SOX 191.89 -3.83 VIX 67.64 -1.51 Strongest Sectors: XLE +2.80%...XLK +1.39%...XLP +0.69% Weakest Sectors: XLF -1.43%...XLB -1.12%...XLU -1.08% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Stocks rallied late Tuesday moving the DJIA and SPX into positive territory for the day. However market breadth was weak as the Nasdaq was essentially even and the RUT was down for the day. Decliners led advancers by almost a 2 to 1 margin. Five sectors were up for the day while four were lower. Oil moved fell another 56 cents hitting a new 52-week low and continuing the down trend since July. Gold was down $9.30. Continue to maintain mental flexibility and trade with the current trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks. Index Commentary The DJIA formed lower high and lower low …white spinning top bullish harami …held above Oct. 10 support. The SPX formed a hammer and bullish harami…closed at the S2 level of Thursday’s large white candle…closed above Thursday’s low. The Nasdaq formed a hammer and bullish harami…closed above Thursday’s intraday low. The RUT formed a hammer…made a new 52-week intraday and closing low…still forming potential double or triple bottom. Trend Reversal Strategy In our webcast Monday evening we demonstrated a a real-time virtual trade on RIMM because it met the criteria of our Trend Reversal Strategy that we shared in our October 25, 2008 post. We shared this strategy because we saw that several individual stocks were beginning to exhib it Trend Reversal characteristics at that time. We invite you to revistit that Strategy. Specificially RIMM's chart showed a potential double bottom pattern, a bullish engulfing candle pattern and a bullish divergence on the 14/5 stochastic. RIMM closed on Monday at 42.24 and we entered on Monday evening a Buy Stop to buy 10 December 55 calls if RIMM rose to 42.82 on Tuesday morning. A stop contingent on the order being filled was entered at a stock price of 37.72. The order was triggered at 7:31 am and filled at 2.09 per contract. RIMM rose $5.01 or 11.86% from Monday's close and the Dec 55 calls closed at 3.45, a gain of $1.36 or 65% from our Tuesday morning entry. The trailing stop is moved up to 44.70 after the first day. Stocks to Watch on Wednesday Potential Bull Flag GILD…forms low day hammer Potential Trend Reversal IBM Leading Stocks Holding Above 30 DMA TEVA…GIS…MMM…VIVO…AYE…FLIR…PSSI Stocks Moving Above 30 DMA ANSS…CERN…CHTT…CL…PCLN…PRGO…SHW Moving Below 30 DMA ASIA…ESRX…JCOM…LFL… Stock Commentary CELG lower high…lower low…lower close in sideways pattern ESRX lower high…lower low…lower close…holding support GE doji…no confirmation of hammer, inverted hammer or Monday’s bullish harami MMM piercing line patter on bounce off 30 DMA UTX lower high…lower low…piercing line pattern HPQ gaps higher forms dragonfly doji on strong than expected preliminary Q4 results and full year results Tuesday’s Action Moving Up: MA, PCLN, PNRA, V, SOHU, LDK, AEM, MS, POT, STRA Moving Down: DECK, BIDU, FSLR, ANR, BTU, FWLT, SCHN, MEE, NIHD, AMZN, DRYS, BUCY, CLF, ESRX, NDAQ, GRMN, CNX, NUE, Intermediate Term Market Trend: Neutral – 5 weeks Short Term Market Trend: Down

Dow Continues Pullback to Support

DJIA - 223.73, -2.63% SP500 - 22.54, -2.58% NASDAQ Comp. - 34.80, -2.29% Russell 2000 - 5.22, -1.14% Exchange NYSE NASD Advancing 899 933 Declining 2,769 1,935 Oil $54.95 -$2.09 Gold $742.00 -$0.50 SOX 195.72 -5.67 VIX 69.15 +2.84 Strongest Sectors: XLU -0.17%...XLP -1.32%...XLV -1.72% Weakest Sectors: XLF -6.36%...XLY -2.87%...XLK -2.84% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Stocks moved down towards the horizontal support level from which they rose just last Thursday. Oil moved lower on the day forming a new 52-week. The Financial Sector was the weakest sector on Monday as C announced 50,000 job cuts. Watch closely on Tuesday as indexes trade near support. Watch for a support bounce or break. Traders should maintain mental flexibility and trade with the higher probability of a trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks. Index Commentary The DJIA formed lower high and lower low …pulled back to Thursday’s S2 support level. The SPX formed a lower high and lower low…closed at the S2 level of Thursday’s large white candle…closed above Thursday’s low. The Nasdaq formed an inverted hammer…a lower high and higher low…a new closing low…closed above Thursday’s intraday low. The RUT formed a lower high and higher low…while trading above Thursday’s intraday low…still forming potential double or triple bottom. Stocks to Watch on Tuesday Potential Bull Flag GILD Potential Trend Reversal RIMM Leading Stocks Holding Above 30 DMA Breaking Below Support WYNN TEVA…ESRX…GIS…MMM…PRGO…VIVO Stocks Moving Above 30 DMA AYE…FLIR…JCOM…LFL…PSSI Moving Below 30 DMA ANSS…BLUD…CELG…DNA…EZPW…PRGO…RCI…RTN…SHW Stock Commentary CELG lower high…lower low…lower close pullback ESRX lower high…lower low…lower close…holding support GE bullish harami…no confirmation of Friday’s inverted hammer or Thursday’s hammer MMM lower high…lower low…holding at 30 DMA UTX lower high…lower low…lower close Monday’s Action Moving Up: STRA, PCLN Moving Down: BIDU, MA, GS, CF, DECK, AEM, IPI, ZION, SOHU, BUCY, AMZN, LAMR, V, MER, FSLR, AGU, ANR, X, SCHN, NDAQ, KBE, BTU, MOS, GDX, NUE, SINA, MS, CNX, GRMN, ONXX, KMT Intermediate Term Market Trend: Neutral – 5 weeks Short Term Market Trend: Down

Stocks Pull Back on Friday

DJIA - 337.94, -3.82% SP500 - 38.00, -4.17% NASDAQ Comp. - 79.85, -5.00% Russell 2000 - 34.71, -7.07% Exchange NYSE NASD Advancing 773 605 Declining 2,780 2,261 Oil $57.04 -$1.20 Gold $742.50 +$37.50 SOX 201.39 -13.76 VIX 66.31 +6.48 Strongest Sectors: XLY +2.98%...XLB +1.16%...XLI +0.86% Weakest Sectors: XLE -4.15%...XLK -4.57%...XLU -2.37% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK On Friday stocks opened and moved lower until mid-day when a rally drove the DJIA up 400 points to 8,900. Then the market began a 400 point sell off during the last 45 minutes of the day with the DJIA closing near 8,497. Decliners led advancers by a large margin and six of nine sectors moved lower. Since the October 10 low in the DJIA, the SPX, Nasdaq and RUT have all made intra-day lower lows. The DJIA so far has held above its October 10 low. As we posted on October 10, if support did hold building a new base would take at least four to eight weeks. The market is five weeks into that process and still looks like a new base building. Traders need to maintain mental flexibility and trade with the higher probability of a trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks. We returned Thursday night from teaching a two-day workshop to more than 200 traders on advanced and combination option strategies. The workshop was a succes and many of those in attendance let us know it made an important difference for them. One trader described it this way; "Great workshop in LA! I really enjoyed learning the strategies of combination options from you. I have learned many valuable lessons from this workshop but the lessons I value the most are your comments about a trader's mentality: attitude, discipline, and consistency. I know I struggle with this the most; it has always been a battle within. Your comments have inspired me to take a more disciplined approach to trading. Thank you for motivating and enlightenign me! I have learned so much about myself trading in the past 2 months trading. I never expected to be analyzing myself more than the stock charts." Index Commentary The DJIA formed a higher high and higher low with sellers appearing at the 30 DMA…pulled back to Thursday’s S1 support level while closing lower for the day. The SPX moved slightly above Thursday’s high before pulling back to the S1 level of Thursday’s large white candle…still above Thursday’s low. The Nasdaq formed a lower high and higher low…an inside day…closed near the open or mid-point of Thursday’s price bar. The RUT formed a lower high and higher low…an inside day…closed near Thursday’s open…still forming potential double or triple bottom.

Stocks to Watch on Monday Leading Stocks Holding Above 30 DMA EZPW…TEVA…ANSS…BLUD…CELG…DNA…ESRX…GIS…MMM…PRGO…RCI…RTN…SHW…VIVO Stocks Moving Above 30 DMA No new stocks listed for Friday. 23 of the 35 stocks that moved above their 30 DMA on Thursday fell below their 30 DMA on Friday…the 12 that stayed above are listed just above. Stock Commentary CELG higher high…higher low…lower close pullback ESRX higher high…higher low…lower close…inverted hammer at support GE inverted hammer…did not confirm bullish harami and hammer from Thursday MMM higher high…higher low…lower close doji UTX higher high…higher low…lower close inverted hammer Friday’s Action Moving Up: STRA, IPI Moving Down: BIDU, FSLR, MON, CF, DECK, AMZN, POT, MA, GS, AGU, BTU, MEE, NUE, CNX, NDAQ, ZION, ESRX, KRE, SOHU, FWLT, X, ANR, MOS, GRMN, SCHN, SINA, PCLN, MS, GDX, DRYS, CLF, INFY, NIHD, EBAY, COH, ONXX, FMCN, BRCM, HANS, UAUA, RF, LCC Intermediate Term Market Trend: Neutral – 5 weeks Short Term Market Trend: Neutral

The Dow Bounces Over 900 Points At Support

DJIA + 552.59, +6.67% SP500 + 58.99, +6.92% NASDAQ Comp. + 97.54, +6.50% Russell 2000 + 38.43, +8.49% Exchange NYSE NASD Advancing 2,650 2,089 Declining 919 799 Oil $58.24 +$2.08 Gold $705.00 -$13.30 SOX 215.15 +14.36 VIX 59.83 -6.63 Strongest Sectors: XLE +11.75%...XLB +8.14%...XLY +7.81% Weakest Sectors: XLP +4.00%...XLV +5.36%...XLI +5.36% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK After the DJIA fell to 7,965 around 1 pm ET buyers stepped into the market just like they had on 10, 16 and 22 to 27. Just last night we posted; “If the DJIA 7,882 to 8,143 support area is good we should see big money step in and begin to buy in that area as they did on Oct. 10, 16, 22, 23, 24, 27 and 28. Thursday and Friday become a major retest area.” And did they buy…while the DJIA rose 552.59 from yesterday’s close, the range from the low to the high on Thursday was 911.17 points. The daily range on October 13, the single largest daily point rise in Dow history, was 965.81. The daily range on October 28, the second largest daily point rise in Dow history, was 907.35. Today’s point rise from its intraday was equivalent to record setting days. So are the big money buyers still there in the area of support? Yes and in a very big way just like they have been since October 10.

Check out our leading stocks crossing above their 30 DMA today...Wow...35 stocks!

As we posted Wednesday, "If traders have been trading the short-term trend correctly they are already in short-term bearish trades and could be looking to lock in profits if support holds." We hope you were prepared to lock in profits as the markets did bounce today! Index Commentary The DJIA formed a bullish engulfing pattern…outside day…broke broke through the R1, R2 and R3 levels of Thursday’s large black candle…rose to 20 DMA…bounced at major support area. The SPX formed a bullish engulfing pattern…outside day…potential ripple bottom bounce. The Nasdaq fell to new 52-week low…formed a bullish engulfing pattern…outside day…broke through Thursday’s high. The RUT formed a bullish engulfing pattern…outside day…broke through the R1, R2 and R3 level of Thursday’s large black candle…formed a lower low that negated the potential head and shoulders bottom…forming potential double or triple bottom. Stocks to Watch on Friday Leading Stocks Holding Above 30 DMA EZPW…TEVA 35 Stocks Moving Above 30 DMA AMED…AMX…ANSS…AXYS…AYE…BAP…BCR…BIIB…BLUD…CELG…CHU…CL…DNA…ESRX…FLIR…GIS…JCOM…JW.A…LFL…MMM…MTD…OSIP…PRGO…PSSI…PSYS…QSII…RCI…RIO…TN…SAY…SHW…TECH…UTX… VIVO…WMS Stock Commentary CELG higher low…outside day…support bounce ESRX bullish engulfing…higher low GE hammer…bullish harami MMM bullish engulfing pattern TECH outside day…support bounce…higher low UTX higher low…outside day Thursday’s Action Moving Up: FSLR, MA, CF, BIDU, SOHU, PCLN, POT, CNX, NUE, BTU, ANR, MOS, X, IPI, AGU, AEM, MON, SCHN, GS, STRA, BUCY, AMZN, CLF, V, COH, ZION, PNRA, MEE, GDX, KRE, ESRX, KBE, DRYS, KMT, INFY, LAMR, DECK, NIHD, EBAY, BRCM, LDK, ONXX, UAUA, LCC, GRMN, SINA, FWLT, MS, HANS, RF, Moving Down: None In Our Watchlist Intermediate Term Market Trend: Neutral – 4 weeks Short Term Market Trend: Neutral

Stock Indexes Approach Support

DJIA - 411.30, -4.73% SP500 - 46.65, -5.19% NASDAQ Comp. - 81.69, -5.17% Russell 2000 - 29.49, -6.11% Exchange NYSE NASD Advancing 323 412 Declining 3,250 2,504 Oil $56.16 -$3.17 Gold $718.30 -$14.50 SOX 200.79 -10.64 VIX 66.46 +5.02 Strongest Sectors: XLP -2.14%...XLV -2.21%...XLU -3.32% Weakest Sectors: XLE -8.19%...XLB -6.36%...XLF -6.16% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Stocks, oil and gold moved lower on Wednesday near the area of support established since October 10. If the DJIA 7,882 to 8,143 support area is good big money should step in and begin to buy in that area as they did on Oct. 10, 16, 22, 23, 24, 27 and 28. Watch this major support area on Thursday and Friday for a potential bounce or break. This is an important retest of the October lows. If traders have been trading the short-term trend correctly they are already in short-term bearish trades and could be looking to lock in profits if support holds. If support breaks they could hold existing bearish trades or enter new bearish trades as stocks break support. Even though oil moved lower airline stocks which have been relatively stronger moved lower on concerns for falling demand in air travel related to the current economic slowdown. Index Commentary The DJIA broke below the Oct. 28 S1 support and fell near the S2 level forming a large black candle…approaching major support area. The SPX also broke the Oct. 28 S1 support…nearing 839 Oct. 10 low. The Nasdaq fell to within 6 point of its Oct. 24 low at 1,493…forming a large black candle. The RUT formed a large black candle falling within 11 point of its Oct. 28 low…a lower low would negate the potential head and shoulders bottom. Stocks to Watch on Thursday Leading Stocks Holding Above 30 DMA EZPW…TEVA Stocks Falling Below 30 DMA ANSS…BCR…BIIB…BLUD…ESRX…LFL…OSIP…PRGO…QSII…RTN…SAY…TECH…UTX Monday’s At Resistance Stocks Again Moved Lower on Wednesday CLI -6.66%…AVP -9.34%…DB -10.93%…CRDN -3.41%…SPG -10.98%…DRIV -6.18% Wednesday’s Action Moving Up: None in our Watchlist Moving Down: FSLR, POT, BIDU, GS, STRA, CF, DECK, MON, MA, X, ZION, AMZN, LDK, BUCY, SOHU, CLF, V, INFY, UAUA, NDAQ, PNRA, ESRX, LCC, KRE, KBE, MOS, PCLN, IPI, BTU, NUE, AGU, CNX, AEM, MEE, SCHN, GDX, FWLT, MS, ANR, MER, KMT, NIHD, ONXX, DRYS, GRMN, SINA, JASO, BRCM, COH, FMCN, LAMR, EBAY Intermediate Term Market Trend: Neutral – 4 weeks Short Term Market Trend: Down

Oil, Gold and Stocks Move Lower on Tuesday

DJIA - 176.58, -1.99% SP500 - 20.26, -2.20% NASDAQ Comp. - 35.84, -2.22% Russell 2000 - 10.81, -2.19% Exchange NYSE NASD Advancing 674 723 Declining 2,889 2,119 Oil $59.33 -$3.08 Gold $732.80 -$13.70 SOX 211.43 -3.05 VIX 61.44 +1.46 Strongest Sectors: XLU +0.00%...XLV -1.79%...XLK -2.16% Weakest Sectors: XLB -3.98%...XLY -3.49%...XLF -3.48% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Eight of nine sectors moved lower on Tuesday as the DJIA, SPX, Nasdaq and RUT headed lower towards support. The broad indexes continue in their sideways trading range of the past four weeks moving from resistance to support. Oil and gold also fell on Tuesday. Oil slipped below $60 a barrel for the first time in over a year continuing the intermediate term down trend that we have continually pointed out for more than 3 months. We pointed out on our Monday webcast that the breaking of the 62.45 support on Monday gave a new short-term price target of 53.40 a barrel. Index Commentary The DJIA fell and bounced off the S1 support of its Oct. 28 large white candle…again failed to confirm Friday’s bullish harami. The SPX also fell and bounced off the S1 support of its Oct. 28 candle…failed to confirm Friday’s bullish harami. The Nasdaq traded found support just below the Oct. 28 S1 support level…broke Thursday support low…failed to confirm Friday’s bullish harami. The RUT fell below Monday’s low and closed near its low of the day without a support bounce like the other indexes…did not confirm Friday’s bullish harami…continues to form a potential head and shoulders bottom. Stocks to Watch on Wednesday Leading Stocks Holding Above 30 DMA ANSS…BCR…BIIB…BLUD…EZPW…LFL…OSIP…QSII…RTN….SAY…TECH…TEVA…ESRX…PRGO…UTX Stocks Falling Below 30 DMA BAP…CELG…CHTT…CTSH…DNA…ICON…KNL…MBT…SHW…SYNA…TKC…VIP Monday’s At Resistance Stocks Moved Lower on Tuesday CLI…AVP…DB…CRDN…SPG…DRIV Tuesday’s Action Moving Up: GS, V, BUCY Moving Down: BIDU, SOHU, FSLR, FMCN, CLF, SINA, MON, BTU, CNX, MOS, FWLT, CF, DRYS, AGU, AEM, POT, X, GDX, MA, SCHN, ANR, IPI, PNRA, STRA, AMZN, LDK, NIHD, DECK, INFY, ZION, NUE, GRMN, MEE, ONXX Intermediate Term Market Trend: Neutral – 4 weeks Short Term Market Trend: Down