Indices Fail to Rally, Strong Stocks Breakout

DJIA + 3.50, +0.03% SP500 + 1.62, +0.13% NASDAQ Comp. - 5.74, -0.25% Russell 2000 - 0.28, -0.04% Oil closed at $140.00 down 21 cents The DJIA finished 1,288 points lower or down -10.19% for the month of June. Reportedly it was the worst June in over 75 years. Even though this was the biggest monthly drop this year for the DJIA, SPX and RUT, the Nasdaq Composite actually had a bigger monthly drop in January. Even though the DJIA is at a low for the year the SPX, Nasdaq and RUT are still above their January and March lows. Of course keep in mind any rallies that occur are still counter trend moves at this point. The DJIA formed a lower high and lower and a doji candle pattern. Certainly a pause in downward momentum but no upward momentum developed today. The SPX form a higher low and higher high and inverted hammer. Since Monday’s price action was barely above Friday’s there is still a lack of upward momentum in this index. The Nasdaq formed an inside day and closed at its low of the day. The only positive here is that it failed to create a lower low than Friday, but just barely. No sign of upward momentum here either. The RUT formed an outside day (a higher high and a lower low) and also closed at its low of the day about 2 ½ points below Friday’s low. No upward momentum here. Uptrending Stay focused on the up trend in these stocks. CLF had a support bounce and a resistance breakout in a three day bull flag pattern. BTU had a support bounce and a resistance breakout in a three day bull flag pattern. SCHN had a resistance breakout today following its support bounce in a bull flag on Friday. SCHN reports earnings Tuesday morning, July 1, before the open. Pay attention to trading after the news release. ANR had a resistance breakout with a breakout price target of 120. POT formed a spinning top after yesterday’s bullish engulfing pattern. In Consolidation FSLR had a support bounce. GS formed a spinning top and potential bullish harami pattern. Down Trending MER fell to a 52 week low. MS moved lower in its down trend. LEH fell to 52 week low and below its March 27 low. Monday’s Action Moving Up: CLF, FSLR, BTU, SCHN, IPI, MEE, ANR, DECK, MTL, AGU Moving Down: STRA, PCLN, MA, RIMM, CF, DRYS, MOS, AAPL, LEH, X, MON, IBM, AMZN, V, GRMN, SOHU, MER, EXPE, NKE, JASO Intermediate Term Market Trend: Down Short Term Market Trend: Down

Counter Trend Bounce in DJIA and SPX

With less than an hour to go the DJIA is up and has formed a lower high and lower low as of this moment. The SPX is up and has formed a higher low and higher high. The Nasdaq is still down and is still forming an inside day. The RUT is down and has formed a higher low and higher high. All four indices are still well below the R1 resistance level of Thursday's large black candle. Keep in mind this is a counter trend bounce which for many traders is the time to look for the right entry point into the down trend Ag-related stocks POT, IPI and AGU are higher. MOS, CF and MON are lower. Coal related stocks KOL, CNX, MEE and ANR also moving higher. BTU is breaking out so we will post a new price target after the close. Monday's Last Hour Action Moving Up: CLF, FSLR, SCHN, BTU, DECK, POT, IPI, MEE, BIDU, GS, AGU, ANR, CNX, ESRX, NUE Moving Down: STRA, PCLN, MA, DRYS, RIMM, LEH, V, GRMN, AAPL, MOS, CF, MON

Indices Starting to Bounce

The DJIA, SPX, Nasdaq and RUT are starting to bounce, watch for a break of the high of the low day. Keep in mind any bounce at this time is a counter trend move. Ag-related stocks have pulled back after this morning's early move. Two hours into trading... Monday's Early Action Moving Up: CLF, FSLR, SCHN, BIDU, DECK, BTU, ESRX, AMZN, MEE, NUE, IPI, CNX Moving Down: PCLN, MOS, STRA, CF, DRYS, RIMM, POT, MON, X, V, AAPL, USO, JASO, FWLT

Strong Stocks Stronger, Indices Holding

The DJIA and S&P (SPX) are positive just over one hour into trading this morning while the Nasdaq and Russell (RUT) are down slightly. The DJIA has made a slightly lower low while the SPX, Nasdaq and RUT are all forming an inside day. This indicates like the lower candle shadows on Friday, that selling pressure is taking a break at least for now. What has not yet appeared is buying momentum to shift price action to the upside. The indices are still in a down trend so any upward movement at this time would be counter trend. Ag-related stocks POT, CF and AGU are continuing their support bounce move to the upside this morning. MOS which was down in early trading is now positive and MON is down slightly at the moment. Coal stocks are moving higher with a strong support bounce this morning. KOL the coal etf is bouncing to the upside in it six day bull flag. ANR is breaking out of resistance to new highs. BTU has bounced to resistance watch for a break out. MEE bounced to resistance.

The Down Trend Continues...

DJIA - 106.91, -0.93% SP500 - 4.77, -0.37% NASDAQ Comp. - 5.74, -0.25% Russell 2000 - 0.28, -0.04% Oil closed at $140.21 up 57 cents Oil moved higher to a new all-time high on Friday after breaking out of its pennant pattern on Thursday and the broad markets fell lower.. All four indices traded lower on Friday. Each of them traded only slightly above Friday’s close. None of the indices traded anywhere near the R1 horizontal resistance of Thursday large black candle. Each of the indices fell only a fraction of Thursday’s move which indicates that selling momentum at least slowed down on Friday. Decliners led advancers 1,969 to 1,164 on the NYSE and 1,732 to 1,171 which was stronger than Thursday. There were 235 new 52-week lows on the NYSE and 127 on the Nasdaq. There were only 18 new 52-week highs on the NYSE and only 12 on the Nasdaq. The DJIA barely moved above Thursday’s close and formed a lower high and lower low as it finished Friday with another large black candle. Friday’s candle did have a lower shadow showing some buyers did buy Friday afternoon. The S&P (SPX) also traded only slightly above Friday’s close while forming a lower high and lower. The candle was more of a spinning top as the S&P was stronger than the DJIA. The lower shadow on the candle shows buyers were taking positions on Friday afternoon. The Nasdaq formed a lower high and lower low while forming a hammer like pattern. The hammer has a lower shadow at least twice as long as the body. Today’s lower shadow was more like four times the body size which was quite small. Again buyers did buy Friday afternoon. The Russell (RUT) was the strongest of the four broad indices and finished almost unchanged forming a doji pattern. Now that downward momentum slowed on Friday, watch to see if any upward momentum begins to appear on Monday. If it does remember the R1 resistance from Thursday’s large black candle. If sellers take over again watch price action as it moves to the price targets we have posted this week. Uptrending Ag-related stocks bounced in their six day bull flag pattern. POT bounced with a bullish engulfing pattern. MOS bounced with a bullish engulfing pattern. CF bounced with a piercing line pattern which was almost a bullish engulfing. AGU bounced with a bullish englulfing pattern. MON bounced with hammer that also formed a bullish harami. Coal stocks also moved higher. KOL the coal etf bounced off its 30 DMA with a piercing line pattern. BTU bounced forming an inside day. ANR bounced forming a higher high and higher low large white candle making a new closing high. CNX bounced forming a morning star pattern. MEE bounced with a bullish engulfing pattern. Chart Signals alerted you to these bounce opportunities in our early Friday post. SCHN bounced in its three day bull flag with a large bullish engulfing pattern. Earnings on 7/1. CLF formed a bullish harami in the third day of a bull flag. X also for a bullish harami in the third day of a bull flag. USO moved to a new high after breaking out of its pennant pattern on Thursday. In Consolidation V bounced with a large bullish engulfing pattern. FWLT bounced with bullish engulfing pattern. GS made lower high and lower low while breaking below its 20 and 30 DMA. Down Trending SOHU bounced forming a bullish engulfing pattern. MER formed a lower high and lower low after breaking support on Thursday. MS formed a lower high and lower low spinning top. LEH formed a lower high and lower low spinning top in a potential double bottom if the stock fails to break support.

Friday’s Action Moving Up: STRA, POT, ANR, MOS, SCHN, SOHU, CNX, V, BTU, MEE, CF, AGU, FWLT, AAPL CLF, X, CELG, GRMN, DRYS, MON, NUE, MTL, NKE, USO Moving Down: FSLR, MA, RIMM, IPI, PCLN, GS, AMZN, BIDU Intermediate Term Market Trend: Down Short Term Market Trend: Down

Looking for Some Support...Bounce

With just over an hour of trading left for the day, the broad averages are still down. The DJIA, S&P and Nasdaq have hammer like candles forming and the RUT is forming a doji. These candles are indicating that downward momentum is abating at least for today. The indices have spent most of the day in the red and none have come close to the R1 resistance level of yesterday's large black candle. Are large number of the stocks in our watch list are enjoying strong support bounces today. Dave's Insight: Support bounces in an up trend are with the trend, support bounces in a down trend are counter trend. Ag-related and coal stock continue to be strong with a support bounce in their bull flag formations. Friday's Action Moving Up: POT, STRA, ANR, SCHN, MOS, MEE, BTU, AGU, V, SOHU, CNX, CELG, CF, FWLT, NKE, MON, DRYS, GRMN, MTL Moving Down: FSLR, MA, BIDU, PCLN, RIMM, AMZN, GS, IBM, DECK, LEH We'll have our stock by stock recap later on today after the close...

Bull Flag Bounce

Downward momentum has really slowed today in the broad indices. About three hours into today's trading session the DJIA, Nasdaq and RUT are down slightly. The S&P is just above breakeven. A number of stocks are enjoying support bounces this morning. Ag-related stocks are enjoying a nice support bounce in their six day old bull flag. Coal related stocks are also bouncing. Friday Morning Action Moving Up: POT, MOS, ANR, SCHN, STRA, AGU, MEE, CF, CLF, BTU, FWLT, MON, X, IPI, CELG, NKE, CNX, V, DRYS, SOHU, MTL, NUE, GRMN, ESRX Moving Down: FSLR, BIDU, RIMM, MA, PCLN, AMZN, DECK, IBM

Bullish Engulfing Pattern

At 9:30 am MT there is a bullish engulfing pattern on POT, MOS and AGU. Each of thesse stocks have been in a bull flag for the past six days. CF is forming a piercing line at this moment. Remember these patterns are intra-day at this point and may change before the trading day is over as there is still 4 1/2 hours left in the trading day. The DJIA, S&P, Nasdaq and Russell (RUT have all turned lower since the open and are down at this moment.

Watch the R1 Levels in Any Down Trending Support Bounces

In early trading the markets are moving up. The DJIA, Nasdaq and Russell (RUT) are forming hammers and the S&P is forming a bullish harami. Remember the trend is down and these moves at this early stage are counter trend moves. Follow your trading rules as always. Some traders will lock in profits now and then look to re-enter the down trend of the stock/index they are trading when it hits resistance and begins to roll over. If price action stays below the R1 horizontal level of yesterday's large black candle we will know that buyers are not yet committed to a sustained rally from these levels. Ag-related stocks are rallying this morning look for potential support bounce opportunities in this group: POT, MOS, AGU, CF and MON X is forming a bullish harami in a bull flag in early trading. We'll have more posts this morning as our schedule is clear for most of the trading, so stay tuned and we'll let you know what we are seeing as the morning progresses...

The Path was Deep and Wide with Footsteps Leading to...

DJIA - 358.41, -3.03% SP500 - 38.82, -2.94% NASDAQ Comp. - 79.89, -3.33% Russell 2000 - 17.88, -2.50% Oil closed at $139.64 up $5.09 Oil moved broke out of the pennant that has been forming since June 6. The markets moved significantly lower once again proving that double tops, head and shoulders tops and bear flags do have some predictive value in trading. Decliners blew away advancers on the NYSE 2,701 to 468 and on the Nasdaq 2,323 to 604 on the Nasdaq. This down move was broad and wide and deep today. There were 209 new 52 week lows on the NYSE compare with 6 new 52 week highs on the NYSE. The Nasdaq had 109 new 52 week lows and 7 new 52 week highs. For those that positioned themselves paying attention to the Chart Signals today should have been a great day. All four indices formed large black candles and are clearly in down trends. Watch for any retracements that reach the R1 horizontal resistance level of today’s candle. The DJIA hit a 52 week low as it broke the 11,800 support level in continuation of its down trend. The S&P achieved and broke below the 1,296 target price and moved towards its 1,275 horizontal support level. The Nasdaq broke below its one day bear flag and fell within 11 points of its 2,310 price target. The Russell (RUT) back below the neckline of its head and shoulders top with a price target of 670 to 673. Up Trending Coal sector stocks were moderately lower most of which are in bull flag patterns. KOL – ETF in a bull flag pattern formed a hammer for the second day in a row while bouncing off its 30 DMA. BTU in a two day flag bounced off its 20 DMA. MEE formed a hammer like pattern for the second day in a row and is well above its 20 DMA. CNX in a six day flag formed a hammer and bounced off its 30 DMA. ANR in a six day flag formed a hammer that confirmed yesterday’s hammer as it bounced off of its 20 DMA.

Ag-related stocks many of which are also in bull flag patterns moved lower and found intra-day support. POT in a six day flag bounced off its 30 DMA. MOS in a six day flag formed a bullish harami with a higher low and higher high as it closed at its 20 DMA. CF in six day flag formed an inside day and closed at its 20 DMA. AGU in a six day flag formed a lower high and lower low as it closed above its 20 DMA. MON in a six day flag formed an inside day and closed at its 50 DMA.

X in a two day bull flag pulled back to its 185 horizontal support breakout level.

Down Trending

AAPL fell through its double top support again as it bounced down from hitting the resistance of its 50 DMA yesterday. SOHU broke the neckline of its head and shoulders top. MER broke its bear flag and dropped below horizontal support. MS fell to horizontal support at 37. LEH confirmed yesterday’s shooting star and fell to horizontal support at 22.50.

Thursday’s Action Moving Up: (almost nothing) USO, DRYS Moving Down: (almost everything) RIMM, BIDU, FSLR, MA, AAPL, GS, X, NKE, SOHU, CF, PCLN, DECK, MON, AMZN, CLF, IBM, SCHN, STRA, AGU, V, MOS, NUE, FWLT, MER, POT, IPI, LEH, ESRX, BTU, MTL, MS, JASO, GRMN, BRCM, MEE, SBUX, EXPE Intermediate Term Market Trend: Down Short Term Market Trend: Down

No Surprise the Down Trend Continues

Someone said to me this morning, "I'm disappointed to see the market down this morning. I wanted to go bullish." I responded, "I'm going to do this new program, it's called 'The Trend.'" They laughed. Dave's Insight: It doesn't matter what you want. The only thing that matters is what is. How many of you have heard, Dave's Insight: Trade the Market, not you thoughts? We're not joking about this trend concept. We've stated this over and over and over again, Dave's Insight: The Trend is the Most Important Factor in every trade. Here's a Dave's Insight: The Trend almost always trumps the news. We've also stated and posted here that there are very few economic announcements that change the intermediate term trend. We told you to look for some extra volatility yesterday and then when it was over look for the trend to continue. We'll apparently it is this morning. This philosophical focus is invigorating this early in the morning! Futures are down, which as you know, we know doesn't always always mean the market will be down today, however, the trend is also down and with the bounce we had yesterday and the reality is that nothing changed yesterday, it likely is a good indication that the already existant down trend will continue. Rememer, even though most stocks trend with the market, trade the trend on the stock you are trading. Pre-Market: Stocks to Watch RIMM is down from their earnings release last night. MEE, CNX, ANR, BTU are up in the pre-market. We'll be back a little later this morning after our webcast...

Starting a New Bear Flag?

DJIA + 4.40, +0.04% SP500 + 7.68, +0.58% NASDAQ Comp. + 32.98, +1.39% Russell 2000 + 8.38, +1.18% Oil closed at $134.55 down $2.45 The market opened stronger, became volatile around the Fed announcement and settled down from the day’s high and up for the day. Advancers led decliners 2.177 to 952 on the NYSE and 1,848 to 1,028 on the Nasdaq. As we have stated on many occaisons the intermediate trend of the market seems unchanged by today's announcement. Extra volatiliity but no trend change. The DJIA finished the day with an inverted hammer that failed to rise above the R1 horizontal resistance on Friday’s large black candle. The S&P also formed an inverted hammer that did rise above R1 but closed below R1 by the end of the day. The Nasdaq, relatively stronger than the DJIA and S&P, formed a morning star pattern which perhaps is the start of a new bear flag pattern. Keep your eye on the 2,430 horizontal resistance which was the support between the double top. The Nasdaq is likely forming a bear flag. The Russell (RUT) formed a bullish harami and closed right at the broken neckline of its head and shoulders top. Watch for the formation of a lower high and a bear flag here also. RIMM gapped down more $11 on its earnings announcement after the close. Ag-related stocks continued their bull flag pattern today. Watch for potential support bounce entry over the next few days. POT found some buyers between its 20 and 30 DMA but closed lower for the day. CF formed a doji at its 158 horizontal support level. MOS found buyers between its 20 and 30 DMA and essentially formed a piercing line candle. AGU closed down 10 cents for the day but closed up from its open to form a white candle. MON fell to its 50 DMA where buyers stepped in the stock rose to close above its 30 DMA and formed doji. Coal sector stocks appear to be forming bull flag patterns. Watch for entry opportunities. KOL - ETF formed a hammer BTU formed a bearish engulging pattern MEE bounced from low of the day CNX a support bounce off the 20 DMA ANR formed a hammer BIDU had a major support bounce off of the 200 DMA with a non-idealized morning star pattern. MA gapped up on the open, faded back and still ended strong for the day. DRYS had a bull flag support bounce and closed at its 200 DMA. A potential Dave’s C-entry is setting up. AAPL had a bull flag support bounce, but did trade $2 lower in the after-market after RIMM gapped down after releasing earnings. DECK formed a doji in the area of 145 horizontal resistance. Down Trending MER formed a doji in a bear flag. MS closed below its open in a potential bear flag. LEH formed a shooting star in a potential bear flag.

Wednesday’s Action Moving Up: BIDU, MA, DRYS, AAPL, DECK, STRA, MOS, X, SOHU, CELG, FSLR, RIMM, GS, ESRX, MTL, PCLN, IBM, SCHN, AMZN Moving Down: POT, MON, BTU, CNX, MEE, USO, CF, CLF, FWLT Intermediate Term Market Trend: Down Short Term Market Trend: Down

Fed Announces Today

Keep in mind that the Fed makes their announcement on interest rates at 2:15 pm ET. It is widely anticipated that the Fed will keep rates unchanged. The market will likely look at the wording of their policy statement for hints of change. Look for volatility to increase just before and after the statement. Futures are up a few points in the pre-market. Check back a little later this morning for an update on the indices and watchlist...

The Disappearing Hammer

DJIA - 35.26, -0.30% SP500 - 3.71, -0.28% NASDAQ Comp. - 17.46, -0.73% Russell 2000 - 11.89, -1.65% Oil closed at $137.00 up 26 cents

The Fed announces their interest rate decision tomorrow, Wednesday, at 2:15 pm ET. This announcement can cause the markets to pause while waiting for the announcement and then increase volatility shortly before and after. If you have not traded through a Fed announcement before and you don’t have rules to guide you, you might want to watch the action closely and gain some experience before taking action on an announcement day. Don’t be surprised if the market rallies if it likes the comments and then fades within a day or two when the longer term realities are back on traders’ minds. Generally an economic announcement will not change the intermediate term trend but it can alter the short-term trend create a lot of extra volatility before settling back down with a resumption of the trend. Each of the broad indices formed a hammer pattern intra-day that changed as the markets fell, rallied and then fell again...hence "The Disappearing Hammer." The DJIA formed a spinning top after a doji on Monday. The spinning top does have a large lower shadow as the DJIA fell to 11,725 before rising to its close. The support buying should come as no surprise as major buying occurred around January 22 and March 10 at this same price level and reversed the down trend at those times. The DJIA has achieved the 11, 836 price target we posted last Wednesday and Friday from the most recent support break. Reread our post on Friday about this important support level. As we stated Friday a successful break below would create an intermediate term price target of 11,054. Big money became buyers in January and March and may be willing to do the same now. The S&P also formed a spinning top on Tuesday with long lower shadow and reflects the indecision before the fed announcement. You will notice that the S&P is still above the 1,296 target we posted last Wednesday. The Nasdaq formed a spinning top (hmm…a common pattern today) also reflecting indecision. The Nasdaq is well above the 2,310 price target for its current down move. Today’s move was a clear support break below the June 12 low.

The Russell (RUT) broke below its head and shoulders neckline today, rallied forming a hammer candle pattern intra-day and then fell to its low creating a large black candle closing below its neckline. The close below the 716 neckline gives a target in the 670 – 673 area as we posted on Friday. Remember the target off the chart does not mean price will go straight to the target, rather it is more likely the RUT will zig zag its way to the target. Also please remember targets are probabilities, not certainties.

Ag-related stocks POT, MOS, CF, AGU and MON all pulled back and are in the process of forming bull flag patterns. CLF confirmed today yesterday’s horizontal breakout. Price target is 125. V formed a piercing line with a bounce off of the 50 DMA. LEH formed a bullish engulfing candle in a down trend. MS formed a piercing line at a potential double bottom. BTU formed a shooting star in an up trend. BIDU broke horizontal support at 310 as well as its 200 DMA. Price target is 276. SOHU broke below its 50 DMA and Friday’s low support after hitting the R1 resistance of Friday’s large black candle. Price target is 64. Monday’s Action Moving Up: GS, CLF, V, LEH, MS, BTU Moving Down: BIDU, POT, CF, MOS, MON, AGU, SOHU, IPI, DECK, STRA, CNX, RIMM, MEE, MA, SCHN, PCLN, MTL, FWLT, X, ESRX, AMZN, NKE Intermediate Term Market Trend: Down Short Term Market Trend: Down

Hammer to Spinning Top to Doji to ?

With just over an hour to go in the trading the DJIA, S&P and Nasdaq hammers are changing shape as the market pulls back after a brief rally. What today's candle will be at the end is anybody's guess, but a pause before the Fed announcement tomorrow should not be that surprising. Today's Action Moving Up: CLF, GS, BTU, V, X, FSLR, NUE, LEH, MS, BRCM Moving Down: BIDU, MON, POT, CF, SOHU, MOS, AGU, RIMM, DECK, MTL, AMZN, ESRX, MA, NKE, PCLN, FWLT See you after the close...

If I Had a Hammer...

As of this moment the DJIA, S&P, Nasdaq and Russell have all formed a hammer pattern, which is a short-term reversal pattern. There is still four hours of trading and the hammer may disappear, but clearly the market has found some short-term support this morning. Supprt is not too surprising the day before the Fed releases their lastest FOMC statement tomorrow afternoon at 2:15 pm ET. The Fed is widely expected to leave the Fed Funds rate at 2.0%. The key of whether there is a short-term change in trend or the down trend continues will be in the policy statement, which is likely to have inflation fighting language. Ag-related stocks POT, MOS, CF, AGU and MON are moving lower this morning... The DJIA and S&P are slightly positive at this moment and the Nasdaq or Russell are slightly negative. Mid-Morning Action Moving Up: GS, AAPL, CLF, BTU, NUE, DRYS, PCLN, LEH, V, MER Moving Down: BIDU, MON, POT, CF, MOS, AGU, SOHU, FSLR, STRA, MTL, AMZN, MA, AMZN, CNX, ESRX Stay tuned as the day unfolds...

Price Action Goes with the Trend

The DJIA, S&P, Nasdaq and Russell all four broke Friday's support in early trading. Look for these indices to fall to their next support. Once again the trend follows through. Of course "trends don't always follow through, they just do so most of the time." That is why the old adages are: The trend is your friend. The trend is your friend until the end. The trend is your friend until a new one begins. Once support is broken it is probable (not a certainty) that price will fall to the next support level. The paradox here is that statement presupposes the "next known" support level. The reality is that price always falls to the next support level. Yes, I said always! Of course the paradox is that the next support level is not always known, but price always bounces at some "next" support level. It just may not be the next visible support level. Since a technical trader can not know with a certainty where that next support level is, it is desribed as being probable, not a certainty. Okay, okay, we know that for some of you what just we wrote is too philosophical. If it is, just let it soak...come back to it a few times and then at some point the light will go on and you will have that epiphany. Let's just review, this morning's support break is significant. It was known that since the trend was down it was more likely to break, than not. There are new price targets on each of the indices, which we have posted over the past week and we will repost them a little later this morning. Early Morning Action Moving Up: (very little) IPI, GS, BTU, X, USO Moving Down: (a whole lot) BIDU, MA, MON, CF, POT, SOHU, STRA, MOS, DECK, RIMM, AGU, AMZN, PCLN, SCHN, CNX, MTL, FSLR, V, FWLT, ESRX, CLF, IBM, MEE, GRMN, MER, NKE, DRYS Since we are waxing philosophical this morning, one final thought until a little later this morning, (which means temporarily final), just because it is moving down, doesn't mean it is down trending. Dave's Insight: One of the primary responsibilities of a trader is to determine the difference between price fluctuation and trend change. Let's get back together a little later this morning...

Oil Up, Markets Hold Support - For Today

DJIA - 0.33, -0.00% SP500 + 0.07, +0.01% NASDAQ Comp. - 20.35, -0.85% Russell 2000 - 5.92, -0.82% Oil closed at $136.74 up $1.38 Oil rose again on Monday while the broad indices were flat to lower. XLE formed a large bullish engulfing pattern. XLF the financial sector ETF moved lower while the short financial ETF SKF moved higher. The DJIA formed a doji holding just above Friday’s low. Watch the R1 resistance on Friday’s candle and for a potential support break. The S&P formed a doji just above Friday’s low. Watch whether price action can break above R1 or below Friday’s support low. The Nasdaq broke just below the horizontal support on June 12. With the Nasdaq again below its double top support the price target is 2,310 as previously posted. The Russell (RUT) also closed near Friday’s low appears to be forming a head and shoulders top with a neckline at 716. Watchlist Stocks on Monday FSLR had a bull flag bounce today closing a recent resistance. CLF formed a bull flag and resistance breakout today with a chart price target of 125. X had a breakout today with a chart price target of 206. POT a bull flag bounce and hammer candle pattern Friday's highlighted stocks fared very well on Monday.... Up Trending highlights CF, IPI, DECK, USO, and MEE moved higher. Only MOS moved lower. CF confirmed it bullish harami on Monday. IPI extended its up trend with a big move. DECK another higher high and higher low, sellers at the 145 horizontal resistance. USO moved up still in its pennant. MEE extended it up trend with a new closing high. MOS formed a new low day today in a potential bull flag. Down Trending highlights BIDU, DRYS and MER moved lower. SOHU and IBM moved higher. BIDU continued its bear flag break and bounced on its 200 DMA today. DRYS continued its bear flag break. MER broke horizontal support at 35. SOHU formed a bullish harami and closed above its 50 DMA. Looks like the start of a bear flag. IBM formed a bullish harami consolidating at support below its 50 DMA. Monday’s Action Moving Up: FSLR, CLF, X, POT, IPI, SCHN, BTU, MEE, SOHU, AGU, CNX, FWLT, DECK, MON, USO, CF, PCLN, NUE, ESRX, IBM Moving Down: GS, BIDU, V, AAPL, MOS, RIMM, MA, DRYS, MER, LEH, MS, UAUA,MTL, SBUX, GRMN Intermediate Term Market Trend: Down (DJIA, S&P) Short Term Market Trend: Down

Markets Right at Support

Just before the close the DJIA, S&P and Russell are near Friday's low and their low of today. The Nasdaq is trading about 8 points below Friday's low and near today's low. FSLR support bounce is following through. CLF, X, POT IPI, SCHN, MEE, BTU, SOHU, AGU and CNX all strong before the close. We'll be back with today's closing commentary...

Hearings on Energy Prices and Speculation

We stated last year in some of our audio commentary that from our assessment that fundamental supply and demand issues would value oil in a $50 to $70 a barrel range. That excess premiums above those approximate levels were speculation on general fear, geo-political, terrorist and supply disruption fear premiums. Then oil soared to $130 plus. In recent weeks we have reiterated this view in audio commentaries. A headline caught our attention this morning as MarketWatch wrote on the House Energy and Commerce Committee hearings, where energy analysts told Congress today that energy prices could drop to around $2 a gallon and oil would drop to its marginal cost of around $65 to $75 a barrel with the passage of a law to limit speculation in energy futures. They indicated that this drop could occur in 30 days or less. This reinforces the point we were making that current oil prices were not a result of fundamental factors rather speculation. Thought you might be interested...

Markets at Support - Oil Up, Financials Down

The DJIA and S&P are sitting near Friday's low. The Nasdaq has already slipped below Friday's low of 2,394.26. The Russell is still slightly above Friday's low. This is a significant support area, if broken, should allow the indices to fall to their next support level. This would obviously be a good thing for down trending trades. Stay focused as market action bounces between support and the R1 resistance on Friday's large black candle. Oil is up $1.04 at $136.40. Energy ETF XLE and USO are higher. Coal ETF KOL and stocks, BTU, MEE and CNX are also higher. Financial ETF XLF is lower as well as financial stocks GS, LEH, MER and MS. The FOMC will make their announcement Wednessday 2:15 pm ET. FSLR bull flag support bounce is still holding. Watchlist Mid-day Action Moving Up: FSLR, CLF, X, SCHN, MEE, SHOHYU, IPI, BTU, AGU, FWLT, USO, POT, CNX, DECK, IBM Moving Down: GS, BIDU, DRYS, AAPL, MOS, V, STRA, MER, MS, MTL, LEH, RIMM

Markets Holding Near Even Early Monday

The broad indices are holding near Friday's close essentially unchanged this morning after the first hour of trading. The DJIA, S&P, Nasdaq and Russell have all made slightly higher lows so support is holding at this moment. There is not much of a rally with the DJIA and S&P barely positive and the Nasdaq and Russell slightly negative. There is no technical evidence at this moment that traders should expect anything other than trend continuation. The key to focus on with the indices this morning is the short term resistance of the R1 on Friday's large black candle. If price action stays below this level it should be characterized as price fluctuation. Of course, if the indices break support its more downside in the direction of the trend. Make sure you review Friday's post on the indices and identify the support and resistance levels on the chart. FSLR is experiencing a support bounce this morning in a classic bull flag bounce cutting through both the 30 and 50 DMA this morning. Watchlist Today's Early Morning Action: Moving Up: FSLR, X, CLF, SOHU, SCHN, IPI, DECK, MEE, BTU, RIMM, FWLT, USO, ESRX, STRA Moving Down: GS, MOS, POT, CF, AAPL, MER, MS, MA, AMZN, V, LEH, MON We'll post again within a couple of hours to see how the support and resistance levels are holding on the indices and what other chart action is occurring in our watchlist.

Please Read the 2 Comments...

Chart Signals readers... Please read the two comments to the post "Oil Settles Back, Indices Fall Further" earlier today and just below this post. The first is a question by a reader and the second is our response. We would be very interested in knowing if you are having a similar challenge. If you are, we can put together a more detailed guide on this issue. So, read the comments and then post a comment yourself and let us know if this is a challenge. If it is we can help. The more posts the more effort it is worth. DJIA - 220.40, -1.83% SP500 - 24.90, -1.85% NASDAQ Comp. - 55.97, -2.27% Russell 2000 - 12.10, -1.64% Oil closed at $134.62 up $2.69 As you'll read below all of the indices are at important support areas which if broken could lead to the lower chart price targets for each index. Check with us early Monday and through out the day as we stay focused on the price action in this important support area.

The DJIA continued its bear flag break that occurred on Tuesday and fell to its lowest level since March. Thursday’s non-idealized bullish harami failed to confirm as sellers took control at the open. The DJIA achieved the price target of 11,836 that we posted in Wednesday’s post. The DJIA is in an area of major horizontal support, the lows of January and February and March of 2006. A successful break below the 11,750 would be very bearish. The price target for the large head and shoulders break that occurred on January 8 is 11,054. The DJIA is at an important horizontal support area.

The S&P broke the 1,331 horizontal support area continuing its bear flag break that occurred Wednesday and moved down towards the 1,296 price target we posted on Wednesday. The S&P continues below its 20, 30, 50 and 200 DMA and continues to make lower lows from lower highs. The Nasdaq reversed Thursday's rally and continued its bear flag break that occurred on Wednesday. Buyers stepped in at the 2,400 horizontal support area, on Friday. The Nasdaq fell below its double top low hit on May 23 again which reinstates the previously mentioned price target of 2,310. The Nasdaq is an important short-term support area. The Nasdaq is now trading below its 20, 30, 50 and 200 DMA and has now formed a lower low and lower high since its double top on June 5.

The Russell (RUT) which has been the strongest of the four broad indices fell from its 20 and 30 DMA and continued its bear flag break which occurred on Wednesday. The RUT closed a point and a half below its 50 DMA. Buyers stepped in at the 720 horizontal support area, which has been a key resistance/support all year long. As we posted on Wednesday this bear flag also represent the right shoulder of a potential head and shoulders top. Should the RUT successfully break the 716 area neckline, the price target for the RUT will be 673.

Up Trending Stocks CF after Thursday’s bearish engulfing pattern formed an inside day on Friday, chart is looking like a horizontal bull flag after Monday’s breakout. IPI after Thursday’s bearish engulfing pattern formed a higher high and higher low in its current up trend. DECK gave Dave’s C entry signal on Thursday, formed a higher high and higher low. USO like the price of oil continues in a pennant pattern that began on June 6. MOS after Thursday’s bearish engulfing pattern formed a bullish harami with a small spinning top on Friday. MEE after Thursday’s dark cloud cover formed a small spinning top; some might see it as a doji. The last two days are looking like a pennant. Down Trending Stocks BIDU bounced down from its 20 DMA and is trading below its 20, 30 and 50 DMA. Its 200 DMA is at 315 and horizontal support at 310. SOHU broke its bear flag on Friday and broke through horizontal support on more than double average volume. Chart target 75 area. DRYS broke below its bear flag pattern on Friday while bouncing down from its 200 DMA. Horizontal support is 70. IBM fell below its 50 DMA to horizontal support at 122.50 continuing its bear flag break that occurred on Wednesday. MER fell to horizontal support in the 35 area continuing its bear flag break that occurred on Wednesday.

Friday’s Action Moving Up: CF, IPI, DECK USO, MOS, MEE Moving Down: BIDU, SOHU, MA, FSLR, AAPL, CLF, STRA, DRYS, GS, AMZN, RIMM, MTL, POT, IBM, BTU, NUE, MER, MS, FWLT, JASO, SCHN, CELG, ESRX, NKE, EBAY, GRMN, UAUA, SBUX Intermediate Term Market Trend: Down (DJIA, S&P) Short Term Market Trend: Down

Oil Settles Back, Indices Fall Further

We love it when a trend follows through. One of the core tenents of technical analysis is, "prices move in trends." Trends don't follow a straight line. They are more like two steps forward, one back. A zig zag. Prices zig zag inside the trend. They fluctuate. Dave's Insight: One of the key responsibilities of a trader is to determine the difference between price fluctuation and trend change. You've heard us say it before and the good news you'll hear us say again and again and again. Why? Because it is reality. As a trader you need to stay focused on reality! Oil has settled back to being up just under $3 for the day and is still trading inside its pennant. We'll let the breakout, up or down, out of the pennant tell us the next direction that oil is going to move. Of course with the intermediate and long term trend of oil up, a breakout to the upside is more probable. With the DJIA down over 200 points, most stocks are moving down. Take a look at these charts... Friday's Action Watchlist Moving Up: IPI, USO, CF, DECK MEE Moving Down: BIDU, SOHU, FSLR, MA, AAPL, DRYS, AMZN, GS, MTL, RIMM, SCHN, NUE, BTU, POT, FWLT, IBM, STRA, MER, CELG, NKE, MS, PCLN, JASO, UAUA, ESRX, V, EBAY, GRMN, LEH

Oil Rises, Rally Fails

The importance of trend. We had stated over and over again "one day does not a trend make." Yesterday is a perfect example. Yesterday is also the classic news example. In this case news has a one day effect and then its over. News creates price fluctuation but it seldom reverses the intermediate term trend. You have heard us quote Joe Granville before who wrote, "News is generally for succkers." This is why it is so important to stay focused on trend and maintain mental flexibility. This is why we maintained our short term market trend down reading. One day up movement against the trend does not reverse the trend. This doesn't mean we ignore that up movement...why? Because if a second day of up movement is added then it becomes a short-term up trend and that may be actionable. However "one day does not a trend make." Oil rises over $4 a barrel this morning and the price action is still in the pennant that has been forming since June 6. Remember a pennant is is generally a short-term trend continuation pattern and it needs to break out of the upper falling resistance line to give a entry signal. Oil rises an the markets roll over giving back yesterday's gains and more. The DJIA is moving towards the 11,836 target we posted on Wednesday. It his a low of 11,875 already this morning. The S&P broke what yesterday was a potential double bottom and is moving towards the 1,296 target we posed Wednesday. It has hit a low of 1,322 early Friday. The Nasdaq and Russell reversed Thursday's bullish engulfing patten in early trading. A bullish spot on Friday morning is that ag related stocks CF, POT, MOS, AGU and MON rallied in the face of the market drop and now appear in bull flags on their charts. X is pushing through 185 resistance this morning. If this breakout is successful, the chart suggests a target of 205. Keep in mind today is options expiration Friday which often experiences extra volatility as traders unwind their option trades. We'll have more to post as the morning progresses...

Oil Price Drop Fuels Market Rally

DJIA + 34.03, +0.28% SP500 + 5.02, +0.38% NASDAQ Comp. + 32.35, +1.33% Russell 2000 + 7.12, +0.97% Oil closed at $131.93 down $4.75 The broad indices rose today in large part fueled by China’s announcement that it will raise gasoline prices. This is expected to increase production and decrease demand. Advancers led decliners 1,565 to 1,561 on the NYSE and 1,663 to 1,193 on the Nasdaq. The DJIA made a lower low and lower while forming a non-idealized bullish harami. The DJIA is trading below its 20, 30, 50 and 200 DMA and is still under its recent short-term support break at 12, 080. The S&P formed a potential double bottom today at 1,330 accompanied by a bullish divergence in the stochastic, 2-line MACD and MACD histogram. It also formed a non-idealized bullish harami. The S&P is trading below its 20, 30, 50 and 200 DMA. Watch for confirmation of Thursday’s bullish harami and for either a support bounce or a support break. The Nasdaq formed a bullish engulfing pattern today after breaking a bear flag pattern on Wednesday. The Nasdaq closed above its 50 DMA. It is above its January horizontal resistance level. The Nasdaq is below its 20, 30 and 200 DMA. Watch to see if today’s support bounce continues or pulls back. The Russell (RUT) also formed a bullish engulfing pattern while bouncing off its 50 DMA and breaking through and closing above its 20 and 30 DMA. It is trading below its 200 DMA. Watch to see if today’s support bounce continues tomorrow. X followed yesterday’s bullish engulfing pattern rising close to horizontal resistance for 185. RIMM broke out of horizontal resistance at 144.50. BRCM bounce off support with a large white candle. It is in a trading range with resistance at the 29 area. GENZ formed a bullish engulfing pattern. ADBE formed a bullish engulfing pattern after forming a double bottom pattern. Today’s Action Moving Up: X, STRA, GS, RIMM, BIDU, AAPL, DECK, BRCM, SCHN, AMZN, PCLN, UAUA, DRYS, MTL, GRMN, NUE, IBM, CELG Moving Down: MOS, CF, CNX, POT, USO, MON, MEE, AGU, FSLR, IPI, BTU Intermediate Term Market Trend: Down (DJIA, S&P) Short Term Market Trend: Down

Oil Prices Fall, Tech Stocks Rise

Oil prices have fallen over $4 a barrel on news that China was raising gasoline prices by 17%. As a result oil stocks are taking it in the shorts today. Energy ETF XLE is down 1.85%. Broad indices are rising with the Nasdaq forming a bullish engulfing pattern and the Russell forming a piercing line.before the close. Coal stocks have pulled back from intra-day highs. CNX and MEE are forming a dark cloud cover. BTU has formed a spinning top. Tech stocks are rising... BRCM has formed a large white candle on a support bounce in a trading range. AAPL has reversed Wednesday's pullback. RIMM is extending its recent short-term rise.

Stay Focused on the Trend

The indices are trading down from bear flag patterns over the past two days. The market looks flat this morning. Trade the trend of stock or ETF that you are trading. Coal sector continues to trend up: KOL, CNX, BTU, MEE Basic Materials: X had a bullish engulfing pattern yesterday. SCHN broke through resistance on Wednesday, we'll be watching to see if the price follows through or pulls back on any market weakness. If the breakout holds the chart pattern price target is 115.

Dow Breaks Support as Oil Rises

DJIA - 131.24, -1.08% SP500 - 13.12, -0.97% NASDAQ Comp. - 28.02, -1.14% Russell 2000 - 5.86, -0.80% Oil closed at $136.68 up $2.67 The markets headed lower at the open, rallied a couple of times during the day and closed near their lows for the day. Decliners once again led advancers by a large margin 2,254 to 853 on the NYSE and 2,054 to 801 on the Nasdaq. Oil headed lower in early trading and at mid-day rallied and closed up almost 2% for the day. Oil is currently forming a pennant pattern, which is a short-term continuation pattern, which has been forming since June 6.

For the second day in a row the DJIA was down more than 100 points. Wednesday was a continuation of the bear flag break on Tuesday. The DJIA closed below the 12,083 support level set on June 11. Today’s support break creates a price target of 11,836. The S&P continued with a significant move below its bear flag pattern which it slightly penetrated on Tuesday. The S&P stayed above the 1,331 support low hit on June 12. Should the S&P break below the 1,331 support the S&P price target will be 1,296. The Nasdaq broke it bear flag formation which now completes both a lower low and lower high coming off its recent double top. The index returned to the May 23 horizontal support level of 2,430, the low between the double top. The first break on June 11 rebounded to the lower high yesterday. A successful break at would generate a price target of 2.310 on the index. The Russell (RUT) also broke out of a bear flag to the downside on Wednesday which is a lower high for the small-cap index. The recent high can be viewed as the right shoulder of a head and shoulders top pattern. The RUT did find support at its 50 DMA and rebounded from its intra-day low.

Rail stocks which formed a falling 3 methods pattern over the past five days rallied from support today: NSC sold off from its high forming a spinning top at support. BNI sold off at the resistance of the 50 DMA. UNP the strongest of these rails today formed a piercing line pattern. CSX also strong formed a white candle with an upper shadow equal to the body and closed above its 50 DMA. CNI closed down for the day at horizontal support. Coal stocks CNX, MEE, BTU and coal ETF KOL moved higher on the rise in oil prices. POT formed a potential hanging man candle. If confirmed tomorrow, this would be a counter-trend move. MOS formed a potential hanging man candle which could be the second candle of an evening star pattern if prices move lower tomorrow. CF formed a hanging man candle, also a counter-trend move if confirmed. The stock rallied from the S1 support on Tuesday’s large white candle. AGU formed a dark cloud cover. If confirmed also a counter-trend move. MON pulled back but stayed above the S1 support level of Tuesday’s large white candle. X formed a bullish engulfing pattern just above support. USO rallied on the rise in oil prices on Wednesday. USO is forming a pennant since June 6 just like oil. FSLR broke the low of the high day in its recent 5-day up trend. JASO which rallied from it low of the day formed a lower high but lower low and closed above the low of the high day. Today’s Action Moving Up: CNX, X, MEE, SCHN, BTU, PCLN, GS, RIMM, USO, SOHU, CLF, MA, IPI Moving Down: FSLR, AAPL, POT, ESRX, MON, MTL, DRYS, FWLT, AGU, IBM, V, BRCM Intermediate Term Market Trend: Down (DJIA, S&P) Short Term Market Trend: Down

Watch Key Support Levels on Wednesday Morning

On Tuesday decliners led advancers 1,837 to 1,281 on the NYSE and 1,810 to 1,046 on the Nasdaq. Futures, as they proved yesterday, don't always correctly predict the outcome for the day, however they are down in the pre-market. The bearish technicals on yesterday's charts point to the market rolling over. The DJIA already rolled yesterday...we'll see if the other indices do the same. AAPL and RIMM are up modestly in pre-market. Take a look at BNI, CSX, UNP, CNI and NSC. CSX formed a falling 3 methods candle pattern and each of the other four had non-idealized falling 3 methods pattern. This is a bearish continuation pattern, a candlestick version of a bear flag. Watch to see if the other indices break support. Pay attention to the S1, S2 and S3 levels of the recent large white candles. We'll comment more as the market gets trading this morning...

A Bearish Pivot Point?

DJIA - 108.27, -0.89% SP500 - 9.21, -0.68% NASDAQ Comp. - 17.05, -0.69% Russell 2000 - 4.17, -0.56% Oil closed at $134.01 down 60 cents If you didn't read our first post of the morning titled "Futures Trading Higher in Pre-Market," please take a moment to do so. In part we wrote, "Trade with the trend and watch at those key resistance areas if momentum turns to the downside." This is a real time example of the importance of maintaining mental flexibility even when the outlook for the day is bullish. The market is at a very intriguing pivot point. Strong stocks like POT, CF, MOS, MON and AGU are soaring while at the same time the broad indices are again looking weak. Today’s chart is a story of bear flags, bearish engulfing, dark cloud covers, lower highs and potential head and shoulder tops. Essentially a bear hunters paradise. Read on… The DJIA broke the low of the high day on Tuesday and penetrated to the S2 level of Friday’s large white candle. Today was a bear flag break for the DJIA and formed a truncated falling three methods candle pattern. The DJIA is below its 20, 30, 50 and 200 DMA. The S&P formed a bearish engulfing pattern and also broke Monday’s low. Tuesday was the actual high day as the S&P moved less than 2 points above Monday’s high. Today’s sell off sent the S&P to the S1 horizontal level of Friday’s large white candle. This was a slight penetration of the bear flag pattern. The S&P is below it 20, 30, 50 and 200 DMA. The Nasdaq formed a dark cloud cover pattern as sellers appeared the 20 and 30 DMA resistance. Today’s low was at the S1 level of Monday’s large white candle. The Nasdaq is below its 20, 30 and 200 DMA and above its 50 DMA. Is Tuesday a lower high to go with last week’s lower low? If so, look for the Nasdaq to fall back below the 2,430 double top support low and ultimately achieve the double top price target around 2,300. The Russell (RUT) came within 2 points of its 200 DMA before selling off to close on its 20 DMA and the S1 level of yesterday’s white candle. The RUT is still above its 30 and 50 DMA. Is Tuesday a lower high in a head and shoulders top? Oil is forming a text book pennant which generally is a short-term continuation pattern and occasionally a reversal pattern. There is also a bearish divergence forming in the 2-line MACD. CF moved big on Tuesday after Monday’s breakout of its 159 horizontal resistance area. The chart suggests a 37 point target over the next several weeks. POT, MOS and AGU continue to surge forward. Traders should follow the trend but be protective of profits achieved. A close look at each of these charts indicates that strong moves up are followed by dramatic pull backs. Be mindful of any break of support that may occur. MON had a small breakout on the chart today with a suggested price target of 148 – 149. Earnings are scheduled for June 25. AAPL which on Monday confirmed the hammer on Friday moved higher for the second straight day on Tuesday. We mentioned for a buy stop at 178.65 for a July option, in our audio commentary Monday night, triggered in the simulation account today and is now up 2.78 on the stock. The option rose approximately 15% today. GS formed a dark cloud cover. LEH formed a bearish engulfing pattern on a bear flag. MS formed a bearish engulfing pattern on a bear flag. MER formed a dark cloud cover on a bear flag. Today’s Action Moving Up: POT, CF, MOS, MON, DRYS, AGU, FSLR, AAPL, CLF, CNX, IPI, MTL, BTU, V, AMZN, RIMM, MEE Moving Down: STRA, BIDU, X, GS, GRMN, MA, LEH, PCLN, MS, IBM, ESRX, NUE, CELF, MER, SOHU, BRCM Intermediate Term Market Trend: Down (DJIA, S&P) Short Term Market Trend: Down (DJIA)

Stocks On the Move

The broad indices are off from early morning highs. FSLR broke through its 50 DMA on Monday is moving higher today. CF broke through horizontal resistance at 159 yester is moving higher today. The chart breakout is suggesting a price target in the 190's over the next several weeks. DRYS has moved to its 200 DMA. CLF is continuing its support bounce with horizontal resistance at 110 - 111. AAPL is following through on its support bounce today with horizontal resistance at 190. RIMM is moving higher today and is at horizontal resistance of 144 - 145. Watch for a potential breakout. Oil is currently down 1.19 at 133.42.

Indices Are Lower - Third White Soldier Appears AWOL

During the first two hours of trading the DJIA, S&P, Nasdaq and Russell are clearly pausing with modest pullbacks. At this moment the DJIA is slipping below yesterday's low. The S&P, Nasdaq and Russell near their lows of the morning have made a higher high and higher low so far today. Watch the S1 support levels. AAPL is moving higher after Monday's confirmation of Friday's hammer. AAPL is up over $3. Today's Action: Moving Up CF, FSLR, POT, DRYS, BIDU, MON, AGU, MOS, CLF, AAPL, BTU, RIMM, MA, IPI, MTL, AMZN, MEE, CNX, V Moving Down: STRA, MS, IBM, GRMN, GS, MER, LEH, CELG, BRCM, ESRX

Futures Trading Higher in Pre-Market

7:31 MT - The market is open and AAPL is trading up $1.20 and moving higher. Pre-market Futures are trading higher this morning. This at least an indication that today MIGHT be a third large white candle or the three white soldiers pattern. I emphasis MIGHT because even pre-market futures don't always lead to an up day. Trade with the trend and watch at those key resistance areas if momentum turns to the downside. Last night there was some discussion about AAPL being down in the after-market on approximately 176,000 shares on some rumor...we said watch what the big money does in the regular market tomorrow. If the pre-market is any indication it is suggesting the stock could go higher as it is trading up $1.20 from yesterday's close.

Two White Candles - Three White Soldiers Next?

DJIA - 38.27, -0.31% SP500 + 0.11, +0.01% NASDAQ Comp. + 20.28, +0.83% Russell 2000 + 7.13, +0.97% Oil closed at $134.61 down 25 cents Oil traded as high as 138.69 on Monday before selling off and closing down 25 cents for the day. The broad indices started the day moving down from Friday’s close and found support around the S1 level of Friday’s and rebounded to close above their lows. The DJIA formed a higher low near the S1 support of Friday’s large white candle. Monday was a higher low and higher high even though the DJIA closed down for the day. The DJIA continues trading below its 20, 30, 50 and 200 DMA. The S&P also found support above the S1 support level of Friday’s large white candle and formed a higher low and higher high. Today’s candle was a small white spinning top. The S&P is still well below its 20, 30, 50 and 200 DMA. The Nasdaq opened lower in the support area of its 50 DMA and found buyers early in Monday’s trading session. The index closed near its highs of the day, making a higher low and higher high while forming a second large white candle. If Tuesday forms a large white candle, this will be a three white soldiers candle pattern. The Nasdaq which closed above its 50 DMA on Friday also closed right at its 20 and 30 DMA. Monday was the second consecutive day the index closed above the May 23 double top support low and the January horizontal resistance. The Nasdaq is below its 200 DMA at 2,510. Watch trading closely to see if it continues to trade above the important 2,425 – 2,430 support area. The Russell (RUT) opened just slightly lower than Friday’s close and found buyers early also making a higher low and higher high while forming a second large white candle. Like the Nasdaq a large white candle tomorrow would form a three white soldiers pattern. The RUT broke through and closed above its 30 and 20 DMA on Monday. The RUT’s 200 DMA is 744 just four points higher than Monday’s close. Watch for a potential breakout of this resistance area. AAPL formed a bullish engulfing pattern on Monday confirming Friday’s hammer pattern. Today’s close was near the R1 resistance area of Thursday’s large black candle and above the May 23 double top support low. FSLR made a higher low and higher high on Monday as it closed above its 50 DMA. FSLR closed above Friday’s close and below Monday’s open and intra-day high, which formed a small black spinning top. This is likely a result of oil prices pulling back today. If Tuesday’s price were to move lower FSLR could form an evening star pattern. If the price moves higher it obviously won’t form an evening star. BIDU closed above the high of its low day on Thursday June 12 when it bounced off its 200 DMA. Monday’s price closed near its 20 and 50 DMA. This is a support bounce chart with BIDU currently below but very near to its 20, 50 and 30 DMA. MA moved higher on Monday after closing above the high of the low day on Friday. MA is in a support bounce move closing today above both its 20 and 30 DMA. DRYS formed a second small spinning top in a row on Monday. Trading below its 20, 30, 50 and 200 DMA appears to be forming a bear flag pattern. Moving Up: STRA, BIDU, RIMM, CF, DECK, AAPL, POT, GS, SOHU, FSLR, MEE, AMZN, IPI, AGU, DRYS, MA, MTL, FWLT, V, JASO, CELG, LEH, MS, NUE, BRCM, MER, GRMN Moving Down: X, MON, ESRX Intermediate Term Market Trend: Down (DJIA, S&P) Short Term Market Trend: Up

Markets Continue to Rally

The S&P has joined the Nasdaq and Russell in positive territory. The DJIA is near breakeven for the day. AAPL's bullish engulfing pattern is getting bigger. RIMM which we mentioned for a buy stop at 136.25 in our audio commentary last Thursday morning triggered this morning in the simulation account and is now up $4 plus on the stock. This is confirmation of Friday's bullish harami.

Nasdaq and Russell Above Friday's High

Just over two hours into Monday's trading both the Nasdaq and Russell are positive and above Friday's high. The DJIA and S&P are still negative and below Friday's high. AAPL has erased its early weakness and at this moment is a bullish engulfing pattern on Friday's hammer. Monday's Early Action: Moving Up: BIDU, STRA, RIMM, CF, DECK, POT, GS, MA, AGU, MTL, PCLN, IPI, MON, FSLR, USO, DRYS, MOS, MEE, LEH, AMZN, FWLT, CELG, MS, BRCM, V, MER, SOHU, CNX, JASO

Indices Bounce Near Friday's S1 Support

Indices are bouncing off the S1 support of Friday's large white candle. Monday's Early Action Moving Up: FSLR, GS, DECK, RIMM, MA, POT, AGU, USO, STRA, DRYS, MTL, BIDU, MOS,k MEE, X, IPI, LEH, MS, CNX, FWLT, MON, AMZN, BRCM Moving Down: AAPL