Dell, Technology Stocks Lead Market Lower

DJIA - 171.63, -147% SP500 - 17.85, -1.37% NASDAQ Comp. - 44.12, -1.83% Russell 2000 - 8.29, -1.11% Exchange NYSE NASD Advancing 1,131 1,051 Declining 1,931 1,811 Oil $115.46 -$0.13 Gold $835.00 -$2.20 $SOX 352.82 -10.01 Strongest Sectors: XLF +0.14%...XLE-0.47%...XLB -0.67% Weakest Sectors: XLK -2.23%...XLU -1.39%...XLY-1.13% Monday Evening...After it became apparent that Gustav did little damage to oil resources in the Gulf...in electronic trading...oil which had traded as high as 118 earlier Monday fell below 111...late Monday evening quoted at $110.98. If quotes lower Tuesday morning...look for continued move up in airline stocks...AMR, CAL, DAL, LCC, UAUA Friday saw some interesting trading. DELL on Thursday after the close reported disappointing earnings. That set the tone for selling tech stocks Friday morning and that trend held for most of the day. The Nasdaq Composite actually fell more points on Friday than it had gained on Thursday. The other broad indices held some of Thursday's gains, with the RUT the strongest of the four, holding on to nearly 50% of its gain. DELL finished the day down more than 13%. Selling also occurred in other major Nasdaq stocks AAPL, RIMM, QCOM, MSFT, GOOG, ORCL, INTC and CSCO. These nine large cap stocks accounted for 57% of the 42 point drop in the Nasdaq 100. Also playing a major factor was the decline in the PHLX Semiconductor Index, SOX, which fell 10.01 points or -2.76%. This is consistent with the view if major tech businesses DELL and others appear weak, then selling semiconductor stocks is a logical conclusion. Tropical storm Gustav and the price of oil which was up in early trading also fueled some of the early selling on Friday. In the end oil finished down for 13 cents for the day. Financials, XLF, were the only positive sector gaining just 3 cents. Energy, XLE, was the second strongest losing 35 cents. Technology, XLK, as you would expect was the weakest sector losing 52 cents. Our short-term trend status is up and neutral for the Nasdaq. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU Index Commentary The DJIA finished up 165 points in August...July was up 29 points...April was the only othe up month in 2008...down 85 points for the week...closed above Thursday's S2 level and at its 20 DMA...is trading above its 20, 30 and 50 DMA...intermediate term trend is neutral. The SPX closed up 15 points in August...was up in April and May...down 10 points for the week...closed at its 20 DMA and just below Thursday's S2/S3 level...trading above its 20, 30, and 50 DMA...intermediate term trend is neutral. The Nasdaq closed up 42 points for August...its fifth positive month in 2008...down 47 points for the week...hit its 200 DMA on Thursday...bounced down Friday below its 20 DMA...trading above its 30 and 50 DMA...intermediate term trend is up. The RUT closed up 25 points for August...its fifth positive month in 2008...up 1.90 points for the week...closed above its 200 DMA for the sixteenth straight day and 17 of the last 18...trading above its 20, 30, 50 and 200 DMA...intermediate term trend is up. Stock Commentary FMCN broke out of horizontal resistance continuing a bull flag bounce...new chart target 35.85 GS continued support bounce in sideways trend MER continued support bounce from 7-week basing pattern...closed just above 50 DMA UAUA closed up 11 cents following a bullish engulfing pattern on Thursday in a bull flag pattern LCC closed up 33 cents following a bounce off its 30 DMA...appears to be forming an ascending triangle Friday’s Action Moving Up: DECK, FMCN, AGU, IPI, GS, CF, MER Moving Down: RIMM, AAPL, PCLN, IBM, STRA, AMZN, POT, MON, BTU, FNM, FWLT, BIDU, SOHU, FSLR, BUCY, EXPE, GRMN, FRE, MEE, PNRA, BRCM, ESRX, SNDK, NIHD, CELG Intermediate Term Market Trend: Up Short Term Market Trend: Up (except Nasdaq)

Oil Mixed on Friday...Stocks Lower After Dell Earnings

1:10 ET DJIA -129...SPX -12...Nasdaq -39...RUT -7...SOX -9...Oil -$0.13 We're back from our nations capital where Dave spent the last two days teaching more than 200 hundreds traders technical analyis and how to improve their trading decision making process. Markets are lower about an hour before the close, they are above their lows of the day. Dell reported lower than expected earnings Thursday after the close. That seemed to set the tone for tech stocks as DELL is down over 12% at this time. DELL along with AAPL, RIMM, QCOM, ORCL, GOOG, INTC, MSFT and CSCO are leading the Nasdaq lower today. Higher oil prices also factor in lower stocks prices today. Oil has retreated from it highs of the day. Keep in mind that the macro-factors for oil are still down, but weather concerns over tropical storm Gustav and its potential to disrupt oil supplies acts as a catalyst to price jumping up in the short-term. If Gustav fails to interupt oil supplies, expect macro-factors to have a downward impact on oil prices. Friday's Action Moving Up: DECK, X, IPI, GS, CF, LDK, MS, MOS, AGU, MER Moving Down: RIMM, AAPL, PCLN, STRA, IBM, AMZN, BIDU, SOHU, BUCY, MON, POT, BTU, PNRA, BRCM, SNDK, NIHD, FWLT, FNM, GRMN, FSLR

Stocks Rise as Oil Falls Again

DJIA + 212.67, +1.85% SP500 + 19.02, +1.48% NASDAQ Comp. + 29.18, +1.22% Russell 2000 + 14.84, +2.02% Exchange NYSE NASD Advancing 2,455 2,096 Declining 641 767 Oil $118.59 -$2.56 Gold $837.20 +$3.20 $SOX 362.83 +4.02 Strongest Sectors: XLF +4.04%...XLY +2.32%...XLI +2.24% Weakest Sectors: XLE -1.76%...XLU +0.16%...XLV +0.58% XLF, gaining more than 4% was the strongest sector for the second day in a row on Thursday with XLE, energy the only negative sector. Money center banks BAC, JPM, C, USB, DB, IBN, and WFC had gains between 2 to 6% on Thursday. were all higher on the day. FNM gained 22% and FRE rose 11%. Oil continues to be the primary driver with credit and financial being second. With oil down today stocks had a very strong up day. The oil and USO charts each formed a Falling 3 Methods, a 5-candle short-term continuation pattern. The RUT closed above 739 resistance which creates a new short-term chart target 762. The RUT traded above its 200 DMA for the fifteenth day in a row. The RUT is again above its 20, 30, 50 and 200 DMA. The DJIA closed above horizontal resistance in the 11,632 area and has a new short term chart target 11,924. The DJIA continues in sideways consolidation as it nears horizontal resistance. The SPX is near breaking out of its sideways consolidation. A successful breakout with give a chart target of 1, 340. The Nasdaq followed through on Wednesday’s bull flag bounce and moved higher to close at its 200 DMA. Watch for horizontal or pattern breakouts on Friday. Many of our watchlist stocks were higher on Thursday, Our short-term trend status is up. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU Thursday’s Action Moving Up: DECK, PNRA, AMZN, NDAQ, ESRX, MS, AMLN, IBM, MTL, UAUA, LCC, PCLN, MA, FNM, GS, CLF, MER, V, BUCY, LEH, BIDU, EXPE Moving Down: POT, MOS, ANR, AGU, CNX, MEE Intermediate Term Market Trend: Up Short Term Market Trend: Up

Financial and Energy Stocks Lead Market Higher

DJIA + 89.64, +0.79% SP500 + 10.15, +0.80% NASDAQ Comp. + 20.49, +0.87% Russell 2000 + 9.44, +1.30% Exchange NYSE NASD Advancing 2,359 1,827 Declining 730 992 Oil $118.15 +$1.88 Gold $834.00 +$5.90 $SOX 358.81 +1.83 Strongest Sectors: XLF +1.93%...XLE +1.58%...XLK +0.96% Weakest Sectors: XLV +0.15%...XLI +0.29%...XLY +0.30% Oil moved higher again over concerns that Hurricane Gustav could disrupt oil flow in the Gulf of Mexico. XLF was the strongest sector today with energy second. All Money center banks BAC, JPM, C, USB, DB, IBN, and WFC were all higher on the day. With both oil and gold up again commodity related stocks oil, coal, gold, Ag and steel stocks rose. The key for these groups continues to be if weather disrupts oil flow in the Gulf. If it has little or no impact on oil supplies don’t be surprised to see oil fall these commodity related stocks with it. A positive durable goods report helped all sectors move higher on Wednesday as the broad indices bounced up from support levels. The RUT closed above its 20 DMA and stayed above its 200 DMA for the fourteenth day in a row. The RUT is again above its 20, 30, 50 and 200 DMA. The DJIA closed above its 30 and 50 DMA and at its 20 DMA. The DJIA continues in sideways consolidation as evidence by the flattening 20, 30 and 50 DMA The SPX also is a sideways consolidation with flattening 20, 30 and 50 DMA closed slightly above all three averages. The Nasdaq closed above the high of the low day in a bull flag bounce. Most of our watchlist stocks were higher today which can be seen in our Wednesday’s Action section below. Very few stocks were down more than 60 cents. Our short-term trend status is neutral. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU Wednesday’s Action Moving Up: BIDU, FSLR, SOHU, BUCY, POT, MOS, BTU, CNX, X, ANR, MEE, FWLT, LDK, FMCN,WRC, MTL, RIMM, AAPL, IPI, AGU, NUE, AEM, DRYS, CLF, MER, V, CF, LEH, FNM, FRE, GDX, SINA, IBM, KMT, NIHD, INFY, COH Moving Down: AMLN, UAUA, PNRA, CELG, Intermediate Term Market Trend: Up Short Term Market Trend: Neutral

Oil Rises Over Hurrican Gustav Concerns in the Gulf

DJIA + 26.62, +0.23% SP500 + 4.67, +0.37% NASDAQ Comp. - 3.62, -0.15 % Russell 2000 + 2.97, +0.41% Exchange NYSE NASD Advancing 1,960 1,549 Declining 1,129 1,297 Oil $116.27 +$1.16 Gold $828.10 +$2.40 $SOX 356.98 -3.52 Strongest Sectors: XLE +2.04%...XLU +1.09%...XLF +0.80% Weakest Sectors: XLK -0.39%...XLP -0.39%...XLV -0.12% Oil was higher over concerns that Hurricane Gustav could disrupt oil flow in the Gulf of Mexico. Financial stocks were stronger today with the financial sector ETF, XLF, with the third largest sector gain for the day. Money center banks BAC, JPM, C, USB, DB, IBN, and WFC were all higher on the day. With both oil and gold up for the day commodity related stocks oil, coal Ag and coal stocks rose moderately. The key for these groups will be if weather disrupts oil flow in the Gulf? If it has little or no impact on oil supplies don’t be surprised to see oil fall these commodity related stocks with it. The broad indices held above support levels and the RUT stayed above its 200 DMA for the thirteenth day in a row. On the DJIA and SPX which a intermediate term neutral watch last weeks low as the near term support. On the Nasdaq and RUT which are still intermediate term up, watch horizontal support horizontal support in the area of their 50 DMA. Oil continues to be the primary driver with credit and financial markets the secondary driver for stock prices at this time. Our short-term trend status is neutral. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU Monday’s Action Moving Up: MA, X, ANR, POT, FWLT, BTU, CF, FSLR, NUE, SCHN, FRE, COH, INFY, Moving Down: BIDU, SOHU, LDK, PCLN, DECK, STRA, FMCN, BRCM, AMZN, UAUA, PNRA, JASO, GRMN, SINA, EXPE, DRYS, BUCY Intermediate Term Market Trend: Up Short Term Market Trend: Neutral

Stocks & Gold Lower, Oil Up 52 Cents

DJIA - 241.81, -2.08% SP500 - 25.36, -1.96% NASDAQ Comp. - 49.12, -2.03% Russell 2000 - 17.06, -2.31% Exchange NYSE NASD Advancing 700 632 Declining 2,418 2,228 Oil $115.11 +$0.52 Gold $825.70 -$7.70 $SOX 360.50 -5.70 Strongest Sectors: XLU -1.06%...XLK -1.29%...XLE -1.30% Weakest Sectors: XLF -3.52%...XLY -2.80%...XLB -2.16% Oil was higher at the open, went negative and then rose to close up 52 cents. Gold was down on Monday also. It appears that it wasn’t so much oil rising as it was the weakness in financials all day long. Especially banks like BAC, JPM, USB, DB, IBN, and WFC. Regional banks that were down big today included STI, PNC, CMA, MTB, NTRS, BBT and STT. This combination of mixed oil prices, lower gold and lower financials sent not only the broad indices lower but also the commodity related stocks. Economic news that seemed to set the tone early was existing home sales rose in July, but that inventories also rose to a record 4.67 million homes. This record supply is adding pressure on falling prices. Our short-term trend status is neutral. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU Monday’s Action Moving Up: LDK, AMLN, AEM, CF, DRYS Moving Down: DECK, PCLN, STRA, RIMM, AAPL, AMZN, ESRX, IBM, MA, X, BTU, POT, MEE, MON, CNX, FSLR, GS, CLF, BIDU, MER, FWLT, SCHN, NUE, GRMN, COH, FMCN, NIHD, INFY, CELG, BRCM, LAMR, HANS, MTL, KMT, NDAQ, ONXX, MS, WRC, IPI, LEH, EXPE, V Intermediate Term Market Trend: Up Short Term Market Trend: Neutral

Sellers in Control in Monday Morning Trading

8:55 ET DJIA -127...SPX -14...Nasdaq -32...RUT -12...SOX -2...Oil +$0.36 A combination of higher oil prices and continue concerns in the financial sector gave sellers control in early trading on Monday. Oil which had been up as much as 71 cents to 115.30 a barrel has fallen under 115. Airline stocks which had been down early have started to rise...take a look at CAL, LCC, UAUA, DAL, AMR. These stocks are volatile and are have been moving inverse to oil prices. If oil heads higher thes stocks will likely move lower. Monday's Early Action Moving Up: LDK, BIDU, DRYS, CF, SOHU, AMLN, SINA, AEM Moving Down: FSLR, CLF, GS, STRA, X, ANR, MEE, PCLN, DECK, AAPL, COH, FMCN, AMZN, MA, BTU, SCHN, CNX, NUE, FWLT, ESRX, CELG, HANS, WRC, INFY, NIHD, ONXX, GRMN, MON, MTL, LAMR, BRC, PNRA, RIMM, LEH, BUCY, MER, EXPE

Were You Prepared For Friday's Rally?

DJIA + 197.85, +1.73% SP500 + 14.48, +1.13% NASDAQ Comp. + 34.33, +1.44% Russell 2000 + 12.35, +1.70% Exchange NYSE NASD Advancing 2,224 2,007 Declining 861 823 Oil $114.59 -$6.59 Gold $833.50 -$5.50 $SOX 366.20 +4.75 Strongest Sectors: XLF +3.80%...XLY +2.33%...XLI +1.96% Weakest Sectors: XLE -1.75%...XLB -0.05%...XLU +0.40% Oil gave back every cent on Friday it gained on Thursday plus some. We are not surprised by this and hope that you weren’t either. Why? We enumerated this extensively in our Thursday night audio Talk. We detailed the bottoming patterns on commodity related stocks like oil, gold, coal and Ag stocks. We showed how these groups of stocks were correlated with oil prices. We showed the intermediate term down trend in oil prices. We discussed the macroeconomic factors of slowing demand and changes that consumers are making in their driving habits. We talked about the difference between macro-factors and short-term news related factors. We explained that short-term news factors, like hurricane weather, missile testing in the Middle East or tensions with Russia, were essentially speculation and that kinds of factors and their influence on price can change as quickly as the weather. We discussed the non-confirmation from the VIX and that option demand was not increasing volatility, which gives clues that option traders were not expecting a big market drop. We warned that the trend reversal patterns in commodity related stocks were essentially counter-trend moves and if listeners were trading them to be prepared for a quick exit in the event oil prices turned down. In our Thursday post...we alerted readers to “Watch the price of oil on Friday…lower oil prices could alter these commodity related technical patterns.” Why because of the reasons stated above. Even though the gain in oil on Thursday was the largest daily gain since July 10, the balance of the information was not completely convincing. While it is true that a trader needs to trade the Chart Signals, they also need to be aware of the non-confirmations and aware of the difference between macro factors influencing the intermediate term trend and the micro factors that influence the short-term trend but that can fade as quickly as they appear. Being aware of the bigger technical picture helps a trader that takes a counter-trend or early trend reversal trade to make adjustments quickly when the short-term move begins to reverse. We trust you made the right adjustments at the right time. If you did…way to go and keep it up. So Thursday oil gained $5.62. On Friday it lost $6.59. Net change down 97 cents for the two days. Remember one of the core tenants of technical analysis is that market action discounts everything. On Thursday the market discounted the rise in oil prices by commodity related stocks rising and on Friday it discounted the fall in oil prices as commodity related stocks fell and the broad indices rose significantly. The intermediate term trend in oil is still down be we see how easily weather, geo-political concerns or even rumors can influence the short-term trend. We also learned Thursday how non-confirmation can give us a clue to the potential weakness of a short-term move. Oil’s recent low is 111.69 on August 15 and the recent high on Thursday August 21 is 121.30. This establishes an important range for us to watch for either a break of support or resistance as to the next direction in the price of oil. Dave's Insight: Remember moves in the direction of the intermediate term trend are more probable. Financial stocks were stronger on Friday as XLF was the strongest sector gaining 3.80%. BAC, JPM, AXP and C all gained more than 3% each on Friday. We saw a lot of the bull flag patterns in stocks, indexes and the sector ETFs, that we alerted you to in Thursday’s post, break out on Friday. As you check your watchlist tonight notice if you see the same. Our short-term trend status is up. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU Index Commentary The DJIA formed a large white candle following Thursday’s hammer…closed above its 20, 30 and 50 DMA…closed above its 23.6% Fibonacci level from the July 15 low…Thursday was a candle entry day and Friday was the break above the high of the low day entry…on the weekly chart there is a hammer, a flag formation and a close above the S1 of the large white candle two weeks ago. The SPX formed a large white candle after Thursday’s confirmation Wednesday’s bullish harami and close above the high of the low day…is above its 20, 30 and 50 DMA and its 23.6% Fibonacci level…on the weekly chart formed a hammer and closed near the high of the large white candle two weeks ago. The Nasdaq opened Friday above Thursday’s (the low day) high creating both the high of the low day and bull flag entry…closed above the 23.6% Fibonacci and closed at its 200 DMA…on the weekly chart bounced off the S1 level and closed above the high of two weeks ago. The SOX formed a bullish engulfing on Thursday’s gave a candle, high of the low day and bull flag entry…closed above its 50 DMA. The RUT formed a bullish engulfing…Friday was an entry day for candle, high of the low day and bull flag…broke through the 23.6% Fibonacci…closed 11 straight days and 12 of the last 13 days above its 200 DMA…Are you seeing a pattern yet? Stock Commentary Up Trending RIMM pulled back at 134 the old high...dark cloud cove like candle AAPL bull flag breakout…gapped up from doji AMZN gapped up from its bullish engulfing…bull flag breakout NIHD confirmed Wednesday’s inverted hammer…again broke out of horizontal resistance in 52 area…bullish bounce may be a failed H&S ESRX weak bull flag breakout with small body spinning top…closed above body of the low day UAUA gapped up from low day after 3-day bull flag…entry day NDAQ again failed to confirm hammer in bull flag…closed near the high of the low day…watch for potential entry on Monday WRC formed a hammer…failed to confirm Wednesday’s hammer…watch for potential entry ONXX bullish engulfing in a bull flag pattern…closed at the high of the low day HANS still in horizontal bull flag at 30 horizontal resistance area…watch for breakout Down Trending We alerted you to “Watch the price of oil on Friday…lower oil prices could alter these commodity related technical patterns” on Thursday and this did happen on Friday. Ag stocks are rolling over but still in a congestion area near bottom breakout patterns that may be failing. POT formed bearish harami and inside day MOS inside day confirmed Thursday’s hanging man…bounced down from 200 DMA AGU confirmed Thursday’s hanging man bounce down from 30 DMA X confirmed Thursday’s dark cloud cover…broke the low of the high day…fell to 200 DMA SCHN formed a lower high and lower low white hanging man that closed 20 higher than the dark cloud cover on Thursday FWLT formed a lower high and lower low and closed below the low of the high day (entry) in this bear flag CNX formed a lower high and lower low that confirmed Thursday’s hanging man BTU closed below the low of the high day in this breakout pattern…potential short-term reversal down…closed near the 30 DMA Sideways Trending AMLN formed higher high and higher low red candle that closed 17 cents lower that the high of the low day…watch for potential break on Monday CF formed a higher high and higher low white body bearish harami after three white soldiers FSLR formed a small white candle continuation…potential chart target 288 CLF formed a white candle inside day with a slightly lower close than Thursday’s doji in the area the 30 DMA Trend Reversal JASO formed a spinning top above horizontal resistance and its 20, 30 and 50 DMA…chart target 21.50 if breakout holds Friday’s Action Moving Up: PCLN, STRA, AAPL, NIHD, DECK, AMZN, IBM, MS, PNRA, UAUA, FMCN, INFY, CELG, LCC, ANR, SINA, FSLR, GS, SOHU, MER, BIDU, LEH, NDAQ, BRCM Moving Down: X, POT, BTU, MEE, AGU, CNX, AEM, MON, FWLT, GDX, MOS, NUE, DRYS, BUCY, CF, MTL, RIMM Intermediate Term Market Trend: Up Short Term Market Trend: Up

At Mid Day Markets Still Strong...Oil Still Weak

12:40 ET DJIA +186...SPX +12...Nasdaq +34...RUT +10...SOX +5...Oil -$5.18 At the Fed's annual retreat today in Jackson Hole, Wyoming, not so far from here, Bernacke shared with policymakers, economist and the rest of the world through the financial media the obvious...that the recent decline of commodity prices and the improved stability of the dollar are welcome trends and that if the trends don't reverse lower commodity prices and a stable dollar should lead to lower inflation later this year and next. And according to the financial media, that spurred markets higher. Is there anything in that message you didn't know a week or two or three ago? Do you think the economists and analysts at the big money institutions didn't know that three or four weeks ago? If they didn't, why did markets bottom on July 15, the exact same July 15 that oil dropped below $145 and started a 7-day descent to 125 on July 23? If they didn't, why did the DJIA rise from a low of 10,827 to a high of 11,698 in that exact same time period? Is it just possible that big money already knows that lower commodity prices and a stronger dollar is a good thing for stocks or do you really think they didn't know until Bernacke told them today? Whether you do think they knew or don't, enjoy today's rise and the current intermediate term up trend...we'll be back later with more insights and wrap on this week's market action... Friday's Mid-day Action Moving Up: AAPL, STRA, NIHD, MS, PCLN, IBM, AMZN, PNRA, CELG, FMCN, INFY, UAUA, DECK, LCC, NDAQ, BRCM, ANR, SINA, MA, BIDU, GS, FSLR, LEH, SOHU, MER Moving Down: X, BTU, MEE, POT, CNX, AEM, AGU, MOS, MON, FWLT, GDX, NUE, IPI, DRYS, BUCY, CF, MTL

Something Interesting Happened on the Way...

to the bank. You've heard that expression before. We'll that was yesterday. As most of you should know the VIX is an inverse indicator that we use for confirmation of market action. Specifically the VIX is calculated from S&P options volatility. The inverse confirmaiton is that if the S&P is up the VIX should be down and if the S&P is down the VIX should be up. This concept works like a seesaw with the S&P on one end and the VIX on the other. Most of the time the VIX works exactly as it should inversely confirming what the S&P is doing. Everyone once in a while the VIX doesn't confirm and instead it gives non-confirmation. This non-confirmation, when it occurs, can be an advance warning of a move in the opposite direction. While we were doing our mega-audio commentary yesterday morning, oil was up and the markets were lower and the VIX was lower, giving us one of those non-confirmations. Oil was up two, then three, then four dollars in the morning, the markets were off and yet the VIX just did not go up. By the end of the day oil was up over $5 and the DJIA and SPX had limped into positive territory, really just breakeven and the VIX was still negative for the day. All day long the VIX gave this non-confirmation. Last night in our audio commentary we discussed this non-confirmation and warned to be cautious of the bottoming signals that had occured in commodity related stocks like oil, coa, gold and Ag stocks. The technical chart signals were there but the VIX just wasn't confirming. In essence the VIX seemed to be saying that even though oil was up $5, options buyers were not aggressively buying puts to drive volatilty higher. Why not? Well apparently they believed the larger macro-factors driving the trend of oil down had more weight that the U.S./Russia tensions that seemed to fuel oil prices higher yesterday. We also pointed out that the steels also were down for the day and that if the commodity move was a lasting move that one would expect the steels to be moving up also. In effect the steels were also giving non-confirmation. We reflected this issue in our post Thursday night in the Stock Commentary Down Trending portion. Well as I am sure you are aware, this morning we saw exactly what the VIX was telling us yesterday. Oil is down this morning, commodity related stocks are also down and the markets are moving up nicely and we are seeing a lot of the those bull flags we commented on last night bouncing this morning. Just goes to prove the technical evidence is there if we are just willing to pay attention to the Chart Signals. 10:36 ET DJIA +191...SPX +14...Nasdaq +29...RUT +10...SOX +4 Oil -$2.18...Gold -$6.70 All Sectors except XLE are positive at this time. Friday's Early Action Moving Up: STRA, DECK, AAPL, NIHD, PCLN, AMZN, MS, IBM, UAUA, FMCN, PNRA, CELF, INFY, LCC, NDAQ, KMT, MA, SINA, SCHN, GS, BIDU, LEH, SOHU, V, MER, EXPE Moving Down: DRYS, BUCY, FSLR, X, IPI, POT, MOS, POT, AGU, AEM, BTU, MEE, MON, MTL, LDK Well be back a little latter with more comments on the unfolding support bounce in the markets...

Oil Rises Big...

DJIA + 12.78, +0.11% SP500 + 3.18, +0.25% NASDAQ Comp. - 8.70, -0.36% Russell 2000 - 6.35, -0.87% Exchange NYSE NASD Advancing 1,321 1,062 Declining 1,730 1,742 Oil $121.18 +$5.62 Gold $839.00 +$22.70 $SOX 361.45 -1.22 Strongest Sectors: XLE +2.51%...XLU +0.96%...XLB +0.86% Weakest Sectors: XLF -1.82%...XLP -1.09%...XLV -0.64% Oil moved strongly higher on Thursday fueled in large measure by increasing tensions between Russia and the U.S over the conflict in Georgia. Oil stocks CVX, XOM, HES and COP closed higher. ETF’s XLE, USO and UNG also moved higher. We mentioned in Wednesday’s post the bottoming pattern we saw in coal, Ag, gold and steel stocks. Higher oil prices today also gave a boost to many other commodity related stocks. Coal stocks BTU, CNX, MEE, JRCC, ANR and KOL moved higher out of their bottoming patterns as did Ag-related stocks POT, MOS, CF and AGU. Steel stocks X, SCHN, NUE and STLD however did NOT participate in Thursday’s move up. Financial stocks in general were lower today. One bright spot FNM gained more than 10% after losing about 50% of its value since last Friday. FRE was down 9 cents but up from its intra-day low. We saw a lot of bull flag patterns in stocks, indexes and the sector ETFs today. As you check your watchlist tonight notice if you see the same. Our short-term trend status is neutral. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU Index Commentary The DJIA formed a hammer that confirmed Wednesday’s bullish harami …closed near the 30 DMA and 38.2% Fibonacci level from the July 15 low. The SPX confirmed Wednesday’s bullish harami…closed above its 20 and 50 DMA and above the high of the low day. The Nasdaq formed a lower high and lower low spinning top bounced at the 38.2% Fibonacci and up from its 20 DMA…Thursday is the low day. The SOX formed a hammer 3-day bull flag pull back…closed just below its 50 DMA and at 38.2% Fibonacci…Thursday is the low day. The RUT formed a lower high and lower low spinning top at its 20 and 200 DMA…bounced at 38.2 Fibonacci…closed ten straight days and 11 of the last 12 days above its 200 DMA…Thursday is the low day. Stock Commentary Up Trending RIMM continued its bull flag bounce with a white candle AAPL moved lower in its bull flag AMZN formed a bullish engulfing bounce off its 20 DMA in its bull flag NIHD failed to confirm Wednesday’s inverted hammer just below 30 DMA…H&S target 46.50 ESRX formed a white candle in a bull flag…Thursday is the low day UAUA lower white candle in a bull flag…Thursday is the low day NDAQ failed to confirm hammer in bull flag…Thursday is the low day WRC formed a doji…failed to confirm hammer…Thursday is the low day ONXX moved lower in a bull flag pattern…bounced at 200 DMA…Thursday is the low day HANS formed a bullish harami in horizontal bull flag Down Trending Watch the price of oil on Friday…lower oil prices could alter these commodity related reversal technical patterns POT broke above H&S neckline and 20 DMA MOS broke above double bottom resistance X formed dark cloud cover after small double bottom breakout …new chart target 150 SCHN dark cloud cover before potential double bottom breakout at 71.30 AGU broke head & shoulders bottom neckline at 85…with a chart target of 97 FWLT double bottom breakout around 50.60 with chart target of 55.60 CNX rose after small head & shoulders bottom breakout…chart target 75 BTU continuation of horizontal breakout…chart target of 73…closed above 30 DMA Sideways Trending AMLN formed lower high and lower low white candle near the 26 support area CF three white soldiers…potential chart target 151 FSLR large white candle continuation…potential chart target 288 CLF formed doji at 30 DMA Thursday’s Action Moving Up: POT, FSLR, CF, MEE, BTU, BUCY, AEM ANR, BIDU, CNX, GDX, AGU, MON, MOS, FWLT, RIMM, AMZN, FMCN, IPI Moving Down: X, MA, SCHN, GS, AAPL, STRA, NDAQ, PCLN, UAUA, WRC, LDK, HANS, LCC Intermediate Term Market Trend: Up Short Term Market Trend: Neutral

Futures Are Lower...Oil, Gold Higher

Futures are lower in pre-market trading and markets are expected to open lower. Overseas oil is up over $2 a barrel and gold is up over $20. Credit concerns related to FNM and FRE are the catalyst behind the rise in gold. See our Wednesday night post of the bottoming formations in the Ag-related, coal and steel stocks for ideas on what could be moving on Thursday. As we have been posting for over four weeks oil falling is a key factor in stocks rising...be prepared if the trend reverses. Stay focused on trend and important support and resistance levels in your trading. In pre-market trading RIMM and AAPL are lower...POT, MOS, BTU, CNX, SCHN and X are higher.

Oil, Commodity, Financial Stocks Rebound...

DJIA + 68.88, +0.61% SP500 + 7.85, +0.62% NASDAQ Comp. + 4.72, +0.20% Russell 2000 + 1.57, +0.22% Exchange NYSE NASD Advancing 1,637 1,402 Declining 1,429 1,431 Oil $114.98 +$0.45 Gold $816.30 -$0.50 $SOX 362.67 +1.10 Strongest Sectors: XLE +2.89%...XLF +2.06%...XLB +1.75% Weakest Sectors: XLY -1.23%...XLI -0.80%...XLV -0.63% On Wednesday the broad markets, oil, commodity related stocks and financials were all higher. HPQ came with strong earnings after the close on Tuesday and led the DJIA higher on Wednesday gaining 5.65%. This helped lift tech stocks like AAPL, RIMM, BIDU, NVDA, DELL, KLAC, INTU and ADSK. Oil opened higher, fell and moved higher again to lead many oil stocks higher. Both CVX and XOM closed higher. This also gave a boost to coal stocks BTU, CNX, MEE, ANR and KOL. Ag-related stocks POT, MOS, CF and AGU were also higher as were steel stocks X, SCHN, NUE and STLD. Take note of the listed potential bottoming patterns on the Ags, coals and steels below in Down Trending stocks. Even though FNM and FRE closed down over 20%, the financials in general closed higher. BAC, JPM, AIG, AXP and C were big gainers in the DJIA. Financial sector ETF, XLF, rose 2.06%. Apparently today was Bullish Harami Index Day as you will read below...Did you ge the memo? Our short-term trend status is neutral. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU

Index Commentary The DJIA formed a bullish harami and rose to its 30 DMA…closed near the 38.2% Fibonacci level from the July 15 low. The SPX formed a bullish harami held above its 50 DMA and rose to its 20 DMA…also rose above the 38.2% Fibonacci retracement from the July 15 low. The Nasdaq formed a bullish harami...above it 20, 30 and 50 DMA...below 200 DMA...closed just below the 23.6% Fibonacci level from the July 15 low.

The SOX formed inverted hammer bullish harami in 2-day bull flag pull back…closed at 50 DMA…trading above 20 and 30 DMA. The RUT formed bullish harami after three black crows…trading above 20, 30, 50 and 200 DMA…closed nine straight days and 10 of the last 11 days above its 200 DMA. Stock Commentary Up Trending RIMM bounced from its doji with a support bounce that broke the high of the low day AAPL bounced with an inside day that did NOT close above the high of the low day AMZN formed a bullish harami following its three black crows NIHD formed an inverted hammer bullish harami pattern…still trading below neckline of the head and shoulders pattern…H&S target 46.50 ESRX formed a bearish engulfing pattern that closed below its 74 horizontal resistance area UAUA followed Tuesday’s bearish engulfing pattern with a close below the high day in what appears to be a bull flag pattern NDAQ formed a hammer after a two day bull flag…broke the high of the low day WRC formed a hammer and bullish harami…stayed above support of the potential double bottom ONXX moved lower in a bull flag pattern…closed near the August 14 S1 level HANS today formed a bullish engulfing like pattern on Tuesday’s inverted hammer…broke above the high of the low day in a bull flag pattern Down Trending POT move up in a counter trend move after Tuesday’s bullish engulfing potential head & shoulders bottom MOS moved higher after Tuesday’s bullish engulfing…potential double bottom X broke out of a small double bottom around 140…new chart target 150 FWLT broke high of low day potential double bottom breakout around 50.60 with chart target of 55.60 CNX small head & shoulders bottom breakout…chart target 75 AGU potential head & shoulders bottom breakout at 85…with a chart target of 97 SCHN potential double bottom breakout at 71.30…with a chart target of 77.30 BTU horizontal breakout…with chart target of 73…closed at 30 DMA Sideways Trending AMLN did NOT confirm hammer…closed below 50 DMA CF horizontal breakout…potential chart target 151 FSLR 20, 30 and 50 DMA breakout…potential chart target 288 CLF broke horizontal resistance and 20 DMA…closed at 30 DMA Trend Reversal JASO broke through horizontal resistance and its 50 DMA…chart target 21.50 Wednesday’s Action Moving Up: FSLR, BIDU, CLF, CF, X, MON, MA, RIMM, CNX, MOS, FWLT, AGU, ANR, BTU, SCHN, POT, LDK, AAPL, HANS, IPI, BUCY, JASO, NUE, SINA, MEE, FMCN, PCLN, AMZN, WRC, NDAQ, LEH, V Moving Down: AMLN, UAUA, STRA, DECK, COH, MS, ESRX, ONXX, FNM, FRE Intermediate Term Market Trend: Up Short Term Market Trend: Neutral

Futures are Higher in Pre-Market

Dow, S&P, Nasdaq and Russell futures are all higher with about 90 minutes to go before market open. We'll watch and see if this translates into a stronger cash market on Wednesday. The primary factors to the broad markets still seems to be a combination of financial stocks and oil prices. Pay attention to key support and resistance areas in Wednesday's trading. The broad indices and are still in an intermediate term up trend and in a short-term down trend after Tuesday's pull back. Many charts are forming bull flag patterns of two or three day lengths so watch those charts for support bounces. The oil, coal, steel, gold and Ag-related stocks have had bounces in their down trends the last two days. These are essentially bear flags. If oil prices pull back and continue its intermediate term down trend look for these stocks to give a resistance bounce down and a possible break of their bear flag patterns. HPQ reported strong earnings after the close yesterday and is higher is pre-market trading. Other tech stocks also trading higher in pre-market: AAPL, RIMM, BIDU, GOOG

Oil Rises...Financials, Broad Markets Fall

DJIA - 130.84, -1.14% SP500 - 11.91, -0.93% NASDAQ Comp. - 32.62, -1.35% Russell 2000 - 11.94, -1.61% Exchange NYSE NASD Advancing 844 778 Declining 2,262 2,054 Oil $113.77 +$1.66 Gold $805.70 +$11.10 $SOX 361.57 -8.37 Strongest Sectors: XLE +3.59%...XLU +0.54%...XLV -0.45% Weakest Sectors: XLF -2.92%...XLY -1.86%...XLK -1.75% Concerns continued in the financial sector, rising gold and oil prices sent the broad indices lower. XLF was the weakest sector for the second day in a row. Semiconductors were weak also. Steel, coal, oil, gold and Ag-related stocks were strong. Our short-term trend status is down. XLF broke below last weeks low and fell to the horizontal support level of its current sideways trend around 19.75. Watch today’s low as an important support level. A successful break below this level will change the intermediate term trend of XLF to down. XLE formed a bullish engulfing pattern on rising oil prices today. The intermediate term trend is still down. The short-term trend is neutral or sideways. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF, Down Trending: XLE, XLU, Index Commentary The DJIA broke down through its 30 DMA and its rising support line and the August 8 S3 support level…as we posted yesterday this turns the short-term trend to down and the intermediate term trend to neutral…Tuesday’s close represents a 50% Fibonacci retracement from the July 15 low. The SPX broke down through its 20 DMA and closed at its 30 DMA and at its August 8 S2 level…the intermediate term trend shifts to neutral and the short-term trend to down…Tuesday’s close is just below a 38.2% Fibonacci and still above the 50% Fibonacci retracement. The Nasdaq again closed below its 200 DMA…broke last weeks support low…bounced at the August 8 S1 level…is above its 20, 30 and 50 DMA…the short-term trend is down with a break below 2,400…current retracement is still above the 38.2% Fibonacci level from the July 15 low. The SOX fell below its 50 DMA and is still above its 20 and 30 DMA…the short-term trend is down with the break below Monday’s low and its 50 DMA…current retracement is a 38.2% Fibonacci since the July 28 low. The RUT formed three black crows and turned the short-term trend down on Tuesday with the break below the August 11 S3 level of 732…closed above its 200 DMA for the eighth consecutive day and 9 of the last 10 days…Tuesday’s low is between the 23.6% and 38.2% Fibonacci levels. Stock Commentary Up Trending RIMM formed a doji as it held above its 50 DMA…consolidating sideways for 8 days AAPL formed a spinning top for its third consecutive down day…still above 50 DMA AMZN three black crows falling below the August 11 S1 level…still above the S2 and S3 levels NIHD fell below horizontal support and its 20 and 30 DMA…appears to have broken the neckline of a head and shoulders pattern…H&S target 46.50 ESRX confirmed Monday’s shooting star and bearish harami and held above the breakout of long term horizontal resistance in the 74 area… watch if support holds UAUA bearish engulfing pattern with rise in oil prices on Tuesday NDAQ held support at the August 8 S3 level WRC fell from resistance forming potential double top ONXX confirmed Monday’s shooting star and bearish harami…held above August 14 S1 level HANS formed shooting star or inverted hammer? held above August 14 S1 level and above its 50 DMA Down Trending POT confirmed bullish harami inverted hammer with a bullish engulfing MOS confirmed bullish harami and inverted hammer with a bullish engulfing X confirmed its bullish harami with a bullish engulfing pattern FWLT spinning top did NOT confirm Monday’s bullish harami at its long term support area of 46 CNX formed a bullish engulfing AGU confirmed Monday’s inverted hammer with a bullish engulfing…potentially forming a head and shoulders bottom SCHN formed a spinning top (mini) bullish engulfing at 66.50 support area BTU formed a bullish engulfing rising to its 20 DMA Sideways Trending AMLN formed hammer like spinning top at its 50 DMA…volume dropped to 8.4 million shares CF formed a bullish engulfing FSLR formed a spinning top…bearish harami? CLF formed a shooting star confirming Friday’s bearish harami Tuesday’s Action Moving Up: X, MEE, BTU, POT, CNX, CF, AEM, MOS, AGU, FSLR, BIDU, NUE, GDX, IPI, LDK, MTL Moving Down: DECK, CELG, IBM, AAPL, AMZN, NIHD, ONXX, WRC, MS, LAMR, PCLN, DRYS, GS, LEH, V, UAUA, AMLN, RIMM, BRCM, COH, PNRA, INFY, SNDK, NDAQ, MER, CLF Intermediate Term Market Trend: Up Short Term Market Trend: Down

Financials Weak...Energy, Coal, Gold, Steel and Ag Stronger

11:45 ET DJIA -132...SPX -12...Nasdaq -23...RUT -10...SOX -5...Oil +$0.26 In early trading financials, consumer discretionary and industrial sectors continue to be weak while the energy, coal, steel, gold and Ag-related stocks are stronger. Weak financials and strong energy has over the past several weeks been a combination that has led to lower price action for the broad indices and that is the case this morning. Watch whether price action stays above or breaks below support levels. Tuesday's Early Action Moving Up: POT, MA, CNX, MEE, BTU, MOS, X, AGU, ANR, AEM, CLF, GDX, CF, BIDU, SOHU, CLF, FSLR, AAPL, FMCN, LDK Moving Down: DECK, IBM, MS, PCLN, ONXX, CELG, NIHD, AMLN, PNRA, LAMR, WRC, RIMM, COH, BRC, INFY, LCC, DRYS, GS, LEH, MER,V

Oil Falls But Financials Take Broad Markets Lower

DJIA - 180.51, -1.55% SP500 - 19.60, -1.51% NASDAQ Comp. - 35.54, -1.45% Russell 2000 - 11.40, -1.51% Exchange NYSE NASD Advancing 881 891 Declining 2,215 1,961 Oil $113.77 -$0.90 Gold $805.70 +$13.60 $SOX 369.94 -6.49 Strongest Sectors: XLU +0.14%...XLP -0.41%...XLV -0.83% Weakest Sectors: XLf -3.84%...XLY -1.70%...XLE -1.27% Fresh concerns over the need for a bailout for Fannie Mae-FNM and Freddie Mac-FRE sent financial stocks lower today and the weakness in financial stocks took the broader market lower. FNM was down over 22% on volume that was about 70% above average while FRE was down over 24% on 50% above average volume. The question is the speculation in the news about failure and bailout accurate or are the bears just getting the media to buy in to the idea and spread the fear? Of course, only time will tell but there is an opportunity here if one can assume the risk. In the broader financial sector XLF was down 3.84%. XLF is currently in a sideways trend and Monday’s low held above lows of last week, which suggests that the concern in the broader sector is not as great as with FNM and FRE. Watch last week’s low as an important support level. The prior week support low of 19.75 is also important. Up trending sectors have maintained their intermediate term uptrend. In the broad indices we have changed our short-term trend status to neutra. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF, Down Trending: XLE, XLU, Index Commentary The DJIA broke down through its 50 and 20 DMA and bounced off its 30 DMA while forming a bearish engulfing pattern…a break below the 30 DMA and the August 8 S3 level of 11,388 would turn the intermediate term trend from up to neutral and the short-term trend down. The SPX broke down through its 50 DMA bounced off its 20 DMA while forming a bearish engulfing pattern…a break below the 30 DMA and August 8 S3 level would turn the intermediate term trend neutral and the short-term trend down. The Nasdaq fell back below its 200 DMA while forming an evening star like pattern…the short-term trend is neutral…a break below the 2,400 level would turn the short-term trend down. The SOX unable to break through its 200 DMA formed an evening star like pattern and bounced up from its 50 DMA…the short-term trend is neutral and a break below Monday’s low and its 50 DMA would turn the short-term trend down. The RUT formed an evening star pattern and turned the short-term trend neutral…a break below the August 11 S3 level of 732 would turn the short-term trend down…closed above its 200 DMA for seven consecutive days and 8 of the last 9 days. Stock Commentary Up Trending RIMM pulled back on Friday to its bull flag low and bounced watch for a break below its 125 support and 50 DMA for a failed bull flag AAPL formed a doji following Friday’s bearish engulfing AMZN broke below horizontal bull flag and August 11 S1 level…holding above Monday’s S2 and S3 levels NIHD pulled back to horizontal support at 52…closed below its 20 DMA…may be forming a potential head and shoulders formation ESRX held above the breakout of long term horizontal resistance in the 74 area…formed shooting star and bearish harami…watch if support holds UAUA bull flag breakout continued on Monday as oil falls…short-term chart target 16.67 NDAQ formed evening star pattern…watch the August 8 S3 support level WRC small spinning top at horizontal resistance ONXX formed shooting star and bearish harami in a horizontal bull flag…. HANS held above Thursday’s S1 level and above its 50 DMA Down Trending POT formed a bullish harami inverted hammer at its 200 DMA MOS formed a bullish engulfing and an inverted hammer X formed a bullish harami FWLT formed a bullish harami at its long term support area of 46 CNX formed a spinning top at its 60 – 61 support area AGU bounced up failing to follow through on Friday’s bear flag break with an inverted hammer that rose to its 20 DMA…potentially forming a head and shoulders bottom SCHN held at 66.50 support area of breaking its bear flag on Friday BTU formed shooting star inside its bear flag pattern Sideways Trending AMLN fell below its horizontal breakout on six times normal volume on negative FDA news on one of its drugs CF formed a doji FSLR formed a bearish engulfing pattern on Friday’s shooting star CLF formed a doji failing to confirm Friday’s bearish harami Monday’s Action Moving Up: FMCN, UAUA, ONXX, MOS, AEM, AGU, IPI, GDX, BUCY, CF Moving Down: DECK, AMLN, STRA, AMZN, PCLN, NDAQ, SNDK, RIMM, IBM, NIHD, MS, COH, INFY, FNM, SINA, FRE, MA, MEE, NUE, BIDU, FSLR, GS, MER, LEH, V, SOHU Intermediate Term Market Trend: Up Short Term Market Trend: Neutral

Oil Up...Broad Indices Down in Early Trading

10:32 AM ET DJIA -55...SPX -5...Nasdaq -10...RUT -3...SOX -4...Oil +$0.88 Early Monday morning oil is rising. Oil was up over a $1 a barrel and USO was up over 70 cents in early trading. As we have been posting for the past four weeks the direction of oil is one of the major factors is the market movement at this time. When oil is down the market has a tendency to rise and when oil is up the market has a tendency to go down. It appears this morning is working perfectly with that relationship. As a result energy, gold, coal, steel and Ag-related stocks are on the rise this morning while the broad indices and many other equities are down this morning. If the trend holds then this could be presenting some entry opportunities as prices find support. If support is broken, of course trade accordingly. As always follow your trading rules. Here is what is moving in the early going on Monday. Monday's Early Action Moving Up: FMCN, ONXX, HANS, BRCM, POT, MOS, AGU, X, AEM, MON, ANR, BTU, MEE, IPI, SCHN, GDX, CLF, CNX, FWLT, CF, BUCY, DRYS, CLF Moving Down: PCLN, DECK, AMZN, IBM, SNDK, MS, RIMM, NDAQ, UAUA, LDK, NIHD, FNM, FRE, BIDU, GS, MER

August Options Expire...Stocks Mixed...Oil & Gold Down

DJIA + 43.97, +0.38% SP500 + 5.27, +0.41% NASDAQ Comp. - 1.15, -0.05% Russell 2000 - 1.01, -0.13% Exchange NYSE NASD Advancing 1,630 1,358 Declining 1,442 1,495 Oil $113.77 -$1.24 Gold $792.10 -$22.40 $SOX 376.43 -0.18 Strongest Sectors: XLY +1.17%...XLV +0.99%...XLP +0.98% Weakest Sectors: XLE -1.87%...XLB -0.63%...XLU +0.13% The RUT +19 and the Nasdaq +38 made the largest moves for the week although they were essentially flat on Friday. The SPX +2 flat and the DJIA -75 down for the week were up more on Friday than their net gain for the week. Ironically, the SOX, +9 for the week, was also flat on Friday. Oil and gold continued to fall on Friday as did oil, gold, coal, steel, and Ag-related stocks. While there will likely be counter trend support bounces in the days ahead, the technical evidence on the chart as of Friday points to a continued down trend in the stocks. The strong gains in the SOX, semiconductor stocks, created a strong foundation for the rising Nasdaq. AMD moved up 6.42% on Friday on heavy volume. For the week XLK and XLP were strongest followed by XLY, XLV and XLB. XLI, XLF, XLE and XLU were down for the week. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF, Down Trending: XLE, XLU, Index Commentary The DJIA bounced through its 50 DMA and closed above last Friday’s S1 level…breaking out of its bull flag…did not quite close above the high of the low day which was Thursday. The SPX broke through its bull flag and did close above the high of the low day, the hammer, which formed on Wednesday…Thursday was a bullish engulfing pattern…closed for the second day in a row above its 50 DMA. The Nasdaq which formed a white candle moving up for the fifth week in a row on its weekly chart pulled back and formed a black spinning top on its daily chart…did form a higher high and higher low…watch on Monday to see if Friday was the pause that refreshes or the beginning of a short-term pull back…key short-term support is the S1 on Thursday’s large white candle…closed for the second day in a row above its 200 DMA. The SOX formed a white candle on its weekly chart and rose for the second week in a row….formed a small black spinning top on Friday net moving sideways for the fourth day in a row…still a horizontal bull flag…closed for the fifth straight day above its 50 DMA…still trading below its 200 DMA. The RUT formed a large white candle on its weekly chart and was up for the sixth week in a row…rose to the 765 horizontal resistance area on Friday before closing down a point with a spinning top…did form a higher high and a higher low…watch to see if this is the pause that refreshes or the beginning of a short-term pull back…watch if Monday’s price action moves below Friday’s low or moves higher through resistance…closed above its 200 DMA for the sixth day in a row. Stock Commentary Up Trending RIMM pulled back on Friday…stayed above bull flag low AAPL bearish engulfing bounce down from resistance at 180 AMZN black candle in horizontal bull flag holding above Monday’s S1 level NIHD dark cloud cover after two up days holding above 20 DMA…this could be a continuation of a trading range or a potential head and shoulders formation? ESRX breakout of long term horizontal resistance of 74 area…intermediate term chart target of 87 UAUA bull flag and breakout as oil falls…short-term chart target 16.67 if breakout holds NDAQ spinning top after resistance breakout…if breakout holds short-term chart target of 37.17…watch S1 level of Thursday’s large white candle WRC shooting star at horizontal resistance area of 53 following bull flag bounce ONXX pullback that holds above Thursday’s S1 level following horizontal breakout…chart target 50 HANS pullback that holds above Thursday’s S1 level after bull flag support bounce and horizontal breakout AMLN pullback that holds above Thursday’s S1 level after horizontal resistance breakout…chart target 42 Down Trending POT, MOS, X, FWLT, CNX all confirmed Thursday’s bearish harami on Friday and broke below support in bear flag breakouts to the downside AGU broke below Thursday’s low in bear flag breakout SCHN bear flag breakout NUE bear flag breakout BTU confirmed Thursday’s hanging man pattern…closed above Thursday’s low and bear flag support line Sideways Trending CF confirmed its bearish harami and broke the rising support of its bear flag FSLR gapped up and formed a shooting star in the area of its 20, 30 and 50 DMA CLF formed a bearish harami near its 20 DMA after rising for three days Friday’s Action Moving Up: FSLR, MA, ESRX, UAUA, PCLN, LDK, GET, FMCN, LAMR, JASO, SINA Moving Down: POT, CF, MOS, X, BIDU, ANR, AAPL, BUCY, GS, SCHN, AGU, DRYS, CLF, CNX, BTU, FWLT, MOM, RIMM, STRA, AMZN, IPI, MTL, CELG, HANS, ONXX, EXM, USO, NIHD, MEE, SOHU Intermediate Term Market Trend: Up Short Term Market Trend: Up

Oil Falls, Market Rally and Pullback, Options Expire Today

10: 48 ET DJIA + 54...SPX +4...Nasdaq +5...RUT +0.57...SOX +0.25...Oil -2.91 Oil falls anothe $2 plus Friday morning...stocks rally, pull back and then find support...all in the first hour plus on Options Expiration Friday...volatility or trading range that is not uncommon for Options Expiration...expect more of the same today. With oil down airlines are taking off this morning...consistent with our audio commentary last night. Steel, Gold, Ag-related, Coal and oil stocks are moving down again...exactly what should be expected with oil falling and these stocks alreay in strong down trends for the past four weeks. Moving Up: FSLR, MA, PCLN, ESRX, UAUA, SINA, LEH, Moving Down: CF, POT, MOS, X, ANR, BTU, CNX, AGU, MON, SCHN, DRYS, MEE, BUCY, CLF, USO BIDU, STRA, FWLT, IPI, NUE, NIHD, MTL, AMZN, SOHU,

Stocks Rise As Oil Falls

DJIA + 82.97, +0.72% SP500 + 7.10, +0.55% NASDAQ Comp. + 25.05, +1.03% Russell 2000 + 6.69, +0.89% Exchange NYSE NASD Advancing 1,981 1,762 Declining 1,096 1,131 Oil $115.01 -$0.99 Gold $814.50 -$17.00 $SOX 377.09 +4.00 Strongest Sectors: XLF +3.11%...XLY +1.51%...XLK +0.77% Weakest Sectors: XLE -1.84%...XLU -0.86%...XLB -0.20% Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF Down Trending: XLE, XLU The broad indices rallied after a disappointing CPI report for July, showing that trend is more significant than this economic report. Oil and gold fell again resuming their intermediate down trend. Oil, coal, gold, basic materials, steel and ag-related stocks that had a counter-trend rally on Wednesday moved lower in their intermediate term down trend. XLI, XLK, XLY XLP and XLV all had bull flag support bounce type moves on Thursday. Short Term Market Trend changed to Neutral one bay bounce following two day pullback. Index Commentary The DJIA formed a bullish harami outside day at its 20 DMA in bull flag...closed at 50 DMA. The SPX formed a bullish engulfing bull flag bounce...closed above 50 DMA. The Nasdaq formed a bullish engulfing bull flag bounce...closed above its 200 DMA...a new high close on Thursday.

The SOX formed a bullish engulfing pattern in a horizontal bull flag just below its 200 DMA.

The RUT broke the high of the low day in two-day bull flag...closed above 200 DMA for fifth straight day...approaching 765 horizontal resistance. Stock Commentary Up Trending RIMM classic support bounce bull flag bounce entry point AAPL spinning top 180 resistance area AMZN bullish engulfing after two day pullback above Monday’s S1 level… a bull flag bounce NIHD support bounce off 20 DMA…chart target 63 ESRX at long term horizontal resistance of 73 - 74 area…watch for breakout or bounce down UAUA slight bounce in bull flag as oil falls NDAQ bull flag bounce…morning star pattern WRC bull flag bounce bounce ONXX horizontal breakout…chart target 50 HANS bull flag support bounce and breakout AMLN horizontal resistance breakout…chart target 42 Down Trending POT, MOS, X, FWLT, CNX all formed a bearish harami Thursday after a counter trend support bounce Wednesday…watch for a break below support in these potential bear flags AGU formed a reversal spinning top in its counter trend support bounce… watch for a move below Thursday’s low in this potential bear flag BTU formed a hanging man pattern in its counter trend support bounce…watch for a break below Thursday’s low in this potential bear flag

Sideways Trending CF formed a bearish harami FSLR formed a white spinning top CLF formed white candle after Wednesday’s horizontal support bounce

Thursday’s Action Moving Up: BIDU, DRYS, RIMM, CLF, MA, V, DECK, GS, SOHU, AMZN, CELG, IBM, PCLN, ANR, NIHD, SINA, ESRX, LEH, UAUA, FNM, BRCM Also Moving Up: HANS, SNDK, NVDA, LAMR, FMCN, AMLN, INFY, UAUA, DRYS, ONXX, GET, EXM, NDAQ, LDK, WRC, COH, KMT, PNRA Moving Down: IPI, X, MON, MOS, FWLT, NUE, CF, CNX, AGU, USO Intermediate Term Market Trend: Up Short Term Market Trend: Neutral

Stocks Rally After CPI Higher Than Expected

Two of the concepts that I have learned from 31 years of investment experience are that what the futures are doing before the open does NOT dictate what the market will do that day and economic announcements seldom alter the intermediate term trend of the market. Today proves out these two concepts once again. The futures were down this morning in part due to the higher than expected CPI report. The market then opened lower and after about 30 minutes of trading rose to Wednesday's close and the moved higher from there. Why don't futures in the pre-market show us what the market will do that day? Quite simply, the futures market is NOT a crystal ball. We know that no one has a crystal ball, so isn't it amazing that some people believe that pre-market trading is a pre-look into later that day? Well it is not and today's price action proves the point once again. Why don't economic announcements typically alter the intermediate term trend of the market? Institutional traders already have a very reliable expectation of what the economic factors are and they have generally made decisions based on their analysis and not the news itself. At times they may fine tune their positions after learning the news but seldom will they totally make or reverse a decision based on the news. Nasdaq 100 Stocks Moving Up: HANS, SNDK, NVDA, LAMR, FMCN, AMLN, INFY, UAUA.. Stocks Moving Up: DRYS, ONXX, GET, EXM, NDAQ, LDK WRC, COH, KMT, PNRA Futures are down in pre-market trading. The CPI was up0.8% in July, higher than the expected 0.6%. This is an annualized 5.6% rate. Core inflation was 0.3% for July. Watch key short-term support and resistance levels like yesterday's highs and lows to determine if the two-day pull back has more to go or is ready to reverse back in the direction of the bigger trend. Review yesterday's Stock Commentary for stocks to watch on Thursday. Will the counter-trend moves of the coal, energy, steel and ag-related stocks continue or will they fizzle? It will be an interesting day...Stay tuned!

Stocks Fall as Oil, Gold Rise

DJIA - 109.51, -0.94% SP500 - 3.76, -0.29% NASDAQ Comp. - 1.99, -0.08% Russell 2000 + 2.75, +0.37% Exchange NYSE NASD Advancing 1,350 1,533 Declining 1,773 1,345 Oil $116.00 +$2.99 Gold $831.50 +$16.90 $SOX 373.09 -2.19 Strongest Sectors: XLE +3.54...XLB +2.16%...XLV +0.06% Weakest Sectors: XLF -2.88%...XLY -1.62%...XLP -1.00% Sectors and stocks that have been weak over the past four weeks were strong today including oil, gold, basic materials like steel, coal, mining and ag-related stocks. Oil and gold prices rose while financial stocks fell.

The DJIA was the weakest of the four broad indices and the RUT was the strongest on Wednesday. The DJIA was pulled lower by weakness in CAT, BA, AXP, MCD and JPM.

XLF and XLY were the weakest sectors for the second day in a row. Looking to Thursday, the Labor Department will report its monthy Consumer Price Index and Wal-Mart (WMT) and Nordstrom (JWN) will report earnings. Sector Watch Up Trending: XLI, XLK, XLP, XLV, XLY Sideways: XLB, XLF, Down Trending: XLE, XLU, Index Commentary The DJIA fell below its 50 DMA and bounced up from its 20 DMA…closed near Friday’s S1 level…forming a bull flag...look for a break of the flag or above the high of the low day, today. The SPX formed a hammer after a two day pull back…stayed below its 50 DMA and bounced up from its 20 DMA today…in a bull flag…look for a move above the high of the low day. The Nasdaq has paused for three days at its 200 DMA…pulled back to Monday’s S3 level before rallying to form a white spinning top…appears to be in a pennant pattern…look for a break out of the pennant. The SOX pulled back after six straight days up…spinning top…horizontal bull flag between its 50 and 200 DMA. The RUT was the strongest of the broad indices today…has paused for two days in the 750 area which is the horizontal resistance area from late May and early June…the RUT is holding above Monday’s S1 level…has now closed four consecutive days and five of the last six above its 200 DMA...appears to be in a horizontal bull flag...look for a break above today's high. Stock Commentary Up Trending RIMM formed a spinning top in a 3-day bull flag at its 50 DMA…look for break of the flag or high of the low day AAPL formed potential hanging man at 180 resistance AMZN spinning top that confirmed Tuesday’s bearish harami and is still well above Monday’s S1 level…a modest pullback consider it large move up on Monday…appears to be forming a bull flag NIHD bull flag bounce broke high of the low day…return move to 52.50 break out level…chart target 63 ESRX at long term resistance of 74 area…hanging man…bounced up from Friday’s S1 level UAUA forming bull flag on today’s pull back as oil rises QCOM formed a bullish engulfing pattern in a horizontal earnings bull flag Down Trending POT counter trend support bounce off 200 DMA…confirmation of piercing line pattern…potential bear flag MOS counter trend support bounce reversal at 200 DMA…bear flag AGU counter trend support bounce off 200 DMA…confirmation of piercing line pattern… potential bear flag X counter trend support bounce off 200 DMA…confirmation of bullish harami…potential bear flag FWLT large bullish harami inside day at long term sideways trend support CNX counter trend support bounce…confirmation of bullish harami…potential bear flag BTU counter trend support bounce…confirmation inside day…potential bear flag Sideways Trending CF support bounce reversal off 200 DMA and confirmation of inside day FSLR support bounce confirmation of bullish harami CLF horizontal support bounce…confirmation of bullish harami Tuesday’s Action Moving Up: CF, POT, MOS, FSLR, X, CLF, DRYS, MON, AGU, CNX, BTU, MEE, IPI, BUCY, BIDU, FWLT, MTL, ANR, NUE, MA AAPL, NUE, MA, AAPL, USO, DECK, SCHN, NIHD, V, MER Moving Down: GS, MS, RIMM, UAUA, GRNM, ESRX Intermediate Term Market Trend: Up Short Term Market Trend: Down