Broad Indices Move Lower on Friday...

DJIA - 119.15, -1.66% SP500 - 17.74, -2.35% NASDAQ Comp. - 13.63, -0.98% Russell 2000 - 3.93, -1.00% Exchange NYSE NASD Advancing 1,232 1,123 Declining 2,525 1,648 Oil $44.76 -$0.46 Gold $941.50 -$0.30 SOX 199.00 -2.47 VIX 46.35 +1.69 The VIX moved up confirming the move down in the SPX on Friday. Strongest Sectors: XLP -0.62%...XLY -0.68%...XLK -0.70% Weakest Sectors: XLF -6.52%...XLV -4.01%...XLI -2.51% Sector Watch Up Trending: Sideways: XLE, XLU, XLY, XLV, XLB, XLK Down Trending: XLF, XLP, XLI While we were out of the country the broad indices had a strong support bounce on Tuesday and then managed to give it back in pieces Wednesday through Friday. The Financial Sector, XLF, -6.52%, once again was the weakest sector ETF. For the week ended Friday, XLF however was up rising +2.1%. Notice that XLP -4.4% and XLI -8.1% for the week, have also been moved to the down trending sector list. The big mover to the downside was XLV -11.1%, with the new uncertainty arising from the healthcare reform underway in Washington. Big money reacted strongly by selling heavily throughout the week. Even though the SPX slipped to a new low this week the VIX also fell from last Friday, this is a non-confirmation of the SPX move down this week. The SOX Semiconductor Index was also up for the week. ALTR, AMAT, MRVL, NSM and XLNX all closed on Friday above last Friday’s close. Nasdaq stocks AMZN, BIDU and PCLN also finished the week higher than last week’s close. Index Commentary The SPX broke Monday’s Feb. 23 support low and its November support low on Friday. This is a shift in trend to down…be aware the break is only by 6 points and this could turn into a fakeout. Monday’s R1 is short-term resistance. The DJIA broke the November support low and the support low formed last Monday and is down trending. Feb 23 R1 is now short-term resistance. The Nasdaq is still above its November support lows and formed a doji pattern on Friday that could be the second candle of a potential morning star pattern. The RUT is also above its November support low and formed a doji that could be the second candle in a potential morning star pattern. Monday’s R1 is the short-term resistance area. Stock Commentary Many of the coal stocks BTU, CNX, KOL and WLT stayed above Monday’s low support indicating accumulation was still taking place this week. Steel stocks NUE, SCHN, STLD and X continued to experience selling pressure on Friday as they fell below Monday’s support low. Rail stocks BNI, CSX, NSC and UNP all slipped below Monday’s support. Ag-related stocks POT, MOS, CF, IPI and AGU held above Monday’s low and showed strength. Stocks to Watch on Monday Leading Stocks: Holding Above 30 DMA NFLX, VPRT, AMZN, BIDU, CLB, GME, PCLN, MOS Moving Above 30 DMA = 4 BKC, JCOM, SLGN, WRC Moving Below 30 DMA = 4 DLB, FLS, ICE, MYGN Staying Below 30 DMA CPLA, ESRX, GES, PSYS, CHL, DECK, GIL, MHS, TDG, SPWRA, AMED, APEI, BIIB, GMCR, GPRO, GXDX, HANS, MON, PCP, RBN, AAPL, CTSH, DV, ESI, VAR, SYNA, WCG, ATW, BLUD, JW.A, MUR, ORCL, RCI, SWN, GR, FSLR, HLF, EBAY, AMX, STRA, PCR, PWR, RIMM, BDX, BYI, CAM, PPD, ACN, NIHD, SNHY, JOYG, DLTR, K, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, SNA, AFAM, EZPW, WAB, ALGT, AXYS Friday’s Action (=> +0.70 or -0.70) Moving Up: MOS, MA, HANS, CF, GOLD, IPI, NEM, AEM, FSLR Moving Down: ESRX, AFAM, STRA, MS, ZION, NUE, GS, KBE, UAUA, NDAQ, SCHN, ONXX, CLF Intermediate Term Market Trend: Neutral – Nasdaq, RUT; Down – DJIA, SPX Short Term Market Trend: Down

Break of High of the Low Day?

2:20 ET - SPX makes slightly lower low on Monday so today is the new low day...Dave will be on a cruise for the balance of the week, so look for our next post on Friday during the trading day. Follow your rules...buy when you're supposed to buy and sell when you're supposed to sell and you should be fine. Beliefs, Skills, Discipline. You're a Great Trader because you apply the skills of a Great Trader every single day! 11:38 ET - This morning illustrates once again what we have taught on many occaisons...the pre-market futures give no insight as to what the trading day will be, only what the open is likely to be for the day. Pre-market futures were up and as soon as the cash opened the futures sold off and the market is down this morning. Apparently, much of the selloff is occurring basic materials like steels SCHN, NUE, X and STLD which are down more than 5%. If markets don't break the high of the low day, maybe Monday will be a new low day. 9:52 ET - The SPX +2 and Nasdq -6 are below the futures pre-market trading...as soon as the cash markets opened futures sold off...stay tuned for an interesting an potential support bounce. BMO - About 20 minutes before the open the SPX +8 and Nasdaq +8 futures are up from Friday's close. Watch for the break of the high of the low day and a support bounce on Monday. Looks like soup is MMM...MMM Good and GPS has lost its way on Monday morning BMO releases. Earnings BMO - CPB .0.65 beat +0.64 GRMN +0.93 below +0.98

Learn the Discipline Model Portfolio

Learn the Discipline We took two new positions this past week; DV and CTSH. DV was stopped out for second time on news related to another stock in its industry group. CTSH stayed above its stop. We started with a $152,000 account balance and for now continue to make stock trades only. Starting position size is approximately $2,000. There are 5 positions open after week 3, so approximately $10,000 is invested. We made took only two positions because the market was pulling back and there were fewer entry signals and we exercised judgment to hold on entering new positions as the market was making a short-term move from resistance down to support. The portfolio action and performance is inline with our original expectation for a sideways trend market. DV stopped out on a move down due to CECO announcement

Expiration Friday Provided Plenty of Volatiliy and...

DJIA - 100.28, -1.34% SP500 - 8.89, -1.14% NASDAQ Comp. - 1.59, -0.11% Russell 2000 - 5.75, -1.38% Exchange NYSE NASD Advancing 949 826 Declining 2,912 1,994 Oil $38.94 -$0.54 Gold $1,001.80 +$25.70 SOX 197.28 +1.19 VIX 49.30 +2.22 The VIX moved up confirming the move down in the SPX on Friday. Strongest Sectors: XLK +0.97%...XLB +0.79%...XLY -0.67% Weakest Sectors: XLE -2.57%...XLU -2.26%...XLI -1.53% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF …there are strong signs that short-term bottom may be near. As the DJIA dropped to another low and the SPX came within 13 points of its November low, the SPX and RUT formed classic hammer candles and the DJIA formed a hammer-like candle. The DJIA had a bullish cluster for the third straight while the SPX had enough momentum off its low to cause it Momentum and Near Term lines to bounce out of the lower reversal zone today. The Nasdaq formed a WHITE…yes…WHITE spinning top which means it closed higher than it opened. The Nasdaq was down -0.11%, essentially even for the day. Even more significant 8 of the 10 highest priced stocks in the NDX 100 closed higher on Friday: GOOG +1.11%, BIDU +2.79%, FSLR +2.08%, AAPL +0.62%, APOL +5.18%, CEPH +0.80%, GENZ +1.36%, AMZN +3.08%. Of the 10 highest price stocks only ISRG -0.93% and AMGN -0.68% were lower and you’ll notice both down less than one percent. In fact 58 of the NDX closed higher on the day, one JBHT unchanged and only 41 lower. Of the 41 lower, 17 were lower by less than one percent; leaving only 24 were down by more than 1%. No surprise then, that the NDX was up 4.82 points or +0.41% on Friday. If you did not hear the Weekly Wrap live on Friday, (we had over 1,250 people live) take the time to listen to the recording with Scott Sheridan, Dave Johnson and Ben Watson. Scott said almost the same things Dave said in his Thursday night Active Investor Talk webcast about bear market basing action and the more probable opportunities are for the upside not the downside. No one knows the future but you need to understand the market logic and what is most probable. ADBE -7.68% was down graded from Outperform to Neutral by a major brokerage firm. This is, of course, after the stock dropped 56%, from 46 in August to 20 on Thursday. If a 56% drop is Outperform we can’t wait to see what neutral means. RIMM, HOLX and GRMN all which are in down trends were the next biggest losers on the NDX 100 on Friday. PCLN moved higher following its horizontal breakout after better than expected earnings. WMT pulled back after its double bottom breakout. Index Commentary The SPX formed a hammer…watch for a break of the high of the low day on Monday. The DJIA formed a hammer-like pattern…watch for a break of the high of the low day. The Nasdaq formed a spinning top that could be the second candle in a morning star pattern…watch for a break above the high of the low day. The Nasdaq is relatively stronger than the SPX and DJIA. The RUT formed a hammer and could also be the second candle in a potential morning star pattern…watch for a break of the high of the low day. Stock Commentary Many of the Coal, Steel, Rail and Semiconductor stocks formed low days on Friday and many look like a bounce is possible on Monday for a break of the high of the low day. Be alert for opportunities here on Monday. Ag-related stocks bounced either Thursday or Friday. Watch for support bounces in the 22 flag stocks from the NDX 100. The list: CHKP, DISH, EXPE, HANS, ILMN, LLTC, MRVL, MXIM, STLD, XLNX, VRTX, AAPL, AKAM, BIIB, GILD, AMZN, CEPH, GENZ, GOOG, JAVA, RYAAY, SYMC Earnings Friday, Feb 20 ABX +0.32 beat +0.30 moved higher RIO +0.39 below +0.45 moved lower JCP +0.94 beat +0.92 moved up 18 cents LPNT +0.63 below +0.64 moved lower LOW +0.11 below +0.12 moved lower Numbers exclude non-recurring items Monday, Feb 23 BMO – CPB AMC – JWN, ONXX, USNA Tuesday, Feb 24 BMO – CRDN, FWLT, HD, HSIC, RSH, TGT, TASR, WAB AMC – BTUI, DWA, FSLR, HLF, WYNN Wednesday, Feb 25 BMO – DLTR, GRMN, TJX AMC – CLF, ESRX, DAVE, FLS, GNK, NTES, PSYS Thursday, Feb 26 BMO – FRO, GM, MGM, NDAQ, NIHD, PNCL, SHLD AMC – AIG, ADSK, DECK, DELL, GPS, HANS, KSS Friday, Feb 27 BMO – JRCC Stocks to Watch on Monday Leading Stocks: Holding Above 30 DMA NFLX, MYGN, HANS, WRC, GMCR, GES, MHS, MOS, TDG, BIIB, GPRO, VPRT, AMZN, SLGN, AMED, DLB, PSYS, ESRX, GXDX , BIDU, CLB, GME, PCLN Moving Above 30 DMA = 4 APEI, DECK, GILD, MON Moving Below 30 DMA = 2 PCP, RBN Staying Below 30 DMA AAPL, CPLA, CTSH, DV, ESI, VAR, SYNA, WCG, ATW, BLUD, CHL, FLS, ICE, JCOM, JW.A, MUR, ORCL, RCI, SWN, GR, SPWRA, FSLR, HLF, EBAY, AMX, STRA, PCR, PWR, RIMM, BDX, BYI, CAM, PPD, ACN, NIHD, SNHY, JOYG, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, SNA, AFAM, EZPW, WAB, ALGT, AXYS Friday’s Action (=> +0.70 or -0.70) Moving Up: PCLN, MA, NEM, AEM, FSLR, STRA, GOLD, GDX, POT, CF, GG, MON, NUE, AGU, MOS Moving Down: ONXX, AFAM, GS, CLF, MEE, GRMN Intermediate Term Market Trend: Neutral – SPX, Nasdaq, RUT; Down - DJIA Short Term Market Trend: Down

Expiration Friday...Volatility Day?

3:10 ET - As we posted BMO it should be an interesting day and it certainly has been...Volatility has been the word of the day as that black candle, turned black hammer, turned white hammer is now a black hammer again...leading stocks...have...well continued to lead...we hope you took advantage of PCLN and other leaders we mentioned in Thursday's webcast!

2:50 ET - The SPX daily chart has just changed from a black body hammer to a white body hammer after rising 24 points...Volatility...yes, just like Dave stated in Thursday night's webcast...a lot of volatility, not really a large net move but a wide trading range for the day. The intra-day VIX rose from about 45 to 52 before falling to 48.50 currently.

2:25 ET - The SPX fell to 754 around 1:15 ET, then a modest rally began and in the last 15 minutes has risen to 770, forming a hammer on the daily chart with just over 90 minutes to go. PCLN, AMZN, WBMD, RRGB as well as ESI, CECO and APOLcontinue strong, the gold stocks have cooled just a bit.

1:02 ET - Indices continue to trade lower as the DJIA is trading at a new low...the SPX is within 18 points of its 741 November 21 low which was expiration Friday in November...and the Nasdaq has moved below its January support low and is still more than 120 points above its November low.

Leading stocks continue to trade up: PCLN +0.98, AMZN +0.24, WBMD +3.55, RRGB +1.71, GOLD +2.40, GG +1.28, AEM +3.92, NEM +3.73

Education stocks ESI +7.58, CECO +2.90, APOL +2.45 are enjoying a rebound.

10:07 ET - SPX continues to rally from open...gold stocks continue strong...WBMD, RRGB continue to rise...

9:46 ET - WBMD, RRGB, JCOM up this morning after reporting better than expected earnings after the close on Thursday...

9:37 ET - GOLD, GG, AEM, NEM, ABX all open higher...ESI has turned positive...

9:32 ET - Gold and gold stocks are higher on the open...Education stocks CECO, APOL, STRA open higher...watch for a lower high here?

BMO - Eight minutes befor the open a small rally in the futures SPX -15 and Nasdaq -15...it should be an interesting day with some volatility. We'll see where the cash opens... Twenty minutes before the open SPX -18 and Nasdaq -20 futures are down pointing to a lower open. Friday, February 20, 2009 ABX +0.32 beat +0.30 RIO +0.39 below +0.45 JCP +0.94 beat +0.92 LPNT +0.63 below +0.64 LOW +0.11 below +0.12 Numbers exclude non-recurring items

Dow Moves to Six Year Low

DJIA - 89.68, -1.19% SP500 - 9.48, -1.20% NASDAQ Comp. - 25.15, -1.71% Russell 2000 - 6.47, -1.53% Exchange NYSE NASD Advancing 1.132 927 Declining 2,630 1,816 Oil $39.48 +$4.86 Gold $976.10 -$1.60 SOX 196.09 -10.77 VIX 47.08 -1.38 The VIX moved down ad did not confirm the move down in the SPX on Thursday. Strongest Sectors: XLP +1.26%...XLU +0.44%...XLE +0.02% Weakest Sectors: XLF -5.27%...XLK -2.44%...XLI -2.22% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF The broad stock indices started the day up and moved higher during the first hour of trading. Buyers ran out of power and sellers gained control as stocks returned to the low levels of Wednesday’s low. The DJIA average broke it’s November low and closed at its lowest level in over six years. The SPX closed just below Wednesday’s low and 37 points above its November low. There is a bullish cluster for the second straight day on the DJIA and SPX indicating the potential for a short-term reversal. Options expire on Friday so expect some extra volatility. Three of the nine Sector ETFs finished higher for the day. Financials and technology were the weakest sectors. Banks led by 10%+ drops in PRU, BAC, C, KEY, RF and AFL led XLF lower. HPQ led tech stocks lower with DELL, TXN and INTC also falling. PCLN closed more than $11 higher reporting better than expected earnings Wednesday evening. BIDU which missed estimates by 1 cent reporting $1.31 on estimates of $1.32 closed more than $4 higher. ORLY moved higher on earnings above expectation and AZO moved in sympathy. FOSL and WMT continued moving higher and WFMI attracted more than five times average volume soared 37% or $3.46 on a strong earnings report. Stock Commentary Three bull flag stocks VRTX, AKAM and RYAAY moved higher. Many of the Coal and Steel stocks formed inside days, bullish harami or spinning tops indicating that downward selling pressure is a abating. Oil price rose which helped coal stocks. Rail stocks formed a new low day. Semiconductor stocks a new low day in their recent pullback. Earnings Thursday, Feb 19 AGP +.70 beat +0.56 APA 0.82 below +1.26 CTL +0.88 beat +0.82 CVS +0.70 beat +0.69 DSX +0.72 inline +0.72 EXPE +0.22 below +0.24 GG +0.12 beat +0.11 HOS +1.31 beat +1.05 NBL +0.91 beat +0.79 NEM +0.26 beat +0.25 PDCO +0.45 beat +0.44 PDE +1.13 beat 1.05 RS +1.07 beat +0.61 SPAR +0.09 below +0.11 SFY +0.66 beat +0.54 S -0.01 beat -0.03 TRAD +0.18 inline +0.18 WPI +0.53 beat +0.50 WST +0.56 beat +0.52 WMB +0.35 beat +0.30 XTO +0.68 below +0.78 BUCY +0.88 below+0.92 CECO +0.38 beat +0.20 CYH +0.61 beat +0.60 JCOM +0.45 beat +0.42 OIS +1.75 beat +1.45 OSIP +0.44 below +0.47 RRGB +0.43 beat +0.33 TSO +0.99 beat +0.91 VLCM +0.14 below +0.16 WBMD +0.57 beat 0.18 Numbers exclude non-recurring items Fri Feb 20 BMO – ABX, JCP, LPNT, LOW, Stocks to Watch on Friday Leading Stocks: Holding Above 30 DMA NFLX, MYGN, HANS, WRC, GMCR, PCP, GES, MHS, MOS, TDG, BIIB, GPRO, VPRT, AMZN, SLGN, AMED, DLB, PSYS, ESRX, GXDX , BIDU Moving Above 30 DMA = 4 CLB, GME, PCLN, RBN Moving Below 30 DMA = 7 AAPL, APEI, CPLA, CTSH, DV, ESI, VAR Staying Below 30 DMA SYNA, WCG, ATW, BLUD, CHL, FLS, GILD, ICE, JCOM, JW.A, MUR, ORCL, RCI, SWN, GR, MON, SPWRA, FSLR, HLF, EBAY, AMX, STRA, PCR, PWR, RIMM, BDX, BYI, CAM, PPD, ACN, NIHD, SNHY, JOYG, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, AXYS Thursday’s Action (=> +0.70 or -0.70) Moving Up: PCLN, FSLR, CF, MON, GS, PNRA, MOS, AGU, POT Moving Down: STRA, MA, AEM, GDX, GOLD, KRE, BRCM, ZION, HANS, KBE Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down

It's Looking Like a Higher Open and a Potential Support Bounce

Thursday, Feb 19 BMO – With 90 minutes before the open SPX +12 and Nasdaq +12 futures are trading higher pointing to a higher open. Maybe the recent sell off is complete and the market is ready to bounce. A bounce could make for an interesting trading after the market has been down six of the last seven days. This could be the break of the high of the low day...so stay tuned. Refer to Wednesday’s post for setups that attracted our attention last night and keep your eye on AMZN, BIDU, GILD, GOOG and PCLN at a minimum. PCLN reported better than expected earnings after the close last night and is trading over $10 higher in pre-market trading. Looks like Thursday’s are better than Wednesday’s, at least this week, as far as companies reporting better than expected earnings. On Wednesday most of the early reporters were below expectations, this morning most beat expectations. Earnings Thursday, February 19 AGP +.70 beat +0.56 APA +0.82 below +1.26 CTL +0.88 beat +0.82 CVS +0.70 beat +0.69 DSX +0.72 inline +0.72 EXPE +0.22 below +0.24 GG +0.12 beat +0.11 HOS +1.31 beat +1.05 NEM +0.26 beat +0.25 NBL +0.91 beat +0.79 PDCO +0.45 beat +0.44 PDE +1.13 beat 1.05 RS +1.07 beat +0.61 SPAR +0.09 below +0.11 SFY +0.66 beat +0.54 S -0.01 beat -0.03 TRAD +0.18 inline +0.18 WPI +0.53 beat +0.50 WST +0.56 beat +0.52 WMB +0.35 beat +0.30 XTO +0.68 below +0.78 Numbers exclude non-recurring items

Stocks Hold Support...Gold Rises...PCLN Reports

DJIA + 3.03, +0.04% SP500 - 0.75, -0.10% NASDAQ Comp. - 2.69, -0.18% Russell 2000 - 5.72, -1.33% Exchange NYSE NASD Advancing 1.009 988 Declining 2,696 1,738 Oil $34.62 -$0.31 Gold $977.70 +$10.70 SOX 205.87 +0.94 VIX 48.46 -0.20 The VIX moved down not confirming the move down in the SPX on Friday. The change in SPX and VIX is insignificant and practically should be viewed as neutral or flat for the day. Strongest Sectors: XLP +0.53%...XLI +0.16%...XLK +0.07% Weakest Sectors: XLU -1.51%...XLY -0.92%...XLB -0.58% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Buyers and sellers traded to a virtual standstill on Wednesday as the DJIA and SPX formed a doji. DJIA volume was below average. Downward momentum certainly exhausted at least temporarily on Wednesday. There is a bullish cluster on the DJIA and SPX indicating the potential for a short-term reversal. The nine Sector ETFs ranged from +0.53% strongest to -1.51% weakest. Bank stocks were mixed as NTRS, USB, BK STT, KEY and ZION rose. BAC, C, WFC, RF and JPM moved lower. PCLN rose over $8 or almost 13% in after-hours trading after reporting better than expected earnings. BIDU which missed estimates by 1 cent reporting $1.31 on estimates of $1.32 rose more than $3 in after-hours trading. FOSL and WMT continued higher after better than expected earnings.

Index Commentary The DJIA formed a doji top the second candle of a possible morning star at horizontal support. The SPX formed a doji at the S1 level of the Nov 21 large white candle…possible morning star pattern. The Nasdaq formed a spinning top at horizontal support around 1,460. The RUT formed a black candle as it fell below Jan horizontal support and closed near Dec 420 support area.

Stock Commentary Our list of 22 Bull Flags from the NDX 100 continued to consolidate in their flag pattern. Several formed a new low day and some moved up on Wednesday. Watch for a break above the high of the low day on Thursday. If they don’t bounce don’t trade them yet. The list: CHKP, DISH, EXPE, HANS, ILMN, LLTC, MRVL, MXIM, STLD, XLNX, VRTX, AAPL, AKAM, BIIB, GILD, AMZN, CEPH, GENZ, GOOG, JAVA, RYAAY, SYMC Coal stocks and steel stocks moved lower: KOL, BTU, CNX, FCL, JRCC, MEE, WLT, STLD, NUE, SCHN and X. Rail stocks BNI, CSX and UNP each formed a bullish harami and NSC formed a spinning top.

Semiconductor stocks ALTR, LLTC, MRVL, NSM, NVLS, TXN and XLNX showed signs of support buying.

Earnings Wednesday, Feb 18 AVA +0.32 below +0.39 moved lower XEC +0.32 below +0.45 moved lower CMCSA +0.27 beat +0.22 moved lower CEG +0.03 below +1.24 moved lower DE +0.48 below +0.63 moved lower GT -1.22 below -0.97 moved higher JAKK +0.55 below +1.05 moved lower OMX +0.02 below +0.15 up 3 cents STP -0.27 below -0.26 moved lower AAP +0.51 beat +0.37 AEM +0.15 beat -0.01 CBS +0.34 beat +0.26 BIDU +1.31 below +1.32 NILE +0.24 below +0.35 DENN -0.03 below +0.06 DBRN -0.02 below +0.01 HPQ +0.93 inline +0.93 NHP +0.56 inline +0.56 NTRI +0.16 below +0.20 OII +0.93 inline +0.93 PCLN +1.29 beat +1.05 SNPS +0.50 beat +0.41 WFMI +0.20 beat +0.15 Numbers exclude non-recurring items Thursday, Feb 19 BMO – APA, CCC, CTL, DSX, EV, EXPE, GM, GG, HOS, MGM, NEM, PDCO, PNCL, RS, SPAR, S, TRAD, WST, XTO AMC – BUCY, CECO, CYH, RIO, DRYS, HE, JCOM, OIS, OSIP, RRGB, TSO, VLCMWBMD Fri Feb 20 BMO – ABX, JCP, LPNT, LOW, Learn the Discipline The Model Portfolio was stopped out of positions in BLUD and LLTC on Wednesday. The portfolio entered 34 shares of DV at 57.41 with the initial stop at 54.75. There are seven open positions. Stocks to Watch on Thursday Leading Stocks: Holding Above 30 DMA NFLX, ESI, MYGN, APEI, HANS, WRC, GMCR, PCP, GES, MHS, MOS, TDG, AAPL, BIIB, GPRO, VAR, VPRT, AMZN, SLGN, AMED, DLB, PSYS, CTSH, ESRX, CPLA, GXDX , DV Moving Above 30 DMA = 1 BIDU Moving Below 30 DMA = 3 RBN, SYNA, WCG Staying Below 30 DMA ATW, BLUD, CHL, FLS, GILD, GME, ICE, JCOM, JW.A, MUR, ORCL, PCLN, RCI, SWN, GR, MON, SPWRA, FSLR, HLF, EBAY, AMX, STRA, PCR, PWR, RIMM, BDX, BYI, CAM, PPD, ACN, NIHD, SNHY, JOYG, CLB, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, AXYS Wednesday’s Action (=> +0.70 or -0.70) Moving Up: STRA, MA, POT, V, CF, MON, MOS, AGU, HANS, SOHU Moving Down: FSLR, SCHN, X, NUE, PNRA, UAUA, GS, BTU, CLF Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down

Good Morning...is Wednesday Comcastic?

BMO – More than an hour before the open the SPX +4 and Nasdaq + 4 futures are trading slightly higher than Tuesday’s close. This indicates a slightly higher open. If price action follows through to the upside, watch for short term resistance at the R1 level of Tuesday’s large black candles. We’ll be watching our 22 Bull Flags for potential support bounce today since Tuesday was a new low day. Keep in mind these are high volume stocks that are stronger than the broad indices. Here is the list: CHKP, DISH, EXPE, HANS, ILMN, LLTC, MRVL, MXIM, STLD, XLNX, VRTX, AAPL, AKAM, BIIB, GILD, AMZN, CEPH, GENZ, GOOG, JAVA, RYAAY, SYMC Only CMCSA's earnings look Comcastic this morning, so earnings below expectations may provide opportunity to the downside... Wednesday, Feb 18 BMO – AVA +0.32 below +0.39 XEC +0.32 below +0.45 CMCSA +0.27 beat +0.22 CEG +0.03 below +1.24 DE +0.48 below +0.63 GT -1.22 below -0.97 JAKK +0.55 below +1.05 OMX +0.02 below +0.15 STP -0.27 below -0.26

SPX, DJIA & RUT Break Support...Nasdaq Holds

DJIA - 297.81, -3.79% SP500 - 37.67, -4.56% NASDAQ Comp. - 63.70, -4.15% Russell 2000 - 19.46, -4.34% Exchange NYSE NASD Advancing 357 416 Declining 3,453 2,361 Oil $34.93 -$2.58 Gold $967.00 +$25.50 SOX 205.87 -14.68 VIX 48.66 +5.73 The VIX moved up confirming the move down in the SPX on Friday. Strongest Sectors: XLP -1.45%...XLV -1.73%...XLY -3.79% Weakest Sectors: XLF -9.94%...XLY -6.92%...XLP -5.06% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Sellers took over on Tuesday after the three-day President’s Day weekend. Bullish patterns and candles from Thursday which did not confirm on Friday, failed to confirm again on Tuesday. All sectors were lower as Financial Sector etf, XLF led the market lower falling another -9.94%. Bank stocks STT, KEY, USB, WFC, ZION, C, JPM, and BAC all were down more than 10% on Tuesday. Transports dropped -5.20% making a new 52 week low. Rail stocks, BNI, CSX, NSC and UNP all moved lower. Oil fell to another low while gold reached its highest level in seven months as gold stocks GDX, GOLD and AEM also moved higher. The SPX broke below January’s short-term support levels by 1.88% and is still 48 points above its November low. The DJIA moved lower on average volume while breaking well below January’s lows, closed 103 points or just 1.38% above it’s November lows. The Nasdaq is still above its Feb 2 short-term support low. AKAM formed a black candle and moved to the support level of its horizontal bull flag…it is above the S1 level of its Feb 5 candle. AMZN formed a doji and found support at the S2 level of its Feb 5 large white candle…today is the new low day in its current bull flag. FOSL, MDT, TEVA and WMT all moved higher on better than expected earnings reported before the open on Tuesday. Index Commentary The DJIA formed a large black candle which fell below short-term support of 7,693. The SPX formed a large black candle. The Nasdaq gaped lower and formed a black candle breaking last Thursday’s support of 1,495…short-term support is 1, 460. The RUT formed a large black candle…closed just below its Jan horizontal support of 432. Stock Commentary None of the 22 Bull Flags that we selected from the NDX 100 on Thursday night moved higher on Tuesday. All moved lower still in their bull flag patterns, all forming a new low day. What to do now? Since today is a new low day, watch for a break above the high of the low day on Wednesday. If they don’t bounce don’t trade them yet. Here is the list: CHKP, DISH, EXPE, HANS, ILMN, LLTC, MRVL, MXIM, STLD, XLNX, VRTX, AAPL, AKAM, BIIB, GILD, AMZN, CEPH, GENZ, GOOG, JAVA, RYAAY, SYMC Steel stocks STLD, NUE and SCHN in bull flag pull backs fell to a new low day in the pull back. Coal stocks KOL, BTU, CNX, FCL, JRCC, MEE and WLT all formed a new low day in their pullbacks. Semiconductor stocks ALTR, LLTC, MRVL, NSM, NVLS, TXN and XLNX pulled back and formed a new low day. Earnings Tuesday, Feb 17 AMED +0.98 beat +0.91…moved lower FOSL +0.69 inline +0.69…moved higher MDT +0.71 beat +0.70…moved higher RJET +0.56 beat +0.47…moved lower TEVA +0.76 beat +0.73…moved higher RIG +3.69 below +3.70…moved lower WMT +1.03 beat +0.99…moved higher AXYS +0.59 below +0.61 CHK +0.73 below +0.74 LZB -1.25 below -0.10 UPL +0.43 below +0.48 Numbers exclude non-recurring items Wednesday, Feb 18 BMO – CMCSA, DE, GT, OMX, STP AMC – AAP, AEM, CAR, BIDU, NILE, DENN, DBRN, HPQ, NHP, NTRI, OII, ORLY, PAAS, PCLN, SNPS, WFMI Thursday, Feb 19 BMO – APA, CCC, CTL, DSX, EV, EXPE, GM, GG, HOS, MGM, NEM, PDCO, PNCL, RS, SPAR, S, TRAD, WST, XTO AMC – BUCY, CECO, CYH, RIO, DRYS, HE, JCOM, OIS, OSIP, RRGB, TSO, VLCMWBMD Fri Feb 20 BMO – ABX, JCP, LPNT, LOW, Learn the Discipline The Model Portfolio was stopped out of positions in ATW, AMX, EBAY, FLS, NIHD and PCLN on Tuesday. We entered no new positions. There are eight open positions. Stocks to Watch on Wednesday Leading Stocks: Holding Above 30 DMA NFLX, ESI, MYGN, SYNA, APEI, HANS, WRC, GMCR, PCP, GES, MHS, MOS, TDG, AAPL, BIIB, GPRO, WCG, VAR, VPRT, AMZN, SLGN, RBN, AMED, DLB, PSYS, CTSH, ESRX, CPLA, GXDX Moving Above 30 DMA = 1 DV Moving Below 30 DMA = 18 ATW, BIDU, BLUD, CHL, FLS, GILD, GME, ICE, JCOM, JW.A, MUR, ORCL, PCLN, RCI, SWN, GR, MON, SPWRA Staying Below 30 DMA FSLR, HLF, EBAY, AMX, STRA, PCR, PWR, RIMM, BDX, BYI, CAM, PPD, ACN, NIHD, SNHY, JOYG, CLB, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, AXYS Tuesday’s Action (=> +0.70 or -0.70) Moving Up: GOLD, AFAM, GDX Moving Down: FSLR, GS, POT, MA, SCHN, CLF, ANR, MOS, AGU, X, BTU, CF, CNX, NUE, MON, MS, PCLN, STRA, SOHU, IPI, NIHD, MEE, FWLT, NDAQ, KBE, ESRX, V, ZION, ONXX, INFY, KRE, ADM, HANS, DRYS, KMT, SINA, PNTRA, BRCM, EBAY, LAMR, GRMN Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down

Markets Poised for Lower Open Near Support

BMO - SPX and Nasdaq futures are lower in pre-market trading suggesting a lower open.

Watch these 22 bull flag patterns on stocks in the NDX 100 for potential support bounces on Tuesday: AAPL, AKAM, AMZN, BIIB, CEPH, CHKP, DISH, EXPE, GENZ, GILD, GOOG, HANS, ILNM, JAVA, LLTC, MRVL, MXIM, RYAAY, STLD, SYMC, VRTX, XLNX

Earnings Tuesday, Feb 17 BMO – AMED +0.98 beat +0.91 FOSL +0.69 inline +0.69 MDT +0.71 beat +0.70 RJET +0.56 beat +0.47 TEVA +0.76 beat +0.73 RIG +3.69 below +3.70 WMT +1.03 beat +0.99 Numbers exclude non-recurring items

Dave in AO Capstone Tuesday 7 AM MT

Dave will be hosting the AO Capstone, Tuesday morning, 7 am MT, a half-hour before the open, if you have access and can attend. See you there! Watch for our Tuesday BMO post...

Learn the Discipline Model Portfolio

We hope you remembered your Sweetheart today and let them know how much you care! Learn the Discipline

We encourage those who have not read our Model Portfolio explanation post on Saturday, Feb 7 to take the time to read it. Here is a portion of that posting:

“We want to reiterate that this is an intermediate term strategy and we would expect mixed results while the market stays in a sideways trend and for the first few weeks of operation until any good trends we get into have a chance to develop.” “If you are a hyper-short-term trader this will be a lot like the old fable of the tortoise and the hare. Just remember the tortoise didn’t look that good in the beginning but in the end won the race.” “Entry and exit trades will be placed in a real-time virtual account so it will simulate the placement of real trades.” We started with a $152,000 account balance and for now are making stock trades only. Starting position size is approximately $2,000.

18 new positions were opened this week.

10 positions were stopped out. 14 positions are open after week 2, so approximately $28,000 is currently invested.

The trades are working in line with the expectation that there will be several small lossess in the few weeks as signals fail and the larger winning trades from signals that follow through with a good trend move taking several weeks to accumulate larger profits. Week Two Summary and Comments Comments AMED stopped out on a automatic trailing stop GME stopped out on a raised stop PPD stopped out and moved 1.67 lower CAM stopped out and moved 63 cents lower CPLA stopped out on a gap down due to EDU announcement STRA stopped out on a gap down due to EDU announcement DV stopped out on a gap down due to EDU announcement HLF stopped out and moved 16 cents lower CHL stopped out and moved 6 cents lower ICE stopped out and moved 74 cents lower AMED – we chose to use an automatic trailing stop here because of the approaching ERD. In this case the trailing stop proved to be moved too quickly even though the trade produced a profit. GME – the manual trailing stop worked fine in this case. STRA – we entered a trade on STRA on the day before earnings because APOL and ESI had an earnings gap up and we concluded there would be reasonable probability that STRA could experience the same. STRA did beat expectations, however, EDU had a negative announcement and as a result all educational stocks gapped down on the open Feb. 12 filling the stop on STRA, CPLA and DV below the pre-determined stop. A gap down in a stock and being stopped out with a larger than desired stop is one of the risks that exists with placing a stop in the computer.

Friday the 13th...Saturday is Valentine's Day!

DJIA - 82.35, -1.04% SP500 - 8.35, -1.00% NASDAQ Comp. - 7.35, -0.48% Russell 2000 - 2.06, -0.46% Exchange NYSE NASD Advancing 1,537 1,311 Declining 2,179 1,443 Oil $37.51 +$3.53 Gold $941.50 -$7.00 SOX 220.55 +2.65 VIX 42.93 +1.68 The VIX moved up confirming the move down in the SPX on Friday. Strongest Sectors: XLE +0.23%...XLI +0.00%...XLK -0.45% Weakest Sectors: XLF -3.80%...XLY -1.61%...XLP -1.55% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Most indices and stocks traded in a very narrow range on Friday leading into the three-day President’s Day weekend. Many bullish patterns and candles on Thursday did not confirm on Friday due to the lack of buying and narrow trading. Continue to watch for confirmation of these patterns and candles on Tuesday when trading resumes. AKAM formed a black spinning top pulling back 12 cents on below average volume…watch for potential continuation of Thursday’s breakout of a horizontal flag. AMZN formed a black spinning top which did not confirm Thursday’s hammer in its bull flag pullback…watch for potential confirmation of hammer on Tuesday Index Commentary The DJIA formed a black spinning top that did not confirm Thursday’s dragon fly doji…short-term support 7,693. The SPX formed a black spinning top that did not confirm Thursday’s hammer…SPX is just above horizontal support. The Nasdaq formed a black spinning top that stayed above the S1 level of Thursday’s bullish engulfing patter…higher low support on Thursday is 1,495. The RUT formed an black inverted hammer that did not confirm Thursday’s hammer…just above horizontal support of 432. Stock Commentary How did our 22 Bull Flags that we selected from the NDX 100 on Thursday night do on Friday, just before a three day weekend? Moving Up: CHKP, DISH, EXPE, HANS, ILMN, LLTC, MRVL, MXIM, STLD, XLNX Unchanged: VRTX Near Unchanged: AAPL, AKAM, BIIB, GILD Moving Down: AMZN, CEPH, GENZ, GOOG, JAVA, RYAAY, SYMC The largest percentage gainers were: MRVL 3.28%, DISH 2.88% The largest dollar gainers were: HANS 0.74, ILMN 0.41 The largest dollar losers were: GOOG -5.37, CEPH -1.08 The largest percentage losers were: JAVA -3.93%, RYAAY -1.94% In all fairness Friday’s moves or lack thereof were influenced by the light volume and narrow trading range in the market going into the three day holiday weekend. All of the stocks that went down, stayed within their flag pattern, none of them broke support. All the patterns are good going into next week when trading resumes on Tuesday.

Earnings Friday, Feb 13 ANF +1.10 beat +1.00 ALE +0.78 below +0.81 BAM +0.27 beat +0.16 CTSH +0.41 beat +0.38 ENB +0.55 beat +0.48 PEP +0.88 inline +0.88 WYN +0.47 beat +0.40 Numbers exclude non-recurring items Tuesday, Feb 17 BMO – AMED, FOSL, MDT, RJET, TEVA, RIG, WMT AMC – AXYS, CHK, LZB, UPL, WYNN Wednesday, Feb 18 BMO – CMCSA, DE, GT, OMX, STP AMC – AAP, AEM, CAR, BIDU, NILE, DENN, DBRN, HPQ, NHP, NTRI, OII, ORLY, PAAS, PCLN, SNPS, WFMI Thursday, Feb 19 BMO – APA, CCC, CTL, DSX, EV, EXPE, GM, GG, HOS, MGM, NEM, PDCO, PNCL, RS, SPAR, S, TRAD, WST, XTO AMC – BUCY, CECO, CYH, RIO, DRYS, HE, JCOM, OIS, OSIP, RRGB, TSO, VLCMWBMD Fri Feb 20 BMO – ABX, JCP, LPNT, LOW,

Stocks to Watch on Tuesday Leading Stocks: Holding Above 30 DMA NFLX, ESI, MYGN, MON, SYNA, BLUD, APEI, HANS, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, TDG, AAPL, BIIB, GPRO, WCG, VAR, BIDU, VPRT, FLS, AMZN, SLGN, ATW, PCLN, RBN, AMED, DLB, ORCL, PSYS, CTSH, ESRX, GILD, ICE, CPLA, GXDX, JCOM, JW.A, MUR, RCI Moving Above 30 DMA = 2 CHL, SPWRA Moving Below 30 DMA = 3 FSLR, HLF, EBAY Staying Below 30 DMA AMX, DV, STRA, PCR, PWR, RIMM, BDX, BYI, CAM, PPD, ACN, NIHD, SNHY, JOYG, CLB, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, AXYS

Friday’s Action (=> +0.70 or -0.70) Moving Up: STRA, ESRX, AGU, MEE, GS, CLF, HANS Moving Down: AEM, PNRA, MON, FSLR, X, KRE, GDX, KBE Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Neutral

Yes...Still Drinking Pepsi too...

Dave will be on the Weekly Wrap with Steve Quirk and Ben Watson at 4:30 ET today! 3:00 ET - ANF, BAM, CTSH and ENB which reported earnings above expectations this morning are all enjoying a nice support bounce today. 2:40 ET - Indices continue to trade in a very narrow trading range and hover near breakeven...The DJIA is -17 points and trading below average volume...the SPX in - 1.80...the SPX is + 3...the RUT is +0.72. The SOX has been stronger all day and is now +4.35 or +2.01%. TXN is having a nice bull flag support bounce today. Our Bull Flag list from last night has the following stocks positive for the day: AAPL, CHKP, DISH, EXPE, GILD, HANS, ILMN, LLTC, MRVL, MXIM, STLD, VRTX, XLNX. The other bull flag stocks from Thursday night's list are near breakeven expcept for CEPH and GOOG which are down just over 1%. 12:10 ET - At mid-day the Nasdaq and RUT are where the opened this morning...the SPX and DJIA are down slightly...the SOX is still up 1.45%. Indices are maintaining their tight trading range heading into the three day President's Day weekend. Bull Flags: CHKP, DISH, GILD, HANS, ILMN, LLTC, MRVL, MXIM, STLD, XLNX are positive...several others including AAPL, SYMC and VRTX are near breakeven. 10:42 ET - RUT +1.25%...Nasdaq +0.61%...NDX +0.47%...SOX +2.30%...SPX +0.35%...DJIA +0.35%...Indices are start to pick up a little upward momentum...still in a tight trading range between today's open and Thursday's high...watch for breakout of Thursday's high... 10:20 ET - Bull Flag patterns with a little bounce in their step this morning: CHKP, EXPE, HANS, ILMN, LLTC, MRVL, MXIM, STLD, SYMC, XLNX...The SOX is up 4.01 or 1.82%...is this a positive clue for the Nasdaq this morning? Stay tuned for some upward movement...notice LLTC, MRVL, MXIM and XLNX semis are among bull flags thar are bouncing in the first 50 minutes... 10:13 ET - 43 minutes into Friday's trading session the SPX, Nasdaq and RUT are just above the level at which they opened and the DJIA is 6 points below its opening level. Tight trading range in the early going before the three day President's Day weekend. BMO - Here we are on Friday the 13th, the economy is...yes, believe or not...still tough but based on this morning's earnings report, people are still buying lots of Pepsi...Check out PEP below...I guess this week should have been called Soda Week...Apparently they are drinking those Pepsis in their ANF while staying at the WYN. Just before the open SPX futures are down about 5 points from Thursday's close so we may see a slightly lower open, which could then head in either direction... Stay tuned for an interesting trading day. We will be posting throughout the morning... Friday, Feb 13 BMO – ANF +1.10 beat +1.00 ALE +0.78 below +0.81 BAM +0.27 beat +0.16 CTSH +0.41 beat +0.38 ENB +0.55 beat +0.48 PEP +0.88 inline +0.88 WYN +0.47 beat +0.40 Numbers exclude non-recurring items

LIFE is Good...

We will be posting BMO and intra-day on Friday as it is a free schedule day...so check during trading hours tomorrow! DJIA - 6.77, -0.09% SP500 + 1.45, +0.17% NASDAQ Comp. + 11.21, +0.73% Russell 2000 + 2.47, +0.55% Exchange NYSE NASD Advancing 1,680 1,370 Declining 2,001 1,318 Oil $33.98 -$1.96 Gold $948.50 +$4.70 SOX 217.90 +2.79 VIX 41.25 -3.28 The VIX moved down confirming the move up in the SPX on Thursday. Big drop in the VIX today…is this telling us look for a big SPX move? Strongest Sectors: XLB +1.67%...XLV +1.16%...XLP +0.92% Weakest Sectors: XLF -1.27%...XLI -1.12%...XLU -0.87% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF If you have been paying attention to our pre-market posts on BMO earning announcements, you saw that LIFE this morning had earnings +0.83 that beat +0.54 estimates. The stock opened at 28.00 near Wednesday's close and rose $2.63 or +9.39%. Indeed LIFE is good! Stocks rallied in the final hour of trading on news that the government was developing a plan to help subsidize mortgage payments for homeowners with payment problems. AKAM formed a large white engulfing candle forming a new high close in its horizontal bull flag. AMZN formed a hammer in its bull flag pullback. Index Commentary The DJIA formed a dragon fly doji, a bullish pattern in the area of horizontal support. The SPX formed a hammer which was a confirmation of Wednesday’s bullish harami. The Nasdaq formed a bullish engulfing on Wednesday’s bullish harami. The RUT formed a bullish engulfing hammer on Wednesday’s bullish harami. Stock Commentary Check out these 22 bull flag patterns on stocks in the NDX 100 that we discussed in Thursday night's webcast: AAPL, AKAM, AMZN, BIIB, CEPH, CHKP, DISH, EXPE, GENZ, GILD, GOOG, HANS, ILNM, JAVA, LLTC, MRVL, MXIM, RYAAY, STLD, SYMC, VRTX, XLNX Earnings Thursday, Feb 12 Symbol Earnings Estimate AET +0.96 beat +0.94 CPLA +0.66 beat +0.62 KO +0.64 beat +0.61 ECA +0.60 below +0.77 FCL +0.89 beat +0.50 LIFE +0.83 beat +0.54 CLI +1.00 beat +0.87 MAR +0.34 below +0.39 MLM +0.80 below +0.83 NXY -0.35 below +0.31 NRG +0.98 beat +0.42 NWN +1.25 beat +1.21 ZEUS +0.07 below +0.18 PTEN +0.64 beat +0.55 REV +0.22 below +0.70 STRA +1.71 beat +1.70 ULBI +0.01 below +0.07 WMI +0.49 beat +0.48 ACAP +1.24 beat +1.24 AGII +0.38 below +0.73 COG +0.44 beat +0.41 CEPH +1.46 beat +1.36 CAKE +0.15 beat +0.14 ENH +0.94 below +1.00 GDI +0.74 beat +0.62 MFE +0.53 inline +0.53 NTGR -0.08 below +0.07 PNRA +0.86 beat +0.84 RNWK-0.10 below -0.03 TK +1.29 beat 1.12 VCLK +0.23 beat +0.15 Numbers exclude non-recurring items Fri Feb 13 BMO – ANF, ALE, BAM, CTSH, ENB, PEP, WYN

Stocks to Watch on Friday Leading Stocks: Holding Above 30 DMA NFLX, ESI, MYGN, MON, SYNA, BLUD, APEI, HANS, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, TDG, AAPL, BIIB, GPRO, WCG, VAR, BIDU, VPRT, FLS, AMZN, SLGN, ATW, FSLR, PCLN, RBN, AMED, DLB, ORCL, PSYS, EBAY, CTSH, ESRX, GILD, ICE Moving Above 30 DMA = 7 CPLA, GXDX, HLF, JCOM, JW.A, MUR, RCI Moving Below 30 DMA = 4 AMX, DV, STRA, SPWRA Staying Below 30 DMA CHL, PCR, PWR, RIMM, BDX, BYI, CAM, PPD, ACN, NIHD, SNHY, JOYG, CLB, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, AXYS

Thursday’s Action Moving Up: CF, AFAM, PNRA, V, IPI, AGU, ANR, POT, BUT, ONXX, CLF, ESRX, GS, MOS, X, NUE, CNX, GRMN Moving Down: STRA, MA, FSLR, ZION Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Neutral

Yes...Still Drinking Coke...

BMO – Here we are on Lincoln’s birthday, the economy is still tough but apparently based on this morning’s earnings people are still buying lots of Coke…Check out KO below…oh no there is no ICE or NICE this morning to go with that drink, apparently however they are drinking fewer of those cokes at MAR, so it must be when they are going to class at STRA and WMI is still hauling off plenty of those cans… About and hour before the open the SPX futures are down about 10 points and the Nasdaq futures down about 9 points. Support held on Wednesday as indices bounced off support and formed bullish haramis, watch to see if these haramis confirm and the bounce continues. The futures seem to indicate that the markets may have a lower open. Thursday Feb 12 BMO – AET +0.96 beat +0.94 CPLA +0.66 beat +0.62 KO +0.64 beat +0.61 ECA +0.60 below +0.77 FCL +0.89 beat +0.50 LIFE +0.83 beat +0.54 CLI +1.00 beat +0.87 MAR +0.34 below +0.39 MLM +0.80 below +0.83 NXY -0.35 below +0.31 NRG +0.98 beat +0.42 NWN +1.25 beat +1.21 ZEUS +0.07 below +0.18 PTEN +0.64 beat +0.55 REV +0.22 below +0.70 STRA +1.71 beat +1.70 ULBI +0.01 below +0.07 WMI +0.49 beat +0.48

Bullish Harami at Support...

DJIA + 50.65, +0.64% SP500 + 6.58, +0.80% NASDAQ Comp. + 5.77, +0.38% Russell 2000 + 2.18, +0.49% Exchange NYSE NASD Advancing 2,169 1,500 Declining 1,560 1,209 Oil $35.94 -$1.61 Gold $943.80 +$30.10 SOX 215.11 -2.22 VIX 44.53 -2.14 The VIX moved down confirming the move up in the SPX on Wednesday. Strongest Sectors: XLF +4.81%...XLV +1.25%...XLY +0.78% Weakest Sectors: XLE -1.14%...XLU -0.31%...XLB +0.00% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Downward momentum paused on Wednesday as many stocks had fallen into areas of support on Tuesday. The DJIA and SPX traded near Tuesday’s lows and bounce. The Nasdaq and RUT traded lower and bounced. All four indices finished positive for the day after news of agreement on the economic stimulus bill. The Financial Sector XLF +4.81% was Wednesday’s strongest sector after being Tuesday’s weakest sector. Bank stocks which fell more than 10% on Tuesday were positive on Wednesday: RF, Key, ZION, BAC, C, WFC, USB, STT Ag-related stocks were mixed with AGU +2.76% after earnings were better than estimates…MOS, POT and CF moved lower. Technology stocks were mixed with AAPL, ADBE, GOOG and QCOM moving lower while AMZN, MSFT, CSCO, ORCL, and SYMC moved higher. RIMM dropped -14.5% after commenting that Q4 earnings would come in at the low end of estimates AKAM formed a black spinning top holding above its horizontal breakout level forming what appears to be horizontal bull flag. AMZN formed a white candle that rose to middle of Tuesday’s black candle. Index Commentary The DJIA, SPX, Nasdaq and RUT all formed potential bullish haramis near Tuesday’s low and below the R1 of Tuesday’s black candle. The Nasdaq formed a doji while the other indices formed small spinning tops. Watch for confirmation of the haramis on Thursday. Stock Commentary Many stocks listed formed black candles with lower shadows. Since these stocks have fallen near support areas the lower shadows may indicate the potential for a short-term reversal. Today is a low day for many of these stocks. BNI, UNP, NSC, CSX moved lower forming black candles with lower shadows STLD, NUE, SCHN formed bullish haramis X formed a black candle with a lower shadow XLNX, ALTR, NSM, MRVL LLTC, TXN, NVLS moved lower forming black candles with lower shadows KOL and WLT formed bullish haramis BTU, JRCC, CNX, MEE, FCL all formed black candles with lower shadows Earnings Wednesday, Feb 11 Symbol Earnings Estimate AGU +0.70 beat +0.64 AYE +0.51 below +0.52 CCE +0.22 beat +0.52 GENZ +1.04 beat +1.02 MMC +0.37 beat +0.32 MICC +0.61 below +1.52 NICE +0.50 beat +0.46 PFCB +0.31 beat +0.26 SKYW +0.37 below +0.46 ATVI +0.31 beat +0.29 CMG +0.52 beat +0.49 RE +2.93 beat +2.84 INSP -0.23 below -0.05 LVS -0.04 below +0.04 LOOP +0.12 beat +0.11 MOH +0.58 inline +0.58 NTAP +0.28 inline +0.28 STR +0.99 beat +0.84 RNR +0.47 below +1.13 TCO +0.87 beat +0.81 TEX +0.62 beat +0.61 TQNT +0.05 below +0.06 Numbers exclude non-recurring items Thur Feb 12 BMO - AET, CPLA, KO, ECA, GCL, CLI, MAR, MLM, NXY, NRG, NWN, ZEUS, PTEN, RSH, REV, STRA, TASR, ULBI, WMI AMC – ACAP, AGII, BIDU, COG, CEPH, CAKE, DRYS, ENH, GDI, MFE, NTGR, PNRA, RNWK, TK, WCLK, WYNN Fri Feb 13 BMO – ANF, ALE, BAM, CTSH, ENB, PEP, WYN Learn the Discipline The Model Portfolio entered positions in ATW, AMX, BLUD, CHL, FLS, GES, HANS, ICE, GILD, PCLN, STRA on Wednesday. One position CAM at $21.61, a loss of $1.85, were stopped out. The other six positions did not hit their stops. Of the original $152,000 in the model portfolio, approximately $34,000 is invested. Stocks to Watch on Thursday Leading Stocks: Holding Above 30 DMA NFLX, ESI, MYGN, MON, SYNA, BLUD, APEI, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, TDG, AAPL, BIIB, GPRO, WCG, VAR, BIDU, VPRT, FLS, AMZN, SLGN, ATW, FSLR, PCLN, RBN, SPWRA, AMED, DLB, ORCL, PSYS, AMX, DV, EBAY Moving Above 30 DMA = 4 CTSH, ESRX, GILD, ICE Moving Below 30 DMA = 5 CHL, GXDX, PCR, PWR, RIMM Staying Below 30 DMA BDX, BYI, CAM, CPLA, JCOM, JW.A, MUR, PPD, RCI, ACN, NIHD, SNHY, JOYG, CLB, HLF, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, AXYS Wednesday’s Action Moving Up: STRA, MA, GS, AEM, GDX, MS, FSLR, V, ESRX, AGU, SOHU, KBE, FWLT NUE Moving Down: POT, MOS, IPI, CF, MON, AFAM, UAUA Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down

Still Drinking Coke...

BMO – The economy is tough but apparently based on this morning’s earnings people are still buying lots of Coke…Check out CCE below…oh yes and there is some NICE this morning to go with that drink as you are eating Chinese PFCB and flying on your favorite commuter SKYW…Ag-related AGU beat estimates too! About an hour before the open the SPX futures are up 3 points while Nasdaq futures are off 1.25 points. Indices came down to support areas on Tuesday, watch and see if these key support areas hold. Earnings BMO Wednesday, Feb 11 Symbol Earnings Estimate AGU +0.70 beat +0.64 AYE +0.51 below +0.52 CCE +0.22 beat +0.52 GENZ +1.04 beat +1.02 MMC +0.37 beat +0.32 MICC +0.61 below +1.52 NICE +0.50 beat +0.46 PFCB +0.31 beat +0.26 SKYW +0.37 below +0.46

Markets Break Low of the High Day

DJIA - 381.99, -4.62% SP500 - 42.73, -4.91% NASDAQ Comp. - 66.83, -4.20% Russell 2000 - 22.17, -4.74% Exchange NYSE NASD Advancing 620 511 Declining 3,175 2,253 Oil $37.55 -$2.01 Gold $913.70 +$21.30 SOX 217.33 -10.48 VIX 46.67 +3.03 The VIX moved up confirming the move down in the SPX on Tuesday. Strongest Sectors: XLU -2.84%...XLP -3.23%...XLV -3.33% Weakest Sectors: XLF -10.20%...XLI -5.25%...XLY -4.73% Sector Watch Up Trending: Sideways: XLE, XLP, XLU, XLY, XLV, XLI, XLB, XLK Down Trending: XLF Upward momentum which paused on Monday turned to downward momentum on Tuesday as traders did not like the lack of detail on the governments financial rescue plan. Experienced traders know that there are two things “big money” doesn’t like. One is uncertainty, the second is negative surprises. Apparently they felt like they got both relating to the financial rescue plan on Tuesday.

Ag-related stocks were mixed with AGU -5.01%, which reports earnings Wednesday morning, down more than the broad indices and MOS -3.22%, POT -1.38% and CF +0.39% holding up better. The Financial Sector XLF -10.20% led all sectors lower. Many bank stocks fell more than 10%: RF -30.17%, Key -25.58%, ZION -19.47%, BAC -19.30%, C -15.19%, WFC -14.22%, USB -13.82% and STT-12.84%. Technology stocks all moved lower: AAPL, GOOG, QCOM, MSFT, CSCO, RIMM, AMZN, INTC, ORCL, ADBE, EBAY and SYMC. AKAM which reported strong earnings last week fell -1.94% or 34 cents formed a bearish engulfing pattern on Monday’s doji but did stay above its recent horizontal resistance. AMZN formed an evening star pattern.

Index Commentary The DJIA, SPX, Nasdaq and RUT all formed large black candles and broke below the low of the high day on Tuesday. We hope you were prepared as we warned you to watch for this last night when we wrote; “…formed small spinning tops suggesting that upward momentum has weakened. Monday’s pullback and rally stayed above Friday’s S1 level. Watch for a break below the high of the low day on Tuesday or a break of Friday’s S1 level. This could be an exit signal from bullish trades for some short-term traders.”

The mid-section, R1, of Tuesday's large black candle is now a short-term resistance level. Stock Commentary We alerted you yesterday that…”Most of the stocks listed below formed potential short-term bearish patterns on Monday. Upward momentum clearly slowed. These bearish patterns are unconfirmed at this point. Tuesday may give bearish confirmation or these stocks could resume their short-term up trends. Just be mindful as you plan your trading for Tuesday.” We hope you were prepared. BNI, UNP, NSC, CSX, STLD, NUE, SCHN, X, XLNX, ALTR, NSM, MRVL LLTC, TXN, NVLS, KOL, BTU, JRCC, CNX, MEE and WLT all broke the low of the high day and confirmed Monday’s potentially bearish candle patterns. Only FCL did not break the low of the high day.

Earnings Tuesday, Feb 10 Symbol Earnings Estimate CVH +0.60 beat +0.59 DTV +0.32 below +0.33 EXPD +0.36 beat +0.35 ICE+0.82 below +0.83 MDC-1.92 below -1.22 OMC +0.88 beat +0.84 PBG+0.30 beat +0.25 Q +0.11 beat +0.10 TRA +1.65 beat +0.92 AMAT +0.00 inline +0.00 CERN +0.65 beat +0.61 CF +3.87 beat +2.11 CSC +1.06 beat +1.02 MVSN +0.09 below +0.21 NVDA -0.18 below -0.09 SWIR +0.36 beat +0.23 VFC +1.05 beat +1.02 Numbers exclude non-recurring items Wed Feb 11 BMO – AGU, AYE, CCE, GENZ, MMC, MICC, NICE, SKYW AMC – ATVI, CMG, CLB, RE, INSP, LVS, LOOP, MOH, NTAP, STR, RNR, TCO, TEX, TQNT Thur Feb 12 BMO - AET, CPLA, KO, ECA, GCL, CLI, MAR, MLM, NXY, NRG, NWN, ZEUS, PTEN, RSH, REV, STRA, TASR, ULBI, WMI AMC – ACAP, AGII, BIDU, COG, CEPH, CAKE, DRYS, ENH, GDI, MFE, NTGR, PNRA, RNWK, TK, WCLK, WYNN Fri Feb 13 BMO – ANF, ALE, BAM, CTSH, ENB, PEP, WYN Learn the Discipline The Model Portfolio entered no new positions on Tuesday. Two positions GME at $26.58, a profit of $1.38, and PPD $33.97, a loss of $1.35, were stopped out. The other seven positions did not hit their stops. Of the original $152,000 in the model portfolio, approximately $14,000 is invested. Stocks to Watch on Wednesday Leading Stocks: Holding Above 30 DMA NFLX, ESI, MYGN, MON, RIMM, SYNA, BLUD, APEI, HANS, STRA, WRC, GMCR, PCP, GES, GME, MHS, SWN, MOS, PWR, TDG, AAPL, BIIB, GPRO, GXDX, WCG, VAR, BIDU, VPRT, FLS, AMZN, SLGN, ATW, FSLR, PCLN, RBN, SPWRA, AMED, CHL, DLB, ORCL, PCR, PSYS, AMX, DV, EBAY Moving Above 30 DMA = 0 Moving Below 30 DMA = 16 BDX, BYI, CAM, CPLA, CTSH, ESRX, GILD, JCOM, JW.A, MUR, PPD, RCI, ACN, NIHD, SNHY, JOYG Staying Below 30 DMA CLB, HLF, DLTR, K, BKC, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, DECK, SNA, AFAM, EZPW, WAB, ALGT, ICE, AXYS Tuesday’s Action Moving Up: None Moving Down: GS, STRA, MA, FSLR, CLF, SOHU, NUE, X, SCHN, ESRX, ZION, MS, MON, CNX, SINA, INFY, PCLN, KBE, AFAM, KRE, PNRA, V, RF, ONXX, NIHD, AGU, BTU, MOS, ANR, MEE, POT, NDAQ, FWLT, GRMN, LAMR, IPI, COH, KMT, HANS, DRYS Intermediate Term Market Trend: Neutral – DJIA, SPX, Nasdaq, RUT Short Term Market Trend: Down