A Pause or the High Day?

DJIA + 3.91, +0.06% SP500 + 1.76, +0.24% NASDAQ Comp. + 13.36, +0.98% Russell 2000 - 1.49, +0.39% Exchange NYSE NASD Advancing 3,459 2,356 Declining 398 465 Oil $42.33 -$3.38 Gold $910.70 +$14.80 SOX 210.02 +4.18 VIX 43.61 -0.76 The VIX moved down confirming the move up in the SPX on Tuesday. Strongest Sectors: XLB +3.02%...XLF +2.64%...XLK +2.22% Weakest Sectors: XLV -1.81%..XLE -0.42%...XLU -0.17% Sector Watch Up Trending: Sideways: XLE, XLY, XLV, XLK Down Trending: XLF, XLP, XLI, XLB, XLU Technically stocks traded higher in the morning and then gave back most of the morning’s gains. The doji in the SPX and DJIA indicate that upward momentum slowed down at least for today. Each of the indices did form a higher low and higher high for the day, but the sell off indicates short term profit taking. Today is a high day in this counter trend bounce; if Thursday brings a lower high and a break of today’s low, that would indicate momentum shifting to the downside. On the indices that could indicate the end of this short term counter trend and a move back in the direction of the trend. An open at or above the close followed by a move up could indicate a continuation of the counter trend. Thursday morning at 8:30 am ET Jobless Claims, forecast 645,000 and Retail Sales, forecast -0.5% will be out. These announcements could influence the open depending on if there are any surprises. Advancers led decliners on both the NYSE and Nasdaq, but decreased from Tuesday. The Financial Sector XLF rose another 2.64%. Leading financial stocks included ZION, BK, USB, GS, MS, C, STT, JPM, ICE, SCHW IVZ, MER, AFL, BAC and ETF’s UYG and FAS were all moved up more than 2.9%. Remember that all of these stocks are in down trends except STT and IVZ which sideways and MS and GS which are in up trends. Support bounce in a down trend is a counter trend move and in an up trend is a bull flag support bounce. A sideways trend is a horizontal support bounce. Oil fell more than $3 while gold found support and rose $14.80. Dave’s Insight: If you are trading short term, consider using a break below the low of the high day as an exit. Index Commentary The DJIA formed a doji after rising to 7,015…watch today’s low as short term support. The SPX formed a doji after rising to 731…watch today’s low as short term support. The Nasdaq formed a spinning top after rising to 1,385, the old support of the Feb 23 low…watch today’s low as short term support. The RUT formed a shooting star after forming a higher high. AMZN did break through horizontal resistance at 67.50 and closed above its 200 DMA for a second straight day. Chart target is 74+. PCLN dropped on positive analyst comments on a travel promotion by competitor EXPD. BIDU achieved the 169 chart price target we calculated in last week’s Advanced Technical Workshop. At the Open on Thursday Counter Trend SPY – formed a spinning top high day, potential bear flag NSC – formed a spinning top high day, potential bear flag SCHN – formed a spinning top high day, potential bear flag Up Trend HANS – gapped up and pulled back to the horizontal resistance for a second day CF – followed Tuesday’s support bounce in bull flag by breaking through resistance and rising another 6.09% CERN – resistance and 200 DMA breakout AKAM – bull flag support bounce Sideways Trend OSIP – spinning top, potential high day RE – hanging man, potential high day FWLT – sellers at 20 DMA SOHU – at resistance, breakout or bounce down Down Trend ISRG – bearish engulfing pattern LZ – did rose to 20 DMA in bear flag pattern, rose 3.69% ADS - rise to 20 DMA in bear flag pattern, rose 4.74% BA - spinning top in bear flag, rose 0.79% Stocks to Watch on Thursday Leading Stocks: Holding Above 30 DMA BIDU, CLB, BKC, NFLX, DLTR, HANS, ICE, ALGT, MOS, DLB, JEC, PWR, VPRT, AMZN, MON Moving Above 30 DMA = 5 AAPL, CTSH, FLS, SYNA, JOYG Moving Below 30 DMA = 3 MYGN, PCLN, WMT Staying Below 30 DMA GMCR, GME, JCOM, SLGN, WRC, CPLA, ESRX, GES, PSYS, CHL, DECK, GIL, MHS, TDG, SPWRA, AMED, APEI, BIIB, GPRO, GXDX, PCP, RBN, DV, ESI, VAR, WCG, ATW, BLUD, JW.A, MUR, ORCL, RCI, SWN, GR, FSLR, HLF, EBAY, AMX, STRA, PCR, RIMM, BDX, BYI, CAM, PPD, ACN, NIHD, SNHY, K, JOSB, PETS, NTLS, BAP, HDB, CBST, SNA, AFAM, EZPW, WAB, AXYS Tuesday’s Action (=> +0.70 or -0.70) Moving Up: GS, STRA, AEM, POT, CF, MON, SINA, AGU, MOS, NDAQ, SOHU, MS, GOLD, GDX, NEM, BIDU, GG, GLD, COH, ZION, PNRA, GRMN, Moving Down: PCLN, ESRX, V, FSLR, ONXX, X Intermediate Term Market Trend: Neutral – Nasdaq; Down – DJIA, SPX, RUT Short Term Market Trend: Up