SPX, DJIA Form an Inside Day...

DJIA - 79.89, -1.21% SP500 - 6.85, -1.00% NASDAQ Comp. - 25.21, -1.95% Russell 2000 - 7.79, -2.22% Exchange NYSE NASD Advancing 1,110 803 Declining 2,699 1,969 Oil $47.07 +$1.55 Gold $918.00 -$24.70 SOX 190.47 -4.54 VIX 49.68 +0.35 The VIX moved up confirming the move down in the SPX on Monday. Strongest Sectors: XLF +1.29%...XLE +0.18%...XLI -0.90% Weakest Sectors: XLK -3.15%..XLU -1.90%...XLV -1.84% Sector Watch Up Trending: Sideways: XLE, XLY, XLV, XLK Down Trending: XLF, XLP, XLI, XLB, XLU SP and Nasdaq futures and cash indices rallied at the open from a move down in the overnight futures market to within four points of Friday's high. The indices then reversed and down trended to support throughout the trading day. Oil prices rose while gold prices fell. Bank stocks and financials were stronger and tech stocks were weaker. Index Commentary The SPX and DJIA formed inside days and the Nasdaq formed an inverted hammer while the RUT formed a near inverted hammer spinning top. With confirmation these are bullish candle patterns, but in a down trend they would represent a counter trend move at this time. AMZN closed near horizontal support as it traded in a 3.88 range. PCLN did not confirm Friday’s hammer as it formed a large black candle and fell to gap support. BIDU formed a shooting star as it fell to horizontal support in a 10.57 trading range. Great Questions, Great Answers (Email us at chartsignals@yahoo.com with your technical quesiton.) Scott A. asks… Had a question on when you are deciding to take a trade during the day versus end of day. I now understand that you look at: 1. Strength of the move (what is stock price doing that morning, and how is its volume confirming etc.) 2. Overall market direction (that it is confirming the same direction as the stock ) How important is it that both of these are in our favor or is it just enough to have one in our favor. Thanks ….. Answer: These two points are guidelines with the word or in between them. If both conditions are met that is a bonus. Mitch W asks… If the VIX is such a contrarian indicator to the S&P, how come the chart pattern of the VIX does not more closely mirror the pattern of the S&P? Thanks for all your help – Answer: The VIX is an inverse indicator or moves in the direction opposite of the SPX. The VIX is not directly calculated from the SPX itself, but rather from the prices of the derivative SPX options. There is a very high correlation when the SPX moves up the VIX moves down and when the SPX moves down the VIX moves up. However the magnitude of the moves will not be identical since the VIX is calculated from option prices and not directly from the SPX. At the Open on Tuesday Counter Trend SPY – an inverted hammer NSC – at support did not confirm Friday’s bullish harami SCHN – at support, potential double bottom, inverted hammer Up Trend HANS – at resistance, break out or bounce down? SGP – gaps up after bullish engulfing like pattern after MRK buyout offer CF – large white candle support bounce off 20 DMA in bull flag Sideways Trend OSIP – inside day after broke the high of the low day RE – spinning top after bullish engulfing FWLT – large white candle after breaking the high of the low day Down Trend SYNA – sells off at 20 DMA resistance, spinning top after hanging man ISRG – shooting star at 20 DMA in bear flag pattern LZ – shooting star, potential bearish harami in bear flag pattern Stocks to Watch on Tuesday Leading Stocks: Holding Above 30 DMA BIDU, CLB, PCLN, BKC, NFLX, DLTR, HANS, ICE Moving Above 30 DMA = 2 ALGT, MOS Moving Below 30 DMA = 2 DLB, VPRT, AMZN Staying Below 30 DMA GMCR, GME, JCOM, SLGN, WRC, FLS, ICE, MYGN, CPLA, ESRX, GES, PSYS, CHL, DECK, GIL, MHS, TDG, SPWRA, AMED, APEI, BIIB, GPRO, GXDX, 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, K, JOSB, JEC, PETS, NTLS, BAP, HDB, CBST, SNA, AFAM, EZPW, WAB, AXYS Monday’s Action (=> +0.70 or -0.70) Moving Up: POT, MOS, AGU, PNRA, MON, CF, IPI, FWLT Moving Down: PCLN, BIDU, GS, GLD, AEM, GDX, GG, NEM, GOLD, SOHU, BRCM, AFAM, NUE, ESRX, MS, SINA Intermediate Term Market Trend: Neutral – Nasdaq; Down – DJIA, SPX, RUT Short Term Market Trend: Down