SPX New High Close...Stocks Break Out....

DJIA + 56.61, +0.59% SP500 + 3.29, +0.31% NASDAQ Comp. + 10.86, +0.52% Russell 2000 + 4.81, +0.80% Exchange NYSE NASD Advancing 2.146 1,583 Declining 896 1,109 Oil $68.86 +2.07 Gold $1,005.30 +$5.10 SOX 325.46 +2.78 VIX 23.42 -0.44 The VIX moved down and did confirm the move up in the SPX on Tuesday. The SOX confirmed the move up in the Nasdaq. Strongest Sectors: XLB +2.21%...XLI +1.20%...XLE +1.00% Weakest Sectors: XLV -0.90%...XLP -0.51%...XLF +0.20% Seven of nine sectors moved higher on Monday. Materials, Industrials, Energy, Utilities, Technology and Consumer Discretionary were stronger than the SPX +0.31%. Financial stocks that were down but stronger than XLF +0.20%: ZION, RF, KEY, PNC, WFC, CME, AXP, SPG, USB, ICE and ETFs UYG and FAS. Tech stocks stronger than XLK +0.68%: YHOO, MA, AMT, EBAY, ADBE, DELL, INTC, SCSO, AAPL, MSFT and ADP. Sector Watch Up Trending: XLK, XLB, XLY, XLV Horizontal Breakout: XLF Sideways: XLE, XLP, XLI, XLU Down Trending: SPX Key resistance levels: 1,044 = October horizontal 1,075 = 875 Breakout Chart target Key support levels: 1,025 = 950 Breakout Chart target 1,017 = August 21 S1 level & August 27 support low 1,007 = Nov horizontal resistance 992 - 996 = Early August Support Low 980 = July 23 Resistance - August 17 Support 962 = July 23 S1, 30 DMA, 38.2% Fib extension944 – 956 = old January/June/July resistance Why is this emerging up trend different and why are many traders surprised? A Secret of This Emerging Bull Market – Part 1 of 2 Isn’t it interesting how the market has been rising for over six months and yet many people from all over the financial spectrum keep talking about how surprised they are that the market keeps going up and they expect it to go down. My own views which have been consistent and dramatically different from most and have been very clear both in these posts and the hundred plus webcasts and trading workshops I have conducted over the past six months. So what is going on? Peter Lynch in his 1989 book One Up on Wall Street discussed the idea that investors seem to be always preparing themselves for “the last thing that’s happened” instead of “what’s going to happen next.” David Dremen in his 1979 book Contrarian Investment Strategy presented the concept “that the public is convinced that results over short periods are meaningful when they are more often than not simply chance happenings.” How many people do you know that were prepared for the 378 point drop in the SPX from 1,044 on October 14 to 666 on March 6? How many people do you know that were prepared for the 378 point rise in the SPX from 666 on March 6 to 1,044 on September 10? Since March 6, for what have many people been preparing? If what people say publicly is any indication, hasn’t it been for a big drop or the last thing that happened? Have people not spoken and acted as if the drop in 2008 and the first two months of 2009 were meaningful as it related to the future in 2009? If you can’t remember, as just one example, go back to the end of January and early February and read what many people wrote about the January effect. Then go back and read what Chart Signals wrote about the January effect at that same time. For your convenience click here: http://chartsignals.blogspot.com/2009/01/spx-its-worst-january.html Bottom line is that too many people are focused on the past when they talk about the future both from their preparation for the future and their conviction that what just happened is a meaningful predictor of what will happen. What Chart Signals finds ironic, is that no one talks about being surprised about the 378 point move in 144 days from October 14 to March 6, but there are many who speak of it being unbelievable that the SPX could move 378 points in 188 days, or 44 days longer, from March 6 to September 10. We conclude that that two of the major contributors to this are that while people are psychologically preparing for what just happened, they are not evaluating that what’s going to happen next, just might be different. Secondly, they over weight in their thinking the index performance record that just happened as being meaningful for what is about to happen. On Wednesday Chart Signals will share the second part of this discussion about what people are not looking at now that just might hold the secret to what’s about to happen next. SPX New High Close The SPX made a new high close at 1,052.63 its second straight day closing above its October 1,044 horizontal resistance area. Guidance: If Monday’s breakout holds continue to trade to the upside with the next resistance level at 1,075. Stay with the trend you are trading. Short term traders continue to be prepared for a potential counter trend pull back. Be on Yellow Alert. With the SPX extending its breakout on Tuesday, many individual stocks were also pushing above resistance. Remember that stocks at resistance or that broke out of horizontal resistance will likely pull back if the SPX pulls back. Potential Breakout Setups: ZION, DD, JCG, AXP, MA, TXN, JCI, WLT, JEC, FAST Breakout: X, WHR, CAT, JOYG, AGU, DOW, SPG, BDK, FLS, FWLT, MRVL, XLNX, HOLX, BIDU, NWSA, V, FLIR, WYNN, ADBE Potential C Patterns: C Pattern Breakout: DE, APOL, ADSK, AGCO, AMAT, BUCY Flag Setups and Bounces in Progress: BAC, INTC, STT, HANS, FSLR Potential Down Trend Setups: AKAM, AMZN AAPL +1.44 QCOM -0.48 GOOG +2.42 BIDU +18.02 NDX 100 stocks stronger than the NDX included YHOO, FSLR, WYNN, BIDU, JOYG, NIHD, NWSA, RIMM, NVDA, STX, JNPR, EXPE, INFY, STLD, EBAY, ADBE, BIIB, INTC, CSCO, AAPL, MSFT and ADP. Stocks to Watch on Wednesday Leading Stocks Holding Above 30 DMA PSYS, BYI, CTSH, AAPL, PETS, USD, JOSB, CAM, EBAY, PCLN, SNHY, TDG, CBST, WAB, BLUD, CLB, PCP, RBN, VAR, GR, CLB, BIIB, GES, HDB, ESRX, BDX, DLTR, NTLS, MYGN, ICE, NIHD, K, FLS, GXDX, WCG, BAP, FAS, FUQI, GME, JEC, PWR, PWRD, RCI, RIMM, WRC, UYG, BIDU, HDB, JW.A, ORCL, AMX, ATW, EZPW, GILD, MUR, JOYG, X, URE, TRLG, EBAY, GPRO, HLF, MHS, PPD, PSYS, SWN, SYNA, ALGT, DECK, VPRT, AMZN, GMCR, ACN, SPWRA, SLGN Moving Above 30 DMA = 4 AFAM, FSLR, MOS, NFLX Moving Below 30 DMA = 0 Staying Below 30 DMA HANS, APEI, WMT, BKC, CPLA, DV, MON, SNA MCD, ESI, AMED, ICE, STRA, CHL, DLB, JCOM, FAZ Intermediate Term Market Trend: DJIA = Neutral, Nasdaq, RUT, SPX = Up Short Term Market Trend: Up