The SPX Makes Another New High Close...

DJIA + 108.30, +1.12% SP500 + 16.13, +1.53% NASDAQ Comp. + 30.51, +1.45% Russell 2000 + 12.54, +2.07% Exchange NYSE NASD Advancing 2,547 1,920 Declining 517 799 Oil $72.51 +1.58 Gold $1,019.20 +$13.90 SOX 326.84 +1.36 VIX 23.69 +0.27 The VIX moved up and did NOT confirm the move up in the SPX on Wednesday. The SOX confirmed the move up in the Nasdaq. Strongest Sectors: XLF +3.46%...XLE +2.48%...XLY +1.90% Weakest Sectors: XLK +0.77%...XLP +0.80%...XLV +0.90% All nine sectors moved higher on Wednesday. Financials, Energy, Consumer Discretionary and Utilities were stronger than the SPX +1.53%. Financial stocks that were down but stronger than XLF +3.46%: KEY, PRU, ZION, BK, RF, ICE, MS, SPG, PNC, MET and ETFs UYG and FAS. Tech stocks stronger than XLK +0.77%: AAPL, YHOO, MA, GOOG, SYMC, DELL, IBM, ADP, CSCO and AMT. Sector Watch Up Trending: XLK, XLB, XLY, XLV Horizontal Breakout: XLF Sideways: XLE, XLP, XLI, XLU Down Trending: SPX Key resistance levels: 1,075 = 875 Breakout Chart target 1,100 = September 2008 Old Support Key support levels: 1,044 = October horizontal 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 extension 944 – 956 = old January/June/July resistance The SPX, stocks, gold and oil all had a big day on Wednesday. The SPX made a strong move towards it 1,075 chart target. Many stocks made large breakout moves past horizontal resistance. Once again the broad market move was supported by a strong move in financial stocks with XLF again the leading sector. XLF broke out of horizontal resistance reaching its highest level in 10 months to lead the market higher. We closed out September options positions on ZION, FLS, GRMN, MA, PCLN, WHR and XLF with large gains late this afternoon. I will recap the results of each of these real time virtual trades in Thursday's post. A Secret of This Emerging Bull Market – Part 2 of 2 As observed last night the market has been rising for over six months and still many people seem to be surprised that the market keeps going up. Every week someone is saying the is no reason for stocks to go up this much and they predict the up trend will come to an end and stocks will finally go down like they “should.” Most experienced traders know that an index or the market doesn’t just go up because it is going up. It goes up because the underlying stocks and sectors that make up the index are rising. Why are stocks and sectors rising? Because big money is buying those stocks and sectors. Why is big money buying? Because they believe the economic and business factors over the next few months are going to get better and that the stocks will rise in price as a result of those improvements. On September 17 of last year, Charts Signals listed no sectors as Up Trending. It was not until July 24, 2009 that XLK was listed as Up Trending. As the market was trending down and then began bottoming all sectors were either moving down or sideways. It was not until enough buying of enough individual stocks by big money occurred that individual sectors began to trend up. When the sectors began to break resistance and trend up the market indexes began to trend up. (click image to enlarge) (click image to enlarge) So what is the Secret of this Emerging Bull Market? It is that the market is rising because all sectors are rising in a multi-month time frame and that each sector has broken above intermediate term resistance. If the sectors have broken above resistance, then the old resistance becomes new support. As long as the sectors stay above support the market will stay above support. As the market stays above support and big money continues to buy in expectation of economic and business conditions improving, the market will continue to trend up. This market will stop going up and reverse down when big money becomes net sellers. They will become net sellers when they conclude that economic and business conditions will no longer improve. When they become net sellers, stocks, sectors and the indexes will begin to break support. Until then, follow your rules and buy where you are supposed to buy and sell where you are supposed to sell. Stop listening to people who are just guessing that the market shouldn’t be going up. You know that this market is rising because of broad based buying by big money in the the underlying sectors and those sectors are not going to change trend until big money becomes net sellers and the sectors begin to break support. As long as big money keeps net buying stocks; sectors and indexes will continue to rise. Guidance: Stay with the trend you are trading. Short term traders continue to be on Yellow Alert. With the SPX extending its breakout on Wednesday, many individual stocks closed at new highs. Remember that stocks at resistance or that broke out of horizontal resistance will likely pull back if the SPX pulls back. Potential Breakout Setups: STT, JCG, TXN, JCI, FSLR Breakout: WLT, JEC, FAST, MA, AXP, DD, ZION, X, WHR, CAT, JOYG, AGU, DOW, SPG, BDK, FLS, FWLT, MRVL, HOLX, BIDU, NWSA, V, FLIR, AKAM, BUCY, AMZN Pulling Back: WYNN, ADBE, XLNX, AGCO Potential C Patterns: C Pattern Breakout: DE, APOL, ADSK, AMAT Flag Setups and Bounces in Progress: BAC, INTC, HANS Potential Down Trend Setups: AAPL +6.71 QCOM -0.04 GOOG +10.75 BIDU +5.38 NDX 100 stocks stronger than the NDX included AMZN, NIHD, FLIR, FSLR, ERTS, BBBY, JOYG, AAPL, EXPE, YHOO, VRSN, EXPD, MICC, INFY, CTSH, AKAM, HANS, CELG, ADSK, CTXS, IACI, PAYX, GOOG, ILMN, SYMC, FWLT and DELL. Stocks to Watch on Thursday 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, AFAM, FSLR, JCOM, MOS, NFLX Moving Above 30 DMA = 5 AMED, BKC, HANS, ICE, MCD Moving Below 30 DMA = 0 Staying Below 30 DMA APEI, WMT, CPLA, DV, MON, SNA, ESI, STRA, CHL, DLB, FAZ Intermediate Term Market Trend: DJIA = Neutral, Nasdaq, RUT, SPX = Up Short Term Market Trend: Up