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SPX Pulls Back on Negative Reaction to Earnings...
Stocks Pull Back after GOOG, IBM, BAC and GE report earnings...
DJIA - 67.03 -0.67%
SP500 - 8.88 -0.81%
COMPQ - 16.06 -0.76%
Russell 2000 - 7.16 -1.15%
Exchange NYSE NASD
Advancing 1,041 856
Declining 1,970 1,840
Oil $78.53 +0.95
Gold $1,050.9 0 +0.90
SOX 322.83 -6.95
VIX 21.43 -0.29
The VIX moved down and did NOT confirm the move down in the SPX on Friday, which is a new 52 week low. The SOX moved down and did confirm the move down in the COMPQ.
Strongest Sectors: XLP +0.53%...XLU +0.34%...XLV -0.07%
Weakest Sectors: XLF -2.37%...XLB -1.39%...XLK -0.94%
Seven of nine sectors moved lower on Friday. Consumer Staples, Utilities, Healthcare, Consumer Discretionary, Energy and Industrials were stronger than the SPX -0.81%.
Financial stocks stronger than XLF -2.37%: ICE, CME, MS, TRV, AOC, SCHW, AFL, CB, TROW, ALL, IVZ, MMC, AXP, GS and JPM.
Tech stocks stronger than XLK -0.94%: GOOG, ORCL, YHOO, HPQ, ADBE, SYMC, ADP, MA, VZ, MSFT, T and GLW.
Sector Watch
Up Trending: XLK, XLB, XLY, XLV, XLP, XLE
Horizontal Breakout: XLF, XLI, XLU
Sideways:
Down Trending:
Key Resistance Levels:
1,100 = September 2008 Old Support
1,133 = Mid September 2008 Support
Key Support Levels
1,075 = 875 Breakout Chart Target
1,061 = Sep 16 S1 Level
1,056 = Sep 25 R1 level
1,044 = October Horizontal Old Resistance
1,025 = 950 Breakout Chart Target
The broad indices finished the week higher but moved lower from Thursday’s new 52 week high. In moving lower on Friday each index formed a black candle that closed below the body of Thursday’s candle and the COMPQ and RUT closed below Thursday’s low. Stocks moved lower on Friday due to selling after earnings from IBM, BAC and GE.
(click image to enlarge)
While IBM, BAC and GE gapped lower from Thursday’s close on Friday. The market liked what it heard from GOOG and HAL and proved it by gapping both stocks higher on more than double their average volume. Big money is willing to buy if they like what they hear and sell if they don't.
(click image to enlarge)
Financial XLF was the weakest sector on Friday with BAC reporting -0.26 EPS versus -0.21 estimate. This following strong earnings from JPM on Tuesday, and not as well received earnings from GS and C on Thursday. BAC’s weakness pulled the sector lower including JPM.
(click image to enlarge)
During the last seven trading days since AA released earnings the SPX moved from 1,057 to 1,087 at Friday’s close, hitting a high of 1,096.56 on Thursday. Not withstanding the negative reaction to GS, IBM, BAC and C earnings and the pull back on AA, INTC and JPM after an initial move up, the first seven days of this earnings season is net positive. Earning releases accelerate this week with many more SP 500 and NDX companies to release. Perhaps the most significant is AAPL which will release after the close on Monday. AAPL is the bellwether stock for the the NDX and for technology stocks in general.
Week Ahead Key Earnings
Monday: AAPL, DD, BTU, STLD, UAUA, UNH, ZION
Tuesday: ISRG, MS, WLT, WFC, YHOO, ATI, ALGT, AMLN, BK, CREE, GILD, SNDK, STX
Wednesday: AMGN, BA, EBAY, GENZ, ESI, MCD, UPS, AMR, T, CHKP, LRCX
Thursday: MMM, AMZN, AXP, BDK, BRCM, DECK, NFLX, NIHD, POT, DOW, TRV, ALK, BMY, BUCY, BNI, CA, CLEG, CMG, CNX, DHR, EMC, GR, JNPR, MRK, RTN, SGP, SYNA, UNP, LCC, WDC
Friday: MSFT, WHR, SLB, HON, IVZ
On Friday in the Weekly Wrap I mentioned that short term traders should be mindful of Friday’s bearish candle and be prepared for a short term pull back. I also mentioned that if enough of this week’s earning releases are not received well, the market could pull back as far as the 1,044 old horizontal resistance area. Readers of this blog also know that I list daily several higher support areas between 1,087 and 1,044 that would be broken before 1,044 would be reached.
To clarify I did not say it would pull back to 1,044, I stated if enough earnings were weak that the SPX could pull back to that level.
Why?
First of all it is an old resistance level and now a new support area that is within a weekly point range distance. Second a successful test, which breakouts do a large percentage of the time, of that level would in fact be a higher low and confirmation of the trend.
I chuckled when I read that one attendee of the Weekly Wrap wrote in the Chat window, “1044 I don’t think so. 1075 more likely.”
Of course 1,075 is more likely because to get to 1,044 the SPX would have to go through 1,075 first. It was really the first part however, that merits comment.
First if you have not already read my post from last week on “what you think,” click the link here and read it: http://chartsignals.blogspot.com/2009/10/wednesdays-post-is-coming.html
It is silly to say “I don’t think so.”
Why? Because as a technician it does not matter what you think. It only matters if big money is buying and driving price up or selling and driving price down.
Second, look at Monday, April 20 the trading day after April’s option expiration, during earnings season and during this current up trend. The SPX dropped 37.21 points or -4.2%. I am not forecasting that the SPX will go down that amount on Monday or next week, however, if the SPX went down 37 points the target would be 1,050 and if the SPX went down -4.2% the target would be 1,041. What I am saying is that 1,044 is certainly within the weekly trading range and is realistic if big money does not like enough earning releases next week and does sell.
It is also interesting to note that the April 20 pull back did not cause the up trend to reverse but was simply a one day pull back from the 870 level.
Dave’s Insight: The market doesn’t care what you think. Don’t focus on what you think, focus on the chart.
It is silly to close your mind to the chart and instead focus on what you “think.” As a technician it is ignorance to not be aware of the pull back ranges that big money is trading in this up trend and to actually believe that 1,044 is not within a weeks distance if the big money doesn’t like what it hears in the earning releases this next week.
Dave’s Insight: Don’t be ignorant of the facts.
Guidance: The intermediate term trend is up. The SPX closed above the low of the high day but did break below the low intra-day. The COMPQ and RUT did close just below the low of the high day. This becomes a Yellow Alert for short term traders that use a break of the low of the high day as an exit signal or entry for a counter trend trade. Watch for a potential break on Monday.
At the same time remember, the market is in earnings season and big money will discount the new information in price as soon as they hear it. Moves down in IBM, GS, BAC and C show that big money will sell if they don’t like what they hear. GOOG and HAL show that they will put big money into a stock even on a down day. AAPL earnings will be released after the close on Monday and will likely lead the price action up or down on Tuesday. Don’t be surprised if the markets trade in a narrow range on Monday waiting for AAPL earnings. Take breakout and support bounce entry signals as they occur while also watching for short term exit signals. Follow your rules.
Breakout: BDK, JOYG, BUCY, HANS, FLS, AKAM, AMZN, CAM, FCX, JCG, GOOG, NTAP, NWSA
Potential Breakout Setups: NKE, DD, ADBE, WHR, DOW, APOL, CAT, AGU, AXP, MA, V, ADSK
Pulling Back: AAPL, AMX, INTC, BAC, PCLN, STT, BIDU, FSLR
Potential C Patterns:
C Pattern Breakout:
Lower Close in Support Bounce: ZION, FAST, X, JCI, HOLX, FWLT
Flag Setups and Bounces in Progress: DE, JEC, WLT, FLIR, FWLT, XLNX, MRVL, ORCL
Potential Down Trend Setups: RIMM, AGCO, MYGN, MON, TXN, SPG, LVS, WYNN
AAPL -2.51
QCOM -0.49
GOOG +19.94
BIDU -4.11
NDX 100 stocks stronger than the NDX include: GOOG, ORCL, YHOO, URBN, DTV, ERTS, ROST, ILMN, FLIR, SRCL, INTU, ADSK, CMCSA, RYAAY, CELG, GENZ, CHRW, HANS, LLTC, ADBE, XRAY, CHKP, LIFE, JOYG, SBUX, ESRX, HSIC, ALTR and SYMC.
Stocks to Watch on Monday
Leading Stocks
Holding Above 30 DMA
CTSH, AAPL, PETS, PCLN, TDG, PCP, CLB, ESRX, NIHD, K, FLS, GXDX, BAP, GME, WRC, BIDU, HDB, JW.A, ATW, EZPW, JOYG, TRLG, GPRO, PPD, DECK, VPRT, AMZN, GMCR, ACN, SLGN, FSLR, NFLX, HANS, DV, ESI, STRA, MCD, CPLA, HLF, SWN, AFAM, CAM, GES, ICE, UYG, AMX, APEI, BLUD, EBAY, FAS, MUR, SPWRA, CHL, BYI, WAB, MHS, WCG, GR, SNA, SNHY, USD, BKC, WMT, DLB, GILD, JOSB, MOS, WAB, URE, JEC, MON, X
Moving Above 30 DMA = 1
ORCL
Moving Below 30 DMA = 7
FSLR, WRC, MON, SNHY, X, USD, URE
Staying Below 30 DMA
AMED, DLTR, PSYS, PWRD, ALGT, NTLS, PPD, FAZ, BDX, BIIB, JCOM, RCI, VAR, FUQI, CBST, RBN, RIMM, MYGN, PWR, SYNA
Intermediate Term Market Trend: Up
Short Term Market Trend: Neutral
While IBM, BAC and GE gapped lower from Thursday’s close on Friday. The market liked what it heard from GOOG and HAL and proved it by gapping both stocks higher on more than double their average volume. Big money is willing to buy if they like what they hear and sell if they don't.
(click image to enlarge)
Financial XLF was the weakest sector on Friday with BAC reporting -0.26 EPS versus -0.21 estimate. This following strong earnings from JPM on Tuesday, and not as well received earnings from GS and C on Thursday. BAC’s weakness pulled the sector lower including JPM.
(click image to enlarge)
During the last seven trading days since AA released earnings the SPX moved from 1,057 to 1,087 at Friday’s close, hitting a high of 1,096.56 on Thursday. Not withstanding the negative reaction to GS, IBM, BAC and C earnings and the pull back on AA, INTC and JPM after an initial move up, the first seven days of this earnings season is net positive. Earning releases accelerate this week with many more SP 500 and NDX companies to release. Perhaps the most significant is AAPL which will release after the close on Monday. AAPL is the bellwether stock for the the NDX and for technology stocks in general.
Week Ahead Key Earnings
Monday: AAPL, DD, BTU, STLD, UAUA, UNH, ZION
Tuesday: ISRG, MS, WLT, WFC, YHOO, ATI, ALGT, AMLN, BK, CREE, GILD, SNDK, STX
Wednesday: AMGN, BA, EBAY, GENZ, ESI, MCD, UPS, AMR, T, CHKP, LRCX
Thursday: MMM, AMZN, AXP, BDK, BRCM, DECK, NFLX, NIHD, POT, DOW, TRV, ALK, BMY, BUCY, BNI, CA, CLEG, CMG, CNX, DHR, EMC, GR, JNPR, MRK, RTN, SGP, SYNA, UNP, LCC, WDC
Friday: MSFT, WHR, SLB, HON, IVZ
On Friday in the Weekly Wrap I mentioned that short term traders should be mindful of Friday’s bearish candle and be prepared for a short term pull back. I also mentioned that if enough of this week’s earning releases are not received well, the market could pull back as far as the 1,044 old horizontal resistance area. Readers of this blog also know that I list daily several higher support areas between 1,087 and 1,044 that would be broken before 1,044 would be reached.
To clarify I did not say it would pull back to 1,044, I stated if enough earnings were weak that the SPX could pull back to that level.
Why?
First of all it is an old resistance level and now a new support area that is within a weekly point range distance. Second a successful test, which breakouts do a large percentage of the time, of that level would in fact be a higher low and confirmation of the trend.
I chuckled when I read that one attendee of the Weekly Wrap wrote in the Chat window, “1044 I don’t think so. 1075 more likely.”
Of course 1,075 is more likely because to get to 1,044 the SPX would have to go through 1,075 first. It was really the first part however, that merits comment.
First if you have not already read my post from last week on “what you think,” click the link here and read it: http://chartsignals.blogspot.com/2009/10/wednesdays-post-is-coming.html
It is silly to say “I don’t think so.”
Why? Because as a technician it does not matter what you think. It only matters if big money is buying and driving price up or selling and driving price down.
Second, look at Monday, April 20 the trading day after April’s option expiration, during earnings season and during this current up trend. The SPX dropped 37.21 points or -4.2%. I am not forecasting that the SPX will go down that amount on Monday or next week, however, if the SPX went down 37 points the target would be 1,050 and if the SPX went down -4.2% the target would be 1,041. What I am saying is that 1,044 is certainly within the weekly trading range and is realistic if big money does not like enough earning releases next week and does sell.
It is also interesting to note that the April 20 pull back did not cause the up trend to reverse but was simply a one day pull back from the 870 level.
Dave’s Insight: The market doesn’t care what you think. Don’t focus on what you think, focus on the chart.
It is silly to close your mind to the chart and instead focus on what you “think.” As a technician it is ignorance to not be aware of the pull back ranges that big money is trading in this up trend and to actually believe that 1,044 is not within a weeks distance if the big money doesn’t like what it hears in the earning releases this next week.
Dave’s Insight: Don’t be ignorant of the facts.
Guidance: The intermediate term trend is up. The SPX closed above the low of the high day but did break below the low intra-day. The COMPQ and RUT did close just below the low of the high day. This becomes a Yellow Alert for short term traders that use a break of the low of the high day as an exit signal or entry for a counter trend trade. Watch for a potential break on Monday.
At the same time remember, the market is in earnings season and big money will discount the new information in price as soon as they hear it. Moves down in IBM, GS, BAC and C show that big money will sell if they don’t like what they hear. GOOG and HAL show that they will put big money into a stock even on a down day. AAPL earnings will be released after the close on Monday and will likely lead the price action up or down on Tuesday. Don’t be surprised if the markets trade in a narrow range on Monday waiting for AAPL earnings. Take breakout and support bounce entry signals as they occur while also watching for short term exit signals. Follow your rules.
Breakout: BDK, JOYG, BUCY, HANS, FLS, AKAM, AMZN, CAM, FCX, JCG, GOOG, NTAP, NWSA
Potential Breakout Setups: NKE, DD, ADBE, WHR, DOW, APOL, CAT, AGU, AXP, MA, V, ADSK
Pulling Back: AAPL, AMX, INTC, BAC, PCLN, STT, BIDU, FSLR
Potential C Patterns:
C Pattern Breakout:
Lower Close in Support Bounce: ZION, FAST, X, JCI, HOLX, FWLT
Flag Setups and Bounces in Progress: DE, JEC, WLT, FLIR, FWLT, XLNX, MRVL, ORCL
Potential Down Trend Setups: RIMM, AGCO, MYGN, MON, TXN, SPG, LVS, WYNN
AAPL -2.51
QCOM -0.49
GOOG +19.94
BIDU -4.11
NDX 100 stocks stronger than the NDX include: GOOG, ORCL, YHOO, URBN, DTV, ERTS, ROST, ILMN, FLIR, SRCL, INTU, ADSK, CMCSA, RYAAY, CELG, GENZ, CHRW, HANS, LLTC, ADBE, XRAY, CHKP, LIFE, JOYG, SBUX, ESRX, HSIC, ALTR and SYMC.
Stocks to Watch on Monday
Leading Stocks
Holding Above 30 DMA
CTSH, AAPL, PETS, PCLN, TDG, PCP, CLB, ESRX, NIHD, K, FLS, GXDX, BAP, GME, WRC, BIDU, HDB, JW.A, ATW, EZPW, JOYG, TRLG, GPRO, PPD, DECK, VPRT, AMZN, GMCR, ACN, SLGN, FSLR, NFLX, HANS, DV, ESI, STRA, MCD, CPLA, HLF, SWN, AFAM, CAM, GES, ICE, UYG, AMX, APEI, BLUD, EBAY, FAS, MUR, SPWRA, CHL, BYI, WAB, MHS, WCG, GR, SNA, SNHY, USD, BKC, WMT, DLB, GILD, JOSB, MOS, WAB, URE, JEC, MON, X
Moving Above 30 DMA = 1
ORCL
Moving Below 30 DMA = 7
FSLR, WRC, MON, SNHY, X, USD, URE
Staying Below 30 DMA
AMED, DLTR, PSYS, PWRD, ALGT, NTLS, PPD, FAZ, BDX, BIIB, JCOM, RCI, VAR, FUQI, CBST, RBN, RIMM, MYGN, PWR, SYNA
Intermediate Term Market Trend: Up
Short Term Market Trend: Neutral
3 comments:
Excellent post Dave! Trying hard to focus on the chart, and not what I think (particularly as a pullback puts me in the red column). I tend to be over-leveraged, which makes it harder. Another bad habit I am working on. But your writings and weekly seminars help hugely. Thanks so much for helping us through the weekly ups and downs of the market.
Brian
Dave,
Your comments are exactly why you have called this market and have been on the right side of the trade for months and why your co-host has been experiencing an extreme amount of pain. "The contrarians" that are trading the market on what they think and not the charts continue to get burned each and every week.
I'm just so appreciative that you are so willing to share your expertise and experience in the business and keep all of your listeners and followers on the right side of the trade and encourage us to use the best discipline of all..trade the chart not your thoughts.
Many thanks,
Peggy
Dave, I found so many wonderful pieces of information on 10/16's post...
Your Chart Signals blog just keeps getting better and better! I am going to be watchful of guidance to follow..
Oh, and I think- No... I Know, that I am going to keep my focus on the charts, Not on what I think!
Thank you for your most simply superb 10/16/09, Chart Signals Blog yet!
Truly,
One of Dave's Dudettes
PS
(Hello Skypers! ;))
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