SPX Breaks 1,061 Support, Falls to 1,042 Horizontal Support...

DJIA - 119.48 -1.21% SP500 - 20.78 -1.95% COMPQ - 56.48 -2.67% Russell 2000 - 20.63 -3.51% Exchange NYSE NASD Advancing 323 420 Declining 2,783 2,320 Oil $77.46 -2.09 Gold $1,030.50 -4.90 SOX 300.78 -8.66 VIX 27.91 +3.08 The VIX moved up and did confirm the move down in the SPX on Wednesday. The SOX moved down and did confirm the move down in the COMPQ. Strongest Sectors: XLP -0.27%...XLU -1.00%...XLV -1.02% Weakest Sectors: XLE -3.30%...XLF -3.31%...XLB -3.08% All nine sectors moved lower on Wednesday. Consumer Staples, Utilities, Healthcare, and Technology were stronger than the SPX -1.95%. Financial stocks stronger than XLF -3.31%: AOC, SCHW, TRV, CB, BK, STT, ALL, ICE, PNC, MET, CME, JPM, BAC, MMC and USB. Tech stocks stronger than XLK -1.47%: VZ, T, QCOM, IBM, MA, ADP, HPQ, TXN, AMT and GOOG. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLE Horizontal Breakout: XLF, XLI, XLU Sideways: Down Trending: Key Resistance Levels: 1,056 = Sep 25 R1 level 1,061 = Sep 16 S1 Level 1,075 = 875 Breakout Chart Target 1,100 = September 2008 Old Support Key Support Levels 1,044 = October Horizontal Old Resistance 1,025 = 950 Breakout Chart Target During the first hour of trading it appeared that downward momentum on the SPX and INDU was continuing to weaken. After the first hour of trading the downward momentum began to gain strength and the SPX broke below its 1,061 support then its 1,056 support and dropped to its 1,044 horizontal support area finishing Wednesday at 1,042.63. Today was another classic example of the SPX breaking one level of support and falling to the next and then breaking that level and falling to the next exactly as we teach. The COMPQ and RUT were weak all day and fell the most. The RUT appears to have formed a double top with a close below its 576 prior support. Only 3 stocks in the NDX 100 BIDU, QCOM and FSLR were positive. 97 of the 100 moved lower led by earnings reaction on ILMN -19.90% and APOL -17.69%. GRMN -16.36% on news of slowing business from a competitor. Ironically after the market closed, FSLR reported revenues lower than expectations even though EPS was 1.79 vs. 1.74. The stock dropped 24.08 or -15.89% in after-hours trading. Opened Trade In our Options webcast Wednesday morning we placed a real time virtual Straddle trade on FSLR at 9:50:31 buying 6 Nov 150 calls and puts for a cost of $22.90 per straddle. I’ll follow up on this trade on Thursday after we see tomorrow’s gap and option pricing. Closed Trade In our Monday evening AT webcast we placed a counter trend real time virtual trade on the SPY. It was an OCO bracket stop order to buy 100 Nov 106 puts if SPY hit 106. 56 with a sell stop at 1.57 and a sell limit if SPY reached 104.60. The order filled Tuesday at 8:00:16 at 2.18 per contract. This morning we moved the stop to breakeven and then to 2.53. Our sell limit filled today at 1:26:35 at 3.20 per contract. Total in was $21,950 and net out was $31,850 both after commissions for a net return of $9,900 or 45.1% in two days. The SPY moved down just $1.94 from entry to exit. Guidance: The intermediate term trend is up while the short term trend is down. The broad indices are in bull flag patterns. Downward momentum accelerated on Wednesday. Continue watching for a potential support bounce. Watch for a move above 1,056 on the SPX and 9,822 on the INDU to indicate momentum beginning to move up. On the COMPQ a move above 2,081 and 576 on the RUT is the minimum level to indicate momentum beginning to shift on Thursday. Continue to trade the chart of the stocks you watch and follow your rules. Breakout: AMZN Potential Breakout Setups: AXP, HANS, V Pulling Back: FLIR, WHR, DE, GOOG, MA, FLS Potential C Patterns: C Pattern Breakout: Lower Close in Support Bounce: JEC, JCI Flag Setups and Bounces in Progress: AAPL, BDK, NTAP, DOW, DD, WLT, ADBE, JCG, CAM, BUCY, PCLN, SPG, NKE, FCX, AKAM, JOYG, NWSA, AMX, ADSK, CAT, XLNX, TXN, POT, INTC, AGU Potential Down Trend Setups: APOL, X, BIDU, BAC, MRVL, HOLX, STT, RIMM, MYGN, MON, LVS, WYNN, ORCL, ZION, FAST, FWLT, AGCO, FSLR AAPL -4.97 QCOM +0.63 GOOG -7.99 BIDU +13.17 NDX 100 stocks stronger than the NDX include: BIDU, QCOM, FSLR, AMZN, SRCL, EXPD, PAYX, CMCSA, ADP, DTV, CEPH, COST, CHRW, VRTX and TEVA. Stocks to Watch on Thursday Leading Stocks Holding Above 30 DMA CTSH, AAPL, CLB, K, JW.A, JOYG, DECK, VPRT, AMZN, SLGN, NFLX, DV, MCD, CPLA, AFAM, ICE, MUR, DLB, ORCL, VAR, FAZ, RCI Moving Above 30 DMA = 0 Moving Below 30 DMA = 24 ATW, BKC, BLUD, BYI, ESRX, EZPW, FLS, GES, GPRO, GXDX, HANS, HLF, JEC, MHS, PCLN, RBN, STRA, SWN, WAB, ACN, GR, SNA, TRLG, PWRD Staying Below 30 DMA AMED, AMX, BIDU, CAM, FSLR, HDB, GMCR, APEI, MOS, PCP, PWR, WRC, NIHD, WMT, JOSB, TDG, SPWRA, FAS, UYG, ESI, ALGT, EBAY, BAP, CHL, GILD, URE, USD, DLTR, GME, SNHY, URE, PETS, WCG, MON, X, PSYS, NTLS, PPD, BDX, BIIB, JCOM, FUQI, CBST, RIMM, MYGN, SYNA Intermediate Term Market Trend: Up Short Term Market Trend: Down