This Would Be a Good Day to Look for a Support Bounce...

BMO – ES +5.25 and NQ +5.50 futures are slightly higher in pre-market trading pointing to a slightly higher open. AAPL +1.53, AMZN +0.92, GOOG +2.51 and BIDU +2.96 are higher in pre-market trading. The Euro is up 33 pips in overnight trading and oil is quoting up 67 cents in electronic trading. XLE is quoted down 55 cents in pre-market trading. The recent take over announcements by SWK on BDK and Buffet on BNI illustrate an important investment principle that too many investors either forget or just lack awareness. These two situations show investors that very informed investors are still willing to pay a lot more money that the current stock price for an entire company. Why? Because they believe the stock/company is worth more than the current market price. (click image to enlarge)

Why did CSX and UNP rise on the take over announcement of BNI? Because if BNI is worth more than the current market price of a savvy investor like Buffet these other railroads must be worth more too. Keep this in mind when you get influenced by price fluctuation. The price fluctuation does not represent the entire story on a stock, rather just the temporarily dominant short term traders that day or week. Dave’s Insight: One of your primary duties as a trader is to distinguish the difference between price fluctuation and trend change. Follow your rules on every trade. The short term trend is neutral in a bull flag pattern showing signs of support bounce in Tuesday's price action. Watch for Momentum to stay above SPX 1,044 and move higher for bounce confirmation. The SPX highs of the past two days are 1,045 and 1,052. A move above this range is a support bounce and potential entry signal for short term traders. SPX Support = 1,044...1,025 Resistance = 1,056…1,061 Trading Down: Trading Up: CAT, FCX, JOYG, PNC, XLF Look at these Charts… (click image to enlarge) At the Open on Wednesday SPY – QQQQ – XLE – ATW – V – AAPL – AMZN – BUCY – SNDK – CREE – DECK – NFLX – NKE – FCX – JOYG – CAT – POT – ADSK – SWK – BDK – WLT – WHR – ACN – HANS – ISRG – FAS – PNC – AKAM – ORLY – SYMC – PCLN – CSX – UNP –