VIX Soars as SPX Slumps...

Please email me at chartsignals@yahoo.com and tell me what you like, find of interest and value on Chart Signals blog. Thank you to those who have already let me know what you like. DJIA - 154.48 -1.48% SP500 - 19.14 -1.72% COMPQ - 37.61 -1.73% Russell 2000 - 14.98 -2.53% Exchange NYSE NASD Advancing 427 475 Declining 2,533 2,155 Oil $76.05 -1.91 Gold $1,174.20 -12.80 SOX 309.82 -5.27 VIX 24.74 +4.26 The VIX moved up and did confirm the move down in the SPX on Friday. The SOX moved down and did confirm the move down in the COMPQ. Last Friday the SPX closed at 1,091.38 in the support zone of it horizontal channel of the prior two weeks. On Monday the SPX bounced off of support and closed at 1,106.24. As the holiday shortened week progressed trading moved sideways between 1,097 and 1,110. On Thanksgiving Day news about Dubai asking for 6 months extension on its debt sent Asian and European markets lower. In the process S&P futures dropped 40 points from Wednesday’s close to 3 a.m. Friday morning. From that low to the U.S. open at 9:30 a.m. ET, futures rose 12 points. From the 9:30 a.m. open, the S&P futures rallied another 20 points during the first 90 of trading indicating that U.S. traders saw the Asian and European sell off as a buying opportunity, not a reason to jump on their bandwagon. On the close on Friday the SPX closed at 1,091.49, almost exactly where it closed one week earlier. We had expected a modest week, it just came by bouncing from support to resistance and then back to support to close 0.11 point higher. (click image to enlarge) There is no question that the Dubai news rocked the Asian and European markets and that they sold the ES futures off 40 points before bouncing. However, when a trader comes in Friday and a bounce began about 6 hours before the cash open, the logical action is to see if U.S. traders are going to join in the selling or treat the sell off as a buying opportunity. This is why I wrote in Friday morning’s post; “Follow your rules in any trading actions today. Be logical.” If you are uncertain, go back and check the August 12 and September 1 overnight futures action and the subsequent two trading days. Heavy European sell offs to equate to an additional U.S. sell off. Remember U.S. traders are competing with Asian and European traders, they are not one happy club where everyone does the same thing. Also a consideration is that the Dubai debt situation is $60 billion, a huge amount to you and me, but in light of the dollar figures for AIG alone or U.S. banks, an amount that is not unbelievable nor one for which a solution can’t be found. I am not predicting the outcome here just helping to put the situation in perspective. Initial retail sales results on Black Friday are indicating an increase of 0.5% above last year which is positive. Obviously more is always better, but this increase is a step in the direction of recovery. Watch retail stocks next week for traders’ reactions. Also don’t buy into those myopic comments that say something like the S&P Retail Index is up 70% and can’t go higher or it’s gone too high. They cite the March low as if it is the mean of the price action and not the extreme outlier. Did you know that the S&P Retail Index is down 25% from its high in 2007 and retail sales are not down that far in the same time frame? I guess these types of leading myopic statements are what inspired Mark Twain to observe; “There are lies, damn lies and statistics.” Stay focused on the trend and support and resistance levels to know if institutions are continuing to buy or if they become net sellers. AAPL -3.60 QCOM -0.45 GOOG -5.98 BIDU -2.64 NDX 100 stocks stronger than the NDX include: WCRX, APOL, ATVI, GRMN, ILMN, TEVA, FSLR, BIDU, VRSN, HANS, SHLD, EXPD, ALTR, SPLS, XRAY, MXIM, GENZ, GILD, ISRG, DTV, HSIC, VRTX, QCOM, AMGN, GOOG, CHRW and ADP. NDX 100 stocks weaker than the NDX include: INFY, NWSA, WYNN, FLEX, JOYG, EXPE, FWLT, CTSH, ERTS, RIMM, PCAR, URBN, STLD, LOGI, ORCL, CERN, DISH, STX, ADBE, NIHD and SIAL. Stocks to Watch on Monday Leading Stocks Holding Above 30 DMA K, JW.A, AMZN, SLGN, NFLX, MCD, DLB, RCI, ESRX, MHS, WCG, ALGT, BDX, VAR, ACN, CTSH, HLF, AFAM, AMX, GR, SNHY, SYNA, WMT, AAPL, BLUD, DLTR, GILD, HDB, ORCL, WAB, BIDU, EZPW, PCLN, GXDX, PCP, MON, MOS, TDG, X, BIIB, GME, NTLS, AMX, PETS, NIHD, VPRT Moving Above 30 DMA = 1 FAZ Moving Below 30 DMA = 2 BAP, BKC, BYI, CHL, CPLA, DECK, EBAY, FLS, GPRO, ICE, JOYG, URE, USD Staying Below 30 DMA DV, RBN, UYG, SLGN, WAB, ATW, CAM, CLB, SNA, FAS, PWRD, PPD, GES, JEC, JOSB, WRC, GMCR, JCOM, MUR, RIMM, SWN, HANS, STRA, TRLG, AMED, FSLR, APEI, PWR, SPWRA, ESI, PSYS, FUQI, CBST, MYGN Intermediate Term Market Trend: Up Short Term Market Trend: Neutral