Monster SPX Rally as Support Bounce Continues...

DJIA + 169.67 +1.68% SP500 + 19.36 +1.80% COMPQ + 30.66 +1.40% Russell 2000 + 10.12 +1.66% Exchange NYSE NASD Advancing 2,537 1,945 Declining 517 764 Oil $77.01 +2.88 Gold $1,119.30 +29.80 SOX 340.96 +5.01 VIX 22.25 -0.48 Index Direction Confirmation VIX Down Yes - SPX SOX Up Yes - COMPQ Strongest Sectors: XLB +2.52%…XLI +2.36%...XLE +2.36% Weakest Sectors: XLV +0.87%...XLP +1.02%...XLK +1.50% All nine sectors moved higher on Tuesday. Materials, Industrials, Energy and Financials were stronger than the SPX +1.80%. Sector Watch Up Trending: XLK, XLY, XLV, XLI Horizontal Breakout: Sideways: XLF, XLE, XLU, XLP, XLB Down Trending: Key Resistance Levels: 1,101 = October High 1,105 = Feb 2 High 1,113 = November High Key Support Levels 1,087 = Nov 10 Channel low 1,075 = 875 Breakout Chart Target 1,044 - 1050 = October 2008 Horizontal Resistance The SPX and other broad indexes formed large white candles as last week’s support bounce followed through heading into options expiration this Friday. Price action is confirming the bullish divergence we alerted you to in the SPX and many other stocks last week. NIHD +2.02, +5.60%, the leading NDX 100 stock received an upgrade to Buy from Neutral from B of A Merrill. NIHD gapped above horizontal resistance and closed just below.

CREE our recent virtual trade homework was stopped out if you used a hard price stop but was not stopped if you used an end of day stop.

Dave's Insight: Remember if you get stopped out and the stock gives you another entry signal, get in a new trade. Did you enter a new trade? The ideal re-entry was Tuesday, Wednesday or not later than Thursday morning. (click image to enlarge)

Last night and this morning’s highlighted charts had a strong performance today. Check out these charts: (click image to enlarge) (click image to enlarge)

Guidance: The SPX closed above its 10 and 20 DMA as it moved toward recent resistance of 1,105. Don’t be surprised to see a pause as it moves toward this level. Watch the S1 level of today’s large white candle as short term support. The short term trend is up. The four-month trend is sideways. The twelve-month trend is up. Last week’s growing bullish technical evidence was confirming today. It would be wise to take advantage of a support bounce continuation. The cautionary bear flag pattern is off if the SPX breaks and holds above 1,105. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. While a short term break of support is looking less likely don’t ignore that possibility. If you have not yet been stopped out of your up trending positions, continue to trade the trend and raise your stops. AAPL +3.02 QCOM +0.18 GOOG +8.18 BIDU +1.47 NDX 100 stocks stronger than the NDX include NIHD, STX, FSLR, ADSK, JOYG, EXPE, KLAC, FWLT, AMAT, DISH, MRVL, EBAY, EXPD, BBBY, WYNN, PDCO, LOGI, STLD, FAST, INFY, NTAP, GRMN, SPLX, SHLD, NWSA, ALTR, COST, MXIM, DELL, CMCSA, SRCL, BRCM and MSFT. Stocks to Watch on Wednesday Holding Above 30 DMA ALGT, CBST, ZION, FAZ, DLB, NFLX, AMED, CHL, BA, GMCR, MCD, UAUA, AGU, BKC, CAM, CEDC, CREE, VPRT, WHR, WLT, POT Moving Above 30 DMA = 15 AMX, BDX, BUCY, CAT, GR, ICE, MOS, PCLN, PCP, SPG, TSL, UNP, USD, USO, V, Moving Below 30 DMA = 0 Staying Below 30 DMA VAR, K, MYGN, TDG, WFC, WMT, ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, DE, DOW, FAS, HLF, SYNA, UYG, X, ATW, HDB, MHS, URE, GS, HEAT, FCX, BAC, DHR, FUQI, IPI, SWN, WAB, PWRD, AMD, CGA, GES, MON, WCG, GME, MELI Intermediate Term Market Trend: Neutral = 3 months, Up = 11 month Short Term Market Trend: Up