SPX Breaks Support Falls to 1,063...

DJIA 10,002.18 -268.30 -2.61% SP500 1,063.11 -34.17 -3.11% COMPQ 2,125.43 -65.48 -2.99% Russell 2000 589.68 -20.98 -3.44% Exchange NYSE NASD Advancing 273 380 Declining 2,855 2,338 Oil $73.14 -3.14 Gold $1,062.40 -49.00 SOX 312.53 -15.22 VIX 26.08 +4.48 Index Direction Confirmation VIX Up Yes – SPX SOX Down Yes – COMPQ Strongest Sectors: XLP -2.03%…XLY -2.53%...XLI -2.62% Weakest Sectors: XLF -4.31%...XLE -4.10%...XLB -3.73% All nine sectors moved lower on Thursday. Consumer Staples, Healthcare, Utilities, Technology, Consumer Discretionary and Industrials were not as weak as the SPX -3.11%. Sector Watch Up Trending: XLK, XLB, XLY, XLV, XLP, XLI, XLU Horizontal Breakout: Sideways: XLF, XLE Down Trending: Key Resistance Levels: 1,075 = 875 Breakout Chart Target 1,082 = Nov 9 S1 level 1,087 = Nov 10 Channel low 1,101 = October High Key Support Levels 1,044 - 1,050 = Oct 08 High Sellers…sellers…sellers…sellers before the open, sellers at the open and sellers until the close; sellers were in control all day long. Indexes broke short term diagonal support of their recent rally and confirmed a bear flag pattern. Look at these Charts… (click image to enlarge) Decliners led advancers 10 to 1 on the NYSE and 6 to 1 on the Nasdaq. Financials, Energy and Materials stocks were the weakest sectors as oil and gold fell as well. Bonds and the dollar rose as interest rates and the Euro fell. TLT the 20-year bond ETF was up +1.43 or +1.58%. I told you we were going to learn something from the CREE virtual trade homework. The virtual trade entry was either Tuesday above the high of the inside day or Wednesday above the high of the low day. If entered as I teach a stop was set below the low of the low day. The first step is buying when you are supposed to buy. Set the stop and know the target. Next day what happens? An analyst downgrades CREE to Neutral from Buy, the stock falls 4.30 on 3.5 million shares above average volume. The drop doesn’t trigger the stop but does create an immediate virtual loss. This is real life trading and I could not have scripted this any better for a learning experience. The stop is in place and this will be a successful trade as long as the rules are followed. Dave’s Insight: It’s not whether you make money or lose money; it’s whether you follow your rules that makes a trade, a successful trade. Pick your stock and it was probably a bear flag today. Look at these Charts… (click image to enlarge) After Earnings MA -25.47 or -10.29% K -2.78 or -5.04%

Guidance: The SPX breaks support along with the other broad indexes and forms bear flags as we reminded you to watch for on Wednesday night, “watch for potential bear flags if Tuesday’s S1 is broken.” Look for the SPX to fall to the next level of support 1,044 to 1,050 area. The short term trend is down. The multi-week trend is sideways. The multi-month trend is up. The SPX and other broad indexes broke short term support on Thursday. Continue to focus on and trade setups on the charts of the stocks you watch and follow your rules. Many stocks have shifted to a down trend with a lower high and lower low pattern. There are a few up trending stocks. If you have not yet been stopped out of your up trending positions, continue to raise your stops.

AAPL closed just above its Jan 29 support QCOM penetrated its Jan 29 support GOOG closed at its Jan 29 support BIDU formed a bearish harami well above support but forming a potential lower low prior to its earnings on Feb 9 AAPL -7.18 QCOM -1.45 GOOG -14.04 BIDU -8.92 NDX 100 stocks weaker than the NDX include: STLD, JOYG, FWLT, NVDA, ALRT, WYNN, MRVL, GENZ, XLNX, NIHD, INFY, FSLR, LOGI, CTSH, VRTX, DISH, ADSK, MICC, STX, NWSA, CELG, MXIM, LBTYA, PCLN, FLEX, AMAT, AKAM, QOCM, NTAP, AAPL, MCHP, PCAR, URBN, EBAY, INTC, KLAC, LLTC and ISRG. Stocks to Watch on Friday Leading Stocks Holding Above 30 DMA ALGT, CBST, AMED, GMCR, VAR, BA, ZION, FAZ, DLB, NFLX, MCD, GR Moving Above 30 DMA = 0 Moving Below 30 DMA = 11 CEDC, CHL, CREE, K, MYGN, TDG, UAUA, VPRT, WFC, WHR, WMT Staying Below 30 DMA ESI, SNDK, DECK, HANS, JEC, MA, BYI, ACN, FLS, UNG, BUCY, DE, DOW, FAS, HLF, SYNA, UNP, UYG, X, ATW, CAM, HDB, MHS, MOS, PCP, URE, GS, HEAT, CAT, FCX, BAC, DHR, AGU, FUQI, ICE, IPI, SWN, USO, WLT, BKC, WAB, USD, PWRD, AMD, AMX, CGA, GES, MON, POT, TSL, BDX, WCG, SPG, GME, MELI, PCLN Intermediate Term Market Trend: Neutral = 3 months, Up = 10 month Short Term Market Trend: Down