SPX Confirms Bearish Harami, Falls Near Monday's Low...

DJIA                           10,620.16 -162.79 -1.51%
SP500                           1,135.68  -21.76 -1.88%
COMPQ                        2,346.85  -47.51 -1.98%
Russell 2000                    693.98  -15.87 -2.24%

Exchange                  NYSE              NASD
Advancing                    376                  425
Declining                   2,729               2,313

Oil            $71.61       -2.65
Gold    $1,227.40       -1.40
SOX         353.86       -11.10
VIX            31.24       +4.56

Index  Direction       Confirmation
VIX      Up                   Yes – SPX
SOX    Down               Yes – COMPQ

Strongest Sectors: XLU -0.83%…XLP -0.94%...XLV -1.35%

Weakest Sectors: XLF -2.60%...XLB -2.44%...XLI -2.10%

All nine sectors moved lower on Friday. Utilities, Consumer Staples, Healthcare and Consumer Discretionary were stronger than the SPX -1.88%.

Sector Watch
Up Trending: XLY, XLI, XLP, XLF
Horizontal Breakout:
Sideways: XLK, XLE, XLB, XLV, XLU
Down Trending:

Key Resistance Levels
1,145 = 1,133 BO chart target – Dec 31 Low
1,155 = 1,119 BO chart target – Dec 23
1,178 = Fib extension
Key Support Levels
1,125 - 1,133 = 1,075 BO chart target - Sep 08 Low
1,105 - 1,113 = November High
1,101 = October High
Thursday’s bearish harami was confirmed on Friday as the four broad indexes SPX, INDU, COMPQ and RUT as each fell more than -1.5%. The RUT led to the downside falling -2.24%.

For the week ended Friday the SPX rose 63 points from last Friday’s close then fell 47 points before rising 9 points in the last hour to close at 1,135.  The SPX covered 119 points inside a weekly range of 63 points to close up 25 points for the week.

Look at these Charts

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Our Yellow Alert turned red Friday as the SPX started the day below Thursday's low. The SPX then fell to the next support level which was the mid section S1 of Monday's large white candle and the fell to its 50% Fib level broke that level and fell near Monday's S2 level and the 61.8% Fib retracement. At that point the buyers stepped and prices rallied 9 points.

Look at these Charts

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In consolidation patterns short term trends tend to be shorter in time. This week we saw a three day up trend and a two day down trend. If the late buying on Friday turns out to be the end of the pull back traders will want to be prepared for the next short term bounce. Stocks that could look relatively attractive in the event of a bounce include stocks that were relatively stronger late Friday.

Look at these Charts

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As we pointed out this week beginning on Monday a VIX that remained above 25 indicated that the pull back that started the first week of May was not over. The VIX did reach a low of 25.30 on Thursday and then rallied back over 25. A continued higher VIX indicates that bigger and quicker price swings up and down will likely continue and that the market likely will have a downward bias in the short term.

If the short term down trend continues, most stocks will move lower and these stocks are relatively weaker.

Look at these Charts

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Dave's Insight: Continue to Follow Your Rules.

Guidance:

The SPX continued Thursday's late sell off on Friday reaching 1,126 before buyers rallied the index to close at 1,135.

On Monday we will look at whether Friday's close holds and continues its support bounce or the bounce fails and the index continues its recent sell off. If the SPX breaks Friday's low look for it to fall to Monday's open at 1,122. If that level breaks look for a potential move to the Friday May 7 low of 1,094.

Trade strong stocks up. Look for entry signals only on a support bounce on Monday. If a bounce does not occur stand aside until a bounce does happen.

Trade weak stocks down. Trade the resistance pull back continuation or a break of support to the next support level.

The VIX rose +4.56 and closed at 31.24 after reaching a low of 24.30.

The short term trend is down.

The six-month trend is neutral.

The twelve-month trend is up.

Continue to focus on and trade setups on the charts of the stocks you watch, trade with the trend and follow your rules.

Adjust your stops according to your rules for up and down trending trades.

AAPL -4.54

QCOM -0.66

GOOG -3.35

BIDU -1.66

NDX 100 stocks stronger than the NDX include: DISH, GRMN, YHOO, CELG, NTAP, COST, RIMM, IACI, ORLY, FISV, ILMN, SPLS, GOOG, HANS, JBHT, DTV, SRCL, ROST and CMCSA.

Stocks weaker than the NDX: NVDA, CA, FWLT, ADSK, FSLR, JOYG, GILD, MRVL, STLD, NIHD, MXIM, LINTA, LOGI, FLEX, ERTS, CTSH, FLIR, KLAC, SIAL, SBUX, APOL, CEPH, CTXS, RYAAY, ISRG, INFY, EXPE, STX and WYNN.

Stocks to Watch on Monday

Holding Above 30 DMA

NFLX, WHR, AIV, OSTK, ICE, EXBD, NTRI, BYI, CRM, DHR, GR, HAS, HLF, SNDK, STI, UNG, WFMI, ZION, FAZ

Moving Above 30 DMA = 0

Moving Below 30 DMA = 13

AMD, ATI, CAT, CREE, DECK, LVS, MCD, PNC, SPG, SWK, UNP, URE, WFC

Staying Below 30 DMA

BA, DE, JEC, LXK, CHL, GME, SYNA, HANS, WMT, ACN, MYGN, AMX, BKC, DOW, FAS, FLS, PCLN, PCP, TSL, UAUA, USD, USO, UYG, ATW, BAC, GES, MA, V, CAM, SWN, BUCY, WLT, CLF, MHS, WCG, ESI, GMCR, GS, FCX, X, PWRD, AGU, IPI, POT, MOS

Intermediate Term Market Trend: Neutral

Short Term Market Trend: Down