SPX Hits 1,071...Decliners Swamp Advancers...

DJIA                           10,068.01 -376.36 -3.60%
SP500                           1,071.59  -43.46 -3.90%
COMPQ                        2,204.01  -94.36 -4.11%
Russell 2000                    693.98  -15.87 -5.09%

Exchange                  NYSE              NASD
Advancing                    153                  231
Declining                   3,007               2,557

SPX
Key Resistance Levels
1,087 = Nov 10 Channel low
1,101 = October High
1,105 - 1,113 = November High
Key Support Levels
1,075 = 875 Breakout Chart Target
1,044 - 1,050 = Oct 08 High

We alerted you last Thursday to the bearish in the four broad indexes last Thursday which was confirmed on Friday. In the last five trading days the INDU dropped 714 points and the SPX dropped 86 points.

Our Yellow Alert last Thursday, which turned red last Friday gave traders the heads up necessary to profit from drop of the last five days. The markets have broke several support levels this past week to return to its mini-crash lows from two weeks ago.

The SPX is forming a potential double bottom and potential bullish divergence similar to last July and February.

We will continue to stay focused on the short term down trend and stay alert for a potential support bounce.

You might also notice that all but three of our watch list stocks have fallen below their 30 DMA as of today.

Setups for flag bounce: BIDU, WFMI, NFLX, NTRI, HANS

Setups for break of support: FCX, JEC, MCD, DECK, SWK, CAT, BA, ATI
 
Guidance:
The SPX continued to sell off on Thursday reaching 1,071.

If the 1,065 low of two weeks ago is broken look for a move to 1,045, the January February correction low. The mid section, 1,089, of Thursday's large black candle on the SPX is R1 short term resistance.
 
Trade weak stocks down. Numerous stocks broke another level of horizontal support on Thursday. Continue to trade the bounce off resistance and a break of support to the next support level.

Trade strong stocks up. Look for entry signals only on a support bounce on Friday. If a bounce does not occur stand aside until a bounce does happen. There have been very few support bounces this week, so our guidance to stand aside on these trades until they occur may have helped you use correct trade logic.

The VIX rose +10.47 and closed at 45.79. The VIX made it highest close since March 20, 2009.

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 -10.58
QCOM -0.86
GOOG -19.42
BIDU -2.55
NDX 100 stocks stronger than the NDX include: ROST, FSLR, SPLS, APOL, XLNX, ATVI, BBBY, VRSN, TEVA, CTXS, RYAAY, PDCO, COST, ORLY, HANS, PAYX, NVDA, QCOM, GRMN, BIIB, BRCM and SRCL.

Stocks weaker than the NDX: SHLD, WYNN, ADSK, PCAR, DISH, LBTYA, JBHT, FAST, AKAM, PPDI, SYMC, LOGI, RIMM, FWLT, STLD, GILD, ISRG, INTU, HOLX, NWSA, NIHD, VRTX, WCRX, JOYG, LIFE, FLIR, PCLN, LINTA, FLEX, CMCSA, MICC and DELL.

Stocks to Watch on Friday
Holding Above 30 DMA
EXBD, NTRI, FAZ
Moving Above 30 DMA = 0

Moving Below 30 DMA = 5
NFLX, OSTK, HAS, SNDK, WFMI
Staying Below 30 DMA
BYI, DHR, GR, MCD, UNT, WHR, WMT, ICE, ZION, CRM, STI, PNC, AIV, HLF, AMD, ATI, CAT, CREE, DECK, LVS, SPG, SWK, UNP, URE, WFC, BA, DE, JEC, LXK, CHL, GME, SYNA, HANS, 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, GMCR, GS, FCX, X, PWRD, AGU, IPI, POT, MOS

Intermediate Term Market Trend: Neutral
Short Term Market Trend: Down