Support Bounce Continues...

DJIA                           10,896.91 +145.65 +1.38%
SP500                           1,171.67  +15.88 +1.37%
COMPQ                        2,425.02  +49.71 +2.09%
Russell 2000                    716.11  +20.63 +2.97%

Exchange                  NYSE              NASD
Advancing                  2,683               2,247
Declining                       441                 504

Oil            $75.65       -0.88
Gold    $1,242.70      +22.80
SOX         375.08       +10.35
VIX            25.52       -2.80

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

Strongest Sectors: XLK +2.61%…XLI +2.21%...XLB +2.08%
Weakest Sectors: XLP +0.69%...XLV +0.82%...XLU +0.83%

All nine sectors moved higher on Wednesday. Technology, Industrials, Materials, Consumer Discretionary and Energy were stronger than the SPX +1.37%.

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

Key Resistance Levels

1,178 = Fib extension
1,200 = Jul 2008 support
1,216 = Fib extension
Key Support Levels
1,155 = 1,119 BO chart target – Dec 23
1,145 = 1,133 BO chart target – Dec 31 Low
1,125 - 1,133 = 1,075 BO chart target - Sep 08 Low

Tuesday's questions on the “Pause that Refreshes” are now answered.

First, how big (collectively) are the sellers? Just those that sold on Tuesday. Wednesday's shaven bottom candle makes it clear that buyers were in control at the open on Wednesday and they were net control all day with the close near the high of the day.

Second, are there still buyers that are willing to pay a significantly higher price than the were just two days before? Yes. Enough buyers to drive the SPX up 15.88 points. Aside from Monday's 49 point gain, the largest daily gain since March 5.

We now know that Tuesday was the “Pause that Refreshes.”  Monday's support bounce did resume and as we guided yesterday it did provide even more entry opportunities.

Tuesday night's charts NTRI +6.02%, STI +4.60% and SNDK +4.78% were all leaders on Wednesday, while PNC -0.13% lagged. The other 11 stocks that stayed above their 30 DMA from Monday's breakout all moved higher.

Our Wednesday morning charts BA +2.03%, LVS +1.74%, DECK +3.63% and UAUA +4.19%, with pending 30 DMA breakouts for Wednesday, were also leaders and all except UAUA did break out of their 30 DMA giving additional entry signals.

Additional 30 DMA breakout signals on Wednesday:

Look at these Charts

(click image to enlarge)

Traders still need to focus on trend and buy where they are supposed to buy and sell where they are supposed to sell according to their rules.

Dave's Insight: Follow Your Rules.

Guidance:
The SPX closed just above Tuesday's high at 1,171 forming a higher low and slightly higher high.  The SPX large white candle was a shaven bottom meaning that it opened at its low and moved higher. The SPX did NOT retrace to its 1,140 short term support which is both the mid section of Monday's large white candle and the 50% Fibonacci level from Friday's close to Tuesday's high.

On Thursday we will look for a continuation of the support bounce and a move to the 1,178 resistance area which is the 127.2% Fib extension from the 1,150 horizontal breakout in mid March.

Trade strong stocks up.  Look for entry signals into support bounce continuation on Thursday.

Trade weak stocks down.

The VIX fell a -2.80 and closed just above last Wednesday's 25 level.

The short term trend is up.
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 +5.57
QCOM +0.68
GOOG -3.66
BIDU +6.79
NDX 100 stocks stronger than the NDX include: BIDU, FWLT, SBUX, NIHD, ADSK, INTC, MICC, STX, LBTYA, VRSN, SPLS, AMAT, INTU, CSCO, PPDI, ADBE, APOL, ISRG, JOYG, LINTA, IACI, DISH, EXPD, AMZN, XLNX, ALTR, LOGI, AKAM, FLIR, GILD, FAST, MRVL, AAPL, LRCX, CEPH, CA, CTXS, CTSH, ATVI and BBBY.

Stocks to Watch on Thursday
Holding Above 30 DMA
NFLX, WHR, AIV, OSTK, ICE, EXBD, NTRI, BYI, CRM, DHR, GR, HAS, HLF, MCD, PNC, SNDK, SPG, STI, SWK, URE, UNG, WFC, WFMI, ZION
Moving Above 30 DMA = 11
AMD, ATI, BA, CAT, CREE, DE, DECK, JEC, LVS, LXK, UNP
Moving Below 30 DMA = 1
FAZ
Staying Below 30 DMA
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: Up