SPX Breaks 1,105 Resistance...Closes at 1,115...

Dave just returned from teaching 225 traders a two day workshop on Advanced Technical Analysis...

DJIA                          10,404.77  +213.88 +2.10%
SP500                         1,115.23    +25.60 +2.35%
COMPQ                       2,305.88  +61.92 +2.76%
Russell 2000                  668.77    +16.50 +2.53%

Exchange                  NYSE              NASD
Advancing                 2,637               2,165
Declining                      446                  541


Oil           $76.50       -0.44
Gold   $1,233.20       +9.90
SOX        371.47       +19.50
VIX            25.87       -2.71


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

Dave's Insight: Like a master chess player I think several moves in advance but only trade based on market action.

One of my least favorite things about media talking heads that talk big based on the past is the harm they do to people that I am working to help. As you know I have been objectively pointing you to the bullish divergence on the SPX and other charts for at least two weeks.

Check out this post:
http://chartsignals.blogspot.com/2010/06/ive-made-up-my-mindthe-market-is-going.html

Why?

Because to be a good trader consistently you need to look to future and be prepared to trade a move when it occurs.

Why I don't like that some talking heads were saying over the past two to three weeks that the market was going down (which it had over the prior four weeks) is they create blind spots in your thinking so you are not prepared for the move when it happens and then you miss out on making money that could have been yours had you focused on the objective technical evidence on the chart and taken action at the time the entry signal occurs.

On Monday three stocks in our list crossed the 30 DMA. Today 18 stocks crossed the 30 DMA and more are ready to cross perhaps as soon as tomorrow. Were you prepared or were you distracted because of someone's bearish opinion (this would include your own subjective opinion)?

In technical trading subjective opinions are worthless. This is why in my writing and in my teaching both in webcasts and live workshops I constantly stress looking at the objective technical evidence and don't take action on other persons opinion.

Recently I did a joint webcast with another individual that graciously shared their insight and experience with two oscillators. After sharing their significant experience they expressed an opinion that they thought fear would increase and the market would go down. After their comment I affirmed to this group of 300 plus listeners that everything this individual had taught concerning the oscillators was legitimate and then I cautioned them not to blindly accept this trader's bearish opinion just because the trader was experienced and knowledgeable.

I then covered the VIX inverse indicator and explained that fear had already increased and the market had already gone down and that the weight of the technical evidence was not confirming a bearish outlook. I did teach that the market could break support and go down, but at that moment the weight of the evidence indicated that that was a lower probability. I emphasized the principle that they should trade the market, and they should not trade someone's opinion of the market and I included not trading my opinion in that comment.

This webcast was a good and educational sharing of ideas. Why? Because ideas were presented, discussed and objective evidence was evaluated and correct principles were taught. This type of contrasting evaluation often does not occur in the media.

It is okay to listen to someone's opinion just as long as you don't let their opinion distract you from the objective view of the chart.

Today the SPX broke out of resistance and changed the sideways trend of the past three weeks to up. Of course this breakout can fail, however traders should take the entry when it occurs on the stock, index or ETF chart they trade, even though the potential for failure exists.

If you were surprised or caught off guard by the breakout, it is likely because you allowed someone's opinion to color your judgment and create a blind spot to what was occurring on the chart.

Dave's Insight: Trade the market, not your thoughts.

Guidance:
Monday's potential shooting star turned out to be the pause that refreshes as an intermediate term up trend was signaled on Tuesday by a break above the SPX 1,105 resistance. A chart target of 1,170 in approximately four weeks is on the chart. A test of the breakout is likely with the potential of a pull back to the 1,103 to 1,105 area which is both the horizontal breakout and the S1 level of Tuesday's large white candle.

Almost all stocks in our watchlist and in the NDX rose on Tuesday. Leading stocks AKAM, SNDK, DECK, CMG, UAUA, CRM, SWN, ICE, ABC, AZO, CRUS, DTV, VMW, ALK, CAL, AAP, ORLY, ILMN, SRCL, HSY and TIE continued to move higher.

NFLX and HSY pulled back.

Short term support is at 1,103 the S1 level of Tuesday's large white candle.
Trade strong stocks up.

Trade weak stocks down.

The VIX fell -2.71 and closed at 25.87.

The short term 3 day 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 of the chart and follow your rules.

AAPL +5.41
QCOM +0.79
GOOG +14.80
BIDU +2.44
NDX 100 stocks stronger than the NDX include: NWSA, FSLR, MRVL, DELL, XLNX, RIMM, BRCM, LLTC, LRCX, NVDA, ALTR, STX, RYAAY, AMAT and LOGI.

Stocks weaker than the NDX: ERTS, ESRX, HSIC, XRAY, TEVA, ILMN, EBAY, IACI, PCLN, HOLX, CHRW, ROST, CHKP, HANS and VRTX.

Stocks to Watch on Wednesday
Holding Above 30 DMA
TLT, NFLX, SNDK, CMG, VMW, AZO, DECK, SWN, UNG, UAUA, CRM, MHS, CHL, LVS, AIV, AMX, ATI, CKF, HAS, HLF, ICE, MCD, SPG, UNP, LXK, NTRI, GMCR, URE, WFMI
Moving Above 30 DMA = 18
AMD, BA, BUCY, CAM, CAT, CREE, DE, DHR, DOW, GR, POT, SWK, TSL, USD, USO, V, WHR, WLT
Moving Below 30 DMA = 1
FAZ
Staying Below 30 DMA
CSTR, ESI, BYI, WMT, ZION, STI, PNC, JEC, GME, HANS, ACN, FAS, FLS, PCLN, PCP, ATW, BAC, GES, MA, GS, FCX, X, AGU, IPI, MOS

Intermediate Term Market Trend: Neutral
Short Term Market Trend: Up