SPX Forms Evening Star from Higher High Above its 30 DMA

DJIA               10,497.88   -39.81 -0.38%
SP500              1,106.13     -7.71 -0.69%
COMPQ            2,264.56   -23.69 -1.04%
Russell 2000        650.76   -11.41 -1.72%

Exchange     NYSE   NASD
Advancing    1,001       778
Declining      2,025    1,854

Oil           $76.99  -0.51
Gold   $1,160.40 +2.10
SOX        359.47  -6.61
VIX           24.25 +1.06

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

Leading stocks on Wednesday included LVS, MOS, AGU, FAZ, PCP, UNG CSTR, FCX CAT, POT, AIV, WMT, UAUA


Dave’s Insight: Focus on Trend, Support and Momentum.

The Yellow Alert on the SPX did turn Red today as price did close below the low of the high day. Today’s evening star pattern on the SPX did NOT break the 1,100 support area. The short term trend is neutral.

Thursday 8:30 am ET - I’ve been out having fun on Thursday while you have been doing Wednesday evening and sleeping. I intentionally let you think about the above comment over night. Wow, this being in the future is really quite an expanding experience.


Here is my question for you. Did you get my point?

Even though the SPX broke the low of the high day the short term trend is neutral, not down. If the SPX fails to break short term support this pull back, which did break the low of the high day, is price fluctuation not trend change. It has the potential to be equivalent to a horizontal bull flag.

If you, like me, want to think several moves in advance, that is what you should do. Just be mindful that sometimes price will break the low of the high day and not break support. When it fails to break support it is price fluctuation.

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

Guidance:
SPX forms an evening star but stays above its 1,100 support level...

The SPX makes lower high and lower low in a bull flag pattern.
The VIX did confirm the lower close in the SPX, but stayed below 25.
Breadth was weaker as decliners led advancers 2 to 1 on the NYSE.
SPX price target is still 1,1141 as recent short term breakout continues to hold.
If price bounces above 1,100 support follow your rules for re-entry.

SPX
Resistance: 1,115, 1,130
Support: 1,100, 1,086, 1,071

Our Yellow Alert turned Red on Wednesday and signaled a potential exit from short term bullish trades and potential entry into short term bearish trades, with the break of the low of the high day.

Take bearish setups according to your rules. Keep in mind that many bearish setups may be counter trend moves so trade accordingly.

Enter strong stocks up with a break above the high of the low day. Stay with stocks in a bounce continuation.

The VIX rose +1.06 and closed at 24.25. Volatility closed below the important 25 level again on Wednesday.

The short term 3 day trend is neutral.
The two-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 -3.12 - bearish harami
QCOM -0.46
GOOG -8.28 - bearish engulfing
BIDU -1.67 – evening star
NDX 100 stocks stronger than the NDX include: ILMN, CHRW, IACI, RIMM, FISV, NIHD, LBTYA, CMCSA, EXPD, MICC, JOYG, LOGI, ORLY, GENZ and FLIR.

Stocks weaker than the NDX: CEPH, HOLX, MRVL, TEVA, BIIB, NVDA, STX, HANS, ESRX, SHLD, CELG, LRCX, GRMN, FWLT and ALTR.

Stocks to Watch on Thursday
Holding Above 30 DMA
TLT, CRUS, GMCR, HANS, TSL, BUCY, CAT, CREE, CRM, HLF, NETL, PCLN, TIE, VMW, AGU, MCD, DE, GS, IPI, AKS, MOS, POT, CAM, USD, VECO, ATW, DOW, FCX, FLS, GES, GME, PCP, UAUA, WLT, WMT, X, SWK, ACN, AIV, AMX, BA, CHL, CLF, DLR, FFIV, GR, LVS, SPG, UNP, URE, CMG, CSTR, FAS, MA, STI, WFMI, AMD, DECK, HAS, NYX, LXK
Moving Above 30 DMA = 1
UNG
Moving Below 30 DMA = 6
ATI, BYI, PNC, UCO, USO, V
Staying Below 30 DMA
A, DHR, JEC, NTRI, FAZ, NFLX, ESI, HSY, BAC, MHS, ZION, HAS, WHR, SNDK, SKX, SWN, ICE

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