SPX Forms Hammer in Bull Flag at 1,100 Support...

DJIA               10,465.94   -1.22    -0.01%
SP500               1,101.60  +0.07  +0.01%
COMPQ            2,254.70  +3.01  +0.13%
Russell 2000        650.89  +0.46  +0.07%

Exchange     NYSE   NASD
Advancing    1,774    1,467
Declining      1,252    1,194

Oil              $79.05   +0.69
Gold      $1,171.40   +3.00
SOX           348.81    -3.71
VIX              23.50    -0.62

Index    Direction   Confirmation
VIX       Down          Yes – SPX
SOX      Down          No – COMPQ

Leading stocks on Friday included NFLX, DE, BUCY, POT, DLR, V, UNG, JEC, DECK, GME, RMBS, FFIV, HSY, SPG, TIE, UCO, SWK, BA, CMG, X, CRM, VMW, FCX, AGU, IPI, ACN, ATI, AKS, CHL, MA, USO, HAS, LXK, URE, AIV, CLF, ZION, ESI, VECO, CREE, WLT, MCD, CAT, UNP, GES

The key question, of course, is, "Will the SPX bounce?"

A bounce is the most probable price action, but as we all know that doesn't mean it will happen on Monday.  Although a trader should be prepared for it to happen as soon as Monday.

On Friday the SPX formed a hammer, while the INDU formed a hammer like doji and the COMPQ and RUT formed piercing line like patterns. All four indexes are in a bull flag pattern, all made a new low day with an intra-day reversal and all closed above their 10 DMA.  Very positive setup for a potential bounce on Monday.  Be ready if it breaks the high of the low day!

For the week the SPX was down one point, the INDU closed up 41 points, the COMPQ closed down 15 points and the RUT closed unchanged. All four look like spinning tops or doji on the weekly chart.

Financials were stronger this week with XLF +1% and GS a bellwether financial stock +2% for the week.

Entry signals on Friday: DECK, CLF, FFIV

Setups to watch on Monday: CRUS, CREE, VECO, CRM, LXK, GES, GS, PCLN, PCP, CAT, VMW, AKS, X, FAS, STI, UAUA, CAL, GME, CAM, FCX

Guidance:

SPX forms a hammer closing above its 1,100 support level...
The SPX makes lower high and lower low, low day in a bull flag pattern.
The VIX did confirm the slightly lower close in the SPX, and stayed below 25.
Breadth was stronger as advancers led decliners 1.4 to 1 on the NYSE.
SPX price target is still 1,141 recent short term breakout continues to hold.
If price bounces above Friday’s high follow your rules for entry.

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

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

Tighten stops on bearish trades according to your rules. Wait for a break of the low of the high day for bearish entries.

The VIX FELL -0.63 and closed at 23.50. Volatility closed below the important 25 level again on Friday.

The short term 3 day trend is neutral pending a break above the high of the low day.
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 -0.86 – white inverted hammer in a bull flag
QCOM -0.70 – hammer in bull flag
GOOG -0.14 – white candle did not confirm bullish harami in bull flag
BIDU +2.21– confirm hammer support bounce breaks high of low day in bull flag – potential entry signal
NDX 100 stocks stronger than the NDX include: EXPE, WCRX, TEVA, XRAY, RIMM, PPDI, SHLD, VRTX, BIDU, KLAC, CELG, SPLS, PDCO, JOYG and AMGN.

Stocks weaker than the NDX: FSLR, CTXS, MXIM, INTC, APOL, LOGI, QCOM, BRCM, AMAT, BIIB, VRSN, LRCX, MSFT, NIHD and CSCO.

Stocks to Watch on Monday

Holding Above 30 DMA
TLT, CRUS, GMCR, HANS, TSL, BUCY, CAT, CREE, CRM, HLF, PCLN, TIE, VMW, AGU, MCD, DE, GS, IPI, AKS, MOS, POT, CAM, 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, FAS, STI, WFMI, DECK, HAS, NYX, LXK, UNG, DHR, SKX, UCO, USO
Moving Above 30 DMA = 2
MA, ZION
Moving Below 30 DMA = 1
CSTR
Staying Below 30 DMA
AMD, NETL, USD, ATI, BYI, PNC, V, A, JEC, NTRI, FAZ, NFLX, ESI, HSY, BAC, MHS, HAS, WHR, SNDK, SWN, ICE

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