SPX Closes Lower...Rallies From Daily Low After Worse Than Expected Jobs Report...

DJIA               10,653.56     -21.42     -0.20%
SPX                 1,121,64       -4.17     -0.37%
COMPQ           2,288.47       -4.59     -0.20%
Russell 2000       650.68       -4.39     -0.67%

Exchange      NYSE   NASD
Advancing     1,388    1,072
Declining       1,619    1,542

SOX    351.75   -0.69
VIX       21.74   -0.36

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

Leading stocks on Friday included HANS, NFLX, TSL, MA, HLF, MCD, X, GES, CRUS, ATI, FAZ, RMBS, WLT, AKS, TIE, A, V, PCLN, LVS, CHL, MHS, VECO, CAN, FCX, DOW, CREE, JEC, CMG, NYX, WFMI, WMT

On Friday the SPX fell after a worse than expected jobs report. However the selling lasted about 90 minutes and then held around the 1,109 area until the last two hours of trading when buyers took over and the SPX rallied 12 points to close at 1,121. The SPX formed a large tail doji or hammer like candle.

While the jobs report makes the economy look weak, that is a startling revelation since most everyone thought otherwise (sarcasm intended), once short term traders sold the SPX off there was not follow through to the downside, so buyers stepped back for a closing rally.

Now, this is where technical analysis gets really fun. TA allows us to watch the trend, support and resistance and momentum. The price action suggests that the jobs report was not that surprising to big money, so when short term traders took the SPX down, no one got on the bandwagon to the downside and the market came back.

I mentioned on the Thursday post that the jobs report would be the catalyst for direction in the short run and it did for two hours. That is the short run. Then that was it. As I have been teaching for six years short term news is good for one to two days…this was good for two hours.

Forget the jobs report and trade the chart action on Monday. If it is down, trade down. If it is up, trade up. As always follow your rules.

The VIX did NOT confirm Friday’s lower close and closing at its lowest close since May 3. Breadth got stronger as the number of advancers on the NYSE and NASD increased on Friday from Thursday.

Stay focused on and trade according to the chart.

Guidance:
SPX
Resistance: 1,130, 1,141
Support: 1,115, 1,100, 1,086

Enter strong stocks up with a bounce off support (old resistance). Stay with stocks in a bounce continuation.  If you got stopped out on Friday and the stock trend reverses up, re-entry the up trend according to you rules.

Wait for a break of the low of the high day for bearish entries.

The VIX fell -0.36 and closed at 21.74; a new low close and its lowest close since May 3. Th VIX is well below the important 25 level confirming the current up trend since July 7.

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 -1.60 – spinning top
QCOM +0.15 – small bullish engulfing
GOOG -7.88 – black candle return move to horizontal breakout
BIDU +0.96 – bullish engulfing
NDX 100 stocks stronger than the NDX include: HANS, FWLT, WCRX, RYAAY, RIMM, AKAM, EBAY, ILMN, SHLD, ESRX, EXPE, WYNN, YHOO, VRTX and NVDA.

Stocks weaker than the NDX: ATVI, ADSK, NIHD, STX, NWSA, JBHT, CMCSA, GOOG, ORLY, NTAP, FLIR, EXPD, TEVA, BRCM and PAYX.

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, ATW, FCX, FLS, GES, GME, PCP, UAUA, WLT, WMT, X, SWK, ACN, AIV, AMX, BA, CHL, CLF, FFIV, GR, LVS, SPG, UNP, URE, CMG, FAS, STI, DECK, HAS, NYX, LXK, DHR, SKX, UCO, USO, CSTR, SNDK, USD
Moving Above 30 DMA = 4
A, ATI, MA, NFLX
Moving Below 30 DMA = 4
ICE, PNC, SWN, ZION
Staying Below 30 DMA
DLR, UNG, VECO, WFMI, DOW, NETL, SKX, AMD, BYI, V, JEC, NTRI, FAZ, ESI, HSY, BAC, MHS, WHR

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