SPX Forms Double Bottom Breakout...SPX Target 1,082...

DJIA              10,150.65   +164.84   +1.65%

SP500             1,064.59     +17.37   +1.66%
COMPQ           2,153.63    +34.94    +1.65%
Russell 2000       616.76    +17.00    +2.83%

Exchange       NYSE      NASD
Advancing      2,620       2,185
Declining          397          471

Oil              $75.57   +2.21
Gold      $1,239.50   +1.80
SOX           321.76   +6.53
VIX              24.45    -2.92

Index     Direction     Confirmation

VIX         Down           Yes – SPX
SOX        Up               Yes – COMPQ

The SPX returned to the 1,040 support area Friday morning during the first 30 minutes of trading where buyers stepped in and took over just like they did on Wednesday. A rally ensued to the 1,061 resistance area from Thursday morning where a bull flag was formed pulling back to the 1,055 area. Buyers took control at 1,055 and broke through the 1,061 resistance with an SPX close at 1,064. You can view this in the five day chart below.

The good news for those who took long positions on the support bounce on Friday is the 1,061 breakout gives a short term SPX price target of 1,082.

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All four of the broad indexes formed bullish candle patterns on the daily chart. The SPX confirmed Wednesday’s hammer. A confirmation of a hammer at support is a bullish support bounce entry signal. The RUT was the strongest of the four indexes on both Thursday and Friday. The RUT did not pull back as far on Thursday and moved higher on Friday relative to Wednesday and Thursday’s high. The chart below shows both the daily and weekly on the SPX and RUT.  The RUT had the smallest percentage loss on Thursday and largest gain on Friday.

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INDU = bullish engulfing

SPX = white candle confirms Wednesday’s hammer

COMPQ = hammer following Wednesday’s bullish engulfing
RUT = large white candle following Wednesday’s bullish engulfing

This week the media was at least partially obsessed with something called the Hindenburg Omen. This was just classic look for something that projects the negativity of the recent weeks into future. This omen is just another example of how some people can’t resist the drive to see the future. The latest doom and gloom is not-with-standing a bullish MACD histogram divergence on the SPX chart. This is the same divergence that appeared at the low in July 2009, February and May 2010.

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Stop trying to predict the future and focus on Trend, Support and Resistance and Momentum.

Leading stocks on Friday included RVBD, VECO, UCO, FCX, FAS, TSL, BUCY, LVS, CLF, CREE, TIE, CAM, AKS, MOS, WLT, PCLN, DOW, UAUA, SINA, X, IPI, VOD, NETL, AMD, ATI, HLF, USD, CRUS, AGU, URE, ZION, ATW, FLS, CMG, CAT, BYI, BA, DE, USO, SWN, PNC, SWK, NTES, RMBS, NYX, DHR, UNP, AMX, PCP, FDX, CHL, POT

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All four, CRM, NTES, INTU and AKAM, of the breakout stocks we listed last Friday closed above their breakout resistancethis week.

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Twenty out of twenty six stocks we listed as Support Bounce Setups Thursday evening bounced and gave an entry signal on Friday.

Support Bounce Entry Signal on Friday - HANS, HLF, PCLN, RVBD, AGU, MCD, POT, CLF, FFIV, LVS, VMW, CMG, NTES, AKAM, NTAP, BIDU, MRVL, INTU, CAM, MOS

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Support Bounce Setups for Monday - GMCR, NFLX, CRM, QCOM, CSTR, LXK

Guidance:
SPX
Resistance: 1,071, 1,086, 1,100
Support: 1,056, 1,041, 1030

Look to enter bullish trades when a new bounce off support and a break above the high of the low day occurs.

Adjust stops on bearish trades for a potential exit if they bounce above the high of the low day. Enter bearish setups with a new bounce down from resistance or break of support.

The VIX fell -2.92 to 24.45 moving below the benchmark 25 level and confirming Friday’s support bounce.

AAPL   +1.34 – dragonfly doji, bullish harami
QCOM  +0.36 – hammer
GOOG  +7.85 – hammer like
BIDU    +2.77 – white candle
NDX 100 stocks stronger than the NDX include: JOYG, STX, NTAP, PCLN, LINTA, STLD, BRCM, BIDU, ADSK, MRVL, NVDA, VRTX, PCAR, FLIR and WYNN.

Stocks weaker than the NDX: RIMM, URBN, SHLD, INFY, LOGI, ATVI, ESRX, COST, PDCO and CERN.

Stocks to Watch on Monday
Holding Above 30 DMA
TLT, HANS, HLF, PCLN, RVBD, AGU, MCD, POT, FFIV, LVS, NFLX, FAZ, VMW, CMG, NTES, CRM, WMT, TSL
Moving Above 30 DMA = 8
BYI, CHL, CLF, FCX, HSY, SINA, SPG, VOD
Moving Below 30 DMA = 0

Staying Below 30 DMA
GES, GMCR,CSTR, FDX, HAS, LXK, NDAQ, UPS, WLT, A, BUCY, CAT, DE, GR, IPI, PCP, RMBS, UNP, X, AKS, AMX, CAM, FLS, GME, GS, MA, NYX, SNDK, SWK, URE, BA, CRUS, ACN, AIV, ATI, CREE, DECK, DHR, DOW, FAS, STI, TIE, UAUA, UCO, USO, V, DLR, ICE, USD, PNC, SWN, ZION, UNG, VECO, WFMI, NETL, SKX, AMD, JEC, NTRI, ESI, BAC, MHS, WHR

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