SPX Opens Lower...Breaks Support...

DJIA           10,378.83    -265.42   -2.49%
SP500           1,089.47      -31.59   -2.82%
COMPQ        2,208.63      -68.54   -3.01%
Russell 2000    620.39      -25.97   -4.02%


Exchange     NYSE     NASD
Advancing       439         293
Declining      2,645      2,381

SOX      330.06     -14.68
VIX          25.39     +3.02

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

Leading stocks on Wednesday included FAZ, NFLX, UNG

Weakest stocks on Wednesday included VECO, CREE, FAS, CRUS, ATI, TIE, USD, UAUA, AKS, ZION, SNDK, UCO, STI, FFIV, SWN, ATW, NETL, LVS, BUCY, WLT, X, CLF

Dave will sub in Virtual Coaching Options on Thursday at 11 am MT (1 pm ET) for two hours.  Bring your questions on this week's market action...

Stocks survived a weaker than expected jobs report on Friday and a weaker than expected productivity report on Tuesday, but it did survive indications of slowing growth in China. It was a miniature version of the China drop on February 27, 2007 when slowing China growth trigged a massive sell off.

In classic technical fashion the SPX broke short term support and fell to 1,100 and then broke and fell to the 1,185 support area. 1,071 and 1,056 next support levels if the 1,085 does not hold. The SPX, DJIA and NDX held just above the July 30 low, while the RUT broke its July 30 low.

This is the reason I encourage you to stay mentally flexible and realize that on average a 30% probability will occur three times out of ten. Today was the 30% probability becoming the reality. If you weren’t prepared you didn’t pay close enough attention to my comments this week to be prepared if prices rolled over.

On Wednesday, the intermediate term trend (sideways at resistance) won out over the short term up trend, as price turned back into the middle of the sideways trend on increased volume.

The long term trend is still up and the intermediate term trend is still sideways. Stay with the new short term down trend until it finds support.

NFLX +1.17%, managed to rise again notwithstanding volatile trading in the stock. QCOM and MSFT formed white candles on modest pull backs. CREE -13.27%, was crushed after reported better than expected earnings, with lower revenue and higher earnings guidance.

The VIX did confirm Wednesday’s lower close. Breadth was weaker as Decliners led Advancers 6 to 1 on the NYSE.

Stay focused on and trade according to the chart.

Guidance:
SPX
Resistance: 1,100, 1,115,
Support: 1,086, 1,071, 1,056

Wait, to enter new bullish trades, until stocks break above the high of the low day.

Wednesday provided a large number of stocks that broke below of the low of the high day with bearish entries.

The VIX rose +3.02 and closed at 25.39 moving above the important 25 level and confirming a change in the short term trend.

The short term 3 day trend is down.
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 -9.22 – large black candle breaking support
QCOM -0.42 – white hammer in bull flag
GOOG -11.97 - black candle forming bull flag
BIDU -3.64 – black candle forming bull flag
NDX 100 stocks stronger than the NDX include: STX, RIMM, CERN, ATVI, HSIC, MSFT, ILMN, QCOM, ORLY and NTAP.

Stocks weaker than the NDX: RYAAY, LOGI, STLD, BRCM, LINTA, GRMN, KLAC, FWLT, JOYG, WYNN, EXPE, PCAR, FAST, BIDU and JBHT.

Stocks to Watch on Thursday
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, WLT, WMT, X, SWK, ACN, BA, CHL, CLF, FFIV, GR, LVS, SPG, UNP, URE, CMG, HAS, NYX, LXK, USO, SNDK, MA, NFLX, DOW, V
Moving Above 30 DMA = 0

Moving Below 30 DMA = 12
A, AIV, AMX, ATI, CSTR, DECK, DHR, FAS, RMBS, STI, UAUA, UCO
Staying Below 30 DMA
DLR, ICE, USD, PNC, SWN, ZION, UNG, VECO, WFMI, NETL, SKX, AMD, BYI, JEC, NTRI, FAZ, ESI, HSY, BAC, MHS, WHR

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