SPX Flat and COMPQ Closes Slightly Higher...NFLX Flag Entry...

The SPX closed near unchanged +0.02 or +0.00% on Tuesday forming a potential hanging man candle at resistance that did not confirm Monday’s shooting star…

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Selectivity again ruled stocks as stocks like COH, MOS, NFLX, GRMN and RIMM had large gains and stocks like LXK, VECO, AKS and X moved lower. The COMPQ slowed to a gain of +0.26% but still ahead of the SPX. Decliners led advancers 1.17 to 1 on the NYSE…

Exchange     NYSE    NASDAQ
Advancers     1,377       1,310
Decliners       1,616       1,345

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

Leading stocks on Tuesday included NFLX, MOS, LVS, IPI, CMG, DECK, TBT, CF, UAL, RVBD, ATI, FCX, CAM, GMCR, VOD, FFIV, NTRI, AGU, UNG, POT, BAC, TIE, GME, SLB, SKX, UCO, PCLN, BYI, NTES, INFA, GS, RMBS, NETL

Losing stocks included LXK, VECO, AKS, X, BUCY, VMW, ICE, SWN, CSTR, WLT, SINA, TLT, PCP, SOHU, URE, CLF, CRUS, SWK, GES, DE, CAN, FLS, DLR

Interest rates moved higher, bonds fell, the EURO was lower, the SOX closed lower and the VIX rose +0.37 at 20.22.

Four of nine sectors moved higher on Tuesday with Consumer Discretionary +0.43% and Technology XLK +0.25% leading all sectors. Financials XLF +0.14% rose on rising interest rates and weaker bonds.

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In our Monday night webcast we placed three virtual trades. NFLX to buy 10 Dec 185 calls if the stock rose above 170.10, RIMM to buy 20 Nov 50 calls if the stock pulled back to 51.10 and INFY to buy 30 Nov 67.50 puts if the stock moved below 67.11.
 
RIMM did not pull back so the RIMM did not fill. NFLX did rise above the entry level and we bought 10 Dec 185 calls at 5.65. The options closed at 9.675 for a profit of 4,025 or 71% of unrealized gain the first day. INFY Nov 67.50 puts filled at 1.90 and the option closed at 1.875 for an unrealized loss of -75.00 on the first day.

How many of you also placed a virtual trade on NFLX?  It was the only one of 11 up trending stocks that I showed Monday night that had a flag setup. The other 10 stocks were making new highs.

How many people saw me do the paper trade order and thought, “it’s not going to bounce so I’m not going to waste my time practicing this virtual trade?”

Dave’s Insight: Do you want to change the results you get? Then you need to stop failing to practice because of what you think and start practicing because it is a valid setup, not because you know it will bounce.

SPX
Resistance: 1,182, 1,190, 2,000
Support: 1,170, 1,148, 1,130

Enter bullish trades with a bounce off support (like NFLX on Tuesday) and a break above the high of the low day or a break out of horizontal resistance.

Tuesday moved below the low of the high day but did not close below. As a result we maintain our Yellow Alert for Wednesday looking for a close below the low of the high day. As I said in Monday night’s webcast a move below the low of the high day does not necessarily signal a major retracement, but it does signal at least a short term pull back.

A break and/or close below the low of the high day can be a potential exit for short bullish trades. Entry for a bearish signal can be a close below of the low of the high day for a counter trend trade or the same entry on a down trending stock.

The short term 3 day trend is neutral.
The three-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 -0.79 – white spinning top confirms Monday’s shooting star
QCOM -0.39 – hammer
GOOG +2.10 –white spinning top does not confirm potential shooting star
BIDU +2.47 – large white candle does not confirm potential hanging man

NDX 100 stocks stronger than the NDX include GRMN, RIMM, STX, FWLT, EBAY, CTXS, MSFT, BIDU, LINTA, URBN, WYNN, MICC, NIHD, APOL, DISH and WCRX.

Stocks weaker than the NDX: KLAC, CTAS, SPLS, LOGI, JOYG, DELL, CERN, AMGN, STLD, CHRW, EXPE, LRCX, CSCO, QCOM and BRCM.

Stocks to Watch on Wednesday
Holding Above 30 DMA
HLF, PCLN, AGU, MCD, LVS, CMG, FCX, SINA, VOD, AIV, CAKE, CAM, DE, DHR, DOW, UNP, URE, WLT, A, HAS, IPI, JEC, CAT, ICE, FLS, ATW, SLB, ACN, AMX, GES, NDAQ, UAL, USD, MA, HSY, FDX, NTRI, AMD, V, ATI, BA, DECK, GR, UCO, WHR, CF, GS, SPG, HANS, MOS, VECO, CSTR, RVBD, TBT, WFMI, NYX, ZION, FAS, NFLX, NTES, PCP, PNC, BYI, INFA, MHS, NETL, SKX, CRM, FFIV
Moving Above 30 DMA = 2
GMCR, POT
Moving Below 30 DMA = 3
LXK, CLF, SWN
Staying Below 30 DMA
CHL, STI, SNDK, SWK, CREE, AKS, TIE, FAZ, RMBS, TSL, ESI, BAC, GME, CRUS, X, TLT, DLR, VMW, UNG

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