SPX Pulls Back on Light Volume in Half Day of Trading...

On Friday the SPX retraced 50% of Wednesday’s move up in holiday shortened light volume trading.  The SPX closed at 1,189, down -8.95 or -0.75%, the COMPQ moved down -8.56, the INDU fell -95.28 and the RUT closed -3.80 on Friday finding support at Wednesday’s S1 level.

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Breadth weakened from Friday as decliners led advancers 2.1 to 1 on the NYSE and 1.72 to 1 on the NASDAQ…

Exchange       NYSE          NASDAQ

Advancers         923                920

Decliners        1,944              1,586

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Index Direction      Confirmation

VIX       Up                Yes – SPX

SOX     Down            Yes – COMPQ

Leading stocks on Friday included GMCR, FAZ, CMG, FFIV, NFLX, GES, DECK, TLT, F, AKAM, GME, RMBS, HANS, ARUN, X, CRM, TSL

Losing stocks included FAS, FCX, TBT, TIE, CREE, CAM, JEC, AKS, ATI, LVS, STI, VECO, SKX, NTRI, SLB, NETL, LXK, CF, SPG, IPI, BAC, AMX, GS, UAL, DOW, MCD, LDK, SWN, USO, MA, FDX, ICE, PNC, WHR, BA, CLF, AMD, FLS

Interest rates moved lower, bonds moved up, the Euro moved lower and the SOX closed lower -0.67% making a return move to its horizontal breakout on Wednesday.  The SOX is a leading group at this time.  The VIX moved up +2.66 to close at 22.22.

As expected the SPY did have its lightest volume, 76 million shares, of the year in the half day on trading on Friday.  It was the first time in 2010 that SPY traded less than 100 million shares.

All nine sectors moved lower on Friday resembling Tuesday’s sell off with Materials XLB -1.69% and Financials XLF -1.44% leading all sectors lower.

The SPX has been in consolidation for three weeks following a 186 point rise over 10 weeks.  The SPX retraced 54 points or 29% making its recent support low on Nov 16.  Over the past two weeks the SPX has traded in a tight 27 point trading range.

Consolidation is generally a trend continuation pattern.  So if the support low of Nov 16 is NOT broken look for this consolidation to ultimately resolve to the upside.

During the consolidation of the past two weeks the market has become more selective with the small cap RUT, semiconductors SOX and Consumer Discretionary XLY performing relatively stronger.  Individual stocks from our watch list like CMG, DECK, CSTR, RVBD, CRM, CAKE NFLX, FFIV, AMZN, SNDK WLT, GES, SLB, GR, VECO, INFA, ALTR, NVDA, BRCM, USD, JOYG, CTXS, ROST, URBN, SPLS and MAT have also been relatively stronger.

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Dave's Insight: To trade an up trend focus on those stocks that institutions are buying and causing to be relatively stronger.

The big seven were mixed in the half day of trading on Friday with AAPL, BIDU and NFLX up, AMZN, PCLN and QCOM down slightly and only GOOG moving down $4.97.  All are above their 10 DMA and 30 DMA except GOOG.

NFLX made another new all-time high.

Continue to trade with the up trend and simultaneously be prepared for any break of support.

SPX

Resistance: 1,200, 1,209, 1,220

Support: 1,190, 1,182, 1,170

Enter bullish trades with a bounce off support and a break above the high of the low day or a break out of horizontal resistance.  Thursday was an entry signal for many stocks.

Look for break of short term support for bearish entry signals or a bounce down from the 30 DMA.

The short term 3 day trend is neutral.
The two-month trend is up.
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 +0.20 – potential shooting star close above 30 DMA

AMZN -0.05 – doji

QCOM -0.37 – spinning top in consolidation

GOOG -4.97 – doji in consolidation at horizontal support

BIDU +0.37 – white candle above 30 DMA

NDX 100 stocks stronger than the NDX include VRTX, ADBE, MAT, TEVA, EXPE, BIDU, CTSH, INFY, ATVI, URBN, CTXS, CSCO, ROST, AAPL and DTV.

Stocks weaker than the NDX: JOYG, MICC, GILD, DISH, DELL, SRCL, WCRX, ALTR, SPLS, STX, CA, LRCX, CTAS, NVDA and SYMC.

Stocks to Watch on Monday
Holding Above 30 DMA
HLF, PCLN,  LVS, CMG, SINA, CAKE, CAM, UNP, WLT, A, ATW, SLB, NDAQ, USD, DECK, GR, VECO, CSTR, RVBD, TBT, WFMI, NFLX, BYI, MHS, NETL, FFIV, SWN, CAT, GME, NTRI, X, CREE, BUCY, GES, HAS, MCD, UNG, ARUN, CLF, CRM, INFA, UAL, VMW, HANS, RMBS, SNDK, CRUS, FAZ, GMCR, CF, AIV, AKAM, AMD, ATI, DHR, DOW, MOS, PCP, POT, SKX, SPG
Moving Above 30 DMA = 0

Moving Below 30 DMA = 4

AMX, FCX, FDX, FLS

Staying Below 30 DMA
AKS, DE, ESI, MA, PNC, GS, ICE, JEC, NTES, FAS, IPI, LDK, UCO, ZION, AGU, BAC, URE, V, ACN, CHL, NYX, STI, SWK, TSL, BA, HSY, WHR, LXK, TIE, TLT, DLR

Intermediate Term Market Trend: Up – 2 months
Short Term Market Trend: Neutral