SPX Pauses as NASDAQ and RUT Pull Back...

On Monday the SPX closed at 1,240.46 after trading as high 1,246, up +0.06 or +0.00%.  The COMPQ moved down -12.63, the INDU rose +18.24.  The RUT formed a dark cloud cover candle closing down -4.73.  All four indexes pulled back from their intra-day highs.

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Breadth weakened on Monday as decliners led advancers 1.10 to 1 on the NYSE and 1.48 to 1 on the NASDAQ…

Exchange       NYSE          NASDAQ

Advancers      1,444              1,068

Decliners        1,599              1,591

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Index Direction      Confirmation

VIX       Down           Yes – SPX

SOX     Down           Yes – COMPQ

Leading stocks on Monday included VECO, AKS, FCX, AMD, CAT, MA, CAM, CLF, SWN, UCO, SLB, X, VMW, V, ATW, GR, ATI, AGU, GS, PCP, SKX, SNDK, URE, ACN

Losing stocks included SOHU, NFLX, GMCR, TSL, CMG, CSTR, RVBD, SINA, TIE, UAL, CRM, MOS, ARUN, FFIV, DECK, HAS, LDK, CF, USD, CAKE, ZION, CREE, NTRI, BAC, PCLN, NETL, GES, NYX, F, LXK, GME, POT, DLR, RMBS, AKAM, STI, IPI, PNC, WFMI, HLF, SWK

Interest rates initially moved higher and closed slightly lower on Monday.  Bonds traded in a range and closed higher.  The SOX formed a bearish engulfing candle and dropped -0.84% closing at 413.20 on Monday.  The SOX is still a leading group at this time.  The VIX closed down -0.06 at 17.55.

Five of nine sectors moved higher on Monday with Energy XLE +0.85% and Materials XLB +0.54% leading all sectors.

The SPX stayed above its horizontal resistance while forming a potential shooting star pattern.

Both the RUT and SOX moved lower after reaching their measuring distance target on Friday from their Nov low.  The TRAN pulled back after reaching its 1.618 extension price target.  XLE, XLB and XLI each made a new high close.  XLY pulled back and formed a bearish engulfing candle.

The Euro formed a bullish engulfing pattern and broke out of Thursday’s high and ran to its horizontal resistance near 1.3430 before pulling back.  It is up 190 pips at 1.3391 around 5 pm ET.

I wrote on Friday, “If it breaks through Thursday’s high we see a chart target of 1.3732.  If it breaks through Thursday’s low, look for a move towards its recent bottom at 1.2966.” 

Since the Euro broke through Thursday’s high we expect it to move to its chart target of 1.3732.

This week is triple witching expiration.  Recent quarterly expiration cycles have exhibited a tendency for the SPX to rise on Monday and/or Tuesday.  The SPX did follow through continuation move up on Monday morning but sold off going into the close.

On Monday

Continuation – A, CRUS, DHR, DOW, FDX, NUE, NYX, ZION, SNDK

Horizontal Resistance Breakout – VECO, AKS, VMW, FCX, CLF, AMD, MA,

Bull Flag Bounce – STLD, X

MACD Divergence Bounce –

Break of Support – CMG,

Setup Charts to Watch

Bull Flag Setups – CRM, NTRI, ZION, BAC, GME, RVBD, SWK, ICE, SOHU, CSTR, RMBS, AIV, UCO, F, AKAM, ATI, PCP, UNG, PNC, RIMM, PCLN, NETL

Horizontal Breakout – X, STLD, WLT, HSY, ATW, GR, AMD, TBT, WHR, ESI, GS, V

Bear Flag Setups – GOOG

Horizontal Support Breakout - NFLX

Continue to trade with the up trend.

SPX

Resistance: 1,241, 1,256

Support: 1,220, 1,209, 1,200

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.

Wait to enter bearish trades for break of short term support or a bounce down from the 30 DMA.

The short term 3 day trend is up.
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 +1.11 – dark cloud cover-like new high close at resistance

AMZN -1.37 – black candle at support

NFLX -10.83 – large black candle falls to support

QCOM -0.36 – dark cloud cover at resistance

GOOG +2.41 – potential shooting star at resistance

BIDU +0.45 – inverted hammer at support

NDX 100 stocks stronger than the NDX include NTAP, ILMN, NIHD, JOYG, BBBY, APOL, VOD, ORCL, LIFE, SRCL, LRCX, INFY, GRMN, GENZ and SNDK.

Stocks weaker than the NDX: NFLX, EXPE, DELL, VMED, ADBE, URBN, FFIV, ROST, CTXS, NVDA, DISH, RIMM, MRVL, GILD and ISRG.

To be added on Dec 20.

Stocks to Watch on Tuesday
Holding Above 30 DMA
HLF, PCLN,  SINA, CAKE, CAM, UNP, WLT, ATW, SLB, NDAQ, USD, DECK, GR, VECO, CSTR, RVBD, WFMI, NFLX, BYI, MHS, NETL, FFIV, CAT, X, CREE, GES, HAS, UNG, CLF, CRM, INFA, VMW, SNDK, CRUS, AIV, ATI, PCP, SKX, FCX, FDX, AKS, A, AMD, DHR, DOW, FLS, GME, ICE, MA, PNC, TBT, UCO, DE, FAS, JEC, STI, SWK, WHR, ZION, ACN, BAC, GS, NYX, V, ESI, IPI
Moving Above 30 DMA = 0

Moving Below 30 DMA = 7

ARUN, CF, CMG, HSY, NTRI, RMBS, SOHU

Staying Below 30 DMA
AKAM, GMCR, MCD, SPG, HANS, SWN, URE, AGU, AMX, LVS, POT, TIE, UAL, FAZ, TLT, MOS, NTES, LDK, CHL, TSL, BA, LXK, DLR

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