Bear Flag Entry Appears Early and Then Disappears By the Close...

The SPX pulled back and reversed on Wednesday failing to confirm Tuesday’s potential bearish harami and formed a hammer.  The SPX closed up +3.77 at 1,297.54.  The INDU and RUT closed just below their 30 DMA. 

SPX hammer, +0.29%

INDU white candle, +0.56%

COMPQ white candle, +0.54%

RUT hammer, +0.32%

Breadth strengthened on Wednesday as advancers led decliners 1.22 to 1 on the NYSE and 1.14 to 1 on the NASDAQ …

Exchange       NYSE          NASDAQ

Advancers      1,645             1,405

Decliners        1,338             1,223

Index               Chg.    Close    Direction      Confirmation

VIX                  -1.04      19.17     Down            Yes – SPX

SOX               +4.03    426.94     Up                 Yes – COMPQ

Leading stocks > +2% on Wednesday included SLW, FCX, SINA, PCX, RVBD, SOHU, AMD, NETL, VLO, CIEN, JNPR, WLT, LVS, CF, TSL, CLF, NVDA

Losing stocks < -2.0% included ZION, MHS

Positives – SPX, VIX, INDU, COMPQ, RUT, breadth and sectors strengthened, BIDU, NFLX, PCLN, AMZN

Negatives – Euro, Euro

Interest rates TNX closed slightly higher on Wednesday and bond ETF TLT fell 12 cents.  The Euro fell 107 pips to 1.4085 at 5 pm.

Six of nine sectors moved higher on Wednesday with Materials XLB +1.45% and Consumer Discretionary XLY +0.87% the strongest sectors.

Downside potential! It started Wednesday morning and then was gone by the close. 

The SPX, INDU and RUT closed just above old support, new resistance, which is now support once again which is neutral.  The VIX moved lower which is positive.

Follow your rules.  Be prepared for a potential move higher on Thursday if the reversal that started on Wednesday continues.  It is easier when markets just trend in one direction, just keep in mind this is a market consolidation.

Movers and Setups

Bull Flag Signals – PCLN, SBUX

Breakout Resistance Signals – FCX, BIDU, HANS, IBM

Bull Flag Setup – CAT, IL

Breakout Resistance Setup – IBN, PCX, WLT, LRCX, MICC, CTXS, GILD, FSLR, ESRX, SINA, AAPL, SOHU, HUM, ARUN, HLF, SLW, DHR, NTES, VLO

SPX

Resistance: 1,300, 1,311, 1,321

Support: 1,288, 1,281, 1,271

The short term 3 day trend is up.
The six-month trend is up.
The twelve-month trend is up.

Trade with the trend of the chart you are trading.

Bullish entry signal is a bounce off support and a break above the high of the low day or a break out of horizontal resistance.

Bearish entry signal is a break of short term support or a bounce down from the 30 DMA or other resistance.

AAPL -2.01 –doji, -9.8% correction from Mar 7

AMZN +2.72 – white spinning top, -16.1% correction from Feb 14

NFLX +7.67 – large white candle breakout, -23.6% correction from Feb 14

QCOM -0.03 – dragonfly doji, -16.2% correction from Mar 1

GOOG +4.84 – white candle, -12.6% correction from Feb 18

BIDU +5.49 – large white candle breakout horizontal resistance

NDX 100 stocks stronger than the NDX include SBUX, FFIV, BIDU, LRCX, NFLX, ALTR, INFY, MU, DELL, PCLN, TEVA, GILD, WYNN, MRVL and NVDA.

Stocks weaker than the NDX include ADBE, YHOO, FLIR, HSIC, CTRP, ISRG, VMED, COST, VOD, CHKP, AAPL, CEPH, SPLS, RIMM and MYL.

Stocks to Watch on Thursday

Holding Above 30 DMA
HUM, ARUN, GMCR, HLF, HAS, SINA, TLT, FAZ, SWN, UCO, CAT, CSTR, UNG, WDC, SLW, SWK, ATW, DHR, FCX, IL, NTES, VECO, VLO, MCP

Moving Above 30 DMA = 6

A, CLF, DE, ICE, PCX, WLT

Moving Below 30 DMA = 1

CAM

Staying Below 30 DMA

UNP, URE, TSL, CMG, DLR, NYX, RVBD, ESI, JNPR, SOHU, BAC, TIF, AMD, CHL, DECK, DOW, NDAQ, V, FAS, GLW, JDSU, NETL, TBT, ACN, AGU, CRUS, SWKS, CIEN, GES, IPI, MHS, MOS, POT, SLB, SMH, ATI, CF, AKS, CRM, LDK, SNDK, STI, FWLT, GS, JEC, LVS, NVDA, UAL, X, ZION, VMW, F

Eight Week Term Market Trend: Neutral
Short Term Market Trend: Neutral