SPX Rises in Consolidation...

Counter trend trading?  See Monday morning's post...

The SPX on Tuesday reversed Monday’s sell off rising +11.69 and to close at 1,321.82.  The SPX continues its short term consolidation or sideways pattern in place since last Tuesday.  Still looking similar to the November consolidation which lasted 16 days, Tuesday marks the twelfth day since the SPX peak on Feb 18.

(click image to enlarge)

SPX large white candle, +0.89%

INDU large white candle, +1.03%

COMPQ large white candle, +0.73%

RUT large white candle, +1.53%

Tuesday’s trading action had strong breadth and sector participation, but did not include any of the major NDX leaders and the SOX barely rose.  In fact NFLX was particularly weak.  This is why the COMPQ was the weaker of the indexes on Tuesday.

If you read Saturday’s post for the Friday close I wrote about the Euro, the SPX and financial stocks.  Well the Euro was weak today and financial stocks were strong.  For the SPX to break out of its current consolidation, financial stocks will need to continue to be strong.

Last night in my AT Trading Room, I did a virtual trade on ICE.  The initial entry failed and the stop worked as price moved 5 cents below the stop early in the morning and then 7 cents below later in the morning.  My trading instinct, before it was stopped, was to move the stop lower because ICE was falling on very low, only tens of thousands of shares, volume.  I did not in the virtual account because I wanted to have a great learning lesson for either Thursday or next Monday’s trading room.  I let it stop out, but will give you my trading insights and lessons in one of those sessions.

Breadth strengthened on Tuesday as advancers led decliners 3.13 to 1 on the NYSE and 2.54 to 1 on the NASDAQ …

Exchange       NYSE          NASDAQ

Advancers      2,290             1,916

Decliners           731                 752

Index              Chg.    Close    Direction      Confirmation

VIX                 -0.84      19.80     Down            Yes – SPX

SOX              +0.59     447.94     Up                 Yes – COMPQ

Downward momentum slowed on Tuesday for the Semiconductor group which was downgraded Monday.  The SOX formed an inside day as STM and MRVL rose more than +2% and AMD, TER, TSM, LLTC, KLAC and TXM each rose more than +1%.

Leading stocks > +2% on Tuesday included SINA, UAL FAS, BAC, WDC, MCP, STI, HLF, SOHU, F, SWK, ZION, DOW, URE, DHR, X 

Losing stocks < -2.0% included FAZ, CSTR, NVDA, ARUN, VLO, ICE

Positives – SPX, VIX, INDU, COMPQ, RUT, breadth, sectors, TNX, TLT

Negatives – Euro, NFLX

Interest rates moved higher on Tuesday and bond ETF TLT fell 55 cents.  The Euro dropped 63 pips to 1.3904 at 5 pm ET continuing just above its Feb 1 horizontal resistance, now support.  The Euro breakout signals a multi-week price target of 1.4296.

Eight of nine sectors rose on Tuesday with Financials XLF +2.19% and Industrials XLI +1.56% leading all sectors.  Only Energy XLE -0.82% moved lower.

Movers and Setups

Breakouts

SINA, BAC, SWK, UNP, CHL, TBT, WHR, PNC

(click image to enlarge)

Bounces and Setups for Bounce and Breakout

UAL, FAS, WDC, HLF, STI, SOHU, F, ZION, DOW, URE, DHR, X, CAT, PCX, AMD, VECO, GS, IPI, RVBD, DE, TIF, JEC, CLF, NTES, NETL, ATI, FW

SPX

Resistance: 1,321, 1,330, 1,344

Support: 1,311, 1,300, 1,281

The short term 3 day trend is neutral.
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 +0.40 – inside day white spinning top

AMZN -2.19 – inside day black candle new low close

NFLX -11.95 – gap down black candle new low close

QCOM -0.43 – white hammer at 30 DMA

GOOG +0.65 – inside day, bullish harami

BIDU +0.00 – inside day, white spinning top

NDX 100 stocks stronger than the NDX include CEPH, SRCL, INFY, EXPD, WCRX, STX, EXPE, CTSH, MRVL, DLTR, VRSN, ORCL, DTV, COST and LRCX.

Stocks weaker than the NDX include URBN, NFLX, VRTX, NVDA, APOL, AMZN, MU, AMAT, GRMN, QCOM, XLNX, BBBY, ILMN, ESRX and INTC.

Stocks to Watch on Wednesday

Holding Above 30 DMA
NDAQ, VLO, CLF, JDSU, GLW, DLR, HUM, NTES, CAM, CAT, NETL, ATW, SWK, IL, ICE, JNPR, AMD, DHR,  ARUN, DECK, GMCR, RVBD, SLW, ESI, HLF, UCO, CMG, HAS, V, VECO, A, DOW, TIF, WLT, WDC

Moving Above 30 DMA = 9

BAC, CHL, FAS, MCP, PCX, SINA, TBT, UNP, URE

Moving Below 30 DMA = 8

ACN, AGU, CRUS, CSTR, FAZ, NYX, SWKS, TLT

Staying Below 30 DMA

CIEN, DE. GES, IPI, MHS, MOS, POT, SLB, SMH, SOHU, ATI, CF, AKS, SWN, CRM, LDK, SNDK, STI, TSL, FWLT, GS, JEC, LVS, NVDA, UAL, X, ZION, VMW, UNG, F, FCX

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