SPX Rolls Over with Bearish Engulfing Pattern on Heavy Selling...

The SPX formed a bearish engulfing pattern after opening higher and selling off to close down -20.89 at 1,306.33 on Tuesday. Tuesday’s action was a key reversal day coming off a lower high creating a classic counter trend entry. In my AT Workshop we placed a counter-trend virtual trade on the SPY buying 50 contracts of the March quarterly 132 put on a conditional entry at 131.88. The order filled at 11:25:02 at 2.83 per contract. The closing price was 3.625 mark for a ROI of $3,975 or +29%.

SPX white candle, bull flag bounce
INDU white candle, bull flag bounce
COMPQ black spinning top, higher high and higher low
RUT black spinning top, higher high and higher low

Breadth weakened on Tuesday and turned negative as decliners led advancers 3.18 to 1 on the NYSE and 3.24 to 1 on the NASDAQ …

Exchange      NYSE     NASDAQ
Advancers        728           630
Decliners       2,316        2,045

Index      Chg.      Close      Direction      Confirmation
VIX         +2.66       21.01            Up                 Yes – SPX
SOX        -8.84     449.78           Down            Yes – COMPQ

Leading stocks > +2% on Tuesday included UCO, FAZ, SLW, MCP

Losing stocks < -2.0% included LCC, LVS, TIE, FAS, URE, ARUN, AIV, DECK, AKS, GLW, NVDA, CIEN, X, VLO, UAL, ATI, SWN, UNG, PCX, HLF, SNDK, WLT, A, SWKS, CREE, SKX, NDAQ, CRM, CF, CAT, UNP, ESI, WHR, DOW, SPG, PCP, HUM, BA, CLF, F, STI, BAC, FCX, LDK, FDX, VMW, CAM, VECO, DHR, NETL, ZION, RVBD, PNC, HANS, CSTR, SLB, TIF, LXK, AMD, JNPR

Positives – Euro

Negatives – SPX, VIX, INDU, COMPQ, RUT, AAPL, AMZN, BIDU, GOOG, QCOM, breadth weakened, sectors weakened

Upward momentum collapsed on Tuesday as selling pressure increased after opening higher on overnight futures trading. A review of the large number of stocks losing more than 2% reveals the breadth of the selling pressure.

Interest rates closed unchanged on Tuesday and bond ETF TLT was down 3 cents. The Euro closed down 30 pips to 1.3775 at 5 pm ET.

All nine sectors fell on Tuesday with Materials XLB -2.46% and Financials XLF -2.14% the weakest sectors.


SPX
Resistance: 1,311, 1,321, 1,330
Support: 1,300, 1,281, 1,271

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 -3.90 – bearish engulfing, lower high
AMZN -3.85 – large black candle
NFLX -2.04 – black hammer at earnings gap support
QCOM -1.54 – bearish engulfing from new high
GOOG -12.64 – bearish engulfing at horizontal support
BIDU -3.33 – black candle from lower high

NDX 100 stocks stronger than the NDX include BIIB, WYNN, AMGN, CERN, RIMM, GENZ, CSCO and FSLR

Stocks weaker than the NDX include NVDA, FFIV, ILMN, ORCL, SNDK, EBAY, SYMC,WFMI, STX, NIHD, VMED, CTSH, SRCL, MXIM and BIDU

Stocks to Watch on Wednesday
Holding Above 30 DMA
NDAQ, VLO, CLF, JDSU, CRUS, GLW, NYX, URE, DISH, DLR, HUM, NTES, CAM, SLB, SPG, CAT, NETL, SOHU, ATW, SWK, ICE, JNPR, AMD, DHR, ARUN, CIEN, HSY, DECK, GMCR, GES, RVBD, SLW, ESI, HLF, TLT, MOS, SWKS, AGU, HANS, IPI, POT
Moving Above 30 DMA = 2
FAZ, MCP
Moving Below 30 DMA = 16
AIV, AKS, ATI, BA, CF, CMG, DOW, FAS, GES, HAS, SMH, SWN, TIF, UNP, V, VECO
Staying Below 30 DMA
ACN, CRM, CSTR, LDK, MA, SNDK, STI, TSL, TIE, A, BAC, DE, FDX, FWLT, GS, JEC, LVS, LXK, MHS, NVDA, PCP, PNC, TBT, UAL, X, PCX, SINA, SKX, WLT, ZION, VMW, UNG, WHR, F, LCC, CHL, FCX, CREE, GME, UCO

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