"Beware the Ides of March..." Stocks, SPX Gap Lower and Reverse...

Inside Japan

I spoke with my son early hours this morning shortages are beginning to occur in basic supplies like food, water and gas with some malls and convenience stores closing due to lack of inventory.  Costco had food but was allowing only one case of bottled water for each carded member.  About one in ten gas stations are open and one station had a line about two miles long.  They have begun conserving energy both by turning lights and other electrical appliances off if not absolutely necessary and by the city turning the electricity off for a number of hours each day.

My son went to the Jr. High School he teaches at on Monday and they had to send the kids home because they did not have food for lunch.  On Tuesday they had only a half pint of milk and a roll (like a hot dog bun) for lunch.  Normally they have soup, salad, fish and rice.  Quite a contrast.

His school is within a mile from the coast line.  While he was there another smaller tsunami came within 400 yards of the school.  While the school was safe, some of his students’ homes did suffer some water damage but not destruction.

While they are safe, conditions are becoming more challenging.

Apparently the Japanese made another large infusion of $42 billion in their markets and Japanese are shares rebounding in Wednesday trading.

I alerted you, this morning, to not be surprised if big money became buyers after the extreme lower open.  I also mentioned Baron Rothschild’s quote “buy when blood is running in the streets.”  Both observations certainly applied today.


The SPX opened lower from a futures decline overnight, after Japanese markets moved down -11%.  The SPX did reverse the lower open and closed down -14.52 at 1,281.87.  This was after trading as low as 1,261.  Tuesday was a potential key reversal day.

(click image to enlarge)

SPX long tail black hammer, bounce at support, -1.12%

INDU long tail black candle, bounce at support, -1.15%

COMPQ large white candle, bounce at support, -1.25%

RUT long tail white hammer, bounce at support, -0.86%
Breadth weakened on Tuesday as decliners led advancers 3.71 to 1 on the NYSE and 3.07 to 1 on the NASDAQ …

Exchange       NYSE          NASDAQ

Advancers         644                663

Decliners        2,391              2,037

Index              Chg.    Close    Direction      Confirmation

VIX                +3.19       24.32     Up                 Yes – SPX

SOX               -5.38     421.79     Down            Yes – COMPQ

Leading stocks > +2% on Tuesday included LDK, TSL, FCX, FAZ, AKS, F, ATW 

Losing stocks < -2.0% included UCO, SLW, SINA, FAS, TIF, CRUS, MCP, VLO, FWLT, NETL, CLF, NVDA, TBT, CAN, IL, SNDK, DECK, A, VMW, NDAQ, ESI

Positives – Euro, NFLX, intraday price reversal, RUT relatively stronger, solar stocks FSLR, TSL, LDK

Negatives – SPX, VIX, SOX, TNX, breadth and sector weakness, AAPL, BIDU, bonds stronger

Interest rates moved lower on Tuesday and bond ETF TLT rose $1.37.  The Euro rose 7 pips to 1.3998 at 5 pm ET bouncing above its Feb 1 resistance, now new support.  Falling interest rates create a resistance for financial stocks and the SPX.

Eight of nine sectors fell on Tuesday with Materials XLB -0.00% and Energy XLE -0.75% leading all sectors.  XLB opened lower and closed unchanged led by FCX, AKS and MON.

Movers and Setups

Bull Flag Price Pattern – SWK, IL, GMCR, RVBD, SLW, HLF, HAS, A, WDC, SINA, CAM ATW, ICE, DLR, PCLN, BIIB, WYNN, CERN, CTXS, ADP, VRTX, DTV, GILD, SBUX, GRMN, QGEN

Breakout – NFLX, TLT, FAZ

Reversal Move Up – FCX, AKS, TSL, LDK, CMG, POT, MOS, MON, IPI, GES, CMG, SWKS, DE, CIEN, FSLR

SPX

Resistance: 1,281, 1,300, 1,311

Support: 1,271, 1,256, 1,241

The short term 3 day trend is down.
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 -8.13 – white candle closes below 30 DMA

AMZN -1.65 – white candle, -16.0% correction from Feb 14

NFLX +15.91 – large white candle, close above 30 DMA, -23.6% correction from Feb 14

QCOM -0.48 – large white candle, -16.2% correction from Mar 1

GOOG -0.43 – large white candle, -12.0% correction from Feb 18

BIDU -1.83 – white candle

NDX 100 stocks stronger than the NDX include FSLR, NFLX, BBBY, FFIV, GRMN, MU, WFMI, VRTX, ESRX, LRCX, NTAP and CEPH.

Stocks weaker than the NDX include YHOO, XRAY, INTC, ADBE, NVDA, PAYX, MXIM, ADSK, SYMC, LINTA, VOD, CSCO, SNDK, NWSA and CTXS.

Stocks to Watch on Wednesday

Holding Above 30 DMA
HUM, NTES, SWK, IL, DHR, ARUN, GMCR, RVBD, SLW, HLF, CMG, HAS, A, WDC, SINA, TLT, FAZ, CAM, VLO, NYX, SWN

Moving Above 30 DMA = 4

ATW, DLR, TSL, VECO

Moving Below 30 DMA = 5

CAT, ESI, JNPR, SOHU, UCO

Staying Below 30 DMA

BAC, ICE, TIF, URE, MCP, AMD, CHL, DECK, DOW, NDAQ, UNP, V, CLF, FAS, GLW, JDSU, NETL, PCX, TBT, ACN, AGU, CRUS, CSTR, SWKS, WLT, CIEN, DE, GES, IPI, MHS, MOS, POT, SLB, SMH, ATI, CF, AKS, CRM, LDK, SNDK, STI, FWLT, GS, JEC, LVS, NVDA, UAL, X, ZION, VMW, UNG, F, FCX

Intermediate Term Market Trend: Up
Short Term Market Trend: Down