Uncertainty in Japan Sends SPX Lower Again...

If you have been listening to me anytime over the past six years, you have heard me say before that big money likes consistency and predictability and they do not like uncertainty and negative surprises.

Right now the U.S. stock is going down not because the economy is not doing well and not because big money thinks the economy is going to get worse.  It is going down because there are more sellers than buyers due in large part to the uncertainty of the nuclear reactor situations and the uncertainty of the outcome.  Will they be able to cool down the rods and avoid a global disaster or will they fail and a global disaster is lurking just around the corner?

Can you see why they might be reducing exposure to stocks?

What do you think would happen if they find a solution and get the reactors and rods cooled down?

Do you think that removes a major element of uncertainty?

A report out late today is that they are close to completing a new power line to the plant which could restart the cooling system and resolve the critical aspect of the crisis.

Now anyone who reads Chart Signals knows that it’s all about the technical analysis not the news.  So here it is…from Feb 24 to Mar 10 the SPX traded between a range of 1,294 and 1,332, with a break of support the Chart Signals price target is 1,256. 

The SPX closed down -24.99 at 1,256.88. 

It gets even better than that… from Feb 24 to Mar 10 the ES June futures contract traded between a range of 1,287 and 1,331, with a break of support the Chart Signals price target is 1,243.

Today, the ES hit 1,243 just after 2 pm EDT and then rallied…most people don’t believe technicals to begin with and then there are the so called technicians that abandon what the charts say as soon as news comes along that they don’t understand because it seems so uncertain.  At least you have an edge from knowing that buyers come in at a level for a logical reason…the price target has been reached.

Reaching these targets don’t mean the markets can go lower with new negative information.  Remember price action factors in everything…however, if no new negative developments occur, what might be possible?  

Also, we now know that Tuesday was not a key reversal day.

SPX large black candle, -1.95%

INDU large black candle, -2.04%

COMPQ large black candle, -1.89%

RUT large black candle, inside day, -1.19%

Breadth was marginally stronger on Wednesday as decliners led advancers 3.37 to 1 on the NYSE and 2.58 to 1 on the NASDAQ …

Exchange       NYSE          NASDAQ

Advancers         698                740

Decliners        2,355              1,910

Index              Chg.    Close    Direction      Confirmation

VIX                +5.08       29.40     Up                 Yes – SPX

SOX               -9.38     412.44     Down            Yes – COMPQ

Leading stocks > +2% on Wednesday included FAZ, GMCR, SWN, NETL 

Losing stocks < -2.0% included LDK, NDAQ, NTES, MHS, FAS, ATI, CHL, SNDK, ATW, CRUS, A, F, UAL, SLW, RVBD, CAM, URE, NYX, GLW, SWKS, WDC, CLF, TIF,SMH, TBT, IPI, SOHU, JEC, FCX, DOW, CAN, ZION, SWK, DHR, SLB

Positives – Euro bounced at support, RUT relatively stronger, AMZN, GMCR rose

Negatives – SPX, VIX, INDU, COMPQ, NDX, RUT, SOX, TNX, sector weakness, AAPL, GOOG, QCOM, bonds stronger, financials weakness

Interest rates TNX fell to 3.212% its lowest close since Dec 7.  Bond ETF TLT rose $1.05.  The Euro fell 101 pips to 1.3897 at 5 pm ET bouncing at its Feb 1 resistance, now new support.  Falling interest rates create a resistance for financial stocks and the SPX.

All nine sectors fell on Wednesday with Technology XLK -2.44% and Materials XLB -2.01% the weakest. XLP Consumer Staples -1.43% was the strongest sector.

Movers and Setups

These stocks held made a higher low on Wednesday…

Bull Flag Price Pattern – IL, GMCR, RVBD, HLF, WDC, SINA, CAM ATW, ICE, DLR, SBUX, GRMN

Breakout – NFLX, TLT, FAZ

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

These flags made a lower low on Wednesday – SWK, SLW, HAS, A, PCLN, BIIB, WYNN, CERN, CTXS, ADP, VRTX, DTV, GILD, QGEN

SPX

Resistance: 1,271, 1,281, 1,300

Support: 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 -15.42 – large black candle hits 326 support. -9.8% correction from Mar 7

AMZN -0.38 – doji makes higher low, higher high, -16.0% correction from Feb 14

NFLX -3.27 – dark cloud cover, close below 30 DMA, -23.6% correction from Feb 14

QCOM -2.50 – large black candle inside day, -16.2% correction from Mar 1

GOOG -12.46 – large candle candle, -12.0% correction from Feb 18

BIDU -1.67 – black candle in trading range

NDX 100 stocks stronger than the NDX include ALTR, XLNX, WCRX, WFMI, NTAP, DLTR, MCHP, GILD, GENZ and AMZN.

Stocks weaker than the NDX include QCOM, AAPL, MXIM, SNDK, VOD, FFIV, MU, WYNN, CTRP, ATVI, DELL, CHKP, VRTX, LIFE and ORCL.

Stocks to Watch on Thursday

Holding Above 30 DMA
HUM, IL, ARUN, GMCR, HLF, CMG, HAS, SINA, TLT, FAZ, NYX, SWN, DLR, TSL

Moving Above 30 DMA = 0

Moving Below 30 DMA = 11

A, ATW, CAM, DHR, NTES, RVBD, SLW, SWK, VECO, VLO, WDC

Staying Below 30 DMA

CAT, ESI, JNPR, SOHU, UCO, 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

3 ½ Week Term Market Trend: Down
Short Term Market Trend: Down