SPX Makes Higher Low, Higher High, Forms Inverted Hammer on Friday...

The SPX rose +3.86 to close at 1,271.50 while making a higher low and higher high and forming an Inverted Hammer.  On the weekly chart the SPX formed a doji and closed higher for the first time in six weeks.

In the Weekly Wrap on Friday, Scott brought up the idea of perspective.  In the past I have shared many of the perspectives that I have found to be effective.  One that I have spoken about recently is that bullish and bearish are opinions.  I prefer to think in terms of direction up and down.  I find that perspective more useful.

I also have the perspective of looking at the chart objectively for what it shows on the net buying and selling of those creating the directions.  The objective of the Weekly Wrap is short term by focusing on the week just completed and the week ahead. 

Sometimes traders can look so closely at the tree (short term) that they lose sight of the forest (intermediate and long term).

As I mentioned two weeks ago we are in the time frame between earnings and it is unlikely that we will see any catalyst strong enough to drive the market significantly higher.  The next earnings season doesn’t start until July 11, a full three weeks from now.  Also falling financial stocks make it even harder for the SPX to rise.

Over the past seven weeks since the last earnings season the SPX has had three strong down weeks and four range bound weeks including this past week which was the first week of the last seven to end the week positive.

Let’s take a look at the 3 month, six month, 9 month weekly and two year plus monthly charts.  While it is true that the SPX has been down trending over the past seven week what do you see in the intermediate and long term direction?

What do you see in the 9 month weekly chart?

What do you see in the two year plus monthly chart?

(click image to enlarge)

SPX inverted hammer confirmed bullish harami, below 30 DMA +0.30%

INDU inverted hammer confirmed piercing line, below 30 DMA +0.36%

COMPQ large black candle, below 30 DMA -0.28%

RUT spinning top confirmed bullish harami, below 30 DMA +0.03%

Breadth strengthened as advancers led decliners 1.69 to 1 on the NYSE and 1.05 to 1 on the NASDAQ …

Exchange       NYSE        NASDAQ

Advancers      1,898            1,371

Decliners        1,121            1,299

Index              Chg.    Close    Direction    Confirmation

VIX                 -0.88     21.85      Down           Yes – SPX

SOX                -5.66   388.21      Down           Yes – COMPQ

Leading stocks > +2% on Friday included UAL, ZION, STI, TPX, KKD, ANF, FAS

Losing stocks < -2.0% included LDK, FWLT, CF, UCO, SINA, MOS, CREE, IL, VECO, SNDK, CIEN, PCX, FFIV, FAZ, NVDA, AGU, WDC, ESI, NGLS, SOHU

Positives – SPX, VIX, INDU, Euro, TNX, breadth and sectors strengthened

AMZN, BIDU

Negatives – COMPQ, NDX, XLE, XLB, XLK, SOX, AAPL, GOOG, NFLX, QCOM

Seven of nine sectors moved higher on Friday.  Financials XLF +0.91% and Consumer Discretionary XLY +0.75% were the strongest sectors.

Bond ETF TLT moved down -46 cents.  Financials XLF moved up 8 cents.  The Euro moved up 100 pips to close at 1.4302 at 5 pm on Friday.

Stocks to Watch on Monday...

(click image to enlarge)

(click image to enlarge)

SPX

Resistance: 1,278, 1,288, 1,300

Support: 1,267, 1,257, 1,249

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 -4.90– large black candle, below 30 DMA

AMZN +2.72 – spinning top, below 30 DMA

BIDU +1.44 – bullish harami, below 30 DMA

GOOG -15.35 – large black candle, below 30 DMA

NFLX -3.63 – black candle, inside day, close below 30 DMA

PCLN +0.64 – bullish harami, inside day, below 30 DMA

QCOM -0.30 – large black candle, below 30 DMA

NDX 100 stocks stronger than the NDX include SHLD, PCAR, CTSH, FSLR, GRMN, SPLS, URBN, AMZN, ORLY, BIIB, MAT, EBAY, ORCL and BIDU.

Stocks weaker than the NDX include RIMM, FLEX, MRVL, SNDK, GOOG, FFIV, NVDA, STX, LRCX, CTXS, ATVI, ADSK, BBBY, APOL and AAPL.

Stocks to Watch on Monday

Holding Above 30 DMA

TIF, KKD, FAZ, ESI, CROX, GMCR, TLT

Moving Above 30 DMA = 1

ZION

Moving Below 30 DMA = 0

Staying Below 30 DMA

AKS, CF, HLF, NGLS, UNG, ACN, AGU, CHL, CRM, DLR, FCX, FFIV, HUM, IAG, ICE, POT, SLB, TBT, UNP, VMW, CMG, INFA, SWN, CY, V, VECO, COH, ATW, CREE, RVBD, ANF, GES, NVDA, SINA, ANR, TPX, WTW, A, CLF, CRUS, CSTR, DECK, DHR, ENTR, FWLT, SMH, SNDK, STI, URE, UAL, MHS, HAS, JDSU, JNPR, SWK, ARUN, GLW, ATI, CIEN,  DOW, F, CAT, IL, NDAQ, SWKS, WDC, MCP, WLT, FAS, LVS, SOHU, UCO, DE, NETL, PCX, LDK, TSL, NTES, SLW, GS, CDE, MOS, X, CAM, BAC

Intermediate Term Market Trend: Neutral

Short Term Market Trend: Neutral