SPX Falls After Japan Devalues the Yen...PCLN and CF Up After-hours...

 

A key foundational principle of technical analysis is “market action discounts everything.”  This means that everything that is known by traders on a given day is factored into the price as traders decide to be buyers or sellers.

 When new information comes into the market, traders decide if they want to buy, sell or hold.  Today PCLN -38.63 went down -7.40%.  After the close PCLN earnings revealed new information which led traders to pay +46.66 or 9.65% more than at the close.  Look for a gap up on PCLN and CF on Friday

On Wednesday’s big money traders moved the SPX up 26 points on the second heaviest day of trading of 2011 after a first hour selloff.  Why?  Because based on everything they knew on Wednesday the low was a good level to buy.

On Thursday Japan devalued the Yen which sent the dollar higher and the Yen lower.  A rising dollar most typically leads to falling interest rates, falling financial stocks and falling a falling SPX.  As a lower Yen was factored into buying and selling ES and NQ futures fell over night.  On Thursday the SPX opened lower and big money kept selling throughout the day.  The SPY had its biggest point drop and its highest daily trading volume for 2011. 

What was a good price on Wednesday was NOT a good price on Thursday after big money evaluated what the lower Yen meant to the global economy. 

This is the reason technical analysis is based on probabilities and not certainties.  Technical analysis cannot see the unknown future even when it is just 18 hours away.  New information alters the buying and selling price levels that big money is willing to pay and receive for stock.

All 100 NDX stocks closed lower today for the second day this week.  Only four NDX 100 stocks AAPL, GOOG, GMCR and VOD are still above their 30 DMA.

The SPX opened about 16 points lower and big kept selling all day.  When trading was over the SPX was down -60.27 at 1,200.07.  The VIX rose +8.28 closing at 31.66 confirming today’s move down.

(click image to enlarge)

NDX large black candle, below 30 DMA -4.57%

SPX large black candle, below 30 DMA -4.68%

INDU large black candle, below 30 DMA -4.31%

COMPQ large black candle, close below 30 DMA -5.08%

RUT large black candle, below 30 DMA -5.95%

Breadth turned negative as decliners led advancers 19.66 to 1 on the NYSE and 11.84 to 1 on the NASDAQ …

Exchange       NYSE        NASDAQ

Advancers         151              208  

Decliners        2,969           2,464

Index         Change    Close    Direction    Confirmation

VIX               +8.28       31.66        Up               Yes – SPX

SOX            -22.07     357.32       Up               Yes – COMPQ

Leading stocks > +2% on Thursday included FAZ, TLT

Losing stocks < -5.0% included ENTR, WLT, ANR, PCX, AKS, FAS, UCO, DECK, TSL, CDE, DOW, FWLT, CROX, URE, GES, NVDA, ZAGG, JDSU, X, SINA, ATW, TPX, CF, SLW, IL, CLF, VMW, MOS, SWKS, SOHU, CIEN, ATI, CREE, FCX, LVS, CSTR, BAC, GMCR, SLB, FFIV, CAM, ZION, NTES, MCP, CAT, TIF, TBT, RVBD, ARUN, SNDK, LDK, POT, F, CY, C, WDC, MHS, IAG, NKE, CRUS, COH, UAL, JNPR, WTW, DE, STI, SWN, CRM, A, GLW, DHR, UNP, KKD, SMH, ESI, ICE, HLF, NETL

Earnings Next Week

Monday Aug 1= CTRP, HLF, HUM, SOHU

Tuesday Aug 2 = CTSH, EXPD, HSIC, SIRI, COH, FWLT

Wednesday Aug 3 = ATVI, CMCSA, AGU, ATW, ENTR, ICE, WLT

Thursday Aug 4 = DTV, FSLR, GRMN, PCLN, ANR, CF, SINA

Friday Aug 5 = WCRX, WTW

Interest rates TNX closed -1.41 at 24.58, bond ETF TLT rose 3.62 cents and Financials XLF was down 73 cents.  The Euro moved down 230 pips to close at 1.4091 at 5 pm on Thursday.

SPX

Resistance: 1,225, 1,235, 1,249

Support: 1,200, 1,173, 1,160

The short term 3 day trend is down.

The six-month trend is down.

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 -15.20 – large black candle, above 30 DMA

AMZN -8.48 – large black candle, below 30 DMA

BIDU -8.51 – large black candle, close below 30 DMA

GOOG -23.65 – large black candle, above 30 DMA

NFLX -14.23 – large black candle, below 30 DMA

PCLN -38.63 – large black candle, close below 30 DMA

QCOM -2.48 – large black candle, below 30 DMA

NDX 100 stocks stronger than the NDX include SHLD, COST, TEVA, ORLY, ATVI and ROST.

Stocks weaker than the NDX include NVDA, WCRX, MU, JOYG, QGEN, LINTA, YHOO, CTXS, VRTX and PCLN.

Stocks to Watch on Friday

Holding Above 30 DMA

CROX, CHL, FAZ, GMCR, TLT, HLF

Moving Above 30 DMA = 0

Moving Below 30 DMA = 18

CAM, CDE, CF, CMG, CREE, DECK, IAG, LVS, MCP, MHS, MOS, SLW, SNDK, SOHU, SWKS, TPX, V, WTW

Staying Below 30 DMA

ESI, NTES, ANF, ATW, COH, FCX, GS, POT, SLB, WLT, NKE, SINA, SWN, ACN, AGU, DOW, UCO, UNP, VMW, CLF, NGLS, ANR, ATI, CAT, CIEN, CRM, CRUS, CY, DLR, FAS, ICE, JNPR, LDK, NDAQ, SMH, STI, TIF, URE, WDC, AKS, CSTR, DE, PCX, TBT, X, ZION, KKD, NETL, DHR, FFIV, SWK, UNG, ARUN, RVBD, HUM, ENTR, INFA, A, F, GES, HAS, BAC, TSL, UAL, VECO, NVDA, FWLT, JDSU, GLW, IL

Intermediate Term Market Trend: Down

Short Term Market Trend: Down