SPX Forms Piercing Line...Rises 53 Points Following Fed Announcement...

The SPX opened higher and traded between 1,120 and 1,151 until the Fed announcement just after 2:15 pm EDT.  The SPX initially turning negative for thedropped more than 45 points  day and reaching its low of 1,104.  From there big money buyers stepped in and the SPX rose 68 points in the last 70 minutes to close +53.07 at 1,172.53.  The SPX finished with a 68 point trading range.  Tuesday's bounce was confirmed by an rising MACD histogram. 

The VIX was also volatile with a trading range of over 13 points and finished closing down -12.94 at 35.06. 

Three NDX 100 stocks AAPL, GMCR and GOOG crossed above their 30 DMA today and are currently the only three stocks in the NDX above their 30 DMA.  AAPL, GMCR, GOOG and CROX each had a nice flag entry on Tuesday. 

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NDX gap up bullish engulfing, below 30 DMA +4.88%

SPX piercing line, below 30 DMA +4.74%

INDU piercing line, below 30 DMA +3.98%

COMPQ gap up bullish engulfing, below 30 DMA +5.29%

RUT bullish harami, below 30 DMA +6.94%

Last Wednesday I posted about the long tail hammer on the SPX and how it typically marks the support area of a pull back.  I stated that a long tail hammer wasn’t necessarily the low, but generally near the low.  I also referenced and showed the chart for the June 8, 2006 long tail hammer that continued to go down for three days after the long tail hammer before big money started buying aggressively. 

I know some probably thought I was smoking some kind of mud grass, however the 2011 long tail hammer ironically sells off three more days before bouncing.  Here are the chart comparisons:

Long Tail Hammer and  1 2 3 Bounce in 2011

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Long Tail Hammer and 1 2 3 Bounce in 2006

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 The Day After 1 2 3 Bounce in 2006

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Breadth strengthened as advancers led decliners 11.59 to 1 on the NYSE and 4.85 to 1 on the NASDAQ …

Exchange       NYSE        NASDAQ

Advancers      2,899           2,214  

Decliners           250             456

Index         Change    Close    Direction    Confirmation

VIX              -12.94       35.06      Down         Yes – SPX

SOX            +15.36     346.69      Up              Yes – COMPQ

Leading stocks > +2% on Tuesday included FAS, URE, ZAGG, BAC, LDK, ANR, CROX, PCX, SINA, IL, GMCR, UAL, CDE, NDAQ, ATW, MCP, F, JDSU, ARUN, TSL, DLR, HUM, SOHU, ATI, NTES, CIEN, HLF, ICE, CLF, CF, DOW, NGLS, NVDA, GES, AKS, ANF, STI, WLT, FWLT, FCX, LVS, VECO, INFA, AGU, GLW, TIF, JNPR, CRUS, SLW, SWK, POT, CAM, DECK, CRM, MOS, NETL, CAT, SWKS, DE, COH, MHS, SLB, CY, SNDK, SWN, TPX, UNP, A, VMW, X, IAG, KKD, V, CSTR, DHR, GS, NKE, WDC, ZION, CMG, RVBD, ESI, HAS, ACN, CHL, SMH

Losing stocks < -2.0% included FAZ, ENTR

All nine sectors moved higher on Tuesday.  Financials XLF +7.76% and Materials XLB +6.16% were the strongest sectors. 

Interest rates TNX closed -1.57 at 21.82, bond ETF TLT rose 32 cents and Financials XLF was up 94 cents.  The Euro moved up 202 pips to close at 1.4377 at 5 pm on Tuesday.

SPX

Resistance: 1,173, 1,200, 1,225

Support: 1,160, 1,146, 1,134

The short term 3 day trend is down.

The six-month trend is down.

The twelve-month trend is neutral.

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 +20.80 – gap bullish engulfing, bull flag entry, close above 30 DMA

AMZN +11.39 – gap bullish engulfing, below 30 DMA

BIDU +13.19 – gap bullish engulfing, below 30 DMA

GOOG +27.39 – hammer, close above 30 DMA

NFLX +11.16 – bullish engulfing, below 30 DMA

PCLN +12.42 –hammer, below 30 DMA

QCOM +2.60 – gap bullish engulfing, below 30 DMA

NDX 100 stocks stronger than the NDX include LINTA, EBAY, GMCR, VRTX, SHLD, BIDU, WYNN, VMED, JOYG and TEVA.

Stocks weaker than the NDX include FSLR, MRVL, SPLS, ATVI and CSCO.

Stocks to Watch on Wednesday

Holding Above 30 DMA

FAZ, TLT

Moving Above 30 DMA = 2

CROX, GMCR

Moving Below 30 DMA = 0

Staying Below 30 DMA

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