Expiration Friday Produces Late Rally as SPX Closes Higher...

Expiration Friday delivered a 15 point trading range that moved both down and up similar to our expectation stated in my AT webcast Thursday evening and the post Friday morning.  The SPX rose +6.90 and closed at 1,216.01, its highest close since August 31.  The VIX moved down -0.99 and made its lowest close since August 5 when it closed at 23.38.

A weaker Euro and stronger US dollar helped interest rates move slightly lower and bonds higher.  After trading higher for the first 30 minutes financial stocks moved lower until a late rally lifted financial stocks.  XLF closed down just 1 cent for the day.

RIMM which gapped lower after weak earnings on Thursday moved below its 30 DMA leaving 85 NDX stocks above the 30 DMA.  In our 30 DMA Watch List, two stocks moved above the 30 DMA and four moved below.  There are now 63 stocks above their 30 DMA.

Intermediate Term Posture based on the MF Green Line remained bullish today as the green moved higher and closed above 50. 

The intermediate six week trend is sideways and the SPX closed near resistance on Friday.  Trend continuation would suggest at least a short term pull back some time next week, similar (not necessarily in magnitude) to the pull backs that started on August 18 and September 1.  The rising support levels on August 22 and September 12 indicate and upward bias to the sideways price channel.  Before price targets are reached, it is always a good trading tactic to move a stop up as price nears resistance to protect at least some of the profits made on the current move. 

This past week the NDX, COMPQ, SPX, INDU and RUT each closed above their 30 DMA.  In my experience approximately 70% of these successful breakouts make a return move to the breakout point and test. While each index has broken above the diagonal 30 DMA resistance, only the NDX and COMPQ have moved above recent horizontal resistance.

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This week was the largest weekly rise in the indexes in more that three months...

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NDX white candle, above30 DMA +0.85%

SPX white candle, above 30 DMA +0.57%

INDU white candle, above 30 DMA +0.66%

COMPQ white candle, above 30 DMA +0.58%

RUT spinning top, above 30 DMA +0.11%

Breadth weakened as advancers led decliners 1.03 to 1 on the NYSE and advancers led 1.12 to 1 on the NASDAQ …

Exchange       NYSE        NASDAQ

Advancers      1,521           1,396

Decliners        1,465            1,244          

Index         Change    Close    Direction    Confirmation

VIX                -0.99      30.98      Down         Yes – SPX

SOX             +5.36    381.09      Up              Yes – COMPQ

Leading stocks > +2% on Friday MCP, CREE, CRM, SLW, DOW

Losing stocks < -2.0% included PCX, TSL, CIEN, VECO, ESI, AKS, WLT, ZAGG, JNPR, UCO, ENTR, X, SOHU, ANR, FCX, JDSU

Three of nine sectors moved higher on Friday.  Consumer Discretionary XLY +0.77%, Technology XLK +0.73%, and Utilities XLU +0.12% were the strongest sectors.

Interest rates TNX closed down -0.09 at 20.76, bond ETF TLT moved down +0.81 and Financials XLF moved down 1 cent.  The Euro moved down 83 pips to close at 1.3794 at 5 pm on Friday.

SPX

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

Support: 1,200, 1,177, 1,160

The short term 3 day trend is up.

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 +7.54 – all-time high, above 30 DMA

AMZN +12.52 – large white candle, all-time high, above 30 DMA

BIDU -0.22 – doji, potential ascending triangle, above 30 DMA

GOOG +4.12 – white candle, above 30 DMA

NFLX -14.06 – large black candle, below 30 DMA

PCLN -5.56 – bearish engulfing, above 30 DMA

QCOM +0.93 – potential hanging man, above 30 DMA

NDX 100 stocks stronger than the NDX include WCRX, AMZN, EBAY, NWSA, VMED, ROST, INTC, HSIC, AAPL and MYL.

Stocks weaker than the NDX include RIMM, NFLX, FSLR, ALXN, ILMN, ADBE, URBN, SHLD, EXPD and GMCR.

Stocks to Watch on Monday

Holding Above 30 DMA = 61

TLT, CF, CHL, CDE, SLW, DE, GMCR, KKD, MOS, POT, V, JDSU, LVS, CSTR, SINA, DECK, ICE, NETL, NGLS, NVDA, TIF, CIEN, CMG, COH, CREE, CRUS, ENTR, HUM, NDAQ, NKE, SMH, UAL, UCO, VMW, A, ANF, CLF, CRM, DHR, DLR, FFIV, LNKD, SWKS, TPX, ARUN, CROX, GES, HLF, RVBD, STI, SWN, URE, WDC, ZION, ATI, DOW, F, FAS, IBM, RCL, UNP

Moving Above 30 DMA = 2

IL, MCP

Moving Below 30 DMA = 4

AKS, CAT, FWLT, PCX

Staying Below 30 DMA

JNPR, NTES, FAZ, SOHU, ZAGG, GLW, SWK, TSL, BAC, VECO, LDK, HAL, SNDK, ESI, FCX, GS, SLB, WLT, ANR, C, TBT, X, INFA

Six Week Intermediate Term Market Trend: Neutral

Short Term Market Trend: Up