SPX, NDX Reverse Selloff Make New High Close as Euro Finds Support and Bounces...

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All nine sectors moved higher on Thursday.  XLB, XLF and XLK were the strongest sectors.  The NDX, COMPQ, INDU and SPY all made a bull market New High Close.  The SPX made a current New High Close, just 5 points below its bull market closing high.

Thursday’s trading reversed the short-term bearish signs on Wednesday and the short-term Yellow Alert is off for now.  The ES, SPX and SPY all reversed Thursday’s selloff and each made a New High Close.  The VIX reversed Wednesday’s rise and closed below Tuesday’s close.  The Bearish Engulfing patterns were engulfed by a white candle on Thursday.  The INDU made a New High Close and the RUT was just over one point from a New High Close.

As stated in Wednesday’s post “the short-term trend on the SPX and SPY is still neutral… the old resistance on Jan 26 at SPY 133.40 needs to be broken to really be a break of the current short-term support.”

Someone asked today how do I process the Yellow Alert?  By doing nothing and being mindful that if the price action breaks support then to be prepared to take bearish trades on weaker charts. 

Do nothing?  Yes.  This is an alert not a signal. 

What are weaker charts?  One of the easiest ways to identify a weaker chart is where the price action is already below the 30 DMA.

Do you want to be a proficient technical trader?  If so, you must remember that trend is the most important factor in every technical trade.  Not only is it the most important factor it has a high probability of continuing, approximately 66% to 83%.

So the trend always continues?  No, approximately 17% to 34% of the time it will change or reverse.  That is the purpose of a Yellow Alert to alert you to watch to see if the price action changes or reverses the trend.  An actual signal to change occurs in an uptrend when price breaks support.

So I should trade with the uptrend until it breaks support?  Essentially, yes.  Even if a trade reaches a price target and you exit, you should look for a new re-entry signal on that chart or another chart trading with the trend.

Money Flow

Euro    +72 pips   1.3063

TNX     +0.62         19.93

TLT      -0.94        116.61

XLF     +0.23          14.70

SPX   +14.81     1,358.04

VIX       -1.92         19.22

RUT +1.96%

COMPQ +1.51%

NDX +1.42%

SPX +1.10%

INDU +0.96%

Money Flow was typical as the Euro moved higher and TNX, XLF and SPX followed.  The VIX and bonds TLT moved lower.  The most recent SPX breakout has an intermediate term chart target of 1,428 within 12 weeks of the breakout, now just 70 points away.

The VIX moved down and did confirm the SPX on Thursday.

(click image to enlarge)

Breadth strengthened as advancers led decliners 3.05 to 1 on the NYSE and 3.23 to 1 on the NASDAQ.

Exchange        NYSE       NASDAQ

Advancers       2,293          1,945

Decliners           750             602

The Euro bounced at its late January short-term support area, formed a hammer and is still a Flag Setup.

All except three of our Bull Flag stocks moved higher on Thursday.  Some broke out of horizontal resistance and other are now in a Breakout Setup.  GILD, JNPR and NFLX were down pennies.

Bull Flag and Breakout Setups/Entries – JNPR, CREE, LNKD, GES, SWKS, BRCM, STI, FFIV, GILD, LVS, GLW, GS, GRMN, VECO, NFLX, C, CSTR, F, FAS, IL, MOS, RCL, UAL, FSLR, CERN, COST, CSCO, CTSH, WDC, GMCR, BAC

(click image to enlarge)

Leading stocks > +2% on Thursday included CREE, MCP, DECK, WDC, LNKD, CDE, X, GRPN, SWKS, FAS, BAC, ZION, SINA, FCX, INFA, WLT, STI, CROX, PCX, C, SWN, ZAGG, RVBD, F, KKD, CIEN, VECO, JDSU, LVS, POT, AKS, DOW, DHR, UAL, ATI, ANR, GLW, SLW, NDAQ, SMH, ARUN, RCL

Losing stocks < -2.0% included FAZ, NTES

NDX 100 stocks stronger than the NDX included NTAP, EXPD, GMCR, PCAR, WCRX, SHLD, MSFT, CHRW, RIMM and STX.

Stocks weaker than the NDX include AMZN, DTV, TEVA, APOL, LIFE, VMED, MNST, EXPE, NUAN and NFLX.

Eight NDX stocks EXPD, KLAC, MCHP, ORCL, PNRA, SPLS, VOD and WCRX closed above the 30 DMA and one TEVA closed below making 82 NDX stocks above their 30 DMA.

Stocks to Watch on Friday

Holding Above 30 DMA = 65

WDC, DLR, URE, CMG, DOW, ENTR, FAS, SWK, F, NKE, CIEN, CRUS, SMH, SWKS, JDSU, NGLS, BAC, CF, CHL, STI, A, C, CAT, TPX, ESI, KKD, CREE, GS, CROX, HLF, LNKD, LVS, RCL, SLW, TSL, CSTR, SINA, VECO, COH, ARUN, CRM, FFIV, SLB, INFA, NTES, NVDA, SWI, VMW, IBM, ZAGG, UAL, TSLA, LDK, GES, JNPR, V, ICE, ZION, NDAQ, TIF, RVBD, SWN, UCO, ANF, DECK

Moving Above 30 DMA = 5

CDE, DHR, MOS, TBT, WLT

Moving Below 30 DMA = 0

Staying Below 30 DMA

DE, UNP, CLF, FCX, GLW, HAL, IL, X, GRPN, ANR, PCX, POT, MCP, SOHU, AKS, TLT, HUM, ATI, SNDK, FAZ

Eighteen Week Intermediate Term Market Trend: Up

Short Term Market Trend: Up