Tuesday, October 15, 2013

Lack of Resolution in Washington Inspires Another Selloff...Earnings Continue...X Rises...

All nine sectors moved lower on Tuesday…however…XLE, XLB and XLK were the strongest sectors…XLU was the weakest sector. 
 
Breadth weakened… decliners led advancers…3.41 to 1 on the NYSE and 2.34 to 1 on the NASDAQ.
 
Tuesday – weakened, decliners led
Monday – strengthened, advancers led
Friday – weakened, advancers led
Thursday – strengthened, advancers led
Wednesday – strengthened, decliners led
 
 
SPY down 1.24 at 169.70…volume 155.4 million shares
VIX up 2.59 at 18.66…
TNX up .29 at 27.20…
TLT down .07 at 104.54...
XLF down .15 at 20.26 volume 46.6 million shares
 
AAPL up 2.64 at 498.68…volume 11.4 million shares
FB down .01 at 49.50volume 81.1 million shares
 
Technical Commentary: 
QQQ - 0.39%, SPY – 0.73%, DIA – 0.96%, IWM – 0.98%.
 
Index futures traded higher before the open but drifted lower as the no results in Washington continued for another day.  The Senate is working on a compromise but the House still seems confused.  During the final two hours stocks sold off once again and the IWM and DIA were down almost 1% while SPY finished down ¾% and the tech heavy QQQ was down just .39%.  VIX bounced confirming today’s selloff.
 
Notable losers included GMCR, FFIV, CTSH, YHOO, SBUX, SHLD, EBAY, AMZN, ADBE, CERN and EXPE.  Winners included TSLA, GOOG, QCOM, CELG, AAPL and PCLN.
 
KO, JNJ released EPS before the open and had neutral reactions.  SCHW +1.02, +4.63% also released before the open had a positive reaction.  Releasing in after-hours CSX and YHOO had mildly positive reactions after the close while INTC and LLTC had mildly negative reactions.
 
Earnings releases continue tomorrow with more big names releasing.  See Wednesday below.
 
The weight of the technical evidence including trend, support and resistance, momentum, sector patterns, green line and financial sector strength over the past week indicates that the direction trading is to the upside.  Notwithstanding, it is important to remember technical analysis indicates what net trading is based on what traders know.  Market action cannot discount what it doesn’t know.  If new information like a debt default by the U.S. government occurs that will have to be factored into price and many conclude that could lead to a swift selloff.  Be mindful of the risk of default and protect your profits and your positions according to your rules. 
 
 
Resistance Chart Targets:
QQQ = 79.69
SPY = 172.76
 
Remember it is big money that creates and sustains the trend.  As Granville once wrote, “technical analysis is the art of tracking the market, following the footsteps of the ‘smart money’ crowd.  The ‘smart money crowd’ is no mysterious ‘THEY.’  It is simply a collection of people who are reading the market correctly, seeing through the maze, unconfused by this hall of mirrors.”
 
Short-term market posture is SPY up.
Support Levels
ES = 1,685, 1,672, 1,660, 1,641
SPY = 168.33, 167.08, 165.31, 164.62
QQQ = 78.40, 77.36, 76.79, 75.99
IWM = 105.82, 104.85, 103.90, 102.94
 
Earnings to Watch
Monday –
Tuesday – KO, CSX, INTC, JNJ, LLTC, SCHW, YHOO
Wednesday – AXP, BAC, EBAY, IBM, KEY, MAT, PEP, SNDK, SCSS, SWK, STLD, USB, URI, XLNX
Thursday – CMG, GOOG, GS, ISRG, LVS, NUE, BTU, UNP, UNH, VZ
Friday – BHI, GE, HON, KSU, MS, SLB, STI
 
 
Q3 Earnings Reactions
Positive Reactions – COST, AA, SCHW
 
Negative Reactions – FAST, MU
 
 
Chart Signals Strategy Guidelines
When the market is trending up Chart Signals looks for support bounce and resistance breakout entries. 
 
When the market is trending down Chart signals looks for resistance pull back and support break entries. 
 
When the market is sideways in consolidation Chart Signals will look for support bounce, diagonal breakouts and pull backs at resistance where price action stays between support and resistance. 
 
Technical setups for short-term option trades be in and out by earnings release.
Over earnings release use earnings option strategies such as straddles, strangles, OTM calls or puts.
After earnings look for bullish setups in positive reaction stocks and bearish setups in negative reaction stocks.
 
 
The Market Forecast Green Line is pointed up.   
 
____________________
 
Setups 
H Breakout: ADBE, ATVI, CELG, CMCSA, FB, GILD, MSFT, MYL, NFLX, ROST, SIRI, SNDK, STX, TSLA, TXN, WDC, YHOO, ATI, CREE, DDD, DNKN, GME, LCC, NKE, QIHU, SINA, UNG, VRSN, WLT, YELP, YOKU,
 
Diagonal Breakout: CSCO, DTV, GOOG, INTC, NVDA, SYMC, BAC, CLF, GRPN, JNPR, PWRD, STI, SWKS, TBT, ZION,
 
Bull Flag: CTSH,
 
Potential Bullish Divergence:   
 
Gap Up:
 
Gap Down: 
 
Bear Flag: 
 
At Support: NTAP,      
 
Moves
New Highs: X, WYNN, LVS,  
 
Gap Up: ESI,  
 
Gap Down:  MCP, VECO,     
 
H&D Breakout: X, AAPL, MNST
 
Breakout Test: 
 
Bounce:       
 
MACD Divergence Bounce: 
 
Bear Flag:  
 
Support Break: NUAN, JCP,   
 
 
______________________
 
 
17 of 100 NDX stocks closed higher on Tuesday.
 
Leading NDX 100 stocks included: GOLD,TSLA, ALXN, MNST, GOOG, QCOM
 
Lagging NDX stocks included:  GMCR, FFIV, ISRG, FOSL, NUAN, CHKP CTSH, NTAP, CTXS, XLNX, MCHP
 
Leading stocks > +2% on Tuesday included: X, CLF, ATI, LNKD, ESI, SSYS, CDE, FAZ
 
Lagging stocks < -2.0% included: MCP, JCP, VECO, GMCR, SCSS, TPX, ZAGG, CROX, VMW, JNPR, FAS, SWK, UCO
 
Stocks to Watch on Wednesday
Holding Above 30 DMA= 57
GRMN, FB, WYNN, ADSK, AVGO, CTSH, VOD, MXIM, ROST, YHOO, ADBE, DLTR, SNDK, WFM, CHTR, BIDU, MYL, SBUX, STX, AMAT, CERN, CMCSA, BBBY, MSFT, XRAY, VRSK, ISRG, AAPL, HSIC, SPLS, AKAM, ATVI, CELG, FISV, FOSL, GILD, INTC, INTU, KLAC, LINTA, ORLY, PAYX, PCAR, PCLN, SIRI, SRCL, TXN, SBAC, WDC, LMCA, FOXA, CHKP, DTV, TSLA, MNST, VIAB, NFLX
 
Moving Above 30 DMA = 3
ESRX, GOOG, QCOM
 
Moving Below 30 DMA = 16
ADP, AMZN, BIIB, BRCM, COST, DELL, EBAY, FFIV, LLTC, MAT, MCHP, MU, SYMC, XLNX, DISCA, REGN
 
Staying Below 30 DMA
EXPE, SHLD, FAST, NVDA, ALXN, DRFT, AMGN, SIAL, LBTYA, CHRW, EXPD, NTAP, ALTR, EQIX, MDLZ, CA, ADI, CSCO, CTXS, NUAN, GMCR, GOLD, VRTX, CTRX
 
Sixteen Week Intermediate Term Market Trend: Up
5-Day Short Term Market Trend: Up

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