Thursday, January 23, 2014

NFLX, UNP Gap to New All-time Highs...Markets Sell-off after China Data...IWM, QQQ in Bull Flag...FB "Princeton in Danger of Disappearing"

All nine sectors moved lower on Thursday…however XLK, XLU and XLV were the strongest sectors…while XLF was the weakest sector. 

Breadth weakened as decliners led advancers 2.03 to 1 on the NYSE and 2.24 to 1 on the NASDAQ.

Thursday – weakened, decliners led
Wednesday – weakened slightly, advancers led
Tuesday – strengthened, advancers led
Monday – holiday
Friday – weakened, decliners led


SPY down 1.51 at 182.79 volume 132.2 million shares, above average volume
VIX up .93 at 13.77…
TNX down .87 at 27.73…
TLT up 1.49 at 106.79...
XLF down .36 at 21.60 volume 52.5 million shares, above average volume

AAPL up 4.67 at 556.18 volume 14.4 million shares
FB down .88 at 56.63…volume 47.9 million shares


Technical Commentary: 
DIA – 1.08%, SPY – 0.82%, IWM – 0.67%, QQQ – 0.34%.

Futures opened lower on Thursday following weak manufacturing data from China overnight.  The DIA which broke short-term support on Thursday sold off on volume 37% above average.  SPY sold off on volume 29% above average and closed above short-term support.  IWM volume was only 8% above average while QQQ was 10% above average volume.

IWM and QQQ are currently in a one-day bull flag pattern after hitting new highs on Wednesday.  SPY pulled back from resistance in its four week trading range in an intermediate and long-term uptrend.  The DIA the weakest of the broad ETF indexes in part due to poor earnings reactions from TRV, JNJ, VZ and IBM.

NFLX +54.99, +16.48% hit a new all-time high after reporting earnings Wednesday after the close.  UNP +5.62, +3.34% gapped higher and also hit an all-time high after reporting on Wednesday after the close.

FB -0.88, -1.53%, released research using Google search data to predict engagement trends (apparently the same approach Princeton used on FB) using the scientific principle “correlation equals causation,” and their “research unequivocally demonstrated that Princeton may be in danger of disappearing entirely.”   Click here to read.

In after-hours trading on Thursday JNPR +0.94, +3.61%, MSFT +1.26, ALTR +1.07, +3.25%, +3.51%, SBUX +0.81, +1.10%, KLAC +0.46, +0.72% all rose after reporting earnings after the close.  ISRG -20.00, -4.56% fell after reporting earnings.

Bonds TLT +1.42% and gold GLD +2.18% continued to rise along with the Euro +148 pips saw its largest gain in more than three months.

Even though markets sold off (price fluctuation) on Thursday the IWM, QQQ and SPY are above short-term support and the weight of the technical evidence still favors the uptrend. Trade the trend in this week’s holiday shortened trading week and be mindful of when individual stocks are reporting earnings.  Earning releases increase over the next two weeks.

The intermediate-term trend is still up, while the short-term trend is neutral.

Trade with the trend, move your protective stops.  Continue to follow your rules.

Remember it is big money that creates and sustains the trend.  As Granville 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 up trend Chart Targets:
SPY = 184.69, 186.76, 188.04
QQQ = 88.74, 89.38, 90.25
IWM = 116.70, 118.54 

Q4 earnings season is underway.

Monday – holiday
Tuesday – AMD, BHI, CA, CREE, DAL, HAL, IBM, JNJ, NUAN, RF, TXN, TRV, VZ, XLNX
Wednesday – ABT, ATI, COH, EBAY, FFIV, FCX, NFLX, SNDK, USB, URI, UTX, WDC
Thursday – ALK, ALTR, BAX, ETFC, ISRG, JCI, JNPR, KEY, KLAC, LMT, MXIM, MCD, MSFT, LUV, SBUX, UAL, UNP,
Friday – HON, KSU, KMB, PG, SWK, STT

Q4 Earnings Reactions
Positive Reactions – NFLX, FFIV, URI, UNP, EBAY, MCD, CREE, TXN, UTX, NUAN, XLNX, BHI, DAL, RF, MS, SLB, STI, AXP, SWKS, BAC, LLTC, WEN, MON, MU, STZ, APOL


Negative Reactions – KEY, JCI, LMT, WDC, ABT, ATI, COH, FCX, AMD, IBM, HAL, JNJ, TRV, VZ, GE, COF, INTC, UNH, C, GS, CSX, FAST, AA, FDO, BBBY, SCHN,  

Reversal of Initial Reaction – FAST, FDO, AA

The Market Forecast Green Line is above 80.

____________________

Setups
H Breakout: MU,  
Diagonal Breakout: AAPL,  
Bull Flag: ADSK, CMCSA, STX, WDC, WYNN, BAC, ESI, MS, P, V, YELP, M,
Potential Bullish Divergence:  
Gap Up:  ALTR, JNPR, MSFT, KLAC, SBUX,
Gap Down: ISRG,
Bear Flag:  
At Support: XONE, DNKN,  
C- Pattern:

Moves
New Highs: NTAP,    
Gap Up: FFIV, NFLX, UNP,         
Gap Down: BIDU, FB, A, CRM, LVS, NKE, SFUN, SPY, GS, JPM,  
H Breakout: AKAM,  
Diagonal Breakout:  
Breakout Test: 
Bounce: FIVE,  
MACD Divergence Bounce: 
Bear Flag: 
Support Break: COST, NTES, YNDX, CMG, HLF,

______________________


20 out of 100 NDX stocks closed higher on Thursday and three were unchanged.

Leading NDX 100 stocks included: NFLX, FFIV, GOLD, EQIX, TSLA, CTRX, SBAC

Lagging NDX stocks included: BIDU, CTXS, DISH, DTV, ALXN, CTSH, YHOO, CHRW

Leading stocks > +2% on Thursday included: ATI, GLD

Lagging stocks < -2.0% included: TSL, SFUN, CREE, SINA, FAS, GOGO, YOKU, YOKU, YNDX, BX, NTES

Stocks to Watch on Friday
Holding Above 30 DMA= 65
CTSH, WDC, GOOG, ILMN, LLTC, ADSK, ESRX, ALXN, MNST, SIAL, CMCSA, GMCR, STX, DTV, BRCM, WYNN, FB, AVGO, EQIX, ORLY, ADBE, AKAM, CA, CHKP, FFIV, PCAR, SNDK, VRTX, XLNX, CTRX, AMAT, CSCO, SBAC, CHTR, HSIC, SIRI, AMGN, ISRG, MU, MYL, BIIB, CHRW, EXPD, ALTR, AMZN, EBAY, GILD, MXIM, NVDA, QCOM, SRCL, VOD, TXN, REGN, TSLA, NXPI, CERN, NTAP, PCLN, SYMC, CELG, GOLD, FAST, FISV, KLAC

Moving Above 30 DMA = 3
AAPL, NFLX, VIP

Moving Below 30 DMA =8
ADP, BIDU, CTXS, GRMN, ADI, KRFT, CHTR, DISH

Staying Below 30 DMA
EXPE, INTC, INTU, MDLZ, LBTYA, TRIP, YHOO, VIAB, LINTA, TSCO, ATVI, PAYX, ROST, DLTR, BBBY, SPLS, FOXA, MAT, DISCA, WFM, VRSK, NFLX, MSFT, COST, SBUX, LMCA


Sixteen Week Intermediate Term Market Trend: Up
3-Day Short Term Market Trend: Up – IWM, QQQ, Neutral - SPY

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