Indexes Rebound as Interest Rates Rise...Bonds, VIX Fall...FB All-time High Close...KORS, YUM, XYL Gap Higher...Sectors Form Bullish Harami...Bullish Divergences Forming on Charts...

Eight of nine sectors moved higher on Tuesday…XLY, XLE and XLV were the strongest sectors…while XLU was the weakest sector.  XLB, XLE, XLF, XLI, XLK, XLP, XLV and XLY each formed a bullish harami on Tuesday, a setup for a potential bounce reversal.

Breadth strengthened as advancers led decliners 2.14 to 1 on the NYSE and 1.66 to 1 on the NASDAQ.

Tuesday – strengthened, advancers led

Monday – weakened, decliners led

Friday – weakened, decliners led

Thursday – strengthened, advancers led

Wednesday – weakened, decliners led

SPY up 1.21 at 175.38 volume 150.2 million shares, above average volume

VIX down 2.34 at 19.11…

TNX up .43 at 26.24…

TLT down 1.16 at 108.16...

XLF up .20 at 20.73 volume 54.7 million shares, above average volume

AAPL up 7.26 at 508.79 volume 13.7 million shares

FB up 1.27 at 62.75…volume 45.39 million shares…a new all-time closing high

Technical Commentary: 

IWM +0.75%, QQQ +0.74%, SPY +0.70%, DIA +0.36%.

Stocks and indexes rebounded on Tuesday as interest rates (TNX) rose and bonds (TLT) and VIX fell confirming the bounce.  The SPY recovered about 30% of Monday’s losses on its break of support selloff.  KORS, YUM, and XYL gapped higher on positive EPS reactions Tuesday morning.  BWLD +2.3% gained after the close on its EPS report.  CHRW -6.21% in after-hours trading on a negative EPS reaction.

There are a large number (see lists below) of potential MACD histogram bullish divergences and several divergence bounces on the charts today including BAC, CIEN, DDD, DRYS, FSLR, GME, MFRM, NKE, NTES, SCSS, WLT, X, Z, ADSK, COST, INTC, ROST, STX and WDC.

The MACD bullish divergence generally forms after a multi-week pullback and sentiment is often negative at the time.  The divergence is a non-confirmation and indicates the trend of the pullback may be getting weaker.  The SPY MACD divergences have been a high reliability setup and signal since March of 2009.

CTSH has is a divergence but releases EPS Wednesday morning.  The earnings reaction will determine which signal if any to take so EPS overrides the divergence. 

GMCR which is a one day flag pattern releases EPS after the close on Wednesday and the earnings reaction will again indicate which if any signal to take.

Trade with the trend of the chart you are trading and move your protective stops.  Be mindful of reversal patterns like double bottoms and MACD divergences.  Continue to follow your rules.

Short-term up trend Chart Targets:

SPY = 179.81…

QQQ = 86.80…

IWM = 111.02, 113.65…

Support Levels

SPY = 173.95, 172.14

QQQ = 84.29, 83.50, 82.72

IWM = 108.39, 106.76

Q4 earnings season…

Monday – AEIS, AGNC

Tuesday – ADM, BWLD, CHRW, CME, GILD, HCA, IP, KORS, KEYW

Wednesday – AKAM, ADP, BIDU, CTSH, FISV, GMCR, HUM, MDC, MRK, NXPI, ORLY, P, SCSS, SWI, TSO, NDAQ, TWX, TWTR, DIS, YELP

Thursday – ATVI, LNKD, SIAL, TPX, VRSN

Friday – CBOE, CI, MCO

Q4 Earnings Reactions

Positive Reactions – AGNC, KORS, IDXX, XYL, YUM, NOV, SPG, TSN, ZNGA, ALXN, BRCM, BX, CMG, GOOG, JDSU, MTW, PHM, RYL, VIAB, V, BA, DOW, FB, LVS, QCOM, VLO, AKS, AAL, CHKP, EA, F, ILMN, LXK, CAT, RCL, JNPR, MSFT, KMB, PG, MXIM, SBUX, 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 – ADM, CVX, MA, MAT, PCAR, AMZN, MMM, CELG, CL, XOM, ESI, HOG, OSTK, POT, SHW, WHR, BA, CTXS, EMC, TSCO, CRUS, GLW, DD, F, VMW, YHOO, AAPL, STX, ZION, HON, KSU, SWK, STT, ALTR, ISRG, KLAC, KEY, JCI, LMT, WDC, ABT, BAX, 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 – HON, FAST, FDO, AA

The Market Forecast Green Line is below 20.

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Setups

H Breakout: NIHD, CRM,  

Diagonal Breakout: LVS, SCTY, SPLK, STI, SWKS, XONE, YOKU, MU, QCOM,

Bull Flag: BBRY, JNPR, MTW, RCL, CMCSA, FFIV, GOOG, MSFT, NFLX, NTAP, TSLA, WYNN,

Potential Bullish Divergence:  BAC, CIEN, DDD, DRYS, FSLR, GME, MCP, MFRM, NKE, NTES, SCSS, WLT, X, Z, ADSK, COST, INTC, ROST, STX, WDC,

Gap Up:  BWLD,

Gap Down: CHRW,

Bear Flag: 

At Support:

C- Pattern:

Moves

New Highs: FB, ANGI, UPL

Gap Up: KORS, YUM, XYL, FOSL,    

Gap Down: 

H Breakout:  

Diagonal Breakout:

Breakout Test: 

Bounce: A, BX, UNG, YELP, GILD,

MACD Divergence Bounce: SPY, QQQ, FAS, ATI, SFUN, SSYS, SWI, TSL, ADBE, DTV, MNST, PCLN, SNDK, TRIP,

Bear Flag:  

Support Break:

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74 out of 100 NDX stocks closed higher on Tuesday.

Leading NDX 100 stocks included: GILD, DISH, BIDU, TRIP, FAST, ADBE, GMCR, EQIX, ORLY, BIIB

Lagging NDX stocks included: STX, SYMC, TXN, MXIM, QCOM, ESRX, GOLD, ATVI, SIRI, AMGN

Leading stocks > +2% on Tuesday included: UNG, BBRY, YELP, CRM, ANGI, YNDX, CSIQ, SWI, SCTY, SSYS, SINA, TSL, A, WLT, RAX, ANR, SPLK, GRPN, FAS, GOGO, BX, ZION, DDD, P, DRYS, QIHU

Lagging stocks < -2.0% included: none

Stocks to Watch on Wednesday

Holding Above 30 DMA= 26

ILMN, ESRX, CMCSA, EQIX, FFIV, VRTX, SBAC, ISRG, MU, BIIB, GILD, MXIM, TSLA, NXPI, NTAP, GOLD, NFLX, CHTR, ALTR, ALXN, REGN, CERN, GOOG, WYNN, FB, GMCR

Moving Above 30 DMA = 6

ADBE, AVGO, CHRW, DISH, ORLY, SRCL,

Moving Below 30 DMA = 15

Staying Below 30 DMA

ADSK, AKAM, AMGN, BRCM, CHKP, HSIC, MSFT, MYL, QCOM, SIAL, XLNX, WDC, AMZN, DTV, MNST, CTRX, VRSK, SYMC, SIRI, CSCO, STX, EBAY, PCLN, AAPL, AMAT, CA, CELG, CTSH, EXPD, FAST, FISV, KLAC, LLTC, NVDA, PCAR, SNDK, VOD, TXN, VIP, ADP, BIDU, CTXS, GRMN, ADI, KRFT, EXPE, INTC, INTU, MDLZ, LBTYA, TRIP, YHOO, VIAB, LINTA, TSCO, ATVI, PAYX, ROST, DLTR, BBBY, SPLS, FOXA, MAT, DISCA, WFM, COST, SBUX, LMCA

Sixteen Week Intermediate Term Market Trend: Up

3-Day Short Term Market Trend: Down