Buyers at Support Form Hammer on SPY, DIA, QQQ...Divergence Pattern in Place...Oil Rebounds Forms Hammer

Four of nine sectors moved higher on Thursday…XLU, XLP and XLB were the strongest sectors while XLF was the weakest sector.  Oil futures form hammer and rise  .30 to close at 48.76.

Breadth weakened as decliners led 2,150 to 892 on the NYSE and led 1,794 to 778 on the NASDAQ.

Thursday - weakened, decliners led

Wednesday – strengthened, mixed

Tuesday – weakened, decliners led

Monday – strengthened, advancers led

Friday – weakened, decliners led

SPY down .71 at 204.20 on 114.5 million shares, 38% above average volume

VIX up .38 at 16.33

TLT up .56 at 130.05…on 6.0 million shares, 9% below average volume

Technical Commentary:

SPY -0.35%, QQQ -0.52%, DIA -0.54%, IWM -0.81%,

SPY, DIA and QQQ form a hammer candle after bouncing from support on Thursday.  SPY, DIA, IWM and S&P E-mini futures are forming a MACD histogram bullish divergence.

Media reports continue to indicate that selling on Thursday was related to the prospect of an interest rate hike in June.  If so, why does the SPX drop to 2,025 at 11:13 am ET and rally to 2,040 at the close?  If the potential for a June rate hike is THE reason to sell before 11:13, why is it not a reason to continue selling after 11:13?  Or why is it THE reason to sell PYPL -3.41% but NOT THE reason to sell KHC +2.24%?

Earning’s Announcements:

Positive Reactions:  URBN, WMT, CRM, CSCO, DKS, FLO

Negative Reactions: AAP, LB, TTC

It is important to be defensive until a price bounce occurs.

Watch for potential bearish trades on the ETFs below last week’s low:

SPY support low = 203.88, next support 203.09

DIA support low = 175.68, next support 174.55

QQQ support low = 104.40, next support 103.66

IWM support low = 109.54, next support 108.13

Technical analysis based trades should be closed before earnings.

Trade what you see, not…

Stocks below support should generally be traded bearishly until a reversal pattern forms.

______________________

SStrong Stocks: Setups and Moves You Can Use

Bull Flag Setups include:  ATVI, EA, CA, BSX, AMZN, FB, LUK, FISV, JEC, SVXY, WRK, DLR, EGN, NWL, MNST, MDT, NOC, LMT, GD, CMG, JNJ, TSN, GLPI, AEM, NEM, A, ALB, CL, CLR, CNP, CRZO, FMC, HLF, NTES, OKE, PPC, RSPP, STWD, SYY, VMW, VTR, WM, WWAV, XEC, XYL, YELP

Bull Flag Bounces include:  KHC,

Horizontal Breakout Setups include: XLE, ZION, STI, ETFC, WMB, MRK, SWN, FTNT, AFL, ADBE, AGN, TXN, CTXS, REGN, DD, MRO, WFM, JPM, NXPI, BAC, C, MS

Bullish Divergence Setups include: SPY, IWM, DIA, XLF, FAS, QQQ, XLP, XLB, XLK, XLV, XLI, PCAR, ORCL, UTX, AVGO, CAT, CMCSA, EW, FLIR, AXP, ADP, NUE, 

______________________

                                                                                                                                    

Remember:  “It’s a market of stocks, not just a stock market.”

Trade with the trend of the chart you are trading and continue to move your profit protection stops.  Continue to follow your rules.

The SPY MFC green line is pointed down at 26, time to be defensive and ready to turn bearish if price breaks below short-term support.

21 of 100 NDX stocks closed higher on Thursday.

24 NDX stocks are above their 30 DMA.

NDX Stocks to Watch on Friday:

Moving Above 30 DMA = 2

CSCO, TSCO

Moving Below 30 DMA = 6

BMRN, EXPE, INTU, LLTC, TRIP, TXN

6-month Intermediate Term Market Trend: Neutral

3-day Short Term Market Trend: Down