SPX, Nasdaq and RUT Break Support

DJIA - 427.47, -5.07% SP500 - 52.54, -6.12% NASDAQ Comp. - 96.85, -6.53% Russell 2000 - 35.13, -7.85% Exchange NYSE NASD Advancing 303 336 Declining 3,390 2,568 Oil $53.62 -$0.77 Gold $736.00 +$3.30 SOX 177.10 -14.79 VIX 74.26 +6.62 Strongest Sectors: XLU -2.14%...XLP -2.57%...XLV -4.04% Weakest Sectors: XLF -10.47%...XLI -6.46%...XLY -6.42% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Wednesday was a good old fashioned down day with all broad indices, sectors and most stocks moving lower. Decliners led advancers by a 9 to 1 margin. Concerns over the auto industry played a major role in the tone for the day. The price of GM and F indicates the market is not expecting much for these companies, but the real concern is the economic impact and the potential for more lost jobs should government help not be forth coming. Oil moved fell another 77 cents hitting a new 22 month low. Gold rose $3.30. The SPX, Nasdaq and RUT made new closing lows and can be considered to have broken support today. The SPX is 4% below its Oct. 10 low. The Nasdaq is 7% below its Oct. 24 low. The RUT is 6.6% below its Oct. 28 low. Only the DJIA closed above its Oct. 10 low today. Index Commentary The DJIA formed a large black candle…new 52 week closing low…holds above Oct. 10 intraday support low. The SPX large black candle breaks support…new 52-week intraday and closing low. The Nasdaq large black candle breaks support…new 52-week intraday and closing low. The RUT large black candle breaks support…new 52-week intraday and closing low. Trend Reversal Strategy RIMM stop was moved to $44.70 this morning. RIMM fell to 45.33 and did not stop out. Stocks to Watch on Thursday Potential Support Bounce or Break GILD…at support with a potential 5 point target JNJ…at support with a potential 4 point target IBM…at support with a potential 9 point target PCP…at support with a potential 6 point target BCR…at support with a potential 7 point target CELG…at support with a potential 6 point target Broke Support BA Leading Stocks Holding Above 30 DMA TEVA…VIVO Stocks Moving Below 30 DMA ANSS…AOB…AYE…CBST…CERN…CHTT…ESI…FLIR…FSTR…GILD…GIS…MMM…PCLN…PRGO…PSSI…SHW…SWN Stock Commentary CELG lower high…lower low…lower close at support ESRX large black candle…break support…target 49 GE large black candle…new 52-week low MMM large black candle…near support in sideways move…watch for bounce or break UTX large black candle no confirmation of Tuesday’s piercing line pattern HPQ shooting star after Tuesday’s gap up Wednesday’s Action Moving Up: None in our Watchlist Moving Down: BIDU, MA, FSLR, GS, POT, CF, SOHU, AEM, MON, ESRX, X, BTU, SCHN, V, DRYS, AMZN, BUCY, CLF, NUE, AGU, MOS, MEE, SINA, CNX, NDAQ, PNRA, UAUA, KBE, KRE, ZION, LCC, HANS, MS, PCLN, ANR, FWLT, GRMN, IPI, LDK, MER, DECK, INFY, KMT, ONXX, COH, LAMR, FMCN, GDX, RF Intermediate Term Market Trend: Down SPX, Nasdaq, RUT Short Term Market Trend: Down

Support Holds on Tuesday

DJIA + 151.17, +1.83% SP500 + 8.37, +0.98% NASDAQ Comp. + 1.22, +0.08% Russell 2000 - 3.79, -0.84% Exchange NYSE NASD Advancing 1,306 1,163 Declining 2,325 1,749 Oil $54.39 -$0.56 Gold $732.70 -$9.30 SOX 191.89 -3.83 VIX 67.64 -1.51 Strongest Sectors: XLE +2.80%...XLK +1.39%...XLP +0.69% Weakest Sectors: XLF -1.43%...XLB -1.12%...XLU -1.08% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Stocks rallied late Tuesday moving the DJIA and SPX into positive territory for the day. However market breadth was weak as the Nasdaq was essentially even and the RUT was down for the day. Decliners led advancers by almost a 2 to 1 margin. Five sectors were up for the day while four were lower. Oil moved fell another 56 cents hitting a new 52-week low and continuing the down trend since July. Gold was down $9.30. Continue to maintain mental flexibility and trade with the current trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks. Index Commentary The DJIA formed lower high and lower low …white spinning top bullish harami …held above Oct. 10 support. The SPX formed a hammer and bullish harami…closed at the S2 level of Thursday’s large white candle…closed above Thursday’s low. The Nasdaq formed a hammer and bullish harami…closed above Thursday’s intraday low. The RUT formed a hammer…made a new 52-week intraday and closing low…still forming potential double or triple bottom. Trend Reversal Strategy In our webcast Monday evening we demonstrated a a real-time virtual trade on RIMM because it met the criteria of our Trend Reversal Strategy that we shared in our October 25, 2008 post. We shared this strategy because we saw that several individual stocks were beginning to exhib it Trend Reversal characteristics at that time. We invite you to revistit that Strategy. Specificially RIMM's chart showed a potential double bottom pattern, a bullish engulfing candle pattern and a bullish divergence on the 14/5 stochastic. RIMM closed on Monday at 42.24 and we entered on Monday evening a Buy Stop to buy 10 December 55 calls if RIMM rose to 42.82 on Tuesday morning. A stop contingent on the order being filled was entered at a stock price of 37.72. The order was triggered at 7:31 am and filled at 2.09 per contract. RIMM rose $5.01 or 11.86% from Monday's close and the Dec 55 calls closed at 3.45, a gain of $1.36 or 65% from our Tuesday morning entry. The trailing stop is moved up to 44.70 after the first day. Stocks to Watch on Wednesday Potential Bull Flag GILD…forms low day hammer Potential Trend Reversal IBM Leading Stocks Holding Above 30 DMA TEVA…GIS…MMM…VIVO…AYE…FLIR…PSSI Stocks Moving Above 30 DMA ANSS…CERN…CHTT…CL…PCLN…PRGO…SHW Moving Below 30 DMA ASIA…ESRX…JCOM…LFL… Stock Commentary CELG lower high…lower low…lower close in sideways pattern ESRX lower high…lower low…lower close…holding support GE doji…no confirmation of hammer, inverted hammer or Monday’s bullish harami MMM piercing line patter on bounce off 30 DMA UTX lower high…lower low…piercing line pattern HPQ gaps higher forms dragonfly doji on strong than expected preliminary Q4 results and full year results Tuesday’s Action Moving Up: MA, PCLN, PNRA, V, SOHU, LDK, AEM, MS, POT, STRA Moving Down: DECK, BIDU, FSLR, ANR, BTU, FWLT, SCHN, MEE, NIHD, AMZN, DRYS, BUCY, CLF, ESRX, NDAQ, GRMN, CNX, NUE, Intermediate Term Market Trend: Neutral – 5 weeks Short Term Market Trend: Down

Dow Continues Pullback to Support

DJIA - 223.73, -2.63% SP500 - 22.54, -2.58% NASDAQ Comp. - 34.80, -2.29% Russell 2000 - 5.22, -1.14% Exchange NYSE NASD Advancing 899 933 Declining 2,769 1,935 Oil $54.95 -$2.09 Gold $742.00 -$0.50 SOX 195.72 -5.67 VIX 69.15 +2.84 Strongest Sectors: XLU -0.17%...XLP -1.32%...XLV -1.72% Weakest Sectors: XLF -6.36%...XLY -2.87%...XLK -2.84% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Stocks moved down towards the horizontal support level from which they rose just last Thursday. Oil moved lower on the day forming a new 52-week. The Financial Sector was the weakest sector on Monday as C announced 50,000 job cuts. Watch closely on Tuesday as indexes trade near support. Watch for a support bounce or break. Traders should maintain mental flexibility and trade with the higher probability of a trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks. Index Commentary The DJIA formed lower high and lower low …pulled back to Thursday’s S2 support level. The SPX formed a lower high and lower low…closed at the S2 level of Thursday’s large white candle…closed above Thursday’s low. The Nasdaq formed an inverted hammer…a lower high and higher low…a new closing low…closed above Thursday’s intraday low. The RUT formed a lower high and higher low…while trading above Thursday’s intraday low…still forming potential double or triple bottom. Stocks to Watch on Tuesday Potential Bull Flag GILD Potential Trend Reversal RIMM Leading Stocks Holding Above 30 DMA Breaking Below Support WYNN TEVA…ESRX…GIS…MMM…PRGO…VIVO Stocks Moving Above 30 DMA AYE…FLIR…JCOM…LFL…PSSI Moving Below 30 DMA ANSS…BLUD…CELG…DNA…EZPW…PRGO…RCI…RTN…SHW Stock Commentary CELG lower high…lower low…lower close pullback ESRX lower high…lower low…lower close…holding support GE bullish harami…no confirmation of Friday’s inverted hammer or Thursday’s hammer MMM lower high…lower low…holding at 30 DMA UTX lower high…lower low…lower close Monday’s Action Moving Up: STRA, PCLN Moving Down: BIDU, MA, GS, CF, DECK, AEM, IPI, ZION, SOHU, BUCY, AMZN, LAMR, V, MER, FSLR, AGU, ANR, X, SCHN, NDAQ, KBE, BTU, MOS, GDX, NUE, SINA, MS, CNX, GRMN, ONXX, KMT Intermediate Term Market Trend: Neutral – 5 weeks Short Term Market Trend: Down

Stocks Pull Back on Friday

DJIA - 337.94, -3.82% SP500 - 38.00, -4.17% NASDAQ Comp. - 79.85, -5.00% Russell 2000 - 34.71, -7.07% Exchange NYSE NASD Advancing 773 605 Declining 2,780 2,261 Oil $57.04 -$1.20 Gold $742.50 +$37.50 SOX 201.39 -13.76 VIX 66.31 +6.48 Strongest Sectors: XLY +2.98%...XLB +1.16%...XLI +0.86% Weakest Sectors: XLE -4.15%...XLK -4.57%...XLU -2.37% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK On Friday stocks opened and moved lower until mid-day when a rally drove the DJIA up 400 points to 8,900. Then the market began a 400 point sell off during the last 45 minutes of the day with the DJIA closing near 8,497. Decliners led advancers by a large margin and six of nine sectors moved lower. Since the October 10 low in the DJIA, the SPX, Nasdaq and RUT have all made intra-day lower lows. The DJIA so far has held above its October 10 low. As we posted on October 10, if support did hold building a new base would take at least four to eight weeks. The market is five weeks into that process and still looks like a new base building. Traders need to maintain mental flexibility and trade with the higher probability of a trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks. We returned Thursday night from teaching a two-day workshop to more than 200 traders on advanced and combination option strategies. The workshop was a succes and many of those in attendance let us know it made an important difference for them. One trader described it this way; "Great workshop in LA! I really enjoyed learning the strategies of combination options from you. I have learned many valuable lessons from this workshop but the lessons I value the most are your comments about a trader's mentality: attitude, discipline, and consistency. I know I struggle with this the most; it has always been a battle within. Your comments have inspired me to take a more disciplined approach to trading. Thank you for motivating and enlightenign me! I have learned so much about myself trading in the past 2 months trading. I never expected to be analyzing myself more than the stock charts." Index Commentary The DJIA formed a higher high and higher low with sellers appearing at the 30 DMA…pulled back to Thursday’s S1 support level while closing lower for the day. The SPX moved slightly above Thursday’s high before pulling back to the S1 level of Thursday’s large white candle…still above Thursday’s low. The Nasdaq formed a lower high and higher low…an inside day…closed near the open or mid-point of Thursday’s price bar. The RUT formed a lower high and higher low…an inside day…closed near Thursday’s open…still forming potential double or triple bottom.

Stocks to Watch on Monday Leading Stocks Holding Above 30 DMA EZPW…TEVA…ANSS…BLUD…CELG…DNA…ESRX…GIS…MMM…PRGO…RCI…RTN…SHW…VIVO Stocks Moving Above 30 DMA No new stocks listed for Friday. 23 of the 35 stocks that moved above their 30 DMA on Thursday fell below their 30 DMA on Friday…the 12 that stayed above are listed just above. Stock Commentary CELG higher high…higher low…lower close pullback ESRX higher high…higher low…lower close…inverted hammer at support GE inverted hammer…did not confirm bullish harami and hammer from Thursday MMM higher high…higher low…lower close doji UTX higher high…higher low…lower close inverted hammer Friday’s Action Moving Up: STRA, IPI Moving Down: BIDU, FSLR, MON, CF, DECK, AMZN, POT, MA, GS, AGU, BTU, MEE, NUE, CNX, NDAQ, ZION, ESRX, KRE, SOHU, FWLT, X, ANR, MOS, GRMN, SCHN, SINA, PCLN, MS, GDX, DRYS, CLF, INFY, NIHD, EBAY, COH, ONXX, FMCN, BRCM, HANS, UAUA, RF, LCC Intermediate Term Market Trend: Neutral – 5 weeks Short Term Market Trend: Neutral

The Dow Bounces Over 900 Points At Support

DJIA + 552.59, +6.67% SP500 + 58.99, +6.92% NASDAQ Comp. + 97.54, +6.50% Russell 2000 + 38.43, +8.49% Exchange NYSE NASD Advancing 2,650 2,089 Declining 919 799 Oil $58.24 +$2.08 Gold $705.00 -$13.30 SOX 215.15 +14.36 VIX 59.83 -6.63 Strongest Sectors: XLE +11.75%...XLB +8.14%...XLY +7.81% Weakest Sectors: XLP +4.00%...XLV +5.36%...XLI +5.36% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK After the DJIA fell to 7,965 around 1 pm ET buyers stepped into the market just like they had on 10, 16 and 22 to 27. Just last night we posted; “If the DJIA 7,882 to 8,143 support area is good we should see big money step in and begin to buy in that area as they did on Oct. 10, 16, 22, 23, 24, 27 and 28. Thursday and Friday become a major retest area.” And did they buy…while the DJIA rose 552.59 from yesterday’s close, the range from the low to the high on Thursday was 911.17 points. The daily range on October 13, the single largest daily point rise in Dow history, was 965.81. The daily range on October 28, the second largest daily point rise in Dow history, was 907.35. Today’s point rise from its intraday was equivalent to record setting days. So are the big money buyers still there in the area of support? Yes and in a very big way just like they have been since October 10.

Check out our leading stocks crossing above their 30 DMA today...Wow...35 stocks!

As we posted Wednesday, "If traders have been trading the short-term trend correctly they are already in short-term bearish trades and could be looking to lock in profits if support holds." We hope you were prepared to lock in profits as the markets did bounce today! Index Commentary The DJIA formed a bullish engulfing pattern…outside day…broke broke through the R1, R2 and R3 levels of Thursday’s large black candle…rose to 20 DMA…bounced at major support area. The SPX formed a bullish engulfing pattern…outside day…potential ripple bottom bounce. The Nasdaq fell to new 52-week low…formed a bullish engulfing pattern…outside day…broke through Thursday’s high. The RUT formed a bullish engulfing pattern…outside day…broke through the R1, R2 and R3 level of Thursday’s large black candle…formed a lower low that negated the potential head and shoulders bottom…forming potential double or triple bottom. Stocks to Watch on Friday Leading Stocks Holding Above 30 DMA EZPW…TEVA 35 Stocks Moving Above 30 DMA AMED…AMX…ANSS…AXYS…AYE…BAP…BCR…BIIB…BLUD…CELG…CHU…CL…DNA…ESRX…FLIR…GIS…JCOM…JW.A…LFL…MMM…MTD…OSIP…PRGO…PSSI…PSYS…QSII…RCI…RIO…TN…SAY…SHW…TECH…UTX… VIVO…WMS Stock Commentary CELG higher low…outside day…support bounce ESRX bullish engulfing…higher low GE hammer…bullish harami MMM bullish engulfing pattern TECH outside day…support bounce…higher low UTX higher low…outside day Thursday’s Action Moving Up: FSLR, MA, CF, BIDU, SOHU, PCLN, POT, CNX, NUE, BTU, ANR, MOS, X, IPI, AGU, AEM, MON, SCHN, GS, STRA, BUCY, AMZN, CLF, V, COH, ZION, PNRA, MEE, GDX, KRE, ESRX, KBE, DRYS, KMT, INFY, LAMR, DECK, NIHD, EBAY, BRCM, LDK, ONXX, UAUA, LCC, GRMN, SINA, FWLT, MS, HANS, RF, Moving Down: None In Our Watchlist Intermediate Term Market Trend: Neutral – 4 weeks Short Term Market Trend: Neutral

Stock Indexes Approach Support

DJIA - 411.30, -4.73% SP500 - 46.65, -5.19% NASDAQ Comp. - 81.69, -5.17% Russell 2000 - 29.49, -6.11% Exchange NYSE NASD Advancing 323 412 Declining 3,250 2,504 Oil $56.16 -$3.17 Gold $718.30 -$14.50 SOX 200.79 -10.64 VIX 66.46 +5.02 Strongest Sectors: XLP -2.14%...XLV -2.21%...XLU -3.32% Weakest Sectors: XLE -8.19%...XLB -6.36%...XLF -6.16% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Stocks, oil and gold moved lower on Wednesday near the area of support established since October 10. If the DJIA 7,882 to 8,143 support area is good big money should step in and begin to buy in that area as they did on Oct. 10, 16, 22, 23, 24, 27 and 28. Watch this major support area on Thursday and Friday for a potential bounce or break. This is an important retest of the October lows. If traders have been trading the short-term trend correctly they are already in short-term bearish trades and could be looking to lock in profits if support holds. If support breaks they could hold existing bearish trades or enter new bearish trades as stocks break support. Even though oil moved lower airline stocks which have been relatively stronger moved lower on concerns for falling demand in air travel related to the current economic slowdown. Index Commentary The DJIA broke below the Oct. 28 S1 support and fell near the S2 level forming a large black candle…approaching major support area. The SPX also broke the Oct. 28 S1 support…nearing 839 Oct. 10 low. The Nasdaq fell to within 6 point of its Oct. 24 low at 1,493…forming a large black candle. The RUT formed a large black candle falling within 11 point of its Oct. 28 low…a lower low would negate the potential head and shoulders bottom. Stocks to Watch on Thursday Leading Stocks Holding Above 30 DMA EZPW…TEVA Stocks Falling Below 30 DMA ANSS…BCR…BIIB…BLUD…ESRX…LFL…OSIP…PRGO…QSII…RTN…SAY…TECH…UTX Monday’s At Resistance Stocks Again Moved Lower on Wednesday CLI -6.66%…AVP -9.34%…DB -10.93%…CRDN -3.41%…SPG -10.98%…DRIV -6.18% Wednesday’s Action Moving Up: None in our Watchlist Moving Down: FSLR, POT, BIDU, GS, STRA, CF, DECK, MON, MA, X, ZION, AMZN, LDK, BUCY, SOHU, CLF, V, INFY, UAUA, NDAQ, PNRA, ESRX, LCC, KRE, KBE, MOS, PCLN, IPI, BTU, NUE, AGU, CNX, AEM, MEE, SCHN, GDX, FWLT, MS, ANR, MER, KMT, NIHD, ONXX, DRYS, GRMN, SINA, JASO, BRCM, COH, FMCN, LAMR, EBAY Intermediate Term Market Trend: Neutral – 4 weeks Short Term Market Trend: Down

Oil, Gold and Stocks Move Lower on Tuesday

DJIA - 176.58, -1.99% SP500 - 20.26, -2.20% NASDAQ Comp. - 35.84, -2.22% Russell 2000 - 10.81, -2.19% Exchange NYSE NASD Advancing 674 723 Declining 2,889 2,119 Oil $59.33 -$3.08 Gold $732.80 -$13.70 SOX 211.43 -3.05 VIX 61.44 +1.46 Strongest Sectors: XLU +0.00%...XLV -1.79%...XLK -2.16% Weakest Sectors: XLB -3.98%...XLY -3.49%...XLF -3.48% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Eight of nine sectors moved lower on Tuesday as the DJIA, SPX, Nasdaq and RUT headed lower towards support. The broad indexes continue in their sideways trading range of the past four weeks moving from resistance to support. Oil and gold also fell on Tuesday. Oil slipped below $60 a barrel for the first time in over a year continuing the intermediate term down trend that we have continually pointed out for more than 3 months. We pointed out on our Monday webcast that the breaking of the 62.45 support on Monday gave a new short-term price target of 53.40 a barrel. Index Commentary The DJIA fell and bounced off the S1 support of its Oct. 28 large white candle…again failed to confirm Friday’s bullish harami. The SPX also fell and bounced off the S1 support of its Oct. 28 candle…failed to confirm Friday’s bullish harami. The Nasdaq traded found support just below the Oct. 28 S1 support level…broke Thursday support low…failed to confirm Friday’s bullish harami. The RUT fell below Monday’s low and closed near its low of the day without a support bounce like the other indexes…did not confirm Friday’s bullish harami…continues to form a potential head and shoulders bottom. Stocks to Watch on Wednesday Leading Stocks Holding Above 30 DMA ANSS…BCR…BIIB…BLUD…EZPW…LFL…OSIP…QSII…RTN….SAY…TECH…TEVA…ESRX…PRGO…UTX Stocks Falling Below 30 DMA BAP…CELG…CHTT…CTSH…DNA…ICON…KNL…MBT…SHW…SYNA…TKC…VIP Monday’s At Resistance Stocks Moved Lower on Tuesday CLI…AVP…DB…CRDN…SPG…DRIV Tuesday’s Action Moving Up: GS, V, BUCY Moving Down: BIDU, SOHU, FSLR, FMCN, CLF, SINA, MON, BTU, CNX, MOS, FWLT, CF, DRYS, AGU, AEM, POT, X, GDX, MA, SCHN, ANR, IPI, PNRA, STRA, AMZN, LDK, NIHD, DECK, INFY, ZION, NUE, GRMN, MEE, ONXX Intermediate Term Market Trend: Neutral – 4 weeks Short Term Market Trend: Down

Stocks Pull Back in Continuing Trading Range

DJIA - 73.27, -0.82% SP500 - 11.78, -1.27% NASDAQ Comp. - 30.66, -1.86% Russell 2000 - 12.69, -2.51% Exchange NYSE NASD Advancing 1,155 857 Declining 2,372 1,985 Oil $62.41 +$1.37 Gold $746.50 +$12.30 SOX 214.48 -8.71 VIX 59.98 +3.88 Strongest Sectors: XLE +0.34%...XLP +0.29%...XLI +0.04% Weakest Sectors: XLF -2.95%...XLU -2.41%...XLY -2.32% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Buyers came in early Monday to follow through on Friday’s rally but a sell off began in the first 30 minutes and by mid-day E.T. the broad indexes were turning negative. While the DJIA and SPX kept more than half of Friday’s gains, the Nasdaq gave back more than 75% its gains and the RUT fell more on Monday than it rose on Friday. Monday is a good example of why pre-market futures are an inconsistent guide to the trading day. Today was just another example of futures being up nicely and the open and the market finishing down for the day. Both gold and oil rose on Monday and commodity related stocks gold, coal oil, steel and Ag-related were relatively strong. Solar stocks were weak on Monday as were financial and tech stocks especially semiconductors. The market continues to trade in the current sideways trading range since the October 10 low bouncing between support and resistance. The failure of all four broad indexes to confirm Friday’s bullish harami is classic sideways trading range price action; Buyers and sellers fighting it out. As we wrote on Friday;”Either way Monday should prove to be an exciting day of market action as buyers and sellers continue to battle it out.” And sure it enough that’s exactly the way it was. Index Commentary The DJIA rose to its 30 DMA where sellers pushed it back to close under its 20 DMA…failed to confirm Friday’s bullish harami. The SPX rose above and then closed below its 20 DMA…failed to confirm Friday’s bullish harami. The Nasdaq traded and above and then closed below its 20 DMA and failed to confirm Friday’s bullish harami. The RUT gapped up to its 20 DMA and sold off below Thursday’s low…did not confirm Friday’s bullish harami…continues to form a potential head and shoulders bottom. In the DJIA, SPX and Nasdaq Thursday’s low and Monday’s high is the key short-term support and resistance areas to watch. On the RUT it is Monday’s high and low. Stocks to Watch on Tuesday Leading Stocks Breaking Above 30 DMA ESRX...PRGO...SHW...UTX Support Bounce FLS...VMI...MTD...AZO...SYNA...UNP...BNI At Resistance CLI...AVP...DB...CRDN...SPG...DRIV Stock Commentary PCLN pulled back at its 30 DMA for the second straight day. ONXX rose further confirming its breakout out of head and shoulders bottom with price target of $34.50 NVDA pulled back after rising to 9.10 and did not breakout above $9.11…pulling back from its 50 DMA to the support of its 30 DMA. Monday’s Action Moving Up: ANR, BTU, AEM GDX, POT, CF, CNX, BUCY, ONXX, ESRX, STRA, HANS Moving Down: FSLR, BIDU, GS, MA, DECK, LAMR, V, MER, PNRA, NIHD, LDK, NDAQ, ZION, KMT, JASO, RYS, AMZN, MS, KBE Intermediate Term Market Trend: Down Short Term Market Trend: Down

Four Weeks and Counting...

DJIA + 248.02, +2.85% SP500 + 26.11, +2.89% NASDAQ Comp. + 38.70, +2.41% Russell 2000 + 9.95, +2.01% Exchange NYSE NASD Advancing 2,386 1,781 Declining 1,046 1,074 Oil $61.04 +$0.27 Gold $734.20 +$2.00 SOX 219.44 +3.75 VIX 56.10 -7.58 Strongest Sectors: XLK +4.17%...XLF +1.27%...XLB +0.08% Weakest Sectors: XLY -1.21%...XLU -1.20%...XLI -0.86% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK It has been four weeks since the October 10 low and the market continues to build a base with buyers becoming more aggressive and sellers less aggressive during the past two weeks. The base building is not over and it is still not possible to say with certainty that October 10 is the bottom, but each day has been adding positive technical action on the chart. In our Thursday night webcast we pointed out that the short-term Momentum line was in the lower reversal zone for the second straight day and said that the indicator seldom spends more than two days, so don’t be surprised if the market moves up within a day or two. We also referred to our comments of the past four weeks regarding the October 10 low and how if that support level did hold that it would likely take at least four to eight weeks to build a base from which a new up trend could move. We also reiterated how the buying in the market had become more aggressive and the selling less aggressive last week until Tuesday of this week. We also said that if the market did bounce from a higher low that would be further indication that buyers were getting more aggressive. On Friday buyers stepped in and this time from the 8,640 level on the DJIA. If stocks follow through and continue to move higher on Monday watch the price action for strength or weakness at the 9,650 horizontal resistance level on the DJIA during the week. Either way Monday should prove to be an exciting day of market action as buyers and sellers continue to battle it out. Index Commentary The DJIA closed just below its 20 DMA after bouncing off the S1 level of the October 28 large white candle…formed a bullish harami. The SPX bounced off the S1 level of its October 28 large white candle at 900 and formed a bullish harami. The Nasdaq closed bounced off the S1 support level of its October 28 large white candle at 1,600 and formed a bullish harami. The RUT bounced off the 495 support level and formed a bullish harami…continues to form a potential head and shoulders bottom. Stocks to Watch on Monday Leading Stocks Breaking Above 30 DMA ANSS…BAP…BCR…BIIB…BLUD…CTSH…DNA…EZPW…FLR…GIS…KNL…LFL…MBT…OI…OSIP…QSII…RTN…SAY…TECH…TEVA…TKC…VIP…WMS Stock Commentary PCLN rose after better than expected earnings Thursday afternoon, watch for potential double bottom breakout. ONXX gapped up after better than expected earnings Thursday, broke out of head and shoulders bottom with price target of $34.50 NVDA rose after positive earnings on Thursday, bounced from higher low…watch for breakout above $9.11. RRGB after a gap down rose to form a large white candle after positive earnings on Thursday…broke through old support resistance at 13. HANS rose from a higher low after a positive earnings report on Thursday...forming higher low? FLR rose from a positive earnings report Thursday...forming a head and shoulders bottom…watch for potential breakout and chart price target of 58. DIS gapped lower and then rose on Friday after reporting 43 cents earnings below estimates of 49 cents a share on Thursday…potential triple bottom? Friday’s Action Moving Up: BIDU, PCLN, FSLR, CF, ONXX, MA, AEM, CNX, MOS, SCHN, STRA, ESRX, HANS, ZION, NUE, X, POT, BTU, AGU, MEE, AMZN, V, INFY, LDK, BUCY, LAMR, IPI, SINA, Moving Down: DECK, GS, NDAQ, DRYS Intermediate Term Market Trend: Down Short Term Market Trend: Down

Stocks, Oil, Gold Fall For Second Day

DJIA - 443.48, -4.85% SP500 - 47.89, -5.03% NASDAQ Comp. - 72.94, -4.34% Russell 2000 - 18.80, -3.65% Exchange NYSE NASD Advancing 598 634 Declining 2,893 2,244 Oil $60.77 -$4.53 Gold $732.20 -$10.20 SOX 219.44 -16.81 VIX 63.68 +9.12 Strongest Sectors: XLP -1.07%...XLV -2.43%...XLI -4.69% Weakest Sectors: XLF -6.87%...XLE -6.02%...XLK -5.52% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK For the second day in a row all of our watchlist stocks were down. This is not negative since many of readers know how to trade the downside wheter shorting stocks, put options or advanced option strategies. All nine sectors moved lower with Financials, XLF, leading the way and Energy, XLE, was the second weakest sector. Oil and Gold and related stocks moved lower on Thursday. Index Commentary The DJIA closed below its 20 DMA and at the S1 level of the October 28 large white candle. The SPX closed below its 20 DMA and at the S1 level of the October 28 large white candle. The Nasdaq closed below its 20 DMA falling for the second straight day. The RUT formed closed below its 20 DMA…may be in process of forming a head and shoulders bottom. Thursday’s Action Moving Up: None in our watchlist Moving Down: MA, FSLR, BIDU, POT, GS, CNX, X, PCLN, ANR, BTU, MOS, FWLT, CLF, V, AMZN, BUCY, CF, DECK, DRYS, SOHU, AEM, ESRX, NDAQ, AGU, MON, NUE, SCHN, INFY, LDK, FMCN, COH, NIHD, KMT, MER, SINA, MS, MEE, GDX, IPI, GRMN, ZION, KBE, HANS Intermediate Term Market Trend: Down Short Term Market Trend: Down

Profit Taking Drives Stocks Down From Resistance

DJIA - 486.01, -5.05% SP500 - 52.98, -5.27% NASDAQ Comp. - 98.48, -5.53% Russell 2000 - 31.13, -5.74% Exchange NYSE NASD Advancing 690 596 Declining 2,765 2,272 Oil $65.30 -$5.23 Gold $742.40 -$14.90 SOX 236.25 -11.46 VIX 54.56 +6.83 Strongest Sectors: XLV -1.47%...XLP -1.77%...XLU -1.85% Weakest Sectors: XLF -9.15%...XLK -6.05%...XLY -5.52% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Tuesday’s Election Day rise into resistance reversed on Wednesday as profit takers sold at resistance. The decline was relatively modest until just before mid-day when the sell off accelerated. Wednesday’s sell off took back all of Tuesday’s gain and more. Stocks, oil and gold all fell pulling over 75% stocks down on both the NYSE and Nasdaq. The sell-off was broad as all nine sectors moved lower. Many stocks, like the DJIA and other indices, over the last six days had moved into the horizontal resistance, established since October 14. The broad indices have been in a sideways trading range over the past three weeks bouncing between support and resistance. Wednesday’s move down did break the low of the high day creating an entry signal for short-term bearish trades on many stocks, ETFs and indices. The price action was also an exit signal for many short-term bullish trades. Index Commentary The DJIA formed a bearish engulfing pattern in the area of horizontal resistance candle closing below its 30 DMA. The SPX formed a bearish engulfing like pattern closing below its 30 DMA and near its 20 DMA. The Nasdaq formed a large black candle that broke the low of the high day and closed at its 20 DMA. The RUT formed a large black candle falling from horizontal resistance, breaking the low of the high day and closing just below its 20 DMA. Wednesday’s Action Moving Up: None in our watchlist Moving Down: FSLR, BIDU, MA, GS, POT, ANR, MON, AMZN, CF, DECK, SOHU, V, NUE, CNX, FWLT, MEE, X, MOS, BTU, IPI, SCHN, SINA, ZION, KRE, KBE, PNRA, CLF, NIHD, LDK, BUCY, MER, INFY, FMCN, DRYS, MS, AEM, PCLN, KMT, JASO, ONXX, HANS, LCC, UAUA, RF, NDAQ, STRA, AGU, GRMN, EBAY, EXPE, LAMR Intermediate Term Market Trend: Down Short Term Market Trend: Neutral

Election Day: Stocks, Oil, Gold Rise Big

DJIA + 305.45, +3.28% SP500 + 39.45, +4.08% NASDAQ Comp. + 53.79, +3.12% Russell 2000 + 7.47, +1.39% Exchange NYSE NASD Advancing 2,779 1,843 Declining 743 1,041 Oil $67.81 +$6.62 Gold $757.30 +$30.50 SOX 247.71 +10.61 VIX 47.71 -5.95 Strongest Sectors: XLE +6.44%...XLF +5.63%...XLB +4.69% Weakest Sectors: XLV +1.31%...XLP +1.47%...XLU +1.88% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK After falling through its 30 DMA on Monday, the VIX dropped another 5.95 points or 11.08% to close at 47.72 on Election Day. The closing high for the VIX was October 27 at 80.06. In just a week and a half the VIX has fallen by 40% while the markets have risen. Oil prices rose for the second day in a row, rising 10.36%. Energy stocks were the leading sector as a result. Gold rose $30.50 and commodity related stocks also performed well on Election Day. The broad market indexes rose into the zone of resistance formed on October 14. Today the DJIA had a higher close than on October 14 and this is the highest close since Monday, October 6. Additionally all nine sectors closed higher with XLE, XLF and XLB the strongest on Tuesday. The DJIA closed above its 30 DMA for the first time since September 8. The SPX closed a point above its 30 DMA, which is its first close above that level since September 2. The Nasdaq and RUT are still below their respective 30 DMA. While it is still too early to say a new uptrend has begun, there is certainly more and more technical evidence each day that the big money institutions are becoming more aggressive in their buying and less aggressive in their selling. Our blog post on October 10, “Is this the beginning of the down trend?” appears more and more insightful every single day. What were you feeling on October 10 and how far off did you think we were when we posted that day? Most stocks in our watchlist had very solid gains on Tuesday...see Tuesday's action below. Index Commentary The DJIA formed a large white candle closing above its 20 DMA in the area of horizontal resistance. The SPX formed a large white candle that continued the short term uptrend…Monday’s inside day was a pause rather than a short term reversal…closed a point above its 30 DMA. The Nasdaq formed a spinning top 16 points below it 30 DMA in the area of horizontal resistance. The RUT formed a spinning top in the area of resistance. Tuesday’s Action Moving Up: BIDU, MA, FSLR, POT, V, MON, GS, AEM, FWLT, MOS, BUCY, DECK, CLF, SOHU, AMZN, CF, X, GDX, IPI, CNX, SINA, AGU, SCHN, ZION, NDAQ, KBE, PNRA, KRE, ANR, NUE, PCLN, MEE, BTU, FMCN, NIHD, INFY, LDK, MER, EBAY, JASO, MS, RF Moving Down: STRA, UAUA, LCC, Intermediate Term Market Trend: Down Short Term Market Trend: Up

ALERT: DJIA Breaks 30 DMA to the Upside

The DJIA has an intra-day Upside Breakout on its 30 DMA. The SPX is just below its 30 DMA with a potential breakout setting up. The Nasdaq and RUT are moving towards their respective 30 DMA.

VIX Gives Clue on Monday to Stocks Big Election Day

Last night in my internet commentary, I was asked about why the SPX and VIX were not consistent on Monday. The listener noticed that the SPX was unchanged and the VIX had moved down. I responded that it was not inconsistent and that the correlation was not always 100% from moment to moment. I added that sometimes the VIX will act ahead of the market and give us a clue of what the market is going to do. Tuesday morning it looks like the market is not doing what some in the media said was happening on Monday...that the market was waiting for the outcome of the presidential electon on Tuesday. At 11:49 ET the DJIA and SPX are up over the 3%. The VIX on Monday did give us the clue that the market was ready to move higher on Tuesday. Maybe the market is just glad to have the election process done, regarless of the outcome? Oil is also moving higher, so energy and commodity related stocks are having a big day also..airline stocks are not. MA and V up big Tueday morning. Check out the big 6 to 17% gains on these stocks: JASO, AEM, FWLT, IPI, MA, V, GDX, MOS, MEE, BTU, AGU, BUCY, CLF, LDK FSLR, FMCN, NIHD, BIDU, SCHN, CNX, POT, ANR, X, MON, ZION.

Lighther Volume, Lower Volitility and Smaller Trading Range

DJIA - 5.18, -0.06% SP500 - 2.45, -0.25% NASDAQ Comp. + 5.38, +0.31% Russell 2000 + 0.98, +0.18% Exchange NYSE NASD Advancing 1,963 1,600 Declining 1,508 1,271 Oil $63.91 -$3.90 Gold $726.80 +$8.60 $SOX 237.10 -2.37 Strongest Sectors: XLP +1.53%...XLU +1.04%...XLV +0.75% Weakest Sectors: XLE -3.09%...XLY -2.87%...XLK -1.71% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK The DJIA had it's smallest daily trading range since September 3. Ironically Monday was also the lowest DJIA trading volume since Septermber 3. This was attributed to big money remaining on the sidelines until the outcome of the Presidential election on Tuesday. While the broad indices traded in a narrower range on Monday, many individual stocks had strong gains like CVD, ENER, PRU, SPWRA, FSLR, HUM, CLF, UBB, EQ, CTL, CEPH and BIIB.

Oil prices continued their down trend. Inversely airline stocks rose. Look at the charts of ALK, AMR, CAL, DAL, LCC and UAUA.

Index Commentary The DJIA formed a doji and closed above its 20 DMA for the third straight trading day. The SPX formed an inside day, a small black spinning top candle while closing above its 20 DMA for the third straight day. The Nasdaq formed a small white spinning top and closed above its 20 DMA for the second trading day in a row. The RUT formed a small white spinning top that could be seen as a shooting star and closed above its 20 DMA for the second day. Monday’s Action Moving Up: FSLR, LDK, CLF, ZION, DRYS, UAUA,CNX, X, AEM, JASO, LAMR, SOHU, LCC, Moving Down: DECK, MA, GS, NUE, MOS, ANR, V, NIHD, CF, AMZN, BIDU, STRA, NDAQ, MON, MEE, IPI, FWLT, BTU, INFY Intermediate Term Market Trend: Down Short Term Market Trend: Up

DJIA, SPX, NASDAQ & RUT All Close Above 20 DMA

DJIA + 144.32, +1.57% SP500 + 14.66, +1.54% NASDAQ Comp. + 22.43, +1.32% Russell 2000 + 23.34, +4.54% Exchange NYSE NASD Advancing 2,512 2,223 Declining 938 702 Oil $67.81 +$1.85 Gold $718.20 -$20.30 $SOX 239.47 +4.41 Strongest Sectors: XLF +4.86%...XLY +4.08%...XLI +3.32% Weakest Sectors: XLU -2.66%...XLP -0.62%...XLK -0.60% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK If you have been listening to any of our audio commentaries or reading our posts since October 10, you know that we have been thorough in pointing out the technical evidence which began appearing on the charts on October 10 that the down trend could be coming to an end. New technical evidence today shows the DJIA, SPX, Nasdaq and RUT all closed above their respective 20 DMA on Friday. The DJIA had its first two consecutive up days, Thursday and Friday, since September 25 and 26. The Nasdaq had its first four consecutive up days, Tuesday to Friday, since May 27 to 30. Also, have you noticed that the RUT was up 4.5% a day on Thursday and Friday. This is a strong indication that the flight to safety action (selling smaller stocks and buying more mature stocks) during the month of October is shifting back to a more broad based acquistion of stocks by the big money crowd. As we stated Thursday evening what this means is that buyers are becoming more aggressive and sellers are becoming less aggressive. The markets will still fluctuate, at some point the rally of this week will exhaust and the markets will pull back to support. If the next pull back to support is a higher low, that will be further technical evidence of a changing trend. The market still needs to form both a higher high, above the October 14 high, and a higher low to establish a new up trend. The Financial Sector, XLF, +4.86%, was once again the top sector on Friday Friday’s Action Moving Up: STRA, MA, DECK, ESRX, CF, NIHD, DRYS, MEE, PNRA, ZION, KRE, UAUA, KBE, NDAQ, NUE, MOS, GS, MS, SOHU, ONXX, V, COH, MER, BTU, IPI, LCC Moving Down: BIDU, PCLN, AEM, X, GRMN, AGU, GDX, Intermediate Term Market Trend: Dow Short Term Market Trend: Up

Braod Rally...Narrow Range

DJIA + 189.73, +2.11% SP500 + 24.00, +2.58% NASDAQ Comp. + 41.31, +2.49% Russell 2000 + 23.30, +4.75% Exchange NYSE NASD Advancing 2,747 2,148 Declining 668 756 Oil $65.96 -$1.54 Gold $738.50 -$15.50 $SOX 235.06 +9.12 Strongest Sectors: XLU +5.58%...XLE +4.61%...XLP +4.21% Weakest Sectors: XLV +2.35%...XLY +3.03%...XLB +3.14% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK All nine sectors moved higher on Thursday showing the breadth of Thursday's rally. The daily range was modest 289 points compared with recent daily trading range. 79% of NYSE stocks and 72% of Nasdaq stocks moved higher. What was impressive about Thursday's rally was for the first time since October 10, buyers were in control on the second day after a large market rise. The prior two rallies on October 12 and October were followed by sell offs the second day after that had taken back most of the gains. Not so today. That does not mean that sellers won't gain control in the area of resistance, rather it show that sellere were not as agrressive and buyer were more aggressive this time around as the DJIA nears the horizontal resistance. Index Commentary The DJIA and the SPX formed an inside day white candle and closing above their 20 DMA for the first time in weeks. The Nasdaq rose to its DMA and formed a doji with a higher high and higher low compared with Wednesday, closed just below its 20 DMA. The RUT did not confirm Wednesday’s shooting star…rather it gapped open and moved higher through out the day closing at its high for the day. Watch Thursday's low on each index as the key short term support area. Thursday’s Action Moving Up: FSLR, STRA, ESRX, CF, DECK, V, MA, FWLT, MOS, AGU, CNX, IPI, X, NUE, BUCY, FMCN, UAUA, HANS, KRE, PNRA, ANR, AEM, BTU, GRMN, MS, MON, SCHN, DRYS, NIHD, BIDU, INFY, KMT, LDK, ONXX, COH, BRCM, GDX, LCC, NDAQ Moving Down: GS, EXPE Intermediate Term Market Trend: Down Short Term Market Trend: Up

Fed Lowers Rates 1/2%...Dollar Falls...Oil & Gold Rise

DJIA - 74.16, -0.82% SP500 - 10.42, -1.11% NASDAQ Comp. + 7.74, +0.47% Russell 2000 + 8.33, +1.73% Exchange NYSE NASD Advancing 2,216 1,705 Declining 1,224 1,183 Oil $67.50 +$4.77 Gold $754.00 +$13.50 $SOX 225.94 -6.47 Strongest Sectors: XLB +4.11%...XLE +2.21%...XLY +2.05% Weakest Sectors: XLF -6.16%...XLK -3.88...XLU -3.20% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK After the second largest one day DJIA point gain in history on Tuesday, a 10.88% gain, a pullback of 0.82% on Wednesday was a very modest pullback. The SPX gave back a small part of Tuesday’s while both the Nasdaq Composite and RUT rose for the second day in a row. The Fed lowered the Fed Funds rate by ½% that sent stocks gyrating up and down before closing down slightly for the day. In response the dollar fell against other currencies and the price of oil and gold rose. XLF fell 6.16% on Wednesday after rising 15.71% on Tuesday going from Tuesday’s largest sector gain to Wednesday largest sector loss. XLF and XLB rose to their 20 DMA and then pulled back to close below their 20 DMA. The seven other sectors XLP, XLY, XLV, XLI, XLE, XLU and XLK all moved above their 20 DMA only to see sellers push prices lower to close below their 20 DMA. The current price action on these nine sectors may be further technical evidence that the downtrend is in process of shifting from down to sideways. Several leading stocks like AMGN, BA, CB, MMM and TRV have closed above or near their 30 DMA. Remember that stocks are still consolidating between support and resistance and if this is the bottom, as the growing technical evidence since October 10 has been indicating, it could still take anywhere between one and half to five and a half weeks before a clear uptrend reemerges in the broad indices. Which means expect short term moves up and down to continue as the norm…after all that’s what sideways trends do.

Check the charts of our Daily Action Watchlist below for either trend reversal moves or bear flag opportunities.

Index Commentary The DJIA penetrated its 20 DMA and then sold off to close below its 20 DMA…formed a shooting star and bearish harami…watch the S1 level of Tuesday’s large white candle. The SPX moved above and then closed below its 20 DMA…formed a shooting star and bearish harami…watch the S1 support level of Tuesday’s large white candle. The Nasdaq rose to its 20 DMA and closed down from its high and formed a white spinning top. e bottom. The RUT formed a white shooting star as it had the largest percentage gain for the day of the four broad indices. Wednesday’s Action Moving Up: POT, MON, ANR, AGU, CNX, GS, STRA, MOS, BTU, PCLN, AEM, MEE, GDX, BIDU, NIHD, LAMR, FSLR, FMCN, KMT, DRYS, FWLT, SINA, SCHN, IPI, PNRA, NDAQ, LDK, DECK, BUCY, SOHU, AMZN, V Moving Down: ESRX, UAUA, KBE, CLF, BRCM, COH, EBAY Intermediate Term Market Trend: Down Short Term Market Trend: Neutral

Second Largest DJIA Point Gain In History...And From Support...

DJIA + 889.35, +10.88% SP500 + 91.59, +10.79% NASDAQ Comp. + 143.57, +9.53% Russell 2000 + 34.15, +7.62% Exchange NYSE NASD Advancing 2,741 2,047 Declining 727 888 Oil $62.73 -$0.49 Gold $740.50 -$2.40 $SOX 232.41 +19.84 Strongest Sectors: XLF +15.71%...XLE +15.25%...XLK +13.90% Weakest Sectors: XLV +6.30%...XLP +6.89...XLY +9.78% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK Second Largest DJIA Point Gain In History...And From Support...Is that really possible? Does support really have meaning in largest bear market since 1974? While the magnitude of buying can not be predicted from day to day, today's price action is certainly consistent with the price action of the past 13 trading day. The October 10 intra-day low was 7,882.51. Monday’s low was 8,143.59. That is a difference of 261 points. Today we stumbled across a notable newsletter writer that we have known of for approximately two decades. This writer has historically not been a technician but wrote just yesterday on October 27 “the Dow’s Oct. 10 lows have been decisively broken.” I fault no one for their opinion. But I am embarrassed for another individual when they comment beyond their expertise and have compassion for anyone who read their comments and sold out on Monday or Tuesday because of them. Support is not a specific price but an area or zone of support and an intra-day low 261 points above the cited intra-day low is not “decisively broken.” These type of comments mislead readers and can hurt real people financially. Let’s clarify. In an actively traded stock or index the actual low, not the closing low, is the specific area where buyers stepped in and became stronger than sellers. The close is the price those buyers were able to drive the stock or index to by the end of the day. The intra-day low was the epicenter of support. The DJIA has approached or traded in the area of the October 10 low six times; Oct. 16, 22, 23, 24, 27 and today October 28. ALL SIX TIMES buyer have been present and support held. Dave's Insight: There are big money buyers in the 7,882 to 8,143 area of the DJIA. That of course does not mean that this support area can not be broken, however, for the past 13 trading days they have stepped up and become buyers in this area which suggests unless some new and significant negative surprises unfold that they are likely to continue to be buyers in this area of support. On October 10 we posted in this blog “does this finally mark the beginning of the end of down trend?” Since that time we have fairly represented that bottoms can only be identified after it becomes fact, but that price action characteristics of bottoms can identified while a potential bottom is in process of forming. We have also fairly represented those bottoming characteristics that we have seen. Dave’s Insight: Don’t listen to technical insights from individuals who are not technical experts. That said, even with the second biggest daily point gain in history, the technical evidence does not yet support the idea that this basing action is over and a new uptrend is a foregone conclusion. Technically, a higher high than the October 14 high and a higher low above the Monday’s low needs to appear for confirmation of a trend reversal. Interestingly enough the 30 DMA is now at the level of the October 14 high. Also if the price action continues in the range since the October 10 low, volatility which has been flattening for the past 13 trading days should begin to fall more aggressively. All nine sectors moved higher with counter trend support bounces, several of of which have trend reversal characteristics. Oil fell further on Tuesday in the open outcry session which closes at 2:30 ET. In electronic trading after the 2:30 close oil rose $3.19. Airline stocks LCC, UAUA and CAL moved higher with falling oil prices. Leading stocks AMGN, CB and MMM moved higher and TRV formed a hammer with a support bounce off its 20 DMA. Index Commentary The DJIA bounced off support with power forming a bullish engulfing pattern and last Thursday’s bullish harami…closed near its 20 DMA first time since late September…formed a bullish divergence off its potential double bottom. The SPX bounced off support with a bullish engulfing pattern…confirmed last Thursday’s bullish engulfing and Friday’s hammer-like pattern…formed a bullish divergence in the MACD off its potential double bottom. The Nasdaq formed a large white candle that confirmed Friday’s inverted hammer and bullish engulfing pattern…with a bullish divergence in the MACD off a lower low. The RUT forms a bullish engulfing pattern off a lower low while forming a bullish divergence in the MACD. Stock Commentary Look at the Bollinger Band Hook in these Dow stocks: AA, AXP, BA, CVX, DIS, GE, HD, IBM, INTC and KFT...further evidence of a potential end to the down trend. Semiconductors stocks TXN, STM and TSM part of the SOX index were strong again today. Tuesday’s Action Moving Up: BIDU, MON, MA, STRA, SOHU, CF, CLF, AMZN, FLSR, POTS, SINA, NUE, X, PCLN, MOS ANR, AGU, SCHN, ESRX, KBE, HANS, INFY, V, COH, NIHD, FMCN, MER, BUCY, PNRA, KRE, NDAQ,ZION, AEM, BTU, GDX, CNX, MEE, FWLT, MS, GRMN, RF, UAUA, KMT, ONXX, EXPE, BRCM, EBAY, LDK, IPI, Moving Down: DECK Intermediate Term Market Trend: Down Short Term Market Trend: Neutral

Stocks Hit New Closing Lows

DJIA - 203.18, -2.42% SP500 - 27.85, -3.18% NASDAQ Comp. - 46.13, -2.97% Russell 2000 - 22.72, -4.82% Exchange NYSE NASD Advancing 730 634 Declining 2,727 2,233 Oil $63.22 -$0.93 Gold $742.90 +$12.60 $SOX 212.57 +0.24 Strongest Sectors: XLY -1.49%...XLK -2.06%...XLP -2.54% Weakest Sectors: XLB -7.42%...XLE -6.39%...XLV -4.28% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK The DJIA opened lower rallied until 1:40 ET and then sold off to close at its low of the day and a new 52-week but still above the intra-day low on October 10. It is still in the zone of support but approaching the low end. All nine sectors continue their respective downtrends and were lower on Monday.

Watch the October 10 close in the DJIA as a key support area. Trade with the trend.

Oil continued to move lower in its downtrend and gold rose for the second day in a row although gold stocks moved lower. The SOX Semiconductor Index actually rose slightly on Monday. Index Commentary The DJIA The SPX The Nasdaq makes a new 52-week closing low…forms inverted hammer and bullish harami. The RUT forms large black candle closes at a new 52-week low. Monday’s Action Moving Up: STRA, ZION, RF, CF, BRCM Moving Down: FSLR, BIDU, GS, POT, AEM, MA, ESRX, X, CNX, ANR, BTU, NUE, MS, PCLN, ONXX, CLF, DRYS, SOHU, COH, V, AGU, SINA, FWLT, SCHN, GDX, MOS, MEE, GRMN, NDAQ, BUCY, LKD, KMT, INFY, FMCN, LAMR, MON, PNRA, LCC, Intermediate Term Market Trend: Down Short Term Market Trend: Down