Earnings Summary

Reporting a quarter of accelerating earnings growth:
CATM, EXAC, FPO, RGR, SKT

Reporting a quarter of decelerating growth:
CACC, DIN, EEI, GTIV, HWKN, LANC, LHCG, VSEC

Reporting a quarter of negative growth:
CTGX, SOHU

Relative Strength Scans

Here are the results of the relative strength scan. There was a drop in the number of stocks in the top 25% of the 532 week range this week, but the number is still over 2000. Nothing was changed in the methodology this week. I haven't finalized the spreadsheet yet, but so far it looks like it will be under 1 Megabye this weekm so I should be able to upload both pages. I will also be doing the relative strength by industry post, although I'm not sure I can have it done today.

IBD 100

I have BWY as last week's biggest ganer on the IBD 100, but IBD has BWY and TRCR tied for first. Not that it matters, they were the only two stocks on the IBD 100 to finish positive for the week. BWY just ompleted a bounce off the 50dma. but appears to be in the base building process and will likely consolidate here for a while. Price relative is pretty strong, and the lack of pani here indicates that there are a lot of strong holders here. If this correction continues, we will be looking for stoks that are holding up, as they will probably take off when the market turns.

TRCR was the secons biggest gainer, and essentially finished flat on the week. It, too, is in a consolidation and could try to break out at any time. Notie the rising prie relative line. This is pretty thinly traded, and CMF does not indicate a lot of accumulation, but I really like the pattern.

DDRX has been a popular target among short sellers for quite a while, and it finally paid off, as it was last week's biggest decliner. I forgot to put the arrow on last Friday's lose, but it was about where it peaked out. Since then vilume has been increasing and the drop has accelerated. This just had an earnings breakout a couple of weeks ago, so this isn't news related. At some point you will have knife catchers and shorts covering, but where that will happen is anyone's guess.

ININ was last week's second biggest decliner, and like DDRX, was a recent earnings breakout. It formed a bullish consolidation after the breakout, then collapsed as the market entered a correction. O'Neil is adamant about selling and raising cash as the distribution day count gets high, because even the best stocks can get rushed when the market heads south. Here are two prime examples of that.

Since IBD called a correction, distribution days are no longer counted. We are now looking for a rally attempt and follow through day. If you don't know what that means, you can follow this blog as I will be tracking it closely, or you can read IBD (or check their website), or, probably the best thing to do is read O'Neil's "How To Make Money In Stocks".

Friday New Highs

There were 42 new highs today, here is the list.



Here are the high volume advancers from the relative strength list.

And the high volume decliners.

I don't believe anything on either watchlist reported after the close, but I will have an earnings update tomorrow.

Ok, This Time It Really Is A Correction. No, Really.

A big down day on high volume, a bigger bounce on low volume, then an even bigger drop on higher volume. It's sort of hard to draw any other conclusion: It's time to bail out. The dollar rise again today, matching nearly tick for tick the inverse of the SPX. Oddly enough, I noticed GLD rallying in the last hour of trading, I have no idea what that was bout, but the SPX severely hit the skids. We now have 2 short term trendlines broken, and the long term trend from the March low is gone (not shown here).

On the weekly chart the SPX had it's biggest drop in a long time, on higher volume than we've had for a while. Unfortunately for the bulls, In the last 6 weeks the big volume weeks have been sharply down, the low volume weeks the 2 up weeks. Not the stuff that bull markets are made of. Obvious weekly support is at 950, resistance at 1100, and the midpoint about 1025. The 10 week line is broken, stochastics are headed down, and there are about a million short sellers who have been chomping at the bit for this moment.


The Nasdaq traversed half it's weekly range in one week. Stochastics crossed 80, a usually reliable sell signal. CMF is still pretty high, though, and with the big money boys selling into strength, I'll be watching for signs of them buying into weakness.

The Dow industrials are the only major index to have it's march trend line still intact. It is also still in the very upper part of it's range. Stochastics are pointed down but not giving a sell signal. It would figure that this is now the strongest index, as this will probably be seen as being defensive, por at least highly liquid.

The Russell 2000 is the worst place to be when the market turns bearish, and this was the first to crack, first by failing to get to a new high, then leading the charge downward. Stochastics have given a pretty decisive sell signal. The March trend line is long gone. This should get some support around 525, where it will meet the 40 week line. Unless it doesn't.



Here is a weekly of the Dow transports, which may become a weekly staple here. This, along with the Russell, signaled trouble by not getting to a new high, and like the Russell, is leading the way down.

There isn't much doubt now that the correction I've been calling for months now is finally here. Whether this will be a bull market correction or the start of another bear remains to be seen. However, by carefully watching the patterns of price and volume, we may be able to differentiate between another buying opportunity or the shorting opportunity of a lifetime.

I will have the new highs update in a bit.

HMSY

HMSY was an IBD 100 stock that went into a deep correction in early August. Somebody was paying attention because this has been quietly being accumulated, building a somewhat distorted cup and handle pattern. It reported earnings and broke out, although volume could have been better. The O'Neil breakout point is the high of the handle, where I drew the short blue line, just below the July high. It is interesting that this gapped up right to the breakout point, although that is probably coincidence. The price relative is quite weak here, and with the market in a correction, any new buys are going to be quite risky.

MTD

MTD broke out on earnings from a short cup and handle pattern (too short to show up on a weekly chart). Notice how as it was pulling back in the handle, the price relative line was rising. That is exactly what you want to see in a handle.

HAR

HAR was an earnings breakout on a less than espected loss for the quarter. This has been in a relentless uptrend since March and just completed a perfect bounce off the 50dma, which unfortunately came two days before it was to report. The price relave line here is extremely strong, indicating this has been outperforming the market for months. It did, however, pick a bad day for a breakout try, and succumbed to selling pressure.

Options Data

Here is today's unusual options trading, from whatstrading,com.

At Critical Support

This is a one minute 3 day chart of the SPX, with the low from two days ago drawn in. As you can see, we have given back yesterday's rally, and are threatening to break through that line at 1042. A decisive break here will confirm a move down.



Contrast that with the Russell 2000, which has already decisively broken through. The Russell is usually my "leading indicator", as strength or weakness shows up here first.

Today's Economic Reports

Here are today's economic reports as summarized on Finviz. I suspect it is the personal income and spending figures which are havint the most effect on the markets today.

Here is an item in the news this morning. with the $150 bilion in stimulus spent so far, we have saved or created 650,000 jobs. Lets see, 150b/650k=total cost to taxpayers of $230,769.23 per job. Now, is that jobs that will be sustained after the stimulus is no longer needed, or will we continue to have to pay $230,769.23 every year to prevent those (let's be charitable and call them $50k per year jobs) jobs from disappearing?

Breakout Candidates

Here are the top four breakouts in terms of relative volume. All except MXB are on earnings.

Friday Morning Update

Well, that didn't take long. Yesterday's bear trap is turning into today's bull trap, as the market has turned once again. Whether it's earnings season, disappointing economic indicators (we had several this morning, which I will do a run down on later), or just the vagueries of the FX market, the dollar is took another rocket shot last night, especially against the Euro. Commodities are taking a beating, as are the commodity sectors, but in an act of seemingly divine intervention, XLF is getting crushed. The usual suspects are showing strength today, XLV, XLU, and XLP. Since yesterday's high is the first hurdle for this market to get over, I have that as resistance, the prior day's low as support, and 1055 right in the middle. There is a bit of relative strength in the Nasdaq, but the Russell 2000 is waaaaay back there, almost a full percentage point below the SPX.

It seems like only a few days ago we were getting 500 new highs every day, now we have 27.
One of the great things about big down days is that stocks that are strong stick out, and despite the low number of new highs, there are quite a few good looking breakouts. MSTR, MXB, HAR, and EL are thee best in terms of relative volume. From the two watchlists, reporting last night: FPO unchanged, ANH down 1.3%, FADV down 1.7%, WR down 0.36%. Reporting this morning were THI down 3%, and PAG down 6%. I will have a comprehensive earnings report for this week over the weekend.

Thursday New Highs

Here are today's new highs. If you prefer the spreadsheet, the link is here.

The high volume advancers from the relative strength list.

The high volume decliners.

I have scheduled to report today FPO, flat in after hours trading, ANH up .68%, FADV up o.o2%, and WR, down .61%.

A Goldman Bear Trap

After a huge down day (thanks in part to a sandbagged Goldman Sachs GDP estimate), it wouldn't be surprising to see a bounce, especially with GDP beating the said estimates. Goldman did a good job of setting a bear trap. and today was quite a squeeze, but the market is still in precarious territory. The internals have been deteriorating for a couple of weeks, there has been selling into strength, and earnings have been unimpressive. Getting through 1060, though, was an important technical accomplishment, and marks Day 1 of a new rally attempt.

The Nasdaq got the bigger gap at the open, but didn't get the follow through the SPX got, and went from leader to laggard. It is going to have a lot of resistance going forward as this is an area of denser price congestion than it is on the SPX. Price relative is not looking good at all.

The IWM tracks the Russell 2000. Except for today, high volume days here have been down days recently. Today's bounce was weak, and didn't come close to the 50dema. Price relative looks even worse here than it does on the Nasdaq.


USO, of couse, is the oil ETF. that, I believe tracks the futures price rather than the spot price, not that that is terribly important in the short term. 40 is the breakout point on this, and the pullback brought us below it for a day, but it has gotten back above it. It turns out that yesterday's pullback brought it right down to the 200dema. Price relative is looking quite good here, at it's highest level in the last 3 months.


And GLD i the gold traking ETF. 100 is the breakout poinjt here, and we have yet to retest it, let alone break it. Price relative is a little weak compared to USO, but still high.


The 7 year note was auctioned off today, $31 billion worth. Once again, indirect bids looks awfully low to me, but I don't have any history on this, so I can't draw any conclusions. It did not seem to affect the markets, however.

Either the bulls were taken in by the GDP numbers, or the bears just weren't taking chances, but for whatever reason, the bears did not follow up on their gains today. Of course, it's understanble as they have been getting their faces ripped off for the last 7 months.

I will have the new highs update in a bit.

CRR

One of a few earnings breakouts on the day, CRR had the best relative volume, and closed near the high of the day. Notice a strong prie relative line, as opposed to the weak price relative we saw on V yesterday. Volume was a little higher than average on the pullback to the 50dma, but it wasn't a good entry point anyway as I really don't like to take positions just before earnings.

GIGA

There were 31 new highs today and only 19 of them managed to not close lower than they opened. GIGA got a lot of volume, had a big range, but closed right where it opened. This reported good earnings last night (or at least a lot better than a year ago), but could not withstand the selling pressure.

Options Data

Here is today's unusual options trading, from whatstrading.com

I will likely be off the internet for a couple of hours after the market closes so my update will probably be late.

Breakout Candidates

Here are the top 5 new highs in terms of relative volume. ROIA and ROIAK are the same company, I would assume ROIAK are either A or B shares.

Thursday Morning Update

GDP came in this morning at 3.5%, beating the revised estimate that Goldman Sachs issued yesterday at 3.2%, which makes you wonder why they revised it lower.But, hey, they're Goldman Sachs, they are supposed to be underhanded. The market is welcoming the news with a very luke warm rally. Looking at the chart, there are several possibilities for support and resistance, including the obvious computer driven pivot points at 1040, 1050, and 1060. Yesterday's drop stopped at 1042, do that is where I put support. Leading today is XLB, with XLF and XLY slightly behind. Weakness is in XLV, XLU, XLP. Gold, oil and the Russell 2000 are all getting nice bounces.

There are 17 new highs so far. ROIA, a penny stock that made a huge move early this month, is making anotheer one today. There are also good breakouts in GIGA, LMAT, CRR. On the earnings front we have another busy day. Those that reported last night: CATM up 15%, LHCG down 4.2%, RGR down 3%, AEM down 5%, CML up 3.4%, CMO up 4.3%, CYTK down 20%, GNK up 5%, LOOP up 9%, TER up 9&, USMO down 2.8%. Reporting this morning: SRI up 3.5%, VMED up 3.5%, NUS down 2.5%, PNM down 3.1%, ASIA up 17%, CLP up 3.8%, GTIV down 5%, and LANC up 1%.

Wednesday New Highs

Here are today's new highs. If you prefer the spreadsheet, the link is here.

Here are the high volume advancers from this week's relative strength list.



These are the high volume decliners. Click on the picture to get a better view.

After the close we had reports from ASIA, up 3% after hours, CATM up 11%, CML down 0.28%, CMO up 1.6%, CYTK up 4.2%, GNK down 2.9%, LHCG flat, TER up 2.2%, USMO flat.

Put A Fork In This Rally

My call for a bounce off the 50dma lasted all of about half an hour, before we turned tail and broke right through it, and on the highest volume in aboout a month. Now we are sitting on yet another support level at 1040, below that is another one at 1020, then we have the 200dma's (the exponential average is the one I put up today, it will be the first one hit if we go that far). IBD last night changed the market pulse to "market in correction" so we are no longer counting distribution days, and will now look for the start of a new rally.

The Dow industrials havde fallen the least from the highs, are still above the 50dma, and volume is picking up, something you might expect to see as investors become risk averse.

The Dow transports, on the other hand, have cracked and are just barely above the 200dema, and has broken below it's previous low. Volume has been picking up as the sell off proceeded, and could approach near panic levels is this does go down much further.

The Russell 2000 also broke it's previous low, and today's drop was pretty spectacular. The flight to safety has apparently begun.


Many market observers believe thatn the VIX is no longer a reliable indicator of market sentiment, and they may be right, at least to a degree. the emergence of inverse ETF's has provided trader's with a chance to hedge withoout buying options. Still, the VIX has made a rapid and relatively larger move in recent days, although in the context of the last year, it doesn't look that big. However, the trend downward appears to be ending.

I'm pressed for time today. The new highs update will be at it's normal Wednesday time.

V

V broke out on eanings on a big gap up, but late selling spoiled the party. This had a tough time with the market headwinds, and the weak price relative line gave a warning that something like this might happen. However, we did not get the black cnadle that has been so common lately, so that is encouraging.

PEET

The only really succseeful breakout on the day, PEET broke out of a pretty ugly looking base on huge volume, and on a day like today really held up extremely well. Price relative has been weaakening, but that should change if this follows through.

Options Data

Here is today's unusual options trading, from whatstrading.com.