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Mel’s Subscriber Report – Detail Report – Saturday, May 07, 2011

Nightly Report for Sun may 8th 2011by Jerome “Mel” Hickerson

Mel's Subscriber Report – Detail Report – Saturday, may 07, 2011 Short Term Trend                             None Intermediate Term Trend                Neutral Long Term Trend                              Higher Short Term Outlook                          Lower Intermediate Term Outlook             Lower Long Term Outlook                           Lower Market Breadth Statistics: Dow Jones Industrials: +54.57 with 25 advancing and 5 declining and the advancing/declining volume ratio was advancing 3.35 to one while advancing/declining issues ratio was advancing 5. to one. There were three 200 Day new Highs and zero 200 Day new Lows. There were four Twenty Day new Highs and one Twenty Day new Lows. NASDAQ 100 (Qs): +7.97 with 73 advancing and 26 declining and the advancing/declining volume ratio was advancing 2.07 to one while advancing/declining issues ratio was advancing 2.81 to one. There were nine 200 Day new Highs and zero 200 Day new Lows. There were eighteen Twenty Day new Highs and three Twenty Day new Lows. SPX 500: +5.1 with 340 advancing and 144 declining and the advancing/declining volume ratio was advancing 3.33 to one while the advancing/declining issues ratio was advancing 2.36 to one. There were 36 200 Day new Highs and three 200 Day new Lows. There were 51 Twenty Day new Highs and 30 Twenty Day new Lows. Evidence of Trend: For the SPX, new Highs were 26 Thursday and 51 Friday while new Lows Thursday were 79 and Friday were 30. for the Qs, new Highs were ten Thursday and eighteen Friday while new Lows Thursday were ten and Friday were three. In Late Trading: 199 SPX components moved upward and 115 components downward during the after hours with 92.7 million shares traded. good evening. I hope everyone is enjoying their Saturday evening. What we Learned from Friday's Action: Friday was session 4 to close below the 5 DMA, session 3 to close below the 10 DMA, session 12 to close above the 20 DMA, and session 12 to close above the 50 DMA. This was also session 9 for the 5 DMA to close above the 20 DMA. One early sign of a sustainable rally or pullback is often a close above or below the 10 DMA. the SPX closed 10.07 points below the 10 DMA. Non farm payrolls rose by 244,000 in April, more than the expected 185,000, but the unemployment rate rose to 9.0%. on Monday we have nothing significant on the economic calendar. SPX Summary: SPX big winners were Fluor Corp (New) (FLR) 7.56%, CF Industries Holdings inc (CF) 6.37%, and NVIDIA Corporation (NVDA) 3.47%. SPX big losers were Carmax inc (KMX) -6.18%, Washington Post Co Cl B (WPO) -4.77%, and Priceline.com inc (PCLN) -2.82%. the unweighted average gain/loss of all SPX components was .42% with an average range of 2.23%. 118 components gained more than 1% while 35 lost more than 1%. 482 components had a range greater than 1% while 259 exceeded a 2% intraday range. SPX big range movers were Range Resources Corp (RRC) 5.78%, Fluor Corp (New) (FLR) 5.6%, and Nabors Industries inc (NBR) 5.53%. SPX small range movers were National Semiconductor (NSM) .21%, Cephalon inc (CEPH) .35%, and Johnson & Johnson (JNJ) .58%. SPX five day big winners are Novellus Systems inc (NVLS) 10.84%, Macy's inc (M) 9.08%, and Electronic Arts inc (ERTS) 7.78%. SPX five day big losers are Computer Sciences Corp (CSC) -14.65%, Helmerich & Payne inc (HP) -13.07%, and Pioneer Natural Rescs Co (PXD) -12.86%. the five day unweighted average gain/loss of all SPX components is -1.58% with a five day average daily range of 2.27%. on a five day average, 89 components gained more than 1% average per day while 253 lost more than 1%. 493 components had an average daily range greater than 1% while 267 exceeded a 2% intraday range. the SPX average range during these five days has been 1.11%. New Highs/New Lows:   SPX Nine Sector Review: the largest volume gain Friday compared to the previous day's volume came in the Financials Sector (124.58% of previous volume) and the largest volume decline came in the Energy sector (81.47% of previous volume). Combined volume of the nine sectors of the SPX was 94.58% of the previous session. the largest positive change day over day came from the Energy sector and the largest negative moving sector was Consumer Discretionary. for the SPX, the advancing/declining volume ratio was advancing 3.33 to one while the advancing/declining issues ratio was advancing 2.36 to one. There were 340 advancing components and 144 declining and the dollar ratio was advancing 2.38 to one (more dollars went into advancing stocks.) the five key sectors (Materials, Energy, Financials, Industrials, and Technology) had 73.5% advancing issues and the dollar ratio was advancing 2.48 to one (more dollars went into advancing stocks.) Nine sectors had advancing volume while zero sectors had declining volume. for the SPX advancing issues (340) averaged 7.0 million shares traded ($211.1 million each stock) and declining issues (144) averaged 4.9 million shares traded ($209.6 million each stock.) Dow Review: Advancing Dow issues (25) averaged 20.9 million shares traded ($708.3 million each stock) and declining issues (5) averaged 31.2 million shares traded ($1,015. million each stock.) Review of the Qs: the NASADQ 100 advancing issues (73) averaged 6.8 million shares traded ($241.9 million each stock) and declining (26) issues averaged 9.3 million shares traded ($477.8 million each stock.) the power rating for the Qs is 539. Weekly Review: the largest volume gain this week compared to the previous week's volume came in the Energy Sector (137.81% of previous volume) and the largest volume decline came in the Technology sector (89.99% of previous volume). Combined volume of the nine sectors of the SPX was 105.47% of the previous week. the largest positive change week over week came from the Health Care sector and the largest negative moving sector was Energy. for the SPX for the week, the advancing/declining volume ratio was declining 2.07 to one while the advancing/declining issues ratio was declining 2.26 to one. There were 149 advancing components and 337 declining and the dollar ratio was declining 2.25 to one (more dollars went into declining stocks.) the five key sectors (Materials, Energy, Financials, Industrials, and Technology) had 21.1% advancing issues and the dollar ratio was declining 3.82 to one (more dollars went into declining stocks.) three sectors (Consumer Staples, Utilities, and Health Care) had advancing volume while six sectors had declining volume for the week. for the week, SPX advancing issues (149) averaged 6.9 million shares traded per day ($224.2 million each stock) and declining issues (337) averaged 6.4 million shares traded per day ($222.9 million each stock.) for the week, the NASADQ 100 advancing issues (37) averaged 9.8 million shares traded ($300.2 million each stock) each day and declining (63) issues averaged 6.9 million shares traded ($353.1 million each stock each day.) This was a defensive week; the advancing sectors were defensive sectors and the declining sectors were the “leaders”. Looking ahead: the current market environment is -4. the environment variable finally has begun to move lower. Friday’s day trading went well. we were long Friday (all posted live on Twitter) at 10:25am exiting at 11:19am, and then we shorted the market at 11:37am and exited at 13:18pm. it was a profitable and stress-free day of trading as the market moved well and we caught both the move higher and the move lower. Let’s focus a bit on the big picture. for several weeks we have witnessed the indices move higher primarily on the back of the energy sector. we witnessed this week why being carried by one sector can be a problem as we saw the energy sector sharply reverse and carry the market downward with it. The SPX painted a bearish engulfing weekly candle. There have been six bearish engulfing candles on weekly SPX when at a 52 week high. All six led to lower prices; and all but one led to more than a-3% loss. the most recent example was the week ending April 30th, 2010. Another ominous note is that small speculators have their largest net long position in index futures since December 2007. This may sound bullish but keep in mind that when everyone is “all in” long, who is left to buy? we changed our longer-term outlook to “Lower” on April 20th. we were a few days early, as we warned at the time. but we stand by the call and still look for lower ahead. Let’s wrap up the week by reviewing the SPX Sectors chart. Four sectors (Consumer Staples, Utilities, Health Care, and Consumer Discretionary) are mostly green across the entire bottom row of their display telling us that these sectors are above most of the moving averages and that the short-term averages are mostly above the longer-term averages. These sectors therefore are showing strength. One sector (Energy) is showing mostly red across the bottom row of the display telling us that this sector is below most of the moving averages and that many of the short-term averages are below the longer-term averages. This sector is therefore showing weakness. many of the top sectors on the chart (usually these are the SPX leading sectors) are showing a significant amount of red on this row of their display. Week-over-week changes show weakening strength among the leading SPX sectors. So what we are seeing here is this: • Traders are rotating into the defensive sectors.. • the “defensive sectors” are doing quite well. • two major leading sectors – Basic Materials and Energy – painted bearish engulfing candles this week. My thinking: Historical odds are about three-to-one that we see a significantly lower close this week.. Key levels: for Monday, two key pivot areas to watch are 1340 and 1342. Upside resistance is at 1346, 1349, 1352, and 1357. Downside support is at 1338, 1335, 1330 and 1327. the trading range is 1333-1371. we remain near the bottom of the trading range. Stock Ideas (for Day Trades) for Monday:  Buy FLR at $72.54 with Trailing stop of $0.79 and Target of $73.27.  Buy CF at $141.15 with Trailing stop of $1.31 and Target of $142.56.  Buy NVDA at $19.70 with Trailing stop of $0.40 and Target of $19.90.  Sell Short PCLN at $517.90 with Trailing stop of $4.13 and Target of $512.72.  Sell Short WPO at $407.98 with Trailing stop of $3.31 and Target of $403.90.  Sell Short KMX at $31.35 with Trailing stop of $0.49 and Target of $31.04. * ORB: Buy or sell short on a breakout of the opening 30 minute range. Target a one percent gain. Any stock that gaps more than 2% should be rejected as history shows a greater risk with an entry after a 2% gap. No guarantees are made. Traders can and do lose money. the editor may take positions in recommended securities.

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