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Electronic Art (ERTS) declined to the August low in mid January and then firmed the last two weeks. A bullish engulfing formed on Friday as the stock opened weak and closed strong. ERTS follow up on this pattern with a breakout on above average volume. The trend since November remains down and the November trendline marks the next hurdle.


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Oracle (ORCL) surged back above 28 this month, but stalled the last few weeks as resistance came into play. First, notice that broken support turns resistance around 28.50. Second, the stock retraced 50-61.80% of the prior decline. A pennant formed the last two weeks and traders should watch these boundaries for the next directional signal.


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Spot Light Crude ($WTIC) surged above 100 in the second half of December and then formed a falling wedge in January. A decline in oil is unusual because the Dollar is down over the last few weeks and stocks are up. A move above 102 would break wedge resistance and signal a continuation of the December surge.


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With stocks opening strong and then moving sharply lower, the intraday bearish engulfing scan is filling up quite quickly. Of note, the Regional Bank SPDR (KRE) has a bearish engulfing in play on Thursday afternoon. In fact, notice how the ETF pretty much engulfed the last 11 days of trading and broke below its mid January low.


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The Amex Airline Index ($XAL) lagged the market throughout 2011, but may be poised to lead with a breakout in 2012. The P&F chart below is a classic three box reversal chart with each box representing 50 cents. Notice that the current X-Column broke above the last three to forge a Quadruple Top Breakout with an upside price objective at 47.50. You can read more on P&F patterns and price objectives in our ChartSchool.


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A look at the StockCharts Technical Rank (SCTR) movers shows Quest Diagnostics with a big move (+37) on Tuesday. On the price chart, DGX broke ascending triangle resistance with a surge in volume today.


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QQQ opened flat, surged, dipped and then recovered to close basically unchanged on the day. As a result, the ETF formed a long legged doji, which shows indecision on the day. Overall, the trend remains up as the ETF holds above the December trendline. A break below this trendline would be the first sign of weakness.


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While the German DAX Index ($DAX) and the French CAC Index ($CAC) languish well below their 2011 highs, the DJ Ireland Index ($IEDOW) shows strength with a break above its highs. Ireland was one of the first countries to get into trouble, but it appears that the tough medicine is working as the stock market shows relative strength now.


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The Medical Devices iShares (IHI) has been moving higher since mid December and is now challenging its late summer high. Also notice that upside volume picked up over the last 4-5 weeks. While a breakout would be bullish, the ETF is getting overbought after a 13+ percent advance off its mid December low. 

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Stocks were largely higher on Wednesday with the technology sector leading the way. As the Sector Market Carpet shows, three of the top five performers in the technology sector come semiconductor group: Linear Tech (LLTC), Altera (ALTR) and Texas Instruments (TXN).


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