Quite a plunge in the markets on Friday.  The leaders of the market, semiconductors and tech stocks got pummeled.  The SPX made a nominal new high on Friday and then sold off sharply but recovered half the losses.  It was a bearish engulfing reversal so expect the index to trade lower. The NDX looks even worse.  On Friday it dropped 240 points straight down.  It did bounce back 100 points but has made a mess of a lot of charts.  Interestingly, though, the transportation index did not follow the other indices.  So there is not a confirmation by the Trannies on this big drop.  Even more surprising was the Russell 2000 (IWM) was up on the day trading right up to overhead resistance.  The semiconductor sector (SMH) that had been the market leader were off hard (down 4%). 

The other big divergence was the technicals such as the McClellan Ocillator and the % of stocks above the 40 day moving averages also went up on Friday.  It was actually up with markets dropping. It is a positive divergence.  Be aware, a 1 day drop a bear market make.  

The financial sector (FAS) was also trading higher on Friday.  So it really looks like a market of sector rotation where we will see new sectors leading the up trend.  FAS broke through lateral resistance on Friday and broke out of a wedge formation.  It looks like it may be the start of a 5th wave of a 5 wave pattern.

Biotechs (LABU) were flat.  It is trading in a tight channel with no real direction.

Oil looks to be going lower and why I have been writing about shorting that sector.  

Gold (GLD) is in an uptrend and has broken the declining tops line but the ETFs (JNUG and NGUT) are looking lower.

The primary trend of the market is still intact and I am looking for charts that were strong on a huge down day.  These are the stocks that will be market leaders when the NDX and SPX recover.  I am also going to look for stocks whose Friday's plunge have ruined the chart and look to go lower as they have clearly broken down.

ASUR: A stock with a broken chart on the short term.  If the techs continue to drop on Monday I would go short below $14.33 with $13.00 as the target.  Short ration is only 2 days to cover so it is not going to get any help from short covering.

ATSG: Stock is trading right at support.  Below $22.47 and it could drop quickly to the $19.00 range to fill the gap.  

CALA:  Stock broke support on Friday at $15.00 and down through lateral support at $14.50.  Below $14.00 and I would look to go short with $12.50 next support.  Short ratio is only 1.1 days to cover so no support from short sellers covering.

CONN:  After the bullish island reversal the stock moved sharply higher.  On Friday it was only down $.05 with a bullish inside day. Stock does have resistance at $21.00 but through that and the price target is $27.00.

DVAX: This biotech stock was strong on Friday.  Last week it gapped up trading as high as $7.80 before pulling back.  It traded as high as $7.50 on Friday, closing at $7.20.  If it can trade through the highs of $7.80 then $9.00 is the price target.  Short ratio, 7.2 days to cover.  

ENZ: A perfect example of a strong stock in a lousy market.  Stock broke through the declining tops line and traded as high as $10.75 before closing at $10.38.  I would look to go long over $10.75 with $12.00 and $15.00 as my price targets.  

HYGS: Another strong up day for this stock on Friday.  After it broke through the upper channel line it had good follow through.  There appears to be a lot of momentum to the up side for this stock.  It traded as high as $9.60 on Friday, closing at $8.95.  Over $9.60 and the next level is $10.50 and then $12.00.  Short ratio, 5.4 days to cover.

LXRX: This biotech stock was up $1.04 on Friday.  It has broken through the declining tops line trading as high as $16.63 before closing at $16.40.  This stock has lots of room to move with $17.50 and $20.00 as my price targets.  Short ratio, a whopping 25.2 days to cover.  This short position should give this stock added momentum to the up side.

NVCR: Very strong momentum stock.  On Thursday it broke through lateral resistance at $14.00.  On Friday it was up $1.10 trading as high as $15.35 before closing right near the top of its range at $15.30.  I would look to go long over Friday's high with $17.00 as the price target.  Short ratio, 13.2 days to cover.

ORBC:  Stock trading right at multi year high of $11.00.  I was long on Friday on the break out but sold when it failed with the falling market.  But the trend for this stock is very strong and I would look to go long over $11.10.  My price target is $13.00 to start with.  Short ratio, 10.4 days to cover so should add momentum to the trade.