SPX - Finally a correction that we have been looking for.  I am looking for a 5 to 10% correction in the market this February.  But, the secular bull market is in tact and the trend is still higher for many years to come.  Friday's drop came down to the short term tend line at $2760.  If this steep drop has follow through we could see 2720.  But it is a typical rising trend chart pattern.  

NDX, came off hard as well and broke several key levels of support.  I could see NDX coming down to 6,700 if this rout continues.  But, remember, that would only be a 6% decline.  It is healthy for the markets.  You have to wash out the exuberance once in awhile.  

The transportation index failed last week bounced back to resistance at 11,250 and now continues to drop.  It is down around 6.5% as well already.  The trannies should find support around 10.600 and is at the bottom of the down trending channel.  

One of the negative factors to all this analysis is that the big names all had decent earnings reports, such as Apple and, yet, the market is ignoring that good news.  Apple is off 11% so far and could correct further.  GOOG had a massive down gap on near record volume.  AMZN held as well as FB.  But the general market sentiments may over ride even these names.  NFLX is right at the top of its 14 year up trending channel line.  So we could see it pull back as well. 

At this level the market looks oversold.  But, don't be fooled.  It can get even more over sold and sharp corrections tend to go further than you can imagine.  From a historical perspective we are at the bottom of extreme sell off.  So we may get a bounce in here before heading lower.  Let's look for market capitulation on the short term and a bounce.  

There are three main ETFs I follow, the semiconductors (SMH), the financials (FAS) and the Biotech (LABU).  The SMH did double top at 109 and now pulling back but still is above the long term up trending channel line.  I will be watching this closely to see if it holds the trend line.  If it breaks here then $96 would be the support.

Financials (FAS) are looking way over extended and we should find support in the FAS around $72 at the channel bottom.  

Biotechs (LABU) traded up to the top of the up trending channel and pulled back $20 in the last 3 days.  We are at support on the LABU so at critical levels for all the main market sectors.

Gold (GLD) looks to have double topped on the short term and could be a function of a stronger $USD as interest rates firm.  Correspondingly, the miners (JNUG and NUGT) are looking weaker.

Longs:

AQ: A semiconductor stock that has recently popped to new highs.  Like with all longs mentioned tonight, all sectors are vulnerable to a continuation of the market pull back.  But, a fairly new issue it broke through the lateral resistance and traded as high as $14.43 closing at $13.79.  I would look for this to trade over $14.50 with $17.00 as the target.

BSPM: After big spike last week the stock pulled back to support and has been working its way higher.  It  traded as high as $4.73 on Friday closing at $4.08.  Over, Friday's high and we could see a move back to $6.00 from there I have targets of $7.00 and $8.00.

CBAY:  A stock I continue to write about (at $3.00, at $5.00 and recently at $9.50).  It is right at lateral resistance at around $12.25.  If it can get through that level then $16.00 and $20.00 are price targets.

CBIO:  Stock has consolidated in here for the last week or so as it hit the top of the channel.  But, it looks like it wants to go and over $26.00 I am looking for $30.00 and then $35.00.  It is a powerful chart and one of my favorites.

IMGN: Stock is at key resistance here trading up to $10.04 on Friday closing at $9.76.  If this stock can get through $10.00 with conviction then $14.00 is the next price target.

KMPH: After building a long base over the last year or so the stock has broken out and trending higher.  Price target $8.50.  Short ratio 5 days to cover.

PIRS: Strong junior biotech that I was writing about at $6.50.  Now it has a double top at $8.35.  I would look to go long over $8.35 with $9.00 and $10.00 as targets.

QNST: After breaking out of a wedge pattern and trading as high as $13.00, it had an inside day on Friday closing at $12.26.  Over $13.00 and we should see $14.00 and $16.00.

Shorts:

AAOI:  Stock looks super weak and I am looking for a break below $32.00 now.  Price target $26.00.

AGX: Stock recently had a sharp drop and then formed a bear wedge.  And if that is the best it can bounce it is going lower.  Below $42.00 and I would look for $36.00 and $31.00.

BITA: Stock I have been writing about the last week with a short under $33.00.  Friday it hit a low of $31.52 and closed at $31.72.  If it keeps dropping like this look for $28.00 and then $23.00.