Positive End to Very Negative Week

By Harry Boxer, The Technical Trader

The markets astounded investors with a late very sharp rally that exploded into the close with a huge gain today. After backing and filling and making new multi-year lows on the Nasdaq 100 and S&P 500, they retested in the afternoon, and when they failed to take out the lows substantially and follow through to the downside, they turned them around with abandon and rallied 600 points in the last hour to close up 494 on the Dow. The S&P 500 rallied from 741 to 801, closing at 800, up 47 1/2. The Nasdaq 100 rallied from 1019 to 1085 and closed right at the high for the day going away, up 49 points. The Philadelphia Semiconductor Index (SOXX) jumped from 167 to 180, closing right there, up 8.90.

The technicals were positive with advance-declines ahead by 2 to 1 on New York and 3 to 2 on Nasdaq. Up/down volume was 1.9 billion to the upside and less than half a billion on the downside on New York. Nasdaq had a 5 to 1 positive volume ratio.

So a very solid day, most of it coming in the last hour. Leading the way were some of the ETF instruments. The ERX, the 3x bull energy ETF, at 36.23 was up 9.13. The DIG, another long oil ETF, was up 4.88 today on the turnaround in oil.

Also very strong were the agriculture stocks today, with CF up 7.29, POT up 4.96, AGU up 3.16, and MOS 2.63.

Recent Chart of the Day RIMM gained 3.28 to 44.80 on heavy volume of 31-plus million, and ENER snapped back from 18 1/2 to 21 and change, closing right there, up 2.50. Former portfolio position AVAV at 32.41 was up 3.33, AAPL jumped 2.09, and the FXI ETF gained 3.30. The EWZ Brazilian ETF gained 2.47 and the BGU up 2.71.

On the downside, ultra short instruments got hammered. The BGZ reversed 30 points to close down 19 on the day at 102.29, the QID was down 12 points off its high at 90.12, down 8.49, and the SDS dropped 15.03 to 112.94.

So it was a very positive session with a last-hour rally that took them substantially off very oversold conditions, with climactic-type levels on volume and advance-declines yesterday and early this morning.

So, I'm not surprised we got the late rally, although it was options expiration day and anything could have happened. But the bulls took control late in the session and closed them with a bang in a very positive end to an extremely negative week.

Good trading!

Harry

Free 15-Day Trial to Harry Boxer's Real-Time Technical Trading Diary