By Harry Boxer, The Technical Trader
The indices had a volatile session, plunging at the opening and reaching new 6-7 day pullback lows in the morning. They bounced in what looked like bear-flag fashion, and sure enough did roll over, with the S&P 500 taking out the lows, but the NDX did not at that point. That set up a positive divergence, resulting in a very sharp rally that took the NDX from 1143 to 1193, about a 50-point rally inside of the next couple hours. The S&P 500 went from 817 to 851.
In the last hour they had a very steep pullback that retested intraday price and moving average support, which held, and in the last 15 minutes came on with a vengeance, surging sharply back into plus territory.
Net on the day the Dow, after dipping below 8,000 for the first time in a while, managed to close at 8212, up 12.36, about 217 points off the low. The S&P 500 closed at 843.73, up 1.11, about 26 points off its low, and the Nasdaq 100 closed at 1183.52, some 42 points off its low, up 20 on the day. The Philadelphia Semiconductor Index (SOXX) jumped from 199 to 209, and closed at 207, up 5.06, a 2 1/2% gain.
The technicals managed to get back in to the plus column by 8 to 7 on advance-declines on New York and about 5 to 3 on Nasdaq. Up/down volume also managed to get into the plus column by 8 to 7 on New York on total volume of 1.6 billion. Nasdaq traded nearly 2 1/2 billion and had a better than 2 to 1 positive volume ratio.
So, heavy volume today in what may have been a turnaround session ahead of tomorrow's option expiration.
Leading the way on TheTechTrader.com board was Top 20 list member Aerovironment (AVAV), which made it onto the S&P indices, jumping nearly 4 points, up 3.96 to 38.20. SunPower (SPWR), after reaching down to 30.60, jumped all the way up to over 34, but settled back to 32.90, up 2.14, still a positive day on 2 million shares.
Sequenom (SQNM), a portfolio position that we're really liking lately, managed to close over 25 today at 25.04, up 1.14, reaching 25.50 at one point on heavy volume of more than 3 million shares. Airlines were strong on crude being low, with Continental (CAL) up a dollar at 18.76, and UAL (UAUA) up 87 cents to 11.14.
Agriculture stocks were quite strong, with Potash (POT) coming all the way back from under 65 to over 71, closing at 69.86, down 56 cents on the day, but 5 points off its low, on heavy volume of 16.7 million.
Agrium (AGU) was up 1.20 at 32.10, Mosaic (MOS) up 1.26 at 34.47, and CF Holdings (CF) closed up 2.98 at 47.43.
The strongest ETF on our board today was the iShares MSCI Brazil Index ETF (EWZ), which gained 1.18.
Portfolio position VISN at 6.74 was up 44 cents, TeleCommunication Systems (TSYS) at 7.59 up 22 cents, and A-Power Energy (APWR) up 44 cents today to 5.65, along with Solarfun (SOLF) up 49 cents to 5.35, and Canadian Solar (CSIQ) up 61 cents.
Energy Conversion Devices (ENER) advanced 1.73 to 25.50.
On the downside, the financials had a very tough morning, but did come back in the afternoon. Bank of America (BAC), reaching as low as 7.35, snapped back to over 9, but backed off to 8.32, down 1,88 on 550 million shares. Citigroup (C) closed at 3.38, down 70 cents, 50 cents off its low, but traded 633 million today. So nearly 1.2 billion traded on those two stocks alone. Morgan Stanley (MS) dropped 93 cents, and the U.S. Oil Fund ETF (USO) was down 1.05 on weak oil prices today.
Stepping back and reviewing the hourly chart patterns, the indices dropped steeply in the morning to new pullback lows, reaching near key resistance on the SPX below 820, and then bounced sharply, pulled back just as sharply but came on again and closed positively in what appears to be a potential turnaround session.
We'll see if we get an upside follow through tomorrow, which happens to be options expiration day, so anything can happen. It should be interesting to see how the market performs ahead of the inauguration next week.
Good trading!
Harry
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