By Harry Boxer, The Technical Trader
The markets had a solid up-day on Tuesday, although the last hour of it was the most important because of the strong increase in volume. Before that the volume was rather light, and I was a bit concerned that the rally could peter out, but it did gain some momentum and closed strongly, although in the last 20-30 minutes they backed and filled and backed off a bit.
The day started out with a move down that severely tested yesterday afternoon's pullback lows, but when they held those support levels a strong morning rally ensued. They then went into a 2-hour back-and-fill consolidation that looked rather bullish in nature, and it turned out to be so, as a strong thrust came out of those flags and they rallied sharply until the last half hour.
Still, net on the day the Dow ended up 141 1/2, the S&P 500 more than 13, and the Nasdaq 100 nearly 20. The Philadelphia Semiconductor Index (SOXX) was up just 0.31 today.
The technicals were just moderately positive today after being rather lackluster earlier in the session. Advance-declines ended a little better than 3 to 2 positive on New York and positive by 400 issues on Nasdaq. Up/down volume was 8 to 5 positive on New York on total volume of 1 1/3 billion. Nasdaq traded just over 2 billion and had a nearly 3 to 1 positive volume ratio.
TheTechTrader.com board was mixed with several point-plus gainers. The outstanding stock today was OSI Pharmaceuticals (OSIP), which gapped up on positive drugs news, ended up 5.85 on the day on 6 million shares to 42.24. DryShips (DRYS) had some positive refinancing news and jumped quickly out of the gate, closing up 1.20 to 6.09 on 41 million shares.
Point-plus gainers also included Potash (POT), up 1.89 to 75.57, and CF Holdings (CF) up 1.21, both agricultural related stocks.
The Direxion Financial Bear 3x Shares (FAZ) was up 2.04 as the financial stocks today were generally softer. Bank of America (BAC) was down 70 cents to 5.30, Citigroup (C) down 20 cents, and JP Morgan (JPM) down 1.15. Hartford Financial Services (HIG) also dropped 71 cents, and WFC dropped 70 cents.
The iShares MSCI Brazil Index ETF (EWZ) was up 1.11, and the iShares FTSE/Xinhua China 25 Index (FXI) up 54 cents. The Ultra Oil & Gas ProShares (DIG) gained 71 cents and the U.S. Oil Fund ETF (USO) 47 cents on generally firm oil today. The Direxion Large Cap Bull 3X Shares (BGU) also advanced 1.03.
On the downside, the loss leader was the short instrument Direxion Large Cap Bear 3X Shares (BGZ), which dropped 3.03 on the gains in the S&P 500 today. Aerovironment (AVAV) lost 1.09 to 36.09. Sequenom (SQNM) had another weak session and has now backed off more than 7 points in the last week and a half, closing at 18.90, down 1.46 on 4.6 million, as selling continued after their recent conference and news announcements.
Stepping back and reviewing the hourly chart patterns, the indices came down, hit their lows for the day early on, and then had a strong 3-wave advance for the rest of the session that culminated in a solid advance for the day, with the Dow back over 8000, the SPX taking out 830 solidly, and the NDX moving past the 1200-03 resistance zone, closing at 1215 and change.
So, we'll see how it goes over the next few days, but today was a very positive day for the indices indeed.
Good trading!
Harry
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