By Harry Boxer, The Technical Trader
The stock market indices had a very strong finish to the day to close positive on the session. The day started out very differently, however. The futures were lower, and the market gapped down at the opening and plunged early to new pullback lows, even taking out the May 6 flash crash lows on the S&P 500 by about 10 points.
The Nasdaq 100 failed to take out the lows down around 1750, reaching 1768 or so. At that point they rallied back sharply, pulled back mid-morning, and then plowed ahead to reach the session highs just before noon. Over the next several hours they stair-stepped lower, giving back about half of the gains but holding key short-term support near the 1795-1800 zone on the NDX and near the 1070 area on the SPX. In the last 20 minutes the indices jumped sharply on apparent short covering, taking the SPX from 1070 up to 1087. The NDX jumped from 1798 to 1822 and closed right there.
Net on the day, the Dow was up 125.38 at 10,193.39 after reaching as low as 9918 today. The S&P 500 was up 16.10 at 1087.69, which was 32 points off its low, a complete reversal from down 16 points to up 16 points. The Nasdaq 100 was up 22.65 at 1822.77, 55 points from its low today.
Advance-declines surged to 3 to 1 positive on New York Stock Exchange and about 2 to 1 positive on Nasdaq. Up/down volume was 9 to 1 positive on New York on total volume of 2 1/4 billion. Nasdaq traded a hefty 3 1/3 billion today and had a 3 to 1 positive ratio of up volume over down volume. So, some very healthy technicals on the snapback. After the McClellan Oscillator last night reached -426, a new all time low, it wasn’t surprising that we saw some snapback today.
TheTechTrader.com board, as a result, was mixed but mostly up today. Leading the way on the upside was Apple Inc. (AAPL) up 4.56 at 242.32, Baidu Inc. (BIDU) 3.27 at 70.85, Amazon.com up 3.01 to 122.72, and Goldman Sachs (GS) up 4.52 at 140.62.
Other point-plus gainers of note included China Automotive Systems Inc. (CAAS), up 1.86 at 17.40, and Cree Inc. (CREE) up 1.56 at 66.69. American International (AIG) advanced 1.15 at 35.96, Akamai Technologies Inc. (AKAM) 1.30 at 38.93, and Las Vegas Sands Corp. (LVS) 1.15 at 21. Those were the point-plus gainers on our board.
On the downside, Google Inc. (GOOG) failed to participate today losing 2.96 to 472.05 after announcing an acquisition. The ultra-shorts got hammered. The Direxion Daily Emrg Mkts Bear 3X Shares ETF (EDZ) was down nearly 6.00, at 55.25 down 5.98, the Direxion Daily Financial Bear 3X Shares (FAZ) down 1.77 at 15.17, and the ProShares UltraShort Real Estate (SRS) 2.02 at 29.18.
The S&P 500 VIX Short-Term Futures ETN (VXX) lost 76 cents at 33.31, the Direxion Daily Real Estate Bear 3X Shares (DRV) 89 cents to 7.90, and the Direxion Daily Large Cap Bear 3X Shares (BGZ) 76 cents at 16.29. All the other losses on our board were very small fractions, as most stocks were up today based on the technical action.
Stepping back and reviewing the hourly chart patterns, it was a very strong way to close the week and with the indices forming 2-day head-and-shoulder bottoms we’ll be carefully watching neckline resistance at SPX 1095 and NDX 1840. Those are levels to keep a close eye on Monday to see if this is actually a reversal pattern or whether they pull a head fake and reverse back down.
Good Trading!
Harry
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