THE MARKET:
Indeed the market, despite the losses, performed well. After a strong day the market often takes a breather. It was doing that, but had recovered to slightly positive territory before the GM/F news. A hard intraday drop, but stocks held support and then rebounded in the last hour to close basically flat. A good day of rest in the face of some potentially bad news. It weathered it, and indeed it looks as if it will turn bad news into a positive and continue higher after this pause. It has the look of pricing in the end of the rate cuts similar to the end of 2004. It may or may not be right this time, and we still will likely get a test of the recent lows, but we are playing the move as strong stocks show us solid breaks higher.
MARKET SENTIMENT
VIX: 13.98; +0.13
VXN: 18.12; -0.2
VXO: 13.34; +0.21
Put/Call Ratio (CBOE): 1.13; +0.14. Again the ratio was up though the market was down. Still a lot of put activity though it is hard to quantify it as downside speculation. Many stocks remain weak and in downtrends even as leaders break higher. The higher reading is likely attributable to downside plays on weak stocks as well as closing positions on other shorts.
NASDAQ
Went nowhere on lower volume, holding at the recent late April peak.
Stats: -0.43 points (-0.02%) to close at 1961.8
Volume: 1.772B (-8.92%). Volume decreased as tech stocks took a breather, very good price/volume action continues to develop. We note that through Wednesday volume had increased three of the last four sessions, all of which posted gains. That shows the institutions, the big money, coming into the market once more, and doing so on the upside.
Up Volume: 919M (-581M)
Down Volume: 821M (+411M)
A/D and Hi/Lo: Advancers led 1.03 to 1. Flat just liked the price.
Previous Session: Advancers led 2.19 to 1
New Highs: 57 (+6)
New Lows: 79 (-24)
The Chart: The Chart: investmenthouse.com^ixq.html
Flat on lower volume right at the late April high (1962.41). On the candlestick chart NASDAQ showed a doji and that can indicate a pullback ahead, but that is not likely the case here. The index just joined in with a follow through after a violent back and forth slugfest in April. After this pause it looks ready to test the bottom of the recent range (1974), the 200 day SMA (1991), and the 50 day SMA (1995).
NASDAQ 100 showed the same action and looks ready to move to test similar resistance at the 50 day EMA (1467) and the 200 day SMA (1482). If it makes it through there it is showing some real strength. It may take a turn back down for the test at that point. Intel said it was seeing good demand Thursday, and that could help.
SOX rallied but gave back the gain on the general market pullback. It held the 18 day EMA (393), still ready to rally higher in its trading range toward the 50 day EMA (404.45) and the 200 day SMA (407.12). After that is the bottom of the late April/early March consolidation attempt at 410.
SP500/NYSE
Modest loss on lower, below average volume as the large caps had to deal with the GM and F debt downgrades. Still solid action, recovering off the lows and cutting its losses by the close.
Stats: -3.02 points (-0.26%) to close at 1172.63
NYSE Volume: 1.612B (-10.35%). Good lower volume Thursday as the NYSE indices held steady, keeping their gains despite bad news. Well poised to continue the move.
Up Volume: 869M (-1.092B)
Down Volume: 1.094B (+777M)
A/D and Hi/Lo: Advancers led 1.13 to 1. The mid-cap SP400 helped keep breadth positive with their 0.2% gain.
Previous Session: Advancers led 3.23 to 1
New Highs: 82 (+6)
New Lows: 20 (-10)
The Chart: investmenthouse.com^spx.html
SP500 tried the 50 day SMA (1180.54) on the intraday high (1178.62) and then the GM news hit and took it to negative territory. A solid last hour rebound cut the losses as volume backed off. SP500 cleared a key resistance point on the Wednesday follow through move and now it is at another at 1175 and the 50 day SMA along with some prior price lows at 1187. Now it is yet at another test point where it has to prove itself; coming back from selling is never easy. For now this is just a rest stop, but we are going to keep our eyes open as SP500 moves through the 50 day SMA and on toward 1200.
The small cap SP600 closed flat, right below the late April peak where the 'hump' to the short double bottom is (313). This move left it in the same position, still facing the 50 day EMA (315.64), and more resistance at 321 (the 50 day SMA is at 319.67). Another tough road higher, but set up to make the move.
DJ30
Managed quite well despite the news, tapping at the 50 day EMA (10,404) on the high before selling. Lower volume as it came back, so no real damage done to the recent rebound off of 10,000. It is at the late March lows (10,400) as well; several layers of ice to crack through here. As has been the case the past two months, DJ30 has had to deal with one of its components imploding. Thursday it handled the news much better than usual.
Stats: -44.26 points (-0.43%) to close at 10340.38
Volume: 236 million shares Thursday versus 275 million shares Wednesday.
The chart: investmenthouse.com^dji.html |
