THE MARKET:
NASDAQ made a higher high, breaking the string of lower highs. That is always a key move to make in a recovery; it was a clear sign in the last quarter of 2002 that change was indeed underway. Volume was strong as well as the shorts covered their positions as the indices broke through resistance levels. It was not all short covering, however, as breadth mushroomed on NYSE and put in a very strong showing on NASDAQ. Short covering rebounds are high volume but narrow in breadth. This one was clicking on all cylinders. Indeed, SP500 and SP600 delivered another very convincing follow through session.
MARKET SENTIMENT
Bulls versus Bears: Last week bulls ran up to 44.2% last week, up from the 43.5% level a week earlier. Bears fell to 28% after hitting 30.4%. That was the highest bearish level since August 2004.
VIX: 13.63; -0.94
VXN: 17.55; -0.73
VXO: 12.91; -0.92
Put/Call Ratio (CBOE): 0.81; -0.19
NASDAQ
Strong volume break higher, clearing the April highs and posting a higher high, the first since the downtrend started at the turn of the year.
Stats: +26.5 points (+1.32%) to close at 2030.65
Volume: 2.02B (+28.74%). Strongest volume in three weeks. The last time the volume showed this kind of action was on the reversal the last day of April. This repairs the distribution and changes the trend for the year.
Up Volume: 1.551B (+666M)
Down Volume: 422M (-219M)
A/D and Hi/Lo: Advancers led 2.6 to 1. Excellent breadth rounded out the move's strength.
Previous Session: Advancers led 1.18 to 1
New Highs: 97 (+55)
New Lows: 50 (-27)
The Chart: The Chart: investmenthouse.com^ixq.html
Gapped slightly higher after the CPI news but did not stop at the May high or the April high (2022). It was strong all session, but it shot most of its ammunition by early afternoon as it moved laterally the last four hours of the session. It held its gains, breadth was great, and volume was super. The move further broke the 2005 downtrend, and it did it with style. This move is already three days old and momentum may carry it higher, but it will make a test. That is normal and it is healthy as long as it is lower volume and holds near the April high or 200 day SMA (1996). Nice move.
NASDAQ 100 showed the same power as overall NASDAQ, no more and no less. It was a very even and broad move, not some narrow short covering run. The large cap techs cracked the 2005 downtrend and make a higher high as well.
SOX rallied to some resistance at 420, and that stalled its move for the day. SOX is in a much larger downtrend, dating back to early 2004. That trendline is at 424, just 5 points ahead. SOX is improving, but it has a long way to go before it makes some higher highs.
SP500/NYSE
Cleared the May highs on volume and is now taking its shot at the April high.
Stats: +11.76 points (+1%) to close at 1185.56
NYSE Volume: 1.778B (+20.07%). Solid trade as NYSE delivered a second follow through to its move off of the April short double bottom. Additional follow through sessions are very good signs of continuing strength in the move. As with NASDAQ, this was not just short covering as the breadth was excellent. Longer term investors were in the market buying.
Up Volume: 1.882B (+532M)
Down Volume: 406M (-61M)
A/D and Hi/Lo: Advancers led 3.47 to 1. Outstanding breadth as the small caps led higher.
Previous Session: Advancers led 1.71 to 1
New Highs: 130 (+71)
New Lows: 30 (-32)
The Chart: investmenthouse.com^spx.html
Cleared the May high (1179) as SP500 continued its run through the neckline at 1164 and move toward a higher high at 1192. A nice three day run to this key resistance level, and that may prompt some profit taking or a pause at that point. A logical point to take a breather, but as we know the market does not always act logically; it overshoots both upside and downside. Solid move that is laying the foundation for its own higher high ahead.
The small cap SP600 led the market, blasting through the 50 day SMA (316) and moving toward the key April high at 325. It will run into some minor resistance at 320, the middle of the late March/early April consolidation attempt, and the late February low. It formed something of a reverse head and shoulders as the bottom of this base, and it is now starting to build the right side of its 11 week pattern.
DJ30
DJ30 cleared the 200 day SMA (10,388) on strong, above average volume, the best in almost a month. HPQ provided a spark, but the blue chips were moving well across the board. The run higher has moved DJ30 right into the center of the late March/early April range from 10,375 to 10,560. As with SP500, a key level for the blue chips to make the break higher. Also a key level where the index may have to sidestep a bit before making its move.
Stats: +132.57 points (+1.28%) to close at 10464.45
Volume: 299 million shares Wednesday versus 241 million shares Tuesday.
The chart: investmenthouse.com^dji.html |
