THE MARKET:
SP500 continued its move, making a run at the April high NASDAQ strengthened its move above the same resistance point. After the strong Wednesday session, Thursday's lighter volume and narrow breadth was mostly a momentum holdover from that strong follow through. Indeed, with NASDAQ rallying 70 points and SP500 37 points in the past week, the large caps are a bit stretched just as they meet this key resistance.
This is a logical point to take a breather, and the market internals Thursday suggest that is what it is going to do. The April high for SP500 was one of the levels we earlier noted as a point where the late April rally off the lows could stall out and begin the test of those lows. At this juncture the move looks solid given the test last week and the strong volume follow through. That leaves us looking for a more modest consolidation here, holding most of the gains and setting SP500 up for another shot at a higher high over the early April peak.
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: 13.32; -0.31. VIX has faded back too the earl May levels just above 13, suggesting a bit of weakness as stocks digest the recent gains.
VXN: 16.95; -0.6
VXO: 12.34; -0.57
Put/Call Ratio (CBOE): 0.78; -0.03
NASDAQ
Another solid upside session. Volatile but held positive all session as it extended the move over the April high.
Stats: +11.93 points (+0.59%) to close at 2042.58
Volume: 1.745B (-13.62%). Volume fell back below average as NASDAQ continued its rally and extended its move above the April high. As with NYSE, this lower trade shows the move potentially slowing down in the sessions ahead to consolidate the recent surge higher.
Up Volume: 1.239B (-312M)
Down Volume: 487M (+65M)
A/D and Hi/Lo: Advancers led 1.21 to 1. More of a large cap session as the NDX rallied 0.8% versus the 0.6% for the overall NASDAQ.
Previous Session: Advancers led 2.6 to 1
New Highs: 80 (-17)
New Lows: 45 (-5)
The Chart: The Chart: investmenthouse.com^ixq.html
Volatile all session with four rallies and fades before the last hour run to the session high and the closing bell. NASDAQ was never really in danger of turning negative as it once again was the market leader. Volume was back below average, so the strong volume shot Wednesday appears to be somewhat of the aberration as opposed to the rule on this recent continuation of the rally. There is some immediate resistance at 2050 (the middle of the February to March lateral range) and then at the top of that range at 2100. Similar to SP500, NASDAQ has some consolidation and digestion of gains before it is ready to post another serious run higher.
NASDAQ 100 posted the better move with its 0.8% gain as it put more moves on its April high. It is also in the heart of the February/March trading range and its next serious test is near 1550. It has rallied far on this run, and it needs some reset as well before it moves significantly higher.
SOX tried to rally but it closed 4 points off its high and right at 420, the top of the late March/early April range. As it came snapping back down to that resistance point it is likely going to need some consolidation to regroup and break through given the 23 point run the past week.
SP500/NYSE
Stretched up to the April high, trying that level several times on lower volume. Closed holding the gains but it is extended.
Stats: +5.52 points (+0.47%) to close at 1191.08
NYSE Volume: 1.374B (-22.7%). Sharp drop in volume, the lowest in the past week. That does not bode well for an immediate breakthrough, but the strong volume follow through Wednesday indicates the move is solid, and after some low volume consolidation it will be ready to continue.
Up Volume: 1.237B (-645M)
Down Volume: 526M (+120M)
A/D and Hi/Lo: Advancers led 1.67 to 1. A big drop from Wednesday, indicating that the move was running out of some gas.
Previous Session: Advancers led 3.47 to 1
New Highs: 106 (-24)
New Lows: 28 (-2)
The Chart: investmenthouse.com^spx.html
SP500 put together its fourth straight gain after making a higher low just below the 200 day SMA (1160). A nice 3% run since the recent test, and with SP500 right at the April high (1192) and volume backing off, a modest consolidation would be a very good thing for the large caps. It would allow them to consolidate a bit, ease back to near support, and set up another run at that important higher high that would break the lower lows just as with NASDAQ. Moreover, that would confirm NASDAQ's move as well after NASDAQ took over the lead by default when the large caps got cold feet.
Another gain for the SP600 small caps as they ran smack into the middle of the March/April range as well as the late February low at 220. The small caps folded up the tent in April, but a move above 324.64 sends it to a higher high as well. Lots of resistance at this level, and as we anticipate SP500 struggling some before it can make a more significant move higher, the small caps are likely to follow suit. Bigger picture, it has been an impressive hold of the 200 day SMA and surge back up.
DJ30
DJ30 posted a modest gain on very low, below average volume. As with the other NYSE indices, it is in the heart of the March/April range with the April high and top of that range at 10,560. After a 455 point run off the May low DJ30 is likely to take a breather with the SP500 before making a new high. Nice move, needs a breather, then it can rally further.
Stats: +28.74 points (+0.27%) to close at 10493.19
Volume: 209 million shares Thursday versus 299 million shares Wednesday.
The chart: investmenthouse.com^dji.html |
