THE MARKET:
It was not going to be much of a session but some chip stocks received an upgrade and SOX took off. That dragged NASDAQ along with it, though the techs were unwilling to follow until mid-afternoon when they recovered from the modest selling and turned positive. What was a modest consolidation session turned into a modest upside session. At this juncture stocks in general are a bit overextended and we would just prefer it get the consolidation over with and set up more upside.
The higher volume as the indices recovered was a good indication, but the move was pretty weak overall. Modest price gains, below average volume, weak breadth. Some of the better gains were in oil stocks as oil as quietly crept back up over $49/bbl. Definitely don't want to go back there; a continuing active Fed and oil back over $50/bbl is not good for stocks.
Even with the indices still creeping higher many stocks have set up well for the next move, pulling back to near support on lower volume. Good action; just wish the overall market was doing the same so they were all on one page. This way these stocks will have to hold pat here or take the lead and rally when the market tests. Never a bad thing for leaders to set up at support, and we will be watching these for their rebound moves to see what kind of strength they deliver. Good volume in these stocks will be good for the market.
MARKET SENTIMENT
Bulls versus Bears: Bulls rose further the past week, up 46.2% from 44.2% two weeks back. This was the second consecutive rise after bottoming at 43.5% on the most recent decline. Bears rose to 28.6% from 28% after hitting 30.4% on the high three weeks back. That was the highest bearish level since August 2004.
VIX: 12.69; -0.26
VXN: 15.84; -0.2
VXO: 11.22; -0.22
Put/Call Ratio (CBOE): 0.76; -0.05
NASDAQ
Another move higher with an afternoon nudge into positive territory. Volume was not super, but it was stronger and approaching average.
Stats: +4.97 points (+0.24%) to close at 2061.62
Volume: 1.739B (+3.7%). Not a bad volume session as trade approached average. Still below average trade; there have been just three above average volume sessions this month. They were on key days to be sure, but there has not been a ton of volume as summer approaches. After this run higher, how stocks hold the test will be key given the lighter overall trade. Summer gets bogged down due to a lack of money and the failure to move that money around.
Up Volume: 1.006B (-83M)
Down Volume: 666M (+146M)
A/D and Hi/Lo: Decliners led 1.13 to 1. Very mediocre breadth, negative on an up session. Given that NASDAQ was rallying or more accurately moving higher in the last hour, breadth was naturally lower as it lags the move in the indices.
Previous Session: Advancers led 1.2 to 1
New Highs: 70 (-11)
New Lows: 49 (+17)
The Chart: The Chart: investmenthouse.com^ixq.html
NASDAQ continued its rise, and for the second straight session volume was higher as the techs moved higher. That suggests some accumulation, but modest accumulation as volume remained below average. All things considered, there are more buyers than sellers in the market right now, and not just on a particular session. This move has been driven by upside volume even if it has been light overall. The key sessions were on stronger trade, and buyers are still in control. That keeps the action healthy and resistant to a big reversal, but if bad news hits the depth of the buying has not shown the power to hold the line. In any event, NASDAQ has moved deeper into the January to early March trading range with 2100 as resistance and with a midpoint right where NASDAQ is now.
NASDAQ 100's 0.3% gain topped overall NASDAQ as stocks such as CSCO and INTC posted gains as the large cap takes pushed the market. That definitely shows techs in the lead, but with some of those large caps it shows some short covering remains even after this rather lengthy move off of the April lows.
SOX was the catalyst for NASDAQ. SOX was up early and it extended its break above 420 with relative ease, heading for the next peaks at 435-436 and then 440. The top of SOX' range is at 450; it has to top that to make a higher high. Not betting it will do that anytime soon as a pretty nasty double top resides at that point. It can continue the run toward that level and give it a challenge, however, before it needs to test back and set up for the real breakout attempt.
SP500/NYSE
The large caps continued their quasi-lateral move on light volume, managing to hold above the April high with the late push higher by the overall market.
Stats: +0.21 points (+0.02%) to close at 1194.07
NYSE Volume: 1.279B (+0.9%). Volume 'surged' on the session. Hardly. It edged higher and was still well below average. Since the follow through last Wednesday volume has fallen off the table once more. If the index would just move laterally with this volume it would be in better shape. As it is, this action can set it up for a deeper pullback than otherwise.
Up Volume: 802M (-322M)
Down Volume: 841M (+322M)
A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Advancers led 1.78 to 1
New Highs: 83 (-19)
New Lows: 24 (+12)
The Chart: investmenthouse.com^spx.html
As noted, SP500 is edging higher in very modest steps. It is trying to consolidate but keeps edging higher on low trade. Typically a stock or index in a strong move will rally then move laterally in a narrow range. If it is strong it will test back to near support on low volume, shake out the sellers, and rebound. If it is stronger, it will move laterally, holding its gains, then surging once more. It may do that here, but this creep higher is not working to shake anyone out. The purpose of a pullback is to let the froth abate, get the stragglers that joined late to get out, thus creating that demand/supply imbalance once more. This slow creep higher does not do that. There is some resistance at 1200 and there is that April high at 1192 below. We would not be surprised to see SP500 fall back toward the 10 day EMA (1182) to accomplish that shakeout.
Similar to SP500 the small cap SP600 is edging higher in a pseudo-lateral move as it approaches the April peak at 324.64. If it continues this creep higher that level will likely stall the move. It could use some lower volume consolidation here to reset the move higher.
DJ30
The blue chips could not muster a gain as volume faded to well below average and the Dow posted a slight loss. This action is more of a consolidation than the other indices as there is some downside action with the intraday lows dipping deeper as well. Not bad action as DJ30 moves laterally along resistance here at 10,500, just below the April high at 10,557.
Stats: -19.88 points (-0.19%) to close at 10503.68
Volume: 204 million shares Tuesday versus 225 million shares Monday. Much more like a lateral consolidation move here.
The chart: investmenthouse.com^dji.html |
