THE MARKET:
SP500 managed to take 1200 on the close Wednesday, fighting back to hold that level after the early surge was given back late in the session. That was one of the key fights facing the market near term, and if NYSE had shown some more volume it would have meant more. NYSE trade closed early and thus many market on close orders were cancelled; volume likely would have exceeded Tuesday levels, but by how much is not clearly known.
NASDAQ on the other hand gave us a bit more insight into the day's action. It rallied on a solid volume gain. It percent gain (0.9%) was right in line with SP500, so we look at the move as pretty much solid across the board, lower volume on NYSE notwithstanding. NASDAQ did not take its next resistance level at 2100, but we did not expect it to do that. It has run a long way and this is the level that it has bounced down from or off of 6 times in the past six months. A lot of ice at this level, and a break through this level from here would be something of a surprise. It could very well be the level that stops the move IF the Fed stopping theory loses credence and oil remains here in the mid-fifties.
SP600, the small cap index, was again the leader, and it managed to clear some important resistance of its own, moving past the April high and closing near the session high as it did so. While it made another 1.1% gain and led the market, some pundits were pounding the table to ignore the small caps and go large cap. What it boils down to is what stocks are working, and there are enough small caps working to make the sector still very interesting.
MARKET SENTIMENT
Bulls versus Bears: Bulls rose again to 46.7% from 46.2%. Bulls bottomed in early May at 43.5%. Bears dropped sharply to 26.1% from 28.6% after hitting 30.4% on the high in early May. That was the highest bearish level since August 2004.
VIX: 12.36; -0.93
VXN: 15.87; -0.21
VXO: 11.38; -1.12
Put/Call Ratio (CBOE): 0.68; -0.31
NASDAQ
Ran toward 2100 on rising, above average volume. It came close and now has to deal with this level after a strong run.
Stats: +19.64 points (+0.95%) to close at 2087.86
Volume: 1.831B (+9.9%). Nice volume surge, the first above average session in three weeks as NASDAQ made another significant move to another significant resistance level. It will need all of that volume and more to go further. Though NASDAQ has received strong volume on key sessions, overall volume has been lower just as in late 2004. That leaves the move susceptible if the driving forces, a Fed near finished and lower oil, don't hold.
Up Volume: 1.41B (+710M)
Down Volume: 388M (-556M)
A/D and Hi/Lo: Advancers led 1.82 to 1. Solid but not outstanding breadth.
Previous Session: Decliners led 1.08 to 1
New Highs: 111 (+22)
New Lows: 55 (+12)
The Chart: The Chart: investmenthouse.com^ixq.html
After sliding laterally for a couple of sessions NASDAQ opened softer but then rallied sharply higher toward next key resistance at 2100. As noted, that level has acted as support and resistance for the index 6 times in the past six months. That makes this a thick layer of ice for NASDAQ to crack after a long run with little rest to this point. Typically that means either a consolidation starts similar to that in early May (a lateral sidestep for several sessions), a pullback to next support to regroup, or if the move is over the start of some higher volume selling (distribution). That is what you watch for at these important levels after a long run. To this point it has been a solid move though on lower overall volume.
NASDAQ 100 posted a 1.1% move, leading overall NASDAQ higher though not by much. Unlike NASDAQ, NASD 100 has broken through 1550, a key resistance point as it represents the January 2004 peak.
SOX posted a gain but it lagged the overall market again with a 0.7% move. The index continues its lateral slide below 435 while the 10 day EMA (425.33) moves up to meet it. Forming a bit of a handle here as it approaches the top of its range at 450. That might give it the rest it needs to rally to that point, but once there it will have to show something it has lacked for the past 7 months to break it out of this range.
SP500/NYSE
NYSE stocks posted solid gains but the early close on NYSE kept volume lower and below average.
Stats: +10.72 points (+0.9%) to close at 1202.22
NYSE Volume: 1.409B (-4.76%). NYSE was on track to post stronger and perhaps above average volume, but the close 4 minutes early canceled the market on close buys that typically add large amounts of trade to the session.
Up Volume: 1.41B (+690M)
Down Volume: 384M (-706M)
A/D and Hi/Lo: Advancers led 2.75 to 1. A solid breadth reading that was better than 3:1 until the last hour saw that fade and rebound that could not quite recover the session highs. With the small caps leading the NYSE once more, breadth has returned to solid levels.
Previous Session: Advancers led 1.04 to 1
New Highs: 220 (+86)
New Lows: 23 (0)
The Chart: investmenthouse.com^spx.html
Continued the move above the April high (1192) and managed a close above next resistance at 1200. Tried to give it up in the last hour, but a late bump higher closed it over that level. With volume still a question mark it was not a clear case of a breakout through that resistance. It was a decent lead in to the move with the low volume lateral slide the past week. Now it just needs to seal the deal with some better trade as it continues higher toward 1210 and 1218, the interim highs before the March peak at 1229.11. If NASDAQ stalls at 2100 SP500 does not appear to have the strength to lead the market higher at this juncture.
SP600 broke above the April high (1192) with a solid surge higher. The small caps definitely lagged in the recovery, but as SP500 has lost its leadership role, SP600 is starting to take over and move higher with NASDAQ. 331.66 is the next resistance points from its late December and February interim peaks.
DJ30
The blue chips are still trying to form up the handle to the move off the April and May lows, working laterally over the 10 day EMA (10,477) and the 200 day SMA (10,415) just below. On the high it tapped at 10,600, the rough top of several consolidation ranges, and also cleared the April high (10,557). On the close, however, it could not muster the strength to hold the move. Volume was lower but still better than most of the recent trade. DJ30 is basically forming a handle at this point, but it is noteworthy that with the good news in the market it could not make a breakout attempt stick.
Stats: +82.39 points (+0.79%) to close at 10549.87
Volume: 233 million shares Wednesday versus 240 million shares Tuesday.
The chart: investmenthouse.com^dji.html |
