Good day! Thursday was yet another slow day for the market. Throughout most of the session the indices traded in the larger 60-minute trading range that I've been following since Monday. This was when the market pushed through the widely followed 200 moving average on the daily time frame.
Heading into Thursday, I was anticipating similar action to what we saw on Wednesday, but without as much weakness into the open. The indices still corrected off Wednesday's highs to kick off yesterday's session, but prices remained in the upper portion of the week's trading range to date. This continued to confirm the bias I posted in yesterday's column in favor of a break higher on the 60-minute charts.
Dow Jones Industrial Average
The day's economic data once again had little impact on the day's trading activity. Initial jobless claims for the week ending on September 11th came in at 450,000. This was slightly less than the 460,000 consensus. Initial claims were down 3,000 from the prior week, but the biggest change was in continuing claims, which fell 84,000 week-over-week to 4.49 million. Meanwhile, August's Producer Price Index increased 0.4%, which was greater than the 0.3% analysts were anticipating. The Core PPI rose 0.1%. This excludes food and energy prices. Later, the Philadelphia Fed Index climbed off its recent 13-month low of -7.7 to -0.7. Analysts were anticipating an even better rating of +2.5.
After chopping back and forth throughout most of the day, the indices began a final turn higher coming out of the 14:00 ET correction period. This is a key time of the day for major market moves to begin. The Nasdaq, led by technology shares, easily pushed past the resistance week-to-date and hit new 4-month highs. The S&P 500 tried to break past the summer highs, but failed. All three of the major indices ended the session near the day's highs though.
The Dow Jones Industrial Average ($DJI) posted a gain of 22.10 points, or 0.21%, and closed at 10,594.83 on Thursday. Nearly 2/3 of the Dow's 30 index components posted a gain, despite the minor gains in the overall index. 4 closed with gains over 1%. They included Hewlett-Packard (HPQ) (+1.84%), Cisco (CSCO) (+1.57%), Intel (INTC) (+1.34%), and DuPont (DD) (+1.05%). Alcoa (AA) (-1.49%) and Bank of America (BAC) (-1.17%) were the two components posting losses over 1%.
The S&P 500 ($SPX) fell 0.41 points, or 0.04%, and closed at 1,124.66. Ford Motor Co. (F) (+4.80%), Gamestop (GME) (+4.36%), Expedia (EXPE) (+3.86%), and Consol Energy (CNX) (+3.79%) were the top performers in the S&P 500. Helmerich & Payne (HP) (-4.49%), Pulte Group (PHM) (-2.85%), Fedex (FDX) (-3.75%) (missed earnings), and Cabot Oil & Gas (COG) (-3.47%) were the biggest losers.
The Nasdaq Composite ($COMPX) ended the session higher by 1.93 points, or 0.08%, on Thursday and it closed at 2,3003.25. Illumina Inc. (ILMN) (+4.19%), Expedia (EXPE) (+3.86%), KLA-Tencor (KLAC) (+3.57%), and First Solar (FSLR) (+3.57%) were the top gainers in the Nasdaq-100. The weakest components of this tech-heavy index were Activision Blizzard (ATVI) (-4.78%), Comcast Corp. (CMCSA) (-2.61%), and Teva Pharmaceuticals (TEVA) (-1.70%).
The afternoon breakout to the upside continued strong in afterhours trade. The result was the strongest move the index futures have made since pulling higher into Monday. Although the futures are striking smaller time frame resistance heading into 2:00 a.m. ET, the next major resistance level on the daily time frame is the previous high in August in the Dow Jones Industrial Average. This is the 10,720 zone.
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group, Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.