Good day! Crude oil was in the spotlight on Wednesday after it pushed through the $90 a barrel level to settle just under $90.50. This is the highest settled price it's had since October, 2008. On Wednesday morning, the latest inventory data was released, indicating that crude oil stockpiles had fallen by 5.3 million barrel last week.
The overall market was also higher once again on Wednesday as the holiday rally continued. As expected, volume dropped off quite a bit for the session, but there were still a few decent setups in the indices throughout most of the day. The Dow Jones Ind. Average and Nasdaq-100 futures had the best action, whereas the S&P 500 has been much slower and lacked enough movement to generate decent moves on the 5 minute charts, although the 15 minute action has still been steady. The most notable setup in that index was the 15 minute breakout on the upside that triggered ahead of Tuesday's close as the index struck its 15 minute 20 sma. Throughout Wednesday morning it held its 5 minute 20 sma support, but broke through it into the early afternoon.
Dow Jones Industrial Average (Figure 1)
The telecoms helped the Dow jump mid-day, offering a strong buy setup on the 5 minute time frame as morning congestion broke shortly after noon. It was the Nasdaq, however, that had the most regular price swings with the cleanest setups. A descending wedge offered the first trigger when it broke higher into the 11:00 ET correction period. At the same time, the Dow popped a little out of its morning triangle as Alcoa (AA) broke strongly out of a narrow trading range.
The Nasdaq continued its rally throughout the morning, pushing to new highs at 12:30 ET as the Dow jumped as well. Slightly higher highs in the Nasdaq on slower momentum than the 11:30 ET move created a bull trap I call a 2TTM (as in "two tops"). The index quickly reversed into the early afternoon on this sell pattern and continued with a two-wave correction. The second wave was in the form of a pattern I call an AvalancheTM and it triggered at about 13:30 ET and took the Nasdaq back into the zone of morning lows.
At this time the Dow held the greatest relative strength. Even though it also retraced, the morning highs served as support and it remained in the upper half of its trading range throughout the remainder of the afternoon. The support held in the indices coming out of the 14:00 ET correction period, but the price action throughout the final two hours of trade was slower and choppy as the indices hugged their 15 minute 20 period moving averages into the closing bell.
S&P 500 (Figure 2)
The Dow Jones Industrial Average ($DJI) had a gain of 26.33 points, or 0.23%, and closed at 11,559.49 on Wednesday. The financials were once again the best performers in the index. Bank of America (BAC) rose 3.08%, while JP Morgan (JPM) climbed 2.83%. Other top gainers included General Electric (GE) (+1.69%) and Alcoa (AA) (+1.68%). Eight of the Dow's thirty index components posted a loss. The weakest were Hewlett-Packard (HPQ) (-1.03%) and Intel (INTC) (-1.00%).