Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) had a gain of 50.55 points, or 0.43%, and closed at 11,837.93 on Monday. The strongest performers in the index were Boeing (BA) (+3.43%), Caterpillar (CAT) (+2.84%), Alcoa (AA) (+1.88%), and Microsoft (MSFT) (+1.27%). A third of the Dow posted a loss. The weakest performers were Verizon (VZ) (-3.10%), Bank of America (BAC) (-1.64%), and General Electric (GE) (-1.17%).
The S&P 500 ($SPX) rose 1.78 points or 0.14%, and closed at 1,295.02. The strongest performers in the index were Total System Services (TSS) (+6.34%), Allegheny Technologies (ATI) (+5.41%), First Solar (FSLR) (+5.05%), and Titanium Metals (TIE) (+4.70%). The weakest were Comerica (CMA) (-8.31%), Citigroup (C) (-6.43%), JDS Uniphase (JDSU) (-4.39%), and Verizon (VZ) (-3.10%).
The Nasdaq Composite ($COMPX) ended the session higher by 10.55 points, or 0.38%, on Monday and it closed at 2,765.85. First Solar (FSLR) (+5.05%) was the strongest performer in the Nasdaq-100. Other top performers included Mylan Inc. (MYL) (+4.52%), Vodaphone Group (VOD) (+4.51%), and Symantec Corp. (SYMC) (+4.00%). The weakest were NVIDIA (NVDA) (-2.37%), Apple (AAPL) (-2.25%), Expedia Inc. (EXPE) (-2.23%), and Yahoo (YHOO) (-1.84%).
Not much has changed in the dynamics of the markets since the start of the week. The uptrend remains in play with the S&P 500's 10 day moving average continuing to hold. Likewise, this keeps the market extended on the upside, but the indices lack adequate reversal patterns under development on even the 15 minute charts as Tuesday wound to a close. This means keeping short strategies with a daytrade objective to begin with.
It's a good time to also make a list of stocks that aren't holding up as well as the overall market for swingtrades on the short side. For example, those that have been hugging a 20 day moving average support level while the market has rallied over the past several weeks. These can break down sharply once the market turns. Also look for securities that rallied sharply from December 31st to January 4th and have been making only slightly higher highs since then. These will also tend to have steeper retracements.
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.