E-mini afternoon recovery saves the day

The last reversal took place out of 14:30 ET when the Nasdaq once again tested the intraday lows and the afternoon drop mirrored the earlier one in the morning. This reversal gained momentum out of the 15:00 ET correction period and remained strong into the close with only a slight pause at previous intraday highs.

S&P 500 (Figure 2)


The Dow Jones Industrial Average ($DJI) had a loss of 3.33 points, or 0.03%, and closed at 11,977.19 on Tuesday. Thanks to the late-day recovery, half of the Dow's thirty index components posted a gain. WalMart (WMT) (+2.16%), Cisco (CSCO) (+1.75%), Verizon (VZ) (+1.56%), and Intel (INTC) were the top performers. American Express (AXP) (-2.16%), Bank of America (BAC) (-2.08%), 3M (MMM) (-2.02%), and Johnson & Johnson (JNJ) (-1.83%) were the weakest performers.

The S&P 500 ($SPX) rose 0.34 point or 0.03%, and closed at 1,291.18. Harley Davidson (HOG) (+8.06%), Corning Inc. (GLW) (+7.99%), AK Steel Holding (AKS) (+7.68%), and Sara Lee Corp. (SLE) (+6.97%) were the top percentage gainers in the S&P 500. Tellabs Inc. (TLAB) (-19.18%), Red Hat Inc. (RHT) (-4.94%), Teradata Corp. (TDC) (-4.76%), and Grainger W W (GWW) (-4.74%) were the worst percentage performers in the index.

The Nasdaq Composite ($COMPX) ended the session higher by 1.70 points, or 0.06%, on Tuesday and it closed at 2,719.25. The strongest stocks in the Nasdaq-100 were Teva Pharmaceuticals (TEVA) (+3.61%), Sears Holding (SHLD) (+3.22%), Cisco (CSCO) (+1.75%), and Ctrip.com (CTRP) (+1.64%). The weakest stocks in the Nasdaq-100 were Citrix Systems (CTXS) (-4.25%), Sandisk (SNDK) (-4.20%), First Solar (FSLR) (-3.70%), and Netapp (NTAP) (-3.33%).

Nasdaq Composite (Figure 3)

Tuesday's earnings reports were mixed along with the market. Johnson & Johnson (JNJ), 3M (MMM) disappointed shareholders, while Travelers (TRV) and Verizon (VZ) helped lift their spirits.

The economic data on Tuesday was also mixed. Home prices in 20 major metro areas tracked by the S&P Care Shiller Home Price Index experienced a sharp drop of 1% compared to October. This amounts to a 1.6% year-over-year decline compared to the 1.5% analysts anticipated. Foreclosures continued to hit record highs with over a million people losing their homes and 2.9 million notice filed.

Despite the dismal housing data, consumer confidence hit highs last seen in May 2010. Economist were anticipating a move higher from 52.4 to 53.5 this month. Instead, it jumped to 60.6.

On Wednesday expect more housing data, the latest FOMC announcement and earnings from Boeing (BA), United Technologies (UTX) and Xerox (XRX) ahead of the open. Netflix (NFLX) reports after the close. Netflix is forming a potential bull flag on the weekly time frame.

The market continues to favor holding above 20 day moving averages on Wednesday, but the S&P 500 is continuing to show strong relative weakness compared to the other two major indices.

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.

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About the Author
Toni Hansen

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.

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