Support hit around 11:30 ET. This is where we start to see more weakness come into play. Instead of another rapid reaction to support, the upside into the afternoon was substantially more gradual than the pullback off the morning highs. This slowing momentum typically results in a stronger breakdown out of the slower uptrend channel. This breakdown was attempted right after the Fed's 14:15 ET announcement, but it surprised many market players by hanging on and refusing to give way to the momentum shift.
The market continued to hold up following the closing bell as well. Instead of giving way to the pressure to sell off, the index futures fell into a trading range into midnight, which is when this column was completed. The Nasdaq is showing the best relative strength, while the Dow and S&Ps both have three solid waves of buying already established on the 30 minute, all session charts (which include pre- and post-market data.) This leaves the trend extended on the upside heading into Thursday morning.
Part of the market's ability to withstand the bearish pressure immediately following Wednesday's closing bell stemmed from strong earnings out of Qualcomm (QCOM) and Netflix (NFLX), which kept earnings data in the forefront of people's minds.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) had a gain of 8.25 points, or 0.07%, and closed at 11,985.44 on Wednesday. Despite the morning's upside, fewer than half of the Dow's thirty index components managed to post a gain. The leaders amongst those that did were DuPont (DD) (+2.61%), Alcoa (AA) (+2.22%), Verizon (VZ) (+1.70%), and Caterpillar (CAT) (+1.44%). The weakest percentage performers were Boeing (BA) (-3.07%), Disney (DIS) (-1.05%), Procter & Gamble (PG) (-0.88%), and Johnson & Johnson (JNJ) (-0.79%). Boeing's revenue for the past quarter failed to meet expectations.
The S&P 500 ($SPX) rose 5.45 points or 0.42%, and closed at 1,296.63. Devry Inc. (DV) (+12.62%) was the strongest percentage performer in the index. Allegheny Technologies (ATI) (+11.80%) followed DV in the winner department. The other top leaders that broke to 52-week highs on Wednesday included Rockwell Automation (+8.86%) and Halliburton Co. (HAL) (+7.96%). Xerox (X) (-7.63%), CA Inc. (CA) (-7.57%), Sara Lee (SLE) (-5.70%), and Legg Mason (LEG) (-5.22%) were the weakest percentage performers.
The Nasdaq Composite ($COMPX) ended the session higher by 20.25 points, or 0.74%, on Wednesday and it closed at 2,739.50. Gilead Sciences (GILD) (+3.93%), Joy Global (JOYG) (+3.73%), Wynn Resorts (WYNN) (+3.34%) and TEVA Pharmaceuticals (TEVA) (+3.15%) were the Nasdaq-100's top percentage gainers for the session. The weakest shares were CA Inc. (CA) (-7.57%), Staples (SPLS) (-3.07%), Altera Corp. (ALTR) (-3.01%), and Yahoo (YHOO) (-2.81%). On Tuesday afternoon Yahoo offered a guidance for the current quarter that fell short of previous forecasts.
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.