All three of the indices experienced the greatest upside between 10:15 a.m. and 12:30 ET. The remainder of the session was spent in a trading range. The overall pace of the correction off Friday's lows thus far has indeed been more gradual than that original selloff. Although substantially smaller than Friday's range, the intraday trading range on Monday was still decent. So was the volume. This made for an active session despite the weaker strategies. The slower upside move has been continuing after Monday's closing bell as well. We should see resistance from this correction hit before Tuesday's open and another rapid drop. I do not expect the next drop on the all-sessions charts to break Friday's lows. Instead, it is more likely that the indices hold in a trading range on the 30 minute charts over the next day or so.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) had a gain of 68.23 points, or 0.58%, and closed at 11,891.93 on Monday. The month ended with the Dow's strongest January performance in 14 years (+2.13%). Every once in awhile the market likes to break a trend! Over two-thirds of the Dow's thirty index components posted a gain on the day. The top performers were Alcoa (AA) (+2.73%), Exxon Mobil (XOM) (+2.14%), IBM (IBM) (+1.75%), Chevron (CVX) (+1.67%), and Caterpillar (CAT) (+1.39%). The worst performers were Procter & Gamble (PG) (-1.67%), WalMart (WMT) (-1.11%), and American Express (AXP) (-1.09%).
The S&P 500 ($SPX) rose 9.78 points or 0.77%, and closed at 1,286.12. Pall Corp. (PLL) was the strongest performer in the index. It busted sharply higher with a breakaway gap on the daily and weekly time frame for a gain of 13.87%. Other top percentage performers included Massey Energy Company (MEE) (+9.84%), Chesapeake Energy (CHK) (+8.05%), Newfield Expl. (NFX) (+5.98%), and Denbury Res. (DNR) (+5.60%). As you can see, energy shares were among the strongest of the S&P 500's industry groups. Exxon Mobil (XOM) helped the sector by posting stronger-than-expected earnings and unrest in Egypt continued to push oil prices higher. Crude oil ended the session higher by 2.9% and settled at $92.19 a barrel with its highest close since October, 2008 over concern about shipment disruptions in the Suez Canal.
The largest percentage losses in the S&P 500 were seen in Motorola Mobility (MMI) (-5.81%), Whirlpool Corp. (WHR) (-4.92%), Sandisk (SNDK) (-3.06%), and Gannett Inc. (GCI) (-2.96%).
The Nasdaq Composite ($COMPX) ended the session higher by 13.19 points, or 0.49%, on Monday and it closed at 2,700.08. The strongest performers in the Nasdaq-100 were First Solar (FSLR) (+4.81%), Electronic Arts (ERTS) (+3.93%), Genzyme Corp. (GENZ) (+3.16%), and Paccar Inc. (PCAR) (+3.05%). The weakest were Check Point Software Tech. (-3.61%), Sandisk (SNDK) (-3.06%), Netflix (NFLX) (-1.79%), and Research In Motion (RIMM) (-1.73%).
Monday's economic data didn't have much of an impact on the day's trade. The Commerce Department reported that personal spending was slightly higher-than-expected last month at 0.7%. Personal income, however, fell short and rose 0.1% less than the expected gain of 0.5%.
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.