Good day! In yesterday's column we looked at weakness in afterhours and premarket trade. This became the most extended in the Nasdaq futures, which were heavily influenced afterhours due to earnings. The S&P 500 and Dow Jones Ind. Average futures, on the other hand, based in premarket trade, leaving a continued bias for weakness into the opening bell on Thursday, which played out early in the day.
The 8:30 a.m. ET employment data had little impact on the day's direction. The government's Labor Department reported that first-time claims for unemployment benefits fell to 383,000 last week. This is the lowest number in 2 1/2 years.
Dow Jones Industrial Average
At 10:00 a.m. ET the latest wholesale inventories numbers were released. Wholesale inventories in December rose 1% to their highest level in nearly two years thanks to slower-than-expected sales. The market jumped soon after this release. The Nasdaq led thanks to a breakout from a premarket PhoenixTM on the 15 minute time frame. As soon as the gap closed, however, the indices stalled. The upside did continue on a subsequent breakout around 11:15 a.m. ET. This took the Nasdaq back to Wednesday's highs, but the market struggled to push past this resistance zone throughout the remainder of the session.
Although earnings had a strong impact on afterhours and premarket trade, it was news from abroad that played a major role in the intraday swings felt by the market in Thursday's session. This was particularly the case late in the session with whiplash action in the final 15 minutes of trade. Egypt's President Mubarak announced that he would be stepping down. He noted that, while he will not run for another term as president, he will remain in office until September and would be delegating his powers to the country's vice president.
The Dow Jones Industrial Average ($DJI) had a loss of 10.60 points, or 0.09%, and closed at 12,229.29 on Thursday. Slightly under half of the Dow's thirty index components posted a gain. The top performers were American Express (AXP) (+1.86%), Intel (INTC) (+1.58%), AT&T (T) (+0.97%), and JP Morgan Chase (JPM) (+0.93%). Cisco (CSCO) (-14.16%), WalMart (WMT) (-2.01%), Microsoft (MSFT) (-1.68%), and Bank of America (BAC) (-1.02%) were the major laggards. Cisco's (CSCO) losses came after it posted disappointing earnings following Wednesday's closing bell.
The S&P 500 ($SPX) rose 0.99 points or 0.07%, and closed at 1,321.87. Goodyear Tire & Rubber (GT) (+14.31%) was the top percentage performer in the index. It was followed by Whole Foods (WFMI) (+11.72%), eBAY (EBAY) (+7.95%), and Juniper Networks (JNPR) (+7.61%). Whole Foods (WFMI) beat earnings estimates and reported a 79% increase in first-quarter earnings. It also raised its outlook for the remainder of the year. Akamai (AKAM) (-15.09%), Cisco (CSCO) (-14.16%), International Flavors & Fragrance (IFF) (-6.24%), and Molson Coors Brewing Co. (TAP) (-4.39%) were the biggest losers. All the major losses were due to disappointing earnings announcements.
The Nasdaq Composite ($COMPX) ended the session higher by 1.38 points, or 0.05%, on Thursday and it closed at 2,790.45. The strongest performers in the Nasdaq-100 were Whole Foods (WFMI) (+11.72%), eBay (EBAY) (+7.95%), Citrix Systems (CTXS) (+5.31%), and Research In Motion (RIMM) (+5.21%). Activision Blizzard (ATVI) (-8.04%) followed AKAM and CSCO on the losing end.
The index futures were lower once again following Thursday's closing bell. They are also basing once again at the afterhours lows, indicating a continued bearish bias into the end of the evening. The larger intraday bias on the 15-60 minute charts is more ambiguous and can head either way, depending upon how the momentum shifts on the smaller 5 minute charts ahead of Friday's open. The week will wrap up on the data front with December's U.S. trade balance and the Reuters/University of Michigan consumer sentiment report.
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.