Although the Nasdaq outperformed the other two major indices, it also gave in to a bearish bias in the afternoon. Slightly higher highs on slowing momentum on a 5 minute time frame shortly after noon created a 2T reversal that favored further downside. This downside did not gain a lot of momentum until afterhours, but followed through strongly into earlier lows and price congestion soon after the closing bell. This corrective bias on the 30-minutes charts will remain intact as we head into early Tuesday trade.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) had a loss of 5.07 points, or 0.04%, and closed at 12,268.19 on Monday. Twelve of the Dow's thirty index components posted a gain for the day. The top performers were Exxon Mobil (XOM) (+2.52%), Chevron (CVX (+1.27%), Alcoa (AA) (+1.27%), and Pfizer (PFE) (+1.17%). The weakest performers was Wal-Mart (WMT) (-1.60%). JP Morgan downgraded Wal-Mart (WMT) from overweight to neutral, citing a "lack of near-term catalysts". Verizon (VZ) followed with a loss of 1.35% after failing a breakout attempt on the 8th.
The S&P 500 ($SPX) rose 3.17 points or 0.24%, and closed at 1,332.32. The top percentage gainers in the S&P 500 were Tesoro Corp. (TSO) (+7.94%), Netflix (NFLX) (+7.13%), Marathon Oil (MRO) (+6.10%), and Cliffs Natural Resources (CLF) (+5.90%). The weakest were Clorox (CLX) (-6.19%), Motorola Mobility (MMI) (-5.46%), and Macys (M) (-3.05%).
The Nasdaq Composite ($COMPX) ended the session higher by 7.74 points, or 0.28%, on Monday and it closed at 2,817.18. Netflix (NFLX) continued its strong weekly breakout by adding another 7.13% to lead the Nasdaq-100 higher after receiving several upgrades from investment firms. Other top performers were Maxim Integrated Products (MXIM) (+5.11%), Citrix Systems (CTXS) (+4.24%), and Sandisk Corp. (SNDK) (+3.25%). The Nasdaq-100's top losers were Ctrip (CTRP) (-5.40%), News Corp. (NWSA) (-2.76%), Sears Holdings (SHLD) (-2.09%).
Although Monday's session was a slow one for economic data and focused on the government's budget plans, the data will pick up on Tuesday with the Commerce Department's release of January retail sales, as well as the Empire manufacturing data for February and December's business inventories. On Wednesday the latest housing data comes out with the weekly mortgage applications and housing start, as well as the FOMC minutes.
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.