E-mini stock index futures react to $1,500 gold

Good day! The market has been in recovery mode after falling sharply on Monday morning when Standard and Poor's cut its long-term outlook on U.S. debt to negative. The S&P 500 and Dow Jones Ind. Average diverged from the Nasdaq in how that recovery took place, however. The S&P 500 and Dow futures both sold off afterhours on Monday to a much larger degree than the Nasdaq. After striking support just prior to midnight, the futures market once again turned higher. This kicked off two steady waves of upside on the 15 minute time frame in the S&P 500 and Dow, but the Nasdaq, which had been stronger on Monday afternoon, was more gradual as the correction continued in the early morning hours.

Dow Jones Industrial Average (Figure 1)

The morning recovery slowed into Tuesday's opening bell. The market gradually corrected off highs, closing the morning gap. This pace weakened further into noon and initial reversal triggers began out of 11:30 a.m. ET lows for a continuation of the larger 60-minute recovery. The pace increased following the 13:00 ET correction period when the indices broke higher out of 5 minute congestion that formed on light volume, triggering a PhoenixTM. The indices continued to climb throughout the remainder of the session.

Gold also continued to push higher on Tuesday. Although the pace slowed compared to the past several days, it once again hit a new record highs after crossing $1,500 an ounce. It settled at $1,495.10. Silver was also higher and settled at $43.913 an ounce.

The Dow Jones Industrial Average ($DJI) had a gain of 65.16 points, or 0.53%, and closed at 12,266.75 on Tuesday. Two-thirds of the Dow's index components posted a gain. The top performers were Johnson & Johnson (JNJ) (+3.69%), Caterpillar (CAT) (+2.12%), Alcoa (AA) (+1.92%), and DuPont (DD) (+1.62%). Johnson & Johnson (JNJ) outperformed the other Dow components after it posted first-quarter earnings results that topped analysts' expectations and included a stronger-than-anticipated outlook for 2011. The weakest of the Dow components were Travelers (TRV) (-1.41%), Cisco Systems (CSCO) (-0.72%), and Bank of America (BAC) (-0.64%).

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