Good day! Commodity prices stabilized further in Wednesday's session as they continued to react to the support zone that hit earlier this month. Crude oil finished higher by 1.7% to push above the $100/barrel mark and end the session at $101.32, while gold closed higher at $1,526.70 an ounce and silver finished the session at $37.642 an ounce.
Dow Jones Industrial Average
The strength in commodities made itself known in the overall market as well. The weekly support zone at 20 week moving averages held and the pace started to slow on the 60-minute downtrend channel thanks to a rally on Wednesday in the indices that took them back into Tuesday's highs following a lower low the prior evening.
The intraday uptrend on Wednesday was nice and steady, creating a "V" type of bottom on the 15 minute time frame and plenty of intraday opportunities for day traders. Since the price action had comparable momentum as seen on Wednesday's descent, however, those previous highs served as very strong resistance heading into the final hour of trade and the market pulled back somewhat into the closing bell.
The market's pace shifted further afterhours on Wednesday and into early Thursday morning, which leaves the bears at the helm on the 15 minute time frame on Thursday. This will create a stronger shift in the 60-minute momentum, making it difficult for the indices to push to sharply lower lows before creating a larger daily reaction to the support zone. Slightly lower lows, however, are still possible and the market bias is currently more favorable to day traders than those holding multiple days or weeks in securities that mimic the underlying market.
The Dow Jones Industrial Average ($DJI) ended the day with a gain of 38.45 points, or 0.31%, and closed at 12,394.66 on Wednesday. The top performers were DuPont (DD) (+1.78%), Caterpillar Inc. (CAT) (+1.67%), Alcoa (AA) (+1.37%), and Pfizer (PFE) (+1.27%). The weakest were Verizon (VZ) (-1.36%), Kraft Foods (KFT) (-1.26%), and Procter & Gamble (PG) (-0.94%).
The S&P 500 ($SPX) gain of 4.19 points, or 0.32% and closed at 1,320.47. The top percentage performers were Cabot Oil & Gas (COG) (+7.07%), National Oilwell Varco (NOV) (+5.65%), Halliburton (HAL) (+4.99%), and Baker Hughes (BHI) (+4.97%). Polo Ralph Lauren (RL) was the largest decliner, falling 11.35% following earnings. It was followed by losses in Compuware (CPWR) (-5.87%), Hormel Foods (HRL) (-4.76%), and H&R Block (HRB) (-4.09%).
The Nasdaq Composite ($COMPX) ended the session higher by 15.22 points, or 0.55%, on Wednesday and it closed at 2,761.38. The strongest performers in the Nasdaq-100 ($NDX) were Netflix (NFLX) (+4.79%), Flextronics Intl. (FLEX) (+3.83%), Electronic Arts (ERTS) (+2.41%), and Ross Stores (ROST) (+1.96%). The weakest were First Solar (FSLR) (-2.64%), Apollo Group (APOL) (-2.56%), Urban Outfitters (URBN) (-2.55%), and Staples (SPLS) (-2.24%).
On Wednesday the Commerce Department released the latest data on durable goods orders for this past month. They had been expected to decline by 2%, but fell nearly twice as much at 3.6%. Despite the disappointing data, there was not much of a reaction to it in premarket trade. This was not the case with the data released early Thursday morning. The immediate reaction was continued selling off a double top on the 15 minute time frame from a premarket retest of Wednesday's highs.
The second estimate for first-quarter GDP growth repeated earlier estimates for an annualized rate of 1.8%. Analysts were expecting it to be upwardly revised to 2.0%.
Additionally, initial jobless claims for this past week were higher-than-anticipated and rose 10,000 to 424,000 despite estimates for an increase of 400,000. Continuing claims, however, fell from 3.74 million to 2.69 million.
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.