The Dow Jones Industrial Average ($DJI) ended the day with a gain of 72.73 points, or 0.6%, and closed at 12,261.42 on Wednesday. Twenty-four of the Dow's thirty index components posted a gain. The top performers were the financials. They included Bank of America (BAC) (+2.96%), American Express (AXP) (+2.58%), and JP Morgan Chase (JPM) (+2.30%). The financials rallied after a settlement was reached by Bank of America that dealt with securities purchased prior to the housing-market collapse. The weakest performers in the Dow were Microsoft (MSFT) (-0.70%) and Intel (INTC) (-0.47%).
S&P 500 (Figure 2)
The S&P 500 ($SPX) gain of 10.74 points, or 0.83%, and closed at 1,307.41. Visa (V) (+15.00%) and Mastercard (MA) (+11.31%) were the strongest performers in the S&P 500. Other top percentage gainers included eBay (EBAY) (+6.56%), United States Steel Corp. (X) (+5.86%), and AK Steel Holding Corp. (AKS) (+5.15%). The weakest were Pulte Group (PHM) (-3.93%), JDS Uniphase (JDSU) (-3.64%), and DR Horton (DHI) (-3.23%). Home builders felt pressure after KB Home (KBH) (-15.44%) reported a larger-than-expected quarterly loss.
The Nasdaq Composite ($COMPX) ended the session higher by 11.18 points, or 0.41%, on Wednesday and it closed at 2,740.49. The strongest performers in the Nasdaq-100 were eBay (EBAY) (+6.56%), Electronic Arts (ERTS) (+4.70%), First Solar (FSLR) (+3.86%), and Vertex Pharmaceuticals (VRTX) (+3.04%). The weakest were Netapp (NTAP) (-1.50%), Amgen (AMGN) (-1.48%), and Life Technologies (LIFE) (-1.43%).
Nasdaq Composite (Figure 3)
The market remains extended in the short-term heading into late Wednesday evening. The slowing pace of the rally over the past three days opens the door for strong intraday corrections off resistance. All three of the major indices have stronger levels of price resistance just overhead than those that hit on Wednesday, however, so we could easily see choppier trade take over heading into the weekend as the market flirts with 100-day and 50-day moving average resistance levels. This should create wider swings on the 15 minute time frame, but with the moving averages serving as a magnet, we're unlikely to see the bears pull the market back at the same pace as the bulls led over the past several days.
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.