The Dow Jones Industrial Average ($DJI) ended the day on Thursday with a gain of 93.47 points, or 0.74%, and closed at 12,719.49. The strongest percentage performers in the Dow were Cisco Systems (CSCO) (+2.19%), Intel (INTC) (+2.11%), JP Morgan Chase (JPM) (+1.87%), and Bank of America (BAC) (+1.68%). Retailers were amongst the strongest shares in the index following a report on June same-store sales that far exceeded analysts' expectations. The Thomson Reuters Same-Store Sales Index rose 6.5% for the month compared to an estimate of 4.9%. Only three of the Dow's thirty index components posted a loss. They included Pfizer (PFE) (-2.65%), IBM (IBM) (-0.69%), and Verizon (VZ) (-0.32%).
The S&P 500 ($SPX) gain of 14.00 points, or 1.05%, and closed at 1,353.22. The strongest percentage performers in the index were Kohls Corp. (KSS) (+7.08%), KLA-Tencor (KLAC) (+7.02%), Target (TGT) (+6.67%), and Urban Outfitters (URBN) (+5.95%). The weakest performers were Precision Castparts Corp. (PCP) (-3.42%), Intuitive Surgical Inc. (ISRG) (-3.31%), Dr. Pepper Snapple Group (DPS) (-2.71%), and Pfizer (PF (-2.65%).
Nasdaq Composite (Figure 3)
The Nasdaq Composite ($COMPX) ended the session higher by 38.64 points, or 1.36%, on Thursday and it closed at 2,872.66. The strongest performers in the Nasdaq-100 ($NDX) were KLA-Tencor (KLAC) (+7.02%), Urban Outfitters (URBN) (+5.95%), Research In Motion (RIMM) (+4.73%), and Sears Holdings Corp. (SHLD) (+4.55%). Only ten of the 100 index components posted a loss. The weakest were Intuitive Surgical Inc. (ISRG) (-3.31%), Illumina (ILMN) (-2.36%), and Biogen IDEC (BIIB) (-1.27%).
Overall the momentum of the daily rally has shifted compared to last week, but the pace still remains stronger-than-average. This has the indices gunning for another test of the year's highs with the potential for establishing slightly higher highs. The creation of a "V"-style of reversal off the daily lows will allow that zone to serve as strong resistance, but the pace of the rally will also mean that a bull trap is possible with the absolute highs of the year breaking slightly on the weekly time frame before we experience another correction off highs on a scale of at least a month.
This will also create a third high on the weekly time frame since the momentum from the rally off last August's lows slowed in February. This would be further confirmation of a larger corrective phase in the market, although so far that correction has been more through time than price on the weekly and monthly charts.
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.