Stock indexes following European gains

MONDAY'S MARKET WRAP-UP

Market Snapshot for September 27, 2011 (11:05 pm ET):

  • Closing Prices: DOW 11,190.69 (+146.83, +1.33%),S&P 500 1,175.38 (+12.43, +1.07%), NASDAQ
    2,546.83 (+30.14, +1.2%), Nikkei 225 8,625.40 (+15.45, +0.18), DAX 5,628.44 (+282.88, +5.29%), FTSE 5,294.05 (+204.68, +4.02%)
  • OIL 81.17, GOLD 1,637.90, SILVER 31.14
  • EURO 1.3555, YEN 76.52, BRITISH POUND 1.5629, U.S. DOLLAR INDEX 78.38

Buyers Beware!

Tuesday was a good day if you were a bull... at least in theory. The Dow Jones Industrial Average managed another triple point gain and all three of the major indices were up over 2% and nearly hit 3% gains at one point, but as I warned in yesterday's column, this is a market ripe for flushing out hard-sought gains.

Most of Tuesday's reprieve came on the heels of gains in Europe and took place in premarket trade in the U.S. in the index futures. The rally was slower than earlier selloffs and even more gradual than the intraday pops on Friday and Monday. It continued well into the afternoon, but without any strong intraday swings to further benefit daytraders until the slow uptrend channel finally gave way to trigger another nasty selloff in the final 90 minutes of trade. The indices nearly closed their opening gaps before finding support into the closing bell. Despite this flush, all three of the major indices still managed gains of over 1%.

Dow Jones Industrial Average (Figure 1)

Commodities Continue to Find Relief

It wasn't only the indices that managed to catch their breath to some extent on Tuesday. We also continued to see the commodities find their footing and move away from "free fall mode" as anticipated. Gold for December delivery was up $57.70 an ounce and settled at $1,652.50 at the Comex division of the New York Mercantile Exchange. It was as high as $1,679.50 an ounce, but like the overall market, it also pulled back intraday. Meanwhile, silver gained $1.56 an ounce and closed at $31.54, while the U.S. dollar index fell 0.8% to $77.46.

Crude oil also posted strong gains after several days of sharp selling. Oil prices in the pit settled at $84.45 a barrel for a gain just over 5%. This was the strongest session for oil in four months.
Overall, the commodities are likely to continue to chop around off the daily support zone and we will continue to see more limited selling, although gold in particular appears to be at risk of continuing to drag lower into 200-day moving average support and the zone of early summer trade over the next couple of weeks.

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