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
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 $84.45 a barrel for a gain just over 5%. This was the strongest session for oil in four months.
Overall, the commodities are likely to continue to chop around off the daily support zone and we will continue to see more limited selling, although gold in particular appears to be at risk of continuing to drag lower into 200-day moving average support and the zone of early summer trade over the next couple of weeks.
S&P 500 (Figure 2)
What Else Can We Expect?
The market has essentially spent the past three trading days correcting from the sharp selloff that took place mid-week last week. This correction hit a roadblock Tuesday afternoon that is likely to continue to affect it in Wednesday's session. My overall bias for the market is relatively unchanged from yesterday. I continue to anticipate greater intraday swings with more of a range bound focus as the week continues. This will be more ideal for daytraders than swingtraders who will once again be at greater risk for strong, adverse intraday moves.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) ended the day on Tuesday with a gain of 146.83 points, or 1.33%, and closed at 11,190.69.Twenty-five of the Dow's thirty index components posted a gain. The top performers were Hewlett Packard (HPQ) (+3.87%), Disney (DIS) (+ 2.84%), Chevron Corp. (CVX) (+2.24%), and United Technologies (UTX) (+2.24%). Bank of America (BAC) (-1.82%) and American Express (AXP) (-1.01%) were the weakest.
The S&P 500 ($SPX) gain of 12.43 points, or 1.07%, and closed at 1,175.38. All of the index's industry groups established gains, but materials were the strongest with an overall gain of 2.1%. The top percentage performers in the index were Allegheny Technologies (ATI) (+7.35%), Sears Holdings Corp. (SHLD) (+6.56%), QEP Res. (QEP) (+6.21%), and Interpublic Group (IPG) (+6.17%). The weakest were Walgreen Co. (WAG) (-6.27%), Discover Financial Services (DFS) (-4.49%), and Nabors Industries (NBR) (-4.32%). Walgreen was lower despite strong earnings after it announced that it was ending its relationship with Express Scripts (ESRX), which is a company that pays Walgreen to fill prescriptions. According to Walgreen, there has been little progress in contract renewal talks with the company.
The Nasdaq Composite ($COMPX) ended the session higher by 30.14 points, or 1.2%, on Tuesday and it closed at 2,546.83. The top gainers in the Nasdaq-100 ($NDX) were Sears Holdings Corp. (SHLD) (+6.56%), Joy Global (JOYG) (+5.23%), Infosys Ltd. (INFY) (+5.13%), and Akamai Technologies (AKAM) (+4.73%). The weakest were Netflix (NFLX) (-3.58%), Amazon.com (AMZN) (-2.45%), and Vertex Pharmaceuticals (VRTX) (-2.41%).
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.