E-mini stock indexes struggle at resistance

The S&P 500 ($SPX) finished the session with a gain of 24.52 points, or 2.04%, and closed at 1,225.38. The top percentage performers in the index were AK Steel Holding Corp. (AKS) (+12.73%), Pulte Group (PHM) (+11.22%), DR Horton Inc. (DHI) (+11.01%), and Regions Financial Corp. (RF) (+10.69%). Shares in home builders rose following the National Association of Home Builders report that its index for builder sentiment rose from 14 to 18 in October. Thirty-two of the S&P 500's index components posted a loss on Tuesday. The weakest was Hospira Inc. (HSP) (-21.01%). It was followed by losses in Harley Davidson (HOG) (-7.04%) and Netflix (NFLX) (-4.76%).

The Nasdaq Composite ($COMPX) ended the session higher by 42.51 points, or 1.63%, on Tuesday and it closed at 2,657.43. The strongest performers in the Nasdaq-100 ($NDX) were Seagate Tech. (STX) (+7.08%), Micron Tech. (MU) (+6.26%), First Solar (FSLR) (+5.57%), and Joy Global (JOYG) (+5.47%). Ten of the index's components posted a loss. The weakest were Netflix (NFLX) (-4.76%), Ctrip (CTRP) (-3.98%), and Baidu (BIDU) (-2.39%).

Nasdaq Composite (Figure 3)

Weekly Losses Wiped Out

The market struggled initially heading into Tuesday's session, but the larger intraday support pointed out in yesterday's column held well. The index futures primarily congested overnight with only slightly lower lows. Instead of indicating underlying weakness, the slightly lower lows served as bear traps. Every time a new low hit, the market snapped back. At 10:00 a.m. ET the reversal finally held and the upper end of the trading channel that had been in place throughout premarket trade finally gave way. The pace of the buying slowed mid-day, but the report from The Guardian provided an added boost for the bulls in the final hour of trade. This wiped out the losses from the previous session.

Outlook

As we head into Wednesday's session the markets are primarily favoring a trading range on the 60-minute time frame. The 200 day moving averages in the S&P 500 and Dow can still draw those indices higher, but the market will likely experience wider swings in intraday price action as debt and job crisis headlines continue to vie for a attention alongside earnings news. Swingtrades overnight at this time will be higher risk as a result.

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.

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About the Author
Toni Hansen

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.

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