THURSDAY'S MARKET WRAP-UP
Market Snapshot for November 3, 2011 (4:22 a.m. ET):
Closing Prices: DOW 12,044.47 (+208.43, +1.76%), S&P 500 1,261.15 (+23.25, +1.88%), NASDAQ 2,697.97 (+57.99, +2.2%), Nikkei 225 8,640.42 (-195.10, -2.21), DAX 6,133.18 (+167.55, +2.81%), FTSE 5,545.64 (+61.54, +1.12%)
OIL 94.03, GOLD 1,764.20, SILVER 34.51
EURO 1.3812, YEN 78.10, BRITISH POUND 1.6035, U.S. DOLLAR INDEX 76.935
ECB Rallies Market
This week started off on a sour note with the Dow down over 500 points in just two days, but 20-day moving averages held as support heading into the end of the day on Tuesday and the market received a boost early Thursday morning following the European Central Bank's decision to cut its interest rates by a quarter of a percentage point, making it the first rate cut by the bank in two years. This move overshadowed continued concerns out of Greece on a potential debt default despite recent bailout plans that included cutting its debt by 50%.
Thursday's session began with a strong upside gap following the ECB's announcement, but the gains were eroded quickly out of the gate. This kicked off the period of choppier trade I was anticipating heading into the day, but the market managed to strengthen mid-day after closing the opening gap. The indices pivoted off low with a "V" formation on the 5 minute time frame and then formed a base along higher, thus shifting the intraday momentum once again to favor the bulls. Two more waves of buying followed on the 5 minute charts into the close, although each wave was more gradual than the initial move off 10:00 a.m. ET lows.
Dow Jones Industrial Average (Figure 1)
In economic news, weekly jobless claims fell below 400,000 with a drop of 9,000 to a seasonally adjusted 398,000 on first-time filings for unemployment. This was slightly more than anticipated, but had little impact upon price action in the market. Later, the Institute for Supply Management released its October non-manufacturing index. It was expected to come in at 53.5, but pulled back to 52.9 instead. September's reading was 53.0. The Commerce Department also released its factory orders for September, which were expected to have fallen 0.1%, but came in better-than-expected with an increase of 0.3%. August's previously reported drop of 0.2% was also upwardly revised to show an increase of 0.1%.
S&P 500 (Figure 2)
The Dow Jones Industrial Average ($DJI) ended the day on Thursday with a gain of 208.43 points, or 1.76%, and closed at 12,044.47. All of the Dow's index's thirty components posted a gain. The top performers were Hewlett-Packard (HPQ) (+3.59%), Kraft Foods (KFT) (+3.29%), Bank of America (BAC) (+2.83%), and Disney (DIS) (+2.82%). The weakest were McDonalds (MCD) (+0.51%) and Procter & Gamble (PG) (+0.56%).
The S&P 500 ($SPX) finished the session with a gain of 23.25 points, or 1.88%, and closed at 1,261.15. Top performing industry groups were energy (+2.5%), industrials (+2.5%), and technology (+2.5%). The strongest individual percentage performers were Estee Lauder (EL) (+17.94%), Alpha Natural Resources (ANR) (+13.29%), Netflix (NFLX) (+10.67%), and Micron Tech. (MU) (+7.55%). ANR was a top energy performer thanks to an unexpected upgrade following better-than-anticipated quarterly results. EL's gains were also thanks to earnings. All of the S&P's industry groups were up more than 1%, but the weakest percentage performers were Abercrombie & Fitch (ANF) (-19.93%), MEMC Electronic Materials (WFR) (-11.76%), and Kellogg Co. (K) (-7.64%).
The Nasdaq Composite ($COMPX) ended the session higher by 57.99 points, or 2.2%, on Thursday and it closed at 2,697.97. The top index components in the Nasdaq-100 ($NDX) were Netflix (NFLX) (+10.67%), Green Mountain Coffee (GMCR) (+8.48%), Micron Tech. (MU) (+7.55%), and Qualcomm (QCOM) (+7.53%). The weakest were Whole Foods (WFM) (-2.00%), and Sirius XM Radio (SIRI) (-1.79%), and Alexion Pharmaceuticals (ALXN) (-1.38%).
Nasdaq Composite (Figure 3)
Employment Data Set to Grab Headlines
The market closed just shy of the day's highs on Thursday and continued to hold this resistance level afterhours despite the slowdown in the trend as it hit. The G20 is wrapping up a two-day meeting in Cannes today, but the index futures have had little reaction overnight. The market is trading near Thursday's close in early pre-market trade. Nevertheless, there will be plenty of news to still break the range prior to the open once October's employment data comes out at 8:30 a.m. ET. The technical bias for the market is fairly wide open ahead of the data. Neither the bulls nor the bears have an overwhelming pull ahead of the announcement, so use caution positioning ahead of the news.
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.