Market Snapshot for November 15, 2011 (10:42 a.m. ET):
Closing Prices:
- DOW 12,096.16 (+17.18, +0.14%), S&P 500 1,257.81 (+6.03, +0.48%), NASDAQ 2,686.98 (+28.98, +1.09%), Nikkei 225 8,541.93 (-, -%), DAX 5,933.14 (-51.88, -0.87%), FTSE 5,517.44 (-1.704, -0.03%)
- OIL 99.30, GOLD 1,780.50, SILVER 34.455
- EURO 1.3508, YEN 77.04, BRITISH POUND 1.5805, U.S. DOLLAR INDEX 78.06
Market Provides Solid Setups for Intraday Traders
This week has been a good one for daytraders, while providing a beating to those looking for multi-day runs. As the market congests on the daily time frame, support and resistance levels at prior highs and lows, fibonacci, and moving average levels have all held extremely well and price patterns on the intraday time frames have offered decent reward to risk ratios without a lot of choppy action, although Tuesday afternoon was a bit slow as the Momentum Reversal on the 15 minute time frame developed.
Tuesday morning began with strength after the index futures sold off in response to European weakness in premarket trade. Downside gaps filled quickly, but the market had been down even further in early trade, leaving the indices at resistance fairly early into intraday trade. The response was a two-wave correction on the 15 minute time frame throughout most of the morning before the indices found support at 15 minute 20 sma levels around 11:30 ET. The upside reaction was strong and the market established an equal move on the 15 minute time frame as compared to premarket buying before stalling into afternoon trade. Slowing momentum at this resistance tilted the favor once again to the bears and the market was poised for another selloff heading into the closing bell.
Dow Jones Industrial Average (Figure 1)
Tuesday's Data
Retail sales rose by 0.5% in October, which was just over the 0.4% increase analyst's were anticipating. Excluding autos, sales were up 0.6%. An increase of 0.2% had been expected. Meanwhile, the Producer Price Index declined 0.3% in October. A 0.2% decline had been expected. The Core Producer Price Index was flat. Meanwhile, the Empire State Manufacturing Survey improved from -8.5 to 0.6. Finally, business inventories for September were flat.
S&P 500 (Figure 2)
Index Wrap-up
The Dow Jones Industrial Average ($DJI) ended the day on Tuesday with a gain of 17.18 points, or 0.14%, and closed at 12,096.16. Twenty-three of the Dow's thirty components posted a gain. The top performers were Hewlett-Packard (HPQ) (+3.37%), Intel (INTC) (+2.88%), Bank of America (BAC) (+1.32%), and American Express (AXP) (+1.01%). The weakest were Chevron (CVX (-2.73%) and Wal-Mart (WMT) (-2.43%).
Wal-Mart (WMT) collapsed following a weaker-than-anticipated earnings report that weighed heavily on the Dow. Further corrective action in Wal-Mart is likely over the next several months and it will face difficulty establishing new highs this year.
The S&P 500 ($SPX) finished the session with a gain of 6.03 points, or 0.48%, and closed at 1,257.81. The strongest industry sectors for the day were the tech stocks (+1.3%) and industrials (+0.6%). The strongest individual percentage performers in the index were Jacobs Engineering Group (JEC) (+7.94%), Varian Medical Systems (VAR) (+6.22%), and Vulcan Materials Co. (VMC) (+5.46%). The only declining sector was energy (-0.2%), while the weakest individual performers were Western Digital Corp. (WDC) (-4.90%), Gamestop Corp. (GME) (-4.38%), and Staples (SPLS) (-3.64%).
The Nasdaq Composite ($COMPX) ended the session higher by 28.98 points, or 1.09%, on Tuesday and it closed at 2,686.20. The top index components in the Nasdaq-100 ($NDX) were Green Mountain Coffee Roasters (GMCR) (+12.98%), Research In Motion (RIMM) (+4.59%), and Broadcom (BRCM) (+4.14%). The weakest were Ctrip.com Intl. (CTRP) (-8.35%), Activision Blizzard (ATVI) (-4.53%), and Staples (SPLS) (-3.64%).
Nasdaq Composite (Figure 3)
Getting Technical
The strong selling that followed Tuesday's close will leave the index futures once again extended on the 15 minute time frame heading into early Wednesday morning. The downside momentum has been stronger than the selloff into Monday's lows, which confirms a bias continuing to favor the bears even though the daily trading range from this month remains unbroken and the lows of the range will continue to serve as support at this point. The early-morning action heading into Wednesday should experience a slowdown in the afterhours selloff and congestion into Wednesday's open is likely.
Oil Approaching Major Weekly Resistance
Crude oil has been pushing higher with steady upside since the beginning of October. It is now approaching July's highs, however, which is a strong level of price resistance. This will also be a 61.8% fibonacci retracement back to the year's highs. This will make it difficult to continue the move without a weekly correction kicking off by the end of the this week.
NOTE: I will be in Las Vegas over the next several days where I'll be speaking at the Intl. Trader's Expo. This column will resume next week. I hope to see some of you there!
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.
