MONDAY'S MARKET WRAP-UP
Market Snapshot for Dec. 20, 2011
Closing Prices: DOW 11,766.26 (-100.13, -0.84%), S&P 500 1,205.35 (-14.31, +1.17%), NASDAQ 2,523.14 (-32.19, -1.26%), Nikkei 225 8,340.75 (+44.63, +0.54%), DAX 5,670.71 (-31.07, -0.54%), FTSE 5,364.99 (-22.35, -0.41%)
OIL 94.30, GOLD 1,599.00, SILVER 28.85
EURO 1.2997, YEN 77.97, BRITISH POUND 1.5513, U.S. DOLLAR INDEX 80.905
Financials Once Again Take a Beating
The market has continued to face choppy trade as we head into the end of the year. The index futures were trading sharply lower Sunday evening, but made such a strong recovery following Europe's open that all three of the major indices were in the black by the time Monday's opening bell rang. The move, however, was also exhausted by that point and the indices were struggling out of the gate to hold onto those gains.
Slightly higher highs in the Dow ($DJI) in premarket trade created a Momentum Reversal short setup into the open, while both the S&P 500 ($SPX) and Nasdaq ($COMPX) joined the Dow in a gradual pullback into 10:00 a.m. ET and the 5 minute 20 period moving average support intraday. This support held initially, but the market hugged the support zone, creating a short pattern I've dubbed an "Avalanche". This forms as the indices hug initial support following a reversal off highs. As it hugs that support, volume drops, indicating a lack of buying interest even as prices attempt to recover. This pattern triggered with the 10:45 ET correction period and the premarket gains were quickly erased.
The market remained weak throughout Monday's session. The indices congested mid-day and throughout most of the afternoon, creating another short pattern. It was Bank of America's (BAC) break of the $5/share mark, however, that triggered the second wave of selling on Monday. When BAC broke, the indices quickly broke through intraday lows and the session ended near lows, albeit at support on the 15 minute time frame.
Dow Jones Industrial Average
Monday's Index Wrap-up
The Dow Jones Industrial Average ($DJI) ended the day on Monday with a loss of 100.13 points, or 0.84%, and closed at 11,766.26. Only Merck (MRK) (+0.61%), Pfizer (PFE) (+0.52%), and Caterpillar (CAT) (+0.06%) came out ahead. The weakest were the financials. Bank of America (BAC) fell 4.22%, while JP Morgan (JPM) fell 3.73%.
The S&P 500 ($SPX) finished the session with a loss of 14.31 points, or 1.17%, and closed at 1,205.35. The strongest individual percentage performers in the index were Cerner Corp. (CERN) (+2.45%), Cablevision Sys. Corp. (CVC) (+1.96%), and DTE Energy Co. (DTE) (+1.54%). The weakest were Genworth Financial Inc. (GNW) (-8.15%), United States Stl. Corp. (X) (-7.81%), and Alpha Natural Resources (ANR) (-7.24%).
The Nasdaq Composite ($COMPX) ended the session lower by 32.19 points, or 1.26%, on Monday and it closed at 2,523.14. The top index components in the Nasdaq-100 ($NDX) were Cerner Corp. (CERN) (+2.45%), Sirius XM Radio (SIRI) (+2.26%), and Green Mountain Coffee Roasters (GMCR) (+1.57%). The weakest were First Solar (FSLR) (-4.42%), Micron Tech. (MU) (-4.22%), and Research In Motion (RIMM) (-4.09%).
Despite the strong day of selling on Monday, the indices have stuck to the recent tradition of sharp overlap from one day to the next as daily congestion continues. Monday afternoon's 15 minute support held and the slight shift in momentum in the final 45 minutes of trade helped the market form an initial recovery afterhours. Resistance from Monday's mid-day price congestion struck around 21:00 ET, but the index futures hugged this resistance zone and were able to break through it once again with strength out of the European open. This has created a second wave of buying off Monday's lows that has returned the market to the price zone at Monday's highs. Despite the increase in momentum into this level, it will still serve as resistance heading into Tuesday's open and we can easily expect to see a choppier morning session. Maintaining a strong opening trend will be difficult.
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.