The Nasdaq Composite ($COMPX) ended the session lower by 25.76 points, or 0.99%, on Wednesday and it closed at 2,577.97. The top index components in the Nasdaq-100 ($NDX) were Research In Motion (RIMM) (+10.06%), Yahoo (YHOO) (+5.82%), and Warner Chilcott (WCRX) (+3.51%). The weakest were Oracle (ORCL) (-11.66%), Citrix Systems (CTXS) (-7.76%), and F5 Networks Inc. (FFIV) (-6.64%).
Nasdaq Composite (Figure 3)
Wednesday's existing-home sales data had little impact on intraday price action. Sales in November were up 4% compared to the prior month, making it the third straight monthly increase. It was still short of expectations, however, and a revised report on overall sales from 2007 to 2010 put the numbers lower by 14% compared to previously released data.
As we head into Thursday morning, the market is once again forming a period of congestion that began with Wednesday's closing bell. This will be the third straight session whereby we have seen such activity. The typical breakout from such a range in to the upside. This is what we experienced on both Tuesday and Wednesday. It will face steep resistance, however, on the 15 minute time frame this time around and patterns have a tendency to not perform as well on the third setup when the same pattern repeats a third time. This will make it likely that the trading range we had expected to hold yesterday will continue to do so on Thursday as well.
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.