Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) ended the day on Tuesday with a gain of 179.82 points, or 1.47%, and closed at 12,397.38. Twenty-six of the Dow's thirty index components posted a gain. The strongest performers were Alcoa (AA) (+6.71%), JP Morgan (JPM) (+5.20%), and Bank of America (BAC) (+4.32%). The weakest were McDonalds (MCD) (-1.49%) and Verizon (VZ) (-0.97%).
The S&P 500 ($SPX) finished the session with a gain of 19.46 points, or 1.55%, and closed at 1,277.06. The top performing industry groups were materials (+3%) and financials (+2.8%). The strongest individual percentage performers in the index were Nabors Industries (NBR) (+9.69%), Peabody Energy (BTU) (+9.54%), and MetroPCS Communications (PCS) (+8.18%). Utilities were the only group as a whole to post a loss. The weakest individual performer was Williams Cos. (WMB) with a loss of 18.78%. It was followed by Altria Group (MO) (-3.68%) and Public Svc. Enterprise Group (PEG) (-3.64%).
The Nasdaq Composite ($COMPX) ended the session higher by 43.57 points, or 1.67%, on Tuesday and it closed at 2,648.72. The strongest performers in the Nasdaq-100 ($NDX) were Warner Chilcott (WCRX) (-7.53%), Micron Tech. (MU) (+7.47%), and Research In Motion (RIMM) (+6.97%). The weakest were Sandisk (SNDK) (-3.31%), Vertex Pharmaceuticals (VRTX) (-2.95%), and Microchip Tech. (MCHP) (-2.38%).
After seeing unemployment drop in Germany, the U.S. is looking for its own improvement on the employment front this week (although Germany's levels are currently akin to a pipe dream in the U.S.). The U.S. reports its December's unemployment and nonfarm payrolls report on Friday
A number of large retailers will be also be reporting their December sales this week. Those to watch on Thursday include Costco Wholesale (COST), Macy's (M), Nordstrom (JWN), and Target (TGT).
Although the market managed to hold onto Tueday's gap fairly well throughout that session, the morning turnaround brought with it a return of a bearish intraday bias. This put some pressure on the markets in the afternoon after a strong morning selloff into mid-day. The afternoon rally was slower than the morning descent, which allowed selling to return sharply into the close. Although the extent of the moves was minor, the pace was not. The bearish bias continued afterhours with congestion at lows and gave way to further selling in premarket trade.
Overall the market is favoring a continuation of the trend channel from the second half of December as this week progresses, but maintaining the uptrend will become more difficult in the days ahead. Prior daily highs and a slower overall uptrend compared to the early-December selloff will increase the risk of a stronger daily downside flush compared to the upside momentum once the uptrend channel breaks.
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.