MONDAY'S MARKET WRAP-UP
Market Snapshot for January 9, 2011 (10:30 p.m. ET):
Closing Prices: DOW 12,392.69 (+32.77, +0.27%), S&P 500 1,280.70 (+2.89, +0.23%), NASDAQ 2,676.56 (+2.34, +0.09%), Nikkei 225 8,427.83 (+37.48, +0.45%), DAX 6,017.23 (-40.69, -0.67%), FTSE 5,612.26 (-37.42, -0.66%)
OIL 101.57, GOLD 1,617.00, SILVER 29.07
EURO 1.2772, YEN 76.82, BRITISH POUND 1.5469, U.S. DOLLAR INDEX 81.25
Slow start to the week, but...
After a week of stagnant trade, things are finally starting to look promising. The market was stuck in a narrow trading range with light volume into the holidays and even throughout the first week of trade in 2012 despite a jump into the first day of trade. But the indices hit the equal move point on the congestion when comparing the time of the end-of-the-year trading range to the one this past week and began to show promise for an upside breakout. This promise began when the indices rallied sharply in premarket trade on Monday morning. Then they continued to bump up against the price resistance at the upper end of the 30-minute trading channel, creating a change in the momentum within the larger period of congestion. The breakout finally came afterhours and into early premarket trade this morning.
Dow Jones Industrial Average (Figure 1)
As earnings season unofficially kicks off following the release of Alcoa's (AA) quarterly results on Monday, the market has another reason to show some action. Alcoa met earning estimates and offered a positive outlook, providing comfort to those looking for a strong start to last quarter's earnings results.
S&P 500 (Figure 2)
Keeping the premarket momentum going, however, is another challenge that will be more difficult to accomplish. Despite the rally of December's lows, the move has been on extremely light volume and each step higher has been followed by a great deal of congestion. This has created a slower overall move to the upside than seen at the end of November, creating a shift in momentum that is going to leave the market facing resistance once again on the intraday time frame as we head into Tuesday's opening trade.
Additionally, the market rallied more swiftly off December lows than over the past two weeks. The indices are now onto their third high on the 30-minute time frame since Dec. 23. This is creating another shift in momentum on that time frame as well that will add further pressure to the bulls, as will the resistance from last year's highs, which will be quite difficult to break without yet another correction on the monthly time frame.
So, if you missed the afterhours breakout (like most of those who trade intraday would have), use extra caution on new bullish positions going into early Tuesday morning and expect setups in that direction to be limited overall to the smaller 2-5 minute time frames in the overall market today.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) ended the day on Monday with a gain of 32.77 points, or 0.27%, and closed at 12,392.69. Twenty-three of the Dow's thirty index components posted a gain. The strongest performers were Alcoa (AA) (+2.95%), Bank of America (BAC) (+1.46%), and Caterpillar (CAT) (+1.40%). The weakest were Microsoft (MSFT) (-1.32%) and McDonalds (MCD) (-0.95%).
The S&P 500 ($SPX) finished the session with a gain of 2.89 points, or 0.23%, and closed at 1,280.70. The top performing industry groups were the industrials (+0.8%) and energy (+0.6%). The strongest individual percentage performers in the index were Netflix (NFLX) (+13.78%), Juniper (JNPR) (+5.38%), and First Solar (FSLR) (+4.45%). The weakest industry groups were the techs (-0.3%) and telecoms (-0.1%). The weakest individual performers were Carefusion Corp. (CFN) (-8.63%), Google (GOOG) (-4.24%), and Valero Energy Corp. (VLO) (-3.73%).
The Nasdaq Composite ($COMPX) ended the session higher by 2.34 points, or 0.09%, on Monday and it closed at 2,676.56. The strongest performers in the Nasdaq-100 ($NDX) were Netflix (NFLX) (+13.78%), Green Mountain Coffee Roasters (GMCR) (+7.16%), and Avago Tech. (AVGO) (+6.75%). The weakest were Google (GOOG) (-4.24%), Costco (COST) (-2.61%), and CTrip.com (CTRP) (-2.22%).
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.