MONDAY'S MARKET WRAP-UP
Market Snapshot for January 23, 2011 (6:23 p.m. ET):
Closing Prices: DOW 12,708.82 (-11.66, -0.09%), S&P 500 1,316.00 (+0.62, +0.05%), NASDAQ 2,784.17 (-2.53, -0.09%), Nikkei 225 8,778.96 (+13.06, +0.15%), DAX 6,436.62 (+32.23, +0.5%), FTSE 5,782.56 (+54.01, +0.94%)
OIL 99.65, GOLD 1,675.20, SILVER 32.34
EURO 1.2989, YEN 77.01, BRITISH POUND 1.5543, U.S. DOLLAR INDEX 80.055
Bulls Beware
The market has been plodding higher over the past several weeks and despite the lack of stellar, single-session runs, the bulls have fought hard to hold onto those gains. As we head into Tuesday morning, however, the cracks in the rally are beginning to show. The index futures had been trading in a range from the Friday and broke out to the upside Monday morning in premarket trade. Compared to the rally Thursday and into Friday morning, however, the breakout was second-rate.
The indices held resistance at the 10:15 a.m. ET correction period and pulled back strongly throughout the remainder of the morning. It wasn't until noon that they managed to find support. Unfortunately, that support level was the lower end of that previous congestion on the 15 minute charts. This meant that the pace of the morning selloff was now stronger overall than the earlier morning breakout. It made it difficult for the bulls to pull the market higher once again to allow for another change in momentum and a continuation of the breakout into Tuesday morning. Instead, the slower afternoon upside resulted in further selling afterhours and into premarket trade on Tuesday.
Dow Jones Industrial Average (Figure 1)
Weekly Resistance
The bulls have been struggling with this rally throughout January, but stronger tests of weekly resistance at prior highs will make it even more difficult to continue without a stronger pullback and break of that 60-minute uptrend channel this week. The market has had some decent news in recent months, but it hasn't been enough to alleviate overall anxiety, particularly when it comes to the larger global picture.
Fed Focus
Earnings season is well under way at this point, but this week also brings in another area piece of news to watch. Today is day one of a two-day FOMC meeting. For the first time ever, the Federal Reserve will include an outlook on interest rates in its policy announcement, which is due out Wednesday afternoon.
S&P 500 (Figure 2)
Index Wrap-up
The Dow Jones Industrial Average ($DJI) ended the day on Monday with a loss of 11.66 points, or 0.709%, and closed at 12,708.82. Fewer than half of the Dow's thirty index components posted a gain. The strongest performers were Bank of America (BAC) (+2.55%), Hewlett-Packard (HPQ) (+1.96%), and Intel (INTC) (+1.25%). The losers were Travelers (TRV) (-2.11%), Procter & Gamble (PG) (-1.86%), and Verizon (VZ) (-1.46%).
The S&P 500 ($SPX) finished the session with a gain of 0.62 points, or 0.05%, and closed at 1,316.00. The top performing industry groups were energy (+0.7%) and technology (+0.4%), while telecoms (-0.8%) and health care (-0.5%) were the weakest. The top individual percentage performers were Southwestern Energy (SWN) (+10.30%), Range Res. Corp. (RRC) (+9.22%), and EQT Corp. (EQT) (+8.27%). The top decliners were Netflix (NFLX) (-6.26%), International Game Tech. (IGT) (-3.53%).
The Nasdaq Composite ($COMPX) ended the session lower by 2.53 points, or 0.09%, on Monday and it closed at 2,784.17. The strongest performers in the Nasdaq-100 ($NDX) were Marvell Tech. (MRVL) (+2.83%), NVIDIA (NVDA) (+2.74%), and Check Point Software (CHKP) (+1.97%). The weakest were Research In Motion (RIMM) (-8.47%), Netflix (NFLX) (-6.26%), and Green Mountain Coffee Roasters (GMCR) (-4.81%).
Nasdaq Composite (Figure 3)
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.
