Stock indexes struggles between support, resistance

Market Snapshot for February 2, 2011 (7:52 p.m. ET), Closing Prices:

  • DOW 12,705.41 (-11.05, -0.09%), S&P 500 1,325.54 (+1.45, +0.11%), NASDAQ 2,859.68 (+11.41 +0.4%), Nikkei 225 8,875.91 (-0.91, -0.01%), DAX 6,655.63 (+38.99, +0.59%), FTSE 5,796.07 (+5.35, +0.09%)
  • OIL 96.59, GOLD 1,761.80, SILVER 34.30
  • EURO 1.3122, YEN 76.20, BRITISH POUND 1.5791, U.S. DOLLAR INDEX 79.11

Thursday was not a particularly exciting day for the market. Volume was on the light side and the session was caught between the larger intraday time frame support and resistance levels I discussed in yesterday's column. The day kicked off after a pullback in premarket trade landed the indices at support from premarket congestion Wednesday morning (as shown on the 15 minute charts). This support zone held well and continued to do so even when the indices retested the level mid-day on Thursday.

Prior to that, however, the market attempted a recovery. After hitting lows around 7:45 a.m. ET, the indices continued higher past the 10:00 a.m. ET economic data and into the 11:00 a.m. ET correction period. The Nasdaq ($COMPX) once again served as the relative strength leader, but the pace of the strength began to diminish as the morning wore on.

Dow Jones Industrial Average (Figure 1)

The shifting momentum offered the bears a chance to take the lead and a short triggered intraday as the S&P 500 ($SPX) and Dow Jones Ind. Average ($DJI) tested the highs from early premarket trade. This slowdown in momentum also allowed the bears to develop a stronger reactionary move to the short trigger and the pace of the selling quickly returned the market to the premarket lows by early afternoon.

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