Nasdaq Trails in Mixed Session, As Blue Chips Hold Support and Rally Back

Stock-Markets / Stock Index Trading Apr 16, 2009 - 01:46 AM GMT

We had a very interesting session on Wednesday. Most indices managed to end in the positive column except for the Nasdaq 100 and Philadelphia Semiconductor Index (SOXX), which pressured the NDX all day. But the story was how firmly the S&P 500 and Dow held despite three consecutive new intraday lows on the NDX. That positive divergence caused a late, short-covering rally that popped the indices and closed them near the highs for the day going away.

The day started out with a gap down, then the indices bounced, recovered a portion of their losses, and then made lower lows on the NDX, but not on the S&P 500. A mid-day rally failed to take out the highs on the NDX, despite the SPX making new session highs, and then they rolled over in mid-afternoon, setting new NDX lows around 1295 , but making a third consecutive higher low intraday on the SPX. Again, when that positive divergence occurred, a sharp late rally fueled by short covering spiked the market higher.

Net on the day the Dow closed up 109.44 at 8029.62, the S&P 500 up 10.56 at 852.06, but the Nasdaq 100, despite bouncing 21 points off the low, ended down 5.80. The SOXX fell 3.77.

Advance-declines were 2 1/2 to 1 positive on New York and a little better than 3 to 2 positive on Nasdaq. Up/down volume was 2 1/2 to 1 positive as well on New York on total volume of 1.4 billion. Nasdaq traded 2 billion shares, but had about an 11 to 8 negative volume ratio.

TheTechTrader.com board was mixed. The financials were positive, with Goldman Sachs (GS) leading the way, closing 8 points off its low, up 6.08 on 40.7 million. JP Morgan (JPM) jumped to 32.56, up 1.86 on nearly 107 million shares. Wells Fargo (WFC) bounced 2 points off its low and closed at 19.55, up 1.28 on 118 million. Bank of America (BAC) jumped from 9.27 to 10.52, closing at 10.44, up 35 cents on 515 million traded. General Electric (GE) ended 32 cents higher at 11.83 on 120 million

Other stocks of note, Aluminum Corp. of China (ACH) had a stellar day, gapping up and closing strong at 21.61, up 2.01, now up more than 200% off its November low. The iShares FTSE/Xinhua China 25 Index ETF (FXI) was strong, up 1.03 to 33.09. The Direxion Financial Bull 3x Shares (FAS) on strong financials today closed at 8.86, up 1.03 on 274 million shares.

On the downside, Amazon (AMZN) fell 2.51 at 74.71, and American Italian Pasta (AIPC) down 1.20 at 31.00.

The UltraShort Financial ProShares (SKF) fell 5.87 to 61.39, and the UltraShort Real Estate ProShares (SRS) was down 5.54 at 30.87. The Direxion Large Cap Bear 3X Shares (BGZ) closed at 49.44, down 2.01, and the Direxion Financial Bear 3x Shares (FAZ) got hammered back to 9.52, down 1.49 on 174 million shares.

Stepping back and reviewing the hourly chart patterns, despite nominal breaks on the Nasdaq 100 over the last couple sessions below price and moving average support, intermediate trendline support held on that index. On the S&P 500 and Dow, price, moving average and trendline support all have held. That may have resulted in the late short covering at the end of the day that really spiked the market higher. So it was a stellar day for the bulls, as support held all day on the blue chips.

Good trading!

Harry

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