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Stock Market Indices Hold Support and Continue Rally

Stock-Markets / Stock Index Trading May 07, 2009 - 04:16 AM GMT

By: Harry_Boxer

Stock-Markets

The stock market indices snapped back today and closed with solid gains after a very steep morning sell-off. They came back with a vengeance in a 3-wave rally that saw them reach new highs on the S&P 500 at 920 with about an hour to go. At that point the Nasdaq 100 failed to reach its highs and they sold off, but held the intraday trendlines and snapped back in the last 10-15 minutes to closer higher.


Net on the day the Dow was up 101.63 to 8512.28, and the S&P 500 up 15.73 at 919.73, closing less than a point off its high. The Nasdaq 100 was up just 0.04 at 1423.85, getting back into the plus column after being down almost all day. That was about 22 points off its low. The Philadelphia Semiconductor Index (SOXX) was up 1.91 to 270.61.

The technicals were positive by about 22 to 9 on advance-declines on New York and by just 334 issues on Nasdaq. Up/down volume was 3 to 1 positive on New York on total volume of 1.85 billion. Nasdaq traded a hefty 2.85 billion and had a 9 to 5 positive volume ratio.

TheTechTrader.com board was mixed. On the plus side, financials were very strong, with Goldman Sachs (GS) up 4.02 to 139.22 and Wells Fargo (WFC) soaring 3.62 to 26.84 on 255 million shares. Hartford Financial Services (HIG) was up 2.29 to 15.07, JP Morgan (JPM) up 2.40 to 37.22, Morgan Stanley (MS) up 1.30 to 28.51, and Bank of America (BAC) up 1.85 to 12.69.

As a result, the Direxion Financial Bull 3x Shares (FAS) had a stellar day, up 1.86 to 11.43 on 360 million shares. The iShares MSCI Brazil Index ETF (EWZ) was up 1.32 to 50.56, and the U.S. Oil Fund ETF (USO) had a strong session on rising oil, up 1.28 to 31.43. The low priced DXO double long was up 23 to 3.29.

DryShips (DRYS) gained nearly a dollar today, up 97 cents to 10.70, and Excel Maritime (EXM) was up 60 cents to 9.15 in a strong shipping sector. Research in Motion (RIMM) gained 1.67 to 77.07.

On the downside, ultrashorts got smashed, with the UltraShort Financial ProShares (SKF) down 6.19 to 43, the UltraShort Real Estate ProShares (SRS) down 1.54 to 20.82, and the Direxion Financial Bear 3x Shares (FAZ) losing 1.30 to 5.24 on 470 million shares, the heaviest volume in its history.

Stepping back and reviewing the hourly chart patterns, the indices were down and up in the morning, and then back down and up in the afternoon, rather volatile today, but closed with positive gains, continuing the rally and continuing to hold support despite the early sell-off. So the rally moves on. Although the market continues to look overbought and long in the tooth, the mini consolidations that it has been undergoing every couple sessions are alleviating some of the overbought conditions, and as a result the indices are able to still move higher. But I'm still anticipating a high in this timeframe.

Harry

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Mr. Boxer's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Boxer's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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