Stock Market Bulls Roar Back

By: Harry_Boxer

The stock market indices had an exceptional day as the bulls certainly roared today. The indices started out with a gap up, ran hard early on, reached resistance levels and backed off to consolidate, but continued its stair-step advance in a steady fashion, closing near the highs for the day going away in a strong surge with strong technicals to confirm the trend today.

The key to today's action was that S&P 500 resistance at the 1105-6 level was taken out in the afternoon as the indices continued higher. The Nasdaq 100 broke above initial resistance, but closed right at secondary resistance, just under the 1900 range.

Net on the day, the Dow was up 213.88 at 10,404.77, the S&P 500 up 25.60 at 1115.23, and the Nasdaq 100 up 52.00 at 1897.48.

Advance/declines were about 6 to 1 positive with 2640 up and 445 down on the New York Stock Exchange. Up/down volume was 1.1 billion to the upside and just 47 million to the downside, a very strong positive ratio. On Nasdaq the advance/declines were about 4 to 1 positive, and up/down volume about 6 1/2 to 1 positive.

Our Charts of the Day:

Ariba (ARBA) broke out over the April and early June double-top, spiked up 1.00 or 6.25% on 1.75 million shares, the biggest volume in about three weeks. Looks like this stock is now headed for a test of key overhead resistance from the 2008 high double-top up around the 18 1/2 level. If that's taken out, next resistance will be up around 23, our next trading target.

Cirrus Logic Inc. (CRUS) is in a very nice formation, moving at a certain angle of ascent that's now transformed into a sharper angle of ascent with heavier volume. The volume traded in May and early June is heavier than normal, and the stock, which has been moving in a coiling-type pattern, spiked 1.15 today or 8% on 4.9 million shares. That's the heaviest volume in a couple weeks. It sure looks like this stock may be headed for a test of overhead resistance at the top of the channel up near 20.

IDT Corporation (IDT) continues in a sharply rising angle of ascent. The recent 6-week coil was broken two days ago. The stock followed through yesterday and again today, but more importantly today's move to 11.20 took out the April high and now appears to be headed toward the top of the channel in the 14 1/2 range, our next trading target for IDT.

Ram Energy Resources Inc. (RAME) had a significant price volume surge, up 45 cents or 25.4% on huge volume of 2.28 million shares. That's extremely heavy volume, but more importantly, lateral price resistance at around the 2.00 range was taken out, and the stock closed significantly higher. Now there is a resistance level up around the December highs that it tested and backed off of today. Watch for a move to the 2.40-.45 range, and if that does occur the next target on RAME will be around the 3 1/2 - 4 zone.

Reviewing our Watchboard:

TheTechTrader.com board was mostly sharply higher and many stocks were multiple-point gainers today. Leading the way was Google Inc. (GOOG) up 14.80 at 497.99, Cree Inc. (CREE) up 3.58 at 69.83, and Baidu, Inc. (BIDU) up 2.44 at 75.37. Apple Inc. (AAPL) jumped 5.41 to 259.69, Goldman Sachs (GS) 3.46 to 136.90, and Transocean Ltd. (RIG) 3.73 to 48.51, snapping back sharply from recent losses.

Other point-plus gainers included Amazon.com Inc. (AMZN) up 3.01 at 126.84, Cirrus Logic (CRUS) up 1.17 at 15.39 as mentioned above, Dendreon Corp. (DNDN) up 1.81 at 40.59, NetApp, Inc. (NTAP) up 1.46 at 41.38, and portfolio position OmniVision Technologies Inc. (OVTI) 1.43 at 20.64.

RINO International Corporation (RINO) jumped 1.36 at 14.54 and Valassis Communications Inc. (VCI) 1.15 at 38.01.

There were many large fractional gainers as well. Those included Ariba (ARBA), up 99 cents at 16.98 as noted above, portfolio position China Automotive Systems Inc. (CAAS) 83 cents at 19.20, Las Vegas Sands Corp. (LVS) 75 cents at 26.74, L & L Energy, Inc. (LLEN) 48 cents at 10.11, and Xyratex Ltd. (XRTX) 72 cents at 16.16. Portfolio position Westport Innovations Inc. (WPRT) also advanced 43 cents at 19.42.

Stepping back and reviewing the chart patterns, the indices were up from the get-go, and stair-stepped their way sharply higher in a strong rising channel all day, closing at the session highs going away. Fantastic session for the bulls with very strong technicals to confirm the trend. Just ahead, key overhead resistance at 1900 on the NDX and around the 1118-20 zone on the SPX should be tested early tomorrow.

Good trading!

Harry

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