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us stock market, stock watch
Begin Part 2 of 2
VIX: 32.59; -0.87. Big move in the S&P but not a big move down in the VIX. It is still sitting above the 30 level that is considered high in the normal range.
VXN: 61.64; -4.55. Volatility fell hard as the Nasdaq rallied hard. It is still well above the normal range.
Put/Call Ratio (CBOE): 0.62; -0.11. Fell for a second day on another strong rally. Not as severe as on Wednesday with its 0.24 drop. Even with the sharp drop, it is still well within a 'safe' zone.
Nasdaq
Moved beyond the April closing low and the September 10 close on very powerful volume. Leadership was across the board as the techs mount a strong comeback, closing right at the next level of resistance at 1700.
Stats: +75.21 points (+4.6%) to close at 1701.47.
Volume: 2.471 billion shares (+33.3%). Massive surge in volume as it approached the 2.7 billion shares on the massive October 3 breakout. Up volume soared over 2 billion (2.146B) as down volume was again withering at 301 million shares.
A/D and Hi/Lo: Advancers upped the lead to 2.04 to 1 (1.96 to 1 Wednesday). Good follow through caliber numbers. New highs grew to 58 (+13) as new lows fell to 58 (-30), matching the highs.
The Chart: http://www.investmenthouse.com/cd/$compq.html
There was no looking back. The Nasdaq gapped higher and rallied from there. When the Bin Laden rumor was denied it sold back a bit, but that just set up a rally again. It broke higher, but bounced down from resistance at 1700; that gave us some pause, but the volume on the selling was lighter than the earlier buy volume. It bounced off of its intraday trading range low and raced ahead to close on the high. It is now sitting right below the first major test in a long time, the 50 day MVA (1724.34). With such a strong surge, we may see a continuation tomorrow and them some weakness before the weekend. A little profit taking after two strong, strong moves.
Dow/NYSE
The Dow was impressive as well, taking out its March closing low. It blew past that level and is not facing the lows of the right side of the March/April double bottom and the 50 day MVA at 9549.78. This is the next licklog level. Seems there are a lot of these climbing out of a bear. Up, then consolidate and test, up then consolidate and test.
Stats: +169.59 points (+1.8%) to close at 9410.45.
NYSE Volume: 1.649 billion shares (+25.6%). Volume was again above average, but much more powerful. Up volume almost matched all of Wednesday's volume, coming in at 1.202 billion shares. Down volume was 459 million. Very strong volume on a powerful resumption in buying. Excellent price/volume action.
A/D and Hi/Lo: Advancers led again at 1.76 to 1, dropping from Wednesday's powerful 2.58 to 1 reading. New highs rose to 77 (+5) as new lows plunged to 26 (-21).
The Chart: http://www.investmenthouse.com/cd/$indu.html
That coiled spring continued to let loose that built up energy. It has momentum up to 9500 and the 50 day MVA at 9549.78. At that point we may see a bit of profit taking before the weekend. It is a stair-step process, but we have seen how that works over the past three weeks: powerful moves, lateral consolidations, then renewed powerful moves. That is a very bullish pattern, and the 9500 level is the next logical level of resistance. If it can clear that? How does 9900 sound? Not bad.
S&P 500: Such a strong move off of the 1050 support level. In two days the index has jumped from that point to the closing low from April (1103). That is also just below the 50 day MVA at 1105.20. All of the indexes have made powerful moves up toward that significant level. In the S&P's case, that is coincident with the April closing low, so there is even more ice overhead there, and more of a chance that it will take a breather there. We may see it clear the 50 day MVA tomorrow. That is fine, but we will then most likely get some testing and consolidation again. Remember, that allows stocks to test breakouts and more stocks to finish their patterns for their own breakouts. After a bit of rest, then it is on to 1050.
Stats: +16.44 points (+1.5%) to close at 1097.43.
Volume: NYSE volume surged to 1.649 billion shares (+25.6%) on a surge in new buying.
The Chart: http://www.investmenthouse.com/cd/$spx.html
TOMORROW
Friday after some powerful moves. Indexes right at resistance levels. Lot's of momentum up to the close and after the close with Juniper Networks beating the street by 3 cents and saying it would earn 55 cents for the year versus expectations of 49 cents. The stock was flying and carrying Nasdaq stocks with it. Futures were up across the board.
That was in spite of the FBI warning about possible terrorist attacks that could occur in the next several days (tomorrow is the one-year anniversary of the USS Cole bombing). That indicates a strong open. We don't like the scenario too much: big rally Wednesday and Thursday, a strong open on Friday with an ongoing war. We could easily see a strong open and then some profit taking before the weekend. There has been a powerful move higher this week with lots of profits on the tape. Another powerful move up early tomorrow will lure some of those to take profits before the weekend when there is a threat of new terrorist attacks.
If the markets log a 2% gain, we don't expect them to turn negative on the close, but they could close well off of their session highs. We have had some tremendous runs on DJX, QQQ, and SOX options, and since they are options, if we get a rip-roaring open that double tops (often a high then the next attempt a half hour or so later does not make it back to the session high), we will take some profits on those short term positions.
Overall the market looks very, very good. We are not talking about selling out of long-term positions that we caught on breakouts that still look very good. The market is showing the right kind of price/volume action, and we have more comfort in letting positions consolidate to the breakout point or the short term moving averages before the next run higher. These periodic resting periods are necessary for the next strong move higher; they give stocks time to finish bases and give us additional solid entry points on old and new plays.
Now with that said, the market has been powerful. Instead of pulling back, it may just rally on to the close; we are usually looking out ahead of the curve to get you ready, so when the events occur you are ready. Again, we will watch for that double top action tomorrow if we get that big open to take some profits on short term profits.
Support and Resistance
Nasdaq: Closed at 1701.47.
Resistance: The Nasdaq blew all the way up past resistance levels to close right at the 1700 resistance level. The 50 day MVA is at 1724.34, the first time since early August that the Nasdaq has been near this level. A key test coming here. Then there is not a lot of congestion until 1820 to 1850. That is quite a ride.
Support: 1670 is where we would like to see the index hold. 1641 is the top of the prior consolidation, and 1630 is after that.
S&P 500: Closed at 1097.43.
Resistance: The former closing low remains intact for now at 1103.25. The 50 day MVA is at 1105.20. After that, there is 1124 (prior consolidation level) and 1150 (also price consolidations).
Support: 1084 is the high in the prior consolidation with the closing tops in that consolidation at 1070 to 1072. 1050 has been solid prior to that during the consolidation.
Dow: Closed at 9410.45.
Resistance: Topped the April closing low at 9389. The next level is 9500. The 50 day MVA backstops that level at 9549.78.
Support: We will look for 9389 (the April closing low) to hold. Then there is the high in the recent consolidation at 9187.37. The consistent prices in that consolidation are at 9115 to 9120.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
10-10-01
Wholesale Inventories, August (10:00): -0.1% actual versus -0.3% expected and -0.9% prior (revised from -0.7%). Better than expected, showing that before the attack inventories were still declining, something very much needed.
10_11-01
Initial jobless claims (8:30): 468,000 actual versus 505,000 expected and 535,000 prior (revised from 508,000).
Export prices, September (8:30): -0.3% prior.
Import prices, September (8:30): -0.4% prior.
10-12-01
Producers Price Index, September (8:30): 0.0% expected versus +0.4% priorl
Core PPI (8:30): +0.1% expected versus -0.1% prior.
Retail sales, September (8:30): -0.7% expected versus +0.3% prior.
Retail sales, ex-auto (8:30): -0.5% expected versus +0.5% prior.
Michigan sentiment, October prelim (10:00): 75.7 expected versus 81.8 prior.
SUBSCRIBER QUESTIONS
Q: I really get a lot out of your perspectives and analysis of the market. I am in the market about 20 months now, and am becoming a fairly proficient chartist. I am interested in how you monitor intraday volume on the indices... all of them.
A: Thanks for the compliment. We monitor intraday volume using a real time services were we can watch volume as it occurs. You can keep up with volume fairly well at several sites on the web, including Yahoo!Finance.
Q: Please explain why "worry is good for rallies".
A: Emotion is a contrarian indicator. The old saying 'just when everything was going well . . .' has some wisdom behind it. Remember when all of the analysts were so bullish in early 2000 as the Nasdaq had rallied 80%? It was never going to stop. Just about that time it did. History shows that when everyone thinks the market will continue to rise, it is just about done on the move higher. Why? Because everyone is in the market at that point. There are no doubters still holding out, keeping cash on hand. They have all joined into the rally, and there is no cash to keep driving things higher. As long as there are serious doubters about a rally, there will be money held out of the market. There will be short sellers shorting the move when they think it has topped. There will be advisors telling there clients to stay out of the market. So, even as we see many institutions buying, there are still those managers that are skeptical; we still see television analysts shaking their heads in doubt. That means there is still fuel out there to keep the rally going when the doubters start throwing in the towel and put that idle money to work. Thus, continued worry means the rally is not tapped out. There are trillions of dollars sitting around still. Bit by bit (and even faster in some points this week), that money is put in the market. It is good that it is a slow process; that gives us the likelihood of a longer rally ahead. Yes, we like worry.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
Investment House subscribers are offered a special from eSignal for those interested in a realtime service. Contact:
Jeff Whitney
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Good Investing!
Jon L. Johnson and the Technical Traders Team
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners of Online Investment Services, LP or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.
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us stock market
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