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Stock Market Strong Snapback Rally

Stock-Markets / Stock Index Trading Sep 04, 2009 - 01:41 AM GMT

By: Harry_Boxer


The indices had a strong snapback off early losses that held support and at the end burst through 3-day resistance and closed at the session highs going away.

The day started out with a slight move higher, and then a sharp pullback that tested yesterday's lows but held right there. A 5-wave advance took the indices to key resistance over the last 3 days. They failed there, rolled over, but held initial key support at 1595 NDX and around 996 SPXm and then rallied sharply in the last hour, particularly in the last half hour.

Net on the day the Dow was up 63.94 at 9344.06, the S&P 500 up 8.49 to 1003.02, and the Nasdaq 100 up 11.70 at 1605.09.

Advance-declines were positive by better than 3 to 1 on New York and about 2 to 1 on Nasdaq. Up/down volume was about 5 ½ to 1 positive on New York on total volume of 1.15 billion. Nasdaq traded 1.85 billion and had a 2 ½ to 1 positive volume ratio. board was generally higher. The Direxion Financial Bull 3x Shares (FAS) led the way, coming back sharply to close up 4.22 at 70.04. Goldman Sachs (GS) led the financials, up 3.12 to 161.66. JP Morgan (JPM) gained 1.25 to 42.11, Morgan Stanley (MS) 56 cents to 27.65, Wells Fargo (WFC) 82 cents to 26.91, and Citigroup (C) 21 cents to 4.77.

American International Group (AIG) jumped 3.80 to 41.75, and RINO International (RINO), our current portfolio position, 1.92 to 14.27.

On the downside, Direxion Financial Bear 3x Shares (FAZ) fell 1.81 to 25.46, Direxion Large Cap Bear 3X Shares (BGZ) 74 cents to 25.59, the Direxion Small Cap 3x Bear (TZA) 55 cents at 15.40, and the UltraShort Real Estate ProShares (SRS) 52 cents to 12.58.

Stepping back and reviewing the hourly chart patterns, we had a sharp decline that held support, a 5-wave advance to mid-day that tested highs and failed and rolled over, did a Fib retracement that held price support, and then rallied strongly back into the close.

However, on the hourly charts the indices have done nothing more than rally back to more formidable resistance in the 1610-1612 zone on the NDX and 1008-1010 zone SPX.

We'll see if those areas are tested and can be broken, or whether they turn the market back.

Good trading!


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