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Stock Market Indices Bounce Back from Morning Sell-Off to Close Ahead

Stock-Markets / Stock Markets 2010 Jul 21, 2010 - 03:25 AM GMT

By: Harry_Boxer


Best Financial Markets Analysis ArticleThe stock market indices started out the day in sharply lower fashion with a big gap down as the futures were lower before the opening. But they quickly stabilized and then took off. Within the first hour and a half they had reached key resistance at 1810 on the Nasdaq 100 and just under 1070 on the S&P 500, and backed off to form bull flags.

When it was apparent that they weren't going to rollover, they ran sharply higher again, and by mid-afternoon had reached 1828 NDX and 1078 SPX. Another bull flag ensued, and they ran sharply into the close.

Net on the day, the Dow was up 75.53 at 10,229.96, 220 points off the low. The S&P 500 was up 12.23 at 1083.48, 27 points off its low. Nasdaq 100 was a whopping 56 points off its low, up 21.39 at 1840.67.

Advance/declines were better than 4 to 1 positive on the New York Stock Exchange, and up/down volume was about 5 1/2 to 1 positive with total volume of 1.15 billion shares traded. Advance/declines on Nasdaq were about 2 1/2 to 1 positive and up/down volume was just about 3 to 1 positive on total volume of over 1.9 billion.

Charts of the Day:

ADTRAN Inc. (ADTN) is a stock I continue to like. The long-term trend has been nothing but up for the last year, although there was a multi-month consolidation that set up a big move that started in February. Another consolidation followed that coiled and set-up the breakout move that we had recently. A beautiful little 5-day flag pattern is being set up that's calling for higher levels. There is some resistance at around 33 1/2, but my trading target is going to be around 38 at the lateral price resistance at the top of the channel.

Genco Shipping & Trading Ltd. (GNK) is my favorite shipping stock, with the industry perhaps is turning around. It had a nice price-volume thrust today on the heaviest volume in about 2 months. This stock ran $1.59, or nearly 10%, closing above its 50-day moving average, right at the top of the lateral price resistance zone. Any follow-through here could get this one moving. Short-term resistance beyond that around 20, but I'm looking for a move to 22 1/2, or perhaps as high as 24 1/2 on this next potential swing trade.

iGATE Corporation (IGTE) had a terrific pop today, up 1.10, or 6.8%, on strong volume. But more importantly technicals surged, as the stock broke out of a 3-day little flag. It's at a multi-year high, reaching the highest level since 2000. This stock looks like it could accelerate from this point, and I'll set a trading target around 23 - 24.

OmniVision Technologies Inc. (OVTI) also had a nice reversal, from 20.65 to 22.22, just 7 cents off its high today. It traded 2 3/4 million shares today, the heaviest volume in several days. But more importantly key 7-8 week support has held. I'm looking for a move up towards 24 1/4 to test that zone, and then a follow-through move that takes it up 26, my short-term trading target. Intermediate target is $30.

Reviewing our Watchboard: board, as a result, was mostly higher, except for the ultra-shorts, obviously. Leading the way, Google Inc. (GOOG) advanced 15.41 to 481.59, and Apple Inc. (AAPL) 6.31 to 251.89, closing almost 12 points off its low. A big reversal there ahead of its earnings tonight. Goldman Sachs (GS) jumped 3.23 to 148.91, about 7 1/2 points off its low.

So, there were big reversals in the large-cap market leaders today.

Cree Inc. (CREE) was another point-plus gainer, up 1.71 at 68.61. Large fractional gainers included Acme Packet, Inc. (APKT) up 83 cents at 30.68, more than 2 points off its low today. China Agritech Inc. (CAGC) was up 60 cents at 11.11, China Automotive Systems Inc. (CAAS) 58 cents at 17.48, and China TransInfo Technology Corp. (CTFO) 14 cents at 7.43 in a generally firmer Chinese group today.

In addition, L & L Energy, Inc. (LLEN) gained 66 cents at 10.32, Isilon Systems, Inc. (ISLN) 62 cents at 14.43, IDT Corporation (IDT) 78 cents at 15.62, Cirrus Logic Inc. (CRUS) 66 cents at 18.15, and Power-One Inc. (PWER) 41 cents at 9.23.

RINO International Corporation (RINO) jumped 66 cents at 13.54, and Valassis Communications Inc. (VCI) snapped back 91 cents at 29.47. Trina Solar Ltd. (TSL), our favorite junior solar, rose 62 cents to 23.70.

On the downside, International Business Machines Corp. (IBM) lost 3.24 to 126.55 after reporting earnings, but was well off its low.

The ultra-short ETFs suffered today with the Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) down 2.95 at 39.53, the Direxion Daily Small Cap Bear 3X Shares (TZA) down 2.02 at 36.85, and the iPath S&P 500 VIX Short-Term Futures ETN (VXX) down 1.36 at 25.17.

Stepping back and reviewing the hourly chart patterns, the indices were down sharply at the opening, then had a strong 5-wave advance throughout the rest of the session that brought them way back into sharply positive territory today, taking out two layers of resistance along the way.

It was an impressive showing for the bulls today, and we'll see if they can follow-through tomorrow.

Good Trading!


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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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