Stock Market Indices Follow Through on Last Week's Rally

By: Harry_Boxer

The stock market indices started the week off with a bang and followed through brilliantly on last week's rally, gapping up from the get-go and exploding early on short covering. They consolidated mid-day, and then ran again hard in the afternoon, as the Nasda 100 had two rallies of more than 20 points during the session and the S&P 500 had two rallies of more than 12 points. Only a last 5-minute pullback prevented them from closing on the highs for the day.

Net of the day, the Dow was up 145.77 at 10,753.62, about 21 points off its high, but still up substantially today. The S&P 500 was up 17.12 at 1142.71, just 2 points off its high. The Nasdaq 100 was up 33.60 at 1989.43, about 3 points off its high.

Advance-declines were a little less than 5 to 1 positive on the New York Stock Exchange and about 4 to 1 positive on Nasdaq. Up/down volume was 12 to 1 positive on New York on light total volume of under 950 millions shares traded today. Nasdaq managed to trade just under 2 billion shares, and had about a 5 to 1 positive ratio on advancing volume over declining volume.

So, it was a strong day price-wise, with technicals confirming.

Charts of the Day:

Infinera Corp. (INFN), after popping in July and moving back down in a 4-week declining channel, broke out and has moved up steadily since the beginning of the month. It is up from about 8 1/2 to 12 in just the last 2 1/2 weeks, and just reached our short-term trading target today as well at 12.00. Secondary target around 14 1/2.

McMoRan Exploration Co. (MMR) had a significant day today, breaking out of this 2-2 1/2 week flag, popping on heavy volume of 8.3 million shares, the biggest volume in the last month. It sure looks like this stock may be headed toward my target at 18 1/2-3/4. Beyond that the target is around 20.

TPC Group Inc (TPCG) followed through nicely from Friday's gains, up another 1.23 today. It got up to the resistance, or target zone, around 21 1/4. If this breaks out, we can see the stock spike into the high 20s, my next trading target.

VirnetX Holding Corp (VHC) is in a similar pattern, having broken out of a coil. But this one has accelerated rapidly from 6 1/2 to 12 1/4 in the last 2 1/2 weeks, nearly doubling. Today it broke out of a little wedge, and looks like it could be headed toward 15, my next trading target.

Reviewing our Watchboard:

TheTechTrader.com board, as a result, was substantially higher. Leading the way today was Apple Inc. (AAPL), up 7.86 to 283.23, and Amazon.com Inc. (AMZN), up 2.98 to 151.30.

Other point-plus gainers of note were Allied Nevada Gold Corp. (ANV), one of our Top 25, up 1.38 to 27.44. CommVault Systems, Inc. (CVLT) on continuing take-over rumors was up 1.02 to 28.03. McMoRan Exploration Co. (MMR), which we traded today and is also a recent swing trade pick, advanced 1.39 to 15.96 on heavy volume today. VirnetX Holding Corp (VHC), also a swing trade pick, gained 1.23 to 12.30.

In addition, Hornbeck Offshore Services, Inc. (HOS) was up 1.38 to 18.95, NetSuite Inc. (N) up 1.74 to 24.10, and the Direxion Daily Financial Bull 3X Shares (FAS) up 1.24 to 23.38.

Among large fractional gainers, Acme Packet, Inc. (APKT) joined the party, up 89 cents to 38.80. Sourcefire, Inc. (FIRE) jumped 43 cents to 29.86, Finisar Corp. (FNSR) 64 cents to 18.17, Goldman Sachs (GS) 92 cents to 151.90, Mindspeed Technologies Inc. (MSPD) 56 cents to 9.27, Nanometrics Incorporated (NANO) 84 cents to 13.86, and Polypore International Inc. (PPO) 87 cents to 29.76.
Further, Spreadtrum Communications Inc. (SPRD) had a terrific session, up 93 cents to 13.50.

On the downside, small fractional losers included Cree Inc. (CREE) down 60 cents to 50.60, continuing weak action, and Trina Solar Ltd. (TSL) down 21 cents to 26.60.

The ultra-short ETFs got hammered, with the Direxion Daily Small Cap Bear 3X Shares (TZA) down 2.46 to 27.10, the Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) down 1.43 to 29.01, and the Direxion Daily Financial Bear 3X Shares (FAZ) 70 cents to 12.42, a new 4-month low.

Stepping back and reviewing the hourly chart patterns, two strong rallies today were interrupted by a mid-session consolidation and ended up yielding a very strong way to start the week, as the indices continue to spike up to what apparently may be an important high in this time frame.

We'll see going forward, as no indication of a top is in yet. In fact, today's breakout above key resistance on the S&P 500 above 1130-31 was an important technical session for the bulls.

Good Trading!

Harry

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