It was a significant day, in my opinion for the indices. They were volatile this morning and vacillated back and forth, testing both support & resistance on several occasions. When three separate opportunities to break them down failed, the indices then rallied in the afternoon, took out the session highs, broke through the 4-5 week declining tops lines on the intermediate charts and through the moving average as well and triggered some short-covering which caused the market to surge sharply.
Net on the day the Dow closed up around 70, the S&P 11 3/4, the Nasdaq 100 more than 15 1/2 and the SOX more than 5.
The technicals were very strong, particularly on New York where advance-declines were 25 to 7 3/4. Nasdaq was 21 to 9. Up/down volume was very strong by more than 4 to 1 on New York and a little less than 4 to 1 on Nasdaq. Total volume was strong on New York with about 1 2/3 billion traded, and a little less than that on Nasdaq, with 1.6 billion traded.
TheTechTrader.com board was very active today, led by Dynamic Materials (BOOM), which went BOOM, up around $4 on 1 1/2 million shares, busting back over a couple minor layers of resistance and taking out 40 at the close, closing at 40.38, up 3.98.
Abatix (ABIX), a stock we've been following, broke out today, up 2.09 on nearly 1 million shares. Amylin Pharmaceuticals (AMLN) snapped back 1.05 on 2 1/4 million. Forward Industries (FORD) rebounded 1.28 on nearly 3/4 million.
Other stocks of note, Global Industries (GLBL) was up 77 cents, Cutera (CUTR) up 65 cents, Kendle International (KNDL) up 39 cents, Vertex Pharmaceuticals (VRTX) 56 cents, ViroPharma (VPHM) up 65. So, as you can see. a solid day for the junior biotechs.
Low-priced Intellisync Corp. (SYNC) and new Watchboard position closed up 67 cents on 6.7 million and took out key resistance to a new 18-month high. Energy Conversion Devices (ENER) surged back from early losses in the afternoon to another new four-year high, touched 34 3/4 and closed a few cents off that, up 30 cents on 2.2 million.
Stepping back and reviewing the hourly chart patterns, the significance of today's action, particularly in the afternoon session, was the breakout of the 4-5 week declining channels on the Nasdaq and S&P, and closing at the highs for the day going away. So it was a very strong session, technically and volume was strong as well. We had key breakouts which may have broken the back of the current downtrend and reversed prices up.
Tomorrow we'll be watching for a follow through. Overhead resistance at the 1225-29 zone on the S&P 500. Support at around 1215-17. On the Nasdaq 100, those levels are 1590 resistance and support at around 1570.
A breakout above 1590 NDX in my opinion as well as the 1225-30 zone on the S&P would confirm that the downtrend has been reversed.
Good trading!
Harry Boxer is a technical consultant to many Wall Street hedge funds and large institutional traders, and author of TheTechTrader.com, a real-time diary of his day, swing and intermediate-term trades. For more of Harry Boxer, sign up for a FREE 15-day trial to his Real-Time Technical Trading Diary, or sign up for a Free 30-Day Trial to his Top Charts of the Week service.