Obviously the year started off with a bang.  But the morning was a lot less obvious.  Despite the fact that futures were higher before the opening, and sharply so, the indices did open higher but sold off sharply to new lows for the decline, taking out Friday's lows and probably a lot of stops, too. 

Just as suddenly, the market turned around and rallied back up to resistance, and then backed and filled during the lunch hour in a bullish-looking flag pattern.  Just after lunch, the FOMC came out with their minutes, which provided some bullish comments in reference to interest rates.  The market exploded and ran hard and strong for the rest of the afternoon.

The NDX vaulted some 53 points off its lows at its high in the afternoon, a tremendous run-up. The S&P ran about 25 points in the same period of time, with the Dow running about 180 points.  So, it was a terrific rally.

A late pullback did bring them off the high slightly, but still net on the day, the Dow was up 130, the S&P 500 up 20 ½, the Nasdaq 100 35, and the SOX Index up a whopping 13.64.

It was a terrific day.  But the technicals were much better on New York, where the advance-declines were about 3 to 1 positive, than on Nasdaq, where they were barely 3 to 2 higher.  However, up/down volume was strong on both exchanges.  Total volume on the NYSE was more than 1.9 billion, with about a 4 to 1 positive ratio on up/down volume, and about a 3 to 1 ratio on Nasdaq with total volume of over 2 billion.

Needless to say, the TechTrader.com board was mostly strong, although there were some fractional decliners, mostly because we trade a lot of Nasdaq stocks, and as I mentioned Nasdaq had only a 3 to 2 positive margin on advance-declines.

Among some of our model portfolio positions, Neoware Systems (NWRE) continued strong to a new 2-year high today, up 2.33.  Dynamic Materials Corp. (BOOM), which was also a pick for 2006, was up 1.34.  Rediff.com India (REDF), another pick for 2006, was up 1.06.

Other gainers of note, Energy Conversion Devices (ENER) was up 94 cents, BioCryst Pharmaceuticals (BCRX) up 46 cents, and NeoMagic (NMGC) up 58 cents.  PW Eagle (PWEI) was also up 95 cents. All techtrader.com picks for 2006!

Other stocks of note, Evergreen Solar (ESLR) was up 68 cents, and American Pacific (APFC) up 45 cents, along with the SMH (SMH) up 1.28 and Broadcom (BRCM) up 1.43.  The Qs (QQQQ) advanced 90 cents.

On the downside, there were fractional losses for Staar Surgical (STAA), Atherogenics Inc. (AGIX), and China Energy Savings (CESV.

Stepping back and reviewing the hourly chart patterns, the significance of today was that on heavy volume with a strong up/down volume ratio and good breadth on New York, the indices vaulted up through multiple price resistance levels, moving averages, and closed near the highs for the day.  It was a very positive start and good sign for the rally to continue in the early part of January.

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.