The markets had a remarkable rally after a very weak opening that followed news of the terrorist attacks in the United Kingdom.  Before the market opened the futures were down sharply, but they recovered even before the opening.  That led to an early rally off the negative opening that took us right to initial resistance and then they backed off and retested. 

The retest was successful, and as a result the market staged a very strong morning rally right into the lunch hour.  They backed and filled in the afternoon but worked their way higher, and in the last hour or so staged a recovery rally that took all three indices to new session highs.  Only a last few minutes back-off prevented them from closing at the highs for the day.

Net on the day the Dow was up 31, but that was 127 points off the low.  The S&P 500 was up 3, some 14 points of the low.  The Nasdaq 100 was up about 5 3/4, but 19 points off the low, and the SOX Index managed to gain 1.56 today, some 6 points off the session low.  So most indices as you can see were sharply lower and reversed, closing strongly near the highs for the day going away.

The technicals didn't quite reverse as much as you would have liked to see, but that quite often occurs on a sharp intraday reversal rally.  There was a 17 to 14 advantage on advance-declines on New York and a marginal advantage of only 40 issues on Nasdaq.  Up/down volume was nearly dead-even on New York, with a total of 1.5 billion traded.  Nasdaq traded about 1.56 billion, with a 3 to 2 positive ratio.

TheTechTrader.com board was very active with dramatic swings.  Catuity (CTTY) again was a dramatic gainer from a 14.82 low to a 19.25 high, closing at 17.46, up 1.77 on 4.7 million.  A new stock we're following, Imergent (IIG), was up 1.38 and broke out.  The security group was very strong today, as can be imagined, but gave back a lot of their early gains. However, Magal Security (MAGS) was still up 1.03 on 4 1/2 million shares.

Other stocks of note on the plus side, Vertex Pharmaceuticals (VRTX) was up 46 cents, Energy Conversion Devices (ENER) up 24 cents, Amylin Pharmaceuticals (AMLN) up 25 cents, and Dynamic Materials (BOOM) up 26 cents.

In the large-cap sector, the SMH was strong all afternoon, closing at the high for the day going away, up 42 cents.

On the downside, Broadcom (BRCM) fell 43 cents and QLogic (QLGC) down 22 cents.  Most other stocks on my board were narrowly mixed.

Stepping back and reviewing the hourly chart patterns. The indices plunged to new lows for the entire decline, but rallied back smartly and closed at or just above key short-term resistance levels.  It will be very interesting to see if we can get any kind of follow-through that takes us back up to retest the highs, or whether the indices will stall here and come down and either retest or make lower lows.

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.