Technical View: Market Holds Gains in Volatile Trading

Yesterday, in my evening post, I said,

"VIX shot up above 30 today and closed at 31.7!  Both SPX and Nasdaq closed below their July low levels (SPX 1200; Nasdaq 2200).  This downward momentum will likely carry through tomorrow morning.  Then, we'll have to see if the bottom fishers come in and how the market reacts to the attempts to bounce."

The market opened lower with the downward momentum carried over from yesterday.  Then, it bounced.  When the Fed announced its decision to hold the interest rates unchanged, the market went down initially, as many people had "hoped" for a rate cut.  But, soon, the market reversed and went higher into the close.

The financials held up well today.  MER shares finally reacted to BAC's $29/share buyout bid and flew up +30%!  BAC added +11.3%.  PRU gained +9.15%.  GS announced its worst quarterly earnings sinced it went public, but, it still beat the estimates.  GS traded as low as $116.13 and closed at $133.01, down 1.84%.  MS "pre-announced" its earnings after the market and also beat the estimates.  At the time of this writing, both GS and MS traded higher in AH-trading.  All eyes are now on AIG, which has just been reported by CNBC to get $85 billion bridge loan to avoid filing bankruptcy.  AIG dropped to as low as $1.25/share today and closed at $3.75/share.  It is now hovering around $2.6 in AH-trading. 

The Dow was up +141.51 points; SPX added +20.9 points; Nasdaq gained +27.99 points:

VIX went as high as 33.7, but, came down to close at 30.30.  XLF (financials) added +7.49% while HGX (housing) garnered +3.75%.  Tech sectors were mostly in the green, with BTK (biotechs) gaining +2.3%.  OIH (oil services) bounced +3.99% and XLE (energy) advanced +4.23%.  XME (metals and mining) went up +2.87%.  MOO (agriculture) recouped +2.88%.  FXI (Chinese ADRs) clawed back +1.61%.

click to enlarge

SPX

SPX added 20.9 points to close at 1213.6, above the 1200 level.  The daily MAs and MACD went lower.

Nasdaq

Nasdaq gained +27.99 points to close at 2207.9.  It closed above the 2200 level.  The MACD slid.

It looks like AIG will get the $85 billion bridge loan from the federal reserve to avoid filing bankruptcy.  Market futures jumped higher immediately after the news was released.  GS is now trading above $138, or almost +4% higher in AH.  MS is trading at $31.75, +10.63%!  Looks like the market is looking at a higher open tomorrow.  We've been waiting for VIX to get above 30, and now it has.  We'll have to see how strong the market can rally up from here.  VIX could find a soft support at 28; below that, 24-25 is a stronger support.  Both Nasdaq and SPX closed above their respective support levels (SPX 1200; Nasdaq 2200), mentioned in my Market Forecast this weekend.  Now, we need to see these market indices start making higher highs and higher lows.  Nearest resistances are SPX 1240 and Nasdaq 2250.

Disclosure: None

Comments

[Wez:]

So you're bullish?

2008 Sep 17 09:55 AM