David Chojnacki S1F Market Technician
As expected, the Market was due for a bounce after the recent weakness, and the indices gapped up right from the open on Monday. We traded in a very narrow range, after the first 15 minutes, for most of the session, but a late push up resulted in significant gains for the indices. At the close, the DJIA was up 1.6%, the S&P added 1.99%, and the Nasdaq100 a strong 2.4%. Breadth was positive, 7.7 to 1, on above average volume. RSI's also bounced back into the low 40's and ROC(10's) advanced in the session. The indices closed near their session highs. The Nasdaq100, helped along by a strong day in AAPL(+7.2%), closed above the 10% correction level of 2578, but just below the psychological 2600 level. The DJIA did see its 20D-SMA cross below its 200D. Its 200D-SMA sits at 12992, about 200 points above where it finished yesterday. The S&P did manage to have enough strength to close above its 200D-SMA, which is currently at 1382. This pause in the down slide may have some more support, as yesterday formed a large 'bull' candle and breadth was extremely positive. The indices remain with a short and long term bias to the downside, however, we may see some additional consolidation at these levels. The Nasdaq100 continues to remain the weak, and is now looking for support at 2578 and 2562. Near term, upside resistance now sets up as 2600 and 2612-13. The S&P moved back above its 200D-SMA of 1382 and its 50% retracement level of 1371. Yesterday's strength was impressive, but we see no impetus to justify that the reversal continues. The S&P now has near term support at 1382 and 1375. If we stay above those levels we can see the bias holding to the upside, at least near term. Upside resistance sets up as 1393 and 1400. The VIX closed down significantly, down 7.1%, to 15.24. While yesterday's volume was above average, typically this week we see holiday type volume, which makes confirmation of moves difficult. Futures are lower this morning.
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