David Chojnacki S1F Market Technician
The Market continued the strength from the prior session by gapping up at the open. Prices slowly advanced through the day, with a late upside pop. The large move, with the DJIA and S&P moving and holding above their 200D-SMA, was additionally fueled by some short squeezes. At the close, all three major averages had gains of 2.3%, with this being the third straight day of gains for the Nasdaq100. Breadth was strongly positive, nearly 7 to 1, on average volume. Strong volume was the only thing missing from yesterday's action that would make it a perfect 'Bull' day. RSI's spiked into the mid 40's, and ROC(10's), while still negative, were rising. All three major indices developed a large 'Bull' candle, however, once again we traded in a technical range. For instance, the Nasadq100 traded almost exactly between its 150D-SMA(2506) and its 20D-SMA(2542). This suggests that fundamental money was probably not involved in yesterday's action. We noted the other day the near term strength building in the Nasdaq100 and its importance, because it has been the Market leader. In yesterday's session, its MACD began crossing over signal and it closed just above its .38 Fibonacci retracement level(2541). If we can hold these levels, we will see short technical bias reversing to the upside. The S&P and DJIA near term technicals are not as strong as the Nasdaq100, but are improving. The S&P moved above its 200D-SMA and 50% retracement level, indicating that it is attempting to retain its longer term strength. It will find resistance at its 150D-SMA(1319) and Fibonacci level of 1320. Look for the S&P to find support at 1312 and 1294. We saw a large pullback in the VIX of 10%, to 22.16. Futures this morning are a little higher and it looks like some early session follow through.
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