Market Alert - The Close

Once again a softer open or an intraday selloff was met with bids as the more bullish low to high action continues. Thursday showed a lower open but as noted in the pre-market alert, nothing significant and indeed the type of soft open that gives buyers the chance to re-up bids. That is precisely what happened.

Stocks were not racing upside, but posted a steady rise off the lower open into mid-afternoon and the FOMC minutes release from September. When the Fed statement hit and the market reacted, the move was up. The minutes acted as a B-12 shot for stocks and they surged higher to the last hour. A bit of a test, then right back up to the prior highs for the close.

SP500 17.60, 0.88%
NASDAQ 19.63, 0.41%
DJ30 138.46, 0.82%
SP400 1.09%
RUTX 0.92%
SOX 0.55%

VOLUME: NYSE -22%, NASDAQ -7%. After good upside volume on the rally, trade did not follow stocks higher. I guess you could argue that volume was low on the early downside and then improved post-FOMC on the buying. If you did, you would be absolutely correct as volume doubled up on the prior volume levels. So, as the buyers returned after more than a half session of idling, it came in on the upside.

A/D: NYSE 3.5:1, NASDAQ 1.8:1. With NASDAQ and SOX lagging, NASDAQ breadth lagged. Once again NYSE breadth posted solid gains as once again one of the lower cap indices (SP400) led the upside action after RUTX did so Wednesday.


The action pushed SP500 and SP400 through the September closing highs while DJ30 is now free of all the prior recovery highs and indeed eyes the levels before the August selloff.

Notably NASDAQ lags, just now hitting its 50 day EMA while still below the late August high and well off the mid-September high. RUTX, despite its blistering upside the past week, is just now at the late August peak; start lower, takes longer to catch up.

All in all, a good recovery session as once more bids returned after being challenged, albeit it was more of a lack of buyers than any real selling. There are real challenges facing NASDAQ as it tries to follow the large cap NYSE indices and bumps resistance. No real tests of the rally yet and you know those are going to come, but thus far there is enough leadership and a lot of rebounding industrial, energy, materials stocks to keep the upside move charged.

We picked up some more NFLX as it broke higher on a planned price hike, and we took some gain on a more recent PCLN positions. Enjoying letting positions run, still looking for new breaks higher from e.g. ATHM, and watching tests from VDSI, BITA, AMZN and others as opportunity for ramping up more upside gains.

Have a great evening!


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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