Market Alert - The Close

Stock indices posted losses but compared to recent action it was pretty minor and I found myself saying it surely could have been worse. Oh but foolish me, it really cannot get much worse given the Fed and central banks are now into no market losses, not just avoiding serious market selloffs.

SP500 -7.07, -0.33%
NASDAQ -11.13, -0.21%
DJ30 -54.30, -0.30%
SP400 -0.66%
RUTX -0.47%
SOX -0.73%

VOLUME: NYSE -33%, NASDAQ -22%. Significant drop in volume off of the Friday end of quarter volume surge.

A/D: NYSE -1.4:1, NASDAQ -1.4:1. Pretty tame, pretty much in line with the market test.

Thus Monday, even though on the downside, the indices recovered from the midday lows. The modest losses did not alter the patterns in any significant way. SOX and NASDAQ tested back from their recent moves higher while DJ30, SP500, SP400 held in their same bear flag recoveries after breaking their near term uptrends.

With worries that the reality of a DOJ/DB settlement as celebrated on Friday might not be as firm as thought, the 1/3 to 2/3% losses on the indices was not bad. Again, it didn't change anything, but given the negatives, the indices did a good job, particularly if you have an upside view, of avoiding further selling.

On the other hand, the lack of definitive movement keeps the indices somewhat in a state of limbo with the split in the index patterns still looking for a trend upside or a trend downside to unite them together. Monday bought time for the upside by allowing SOX and NASDAQ to test without the NYSE indices losing a lot of ground and rolling over, but it did not stamp out volatility, and thus it is still a matter of working through the current setup to see which trend ends up in control.

On the session we picked up some LIVE and SID, buying a partial on LIVE early and SID late. LIVE surged even farther but then struggled to hold much of the move. SID showed good volume and held its move up to the 50 day SMA. Most other positions worked inside their patterns and we let the work. ARAY was struggling, but it recovered nicely to hold the 10 day EMA after last week's surge so we left it to work into Thursday to see if Monday was a one off session for it.

Again, no change in the relative position of the indices, no merging of recent action, just tests from SOX and NASDAQ, and hanging on for dear life from DJ30, SP500, and SP400.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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