Market Alert - The Close

Stocks rallied to start a new week, and when you look at the final percentage gains, outside of SOX, they are more than solid enough.

When you look at the intraday price action and the internals, the day was really rather crappy.

SP500 9.92, 0.46%
DJ30 36.27, 0.69%
DJ30 88.55, 0.49%
SP400 0.78%
RUTX 1.15%
SOX -0.49%

VOLUME: NYSE -24%, NASDAQ -16%. Abysmal volume falling well, well below average on both exchanges. About the only thing you can say good about the volume: SOX was down so at least it wasn't all about dumping stocks.

A/D: NYSE 2.5:1, NASDAQ 2.35:1.

The action showed gains, but outside of RUTX and NASDAQ, the indices closed well off the intraday highs. Indeed, even NASDAQ faded from its high after tapping at the post-FOMC rally high.

SP500 gapped upside and rallied through the 50 day SMA, but faded to close below that level. So few were involved in the action that there was just not enough power to hold a move through that resistance.

DJ30 showed similar action, rallying through the 50 day SMA and the 2015 prior all-time high, but fading below both to close. That leaved DJ30 in that same wedge pattern below resistance. Looked pretty solid, then it just dissipated.

SP400 gapped back through the 2016 up trendline and through the 2015 prior high and the 50 day SMA. It tumbled off its high, managing to hold a 3/4% gain, but closing below that same resistance, showing the same wedging pattern.

SOX rallied to a higher post-2000 high, but it faltered and lost a half percent, closing back near the 10 day EMA. Still trending higher, just could push past those last week intraday highs.

RUTX bounced off its 50 day SMA and managed to hold most of a solid 1+% move. It was the outlier.

NASDAQ gapped upside, tested the mid-September high, faded some of the gains. Along with RUTX, NASDAQ held onto most of its move.

No index managed a new high on the close though NASDAQ and SOX are right there and RUTX put in a much improved showing at an important support level. It was, again, the same story: NASDAQ, SOX, RUTX showing better patterns, DJ30, SP500, SP400 trying, but unable to change their wedge patterns after that Friday bomb lower 5 Fridays back.

That doesn't mean they are resigned to stay there. They are still working laterally, moving away from all of that volatility. They just have failed to make a move higher stick, and sessions such as Monday where they blow a big lead are not that confidence building. The low volume does make it more palatable, and there are still good upside patterns. With the world central banks complicit in wanting to hold the markets higher, with the volatility waning, you have to give the nod to the upside. That said, the upside might get the nod, but that doesn't mean the upside gets the breakout.

We picked up some HOS as it continued its move, but HOS suffered the same fade from its highs that many stocks felt. We took some gain on CSX as it faltered some after four weeks higher that saw it in still a rather modest move. The gain on the options was solid at over 85%, but it takes so long for CSX to build a gain we didn't want to let any of that slip away. Closed CERN near the entry point as it showed too much upside strength after trending lower, albeit slowly, al last week.

Tomorrow we see if NASDAQ and RUTX can lead higher again and this time help the NYSE indices hold onto their gains and get out of their wedges versus the failed moves thus far.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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