Market Alert - The Close

Some very big and exciting mergers had the stock market excited. Would the trends of the NYSE merge with the NASDAQ and SOX uptrends? All indices were of course higher on the upside gap and merger buzz, but by the close, while SOX and NASDAQ showed their trends are solid, so did the NYSE indices. Not solidly up, but solidly lateral, unable to break through the next resistance at the 50 day EMA. DJ30, SP400, RUTX, and SP500 all moved through the 50 day EMA intraday, all gave it back up by the close. SP500 touched its January 2016 trendline and faded from there.

SP500 10.17, 0.47%
NASDAQ 52.43, 1.00%
DJ30 77.32, 0.43%
SP400 0.52%
RUTX 0.68%
SOX 1.87%

VOLUME: NYSE -10%, NASDAQ -5%. Post-expiration drop in volume, but volume wasn't that great to begin with on expiration. Not a flood of new buyers, but still working higher.

Disappointing for the NYSE indices, but they did still move higher in the range, just not ready to hold a break over the midrange resistance. Further, while they gave up gains off the highs, they didn't totally collapse as in some cases testing this resistance. DJ30 gave up 52 points from the high, SP500 3.5 points. Big deal, right? If NASDAQ and SOX continue their excellent trends higher you would anticipate the NYSE indices following, they just could not break the old habits on Monday.

Mergers were the Monday excitement, but earnings are still the main course. Today CNBC flashed a statistic that 78% of S&P listed companies that had announced beat expectations. That sounds impressive, but they are beating low expectations that were already lowered here in the 6th quarter of declining profits. It is, as Einstein showed, all relative.

The sharp gaps made it harder to enter. GOOG got away; its play parameters were pretty tight and the gap loused them up. We picked up some PANW, but it gave back a chunk of its gain as did many stocks. We are watching, however, to see if stocks such as NVDA give back some of the gain as is often the case after a strong, rather outsized move. If we get that we might be able to land us some pretty nice entries.

Solid NASDAQ and SOX, more of the same from the NYSE indices, but again, with NASDAQ and SOX rallying higher in their trends, one would expect the NYSE indies to come around. More earnings could help, one way or the other.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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