Market Alert - The Close

New month, new quarter, continued buying. Stocks closed higher to end the last session of September and for the month of September, and they added solid gains Monday with a bullish higher to even higher session to start October and Q4.

Typically September is a month the market fades gains, selling more times than not year in, year out. When it does not, as was the case for this September, the door is often open for farther upside. The first trading session of October showed that tendency, but you have to attribute some of the move to new month, new money -- but, the good September move certainly did not help.

SP500 9.76, 0.39%
NASDAQ 20.76, 0.32%
DJ30 152.51, 0.68%
SP400 0.84%
RUTX 1.25%
SOX 0.60%
NASDAQ 100 0.04%

VOLUME: NYSE -17%, NASDAQ +1%. Volume not that impressive on an overall solid upside session. NYSE trade fell to below average, never great on a solid upside move, particularly when new money hits to start a month.

ADVANCE/DECLINE: NYSE 1.8:1, NASDAQ 2.4:1. Kind of anemic on NYSE for the gains on RUTX, SP400, but that is the way it has been. NASDAQ was clearly a smaller cap session given NASDAQ 100 was barely positive.

There was no reversal of the SP500 breaking through the Friday close over the 2009 channel upper trendline. Indeed, SP500 added over a third percent to that move, extending the break.

The moves were there and they were good, so we picked up positions in biotech, China stocks, chips, software. Took some gain on IMMU. Overall very solid action though volume overall was lighter on NYSE.

Okay, the end of the month/quarter came with a gain in September, and now the new month/quarter starts with a gain with the new money. Now, can it continue?

CHARTS

RUTX continued its almost incredible run off the mid-August low, adding 1.25%. Talk about getting overextended near term. The only rest it had on the move was the very solid early September 4-day test.

SP400 midcaps took a while to get that new high, but after scratching out that high last Thursday, it had not stopped, Monday adding that 0.84% surge.

DJ30 finally broke higher again, clearing to a new high after 7 sessions testing the mid-September new high. Both DJ30 and DJ20 are at new highs, a good upside Dow Theory signal.

NASDAQ was up but unimpressive. Gained a third percent on continued above average volume. Very credible action, just had no leadership from the largest market cap stocks on the index, e.g. FAANG and other huge market cap techs -- they were a definite drag on NASDAQ.

SOX gained as well, but it too gapped higher to a loose doji and lagged even DJ30. It added another post-2000 high but was weighed down by stocks such as AVGO that was notably and significantly weak, NVDA and AMD that traded flat. At least INTC managed a solid advance.

LEADERSHIP

Many of the same groups received the money to start the month and quarter.

Financial: Excellent moves higher with C posting a 1.46% move, JPM 1.39%, BAC 1.1%, GS 1.46%. Definitely helping SP500.

China stocks: Some excellent moves as others hang in their trends. YY +3.8% as it continues its run. BZUN surged upside 9.8% off the 2 week test to the 50 day EMA. SOHU rallied 3+%. BIDU flat after a strong Friday gain. BABA gapped but no power. HTHT still in a good test. YNDX tried to rally but faded. All in all, still strong.

Biotech/Drugs: Some good moves early that struggled to hold on. IMMU rallied to the initial target, we took some solid gain, it faded to a doji. IMGN ditto though it held a 3.5% move. ARRY added more upside. VCEL paused with a modest loss. AMGN still looks good but did not make a move. IDRA is setting up very well, and AGEN gave us a solid entry with its 7.26% surge.

Semiconductors: INTC rallied 2.52%. ON continued higher another 1.73%. MLNX posted a nice break higher on a solid volume bump. BRKS added another 2.8% upside. AMAT, LRCX showed doji after solid moves last week. SLAB looks interesting in a short pennant, showing strong volume. AVGO breaking lower on volume.

Software: FEYE jumped 3+% off the 10 day EMA test. RHT still solid. CRM and VMW both look to be in position to move.

Oil: The move thus far won't die. After its test of the surge, APC started back upside. SWN looks very good to move higher. DO is interesting. APA is working on the handle to a cup with handle base.

Retail: Mostly taking some time off but holding moves, e.g. GPS, KORS, DLTR, CONN. HD and LOW rallied nicely. WSM looks very interesting. COST holding a nice lateral move after breaking higher. Still positive.

FAANG: Very weak on the session. FB reversed some of Friday's gain after recovering to the middle of its range. AMZN showing a bear flag as well but it looks range-bound for now. AAPL shows a doji below the 10 day EMA after its bounced started to stall last week. NFLX fell hard to the 50 day MA on rising, above average volume. GOOG tested on lower volume after 3 solid upside sessions to end last week. This group definitely did not help NASDAQ.

Telecom: Some promise here that perhaps they turn off the lows, but just promise. SWIR bounced on volume after a sharp gap lower early August. CIEN is trying to break higher off a double bottom after gapping to a low in late August.

Transports: Down a bit/pausing after good moves. ODFL, WERN, SAIA testing in their uptrends. KSU, CSX tested.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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