Market Alert - The Close

After two sessions of failing to make good on opening gaps upside, stocks gave up. Futures were markedly lower with NASDAQ futures -55 heading to the bell. Looked like a failure to make good on a good pattern and upside attempts was going to result in a break lower.

It did. The indices gapped downside, threatening a break below the lows in the lateral ranges. Buyers came in at the open, however, and bid stocks upside. The sellers hit back, and for the next 3.5 hours the two sides battled it out -- in negative territory. The back and forth narrowed and narrowed some more heading into the FOMC minutes release.

Ah the FOMC minutes. The rulers of markets would make known their discussions at the prior rate meeting and we would all be the better for it.

Well, it turned out that way, at least for the upside. The Fed discussed how it could afford to miss some on the upside of inflation -- overshoot as they call it -- in order not to stall things out too quickly.

Stock buyers liked it more than the sellers hated it. Stocks rallied basically into the close, turning the indices positive into the close. With the gaps lower the final gains were not that impressive, but the intraday swings were solid. NASDAQ 90 points low to close. DJ30 220 points.

SP500 8.85, 0.32%
NASDAQ 47.50, 0.64%
DJ30 52.40, 0.21%
SP400 0.09%
RUTX 0.15%
SOX 0.51%
NASDAQ 100 0.87%

VOLUME: NYSE -1%, NASDAQ +3%. NASDAQ trade moved close to average, NYSE trade slipped back from average, but just modestly.

ADVANCE/DECLINE: NYSE 1.1:1, NASDAQ 1.2:1.

Again, the internals don't blow anyone away, but with the big reversal, that is forgivable at least for today.

As you can see, it was a tech day with some of the FAANG posting very good moves, e.g. NFLX. FB not bad and AMZN may be ready to buy. Some industrials came back as well with BA rebounding and CAT bouncing nicely off the gap test. Some chips joined in, e.g. NVDA. Software looked as if it is stirring upside again. Biotechs showed some moves and we picked up GERN early and did not complain about IMMU jumping and BLUE bouncing back up. Not bad, not great, but in the context of the Monday and Tuesday failures after upside gaps, it works.

Perhaps the stirring of NFLX and other dormant names will lead to a break higher. Keep the move in perspective: the indices are still in the lateral range and it took the recovery to keep them there. They need some additional juice to move them higher. Again, if the big names on NASDAQ start to move again, that provides some juice for NASDAQ and for SP500. There are stocks moving on SP500, e.g. CAT, BA. INTC and MSFT, both Dow components and both look good to make upside moves.

In sum, once again the moves look promising, the patterns look as if they can lead to breaks higher. At this juncture, however, the moves are still unfulfilled. A nice job Wednesday of coming back from a quite weak open, showing buyers are still interested. Now, with stocks such as NFLX, MSFT, INTC, FB, AMZN appearing ready to join in, the prospects for fulfilling the promise perhaps are a bit better. As always, however, the 'pretty pictures' need to turn in to good moves. And not take too long about it.

We did buy into the move, picking up GERN early as it scored a 15% gain on the session. Also some FB and CAT. PCTY moved up late, AMZN looks as if it can go. Interesting patterns -- again -- and again, they have to turn into good moves.

Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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