MARKET ACHIEVES LATE TURNAROUND -- LED BY BIG TECHS
MAJOR AVERAGES HOLD SUPPORT... After trading lower throughout the morning, all the major stock averages closed higher today. All things considered, it was a pretty impressive performance. Breadth figures were positive -- especially on the big board. The only thing missing was heavier volume. But up volume did exceed down volume on the Nasdaq and the NYSE. It's also encouraging to see the major averages bouncing off chart support. The Nasdaq bounced off initial support at 1600, which has held three times over the past month. The S&P 500 bounced off initial chart support at 965 (the peak from last August). And the Dow is back over 9,000. The daily RSI lines are holding support near 50. And, the daily stochastics lines are in oversold territory under 20. The fact that some of the indexes came close to their 50-day averages was also encouraging. Some group indexes actually touched their 50-day lines before bouncing.
Chart 1
Chart 2
Chart 3
DRUG INDEX AND SOX BOUNCE OFF 50-DAY LINES... Charts 4 and 5 show two group indexes bouncing off their 50-day lines. That's always a good sign. If an intermediate uptrend is going to continue, the 50-day lines have to hold. And they did today. The rally in the SOX Index also underpinned a strong technology bounce. The Nasdaq 100 was the top percentage gainer for the day. That was because a number of big tech stocks bounced off their moving average lines.
Chart 4
Chart 5
BIG TECHS LEAD NASDAQ 100 HIGHER... A large part of the late stock market turnaround can be attributed to the three big tech stocks shown below. All three bounced off moving average lines late in the day. And each one did it on rising volume. That's a good combination. Cisco and Intel achieved upside reversal days off their 50-day lines. Microsoft did so off its 50-day and 200-day lines. Golds and financials were also market leaders today. Gold stocks gained 3% on the back of a $5.00 gain in gold. Bond prices were lower. We've been sweating out the recent downside correction to see if it can hold above crucial support levels. Today's action was very encouraging.
Chart 6
Chart 7
Chart 8
