Closing Analysis

All Goes Well For Year-End Rally Extension

Closing Technical Market Analysis for Tue December 20th 2011

The stock market indices had a volatile day, and the session was topsy-turvy. The morning was ugly with the indices opening lower, and going sharply down. The Nasdaq-100 dropped at the opening from 2265 down to 2223 or so, and the S&P 500 dropped from 1242 down to 1230, with the 1230 level being key support. That completed a 5-wave intraday decline, at which point they turned it around. A sharp 5-wave advance on the S&P 500 took the indices sharply higher, from 1230 up to 1245. They backed off in the last 10 minutes, but came on into the close to put the S&P 500 and Dow back in the plus column just slightly.

Net on the day, the Dow closed back over 12,000 at 12,107.74, up 4.16, the S&P 500 up 2.42 to 1243.72, but the Nasdaq 100 was down 32.91 to 2249.03.

Advance/Declines did get into the positive column by 3 to 2 on the New York Stock Exchange, and flat on Nasdaq. Up/down volume was more than 2 to1 positive on New York, with total volume of a light 800 million shares traded today. The Nasdaq traded over 1.8 billion shares, and had an 11 to 7 negative volume ratio. board, however, was narrowly mixed up and down, but that did not tell the story, as many stocks came well off their lows. Market leaders on our board today included Shaw Group Inc. (SHAW), which we traded today, up 3.64 to 26.30, or 16%; Cobalt International Energy, Inc. (CIE) continues its strong move of late, up 1.58 to 15.43, or 11%; Research In Motion Limited (RIMM) 1.26 to 13.78, or 10%; Shuffle Master Inc. (SHFL) 92 cents to 11.90, or 9%; and Mitcham Industries Inc. (MIND) 2.02 to 22.01, or 10%. Many of the low-priced stocks did well today as well. They included Delcath Systems, Inc. (DCTH), up 42 cents to 2.42, or 21.6%; SemiLEDs Corporation (LEDS) up 39 cents to 3.28, or 13 1/2%; FSI International Inc. (FSII) 49 cents to 3.49, or 16%; and BioTime, Inc. (BTX), which appeared to breakout late in the day, was up 55 cents to 6.02, or 10%.

Other stocks of note included Cintas Corporation (CTAS), up 2.91 to 34.19, Inhibitex Inc. (INHX) up 69 cents to 11.21, Mistras Group, Inc. (MG) 1.07 to 24.29, Fusion-io Inc. (FIO) 1.07 to 24.46, and Amgen Inc. (AMGN) 1.98 to 63.14.

On the downside, SolarWinds, Inc. (SWI) was down 1.58 to 29.00 even, Questcor Pharmaceuticals, Inc. (QCOR) down 1.28 to 43.33, Liquidity Services, Inc. (LQDT) 1.05 to 37.05, and First Solar, Inc. (FSLR) 1.08 to 31.80.

The ultra-shorts got hammered today again. VelocityShares Daily 2x VIX ST ETN (TVIX) was down 4.43 to 29.03, the iPath S&P 500 VIX Short-Term Futures ETN (VXX) down 2.46 to 33.76, and some of the other ultra-shorts were very narrowly mixed today.

Stepping back and reviewing the hourly chart patterns, the indices came down hard until midday when they reached their session bottoms near support on the S&P 500, and rallied back in a 5-wave advance to put the S&P 500 in new session highs at the close not far off the highs for the day.

That was a pretty good comeback after some early profit-taking. All goes well for an extension of a year-end rally.

Good Trading!


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- Harry Boxer

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