Closing Analysis

Indices Rally Back

Closing Technical Market Analysis for Wed December 28th 2011

The stock market indices had an excellent day today, even though they started out somewhat mixed. The S&P 500 and the Nasdaq 100 bounced at the opening. The S&P 500 kept going, but the NDX pulled back. At that point, it looked a little worrisome because of potential negative divergences, but the NDX quickly reversed sharply after positive housing and economic news from Chicago. They stair-stepped their way higher the rest of the day, and although they immediately consolidated midday, they punched through a couple layers of minor resistance, closing right at key overhead resistance near 2285 NDX, but took out the 1260 area on the S&P 500.

Net on the day, the Dow was up 135.63 at 12,287.04, the S&P 500 up 13.38 to 1263.02, and the Nasdaq 100 up 17.99 at 2285.07.

Advance-declines were nearly 4 to 1 positive on the New York Stock Exchange, and 2 1/2 to 1 positive on Nasdaq. Up/down volume was more than 10 to 1 positive on New York, with light volume of only 528 million shares traded today. Nasdaq traded just over 1 billion shares and had a 6 to 1 positive volume ratio. board was mostly higher, but just fractionally so. Leading the way today was LiveDeal, Inc. (LIVE) jumping 1.32 to 4.38, or 43%; Cardiome Pharma Corp. (CRME) up 38 cents to 2.61, or 17%; Hollysys Automation Technologies, Ltd (HOLI) 1.20 to 8.42, or 17%; Dex One Corporation (DEXO) 24 cents to 1.77, or 16.6%; DexCom, Inc. (DXCM) 86 cents to 9.40, or 10%; and Masco Corporation (MAS) 83 cents to 10.70, or 8.4%.

Diamond Foods, Inc. (DMND) was up 2.11 to 31.51, Owens Corning (OC) up 1.94 to 28.99, Elan Corp. plc (ELN) 73 cents to 13.85, VIVUS Inc. (VVUS) 47 cents to 9.72, Sony Corporation (SNE) 60 cents to 17.68, Kodiak Oil & Gas Corp. (KOG) 30 cents to 9.66, McMoRan Exploration Co. (MMR) 42 cents to 14.32, Inc. (STMP) 75 cents to 26.27, and Westport Innovations Inc. (WPRT) 74 cents to 33.29.

Other stocks of note included Apple Inc. (AAPL) up 2.48 to 405.12, and International Business Machines Corp. (IBM) up 2.19 to 186.18.

The Direxion Daily Financial Bull 3X Shares (FAS) ultra-long jumped 2.63 to 64.90, and the Direxion Daily Small Cap Bull 3X Shares (TNA) took back 1.37 to 45.57.

On the downside, no stocks were down as much as a point other than some of the ultra-shorts. The VelocityShares Daily 2x VIX ST ETN (TVIX) was down 1.59 to 30.81, and the Direxion Daily Financial Bear 3X Shares (FAZ) down 1.68 to 36.76. ProShares UltraShort Silver (ZSL) rallied back today, jumping 1.39 to 15.81.

Stepping back and reviewing the hourly chart patterns, the indices stair-stepped their way in a 5-wave rally into midday before settling into an afternoon consolidation, but then breaking out in the last hour. In the last 30 - 40 minutes they backed and filled, and managed to close at the highs for the day.

It was a very nice recovery day from yesterday’s deep sell-off.

Good Trading!


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