Closing Analysis

Year Opens with Big Up-Gap

Closing Technical Market Analysis for Mon January 2nd 2012

The stock market indices started off the year with a big gap up and had a very sharp rally early on, reaching the session highs in the first half hour, and then pulled back quite sharply into the opening gap. They held at 2315 on the Nasdaq 100, and 1275 on the S&P 500, double-bottomed, and then rallied to come back to take back about 75%-80% of their pullback. They then backed off, came on again, couldn’t get through that little late double-top on the Nasdaq 100 and the S&P 500, and rolled over in the last 10 minutes or so to take back a decent chunk of their gains.

Net on the day, the Dow was up 179.82 at 12,397.38, the S&P 500 up 19.46 to 1277.06, and the Nasdaq 100 up 44.13 at 2321.96. It was a great way to start off the new year on Wall Street.

Advance-declines were 3 1/2 to 1 positive on the New York Stock Exchange, and 3 to 1 positive on Nasdaq. Up/down volume was 4 1/2 to 1 positive on New York, with total volume of 800 million shares traded today. Nasdaq traded about 1.6 billion shares and had a 4 1/2 to 1 positive volume ratio. board, as a result, was mostly higher. Leading the way, Apple Inc. (AAPL) was up 6.23 to 411.23, Goldman Sachs (GS) up 4.93 to 95.36, SodaStream International Ltd. (SODA) 2.17 to 34.86, International Business Machines Corp. (IBM) 2.42 to 186.30, Netflix, Inc. (NFLX) 2.95 to 72.24, Molycorp, Inc. (MCP) 1.14 to 25.12, and First Solar, Inc. (FSLR) 2.03 to 35.79.

Other stocks of note included Fusion-io Inc. (FIO) up 2.89 to 27.09, and MAKO Surgical Corp. (MAKO) up 3.08 to 28.29. We traded both of those today. Peabody Energy Corporation Comm (BTU) was up 3.16 to 36.27, Nabors Industries Ltd. (NBR) up 1.68 to 19.02, Arcelor Mittal (MT) 1.58 to 19.77, and RPC, Inc. Common Stock (RES), another stock we traded today, 2.26 to 20.51.

In addition, Rio Tinto plc (RIO) was up 3.41 to 52.33, Research In Motion Limited (RIMM) up 1.01 to 15.51, Carrizo Oil & Gas, Inc. (CRZO) up 1.69 to 28.04 in a strong oil sector, Teva Pharmaceutical Industries (TEVA) 2.74 to 43.10, Georgia Gulf Corp. (GGC) 1.26 to 20.75, Deutsche Bank AG Common Stock (DB) 2.00 even to 39.86, and Riverbed Technology, Inc. (RVBD) 1.21 to 24.71.

The ultra-long ETFs did well. The Direxion Daily Financial Bull 3X Shares (FAS) jumped 4.38 to 69.25, and the Direxion Daily Small Cap Bull 3X Shares (TNA) was up 2.16 to 47.00 even. However, both of those did sell off late in the session along with the market. The iShares Silver Trust (SLV), in a strong silver sector, was up 1.89 to 28.83.

The ultra-shorts got hammered. The VelocityShares Daily 2x VIX ST ETN (TVIX) was down 3.44 to 28.51, the Direxion Daily Small Cap Bear 3X Shares (TZA) down 1.26 to 25.22, the Direxion Daily Financial Bear 3X Shares (FAZ) 2.56 to 34.79, the Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) 1.77 to 17.92, the Direxion Daily Large Cap Bear 3X Shares (BGZ) 1.36 to 28.17, and the iPath S&P 500 VIX Short-Term Futures ETN (VXX) 1.86 to 33.67.

On the downside, Universal Display Corp. (PANL) had a difficult session, down 4.08 to 32.61. Questcor Pharmaceuticals, Inc. (QCOR) lost 1.92 to 39.66, and Onyx Pharmaceuticals Inc. (ONXX) 1.09 to 42.86.

Those were the only multiple-point losers on our board today.

Stepping back and reviewing the hourly chart patterns, the indices gapped up huge early on, ran a little bit, and then rolled over hard into midday where they double-bottomed. They rallied back in the afternoon where they failed to take out the high, and then rolled over into the close. It was a strong session, up nearly 180 on the Dow, nearly 20 on the S&P 500, and nearly 44 on the NDX, with good technicals.

We’ll see what kind of follow-through we get tomorrow.

Good Trading!


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- Harry Boxer

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