Stocks find support at the days lows and move to close off the highs of the day
Technology heavy NASDAQ leads the market off the lows as a major intraday reversal puts a positive spin on the day. As of late mid-day trading has been challenging for the market. Even as the final two hours worth of trading closed in the market didn’t appear to be any buyers left to support the market. Durable goods orders didn’t help the market nor did new home sales released earlier in the day. However, the last two hours buyers began to show up as a few market leaders reversed and moved higher on the day. By the close the NASDAQ, our leading index closed in the green as volume increased over Tuesday. We had another positive day for our market leaders and the current uptrend.
On the negative side the Dow and S&P 500 suffered distribution days, but both indexes closed well off their lows on the day. Both indexes closed well above their mid points suggesting sellers lost control to buyers. The Dow had to overcome hefty losses mid-day with the index down more than 100 basis points. Even the S&P 500 was down more than 100 basis points only to see buyers step up and accumulate shares. While technically today was a distribution day for both indexes, it is hard to judge today as a true distribution day. We’ll just need to see the buying follow through in the very near future.
For most of the October the number of stocks over their respective 20 day moving average has been over 70%. Today, the number of stocks above their 20 day moving average stands at 58%. In the near term we aren’t overbought as some may think we are. The past few days we have seen the NASDAQ continuingly get support at the 2480 level. 2500 has been a bit of an issue, but with today’s close we should see the NASDAQ continue to push higher.
The big story of the day was the moves being put on by cloud computing lead by FFIV. Other leading stocks too continued to show positive signs. If I didn’t know any better, I would think the market has moved too far too fast, but seeing market leaders it is hard to think we can’t go higher. But, we can only trade what we see and not what we think. Until we see more market leaders fall and distribution pile up this market can continue its trend. Remember, always cut your loss and ride your winners!
