Stock Market Rally Continues on Good Technicals

By: Harry_Boxer

The stock market indices had another up day as the rally continued. Starting out with a gap up, they ran sharply higher until mid-morning when they paused. At that point they resumed the advance, reaching the session highs just before noon. They then sold off early afternoon, bounced back sharply to retest the highs, but fell short and then rolled over in the last hour.

Net on the day, however, they closed positive, with the Dow up 46.32 at 10,387.01, about 40 points off its high. The S&P 500 was up 7.03 at 1098.87, about 5 points off its high. The Nasdaq 100 gained 23.50 to 1880, with a high of over 1887.

Advance-declines were 21 to 9 positive on the New York Stock Exchange and about 2 to 1 positive on Nasdaq. Up/down volume was about 3 to 1 positive on New York with total volume of about 815 million shares, rather light today. Nasdaq, however, traded about 2 billion shares, and had about a 2 1/2 to 1 positive ratio.

Charts of the Day:

Today is a review of the Boxer Shorts. There's plenty of beautiful-looking, bullish charts out there, but we're starting to see just as many bearish ones. So, a very mixed picture.

Almost Family Inc. (AFAM) has been on our list since earlier this year when it cracked. Notice that this big wedge has formed, and it looks to me like after four waves, we may get a fifth that takes us down near the 20 range, my new trading target.

Conceptus, Inc. (CPTS) has been in a downtrend since February when it was in the low 20s and dropped all the way down to 12 after cracking key neckline support in July. This stock has since morphed into a bear wedge. If it breaks to the downside, look for a move down toward the 11 range, maybe even as low as 9 1/2 or 10.

DeVry, Inc. (DV), another educational stock that's gotten hammered, rolled over in April and May, continued a downtrend, had a bounce back in July briefly, and then rolled over hard, now forming a bear flag that may not be done yet. It sure looks like it could be lower, although there is major support in this zone going back a couple 2 1/2 years now. So we'll see if we can break that. If we do it could be curtains.

Universal Corporation (UVV), after the hard break in May and the bounce back forming a bear flag that failed at resistance, this stock then got pummeled in August. Since then it's formed a bear flag, today dropping another 73 cents. The stock appears headed to the 32 range, our next trading target, which is the juxtaposition of the bottom of the channel and lateral price support.

Reviewing our Watchboard:

TheTechTrader.com board, as a result, was mostly higher. Leading the way today was Apple Inc. (AAPL), up 5.11 to 262.92. Goldman Sachs (GS) advanced 2.33 to 147.54, Dendreon Corp. (DNDN) 1.61 to 41.84, BP Exploration plc (BP) 1.18 to 38.37, Acme Packet, Inc. (APKT) 1.22 to 37.28, and Amazon.com Inc. (AMZN) 1.92 to 139.14.

In addition, ARM Holdings PLC (ARMH) was up 1.24 to 18.09, Netezza Corporation (NZ) 2.63 to 23.97, Sycamore Networks Inc. (SCMR) 95 cents to 28.84, and MGM Resorts International (MGM) 65 cents to 10.22.

Among other gainers of note, Spreadtrum Communications Inc. (SPRD) jumped 55 cents to 11.92, Transocean Ltd. (RIG) 69 cents to 53.94, and ADTRAN Inc. (ADTN) 68 cents to 32.85.

On the downside, loss leaders included Boxer Short Cree Inc. (CREE), which got hammered for another 4.42 to 50.18, dipping under 50 for the first time in many months. That was by far the loss leader today.

Other losses of note, China Agritech Inc. (CAGC) on the downgrade fell 2.59 to 13.29, a big percentage loss there. OmniVision Technologies Inc. (OVTI) dropped 92 cents to 20.08, and the ETF Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) was down 1.10 to 33.23.

Stepping back and reviewing the hourly chart patterns, the indices gapped up at the opening, ran sharply all morning, and reached their peak by mid-day. They pulled back in the afternoon and bounced, but fell short of their highs, and then rolled over into the close to pare back the gains.

It was still a positive day for the indices with good technicals as the rally continues. The only negative right now is that despite the new highs for the rally on the Nasdaq 100, the S&P 500 has failed to make new highs and to confirm, causing a potential negative divergence.

We'll see what that means going forward.

Good Trading!

Harry

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