Friday the market finished the week on a strong note as the S&P 500 not only rallied above the short term resistance of the previous 6 days, but also above intermediate term resistance at the 1336-1338 level to settle at 1342.84, +1.03% for the day. With quadruple witching, volume kicked in, and so when combined with the strong price action it represents a valid follow through day.
The Nasdaq Composite closed at 2872.80 +1.29%, breaking above the upper line of the downward parallel channel it's been in since mid April, yet failing to break above recent intermediate term resistance at 2883.
The DJIA was up 0.91%, while the important Dow Jones Transportation Average did not fully confirm the action of the other indices as it was up only 0.67%, and also failed to break above prior resistance from the previous 6 days. So all in all, I would grade the action of the broad indices as a "B".
As I've mentioned in recent posts it's possible that the first move out of the recent consolidation phase could reverse back the other direction, trapping those who piled in once support or resistance levels were breached.
So while the action on late Thursday and Friday are encouraging and some market leading stocks have pushed out of bases and others have firmed up, with the election results looming in Greece tonight, I'm a little skeptical of going long full bore until I see how the market reacts to the news on Monday.
It's early in this rally attempt so we have to be patient and see
how the market acts to the bevy of news from the elections in Greece, to
the notes coming out from Bernanke and the FOMC meeting on Tuesday and Wednesday.
Ultimately, the price and volume action of the market leading stocks takes precedence over any news event. I'll go through the list of stocks that I'm watching closely as we approach the week ahead in my next post.
Here are the charts of the broad market indexes.
Click on charts to enlarge view:
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