The markets were down and dirty in the morning to new pullback lows, reaching
as low as 1606 on the NDX and 1133 1/2 on the S&P 500, but staged a monster
rally in the last hour and exploded for big gains at the close.
The Dow moved up more than 600 points off the low just before the close from
10,459 to over 11,076, closing up 410 on the day. The S&P 500 jumped from
1133 1/2 to 1211, closing at 1206.51, up more than 50, and the NDX jumped from
1606 to 1704, almost 100 points, closing at 1697 and change, up 65 on the day.
The Philadelphia Semiconductor Index (SOXX) exploded for 4 1/2%, up 15.57.
It was a broad rally, as the advance-declines were 3 to 1 positive on New
York and a similar amount on Nasdaq. However, up/down volume was where the story
was, with a ratio of better than 8 to 1 on New York on total volume of more than
2.4 billion. Nasdaq traded 3 3/4 billion, one of the largest days ever, and had
a ratio of nearly 10 to 1 positive on advancing over declining volume.
That's certainly the kind of volume you want to see on a major reversal. With
all the indicators screaming for a rally from oscillators to the VIX, which
reached over 40 today, and with cycle lows coming in this timeframe, the rally
wasn't a surprise to us, in fact we were expecting one.
There were many multiple point gainers on our board. Leading the way was
Focus Media (FMCN), which jumped 4.58 on 9 million shares, closing at 26.83.
Sigma Designs (SIGM) had a superior day today, up 2.95 at 17.15, the high for
the day going away, on nearly 2 million shares, as it has nearly 40% of its
stock short, and new anti short legislation was announced today. Also in that
realm, China Architectural (CAEI) jumped 1.32 to 7.75, as more than 100% of its
float is short, and Emcore (EMKR) jumped 1.35 to 6.48 on 3.8 million shares, a
heavily shorted situation there ,as well.
Other stocks of note, Clean Energy (CLNE) was up 1.82 to 15.34, Canadian
Solar (CSIQ) up 1.73 to 24.94, AgFeed Industries (FEED) 1.29 to 10.10, and
Solarfun (SOLF) 1.03 to 14.00.
The US Oil ETF (USO) jumped 1.74 and the Q's 1.36. As you would imagine the
short instruments got hammered today. The SDS lost 5.32, the QID 3.84, and the
DUG 2.03.
Goldman Sachs (GS) lost 6.50, but closed way off the low. It got under 86
earlier in the session, but rallied to close at 108. MS as well closed up only
80 cents on the day but more than 10 points off its earlier low on 317 million
shares today.
So some exciting big reversals today. One, in particular, State Street Bank
& Trust (STT), got hammered from 69 down to 29 at one point, rallied back up
to 59, where it closed, down 5.79 but 30 points off its low, an amazing session
there.
Washington Mutual (WM) had a big day, up 98 cents to 2.99, nearly 50% in one
day on 190 million shares.
Stepping back and reviewing the hourly chart patterns, the significance of
today's action was that the indices plunged to new lows, reversed, consolidated,
and then came on strong in the last hour, other than the last 10-minute
pullback, to close near the highs for the day.
Our next target, and overhead resistance to keep an eye on, is the 1710 area
on the Nasdaq 100. That was yesterday's gap after the breakdown. On the S&P
500 the level to watch is the 1211-13 zone.
Today was a very promising reversal and had the tools of an important low
being put in. We'll see if we can get an extension tomorrow, which is options
expiration day, where anything can happen.
