3 Big Stock Charts for Wednesday: DIS, GPS, AIG >>> READ MORE

What Will it Take to Reverse the Market’s Intermediate Downtrend?

A close above resistance at the 200-day moving average is required

By Sam Collins, InvestorPlace Chief Technical Analyst


On Monday, stocks opened higher as optimism from Friday’s “fiscal cliff” talks carried over the weekend. The optimism was further strengthened by indications that the next tranche of Greek aid would come before Dec. 5.

The president is out of the country, and so nothing will likely be announced this week. The breather from the intense negotiations and the back-and-forth of rumors and announcements no doubt relieved pressure on the markets.

At Monday’s close, the Dow Jones Industrial Average was up 208 points to 12,796, the S&P 500 rose 27 points to 1,387, and the Nasdaq gained 63 points at 2,916. The NYSE traded 709 million shares and the Nasdaq crossed 416 million. On the Big Board, advancers exceeded decliners by 7.8-to-1 and by 3.7-to-1 on the Nasdaq. But more important, the upside volume versus downside volume on the NYSE hit an impressive 13.4-to-1.

Monday’s turn was billed as a “blue-chip reversal,” but the blue chips that bounced highest were the technology stocks of the Nasdaq. Google (NASDAQ:GOOG), our Trade of the Day, gained 3.25%, Amazon.com (NASDAQ:AMZN) rose 2%, and Apple (NASDAQ:AAPL) surged 7.21%. The Nasdaq was up 2.21%, leading the Dow, up 1.65%, and the S&P 500, which gained 1.99%. 

Nasdaq Chart
Click to EnlargeTrade of the Day Chart Key

The Nasdaq’s chart is ripe with interesting technical features, the most important of which are: Monday’s opening gap at 2,860 to 2,885, which sprang from the twin lows’ lower support line at 2,837; the August low of 2,890; and the next line of resistance — the 200-day moving average at 2,989. The “hook” of the MACD indicator is telling us that a buy signal is likely from this important indicator.

Conclusion: Like the Nasdaq, the S&P 500 (see Nov. 19 Daily Market Outlook) has significant resistance at its 200-day moving average (1,384 for the S&P 500), and a close above that barrier, in each index, is required in order to reverse the intermediate downtrend. 

Nevertheless, Monday’s impressive upside volume breadth of 13.4-to-1 will probably be kind to the bulls, carrying them through the normally quiet days of the Thanksgiving holiday with a positive respite from the straight line fall of the past six weeks.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

Article printed from InvestorPlace Media, https://investorplace.com/2012/11/daily-stock-market-news-what-will-it-take-to-reverse-the-markets-intermediate-downtrend/.

©2019 InvestorPlace Media, LLC