Jack's Wrap - Quiet At Resistance...After Hours Buyout....


Monday April 4th 2011
Quiet At Resistance...After Hours Buyout....
by Jack Steiman www.SwingTradeOnline.com

What else can you say about today! The market refused to sell all day, even though we tested and failed at the test of the old highs on Friday. You would have thought that the bears could have done some damage today based on Friday's failure off a long run up, but that was not to be. The market moved up a bit at the open, but then spent the rest of the day trading on either side of the flat line with the Nasdaq leading down and the Dow leading up. Apple Inc. (AAPL) was a drag along with Google Inc. (GOOG) That's really the only reason why the Nasdaq was red at all. So nothing to talk about all that negative with technology. The NDX has under performed for some time now, but again, that's mostly due to Apple, which is taking a long, and much needed, rest from going up every single day for seemingly years.

Although the Nasdaq flashed a poor candle today, it still isn't anything resembling the type of candle stick that says, here comes the next big move lower, to unwind things. The sellers didn't show up today when they had the bulls vulnerable. The bulls were able to unwind things down again today on the short-term charts with virtually no price erosion. Same action we've been seeing for quite some time to be sure. The bears get a drop of selling while those oscillators reset, and then it's off to the races, or at least off to the up side.

Today was basically a quiet day, but overall, bullish since we did take the short-term charts from overbought to more neutral. The bears were once again unable to do anything of significance to help their dying cause. Things can turn quickly in this game, and you never let your guard down, but today resembled this entire move off the lows. Selling was gathered up by the bulls with little resistance from the bears. It was just another day in the overall up trend, folks.

After hours is rocking up in the world of the semiconductor stocks. Texas Instruments Inc. (TXN) is buying National Semiconductor Corporation (NSM) for a huge premium, which is beyond my ability to grasp. NSM is a perennial earning's warner and is priced at 14$ for that reason. Texas Instruments decided to pay $25 for the company after hours. Hey, why not! Just your typical near 100% premium because the company doesn't know what to do with its cash. Why not give it back to the share holders. I know, why do the smart thing.

So NSM is 25$ after hours after closing at 14$, and of course, the market loves this, even though Texas Instruments grossly overpaid. Typical bull market behavior. Any and all news is good news. It doesn't matter what's report. It's all good all the time. Many semiconductor stocks are rocking after hours with the Semiconductor HOLDRs (SMH) exploding up.

The futures, especially the Nasdaq futures, are rocking up pretty big this evening. It's sector specific, but that doesn't matter. Up is up, and that's all that matters. This may help the market forego any hard pullback and just blast out, although the market internals aren't set up perfectly for that in my opinion. My opinion is ignored by the energy that is this crazy game. Bottom line is the news after hours is being greeted positively, although I can't figure out why. Let's see if those futures can hold over night and allow the S&P 500 to blast back up towards 1244, or the old highs, and let's see if the Nasdaq can clear the gap at 2808.

If the S&P 500 can blow through 1344, and the Nasdaq through 2808, there isn't much to stop the market from getting silly to the up side. The S&P 500 would have no real resistance, while the Nasdaq, the laggard, will have the top of the gap to still deal with. It does open the door for higher prices even in the Nasdaq. It'll be so interesting tomorrow to see if the PHLX Semiconductor SOX closes with a clear candle tomorrow, or prints a black filled, which will tell us the Nasdaq isn't ready for real upside at this time.

The first hourly candle stick will be crucial in understanding whether this market is truly ready for the next leg up, or if it still needs more time to move laterally, overall, below key resistance to further unwind the oscillators. 1320 S&P 500 and 2760 Nasdaq is massive gap support levels. There are no signs the market wants to test down to those numbers, but you have to remain open to the possibility if tomorrow's candles fail on any gap up.

So tomorrow we should see the Nasdaq lead, which it has been failing to do for quite some time now. That story is getting old. In most bull markets you see beta and risk lead, but some time now we're seeing lower risk lead the way overall. There are always exceptions, of course. If the Nasdaq gaps up and holds, the bears will start to give up the way they have been for a long time now. This would give the bulls the green light to take out 2808 Nasdaq and 1344 S&P 500.

Tomorrow will be a very interesting day in understanding whether the moment has truly arrived for some selling to finally take place again, or whether there's just no stopping this market from beginning yet another leg higher.

Peace

Jack


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