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NASDAQ-100 moves to session high, as Industrials pull free

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Broader technology stocks as depicted by the NASDAQ-100 Index (NDX.X) 1,034.92 +2.82% has built a session best 28 point gain and nearing its daily R2 level of resistance from our pivot analysis, which looks to be a "reversal day" taking place for the broader markets. For this type of thinking to be "true," I'd want to see an NDX close ABOVE today's R1 level of 1,021.

The NASDAQ-100 Index has been able to build its best levels of the session, as the weaker Dow Industrials (INDU) 8,373 +0.66% has been able to get above its weekly S2 support, which was violated to the downside yesterday, and sees the Dow Industrials now challenging this morning's opening highs of 8,380. With some "leadership" taking place in the NASDAQ-100, which has been showing some relative strength during the recent market's declines, I'm beginning to think the Dow has put in a near-term bottom at 8,250, and has rally potential to the 8,500 level before bears start looking for some new entry points.

Some of the stronger Dow components like Hewlett Packard (NYSE:HPQ) $19.89 +4.96% and 3M (NYSE:MMM) $128.86 +1.06% continue to trade technically strong, and most likely have bearish traders that have looked to pick a top some of these stronger components looking to reassess things near-term. In the coming sessions, I will want to follow stocks like HPQ and MMM, which have shown good relative strength to monitor their progress. Strength most often leads in a rally, while weakness will lead to the downside. In my mind, for the Dow to get back above the 8,500, some substantial short-covering at the low end of the spectrum in stocks like Home Depot (NYSE:HD) $22.00 +1.89% and McDonalds (NYSE:MCD) $15.10 -1.69% would have to take place, along with some new relative highs from HPQ and MMM.

After dipping into negative territory earlier this morning, the most "impressive" upside reversal among technology sectors in my view has been in the GSTI Software Index (GSO.X) 111.15 +4.52%. Shares of Dow component and NASDAQ-100 heavyweight Microsoft (NASDAQ:MSFT) $52.39 +2.74% has made a nice little recovery from yesterday's multi-month low close of $51.00. With a "gap" from $53-$55 that could potentially be filled back to the upside, MSFT is also a stock I'll be keeping an eye on in coming sessions.

Trade volumes are brisk today, but not heavy. NYSE volume is at the higher-end of volumes we've seen in recent weeks at just over 1.5 billion shares. NASDAQ volume is just about average at 1.35 billion shares, but should press the 1.5 billion mark by the close.

NYSE breadth is positive with advancers outnumbering decliners by a 2 to 1 margin, while NASDAQ breadth is positive, but to a lesser extent at 3 to 2.

New highs versus new lows breadth remains rather stable at the NYSE, with current readings showing 75 stocks trading new 52-week highs compared to 51 stocks trading new 52-week lows. NASDAQ shows 61 stocks having traded new 52-week highs compared to 43 stocks trading new lows. For NASDAQ, this is slightly better than yesterday's breadth for this indicator, which was almost a dead heat at 64:63 by session's end.

Jeff Bailey

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