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Stocks Stage Dramatic Rebound
By Paul Shread

http://www.internetnews.com/bus-news/article.php/3723486

U.S. stocks staged a dramatic turnaround Wednesday on reports of a possible rescue of troubled bond insurers.

The major indexes lost 3-4% in early trading on rumors of European bank troubles and European Central Bank comments that suggested the ECB won't be following the U.S. Federal Reserve's lead in cutting interest rates. But afternoon reports of a possible New York state-led rescue of bond insurers had the indexes sporting 1-2% gains by the close.

Apple was a big decliner, though, its shares down 10% on a much weaker than expected outlook.

Motorola fell 18% on ongoing troubles in its handset division that will lead to a loss this quarter.

Texas Instruments was up 4.6% on better than expected earnings and in-line guidance.

IBM, Intel and AMD were big winners, up 5-10%, while Google and Amazon were big decliners.

Microsoft was little changed ahead of its earnings report due out after the close on Thursday.

After the close, eBay gave up all of the day's 7% gains after lowering its current quarter outlook and announcing the retirement of CEO Meg Whitman. Qualcomm and Symantec were big winners after beating estimates.

The Nasdaq rose 24 to 2316, the S&P gained 28 to 1338, and the Dow surged 299 to 12,270. Volume rose to 7.48 billion shares on the NYSE, and 3.65 billion on the Nasdaq. Advancers led by a 24-9 margin on the NYSE, and 18-12 on the Nasdaq. Upside volume was 37% on the NYSE, and 56% on the Nasdaq. New highs-new lows were 31-408 on the NYSE, and 32-469 on the Nasdaq.

Technical Analysis: Stocks Snap Back
By Paul Shread


At this week's lows, the market has been as oversold as any in the last 70 years, just based on the depth of the decline in a short amount of time. A weekly close below 11,847 on the Dow would be even better, giving us that oversold reading on a weekly closing basis, but stocks appear to be too stretched to the downside for that, at least for now.

Still, there are other ways to spot bottoms, and we'll be on the lookout for them. For starters, we expect a lengthy basing period after the decline we've had. One good sign of a bottom would be a higher low and higher high in the rate-of-change indictor (ROC at the bottom of tonight's charts below), a sign that momentum has turned back upward. In fact, it's hard to find a major low that hasn't had that positive divergence.

Another would be continued buying by commercial futures traders.

But given the depth of the panic — multiple front-page bearish headlines just about everywhere you look today and yesterday — the credit crisis may largely be priced into stocks at this point. Still, a retest of the lows, and possible lower lows, with positive divergences, may still lie ahead.

1364-1370 on the S&P 500 (first chart below) remains the biggest hurdle for the bulls, with 1350 up first. The first test of that level will likely prove tough. Support is 1320, 1310 and 1270, with 1225-1250 possible below that.

The Dow (second chart) barely held onto yesterday's low (11,635) today, stopping at 11,644. 12,092 is first support before 11,750-12,000 gets tested again, while 12,400-12,500 looks tough to the upside.

The Nasdaq (third chart) faces resistance at 2323, 2350 and 2387-2400, and 2250, 2221 and 2200 are support.

Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association.

http://www.internetnews.com/bus-news/article.php/3723491