Now that’s a reversal!

The day did start off as a painful one for the bears. The indices all gapped up on the back of a better than expected unemployment report, decent news from Intel, and some potential M&A activity. The NASDAQ had jumped to a better than 2% gain shortly after 10:00, just in time for the standard 10:00 reversal. It then proceeded to drop approximately 3.5%, or 57 points, closing near the lows of the day. While not quite as dramatic, the action was similar in the other indices. The Dow was actually able to close up 21 points, but it was 153 points off of its high. To make matters even more ominous, volume was huge today. The NASDAQ, which traded 2.95 billion shares, had its highest volume day since July 2, 2002. Today marks the second distribution day on the NASDAQ this week.

Here’s a look at the NASDAQ chart. Note how it keeps chasing that orange trendline. I can’t recall ever seeing an index gravitate towards a previously broken trendline like this. I still contend that this advance is too steep to be sustainable. The NASDAQ is up about 28% since the March bottom, which is about ~115% annualized. You be the judge…

Here’s the S&P 500, which I think is headed back to 950. It’s also worth noting that the S&P ran into resistance at 1,000. Round numbers like that are often areas of resistance/support. It may get over 1,000 eventually, but I think it’s not likely without some backing & filling.