A RETURN TO NORMALCY (DOWN!)
By Harry Boxer, The Technical Trader (www.thetechtrader.com)
The market certainly appeared to revert back to the pattern it was in prior to last Wednesday through Friday today when normalcy –- i.e., movement to the downside -- returned to the market.
We had a very strong move last week, of course. However, looking at the charts, you’ll see that neither of those rallies on the NDX or S&P 500 got above the rally high of the prior week, and once again we had a lower high as resistance proved futile.
The market started off negatively with the futures being down this morning before the opening. We had a morning sell-off which went into a mid-day basing period, a very similar intraday pattern to what we’ve seen in recent weeks. When a minor breakout failed to follow through, we then sold off for the last two hours. Then with about 15 minutes to go the market firmed up a little bit into the close in what looked like some short covering.
Net on the day, the Dow Jones was down 105, the S&P 500 was down 12, and the Nasdaq 100 was down 46 1/2, led by the SOX, down more than 20, or about 6%. So the tech sector was extremely pressured by the SOX Index on today. There’s an awful lot of negativity out there, and it seems like traders are still willing to sell into every rally.
It still appears that until we get the VIX/VXN and oscillator levels to historical extremes, it may continue to be very difficult to turn this market around.
The indices backed off on the hourly charts to near moving average support and held there at the close, so there’s still some chance that if we can stabilize in this area, we still have a possibility of basing in this area. However, if we start off negatively tomorrow morning and take out today’s lows, they’ll probably come down and retest the lows or even make lower lows. So by no means are we out of the woods yet.
A review of the technicals today showed that advance-declines were about 3-2 negative on New York, and about 21-12 ½ on Nasdaq. The up/down volume was 2 1/2-1 negative on New York and more than 6-1 negative on Nasdaq. Total volume was at about the recent average, about 1.15 billion on New York and about 1 2/3 billion on Nasdaq.
A review of my personal board showed that all tech stocks were losers except for Nvidia, which held gains all day and even with the late sell-off still managed to close up 57 cents. Low-priced Numerical Technologies soared today, up a point at one time. It ended up 69 cents, a big percentage gain there on good volume.
The losers were led by eBay, which acquired PayPal. Obviously investors didn’t like that, as the stock was down 4.30 on big volume. Among the other losers, Veritas had a big percentage loss, down 2.65. IBM down 2.20 and Microsoft down 1.93 led the market lower today.
As I indicated before, I’d like to see the market ideally hold either at these levels or slightly below and then try a rebound rally and see if we can finally, convincingly, take out a previous high. There’s still a chance that the pattern of the last few weeks will turn out to be a basing pattern. We’ll soon see if that occurs or not.
Good trading!
Harry |
