RETESTING PROCESS BEGUN
thetechtrader.com
By Harry Boxer, The Technical Trader (www.thetechtrader.com)
The Indices were down all day and ended near the low end of the daily range. It wasn’t surprising based on the fact that yesterday’s closing NYSE McClellan Oscillator was a +234, the highest & most overbought reading I’ve seen since October 1998.
The market started out with a gap down because pre-opening futures were lower. We barely bounced after the opening and then went steadily lower, and by mid-day we had seen several consecutively lower lows, at which point the indices attempted to put in a basing-type pattern. This failed to gather enough momentum to break out and the last hour the market fell sharply and got to its lows for the day before just a late slight bounce-back took them a bit off the lows.
Net on the day the Dow was down 180. We were down 22 on the S&P 500, 42 on the Nasdaq Composite and 38 on the 100. The SOX was down a dismal 21 points, or nearly 7%, and that was a big part of the reason for Nasdaq’s weakness.
A review of the technicals shows advance-declines were 21-10 negative on New York and 22-11 negative on Nasdaq, similar numbers. Up/down volume was about 6-1 negative on New York, with nearly 900 million shares down and 153 million up. NYSE total volume was just over a billion shares, so it was another light Friday session in late August. Nasdaq volume totaled 1.4 billion, with advancing volume of 245 million and 1.17 billion on the downside, about 5-1 negative.
So the market had an ugly day today, and I believe we’ve begun the pullback/retesting phase I was looking for. The NDX had gone from 855 to over 1052 in just 3 weeks to just below major overhead resistance from the June highs, a gain of 23%. The S&P 500 also was due for a pullback after having gone from 775 to 965, 190 points or 24% in less than 4 weeks. The Dow had gone up 1500 or about 20 percentage points and pulled back nearly a couple hundred today. The indices were certainly ahead of themselves and as a result the pullback/retesting process probably began today and should have more to go.
I see chart support below here at about 1000 on the Nasdaq 100 and below that in the 980-85 zone. On the S&P 500, near-term support is around the 930 zone and beneath that 918-20. I’ll be watching those levels carefully on Monday.
Good trading!
Harry
Don, if it were not for the light volume I would still be reasonably confident in my expectations that the SOX is headed below 250. My new target is 243. Do I think we will get there without any rallies in the meantime. Absolutely not. Selling pressures have abated so far in the general market despite the selling the last two days in the semiconductors. We may never get to 243 on this cycle but none of the numbers I am hearing about the economy suggest that it could not happen.
By the way Don, the tables just keep getting better and better.
Thank you, RtS |
