TECHNICAL DAMAGE
By Harry Boxer, The Technical Trader (www.thetechtrader.com)
The market certainly finished differently from how it started. In the morning we had a nice rally from the get-go that took the Nasdaq 100 to new rally highs, the highest level reached in about eight days.
At that point, however, the S&P 500 and Dow had not broken to new highs and did not confirm. They then went into a slow drift downward, pulling back for a couple of hours before the Fed announcement.
The Fed announced it was not going to lower rates, and the market apparently did not like what it heard, because it sold off quickly. When they got to support, bounced sharply but failed at resistance and then sold off sharply, especially over the last hour, closing at the lows for the day going away on all the indexes.
The Dow was down over 200 points today, 20 on the S&P 500, 37 on the Nasdaq Composite, and 31 on the 100. The SOX closed under 300, down 13 to 299.
The technicals were very poor today, with advance-declines 22-10 negative on New York and nearly the exact same numbers on Nasdaq. Up/down volume was 5-1 negative on New York and about 7-1 negative on Nasdaq. Total volume was about 1.3 billion on New York, 1.5 billion on Nasdaq.
My personal board was mired in red. Although a lot of them were up earlier, most of them closed down and down sharply. QLogic, down 3.15, was the leader. Amgen, down 2.34, was another big loser today. eBay down 1.91, Microsoft 1.42, GE down 1.30 and Broadcom 1.28 were among the bigger losers.
Only Qualcomm up a half and Emulex up 3/4, along with IBM up 13 cents, were gainers on my board today.
The problem with today was that a lot of technical damage was done. The NDX broke its 5-day up-trend line, broke price support, and towards the end of the session, broke the rising 40-day moving average on the hourly chart, although we closed above it on the S&P 500 and Dow.
So tomorrow morning we have to see if the market can calm down, stabilize and perhaps snap back. But today quite a bit of technical damage was done, and we may very well be in the throes of a retest of the lows on the Nasdaq 100 and the rising trend line on the S&P 500.
Right now support beneath today’s closing levels on both the S&P 500 and Nasdaq 100 is coincidently around the 875-880 zone.
Good trading!
Harry
thetechtrader.com |
