SELLING CLIMAX IMMINENT
By Harry Boxer, The Technical Trader (www.thetechtrader.com)
Considering yesterday’s promising close, it was certainly disappointing that the market started off at the get-go with a hard drop-down in the morning. That was spurred by the Intel downgrade by Merrill Lynch. The indices went down and tested Tuesday’s lows on the Nasdaq 100 and the S&P 500 and then did some mid-day firming. But, for the most part, most of the rest of the session was spent going sideways with some last hour firming, and even that was hit near the very close.
So we ended down badly on the day, but more importantly the S&P 500 went to a new low for the year and closed very negatively. The NDX and DJIA managed to hold their prior lows, but are very tentative in here.
We’re now in danger of getting a nasty spill over and perhaps a selling climax as early as tomorrow. We failed miserably at resistance late yesterday and we’re still in a bearish down channel and we can obviously still go lower. The odds are looking more and more like we’re setting up for a spike or crash low.
A review of today’s indices showed the Dow down 172 points and just 30 points off the low. The S&P 500 closed 2.5 points off the low, down nearly 21. The Nasdaq was down 40 and about 4 points off the low. So it was an ugly day today.
Technicals bore that out with 968 advances and 2,465 declines on Nasdaq, with an up/down ratio of 4-1 negative. Total volume was about 1.55 billion shares. On the NYSE, total volume was about the same with even more down volume than up. There were 246 million up to 1.3 billion down. So we obviously had a negative day today.
My personal board was, not surprisingly, mostly down. There were just a few gainers: Little OmniVision gained 36 cents and continues to act excellent in a very poor market. Qualcomm was the leader on the downside, down 2.08; Mercury Interactive was down 1.87; Broadcom was down 1.42 and a few others were down between 1 and 1.25.
On the gaining side, Microsoft managed to inch into the plus side late in the day, up 24 cents. But, for the most part, that was the only meaningful gainer today.
The NDX has been dropping steadily now for three weeks and it’s down about 200 points with not more than a one-day rally. Also, we’ve had three legs down averaging about 100 points per leg. I strongly believe we are very close to an important low, but it will most probably come from a lower spillout level. As a result of this evening’s additional negative news from Intel, the futures are very sharply lower overnight & we may very well see that climax as early as tomorrow morning!
Good trading!
Harry |
