TRADABLE LOW MAY BE NEAR, BUT FASTEN YOUR SEATBELTS !!
thetechtrader.com
By Harry Boxer, The Technical Trader (www.thetechtrader.com)
The market had its third very bad day in a row and its fourth decline in a row, and closed very close to the low for the week going away. The Nasdaq 100 closed at the lowest level since January 1998 – that’s 4 ½ years!
Obviously, the market continues to make lower lows, as every rally attempt is met by more waves of selling. This morning’s pattern was similar to what we’ve seen often over the last couple weeks. The pattern is to be down early, try a rally which fails, get a morning sell-off, then go into a mid-day consolidation which tries several times to break out and can’t and then rolls over and closes down at the lows for the day. That’s exactly what occurred today.
The Dow was down another 177 points, the S&P down 17, Nasdaq 100 down 27, the Nasdaq Composite nearly 24. The SOX index crumbled another 3% today and is now down to 380, which is nearing its September low.
The technicals today made a relatively strong showing as the advance/declines were only about 14-18 negative on New York. Believe it or not, as bad a day as it seemed on Nasdaq, there were still 1671 up and only 1739 down. You certainly wouldn’t know it by observing the hi-tech/biotech sectors that continue to get pounded! The up/down volume on New York was still rather poor at about 3-1 negative with a total of over 1.8 billion traded. That’s getting pretty heavy and nearing climactic. Nasdaq volume was near 2 billion, but the up/down was substantially worse with 347 million up and 1.47 billion down.
We’ve had almost 3 billion shares of down volume in the last two days on Nasdaq, which is very heavy downside volume and getting near climactic levels, as well.
The Nasdaq VXN (volatility/fear gauge) was up another 1.37 and reached over 60 today. That’s starting to get into the range of fear that traders usually show near important lows. But it’s not quite there yet as we want to see a reading closer to 70-80 or even higher. The NYSE VIX got up into the low-mid 30’s, but we’ve seen 40-50 or more at important lows before.
The decline here may be setting up a selling climax and we could be getting that as early next week. That’s certainly what it looks like –- we’ll have to see what gives there.
The NDX & DJIA have taken out its recent lows. The S&P 500 is still hanging in there, but it’s just above the prior week’s lows when it reached down to 981. Today’s low was about 985, closing at 989. So it’s one of the last bastions of relative strength left and there’s still a positive divergence there should the markets reverse on Monday.
But there’s no getting away from it, the market is under severe selling pressure and psychology is becoming very negative. I believe that will result in a VERY tradable low early next week.
Good trading!
Harry
Harry Boxer is an award-winning, widely syndicated technical analyst and author of The Technical Trader (www.thetechtrader.com), which features a real-time diary of Harry's minute-by-minute trades and market insights, plus annotated technical charts & stock picks, based on Harry's 30 years experience as a Wall Street technical analyst.
Don, I have an interesting chart set up here for MU. I think 16.39 should hold but the congestion below that area is unclear to me for ultimate support.
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