RETEST (AT BEST)
By Harry Boxer, The Technical Trader (www.thetechtrader.com)
Thursday’s session was certainly disappointing in terms of the net results, but we did have a nice late-afternoon rally that made things look a little bit better. So far the indices managed to hold yesterday’s lows, and the day may still be considered a retest depending on what the next day or two brings and whether or not the indices can come up off these levels and complete a bottoming pattern.
In any case, the day started out with a gap down due some very negative news from the semiconductor industry, as well as AOL and others. The market gapped down and moved down in 4 very orderly steps on the Nasdaq 100, until about an hour and a half to go and then started a snapback rally that took us back up and recovered about 40% of the losses. Although unfortunately in the last 10 minutes, the market sold back off again.
Net on the day the Nasdaq 100 (NDX) ended down 57, about a 6% loss. The SOX Index was the chief cause of the pressure on the Nasdaq today, at one point down nearly 49 or 14%, closing down 35. That’s a 10 % loss on the day, so very ugly there. Just maybe the SOX was a day late in its climax, we’ll soon see.
The DJIA swung back and forth between 8300 and 7945 and closed at 8186, down less than 5 points on the day and more than 240 points off its intraday low! The S&P 500 was off 4.75 but some 22 points off the low, so they both came back very strongly.
It was a very mixed picture technically as well –- 1832 up, 1381 down on New York, about 3-2 positive. On Nasdaq, it was about 6-5 negative, with 1873 down and 1521 up. Up/down volume was negative on both exchanges. Nasdaq was much worse by 5-1 with 326 million up and more than 1.75 billion down. New York Stock Exchange was a little less than a billion up and less than 1.4 billion down. Total volume was 2.5 billion again on New York, so very heavy volume trading on the NYSE over the last three days.
At the close the Nasdaq Volatility VXN index edged up near 70, up nearly 4 points today, again getting close to historical extremes. At one point today at the low of the market we did have a NYSE tick of -1254, and that’s probably one of the reasons why we got the rebound rally.
But the tech wreck today was very, very broad and included such high flyers as Qualcomm down 3.45, Microsoft 3.40, QLogic 3.01 and several others down between 1 and 2 ½ points.
There was only one major gainer on my board today, Amgen on great earnings news, up nearly 5 points. That was the major standout today.
Overall, I’m considering this just a retest for now and we’ll see if the market can hold the lows of yesterday and today, which were in the 870-80 zone on the Nasdaq 100. The S&P 500 bounced off important support today in the 1818-20 zone and closed strongly, up near 840, so that augers well for the market potentially over the next day or two.
If the Nasdaq and the semiconductor group can settle down & stabilize we may still get a strong rally and significantly higher prices, but the patterns on the NYSE, the Dow and the S&P 500 are much more encouraging right now than the Nasdaq composite & 100 indices.
Good trading!
Harry |
