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Closing Technical Market Analysis for Thu May 17th 2012
The stock market indices moved sharply lower within confined channels and each rally failed at resistance. They had a 5-wave move today, with the 5th wave being the steepest, closing at the lows for the day going away. It can’t get much worse than today’s action.
It was a very nasty day on Wall Street, to say the least.
Net of the day, the Dow was down 156.06 at 12,442.49, the S&P 500 down 19.94 at 1304.86, and the Nasdaq 100 down a whopping 52.51 at 2509.05, which was more than 2% for the NDX today.
Advance-declines were 6 to 1 negative on the New York Stock Exchange, and about 4 1/2 to 1 negative on Nasdaq. Up/down volume was 8 to 1 negative on New York. Nasdaq also had an 8 to 1 negative volume ratio.
It was extremely negative. With the McClellan Oscillator already at -233 last evening, I’m expecting to see the steepest oversold reading on the indices I’ve seen in quite a long time, and perhaps a set-up for a sharp snapback rally.
Right now, momentum is to the downside. The indices continue to fall as I stated in the last week or two. I expected the indices to fall into this timeframe. Perhaps tomorrow or Monday could be a pivot point where we could snap back from.
TheTechTrader.com board was mostly down today. Leading the way to the downside, Apple Inc. (AAPL) dropped another 15.96 to 530.12, the exact low for the day, and 17 1/2 points off its high. It is now down 114 points from its high the last month or so.
Other losers of note included Chipotle Mexican Grill, Inc. (CMG), one of our Boxer Shorts, down 10.03 to 394.50. Google Inc. (GOOG) was down 5.88 to 623.05, and that traded up 9.00 earlier, so a 14-point negative reversal there. Netflix, Inc. (NFLX) lost another 2.23 to 71.97. Universal Display Corp. (PANL) is falling hard here, down 3.40 to 28.82. Amazon.com Inc. (AMZN) was down 5.70 to 218.36. Goldman Sachs (GS) lost 1.12 to 97.08. International Business Machines Corp. (IBM) dropped 1.84 to 197.89.
Other point-plus losers of note included Dunkin' Brands Group, Inc. (DNKN) down 1.07 to 31.41. Cobalt International Energy, Inc. (CIE) lost 1.04 to 20.20. Sourcefire, Inc. (FIRE) gave back another 2.22 to 50.93. Cheniere Energy, Inc. (LNG) lost 1.40 to 14.03 and cracked hard today. Pharmacyclics Inc. (PCYC), which was up to 31.00 this morning, rolled over hard and closed at 28.14, down 1.17, nearly 3.00 off its high. SodaStream International Ltd. (SODA) lost 1.72 to 30.06. VirnetX Holding Corp (VHC) lost 1.07 to 28.98, Vertex Pharmaceuticals Incorporated (VRTX) was down 1.34 to 61.37. VIVUS Inc. (VVUS) got slammed for 1.31 to 22.90.
As you can see, they are breaking down all across the board. Even the strongest momentum stocks are rolling over.
The Direxion Daily Small Cap Bull 3X Shares (TNA) got hammered for 3.49 to 46.28, and The Direxion Daily Financial Bull 3X Shares (FAS) was down 5.17 to 77.53. The ProShares UltraShort Silver (ZSL) broke down 4.78 to 67.97.
On the upside, low-priced FriendFinder Networks Inc. (FFN) was up 56 cents to 1.71, or 48.7%, on 5.3 million shares, and Galena Biopharma, Inc. (GALE) jumped 35 cents to 1.60, or 28%, on 7.2 million shares.
Ctrip.com International Ltd. (CTRP) advanced 1.26 to 20.91. Millennial Media Inc. (MM) gained 1.00 even to 12.44. Sears Holdings Corporation (SHLD) ran 1.55 to 52.41.
The ultra-shorts had a big day. The ProShares Ultra VIX Short-Term Futures ETF (UVXY) jumped 1.90 to 21.32. The Direxion Daily Small Cap Bear 3X Shares (TZA) was up 1.46 to 22.67, and the Direxion Daily Financial Bear 3X Shares (FAZ) was up 1.61 to 27.74.
Stepping back and reviewing the hourly chart patterns, the sell-off continued with abandon today as momentum increased to the downside. When support was broken early on, they did rally back to complete a 1st-wave, and then a 2nd-wave failing right at intra-day declining topsline moving averages. Then another steeper leg ensued, with an early afternoon snapback, failing once again at resistance on both the NDX and S&P 500.
That resulted in a late rollover that took the NDX from 2547 down to 2509 in the last couple hours. The S&P 500 dropped from 1320 to 1305 in that same timeframe, and closed at the lows going away. There was a negative 1407 on the New York Stock Exchange earlier in the session, but that failed to close enough of a rally to break them back out, and at the end of the session, they closed extremely negative.
We’ll see how it goes tomorrow. We may be reaching a climatic-type sell off the lows shortly.
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