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Mon August 17th 2009
Big Down Gap Starts the Week in a Negative Fashion
by Harry Boxer, www.TheTechTrader.com

The indices started the week on a sharp down note. Pre-market futures were sharply lower, as the market gapped down big time, made lower lows in the morning, bounced around mid-day, consolidated, and then rolled over towards the end of the day, closing not far off the lows for the session.

Net on the day the Dow was down 186 at 9135.34, the S&P 500 down 24.36 at 979.73, and the Nasdaq 100 down 46.69 at 1564.89.

The technicals were sharply and decidedly negative. Advance-declines were nearly 9 to 1 negative on New York and about 5 to 1 negative on Nasdaq. Up/down volume was even worse, with only 75 million shares traded to the upside and more than 1.1 billion to the downside on New York. Nasdaq traded 1.7 billion to the downside and 144 million to the upside.

So, extremely negative ratio, and a decidedly negative downside thrust that broke the overall patterns for the last 2-3 weeks and may have set off or triggered a new downtrend.

TheTechTrader.com board was vastly negative with many point-plus losers. The Direxion Financial Bull 3x Shares (FAS) dropped 8.64 to 64.97. Goldman Sachs (GS) lost 5.48 to 157.25, Potash (POT) 4.63 to 91.12, Mosaic (MOS) nearly 3 at 51.12. The iShares MSCI Brazil Index ETF (EWZ) gave back 2.14 to 57.66, the iShares FTSE/Xinhua China 25 Index (FXI) 1.91 to 79.13, China Green Agriculture (CGA) 1.19 to 12.58, and Canadian Solar (CSIQ) 1.02 to 15.52.

Among other financials, Wells Fargo (WFC) dropped 1.43 to 26.30, Morgan Stanley (MS) 1.25 to 28.54, JP Morgan (JPM) 1.72 to 40.73, and Bank of America (BAC) 83 cents to 16.56.

OncoGenex Pharmaceuticals (OGXI) lost 1.80 to 28.19.

On the plus side, ultrashorts led the away.  The Direxion Financial Bear 3x Shares (FAZ) was up 2.92 to 28.65, portfolio position Direxion Small Cap 3x Bear (TZA) 1.30 to 16.89, and the UltraShort Real Estate ProShares (SRS) 1.21 to 13.49. The Direxion Large Cap Bear 3X Shares (BGZ) jumped 1.92 to 27.71.

Stepping back and reviewing the hourly chart patterns, a big gap down at the opening broke key support, and the indices moved lower for most of the session, closing near the session lows. It’ll be very interesting to see if they get downside follow-through, but we may be headed lower for a bit here.

Good trading!

Harry

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