Relentless Onslaught Continues
By Harry Boxer, The Technical Trader (
www.thetechtrader.com)
The markets suffered another down-session in a relentless onslaught, particularly in the financials, which pressured the market all day. But they did start out with a strong gap up to the upside on strong index futures based on news over the weekend that the Fed was basically bailing out Freddie Mac and Fannie Mae. However, after the initial opening gap it was downhill all the way. The indices sold off sharply in the morning, bounced mid-day, tested resistance but couldn't take it out, and then came back and retested the lows. When the lows held for the third time today the indices staged strong rally, which lasted about 30 min. With about a half hour to go they reached their afternoon peak but failed to follow through and rolled over just as sharply and closed not far off the lows for the day.
Net on the day the Dow was down another 45, the S&P 500 was down 11 and change, and the Nasdaq 100, 12.85. The Philadelphia Semiconductor Index (SOXX) was down 2.69.
The technicals definitely confirmed the negative day today. Advance-declines were 3 to 1 negative on New York and 2 1/2 to 1 negative on Nasdaq. Up/down was 2 1/2 negative on New York on total volume of a lighter 1.4 billion. Nasdaq traded more than 2 billion and had nearly a 4 to 1 negative ratio on advancing over declining volume.
TheTechTrader.com board was very mixed. There were some outstanding gainers, particularly two of our model portfolio stocks. Canadian Solar (CSIQ) came out with strong upside guidance and ran 6 points on 4 million shares, closing at 38.39. Sequenom (SQNM) reached over 20 for the first time in six years, up 1.86 at 20.06. Also in the solar energy sector, JA Solar (JASO) was up 85 cents and Solarfun (SOLF) up 71 cents. Energy Conversion Devices (ENER) gained 82 cents.
But it was a mixed picture in that sector as A-Power Energy (APWR), despite a very strong early morning run up to 31.80, backed off 5 points, closing at 26.88. It had a huge negative reversal day, down 1.65 on the day after being up 3 1/2 points.
Aluminum Corp. of China (ACH) dropped 1.31, and Pyramid Oil (PDO) fell 1.60 to 15.20, along with Washington Mutual (WM), which got slammed hard from a 5.22 high down 3.03, closing at 3.23, down 1.72 on 210 million shares. It appeared on a list of banks that may be in jeopardy as well.
Stepping back and reviewing the hourly chart patterns, the indices retested Friday's lows on three occasions today, did not break, but closed poorly and down on the day. We'll have to see if they follow-through to the downside, take out the lows and spike them down further and right now the trend is your friend, and the trend is still down.
Until they take out key overhead resistance for starters at the 1840-45 zone on the Nasdaq 100 and at the 1255-60 zone on the S&P 500, the indices have little chance of reversing this trend, despite the fact that the technicals and oscillators are stretched to the downside.
Good trading!
Harry
