Sharp Sell-Off Has Silver Lining as Key Support Holds
By Harry Boxer, The Technical Trader (
www.thetechtrader.com)
It was quite a negative way to start the week and not a good sign for the bulls, although key support at last week's lows did hold in the afternoon part of the session. In the morning they gapped down hard, bounced, formed mini bear flags and then went sharply lower all morning until about the lunch hour, at which point they stabilized and then went back and forth for the rest of the afternoon, rolling over late in the session to nominal new lows and then bouncing in the last 15 minutes.
Net on the day the Dow was down just under 242, the S&P 500 25.36, and the Nasdaq 100 41.75, about 2 1/2 percent. The Philadelphia Semiconductor Index (SOXX) was down 5.70.
Advance-declines were nearly 3 1/2 to 1 negative on New York and nearly 4 to 1 negative on Nasdaq. Up/down volume was about 7 1/2 to 1 negative on New York on very light total volume of about 860 million. Nasdaq traded a little more than 1.4 billion and had a ratio of about 9 to 1 negative on advancing over declining volume.
So, very low volume was traded on both exchanges today.
TheTechTrader.com board was mostly negative. There were some point-plus gainers. Portfolio position Sequenom (SQNM) broke out of a 5-week flag, got up to its July high at 23 and backed off and closed at 22.33, up 1.34 on 1.87 million. AgFeed Industries (FEED) gained 1.73 to 12.32 on 1 1/3 million. The SDS (ultrashort SPY), as expected on a very negative day, was up 2.45, with the QID (ultrashort Q's) up 1.42.
Other gainers of note, Almost Family (AFAM) advanced another 98 cents to 43.69, hitting 44.70, a new all-time high, intraday. DryShips (DRYS) advanced 96 cents. Canadian Solar (CSIQ), a portfolio position, was up 57 cents.
On the downside, point-plus losers were plentiful. Chart of the Week SunPower (SPWR) dropped 3.65 to 92.94, Fuel Systems Solutions (FSYS) was down 3.30 to 53.51, portfolio position Energy Conversion Devices (ENER) at 77.07 was down 2.31 after reaching as high as 81.62 in the morning, and A-Power Energy (APWR) cracked support and dropped below 18, closing at 17.98, down 2.67.
The Q's (QQQQ) dropped 1, and Focus Media (FMCN) lost 1.77.
Other stocks of note on the downside, Chart of the Week Blue Coat Systems (BCSI) backed off 95 cents, Lehman (LEH) lost another 96 cents, and VisionChina (VISN) was down 51 cents to 18.69.
Stepping back and reviewing the hourly chart patterns, the best that can be said about today is that despite the sharp sell off the indices did hold last Thursday's weekly lows on the Nasdaq 100 and the S&P 500, so key support now exists around the 1886 level on the NDX and the 1262-64 zone on the S&P 500. We'll be watching that carefully to see if the indices do break down and head lower, or whether they can stem the tide here.
Good trading!
Harry
