Closing Analysis

Dow Plunges 1000, Closes Down 347, in Historic Session

Closing Technical Market Analysis for Thu May 6th 2010

The stock market had an epic day today as the indices rolled over in the morning, accelerated in the afternoon, and then plunged with a huge spike down on heavy volume, reaching a negative tick of nearly 1700. The Nasdaq 100 dropped from over 1960 to nearly 1750, or 210 points. The Dow dropped more than 1000 and the S&P 500 over 100 points. But a vicious snapback rally ensued, and they took back about two-thirds to 3/4 of the losses.

Net on the day, the Dow closed down 347.80 after being down 1000 at 10,520.32, and the S&P 500 down 37.72 to 1128.15, 63 points off its low. The Nasdaq 100 at 1893.75, nearly 140 points off its low, was down 64.51.

Advance-declines were 173 up and 3016 down on the New York Stock Exchange, with up/down volume at 108 million shares up and 2.46 billion down. That was about a 24 to 1 negative ratio and certainly was climatic. Nasdaq advance-declines were 341 up to 2434 down, and up/down volume was about 16 to 1 negative ratio today on total volume of 4.4 billion traded. That could be the heaviest volume in history. board, except for the ultra-shorts, was all down today and sharply. Leading the way down was Baidu, Inc. (BIDU) down 21.51 at 688.02, but that was 43 points off its low. Google Inc. (GOOG) dropped 11.09 to 498.67, but closed 38 points off its low. Big, big reversals.

Dendreon Corp. (DNDN) was down 5.30 to 47.60, about 5 points off its low. Apple Inc. (AAPL) fell 9.74 to 246.26, with a low of 199.25, so 47 points off its low. Inc. (AMZN) lost 2.22 to 128.71, closing 8.00 off its low.

Other point-plus losers were Las Vegas Sands Corp. (LVS) at 21.65 down 1.66, Northern Oil and Gas, Inc. (NOG) in a weak oil group at 14.48 down 1.37, Houston American Energy Corp. (HUSA) at 11.20 down 1.28, and Brigham Exploration Co. (BEXP) at 17.31 down 1.31. Those are just a few of the junior oils that got hammered today.

Acme Packet, Inc. (APKT) dropped 1.93 to 25.03, China Agritech Inc. (CAGC) 1.34 to 13.76, Cree Inc. (CREE) 1.95 to 69.40, and Goldman Sachs Group Inc. (GS) 5.87 to 142.32.

The ultrashort ETFs, needless to day, were sharply higher. The Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) gained 5.91 to 56.04, but that was nearly 6.00 off its high at 61.90. The Direxion Daily Large Cap Bear 3X Shares (BGZ) closed at 15.11 up 1.37 with a 17.54 high, and the Direxion Daily Financial Bear 3X Shares (FAZ) ended at 14.29, up 1.55 with a 15.97 high. The UltraShort Real Estate ProShares (SRS) at 28.14 was up 2.04, but reached 33.50 today, and the iPath S&P 500 VIX Short-Term Futures ETN (VXX) at 26.12 was up 2.79, reaching as high as 31.44.

Stepping back and reviewing the hourly chart patterns, the indices certainly had a vicious drop and a vicious rally back up as well. Needlessly to day, it will be interesting to see what the indices do in terms of a follow-through tomorrow, on Friday of all days. We’ll see what happens.

Good trading!


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