Closing Analysis

Sharp Losses Despite Late Snapback

Closing Technical Market Analysis for Fri May 14th 2010

Well, the week ended on quite the negative note, as the stock market indices started sharply lower and moved lower for most of the morning. About 11:30 they bounced, then backed and filled for several hours in what appeared to be a basing attempt. After a late afternoon retest of the lows on the S&P 500 for the third time, they held, then snapped back sharply, and for the last 30 minutes took back a big chunk of the losses.

Net on the day, the Dow was still down by 162.79 at 10,620.16, closing 83 points off its low. The S&P 500 down 21.76 at 1135.68, 9 points off its low, and Nasdaq 100 38.42 at 1907.10, 22 points off its low, and at one point down as much as 60.

Advance-declines were about 8 to 1 negative today on the New York Stock Exchange, and a little less than 6 to 1 negative on Nasdaq. Up/down volume was 20 to 1 negative on New York on total volume of a little over 1 1/2 billion shares. Nasdaq traded 2.6 billion today, but had an 8 to 1 negative ratio.

So, it was a decidedly negative day on Wall Street to end the week. board, as a result, was mostly down today other than just a few issues. Hauppauge Digital Inc. (HAUP), after yesterday’s big announcement, jumped another 90 cents to 3.93, although it traded as high as 4.85 at one point on 29.2 million shares traded.

Neostem, Inc. (NBS) was up 47 cents to 3.41, and UltraLife (ULBI) up 31 cents to 4.52.

In the ETF sector, the Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) jumped 2.68 to 47.82, ProShares UltraShort Real Estate (SRS) 1.62 to 26.62, iPath S&P 500 VIX Short-Term Futures ETN (VXX) 2.14 to 26.86, and the Direxion Daily Financial Bear 3X Shares (FAZ) 1.08 to 13.75.

On the downside, multiple point-plus losers included Apple Inc. (AAPL) down 4.54 to 253.82, (AMZN) down 2.94 to 128.53, Cree Inc. (CREE) down 3.82 to 72.10, and Google Inc. (GOOG) down 3.35 to 507.53.

Among other point-plus losers of note, RINO International Corp (RINO) lost 1.01 to 15.44, Goldman Sachs (GS) 1.42 to 143.23, Dendreon Corp (DNDN) 1.64 to 43.76, China Automotive Systems Inc. (CAAS) 1.24 to 19.41, Baidu Inc. (BIDU) 1.66 to 73.98, Brigham Exploration (BEXP) 1.25 to 16.96, and Acme Packet, Inc. (APKT) 1.01 to 25.19. Those were the point-plus losers today.

Stepping back and reviewing the hourly chart patterns, the indices were down sharply in a 3-wave decline until just before lunch hour. Over the next several hours they backed and filled, then tried to consolidate, but when they were unable to make any further downturn progress they experienced some late short covering and rallied to take back a portion of the losses, but still ended with sharp losses for the day. We’ll see what kind of follow-through, if any, we get to the downside Monday.

Good trading!


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- Harry Boxer

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