Closing Analysis

Indices Recover Sharply After Big Opening Down Gap RSS

Closing Technical Market Analysis for Wed February 24th 2010

The stock market indices ended lower on Thursday, but came way off the lows in the afternoon on what appeared to be a short recovering rally, which left the indices near the highs for today going away at the end of the session. That was despite the fact that the big gap down wasn’t quite filled on the Dow and S&P 500. The Nasdaq 100, however, took it all back and gained a very small fraction.

The day started out with a big gap down. They initially bounced but not very strongly, then retested the lows, and when that was successful they started to move again and retested the highs before backing off. When no real selling appeared they came on strongly with about two hours to go and then spiked up sharply. After a late afternoon consolidation on the NDX and SPX, they exploded to the upside in the last 90 minutes.

Net on the day, they closed down 53.13 on the Dow at 10,321.03, about 140 points off its morning low. The S&P 500 jumped from 1086 to 1103 and closed right near there, down just 2.30, and the Nasdaq 100 jumped from 1781 to nearly 1813, and closed at 1812.92, up 40 cents on the day. The Philadelphia Semiconductor Index (SOXX) came back about 9 points, closing down just .88 today.

It was a very impressive afternoon rally as the indices failed to follow through to the downside after an early huge gap cracked indices to new pullback lows.

Technicals ended flat on the New York Stock Exchange on advance-declines and on up/down volume as well. Total volume on New York was just over 1.1 billion. Nasdaq traded over 2.2 billion and had a 7 to 4 negative ratio. Advance-declines were 15 to 11 negative as well on Nasdaq. board was very mixed today. There were no point-plus gainers or losers on our board other than China Agritech (CAGC), which jumped more than 3.00 off its low to close up 1.44 for the day at 23.67.

Other gainers of note were Genco Shipping (GNK) at 21.17 up 84 cents, Clean Energy Fuels (CLNE) at 17.97 up 71 cents, China Automotive (CAAS) 20.07 up 85 cents, Brigham Explorations (BEXP) 16.37 up 68 cents, and McMoRan (MMR) 16.87 up 63 cents, as junior oils were strong today.

Impax Laboratories (IPXL) at 15.47 was up 57 cents, and A-Power Energy (APWR) at 13.74 was up 48 cents. Those were among the leading fractional gainers.

Among losers the biggest point drop today was by the U.S. Oil Fund ETF (USO), which closed at 38.11, off 88 cents. Other than that just small fractional losers across the board, if they were down at all.

Stepping back and reviewing the hourly chart patterns, a huge gap to the downside cracked support early. After a couple hours of consolidation and what appeared to be bear flags forming, no selling appeared. At that point the indices then exploded and ran hard as short covering kicked in and the indicies ended up closing near the session highs.

Quite the surprise after the early start, but nevertheless the indices closed near their short-term declining tops lines and moving averages resistance levels on the hourly charts and have some work to do up in the zone where more formidible resistance exists just above today’s closing prices. We’ll see how it goes tomorrow.

Good trading!


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- Harry Boxer

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