Closing Analysis

Nominal Losses in 4th Consecutive Consolidation Session

Closing Technical Market Analysis for Thu August 5th 2010

The stock market indices had a vacillating-type, consolidation day, as the four-day sideways move continued today. Although they closed down a little bit today, the path was different.

They opened sharply lower, bounced back quickly and then rolled over. The Nasdaq 100 made new lows for the day, but the S&P 500 did not, which set up a positive divergence. That caused a 3-wave rally, bringing the NDX back from 1892 to 1908 in the afternoon. The SPX at that point rallied from 1119 1/2 to 1126 1/2. They rolled over in the last half hour, but in the last 5- minutes snapped back again to pare the losses.

Net on the day the Dow was down 5.45 at 10674.98, the S&P 500 1.43 at 1125.81, and the Nasdaq 100 down 4.25 at 1904.95.

Advance-declines were about 3 to 2 negative on New York and about 2 to 1 negative on Nasdaq. Up/down volume was about 3 to 2 negative as well on New York and about 5 to 3 negative on Nasdaq.

A lot of stocks we follow did well today. Transocean (RIG) on news of capping of the well jumped 4.37 to 57.93 to lead the gainers on our board today.

Polypore International (PPO) advanced 2.70 to 26.89. Affymax (AFFY) was up 1.70 to 8.13. RINO International (RINO) gained 1.30 to 15.21. BP (BP) was up 1.29 to 40.68. And in the ETF sector, the Direxion Daily Small Cap Bear 3X Shares (TZA) gained 1.01 to 30.92.

Other gainers of note, Trina Solar (TSL), our favorite junior solar stock, was up 40 cents to 22.84. Pactiv (PTV) advanced 39 cents to 30.83, IDT Corp (IDT) 1.11 to 18.97, and China Agritech (CAGC) 69 cents to 14.02.

On the downside, Cree Inc. (CREE) was the loss leader, down 3.55 at 70.18. Apple (AAPL) dropped 1.28 to 261.70, and Dendreon (DNDN) 1.31 to 38.47. Those were the only point-plus losers on our board.

Among fractional losses of note, Cirrus (CRUS) gave back 80 cents to 19.60, OmniVision (OVTI ) 48 cents to 23.60, Tesla Motors (TSLA) 81 cents to 20.45, and Valassis Communications (VCI) 82 cents to 34.03.

Other losses on our board were just very fractional.

Stepping back and reviewing the hourly chart patterns, the indices were down in the morning, up mid-day and early afternoon, and backed off into the last hour only to snap back again in the last 5-10 minutes to pare the losses and end just fractionally lower on the day. So it was a nominally lower day, but overall part of a consolidation process that has continued over the last four sessions.

I expect with the labor report tomorrow we may get a breakout of the trading range. We’ll see how it goes.

Good trading!


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- Harry Boxer

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