Closing Analysis

Decent Snapback Session as Indices Pare Losses

Closing Technical Market Analysis for Sat August 7th 2010

The stock market indices were very volatile on Friday, but at the end of the day only closed narrowly lower. The day started with a big gap down. They rallied back very sharply, and then rolled over hard in the morning, taking the Nasdaq 100 from 1905 down to 1803.

The S&P 500 at that point dropped from 1123 down to 1107. They bounced, consolidated, and then when it was apparent they were not going to rollover but instead rallied, that accelerated the short covering. They rallied sharply late afternoon into the close, bringing the Dow back about 140 points.

Net on the day, the Dow closed down 21.42 on the day at 10.653.56. The S&P 500 came back about 14 points and closed down 4.17 at 1121.64. The Nasdaq 100 closed down at 2.07 at 1902.88, about 30 points off its low.

Technicals came back in the end, but weren’t able to get in the plus column. Declines led advances by about 8 to 7 on the New York Stock Exchange, and by about 3 to 2 on Nasdaq. Up/down volume was 2 to 1 negative as well on New York on total volume of a light 935 million. Nasdaq traded a little over 1.8 billion and had about a 5 to 4 negative ratio of declining volume over advancing volume. board, as a result, was mixed, and showed as many gainers as losers. Leading the way on the plus side was China Agritech Inc. (CAGC), up 1.52 at 15.54 as Chinese stocks were strong today. That also included China Automotive Systems Inc. (CAAS) up 90 cents at 20.70, Trina Solar Ltd. (TSL) 93 cents at 23.77, and China Green Agriculture, Inc. (CGA) 49 cents at 11.50.

Power-One Inc. (PWER) was up 46 cents at 12.35, Dendreon Corp. (DNDN) up 58 cents at 39.05, and Cirrus Logic Inc. (CRUS) 32 cents at 19.92.

On the downside, large-cap stocks suffered losses. Google Inc. (GOOG) lost 7.88 at 500.22, International Business Machines Corp. (IBM) down 1.04 at 130.14, and Apple Inc. (AAPL) down 1.61 at 260.09. Those were the point-plus losers.

Stepping back and reviewing the hourly chart patterns, the indices were down sharply at the opening, rallied sharply, dropped again even more sharply, and took out support, but then rallied back with a vengeance in the afternoon and took back 85% of its losses.

So, it was a decent snapback session after some sharp losses in the morning. We’ll see what that translates into Monday.

Good Trading!


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