Closing Analysis

Late Rally Pares Session's Losses

Closing Technical Market Analysis for Tue September 6th 2011

The stock market indices had a down day today, but they came way off the lows, particularly in the last half hour when they exploded to take back a big chunk of the losses.

The day started out with a big gap down. They bounced and then made lower lows, but couldn’t follow through, and then started a snapback rally that went five waves. The first wave got up to 2140 on the Nasdaq 100, the second wave up to 2165, and the third wave to over 2170. On the S&P 500 those levels were 1155, 1164, and then 1167. The bottom line is that the indices closed at the highs for the day going away.

Net on the day, the Dow was down 100.96 at 11,139.30, nearly 200 points off the low. The S&P 500 was down 8.73 at 1165.24, about 25 points off its low, and the Nasdaq 100 fell just 0.23 at 2167.60, 55 points off its low, nearly taking back its entire loss.

Advance-declines were 2 1/2 to 1 negative on the New York Stock Exchange, and about 2 to 1 negative on Nasdaq. Up/down volume was 4 to 1 negative on New York, with a total volume of 1 billion shares traded. Nasdaq traded 1.7 billion shares, and had a little less that 2 to 1 negative volume ratio.

They came way off the lows but couldn’t get back into the plus column. board was mixed, with gains by some of the large-cap stocks that led the market today. Apple Inc. (AAPL) was up 5.69 to 379.74, Inc. (AMZN) up 6.18 to 216.18, about 12 points off its low in a nice reversal, and Netflix, Inc. (NFLX) closed up 5.66 at 218.77, about 10 points off its low.

Other gainers on our board today included Pharmasset, Inc. (VRUS) up 6.33 to 70.53, Regeneron Pharmaceuticals, Inc. (REGN) up 3.77 to 68.55, SodaStream International Ltd. (SODA) 2.86 to 38.45, International Paper Co. (IP) up 2.28 to 27.77 after acquiring Temple-Inland Inc. (TIN), VeriSign Inc. (VRSN) 2.05 to 32.06 on rumors of a take-over, and Hansen Natural Corporation (HANS) up 1.71 to 85.34.

Ultra-short ETF VelocityShares Daily 2x VIX ST ETN (TVIX) was up 3.37 to 59.58 and traded to nearly 67 earlier in the day. The iPath S&P 500 VIX Short-Term Futures ETN (VXX) jumped 1.24 to 42.72, but had traded 3 points higher today.

In addition, low-priced Mitek Systems Inc. (MITK) was up 74 cents to 12.67, new all-time highs today. That was fantastic relative strength there. Hollysys Automation Technologies, Ltd (HOLI) was up 72 cents to 6.64 on news of an inside stock buy.

On the downside, Goldman Sachs (GS) was down 2.50 to 104.56, International Business Machines Corp. (IBM) 1.87 to 165.11, Molycorp, Inc. (MCP) 1.51 to 53.30, Inc (YOKU) 1.37 to 21.75, and First Solar, Inc. (FSLR) 2.51 to 87.59.

Stepping back and reviewing the hourly chart patterns, the indices came down with a big gap, and then had an up-channel the rest of the day in a 5-wave advance, particularly in the last half hour when they exploded into the close to take back the vast majority of the losses and nearly all of them on the Nasdaq 100.

We’ll see what kind of follow-through there is tomorrow.

Good Trading!


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- Harry Boxer

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