Closing Analysis

Indices Close Ahead, but Well Off Highs

Closing Technical Market Analysis for Wed October 12th 2011

The stock market indices ended higher again, but a late sell-off took them way off the highs and may have signaled the beginning of a pullback as the indices are quite oversold in this zone. There was some late, sharp action on the upside on the ultra-shorts, which could also be indicating that the indices are topping here. We’ll see how it goes.

The day started out with a big gap to the upside, and a strong run to new highs at almost 2332 on the Nasdaq 100 and 1214 on the S&P 500. They backed and filled, tried to break out on several occasions on the NDX, but failed to do so despite the fact that the S&P 500 twice made even higher highs at 1218, and then 1220. That probably led to the late sell off. There was a 3-wave corrective move, at the very least, that took the NDX from 2332 down to 2305. The S&P 500 dropped from 1220 to 1207.

Net on the day, the Dow was up 102.55 at 11,518.85. That was 107 points off the high, however, at 11,625. The S&P 500 was up 11.71 at 1207.25, 13 points off its high. The Nasdaq 100 was up 12.26 at 2307.18, down from 2331.

Advance-declines were 4 to 1 positive on the New York Stock Exchange, and 3 to 1 positive on Nasdaq. Up/down volume was almost 5 1/2 to 1 positive on New York, with total volume of less than 1.2 billion shares traded today. Nasdaq traded 1.9 billion shares, and had a little less than a 3 to 1 positive volume ratio. board had a mixed session, but it was mostly positive today. Netflix, Inc. (NFLX) was up 4.96 to 113.62, and Travelzoo Inc. (TZOO) 2.29 to 30.18, although it was 2 points high earlier. LSB Industries Inc. (LXU) jumped 1.57 to 35.21, and IPG Photonics Corporation (IPGP) 2.13 to 56.11.

In addition, Molycorp, Inc. (MCP) gained 1.35 to 37.21, International Business Machines Corp. (IBM) 1.12 to 186.12, Goldman Sachs (GS) 2.41 to 99.11, and First Solar, Inc. (FSLR) 1.17 to 57.08. Apple Inc. (AAPL) was up 1.90 to 402.19, Inc. (AMZN) 1.33 to 236.81, Chipotle Mexican Grill, Inc. (CMG) up 4.05 to 314.00 even.

The Direxion Daily Small Cap Bull 3X Shares (TNA) moved up 1.86 to 40.90.

Other gainers of note included A123 Systems, Inc. (AONE), up 88 cents to 4.19, or 26.6%, and Gentiva Health Services Inc. (GTIV) up 66 cents to 4.50, or 17%. Liz Claiborne Inc. (LIZ) rose 1.74 to 6.84, or 34%; TAAR Surgical Company (STAA) 92 cents to 8.84, or 12%; Pacific Biosciences of California, Inc. (PACB) 87 cents to 3.96, or 28%; and W&T Offshore Inc. (WTI) 1.71 to 16.61, or 11 1/2%. SouFun Holdings Ltd. (SFUN) advanced 1.75 to 11.55, MELA Sciences, Inc. (MELA) 45 cents to 6.21, or nearly 8%, and Frontline Ltd. (FRO) 74 cents to 5.74, or 15%.

Also, the Direxion Daily Financial Bull 3X Shares (FAS) was up 82 cents to 12.65, and the ProShares UltraShort DJ-UBS Crude Oil (SCO) jumped 25 cents to 54.90.

On the downside, SodaStream International Ltd. (SODA) dropped 1.24 to 36.26, Coffee Holding Co.Inc. (JVA) 96 cents to 11.95, Green Mountain Coffee Roasters Inc. (GMCR) 3.72 to 89.90, Research In Motion Limited (RIMM) 53 cents to 23.88, and Incorporated (PCLN) 7.72 to 485.54.

The rest of the ultra-shorts had a pretty rough day today. The VelocityShares Daily 2x VIX ST ETN (TVIX) fell 8.63 to 56.48, the Direxion Daily Financial Bear 3X Shares (FAZ) 3.71 to 51.12, the Direxion Daily Small Cap Bear 3X Shares (TZA) 1.82 to 38.69, the Direxion Daily Large Cap Bear 3X Shares (BGZ) 1.13 to 37.25, the Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) 2.15 to 23.00, and the iPath S&P 500 VIX Short-Term Futures ETN (VXX) 3.07 to 42.97.

Stepping back and reviewing the hourly chart patterns, the indices gapped up at the opening, ran sharply, but could not get through 2332 NDX multiple times, while making new highs on the S&P 500. Negative divergences may have caused a late rollover.

We‘ll see what kind of follow-through we get tomorrow.

Good Trading!


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