Closing Analysis

Oversold Enough to Perhaps Get a Rally - But Rollover May Come First

Closing Technical Market Analysis for Wed May 16th 2012

The stock market indices had another negative session. At the end of the day today, they closed at both the session lows and multi-week lows. As I said yesterday, and the day before, we’re not quite there yet. They appear to be in a downtrend that could go substantially lower in the next few days, if they don’t get going rather quickly from these zones. They are at the bottom of the current channels, but may accelerate, if they crack here.

The day started out, with a move up to test resistance, then immediately rolled over, and stair-stepped their way lower all day. They snapped back in late afternoon only to pull back into the close at the session lows.

Net of the day, the Dow was down 33.45, under 12,600 at 12,598.55, about 125 points off the high. The S&P 500 was down 5.87 at 1324.81, about 17 points off the high. The Nasdaq 100 was down 19.19 at 2561.56, 36 points off the high.

Advance-declines were worse than 2 to 1 negative on the New York Stock Exchange, and the same on Nasdaq. Up/down volume was 2 1/2 to 1 negative on New York, with a total volume of 860 million. Nasdaq traded 1.85 billion, and had a 2 1/2 to 1 negative volume ratio. board was surprisingly mixed. There were quite a few winners on our board today. Google Inc. (GOOG) was up 17.82 to 628.93, not that far from the high for the day. It was a very good day for that stock, while Apple Inc. (AAPL), which ran all the way down to 541, snapped back 5 points in the last minute to close down 7.09 at 546.08. Goldman Sachs (GS) was down 1.67 to 98.20. Netflix, Inc. (NFLX) continues to fall, down 3.28 to 74.20. Universal Display Corp. (PANL) gave back 1.56 to 32.22. SodaStream International Ltd. (SODA) lost 1.41 to 31.78.

The Direxion Daily Financial Bull 3X Shares (FAS) was down 3.26 to 82.70, and the The Direxion Daily Small Cap Bull 3X Shares (TNA) lost 1.05 to 49.77.

Stocks on the plus side included Rosetta Genomics, Ltd. (ROSG), which absolutely flew, reaching as high as 7.84, at which point it was up 360%, but did back way off and got slammed in the last hour back down to under 5.00 to 4.99, up 3.37, or 212%, on 6 million shares. OraSure Technologies Inc. (OSUR) was up 1.86 to 10.96, or 20%, on 7.5 million shares. Citi Trends (CTRN), which we traded, jumped 2.00 even to 14.18, or 16%, on 531,000 shares, which is a lot of volume for this stock. SINA Corporation (SINA) ran up 5.77 to 57.45, or 11%, on earnings, and traded 2 1/2 points higher, near 60 earlier in the day. Herbalife Ltd. (HLF) jumped a whopping 7.07 to 49.51, or 16.7%, on 18 million shares.

In addition, Logitech International SA (LOGI) was up 63 cents to 10.50. Threshold Pharmaceuticals, Inc. (THLD) gained 55 cents to 7.00. Radware Ltd. (RDWR) advanced 2.53 to 39.73. Groupon, Inc. (GRPN) gained 88 cents to 13.05. Pharmacyclics Inc. (PCYC), one of our favorites for the year, had an excellent day, up 1.98 to 29.32.

The ProShares UltraShort Silver (ZSL) was up 2.40 to 72.75. The ProShares Ultra VIX Short-Term Futures ETF (UVXY), which we traded today, jumped 1.23 to 19.41.

Stepping back and reviewing the hourly chart patterns, the indices were up early, but failed at resistance, rolled over and stair-stepped their way lower in a 5-wave decline, which ended near the session lows, and the multi-week lows which are near channel bottoms. At this point, they are oversold enough to perhaps get a rally. We shall soon see, but we may rollover first.

Good Trading!


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