Closing Analysis

Indices Rally Off Lows to Close Mixed RSS

Closing Technical Market Analysis for Mon September 19th 2011

The stock market indices ended mixed today, but it was an ugly session from the get-go. The indices gapped sharply lower, and then dropped suddenly thereafter to reach down to 2260 on the Nasdaq 100 and around 1188 on the S&P 500. They bounced sharply on the NDX to fill the gap, but the S&P 500 did not fare anywhere near as well, recovering only about a third of the way. They then backed off to retest in about a 50 percent retracement of the rally on the NDX and nearly the entire rally on the S&P 500. Then they came back up in the afternoon, exploding late in the session to reach 2320 NDX and 1210 S&P 500, but pulled back in the last 20-30 minutes to prevent the indices from going positive on the Dow and S&P 500.

Net on the day, the Dow was down 108.08 at 11,401.01, 150 points off the low. The S&P 500 was down 11.92 at 1204.09, about 15 points off its low. The Nasdaq 100 was up 2.67 at 2308.76, about 48 points off its low.

The technicals, however, were very negative today. Advance-declines were 3 1/2 to 1 negative on the New York Stock Exchange, and nearly 4 to 1 negative on Nasdaq. Up/down volume was 5 to 1 negative on New York, with total volume of 900 million shares traded today. Nasdaq traded almost 2.9 billion shares, but had a 3 1/2 to 1 negative volume ratio.

It was a very negative day at the end despite the improvement in the indices. board was mixed with both sharp gainers and losers on our board. Leading the way today on the upside was Apple Inc. (AAPL), up 11.13 to 411.63, closing a point off the high today, which was an all-time new high.

In addition, Universal Display Corp. (PANL) was up 2.76 to 58.36, MAKO Surgical Corp. (MAKO) up 4.21 to 40.48, Pharmasset, Inc. (VRUS) 2.27 to 78.58, and Wright Medical Group Inc. (WMGI) 1.37 to 17.40.

The ultra-short ETFs had a good day today with the Direxion Daily Financial Bear 3X Shares (FAZ) up 3.94 to 57.33, and the VelocityShares Daily 2x VIX ST ETN (TVIX) 3.54 to 59.05, although that was 3 1/2 points off the high. The Direxion Daily Small Cap Bear 3X Shares (TZA) gained 2.13 to 42.77, with the Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) up 2.10 to 25.13 and the Direxion Daily Large Cap Bear 3X Shares (BGZ) ahead by 1.08 to 38.99.

Other gainers of note included Sequans Communications S.A. Ame (SQNS), up 71 cents to 7.37, or nearly 11%. Optimer Pharmaceuticals, Inc. (OPTR) rose 1.62 to 15.66, or 11 1/2%, Regeneron Pharmaceuticals, Inc. (REGN) 4.72 to 64.92, and Inc. (STMP) 1.38 to 23.78, after trading over 25 today. IPG Photonics Corporation (IPGP) advanced 3.26 to 62.90, and Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) 2.40 to 72.86.

On the downside, Netflix, Inc. (NFLX) was a big loser as it continues to drop, down 11.44 to 143.75.

Other losses of note included First Solar, Inc. (FSLR) down 1.79 to 83.91, Brigham Exploration Co. (BEXP) 1.13 to 29.44, and Inc (YOKU) 1.09 to 18.99.

Several of the loss leaders on our board today included some of the Boxer Shorts, with Royal Caribbean Cruises Ltd. (RCL) down 95 cents to 24.27, IPC The Hospitalist Company, Inc. (IPCM) 1.39 to 39.79, Freeport-McMoRan Copper & Gold Inc. (FCX) 1.37 to 40.22, and Domtar Corporation (UFS) 2.73 to 80.47.

Also, the Direxion Daily Small Cap Bull 3X Shares (TNA) dropped 2.34 to 43.58, and Direxion Daily Financial Bull 3X Shares (FAS) was down 1.02 to 13.06.

Stepping back and reviewing the hourly chart patterns, the indices were down sharply, had a big down gap at the opening, went a bit lower, and then rallied back, consolidated midday, and came on again in the afternoon to break out to new highs for the NDX, but failed to confirm on the S&P 500.

That may be setting up a negative divergence. We’ll see soon enough.

Good Trading!


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- Harry Boxer

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