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Closing Technical Market Analysis for Tue October 25th 2011
The stock market indices had a definitive down day today coming off of extremely overbought oscillators, so the move didn't surprise us.
The day started out with a gap to the downside. They snapped back in a 3-wave corrective move retracing 50% of the initial loss, and then came down to test the lows. The S&P 500 formed a midday wedge, and the NDX made lower lows. They then snapped back mid-afternoon, but then rolled over hard at the last hour and closed down near the session lows.
Net on the day, the Dow was down 207.00 at 11,706.62, the S&P 500 down 25.14 at 1229.05, just a couple points of the low, and the Nasdaq 100 down 48.55 at 2335.87, about 3 points off its low.
Advance-declines were 5 to 1 negative on the New York Stock Exchange, and about 4 1/2 to 1 negative on Nasdaq. Up/down volume was about 11 to 1 negative on New York, with total volume of just about 1 billion shares traded today. Nasdaq traded 1 3/4 billion shares and had a 5 to 1 negative volume ratio.
TheTechTrader.com board was mostly lower today, led by some large-cap stocks on the NDX. Netflix, Inc. (NFLX) was down 41.47 to 77.37, First Solar, Inc. (FSLR) down 14.68 to 43.27 after their CEO resigned, and Apple Inc. (AAPL) down 8.00 to 397.77.
In addition, Travelzoo Inc. (TZOO) was down 2.29 to 29.16, Universal Display Corp. (PANL) down 3.67 to 47.96, Molycorp, Inc. (MCP) 2.16 to 36.83, and Goldman Sachs (GS) 3.54 to 100.44.
There were a few gainers on the long side today. They included Unisys Corporation (UIS) up 6.28 to 26.30 on great earnings, LCA-Vision Inc. (LCAV) 64 cents to 3.09, Twin Disc Inc. (TWIN) 6.19 to 34.74, low-priced Spherix Inc. (SPEX) 36 cents to 2.57, and SMTC Corp. (SMTX) 71 cents to 2.16.
Other gainers of note included Capella Education Co. (CPLA) up 3.71 to 35.03, Quest Diagnostics Inc. (DGX) 5.52 to 56.50, and Centene Corp. (CNC) 2.67 to 31.74.
The ultra-shorts had a big day today. VelocityShares Daily 2x VIX ST ETN (TVIX) was up 6.61 to 56.19, Direxion Daily Small Cap Bear 3X Shares (TZA) up 2.63 to 34.97, and Direxion Daily Financial Bear 3X Shares (FAZ), which we traded today, up 3.47 to 45.71.
The Direxion Daily Small Cap Bull 3X Shares (TNA) ultra-long was down 3.85 to 43.16.
Stepping back and reviewing the hourly chart patterns, the indices had a very distinct, different pattern today. Other than at the opening, which was a sharp down move, the NDX moved in stair-step fashion in a 5-wave decline into the close. The S&P 500 first formed a large coiling-wedge pattern until midday when it finally rolled over and snapped back to retest, and then got hammered at the close, closing right near the 50-day moving average on the hourly charts.
It should be interesting to see what kind of downside follow-through we get, because we are at support at this zone here. This will be a key test for the indices.
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