Stock Market Indices Suffer a Nasty Spill

By: Harry_Boxer

The stock market indices suffered a nasty spill in a very negative session today. They gapped lower at the opening, went down sharply in the morning despite a 15-minute bounce, and then rolled over hard to the session lows just before noon when they tagged 1811 on the Nasdaq 100 and 1070.66 on the S&P 500.

At that point they were steeply oversold intraday, and managed to stage a countertrend rally, more of a corrective-type move, that saw the NDX bounce back in a 3-wave move that took it from 1811 to 1830. The SPX at that point moved from the 1071 area to just under 1080, but resistance at 1830 NDX and 1080 SPX proved formidable, and they pulled back in the last hour and closed solidly negative today.

Net on the day, the Dow was down 144.33 at 10,271.21. The S&P 500 was down 18.53 at 1075.63, and the Nasdaq 100 down 27.80 at 1823.00 even.

Advance/declines were about 5 to 1 negative on the New York Stock Exchange and 4 to 1 negative on Nasdaq. Up/down volume was about 12 to 1 negative on New York with total volume that crossed 1 billion today on some late volume. Nasdaq wasn't quite as bad, but was about 5 to 1 negative with total volume of just under 2.1 billion shares.

Charts of the Day:

Tonight I'm going to cover some Boxer Shorts, as the market is looking quite tentative here and has some potential additional downside.

Amedisys Inc. (AMED), which has been hit hard recently, could see further downside. The topping pattern was broken in May. This stock has continued to bounce lower in sliding fashion that accelerated, formed a bear wedge, gapped down, tried to bounce back, and rolled back to retest the lows. If those lows are taken out at the bottom of the channel and key support, we could see a drop that takes this into the high teens at the very least.

Cree Inc. (CREE) has been a fantastic stock in the last year and a half, having run up from the 12 1/2 range up to over 80, in the 83 range. It formed a topping pattern, came down hard a couple weeks ago, and bounced, but rather feebly, and I don't see much reaction from the technicals. Today it backed off 1.47, and if the low around 56 is taken out, this stock could cascade lower. Short-term target is 50.

FTI Consulting, Inc. (FCN), in a negative declining channel for the last year and a half, two years, has certainly gone opposite to most of what the bull market has shown us. It rolled over hard in early July and formed a wedge. If this rolls over and retests the 31 zone and it takes that out, it could move down to the mid-to-high 20s.

Blue Nile Inc. (NILE), another retailer with a negative pattern, topped at the end of last year, came down at the end of Jan-Feb, bounced, rolled over, retested. It has done that four times, and finally it broke last week. Since the break, the stock has formed a bear flag. It looks to me like we're headed for a move down to 36, my initial trading target, and beyond that, secondary target is down around 28.

Reviewing our Watchboard:

TheTechTrader.com board was nearly all negative except for just a few issues, and obviously the ultra-shorts. Leading the way to the downside, Google Inc. (GOOG) lost 14.18 to 467.97, Apple Inc. (AAPL) 3.19 to 249.88, Amazon.com Inc. (AMZN) 2.08 to 127.57, Transocean Ltd. (RIG) 1.77 to 52.31, Goldman Sachs (GS) 2.15 to 147.05, Cirrus Logic Inc. (CRUS) 1.31 to 17.54, Cree Inc. (CREE) 1.49 to 58.23, BP Exploration plc (BP) 1.06 to 36.24, and Acme Packet, Inc. (APKT) 1.33 to 31.45.

Ultra-long ETF Direxion Daily Financial Bull 3X Shares (FAS) was down 1.29 to 19.18.

On the plus side, leading the way was the Direxion Daily Small Cap Bear 3X Shares (TZA) up 2.76 at 37.26, the only point-plus gainer on our board.

Ultra-short ETF Direxion Daily Financial Bear 3X Shares (FAZ) gained 98 cents to 15.89, Direxion Daily Large Cap Bear 3X Shares (BGZ) 73 cents to 15.37, Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) 74 cents to 35.65, and the iPath S&P 500 VIX Short-Term Futures ETN (VXX) 98 cents to 23.20.

In the Chinese sector, RINO International Corporation (RINO) advanced 53 cents to 16.85 and China Agritech Inc. (CAGC) 32 cents to 17.27, as several Chinese stocks managed to eek out gains today.

Today's lows are going to be key levels to watch going forward as 1070-71 on the S&P 500 and the 1810-12 zone on the NDX appear to be key short-term support at this point.

We'll see how it goes tomorrow.

Good Trading!

Harry

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