Stock Market Downside Follow Through

By: Harry_Boxer

The indices had another down day following up on yesterday's losses, but also had a lot of volatility. The day started out with a gap down on negative pre-market futures. A steep slide in the morning stabilized by mid-morning, and for the next 3-4 hours the indices moved in a sideways configuration and then exploded out of it in early afternoon, taking the NDX from about 1211 to 1249. The S&P 500 in that period went from 887 to about 917. A sharp 3-wave decline ensued, followed by a late bounce back into the close.

Net on the day the Dow was down 176.5 to 8694, the S&P 500 dropped 20 1/4 to just under 899, and the Nasdaq 100 fell 25.41 to 1225 1/2. The Philadelphia Semiconductor Index (SOXX) fell 3 today to 211.43.

The technicals were decidedly negative by 5 to 1 on declines over advances on New York and 3 to 1 on Nasdaq. Up/down volume was about 6 to 1 negative on New York on total volume of just over 1.2 billion. Nasdaq traded more than 1.9 billion and had about an 8 to 1 negative volume ratio.

TheTechTrader.com board was vastly negative, with many point-plus losers today. Leading the way to Energy Conversion Devices (ENER) at 32.23 down 5.81. CF Industries (CF) at 58.91 was down 3.38, Mosaic (MOS) at 34.22 down 2.34, DryShips (DRYS) to a 2-year low at 10.34 down 2.69 on historically heavy volume of 16 3/4 million shares.

POT at 79.83 was down 1.80. ANR at 25.39 fell 1.22. AGU at 35.55 lost 1.98, and AFAM at 49.72 gave back 1.09. Apple (AAPL) lost 1.11 and the USO lost 2.98 today.

Among other ETFs, the DIG fell 2.02, the EWZ 1.31, and the FXI 1.56. The QLD fell 1.21.

On the other side, the QID gained 3.07, and the SDS 4.53, as would be expected on a down day.

A couple of our portfolio positions were up just very small fractions.

Stepping back and reviewing the hourly chart patterns, the indices immediately broke support this morning and gapped lower, had a very negative morning, and came back in a very sharp, what appeared to be short-covering rally, and gave back most of it before a late bounce firmed them up.

The trend is still down, and the top of the channel today was met but not exceeded, and we'll have to see if they can right themselves and work their way above today's highs. We'll be watching 1250-54 zone on the NDX, and the 917-920 zone on the S&P as resistance. Support on the NDX is in the 1210-15 zone, and on the SPX is the 885-88 zone.

Good trading!

Harry

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