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Harry's Closing Boxer Brief 10/6/5


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Posted 07 October 2005 - 10:09 AM

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Harry's Closing Boxer Brief
Daily Technical Market Analysis

Thu Oct 6th 2005
Last 15-Minute Pop Brings Indices Sharply Off Steep Lows
By Harry Boxer, The Technical Trader (www.thetechtrader.com)

The steep sell-off of the prior two days continued today in earnest, although after a fall in the morning they snapped back to retest resistance and once again they failed. A test of the morning lows during the lunch hour created a minor bounce that didn't have much thrust or follow-through, and then they consolidated right at the lows of the day before collapsing in mid-afternoon and coming down in spike fashion, all the way down to 1540 NDX. That was nearly 80 points off the high just 2 1/2 days ago. The S&P similarly dropped from about 1233 to as low as 1182 in 2 1/2 days, a 50-point drop.

The action looked capitulative in nature, and with many other indicators oversold I was expecting a late rally and we got a huge one in the last 15 minutes. The indices popped sharply, with the NDX jumping about 13 points and the S&P nearly 12 in the same period of time, so an especially sharp pop on the blue chips. The Dow moved up about 70 points in the last 15 minutes.

But net on the day the indices ended to the downside. The Dow closed down 30, the S&P a little less than 5, and the Nasdaq 100 was down 8.58. The culprit there was the SOX Index, which was down more than 8 points, or nearly 2 percent.

The techincals were not able to recover, as would be expected because the rally came too late. Advance-declines were rather negative by a little more than 2 to 1 on New York and a little less than 2 to 1 on Nasdaq.

Volume was very heavy today, and the up/down volume was decidedly to the downside, but the volume figures did come back in the last 15 minutes. Total volume on the NYSE was more than 2.1 billion, with a similar amount on Nasdaq. It's a long time since we saw more than 2 billion on both exchanges. But the ratio of up to down volume was about 2 1/2 to 1 negative on both exchanges.

TheTechTrader.com board was extremely negative today. Just 3-4 stocks were up. Viisage (VISG) on a major $100 million investment exploded for nearly 20 million shares. It was Nasdaq's percent gain leader today, closing at 5.06, up 1.42.

The other gainer of note was ATI Technologies (ATYT), which closed up 94 cents on 23 1/2 million shares, on upward guidance of earnings.

But on the downside, today the loss leader by far was Energy Conversion Devices (ENER), which continued its sharp sell-off of the last three sessions, and at today's lows was down nearly 11 points off the rally high of three days ago. It closed at 36.72, down 4.12 on 3.2 million.

Kendle International (KNDL) gave it back today big time by 1.97. Spire Corp (SPIR) dropped 1.23, Rediff.com India (REDF) 1.19, Vertex Pharmaceuticals (VRTX) 1.07, Momenta Pharmaceuticals (MNTA) 1.43, and Cutera (CUTR) down 1.14.

Stepping back and reviewing the overall patterns, severe technical damage was done to the indices as the Nasdaq 100 dropped below the August and September lows, before spiking back up at the close and closing right at the August-September lows around the 1552 zone.

The S&P 500 and the Dow were even worse. The 1202-05 zone was taken out late yesterday. The S&P snapped back to this zone this morning, but then the big sell-off ensued.

After the intraday, five-wave decline, I expected a late rally, and we certainly got that. The key is going to be if there's any follow-through and if we can mark an important bottom down here. It remains to be seen.

Good trading!

Harry

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