Closing Technical Market Comments for Mon Dec 18, 2006
Indices Finish With Decisive Down-Day After Strong Start
By Harry Boxer, TheTechTrader.com (www.thetechtrader.com)
We had a decisive down-day today after a strong start. For the third day in a row the markets were strong early on and faded. But today the sell-off accelerated after key short-term price support was broken.
The day started out with a rally, after which a very steady downtrend ensued, taking indices below initial support. They bounced around and tried to rally back ,but formed bear flag type patterns that failed and rolled over sharply in the afternoon. Only a last-hour bounce back pared the losses.
The Dow was down just 4 ¼, but the S&P 500 was down 4.61, and the Nasdaq 100 down 17.57. That was despite the fact that the Philadelphia Semiconductor Index (SOXX) was actually up 0.6.
The technicals were decidedly negative by 2 to 1 on New York and a little more than that on Nasdaq. Up/down volume was a little less than 2 to 1 negative on just under 1.5 billion. Nasdaq traded more than 1.85 billion and had a 13 to 5 negative ratio on declining volume over advancing volume.
TheTechTrader.com board was actually quite mixed and mostly narrowly so. The only point-plus gainer was Aluminum Corp. China (ACH), one of our Charts of the Week, at 22.94, up 1.12, trading as high as 23.64 on 2.8 million shares.
China Techfaith (CNTF) was up 70 cents, and Euro Tech Holdings (CLWT), also another Chinese stock and a Chart of the Week, was up 33 cents on 2.7 million. Home Inns & Hotels (HMIN), another portfolio position and a Chinese hotelier, was up 75 cents.
Mamma.com (MAMA) was up 70 cents.Targeted Genetics (TGEN) advanced 41 cents, and Fuel Tech (FTEK) 40 cents.
On the downside, American Oriental Bioengineering (AOB), which switched from the American to the NYSE, got hammered for 1.30 on nearly 2.9 million. Chindex (CHDX) gave it back hard, dropping from 20 to 17 ½, closing at 17.80, down 1.65.
Other losses of note, Energy Conversion Devices (ENER) fell 74 cents, and portfolio position China GrenTech (GRRF) 72 cents. But the big loss of the day today was NVE Corp. (NVEC), which got hammered, broke key support and took out the stops, closing down 3.75 today at 32.99.
Stepping back and reviewing the hourly chart patterns, the keys to today’s action were that short-term support was broken. Strong intermediate support at the 5-month rising trendline on NDX was severely tested, as was the 40-day rising moving average on the hourly charts for the S&P 500.
So a key test lies ahead. If the indices can hold here and rally, they’ll be fine, but the pressure is on. The indices had a very negative start to the week, perhaps an ominous sign for more downside to come.
Good trading!
Harry
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