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NASTY CLOSE TO THE WEEK
By Harry Boxer, The Technical Trader (www.thetechtrader.com)

http://www.thetechtrader.com/closing/index.php?HTTP_REFERER=(none)

The only thing that can be said about today is that it was a nasty day and it closed rather negatively, especially on Nasdaq where the indices ended very close to their lows for the session.

The day started out with a little bump to the upside, which was followed by a sharp 5-minute bar down that took the Nasdaq 100 down about 12-13 points in five minutes. The rest of the morning they kept sliding until about 11:00 when they stabilized through lunch. They then made a lower low right after lunch and bounced a couple of times after retesting the lows. Then they rallied in the last hour back to resistance, failing there and then coming down in the close again.

Net on the day the Dow was down nearly 80, nearly 10 on the S&P 500, 27 on the Nasdaq Composite, and 25 ½ on the Nasdaq 100. The SOX index was down 4 ½ percent, down 14.35, a very negative day in the semiconductor group.

The technicals reflected that. They were 21 to 11 on New York and a very similar number on Nasdaq. Up/down volume was 3 to 1 negative on New York, but volume was fairly low today at about 1 ¼ billion. Nasdaq volume was on the heavy side as 1.8 billion traded with nearly 1 ½ billion of that to the downside. So it was about 4 ½ to 1 negative on Nasdaq volume today, an very negative today.

That was certainly reflected in my personal board, where most of the stocks are high-techs. Some of the popular market darlings of late got slam-dunked today. OmniVision broke 30, closing at 29.50, down 2.55 on heavy volume. That stock is now down about 8 points from its high in just a few days. Netflix was down 2 ¾, closing under 20. Broadcom was down 2.12.

On the upside there were very small fractional gains here and there but for the most part nothing to speak of.

This may have been the strong thrust to the downside off of a high that starts something worse and reverses momentum, although we saw a similar downside thrust that failed to follow through to the downside just a week or so ago. The next day or two should tell the tale.

We held secondary support today, so we’ll see if next Monday or Tuesday the market breaks down further from here or stabilizes & bounces again. We’re at the neckline of a head-and-shoulders type pattern on the Nasdaq 100 with an up-sloping neckline. So we’ll soon see if that is taken out to the downside.

Next support below the 1200 support level, near where the NDX closed, would be down around the 1180-85 zone. The S&P 500 has not quite broken down yet either. There is key support around the 965-70 zone, and we’ll see if that holds or not early next week.

Good trading!

Harry