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Another Ugly Session, But Getting VERY Oversold!
By Harry Boxer, The Technical Trader

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

It was another very ugly day on the Street and the market broke some key levels in the process. It started out with the futures down sharply before the opening. The market opened lower, snapped back to resistance, and then sold off into the lunch hour.

Then we began a steady climb back up to test the morning rally highs. We got right to it on the Nasdaq 100, a little below it in the S&P 500 just after 1 o’clock, and then the market came down and retested the lows, making higher lows, and then late in the session the market snapped back pretty sharply and brought the indices well off the lows.

But net on the day, the Dow was down 127, although that was about 58 points off the low, but it did close under 10,000 at 9990. The S&P 500 was down 11 ½ to 10.87, but that was about 8 points off the low. The Nasdaq 100 was down just 9, but the Composite was down nearly 22, and the SOX Index managed a gain on the day, up 1.89, and that really prevented the Nasdaq 100 from being much lower.

The technicals were extremely ugly, especially on the NYSE where advance/declines were about 9 to 1 negative today. Up/down volume was about 6 to 1 negative with a total of about 1.9 billion traded, with about 1.6 billion of it to the downside.

Nasdaq was 25 to 7 advance-declines to the negative side, and the up/down volume was a half billion up, 1 1/3 billion down, on a total of just under 1.9 billion as well.

It was a very negative day across the board for the most part, other than some high-tech stocks, particularly in the semiconductor group, which may be telegraphing that they’re washed out and want to really and lead the market back up.

On my personal board there were mostly fractional changes, except for Ariad Pharmaceuticals (ARIA), which took it on the chin, down 1.26. Other than that nothing on my board was up or down as much as a point.

The security stocks were off today. MAGS was down 87 cents, MACE 46 cents and VISG down 61 cents. On the plus side in that group, IPIX was up 15 cents. That was one of our Charts of the Week.

Stepping back and reviewing the overall patterns, the market broke down through important key support in the 1405-10 zone on the Nasdaq 100 and plunged as low as 1385 before snapping back and backing and filling into the close.

We still remain above the March lows on the Nasdaq 100 but I believe the Dow and S&P have taken out those lows and were not able to snap back above them by the close.

So even though the jury is still out and we could possibly still go lower, we’re at very extreme levels on some of technical indicators and oscillators,(McClellan Oscillator at -365)!!! put/call ratios, etc., and I fully expect a strong snapback rally tomorrow.

Good trading!

Harry