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Stock Market Ominous Sell-Off

Stock-Markets / Stock Index Trading Apr 20, 2009 - 07:44 PM GMT

By: Harry_Boxer


The indices had a very sharp decline on Monday that may very well have reversed the entire 6 week uptrend. With the indices closing at the lows for the day and down sharply, led lower by the financials which had led the market up, it was a seemingly significant negative day on Wall Street.

The day started out with a big gap down on pre-market negative futures. After gapping lower, they went sharply lower after that. They managed to stabilize by mid-morning on the Nasdaq 100, although the S&P 500 continued to make lower lows all day. Eventually, in the afternoon, the NDX also set lower lows, and despite the fact that the NDX did bounce in the last half hour, the SPX after initially following rolled over hard and closed at the lows for the day going away.

Net on the day the Dow was down 289.60 to 7841, the S&P 500 down 37.21 to 832.39, and the Nasdaq 100 down 44.55 at 1309.37. The Philadelphia Semiconductor Index (SOXX) fell 6 percent, or14.62, to 240.19.

The technicals were extremely negative, with 300 up and 2800 down on advance-declines on New York and 454 and 2640 down on Nasdaq. Up/down volume was the story today, with about a 22 to 1 negative ratio on Nasdaq on total volume of more than 3 billion, and more than 27 to 1 negative on New York on total volume of close to 1 3/4 billion.

Needless to say, board was extremely negative except for the ultrashorts, and a couple of our picks did very well today. Portfolio position DG FastChannel (DGIT) reached a new 6 1/2-month high at 21.72, closing at 21.35, up 73 cents. AgFeed Industries (FEED), also a portfolio position, after having tested 3 earlier in the session, closed at 3.64, up 34 cents, at the highs for the day going away on more than 4 million shares. Recent pick Dendreon (DNDN)jumped 1.53 to 19.52 on 17.7 million shares.

The ultrashorts obviously did very well today, with the UltraShort Financial ProShares (SKF) up 11.80 to 70.45, the UltraShort Real Estate ProShares (SRS) up 5.74 to 32.24, and the Direxion Large Cap Bear 3X Shares (BGZ) up 5.80 to 52.11. The Direxion Financial Bear 3x Shares (FAZ) had a stellar session, closing near the highs for the day at 11.63, up 2.73 on 234 million shares traded.

On the downside, the ultralongs got hammered, with the Direxion Financial Bull 3x Shares (FAS) down 2.82 to 6.58, and the Ultra Oil & Gas ProShares (DIG) 2.26 to 22.28, as oil dropped sharply. The iShares MSCI Brazil Index ETF (EWZ) dropped 2.47 to 41.39, and the Direxion Large Cap Bull 3X Shares (BGU) 3.82 to 25.82.

Goldman Sachs (GS) led the financials lower, down 5.59 to 115.01, just a penny off its low. JP Morgan (JPM) fell 3.57 to 29.69 on 109 million. Morgan Stanley (MS) dropped 1.48 to 23.52 on 45 million. Wells Fargo (WFC) closed near the lows for the day at 17, down 3.26 on 161 million. Bank of America (BAC) lost 2.58 to 8.02 on 193 million shares. Hartford Financial Services (HIG) also hammered at 9.11, down 2.07, on more than 19 million traded.
Other losses of note, Apple (AAPL) dropped 2.92 to 120.50, and Research in Motion (RIMM) 3.25 to 65.00. Mosaic (MOS) lost 2.85 to 39.33, Potash (POT) 3.37 to 86.40, and Agrium (AGU) 1.05 to 39.01.

Energy Conversion Devices (ENER) lost 1.56 to 14.26 in a weak solar sector, with SunPower (SPWR) down 2.20 to 24.25. Sequenom (SQNM) was down 1.45 to 14.82.

The shippers were hit hard, with DryShips (DRYS) down 90 cents to 6.27, and Excel Maritime (EXM) 1.04 to 6.50.

Stepping back and reviewing the hourly chart patterns, the indices gapped lower, took out the moving averages on the hourly charts, and kept going, with the S&P 500 closing right at its low for the day.

So, is this the trigger day that initiates a new downtrend and takes out the entire rising channel? We'll see if we get a downside follow-through, but today was an ominous session for the bulls.

Good trading!


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Mr. Boxer's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Boxer's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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