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Stock Market Negative Session Takes Out Short-term Support

Stock-Markets / Stock Markets 2010 May 20, 2010 - 03:39 AM GMT

By: Harry_Boxer


The stock market indices opened positive but then immediately sold off sharply in a 3-wave decline that reached the session lows just before noon at about 1851 on the Nasdaq 100 and about 1100 on the S&P 500. They rallied backed steadily over the next couple hours to reach their snapback highs right above minor resistance, and then sold off, but with about 40 minutes to go snapped back again and managed to take back more losses, but still ended negative on the session in what looked liked bear-flag consolidation intraday.

Net on the day, the Dow closed down 66.58 at 10,444.37, the S&P 500 down 5.75 at 1115.05, and Nasdaq 100, down 13.64 at 1873.42.

Advance-declines were about 4 to 1 negative on New York Stock Exchange and about 3 to 1 negative on Nasdaq. Up/down volume was 2 to 1 negative on New York on total volume of 1.6 billion traded, while Nasdaq had about a 3 to 1 negative ratio on total volume of 2 1/2 billion.

Our Charts of the Day:

Amarin Corp. (AMRN) has moved from just under 1 to near 2 1/2. More importantly, this stock, which has based out for the last couple years, has moved across the base and breakout resistance zone, then pulled back and flagged. Today it popped 24 cents, or 10.67%, on more than a half million shares, which is the biggest volume in two weeks. Looks like a breakout here, and may see some momentum that could take it quickly towards the 3.00 range. A secondary target up near the 3-3 1/2 area.

Quest Software Inc. (QSFT) also had a significant technical day today. The weekly chart shows an 8-year base. The stock broke out across that range today on heavy volume of 6.9 million shares, taking out key lateral price resistance. It may have triggered at new intermediate uptrend. My next target is in the 22-23 range, and beyond that something in the mid to high 20's.

Looking at some Boxer Shorts, CF Holdings (CF) has been in a downtrend since the beginning of March. It dropped from 110 to 70, or 40 points just in the last 60 days. Oversold indeed, but despite all of that, it is having trouble even at support here. It could crack and move into the low to mid 60's, maybe even the high 50's. Those are my two target highs. (PCLN), a high-priced stock which had run all the way from 45 to 274, finally collapsed a couple weeks ago, snapped back to resistance and failed, gapped down, and stair-stepped its way lower, taking out initial key support around the 195 area. My ultimate target on this is down around 160 with some stops in the 170's.

Reviewing our watchboard: board, as a result, was mostly down today. Leading the way, Apple Inc. (AAPL) fell 4.02 to 248.34. Other point-plus losers included (AMZN) down 1.69 to 124.59, Cree Inc. (CREE) down 1.30 to 71.27, and Baidu Inc. (BIDU) down 1.44 to 70.13.

In the Chinese sector today, China Automotive Systems Inc. (CAAS) lost 1.34 to 17.51 and RINO International Corp. (RINO) 1.46 to 12.40.

Vivus Inc. (VVUS) gave back 95 cents to 12.25, Houston American Energy Corp. (HUSA) 83 cents to 9.30, Dendreon Corp. (DNDN) 95 cents to 42.41, Delcath Systems Inc. (DCTH) 85 cents to 14.30, and Brigham Exploration Company (BEXP) 61 cents to 15.66.

On the plus side, Goldman Sachs(GS) jumped 2.74 at 140.10, the Direxion Daily Emrg Mkts Bear 3X Shares ETF (EDZ) 1.46 at 53.36, and the S&P 500 VIX Short-Term Futures ETN (VXX) 72 cents at 29.81.

Stepping back and reviewing the hourly chart patterns, the indices were down in a 3-wave move in the morning, rallied back steadily but in a corrective-looking manner, and then rolled over into the last hour before bouncing late in the session to pair back the losses. Still, it was another negative session for the indices and short-term support taken out as well. The downtrend continues, although the oscillators are now getting oversold and we could be due for some snapback behavior.

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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