Stock Market Indices Roll Over Hard in Last Hour

By: Harry_Boxer

The stock market indices were quite volatile in the morning, opening sharply lower and then bouncing sharply higher. The Nasdaq 100 made new rally highs at that point just under 1880, but the S&P 500 did not make new highs, and that negative divergence caused a sharp pullback.

They did bounce around midday into early afternoon, but when that failed to take out the highs they rolled over in a sharp 5-wave decline, with the fifth wave being particularly sharp. In the last 20 minutes or so the NDX dropped about 20 points and the SPX dropped about 13 points. They closed near the session lows going away and taking out key short-term support as well.

Net on the day, the Dow was down 112.61 at 10,024.02, the S&P 500 down 18.71 at 1070.71, and the Nasdaq 100 up 17.35 at 1835.04.

Advance-declines were 4 to 1 negative on the New York Stock Exchange, and about 5 to 1 negative on Nasdaq. Up/down volume was 13 to 1 negative on New York on total volume of a little over 1.4 billion. Nasdaq traded just under 2.1 billion and had a better than 5 to 1 negative ratio.

Our Charts of the Day:

Delcath Systems Inc. (DCTH) has been in a fantastic rising channel over the last year and a half, having seen a move from under 1.00 to over 16. But in the last six weeks this stock has been coiling and consolidating the big move. The 19-20 range could be doable if we get a breakout above the lateral line at around 15 1/2. That's what I'll be looking for short-term.

The UltraShort Direxion Daily Energy Bear 3X Shares (ERY), a new ETF we're watching, spiked up 1.53, or 12 3/4%, on 5.7 million shares, the biggest volume in the last week. The stock looks like it's broken back out after forming a beautiful rising channel and retesting the bottom of that channel, and is about to retest the highs again. Trading target up around the 15 1/2 - 16 zone is what I'm looking for short-term.

Jones Soda Co. (JSDA) had an exceptionally big day today. It had a big downtrend in '07 and '08, a base, a retest in mid-April, then a 6-week declining channel that was broken last week with a breakaway gap. It was an inside day on Friday. Today it exploded for 80%, up 84 cents to 1.88. Looks like there's more to come. Short-term resistance around 2.40, and beyond that my trading target around the 3 1/2 range.

Universal Display Corp. (PANL) had an exceptional day today, which is the second strong day in the last three. Thursday it popped, followed by an inside day on Friday, and then today it exploded for another 2.20, or 14%, on 1 3/4 million, the heaviest volume we've seen on this stock for years. So, something significant may be ahead. Short-term target is around 20, secondary target around 23 1/2.

Reviewing our watchboard:

TheTechTrader.com board was mostly lower with a few exceptions. Apple Inc. (AAPL) jumped 3.95 to 260.83, and even that was 5 points off its high. Baidu.com (BIDU) managed to gain 35 cents to 7.56, closing 2 points of its high.

Other than that there were just fractional gainers on the board. Competitive Technologies Inc. (CTT), one of our portfolio positions, was up 20 cents to 3.37.

The ultra-shorts had a bang-up day today. The Direxion Daily Emerging Market Bear 3X Shares (EDZ) jumped 2.90 to 53.20, the iPath S&P 500 VIX Short-Term Futures ETN (VXX) 1.61 to 30.19, the Direxion Daily Large Cap Bear 3X Shares (BGZ) 88 cents to 16.75, and the Direxion Daily Financial Bear 3X Shares (FAZ) 99 cents to 15.92. The Direxion Daily Small Cap Bear 3X Shares (TZX) jumped 63 cents to 7.49, and the Direxion Real Estate Bear 3X Shares (DRV) jumped 43 cents to 7.59.

On the downside, loss leaders included Google Inc. down 3.26 at 482.37, Goldman Sachs (GS) down 2.40 at 141.86, and Amazon.com (AMZN) 2.22 at 123.24.

Other point-plus losers included Xyratex (XRTX) down 1.16 to 15.07, Valassis Communications Inc. (VCI) 2.00 at 34.52, and Northern Oil and Gas Inc. (NOG) 1.08 to 13.35 in a weak oil sector. In addition, Cree Inc. (CREE) lost 1.00 to 65.37, China Agritech (CAGC) 1.13 to 11.75, Acme Packet Inc. (APKT) 1.71 to 27.60, and American International Group Inc. (AIG) 1.13 to 34.25.

Stepping back and reviewing the hourly chart patterns, the indices were up in the morning, and backed and filled most of the day until the last hour or so when they rolled over very hard and closed near the session lows going away, breaking support in the process. Not a good sign for the bulls, indeed. We'll see if there's a downside follow-through or not tomorrow.

Good trading!

Harry

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