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Stock Market Negative Reversal Day

Stock-Markets / Stock Markets 2010 Sep 28, 2010 - 04:01 AM GMT

By: Harry_Boxer


Best Financial Markets Analysis ArticleThe stock market indices started lower this morning, rallied from late morning to late afternoon and reached new rally highs. But in the last hour they rolled over very hard, completely reversing today's gains, and ending up at the lows for the day with substantial losses and a rough start to the week.

Is today a reversal day? We'll see if there is downside follow-through tomorrow, but the areas to be keeping close tabs on are 2000 on the Nasdaq 100 and around the 1138-40 zone on the S&P 500.

Net of the day, the Dow was down 48.22 at 10,812.04, after being at 10,873 earlier. The S&P 500 dropped back from nearly 1150 to 1142.16, down 6.51. The Nasdaq 100 lost 16 points off its high, closing down 12.85 at 2010.99.

Advance-declines were 3 to 2 negative on the New York Stock Exchange, and 3 to 2 negative on Nasdaq. Up/down volume was 5 to 3 negative on New York on total volume of just over 900 million. Nasdaq had about a 5 to 4 negative plurality, and traded a total of 1.845 billion shares traded today.

Charts of the Day:

Amtech Systems Inc. (ASYS), one of our current swing trade ideas, continues to motor along after breaking out of this consolidation flag-type pattern. The stock has popped for the last three days and appears to be headed toward the 21.00 trading target, which is not only the short-term channel but also the top of the more intermediate- to longer-term channel. It could even get as high as 22 1/2.

China Real Estate Information Corporation (CRIC) has had a very important price-volume surge the last couple weeks that has taken it out across its 2010 basing pattern and broken out cleanly through about the 10 1/2 range, which was holding it back over the last several months. As you can see, the stock has strong momentum but is a tad overbought short-term. It may need to come back and consolidat. In any case, trading target currently at 15-15 1/2.

Ebix Inc. (EBIX) has been acting very well of late. It broke out of a recent coil, popped from around 19 1/2 to 23 3/4 in the last five sessions or so. Looks like there is some resistance in this zone, but the stock should make it up towards the 28 range for my trading target.

MIPS Technologies Inc. (MIPS), which has been moving steadily, has started to accelerate on heavy volume the last couple sessions, reaching just under 10 today. There is resistance up in this zone, but it feels like that if it gets through here then MIPS could be a 12 1/2 and then a 15.00 stock on a short and then intermediate basis.

Reviewing our Watchboard: board was mixed, with quite a few point-plus gainers today. They included Seattle Genetics Inc. (SGEN) up 2.14 to 14.30, Transocean Ltd. (RIG) up 2.30 to 62.36, LogMeIn Inc. (LOGM) 1.15 to 37.37, Green Mountain Coffee Roasters Inc. (GMCR) 1.33 to 37.55, and Acme Packet, Inc. (APKT) 1.05 to 39.39, an all-time new high.

On the downside, Isilon Systems, Inc. (ISLN) dropped back 2.36 to 22.10. Radware Ltd. (RDWR) fell 1.20 to 33.50, Goldman Sachs (GS)1.28 to 146.00, Inc. (AMZN) 1.36 to 159.37, and Apple Inc. (AAPL) 1.16 to 291.16.

So, market leaders reversed early gains in a negative reversal day today, closing to the downside. Perhaps an ominous sign for the indices, but we'll see how it goes.

Stepping back and reviewing the hourly chart patterns, the indices had a 3-wave move lower today that slightly took out support. They rallied back in what looked like bear flags, but when they failed to move to the downside and broke out to the upside, short covering fueled an advance that tagged new highs at 2026.42 on the NDX and 1149.92 on the S&P 500. But that was short-lived as the last half hour resulted in a sharp setback that closed near the session lows.

We'll see how it goes tomorrow.

Good Trading!


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