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Stock Market Rally Reverses Lower

Stock-Markets / US Stock Markets Jan 30, 2009 - 02:58 AM GMT

By: Harry_Boxer

Stock-Markets The indices had a definite down day on Thursday, reversing the rally as they started out with a very negative pre-market, with lower futures. The markets gapped lower, rallied back to the gaps and failed, and then rolled over in stair step fashion for the rest of the day. A mid-afternoon rally also failed at resistance, with the S&P 500 closing very near the lows for the day.

Net on the day the Dow was down 226 to 8149, the S&P 500 was down 28.95 to 845.14, and the Nasdaq 100 dropped 32.06 to 1203.85. The Philadelphia Semiconductor Index (SOXX) fell 10.26, nearly 5 percent.

The technicals were also very negative by 5 to 1 on advance-declines on New York and by about 3 1/2 to 1 negative on Nasdaq. Up/down volume was the story with a more than 10 to 1 negative ratio on New York on total volume of under 1.5 billion. Nasdaq traded just under 1.9 billion and had about a 7 to 1 negative volume ratio.

As a result, board was extremley negative with most stocks lower other than the short instrument ETF's. The Direxion Financial Bear 3x Shares (FAZ), which we picked early this morning for our subscribers, jumped 7.60 to close at 46.93, and the Direxion Large Cap Bear 3X Shares (BGZ) was up 5.68 to 65.50.

Other than that, there were just a few fractional gainers on my board. Geron (GERN) had a late rally, jumping about $1 and closing up 56 cents on the day to 7.90 on 9 million shares, and Cree Inc. (CREE) advanced another 33 cents to 21.33 today on nearly 1.2 million. Sequenom (SQNM) got a huge rally off of the early morning gap lows, tagging 19.95 and then rallying back to 24 before settling to 22.73, up 13 cents on the day on 8 million shares, a wild ride there.

On the downside the financials led the way, with WFC down 2.41, JPM down 2.23, Hartford Financial Services (HIG) down 2.31, MS 1.62, and BAC and C also down small fractions.

Energy Conversion Devices (ENER) gave back 1.75, and DryShips (DRYS) got crushed today on a negative report, down 3.66 to 8.56, quite a big percentage loss on 28 million shares. The Direxion Financial Bull 3x Shares (FAS) dropped 2.46 along with the financial stocks, and the Ultra Oil & Gas ProShares (DIG) lost 2.05 and the U.S. Oil Fund ETF (USO) 53 cents as crude oil was weaker today.

Stepping back and reviewing the hourly chart patterns the indices gapped lower and stair stepped lower all session, closing near the lows for the day, but managing to hold the rising moving averages on the hourly charts as well as price support on the Nasdaq 100. So we'll see if they can stem the tide near these support zones, which they'll need to do if they want to continue higher. Any lower penetration of the current areas could reverse the recent rally and create a retest of the earlier month lows.

Good trading!


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