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Stock Market Indices Reach Extreme Oversold Levels

Stock-Markets / Stock Index Trading Mar 02, 2009 - 07:42 PM GMT

By: Harry_Boxer

Stock-Markets It was an extremely negative way to start the week, but that's been customary in this bear market. The indices started with big gaps down, tried to rally early on but didn't last long, and then rolled over and sold off steadily until early afternoon when they tried another rally that lacked thrust and rolled over in the last hour to close near the lows for the day.

Net on the day the Dow was down 300 to 6763, the S&P 500 down 34 1/4 to 700.84, and the Nasdaq 100 down 40.32 to 1076.67. The Philadelphia Semiconductor Index (SOXX) was down 10.03 to 188.97.

The technicals were nearly climactic today. There were only 188 advancers on New York with 2939 down. On Nasdaq the ratio was about 337 up to 2500 down. Up/down volume was 37.26 million to the upside and 1.88 billion to the downside on New York, which is about 50 to 1. Nasdaq had 78 million to the upside and 2 1/3 billion to the downside, about a 29 to 1 negative ratio.

So, extremely climactic-type numbers. The tick got to -1306 at one point on New York and -1146 on Nasdaq. board certainly reflected that with every stock down except for one, Palm Inc. (PALM), which advanced 8 cents today. The ultrashorts, of course, had a fantastic day, with Direxion Financial Bear 3x Shares (FAZ) up 12.41, SRS up 11.56, Direxion Large Cap Bear 3X Shares (BGZ) up 13.37.

On the downside, loss leaders were the agriculture stocks, with Potash (POT) falling 9.33 to 74.64, Mosaic (MOS) 5.33 to 37.72, and Agrium (AGU) down 4.99 to 29.79.

Boxer Short Express Scripts (ESRX) opened lower and closed down 4.56 to 45.75, just off the low for the day.

Financials got hammered, with JPM down 1.69 to 21.16, MS down 1.69 to 17.95, BAC down 32 cents to 3.63, and C 30 cents to 1.20, making a new all-time low today at 1.15. WFC fell 1.26 to 10.84.

General Electric (GE) closed down 91 cents to 7.60, GigaMedia (GIGM) lost 76 cents to 5.09. SunPower (SPWR) in a very weak solar sector gave back 2.51 to 25.38, with Energy Conversion Devices (ENER) down 2.93 to 19.

Portfolio position Net 1 Ueps Technologies (UEPS) lost 1.06 to 13.41, Amazon (AMZN) fell 2.80 to 61.99. Portfolio position Akamai (AKAM) lost 1.68 to 16.51, and Apple (AAPL) fell 1.37 to 87.94.

Stepping back and reviewing the hourly chart patterns, the indices gapped down, moved lower all session and closed near the bottom of the 3 1/2-week declining channels on the NDX and SPX, reached extreme levels of oversold (NYSE McClellan oscillator closing -295!) In addition, the big negative tick numbers and climactic-looking advance-declines could be setting up for a turnaround Tuesday.

But right now the market continues extremely weak. Momentum is heading lower, and there's been no signs of a turnaround yet. Until that occurs, the indices can still fall on their own weight.

Good trading!


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