The market had a definitive down-day to start the week, and it may have signaled the completion of a short-term topping pattern. We’ll know if the indices get a follow-through to the downside over the next couple days.
The day started out with a big gap down and they went sharply lower in the morning. Then the indices bounced around for several hours before attempting an afternoon rally. But that rally was more corrective looking and lacked the thrust we’ve seen in prior rallies over the last few days, which indicates to me that perhaps the buyers have lost some of their enthusiasm and that the bears may be moving to take control. We’ll see if today’s lows hold or not, those lows being 1445 NDX and 920 SPX, which also happens to be near gap support from a couple weeks ago. That’s an important area for the indices to hold if they’re going to be able to move higher, but right now the possibilities are very distinct that the indices have completed a short-term topping formation and could eventually move lower.
Net on the day the Dow was down 187.13 at 8612.13, the S&P 500 down a lofty 22.49 at 923.72, and the Nasdaq 100 down 33.01 at 1456.96. The Philadelphia Semiconductor Index (SOXX) lost 4.29 at 270.50.
The technicals were the story today with advance-declines nearly 6 to 1 negative on New York, with 2601 down and 456 up. Declining volume swamped advancing volume on New York, with nearly 1.1 billion to the downside and only 72 million to the upside, about a 12 or 13 to 1 negative ratio. On Nasdaq the declines over advancers were 2146 to 562, about 4 to 1 negative, and declining volume was 1.7 billion and advancing volume 467 million, or about a 4 ½ to 1 negative ratio.
TheTechTrader.com board was mostly negative today, with many point-plus losers. Only the ultrashort ETFs gained more than a point today, as well as low-priced Jazz Pharmaceuticals (JAZZ), up 1.92 to 4.56 on 27.3 million.
The UltraShort Real Estate ProShares (SRS) was up 1.60 to 19.75, and the Direxion Small Cap 3x Bear (TZA) was up 1.68 to 22.64. The Direxion Financial Bear 3x Shares (FAZ) was up 33 cents to 4.68.
On the downside, leading the way was ag/chem stock Potash (POT), which lost 4.67 to 111.34. Mosaic (MOS) fell 2.36 to 53.12, and Aluminum Corp. of China (ACH) 2.12 to 25.71.
Junior solars got hit today, with Canadian Solar (CSIQ) down 1.47 to 13.15, and Yingli Green Energy (YGE) down 60 cents to 13.16. LDK lost 58 cents to 11.92.
Among the ETFs, point-plus losers included iShares MSCI Brazil Index ETF (EWZ) down 2.27 to 54.61, and the iShares FTSE/Xinhua China 25 Index (FXI) down 1.33 to 38.23.
Low-priced AgFeed Industries (FEED) at 6.10 was down 1.06.
The financials got hit today, with Goldman Sachs (GS) down 2.63 to 143.01, Morgan Stanley (MS) down 1.30 to 28.40, and JP Morgan (JPM) down 1.13 to 32.00. Wells Fargo (WFC) lost 77 cents to 24.71.
Portfolio positions 3Par (PAR) fell 64 cents to 10.89, Patriot Coal (PCX) 94 cents to 8.92, OncoGenex Pharmaceuticals (OGXI) 66 cents to 25.74, China Green Agriculture (CGA) 42 cents to 7.75, and Brigham Exploration (BEXP) 23 cents.
Stepping back and reviewing the hourly chart patterns, the indices gapped down went sharply lower, then moved sideways and consolidated in bear flags before attempting a last-hour rally. But it was rather muted and unimpressive and we’ll see what kind of follow-through, if any, we get tomorrow, but today may very well have been an important key turning point.
