Indices Rally to Cut Huge Sell-Off in Half

The stock market indices had a really interesting day today, which included a very sharp decline in the morning, getting the indices to an extremely negative tick of minus 1373, and the McClellan Oscillator to minus 200-plus. After reaching a level midday where the indices seemed to be washed out, they staged a very strong rally, taking the Nasdaq 100 from 3993 all the way up to 4180, a 187-point rally straight up with a 5-wave advance. The S&P 500, during that time, went from 1812 to 1878, a 66-point rally.

That was a very, very strong move for both of them, and then they backed off again in the last half hour on profit taking.

Net on the day, the Dow was down 249.28 at 15,766.74, about 316 points off its low. The S&P 500 was down 22.00 to 1859.33, 47 points off its low. The Nasdaq 100 was down 10.79 to 4136.28, 144 points off its low.

Advance-declines were less than 3 to 1 negative on New York Stock Exchange and 15 to 13 negative on Nasdaq, declines over advances. Up/down volume was less than 3 to 1 negative on New York, and a heavy 6.2 billion shares traded, one of the heaviest days I've ever seen. The Nasdaq traded 2 billion shares and had a 3 to 1 positive volume ratio.

TheTechTrader.com board was mixed, and there were plenty of gainers, although that did not include the Nasdaq Generals.

To the downside, Priceline Inc. (PCLN), 42 points off its low, was down 13.17 to 1081.33, Google Inc. (GOOG), 25 points off its low, down 3.34 to 698.45, Amazon.com Inc. (AMZN), closing 24 points off its low, down 2.71 to 571.77, and Netflix, Inc. (NFLX) down just 15 cents to 107.74.

Tesla Motors, Inc. (TSLA) lost 6.02 to 198.78, and Baidu, Inc. (BIDU) dropped another 1.04 to 2165.99. Facebook, Inc. (FB) fell 91 cents to 94.35.

To the upside, the negative oil ETF's did great. The ProShares UltraShort Bloomberg Crude Oil (SCO) reached 243.67 to new, all-time highs at one point, closing up 12.46 to 227.50. The Direxion Daily S&P Biotech Bull 3X ETF (LABU) jumped from 7.31 to 10.00, and closed not far off its high at6 9.55, up 1.09.

The biotech sector was strong today. NewLink Genetics Corporation (NLNK) was up popped 2.49 to 28.20 along with other fractional gainers in the biotech area.

If there's any kind of follow-through tomorrow, the key levels to watch are 4200 Nasdaq 100, which is declining topsline, lateral resistance, and 50-day moving average on the hourly charts. On the S&P 500 the same number comes in at 1900.

We have work to do, but a vicious rally off the bottom is indicative of something more than just a short-term low. We'll see if that's the case, and if there is a follow-through.

Good Trading!

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