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Technical Trader Closing Brief

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Promising Start Gives Way to More Downside

Tue, Jul 22 2008, 06:05 GMT
by Harry Boxer

The Technical Trader

The indices ended to the downside after a promising start. Before the opening the futures were higher and the market opened strong, rallied to new snapback highs, but couldn't follow through and sold off rather sharply in the morning. They bounced early afternoon, and then retested mid-afternoon before bouncing back into the close.

Net on the day the indices still lost ground, with the Dow down 29.23, the S&P 500 off just 0.68, and the Nasdaq 100 down 3.47. The Philadelphia Semiconductor Index (SOXX) was off 3.98, more than 1 percent.

However, the technicals were divergently positive. For a day when the indices were down, the advance-declines were 2037 up and 1119 down, almost 2 to 1 POSITIVE, on the NYSE, which is phenomenal for a down day and a very positive divergence. Up/down volume was about 6 to 5 positive on New York and lighter today on under 1.2 billion traded. Nasdaq also was lighter, but had about 1 3/4 billion traded and was nearly dead-even flat, just slightly positive, on advancing over declining volume.

As a result, TheTechTrader.com board was mostly fractionally changed, but most stocks on our board were up today. Leading the way were the junior oils, with Pyramid Oil (PDO) up 2.83 and Brigham Exploration (BEXP) up 1.59. Northern Oil & Gas (NOG) advanced 72 cents, and was much higher earlier in the day in the pre-market after they announced that three of their new wells had discovered oil.

The USO oil ETF was up 2.31 on stronger crude oil, closing at 106.75. Portfolio position Acordia Pharmaceuticals (ACOR) snapped back 1.13 to 31.83, and Chart of the Week AVAV was up 71 cents to 30.97. Chindex (CHDX) was up 96 cents to 17.37, and Canadian Solar (CSIQ) snapped back 66 cents to 31.98.

Chart of the Week General Steel (GSI) at 14.70 was up 98 cents . Last week's Chart of the Week Halozyme Therapeutics (HALO) gained 24 cents, and Sequenom (SQNM), also one of this week's Charts of the Week, advanced 63 cents.

VSE at 6.93 was up 81 cents, a nice percentage gain there, and another of our Charts of the Week.

WAVE finally snapped back out of its doldrums, jumping 36 cents, or 11 percent today on nearly half million shares.

On the downside, there were only fractional losses. Sigma Designs (SIGM) gave back 89 cents from recent gains. The DUG ultrashort oil & gas ETF had a tough day and closed near the lows for the day at 32.14, down 2.06, on 16 million shares.

Stepping back and reviewing the hourly chart patterns, the indices have two distinct patterns, with the NDX falling in a 3-day declining wedge-type pattern, but the S&P 500 remaining in an uptrend over the last 5 sessions. Despite nominal new pullback lows on the S&P 500 in the late afternoon, they were not confirmed by the NDX, and as a result the indices firmed into the close.

Over the last 3-4 weeks the Nasdaq 100 has been developing an inverse or bottoming head and shoulder type pattern, and if they can hold support near here and rally, we could get a completion of the pattern and a potentially strong move higher.

We'll see if there's any upside follow-through over the next session or two.

Published on  Tue, Jul 22 2008, 06:06 GMT