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Technical Trader Closing Brief

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Historic Sell−Off!

Tue, Sep 30 2008, 06:30 GMT
by Harry Boxer

The Technical Trader

The markets had an historic day today and it wasn't a pretty one. The indices headed south, consolidated mid-day, and then rolled over when it was apparent the bailout bill was going to be voted down, which it was. The markets vacillated violently in early afternoon, trying to stabilize, but then rolled over once again to new session lows with about a half hour to go. They then rallied very sharply right near the close, but rolled over just as sharply in the last 10 minutes, with the Dow dropping from 590 to 777 in the last 10 minutes alone.

That's where it closed, down 777.68, an all-time record point loss. The S&P 500 likewise was down 106.85, also a record point-wise, down 7.3%. The Nasdaq 100 down 175.89, closing near 1496, down about 12% on the day. The Philadelphia Semiconductor Index (SOXX) was down a whopping 28.31, about an 8-9% loss.

Needless to say the technicals were negative, and extremely so, particularly on New York where 3075 stocks declined and 159 were up, and I'll bet the vast majority of those were short instruments. Up/down volume was nearly 2 billion down and less than 73 million up, climactic proportions, to say the least. On Nasdaq the numbers were a little better but not much, 420 advanced and 2553 declined, a ratio of better than 6 to 1. Up/down volume was 2.8 billion down and just 82 million up.

TheTechTrader.com board was a bloodbath with many huge multiple-point movers. Leading the way on the upside today was VeraSun Energy (VSE) snapping back sharply, +$1.80 to $4 or 82% today. Another bright spot was Sunday's Chart of the Week Perrigo (PRGO), at 39.48, up 52 cents today, reaching a high of 40 on 1 1/4 million shares. The index short instruments obviously did very well, such as the QIDs, which were up 10.24 to 61.51, and the SDS, which was at 76.50, up 9.79. The DUG on a sharp drop in oil, which dropped $11 1/2, soared to 42.58, up 6.69 on 20 million shares.

See Harry's Chart of the Day Video Presentation Evenings Mon-Thurs

On the downside, multiple point losers were led by Fuel System Solutions (FSYS) at 35.60, down 12.09. Energy Conversion Devices (ENER) at 53.17 was down 7.39. DryShips (DRYS) at 33.15 was down 6.45, Canadian Solar (CSIQ) at 18.77 was down 4, A-Power Energy (APWR) at 8.30 was down 2.80, the USO dropped 9 1/4 on the sharp drop in oil, at 76.96, and the Brazilian index ETF EWZ at 50.99 was down 9.29.
JP Morgan at 41 was down 7 1/4, giving back nearly all of Friday's gain. Focus Media (FMCN) dropped 4.18, Excel Maritime (EXM) nearly 3 points, Cree Inc. (CREE) was down 3.76, and the QQQQ dropped 3.26.

So, it was a blood-bath on Wall Street, with climactic-type behavior, but we may not be done yet, as the market hangs in suspended animation until Washington can take another vote and finally pass the bill. That likely will not occur until Thursday, because of the Jewish Holiday, which may cause additional downside pressure over the couple sessions, so it may not get any prettier tomorrow either.

Stepping back and reviewing the hourly chart patterns, the indices had a dramatic 5-wave decline today and a very sharp one, dropping by historic point numbers. Worldwide markets across the globe were down sharply, and the current overnight futures are down sharply, as well, so fasten your seat belts. However, these are the kind of conditions that create important market bottoms and we'll be looking for one over the next day or two.

Published on  Tue, Sep 30 2008, 06:35 GMT