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Technical Trader Closing Brief

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Last−Hour Rally Brings Indices into Plus Column

Wed, Nov 19 2008, 06:28 GMT
by Harry Boxer

The Technical Trader

The markets surprised late in the session after another nasty session, and ended with a late afternoon last-hour rally that brought all the indices back into positive territory except for the SOXX.

The day started out with a move down, holding support. They backed and filled for a couple hours in what looked like bear-flag formations, then they ended up rolling over hard late morning into mid-afternoon. They tried a bounce that was unsuccessful, then went to lower lows, with the NDX reaching as low as 1113 and the S&P 500 just under 827, not too far off of last Thursday's lows. But they did make slightly higher lows, and then turned them around and rallied sharply, with the NDX moving from 1113 to 1153, about a 40-point rally. The S&P 500 rallied from 827 to 858, 31 points, and they both closed near their afternoon rally highs, and just above secondary resistance. So indeed an impressive snapback, but it appeared to be short covering once again.

Net on the day the Dow was up 151, the S&P 500 8.36, and the Nasdaq 100 just 3 3/4. The Philadelphia Semiconductor Index (SOXX) was down 3.83, but that was about 6 points off its low, reaching multi-year lows under 186.

The technicals came back but did not manage to get into positive territory. Advance-declines were negative by 3 to 2 on both New York and on Nasdaq. Up/down volume was 8 to 7 negative on New York on total volume of 1.58 billion. Nasdaq traded 2 1/3 billion and had about 12 to 11 negative volume ratio.

TheTechTrader.com board had a wild afternoon. Many stocks that were down did manage to get back into plus territory. The BGZ, which is 3x short large-cap ETF, dropped to 85 at one point, and then rallied to 97.81, more than 12 1/2 points, only to roll over in the last hour on a market rally, closing down 2.05 on the day. The ERX, which is the ultra energy ETF, rallied up 4.27 to 48.89 today. The DIG, also an oil & gas ETF, which we hold in our model portfolio, was up 1.94 to 31.39.

AAPL gained 1.77 to 89.91, about 3 1/2 points off its low. AVAV snapped back with a vengeance from 29.90 to 32 1/4, closing at 31.27, up 1.66. And portfolio position EBS soared late in the session to close at 20.34, up 1.72.

Most other stocks were fractionally mixed other than the BGZ down 2.05 and SDS down 1.74. DryShips (DRYS) had a very negative session, making a new all-time low at 7.80, closing at 8.01, down 1.05 on 7.8 million shares. Energy Conversion Devices (ENER) closed at 26.31, down 2.55, and Sequenom (SQNM) dropped 15, down 1.54.

Stepping back and reviewing the hourly chart patterns, the indices continued lower in a 3-day down-channel, but late in the session roared back to close solidly in the plus column and taking out the declining tops line and lateral price resistance. But it remains to be seen whether there'll be any follow-through to the upside tomorrow.

Published on  Wed, Nov 19 2008, 06:31 GMT