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Technical Trader Closing Brief

Surging Markets Disregard Negative Divergences and Overbought Oscillators

Fri, Jul 24 2009, 06:07 GMT
by Harry Boxer

The Technical Trader  |  View company's profile

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The market had an extremely strong session on Thursday, and the rally rolls on.

The day started out with a move up off the opening, and just accelerated from there, reaching the session highs around early afternoon. They pulled back to test the intraday moving averages successfully, and then moved back up to retest the highs, creating doubletops at 1605 NDX and just under 980 SPX. In the last half hour or so they gave back a bit of it, but still closed strong.

Net on the day the Dow was up over 188 points at 9069.29, the S&P 500 up 22.22 at 976.29, and the Nasdaq 100 up 36.52 at 1601.52.

Advance-declines were better than 5 to 1 positive on New York and about 3 ½ to 1 positive on Nasdaq.
Up/down volume was more than 1.1 billion to the upside and 225 million to the downside, about 4 ½ to 1 positive, on New York. Nasdaq traded a heavy 3 billion shares and had an almost 5 to 1 positive volume ratio.

TheTechTrader.com board was nearly all higher, except for the ultrashorts and for STEC Inc. (STEC), which dropped 1.39 on profit-taking, after reaching a new all-time high earlier in the day.

On the plus side, Potash (POT) was up 6.85 at 95.78, and Mosaic (MOS) up 3.03 to 51.45, as ag/chem stocks were very strong.

Among financial stocks, Goldman Sachs (GS) advanced 4.99 at 165.45, JP Morgan (JPM) was up 1.32 at 38.15, and Morgan Stanley (MS) up 1 at 28.54, although Wells Fargo (WFC) actually lost 19 cents to 24.26.

The junior biotech group was generally very strong today. Dendreon (DNDN) gained 1.43 to 24.47 and BioCryst Pharmaceuticals (BCRX) 78 cents to 8.59.
Incyte Pharmaceuticals (INCY) at 5.32 was up 89 cents, and Chart of the Day OncoGenex

Pharmaceuticals (OGXI) jumped to 27.55, a new multi-year high, but gave back a bit, still up 63 cents at the close to 26.50. Savient Pharmaceuticals (SVNT) gained 58 cents at 15.40, and Vanda Pharmaceuticals (VNDA) 80 cents to 14.80.

On the downside, the Direxion Financial Bear 3x Shares (FAZ) lost 3.22 to 38.63 on nearly 50 million traded, and the Direxion Small Cap 3x Bear (TZA) dropped 1.98 to 17.55. The UltraShort Real Estate ProShares (SRS) lost 1.42 to 16.73, and the Direxion Large Cap Bear 3X Shares (BGZ) dropped 2.14 to 28.58.

Among the ETF's today: The Oil Services ETF (OIH) gained 3.66 to 105.95, the iShares FTSE/Xinhua China 25 Index (FXI) 1.64 to 42.06, and the iShares MSCI Brazil Index ETF (EWZ) up 1.51 at 56.92.The U.S. Oil Fund ETF (USO) gained 98 cents to 35.79 on firmer oil.

Stepping back and reviewing the hourly chart patterns, up from the get-go, strong rally today, and then some afternoon backing and filling, but not much damage, as the indices closed with very strong gains. At this point, the oscillators are extremely overbought. Within the next day or two, we're expecting a pullback/retest at the very least and probably something much steeper. The markets continue to press higher, disregarding all negative divergences & oscillators, but we'll see if that changes shortly.

Published on  Fri, Jul 24 2009, 06:09 GMT

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