Closing Comments
Harry Boxer's Closing Market Comments is a daily news bulletin by The Technical Trader, an AdviceTrade company.
May 16, 2012
Capitulation Low ... Not in Yet
The stock market indices suffered losses with an afternoon slide that broke support, and I have to say, despite some oversold readings, we're not as low as we may eventually get. The intensity of the sell-off wasn't quite as low as we want to see before we talk about a capitulation low.
The day started out, with a little bit of a move up, and then they moved back to retest mid-morning. From there, they made higher highs by the end of the day with the Nasdaq 100 taking out even yesterday's highs. However, the S&P 500 didn't confirm. I took note of this during the training session, and sure enough, a 5-wave sell-off ensued, with the 5th waves intraday into the close being the worst. They did bounce around during the last 40 minutes, or so, but were unable to make any progress. This kind of formed late bear flags.
Net of the day, the Dow dropped 120 points off the high to close down 63.35 at 12,632.00. The S&P 500 dropped from 1345 to 1330.66, closing down 7.69, and the Nasdaq 100 dropped 37 points off its high, and closed down 9.53 to 2580.75.
Advance-declines were 2 to 1 negative on the New York Stock Exchange, and about 14 to 11 negative on Nasdaq. Up/down volume was 3 1/2 to 1 negative on New York, total volume 750 million shares. Nasdaq traded 1.75 billion, and had a 2 1/2 to 1 negative volume ratio.
It was quite a negative day on Wall Street, but not as bad as it can get, and certainly not of a capitulation nature, despite the fact that the technicals were somewhat weak. The oscillators are not going to be weak enough yet, so we're still looking for some more downside. Immediate current support at the bottom of the channel on the S&P 500 is around 1317. The NDX could easily reach down to 2565 short-term.
Charts of the Day: Click below to view video.
Reviewing our Watchboard:
TheTechTrader.com board was mixed, but mostly lower, although there were quite a few gainers on our board that were ultra-shorts. There were some individual stocks that did well, including a couple of our current swing trades. Amylin Pharmaceuticals (AMLN) jumped 1.65 to 27.30. Rackspace Hosting, Inc. (RAX) ran 1.50 to 52.91.
Other gainers of note included low-priced Tecumseh Products Company (TECUA), which gained1.31 to 4.70, or 39%. OPNET Technologies Inc. (OPNT), which we traded today, snapped back 5.24 to 27.35, or 23.7%, on 1.2 million shares. VOXX International Corporation (VOXX) gained 2.22 to 13.94, or 19%. Low-priced STR Holdings, Inc. (STRI) advanced 52 cents to 4.48, or 13%. Cornerstone OnDemand, Inc. (CSOD), another one that we traded today, was up 2.71 to 21.02, or 15%. Glu Mobile, Inc. (GLUU) gained 42 cents to 4.65, or 10%. E-Commerce China Dangdang Inc. (DANG) gained 65 cents to 7.41, or 10%.
In addition, KiOR, Inc. (KIOR) gained 1.01 to 10.91. Pandora Media, Inc. (P) jumped 99 cents to 10.81. The TJX Companies, Inc. (TJX) advanced 2.75 to 42.45. Dick's Sporting Goods Inc. (DKS) gained 2.81 to 50.05. Radware Ltd. (RDWR) was up 2.02 to 37.20. Patrick Industries Inc. (PATK), one of our swing trades, snapped back 90 cents to 13.68. Zynga, Inc. (ZNGA) climbed 61 cents to 8.56. The ultra-shorts were very strong today. The Direxion Daily Gold Miners Bear 3X Shrs (DUST) gained another 8.17 to 77.02, or 12%. The ProShares Ultra VIX Short-Term Futures ETF (UVXY), which we traded today, ran up 1.59 to 18.15, or nearly 10%, on 12.7 million shares. The ProShares UltraShort Silver (ZSL) gained another 2.84 to 70.35.
Stepping back and reviewing the hourly chart patterns, the indices had a 3-wave rally back to resistance this morning, but failed there and rolled over in a 5-wave decline, and made new lows for the entire pullback. We may not be done yet.
Good Trading!
Harry
About Harry Boxer
Harry Boxer has more than 30 yrs investment and technical analysis experience. He is a consultant to many Wall Street hedge funds and large institutional traders. Harry currently authors daily reports at his financial website The Technical Trader.
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