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Friday, August 19, 2011

Nasty Day on Wall Street


The stock market had a very nasty day today as the indices were weak all day session. They had big gaps down taking out key support, and then slid even sharper and lower very quickly before reaching the morning lows near the 2065 area on the Nasdaq 100 and just under 1135 on the S&P 500. Over the next couple hours they worked their way back, in what looked like, and turned out to be, bear flags. 

Just before the noon hour they reached 2100 NDX and 1150 S&P 500, which was too formidable a level for them, and they began an afternoon decline that hit their new session lows with 15 minutes down around 2055 NDX, or about 125 points down on the day. At that point, the S&P 500 reached 1131, down 62 points, and the Dow was down about 540-50. But they did bounce in the last 15 minutes in what appeared to be short covering.

Net on the day, the Dow was down 419.63 at 10,990.58, the S&P 500 down 53.24, or more than 5%, to 1140.65, and the Nasdaq 100 down 108.59 to 2073.03, or down around 5% as well.

AAdvance-declines were as negative as they get on the New York Stock Exchange with 176 issues up and 2917 down. Advancing volume was 44 million, while declining volume was 1.57 billion, a huge negative volume ratio. On Nasdaq advance-declines were 236 up and 2400 down. Up/down volume was 64 million up and 2.7 billion down.

Those are astronomical numbers, and as a result the oscillators should be severely oversold. It’s probably one of the reasons they did some late short covering. board, as a result, was extremely negative, other than for the ultra-shorts. An example of how things were on our board today, Apple Inc. (AAPL) was down 14.39 to 366.05, International Business Machines Corp. (IBM) down 7.65 to 163.83, and Goldman Sachs (GS) down 4.11 to 113.14.

In addition, InterDigital, Inc. (IDCC) dropped 4.87 to 64.69, LSB Industries Inc. (LXU) 3.59 to 34.51, MAKO Surgical Corp. (MAKO) 3.04 to 29.64, Molycorp, Inc. (MCP) 3.60 to 52.10, Travelzoo Inc. (TZOO) 3.13 to 33.70, Inc (YOKU) 2.75 to 24.26, Global Crossing Ltd. (GLBC) 3.22 to 26.84, and Brigham Exploration Co. (BEXP) 2.93 to 28.07.

The ultra-long ETF Direxion Daily Small Cap Bull 3X Shares (TNA) lost 8.03 to 38.17.

On the plus side, there were only a few fractional gainers. SodaStream International Ltd. (SODA) was up 92 cents today to 39.72, and Eastman Kodak Co. (EK) jumped 36 cents to 3.05, a nice percentage gain on patent speculation.

The ultra-short ETFs were the stand outs for the day. The Direxion Daily Small Cap Bear 3X Shares (TZA) jumped 8.25 to 55.24, the Direxion Daily Financial Bear 3X Shares (FAZ) was up 8.23 to 65.79, and iPath S&P 500 VIX Short-Term Futures ETN (VXX) added 6.94 to 40.47. The VelocityShares Daily 2x VIX ST ETN (TVIX), which is a new stock that we started trading today, exploded for 15.66 to close at 54.05, or nearly 41% today. That was the biggest gainer on our board today.

So, it was a very negative day today, and only the bounce at the close prevented it from closing at the session lows. Perhaps a retest of the lows, but we’ll have to see if we get any up side follow-through. Certainly the index is vulnerable to more downside.

We’ll have to see how it goes tomorrow.

Good Trading!


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