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Friday, May 14, 2010

Profit-Taking Sets In as Indices Close Lower


By Harry Boxer, The Technical Trader

The stock market indices suffered a down day as profit-taking set in mid-morning after the indices opened strong. A 3-wave decline ensued, breaking key short-term support and testing secondary support before bouncing late in the day.

Net on the day, the Dow was down 113.96 at 10,782.95, the S&P 500 down 14.23 to 1157.44, and Nasdaq 100 down 30.06 at 1945.52. Advance-declines were about 2 to 1 negative on both the New York Stock Exchange and Nasdaq. Up/down volume was about 4 to 1 negative on New York on total volume of just under 1.2 billion. Nasdaq traded about 2.2 billion and had about a 3 1 /2 to 1 negative ratio.

TheTechTrader.com board, as a result, was mixed but mostly lower, although there were some outstanding gainers. Leading the way was low-priced Hauppauge Digital (HAUP), which announced live streaming TV for Apple iPhone and iPad late in the session. In the last half hour the stock jumped from 92 cents to 3.48 before settling back to 3.03, up 2.01, a more than 200% gain on 3 million shares traded.

Google (GOOG) had a good day, closing up 5.49 to 510.88, although the high today was 522 at one point, up much higher.

Other point-plus gainers on the board were China Agritech (CAGC), up 1.09 to 16.38, as well as the Direxion Daily Emerging Markets Bear 3x (EDZ), jumping 1.19 to 45.14.

Other gainers of note: Delcath Systems (DCTH) jumped to as high as 14 1/2 before closing at 14.02, but gained 59 cents today on 3.3 million. Las Vegas Sands Corp. (LVS) was up 38 cents to 24.40, L&L Energy (LLEN) up 24 cents to 10.23, and RINO International (RINO) up 23 cents to 16.45.

Somaxon Pharmaceuticals (SOMX) was outstanding today, jumping as high as 7.47 before closing at 7.17, still up 64 cents on 3.6 million today.

On the downside, the point-plus losers include Goldman Sachs Group (GS), down 2.55 to 144.65. Amazon.com (AMZN) lost 2.40 to 131.47, Dendreon (DNDN) 1.02 to 45.40, Cree Inc. (CREE) 1.62 to 75.92, and Baidu, Inc. (BIDU) 2.57 to 75.64, reaching as high as 82.29 earlier today before reversing on 58.7 million shares traded. Apple (AAPL) gave back 3.73 to 258.36.

Stepping back and reviewing the hourly chart patterns, the indices were up early, then had a 3-wave decline that violated initial key levels of support and completed short-term head-and-shoulder type tops. They were able to reach their projected downside target at secondary resistance before bouncing late in the day. We’ll see what kind follow-through, if any, we get to the downside tomorrow.

Good trading!

Harry

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