The markets had a very interesting and volatile session. The day started out with a move down that tested yesterday's late lows and held, then surged back in a 3-wave rally to the highs for the day, but failed at yesterday afternoon's resistance and then sold off steadily and sharply. The Nasdaq 100 dropped from 1264 to 1177, about an 87-point drop over the next several hours, and the S&P 500 fell from nearly 923 to 859, or 64 points in the same period of time, reaching their session lows, with the NDX making new 2008 and multi-year lows at 1177.

The S&P 500 at that point reached down around the 858 level, but was still approximately 18 off its lows of the last couple weeks. When that positive divergence occurred, the indices then turned around and rallied in a sharp 5-wave move, snapping back from 1177 to 1241 on the Nasdaq 100, closing right there, and from 858 1/2 to around the 910 on the S&P 500, closing at 908.72.

Net on the day the Dow was up 172, the S&P 500 11.35, and the Nasdaq 100 up 2, but way off the lows. The OEX was up an impressive 8.78, more than 2 percent today, and Philadelphia Semiconductor Index (SOXX) was down 2.98, but 9 points off the low, to just under 217.

The technicals did not get back into the plus column but came way off the lows. Advance-declines were negative by a little worse than 3 to 2 on New York and by about 2 1/2 to 1 on Nasdaq. Up/down volume was 9 to 7 negative on New York on heavier total volume of 1 2/3 billion. Nasdaq traded 3.1 billion and had a 23 to 8 negative ratio of declining over advancing volume.

TheTechTrader.com board was mixed but mostly lower, as many stocks came off their lows but still ended down on the day. Major point-plus losers included Boxer Short CF, at 44.55 down 5.33. Energy Conversion Devices (ENER) at 33.41 was down 3.89. Mosaic (MOS) at 28.83 was down 3.38, UAL (UAUA) at 12.51 down 2.14, and Continental (CAL) at 16.38 down 2.12.

Other point-plus losers included Agrium (AGU) down 2.20, Canadian Solar (CSIQ) down 1.34 to 9.15, DryShips (DRYS) 1.85 to 18.10, EBS at 15.21 down 1.89, JA Solar (JASO) down 1.16 to 4.41, and Solarfun (SOLF) at 5.35 down 76 cents, as solar energy stocks continued to be under pressure.

Sequenom (SQNM) gave back 1.21 to 15.23, and Morgan Stanley (MS) lost 1.25 to 18.08.

On the plus side, Potash Corp. (POT) managed to reverse a big loss by nearly 4 1/2 and closed up 1.39. Apple (AAPL) also did the same jumping around 6 1/2 points in the last hour and a half and closed up 1.36 on the day. The USO was up 1.67 today.

Stepping back and reviewing the hourly chart patterns, the indices came down & reached near the bottom of their 4-day channels, particularly on the Nasdaq 100, reaching new multi-year lows, but failing to do so on the S&P 500, and then rallied very sharply in a strong 5-wave move in the last hour and a half to come way off the lows and out of the loss column. So we did have a reversal day. Whether or not we get a substantial follow-through and move tomorrow remains to be seen.

Key resistance levels right now are 1265 and then 1280 on the Nasdaq 100, and 922 and then 931 on the SPX. Those are the levels we'll be keeping an eye on tomorrow.

Good trading!

Harry

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