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July 2nd: Another whopper of a sell off, but volume was surprisingly tame. Unfortunately, light volume for a large one-day loss which is part of a larger decline does not necessarily imply seller's exhaustion but is more likely to represent seller's complacency. If there is a positive in the volume it's the upcoming long holiday weekend which could have contributed to the light trading. How willing traders will be to sit tomorrow out remains to be seen (or return late on Monday)? Large institutions look to have unloaded and it's the last of the weak hand retail sellers throwing in the towel which is responsible for the current trading. Volatility is on the rise, but is some way short of a marked bottom (but no spike is necessary to complete the bottom, although a volatility spike would be preferred).

The NASDAQ had the misfortune of losing April lows as both the semiconductor index and Russell 2000 fell sharply away from the last vestiges of 62% Fibonacci support. The two latter indices look set to fall to March lows. The S&P followed the Dow in breaking January-March support and looks set to head lower given the additional losses in the Dow. The measured move target for the Dow is 10,200; but I doubt it will get this far given the proximity of breadth indicators to oversold levels.

If oil prices start to gap up sharply with greed, expect the indices to correspondingly gap down in fear. The problem for market bulls is that oil hasn't even started such an exhaustion run.

Nasdaq market internals [$NASI, $NAA50R and $BPCOMPQ] fell for yet another day and will very soon put in the first part of a two-pronged bottom with a bullish divergence with respect to the parent NASDAQ.

Target hit: HUSA reached its target price, but finished on a bearish doji. The June 16th subscriber pick closed for a 40% gain.

Stop hit: A few more victims of the selling. WEL took a hit in late afternoon trading to close the June 4th free pick for a 11% loss. The earlier March subscriber pick closed for a 20% gain. XIDE was another key loser. The May free pick closed for a 11% loss and the earlier March pick for a 22% gain. The February subscriber pick closed for a 42% gain. EXPO also drifted into its stop; the February subscriber pick closed for a 4% loss after falling just short of its target price.

July 1st: Bulls put in a solid day's work with significant volume gains. The indices all registered an accumulation day with some enjoying more potent bullish signals than others. The NASDAQ 100 perhaps had the best of it with a bullish engulfing pattern, closely followed by the bullish piercing pattern in the NASDAQ. The NASDAQ found support at April lows while the NASDAQ 100 never quite made it as far. The Dow and S&P had the best of the volume, with each closing on bullish hammers. The S&P had the clearest measure of support at January and March lows; it is perhaps the easiest long signal if it clears the 3-day high. There was a bullish hammer in the Russell 2000 as it held the 62% Fibonacci retracement. The only (slight) disappointment was the bullish hammer in the semiconductor index which didn't quite make it back to the 62% retracement.

Upside targets remain the 20-day MAs until proven otherwise.

Nasdaq market internals [$NASI, $NAA50R and $BPCOMPQ] lost out, but still no strong sign for a bottom.

Target hit: None

Stop hit: MSPDD reversed split and crashed hard. The June 9th free pick goes down as a 13% loss. CDNS has meandered in a tight pattern for months without going anywhere. Today it finally dropped to its stop for an 8% loss.

Declan Fallon

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