Published on 10/10/2006

The indices had a nominally positive session again today, although it took an afternoon rally to bring them back from mid-afternoon losses.

Indices Turn Positive in Afternoon Rally

The indices had a nominally positive session again today, although it took an afternoon rally to bring them back from mid-afternoon losses. The day started out with a move up immediately that failed. They came down but in a corrective-looking manner, and then rallied sharply, taking them to new highs on the S&P but were unable to do so on the NDX. When that occurred, they had a five-wave decline, and a fairly sharp one that lasted a few hours into the early afternoon.

Despite a breakdown below the 4-day rising trendlines , the indices managed to stem the tide, turned back up again and rallied fairly steadily in the last couple hours to close with gains on the day.

The Dow closed up just 9.36, the S&P 500 2 3/4 and the Nasdaq 100 just 2.20. The Philadelphia Semiconductor Index (SOXX) was actually down 1.67 today and one of the reasons why Nasdaq wasnâ€™t up more.

The technicals were positive by about 18 to 15 on the NYSE on advance-declines, and about 15 to 14 on Nasdaq. Up/down volume was 9 to 5 positive on New York on 1.45 billion, and Nasdaq had a 9 to 7 positive plurality on just short of 1 2/3 billion.

TheTechTrader.com board was narrowly mixed, except for just a few stocks. On the plus side, Smith Micro (SMSI), one of our old favorites, went to a new multi-year high today, up 1.34 on more than 2 million shares, over 17 for the first time in six years. That was the only point-plus gainer on our board.

Other stocks of note, OSI Systems (OSIS) advanced 89 cents and Qualcomm (QCOM) 83 cents. Interactive Intelligence (ININ) hit a new multi-year high at 17, closing at 16.60, up 70 cents. Gigamedia(GIGM) snapped back 43 cents, and U.S. Global Investors (GROW) 39 cents.

Bitstream(BITS) snapped back over 9, closing up 42 cents today, and Acorda Therapeutics (ACOR), active on just short of 6 million shares, was up 66 cents.

On the downside, Vertex Pharmaceuticals (VRTX) dropped 1.04 and NVE Corp. (NVEC) 84 cents. DVAX got hammered early and was down most of the session today, down 89 cents. CMED gave back 65 cents, Broadcom (BRCM) 79 cents, and Apple Computer (AAPL) lost 82 cents.

Stepping back and reviewing the hourly chart patterns, the indices mid-afternoon sharp decline was arrested right at the rising 40-day moving averages on the hourly charts, and the indices bounced back off of that. Right now key support exists in 1678-82 zone on the NDX and the 1347-49 zone on the S&P.

On the upside, resistance at 1698 NDX and 1354 S&P will be watched carefully tomorrow.

Harry Boxer is a technical consultant to many Wall Street hedge funds and large institutional traders, and author of TheTechTrader.com, a real-time diary of his day, swing and intermediate-term trades. For more of Harry Boxer, sign up for a free 15-day trial to his Real-Time Technical Trading Diary, or sign up for a free 30-day trial to his Top Charts of the Week service.