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Technology Stocks : Semi Equipment Analysis
SOXX 318.06+1.4%Jan 5 4:00 PM EST
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To: Return to Sender who wrote (13635)2/29/2004 7:18:09 PM
From: Return to Sender   of 95675
 
SNIP: Outside of NASDAQ and SOX the market held up well. Breadth was solid, led by gains in the market leading mid-caps and small caps. DJ30 and SP500 continued to look solid as well, showing slight gains on higher volume. No breakouts and they gave back their highs, but they are holding up very well in their lateral consolidations. They still need to pull back further to set up the next move, but they look fine in their narrow lateral ranges.

As noted earlier, NASDAQ was not showing great action with the higher volume doji at resistance following a lower volume rebound from higher volume selling. All the indications of a modest rebound running out of steam and sellers jumping on at that resistance. SOX could be even more important. Even though it is a small part of technology, it is key as chips tend to lead the market both up and down.

SOX is showing an important crossover where the 18 day MVA is crossing down through the 50 day MVA. It has been below the 50 day for 5 sessions. It is not definitely a breakdown, but it is trending below the 50 day and that typically indicates more selling. Not straight line; it can bounce around the 50 day MVA and even back over it, and it might not be as deep of a correction as say in early 2003 when SOX and NASDAQ both showed this same action. It is a sign of continuing weakness, however. The market moves in momentum; one action begets another, trends stay in place until something big breaks it. Once an index shows this type of crossover it tends to keep that momentum. Another sign of the consolidation underway.

InvestmentHouse Weekend Update:

investmenthouse.com
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