From Rev. Shark - "The Floor Collapses"
The Floor Collapses
8/05/03 04:35 PM ET
Well, either you're closing your eyes
To a situation you do now wish to acknowledge
Or you are not aware of the caliber of disaster indicated
Ya got trouble,
Right here in River city!
With a capital "T"
And that rhymes with "B"
And that stands for Breakdown.
-- Sung to the tune of "Ya Got Trouble" from The Music Man
That sound you heard this afternoon was the breaking of key support levels in the major indices. When it became apparent that the bulls weren't going to step up once again and do enough buying to bounce us back up, the selling accelerated and took out support levels across the board, most notably S&P 975 and Nasdaq 1700.
Breadth declined all day, and we ended up 4,300 losers to about 2,000 gainers. The Nasdaq new 12-month high list shrank to a puny 47 names. Volume picked up, and it was a clear case of distribution. The stage is set for further downside, but maybe Cisco (CSCO:Nasdaq) can bail us out?
It doesn't look like it. Preliminary indications are that Cisco is not going to ride to the rescue. Earnings are in line, but gross margins are down, investors are up, and the stock is off sharply after hours. The conference call has yet to come, but obviously investors are not mollified by what they are seeing.
So we have a technical breakdown in the indices on slightly better-than-average volume. The bulls can rehabilitate this market, but they have their work cut out for them. The advantage has swung to the bears, and the likelihood is that strength will be seen as shorting and selling opportunities rather than the re-emergence of upside momentum.
The bears have been waiting for this breach, now we'll have to see if they can press matters a bit. The shorts have been badly abused for a while, and they are anxious for a little revenge. A lot of bulls have already made their year and may stand aside and take some vacation time while the bears try to make up some performance points.
Have a good evening, and I'll see you tomorrow |
