This is a number of opinions on the trading for the day. I am not sure I agree with the first conclusion. A look at a cross section of stocks
indicates a stronger and more broadly based closed than indicated by the indices. The banks and retailer for the most part finished all in the black after spending most of the day in the red. As the bank and retailer tend to be a good reflection of inflation sentiment, the market is not as pessimistic as the first article suggest. Most tech sectors like telcom equip, chips, chip equip and internet finished relative strong for the day. Only software looked mixed.
Stocks like GALT and CNXT appear to be affected by MMCN related
issue posted by Iris. Rumored accounting issues affect MTZ.
SP500 cruised through the 1316 level with no problem in the last hour, suggesting that there is still plenty of bullish sentiment.
Stocks typically rally after holidays as posted on this thread before.
It might be worth considering picking up stocks that go down in the next few days in anticipation of a post holiday rally.
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Close Dow -84.85 at 10829.28, Nasdaq +26.65 at 2739.34, S&P -3.61 at 1320.41:A technical
rebound from an oversold position and portfolio rebalancing allowed the Dow to trade up late in the
session, only to end the session in very much in the red again as another wave of selling materialized...
While the market began the day very much in positive territory, the indices traded down for much of the
session following the premature release of the August NAPM report at noon which sent bonds tumbling...
The increase in the NAPM index from 53.4% in July to 54.2% in August prompted bonds to sell off as
the price index also rose to 59.8% which proved to be a negative factor for the market... As the 30-year
bond yield rose to 6.11%, stocks tumbled with the Dow losing more than 120 pts... But late in the
session, a rebound ensued as some market players viewed the market to be very much in an oversold
position... While this view allowed the Dow, Nasdaq, and S&P to again climb into positive territory, the
euphoria was short-lived as another late wave of selling sent the Dow and the S&P tumbling again... Only
the Nasdaq managed to close higher, helped by a rebound in certain tech and Net stocks... Among Dow
issues that performed well today were Goodyear Tire, Hewlett-Packard, IBM, Chevron, Exxon, and
General Motors, while depressing the Dow were American Express, AT&T, Caterpillar, DuPont,
Eastman Kodak, International Paper, Sears Roebuck and Union Carbide... Trading volume was again on
the light side, though much mproved from yesterday's very thin volume... Advancers trailed decliners by
less than 2-to-1 on the NYSE and Nasdaq as the A/D line continues to be a negative for the broader
market even when it is able to mount a rebound... DJTA -44.05... DJUA -1.25... Russell 2000 +0.40...
S&P Midcap +0.39... SOX +1.94.
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Because of historical precedent, it is considered "traditional" for the market to rally
after the Labor Day weekend. The premise is that traders return from vacation and start buying stocks
again. That may not have much foundation in financial theory, but it does happen fairly regularly, and
volume will certainly pick up. So, even though it seems slow now, there are probably a lot of traders with
itchy fingers just waiting to pull the trigger in anticipation of a potential rally next week. It is not a sure
thing, but is certainly worth considering.
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Cabletron Systems (CS - 16-5/8) - Call The Cable Guy
This technology name has not made the list of most-active options in quite some time. A look at
the stock's weekly chart gives some indication why this is the case. The 16 mark has been a
monster resistance level and has capped rallies all the way back to January 1998. Yesterday's
move through this resistance and follow through today has not been lost on option traders, as the
October 17-1/2 call has been active today on volume of 4,567 contracts. This is the most active
option on the AMEX. The equity's next busiest option is the September 15 call, with 1,239 contracts
crossing the tape, making it another one of the most active contracts on the AMEX. In addition,
1,077 contracts have traded on the September 17-1/2 call, and 1,000 contracts have crossed the
tape on both the January 15 and 20 call positions. CS is ahead by one percent this morning to
reach its highest level since December 1997.
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Interest-rate concerns continued to be on traders' minds on Tuesday, as U.S. stocks tumbled lower after
a late-day sell-off. This slippage occurred even though investors received an early peak at important
manufacturing data, as the National Association of Purchasing Management accidentally published the
results of its monthly index on a web site a day before its scheduled release. The reading showed a rise
to 54.2 from July's 53.4 and the consensus forecast of 54.7. A figure above 50 indicates an expanding
manufacturing economy. News of continued expansion fueled concerns that the Fed may raise interest
rates yet again. The 30-year U.S. Treasury bond went down 8/32 to bring the yield to 6.06 percent. The
Dow Jones Industrial Average also felt this selling pressure, even though it climbed as much as 68.1
points around 10:25 a.m. By 12:20 p.m., however, the Dow reached its lowest point of the day, dropping
132 points. The Dow managed to slip above breakeven from 3:00 to 3:40 p.m. before a sell-off in the final
20 minutes took the blue-chip indicator to a close of 10,829.3, an 84.9-point setback for the session. It
was the fourth straight losing day for the Dow. This price action took the Dow below its 20-week moving
average. Goodyear Tire & Rubber and Hewlett-Packard ended up with double-digit Dow gains. Finishing
with double-digit Dow losses were American Express, Caterpillar, DuPont, International Paper, Sears,
Roebuck and Co. (which reached its lowest level since November 1995), and Union Carbide. Volume
rose by about 243 million shares compared to Monday's total to hit 842 million shares. Down volume
tripped up volume by 70 percent, while the 1,662 decliners exceeded the 1,304 advancers. New lows
eradicated new highs, 100 to 20. Stocks recording new highs included Cabletron Systems, Texas
Instruments, and Analog Devices. Allstate, Allied Waste Industries, and Waste Management were found
on the new lows list. The S&P 500 Index (SPX) followed a similar pattern to the Dow, finishing with a
3.61-point loss to land at 1320.41. The SPX closed at its worst level since August 12.
Paced by the strength of its large-cap technology components, the overall Nasdaq market rose solidly, as it temporarily shook off interest-rate worries. Seven of the eight Nasdaq indices registered advances, with three shooting up by more than one percent. The Nasdaq Composite (COMP) gapped up nearly five points at the opening bell and moved higher by up to 12.5 points roughly 90 minutes into Tuesday's activity. However, this uptrend didn't last, as the COMP suffered a 41-point loss around 12:20 p.m. Unlike the Dow, the COMP rallied upward throughout the rest of this session to close at 2739.3, an increase of 26.7 points. This move into the black took the COMP above its 10-day moving average after closing right on this short-term trendline yesterday. The upswing also erased a three-day losing skid for the COMP. Volume rang up at 966 million shares, which is about 173 million shares above Monday's figure. The 1,967 declining issues surpassed the 1,861 advancing issues, and new lows held an 82-to-61
advantage over new highs. However, up volume turned the tables on down volume by 53 percent. Sun
Microsystems topped the new highs list along with Ariel and Amylin Pharmaceuticals. The new lows list
featured Brightpoint, CBRL Group, and Theglobe.com. After declining by over three points in the early
afternoon, the Russell 2000 Index (RUT) climbed above breakeven shortly before the closing bell to wrap
up today's action at 427.83, a gain of 0.47 points. This move ahead helped the RUT barely stay above its
20-month moving average. |
