RECAP & STOCKS TO WATCH FOR TUESDAY, 12- 26-00
Santa Claus paid a visit to Wall Street on Friday, delivering his usual “day before Xmas” rally. The Nasdaq Composite jumped 7.56%, led by Redback Networks (RBAK) up 33%, Juniper Communications (JNPR) up 31%, Ciena Corp (CIEN) up 29%, Broadcom (BRCM) up 21%, Brocade Comm. (BRCD) up 24%, Network Appliance (NTAP) up 26%, and Sun Micro (SUNW) up 18%. Strength was seen in the semiconductor, B2B, fiber optic, and Internet sectors. Two heavyweights that didn’t participate in the rally were Intel (INTC) and JDS Uniphase (JDSU), which fell 4.9% and reached a new 52-week low intra-day. The tech enthusiasm carried over to the Dow as it followed with a gain of 1.41%, led by IBM up 9%, Hewlett-Packard (HWP) up 9.6%, and Microsoft (MSFT) up 6.9%.
The Nasdaq Composite finished with a 176- point gain to close at 2,517, and down 5.1% on the week. Volume was a healthy 2.2 billion shares, with 91 stocks making new highs compared to 340 new lows. Blue chips bounced as well, courtesy of the consumer, cyclical, and retail sectors, as the Dow added 148 points to finish at 10,635. Volume on the Big Board was 1 billion shares, with 211 stocks making new highs compared to 91 new lows.
Looking ahead, this week is a dry data week and the economic releases this week shouldn’t have much effect on monetary policy.
The Market Volatility Index (VIX), a contrarian indicator that measures investor “fear,” continues to favor the bulls. The VIX closed under 32 (the neutral zone is 22-28) after trading over 37 on Thursday. This signals that traders are regaining some confidence to come back into the market. A move back into the neutral zone would represent a move in the Nasdaq to the 3,500 area. From a technical standpoint, support on the Nasdaq stands in the 2260-220 area, with resistance in the 2500 and then 2700 areas.
Nasdaq Comp/VIX daily chart: tradewindsonline.net
Another key area to watch this week will be volume. On many of the big tech gainers, the volume exceeded the daily averages. It wasn’t by much, but considering that a lot of traders were out on Friday, or left early, the volume figures were surprisingly strong. A continuation of this trend (prices rising on rising volume) will be a positive sign for the tech sectors going into the New Year. |
