According to IBD Big Picture there is a huge short interest on the NAZ could this not be contrarian??
I think we take out Wednesday's Highs all bets about going lower are off..BWDIK...
IBD's The Big Picture
Thursday, June 28, 2001
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Rate Cut Gets A Ho-Hum Reaction
Investor's Business Daily
Maybe a quarter-point rate cut isn’t so bad.
The Fed gave the stock market less than what it was hoping for Wednesday. Alan Greenspan and his central bankers lowered the fed funds rate 25 basis points to 3.75%, half of the half-point cut many traders wanted.
The market was feeling optimistic ahead of the Fed’s afternoon announcement. The Nasdaq climbed nearly 1%. The Dow industrials added as much as 0.6%, while the S&P tempered the enthusiasm with a 0.3% gain.
Stocks retreated once the news crossed the wires. But they didn’t implode.
The Fed left the door wide open for additional cuts and downplayed any inflation concerns. “The patterns evident in recent months — declining profitability and business capital spending, weak expansion of consumption and slowing growth abroad — continue to weigh on the economy,” the Fed said in its statement. “The associated easing of pressures on labor and product markets are expected to keep inflation contained.”
The Nasdaq quickly made peace with the quarter-point cut and closed 0.5% higher. Volume even picked up slightly as advances ran ahead of declines.
The Dow and S&P tested positive territory after the initial sell-off. But the two indexes eased lower late in the day. The Dow fell 0.4% as the big-cap S&P dropped 0.5%. NYSE volume came in slightly below Tuesday’s level, which is what you’d like to see when these indexes slip.
As on Tuesday, the broad market was stronger than the major indexes let on. NYSE advances maintained their lead over declines. Smaller stocks held the key once again. The S&P SmallCap 600 stepped up 1.1%, leading the way for the S&P MidCap 400’s 0.5% gain.
Indeed, many lesser-known stocks that have maintained their market leadership rallied smartly.
Direct Focus (DFXI) popped up 2.81 to a new high of 45.81 in double its normal volume. The direct marketer of fitness equipment broke out in late April, dawdled a few weeks and then headed higher. The company has achieved an Earnings Per Share Rating of 99, the best possible. Profit in the latest quarter powered ahead 65% as sales jumped 58%.
Copart (CPRT) hit a new high of 30.10, bolting 2.04 on more than three times its normal volume. The salvaged-car auctioneer began outperforming in late September as the major indexes took another leg down in the bear market, a notable sign of strength. The stock led the market again in early April as it broke out before the Nasdaq, Dow and S&P followed through. At the time, average daily volume was running 190,000 shares. It’s swelled to 590,000 as institutional investors build their positions.
While many small- and mid-cap leaders have stabilized and even thrived in the past week, Wall Street is feeling less bullish — which is actually good for the market. The percentage of bullish investment advisers dropped to 48% from 51%.
And Nasdaq investors have raised their short bets. Short sellers hope to profit from a price decline in their positions.
Short interest on the tech-heavy market reached 3.79 billion shares this month, up from 3.68 billion in the May period.> |
