Walberg's commentary today <<Updated: 25-Jun-02
General Commentary
The Nasdaq fell to within 27 points of its post-9/11 low in early trading Monday, before buyers stepped in and stopped the bleeding... Unfortunately, much of the buying was related to short-covering... Given scope of recent decline, and fact that index was nearing influential support, Briefing.com was not surprised to see short sellers secure some profits... However, as we have seen repeatedly over the past few months, the index failed to sustain upward momentum into the close due to a lack of real buying interest.
Assuming the current rebound is nothing more than a technical bounce from oversold territory, investors should look for the advance to start running out of gas in the 1540-1550 area... Not only is there considerable congestion in this area, but the regression line of the Jan-Jun swoon comes in at the lower-end of this band... The regression line acted as stubborn resistance on the last (short-lived) rally try... Should the index manage to break above this ceiling amid an unexpected surge of optimism, traders can expect the Nasdaq to encounter resistance at 1600, 1635 (50-day moving average) and 1670 (two standard deviations above regression)... A move to the latter ceiling would represent a rebound of 14% from current levels... Not unusual for a corrective rally, but unlikely considering the preponderance of pessimism.
Considering that most recovery attempts have stalled out within a matter of days, if not hours, investors are probably better off looking to fade the advance than to play the bounce... Among the stocks that look to be vulnerable to renewed selling are QLogic (QLGC), Apple (AAPL), KLA-Tencor (KLAC), Intel (INTC), Dell (DELL) and Applied Materials (AMAT).
Robert Walberg, Briefing.com>> |
