From Briefing.com: The market slipped back and forth between positive and negative territory during Thursday's session, ending with the major indices continuing to pare September losses. The indices all closed about 0.2% higher, with the Dow up 18.60 at 9487.80, the Nasdaq up 3.97 at 1836.22 and the S&P up 2.03 at 1020.24. Minor weakness was seen in computer hardware and some software names but in general, tech held up well. Thursday's market action was, as one might expect, a struggle between cautious optimism and uncertainty, following Wednesday's snap back from September lows and the prospect that Friday's jobs data may well bring news of a job market that remains stubbornly anemic. Job growth is likely to come at a slow pace. The bubble economy that the U.S. enjoyed in the late '90s created an abnormal level of jobs. These technology jobs disappeared with the bubble and will not likely be replaced quickly near-term. On top of this, developing Asia continues to export deflation, at the expense of other developing markets, including developing Europe and Latin America, as well as the U.S. and developed countries. The per capita income in China is close to $2,000-$3,000 within major cities and significantly lower in outlying areas; the average being around $1,000. The numbers are comparable in India and higher in developing Europe and Latin America. For example, Hungary is just over $5,000. Speak with unemployed techies and one is likely to hear the job went to India. Even jobs previously exported to Latin America and developing Europe are now being relocated to Asia. For corporations, the economics is too appealing to ignore, suggesting this trend will continue for some time. Consistent with our comments in yesterday's Tech Stocks page when we suggested investors should focus on companies that derive a greater percentage of revenues from faster growing Asia markets or with limited dependence on corporate IT spending, some names we would focus on include:
City Telecom (CTEL, 6.82 -0.03): Indirect play on developing Asia. Demand for IDD (international direct dial) and broadband services rising as Hong Kong dials into China and other markets. Recently launched pay-TV service represents large opportunity as penetration rate, at around 30%, is low relative to other markets. Above industry average margins trading at below average industry multiples. Limited float.
Overland Storage (OVRL, 15.30 +0.30): Fast growing provider of hardware and software storage solutions for mid-range networks. Storage is one area where corporations and consumers alike will continue spending. Trading at one-half industry multiples, at 0.9x Reuters Research Consensus fiscal '04E sales of $237MM and 0.7x '05E sales of $272MM; 18x '04E EPS of $0.84 and 16x '05E of $0.94.
United Online (UNTD, 33.41 +1.11): Realizing synergies from Juno acquisition. Value proposition vs. AOL Time Warner (AOL, 15.51 +0.19) is attractive. Above average margins when compared against a broad group of computer services comps. Trading at 3.8x fiscal '04E sales of $370MM and 3.2x '05E sales of $272MM; 34x '04E EPS of $0.97 and 25x '05E of $1.36.-- Ping Yu, Briefing.com
5:52PM Thursday After Hours price levels vs. 4pm ET: A mixed market in the after hours session that mirrors the lackluster trading action in the regular session. Several encouraging earnings announcements have done little to lift the spirits of investors, who remain wary because of valuation concerns. Presently, the S&P futures, at 1020, are 1 point above fair value, whereas the Nasdaq 100 futures, at 1338, are 2 points below fair value.
To begin, Starbucks (SBUX 29.97 +0.67) announced that it ended fiscal year 2003 (Sept) with better than expected revenues. Specifically, net sales rose 24% from year-ago levels, to $4.1 bln, and were above the Reuters Research consensus estimate of $4.06 bln. A large reason for the outperformance was the 8% rise in annual comparable store sales. Briefing.com has been favorable on Starbucks - owing to its strong position within worldwide markets - for some time now, and shares have increased 14% since we last wrote on the company.
Medtronic (MDT 48.45 +0.20) also informed Wall Street of what looks to be a strong Q2 (Oct). The world's largest medical devices company said that it was on track to meet the consensus estimate of $0.39. On Tuesday, Medtronic said that it expected Q2 revenue growth of 13-16%, which was also in line with the consensus forecast.
One stock, however, that has attracted a good deal of buying interest despite a seemingly disappointing piece of news is Siebel Systems (00C0 10.95 +0.40). Shares have risen 4% following the software maker's announcement that Q3 (Sept) revenues should be $320-322 mln, below that of the Reuters Research consensus estimate of $330.3 mln. The market, however, has shrugged off that piece of news in favor of Siebel's licensing revenue number - at $109-110 mln, it is above most analysts' expectations. The company also said that EPS, excluding charges, should be $0.03, in line with the consensus estimate. Competitors of SEBL that have received a bid have been MSFT, ORCL, and PSFT.
Elsewhere, stock of Silicon Image (SIMG 4.46 +0.18) has bounced back some from its slide in the regular session. The designer of semiconductor products said that Q3 (Sept) revenues should be flat to down 1% sequentially, equating to roughly $24.06-24.3 mln versus the consensus of $25.2 mln. Silicon Image also said that it saw a quarterly loss of $0.5 mln (consensus of a $0.01 profit). Investors, though, have engaged in some light buying activity as management blamed the warning on a license contract which was supposed to close before quarter-end and slipped out of the quarter.
Finally, investors will want to make note out of tomorrow's September employment report, which will be released at 8:30 ET. The consensus estimate calls for an eighth month of payroll declines, and for the unemployment rate to increase slightly to 6.2%. For more perspective on what to expect, please visit the Looking Ahead story stock.
For more detail on these, and other developments, be sure to visit Briefing.com's In Play, Earnings Calendar, and Guidance pages. -- Heather Smith, Briefing.com
6:52PM Calif. Amplifier beats by $0.07; guides for Q3 (CAMP) 6.50 +1.49: Reports Q2 (Aug) earnings of $0.03 per share, $0.06 better than Reuters Rsesearch consensus of a loss of $0.03; revenues fell 13.7 % year/year to $24.2 mln vs. the $18.2 mln consensus. Co. sees Q3 (Nov) EPS in the range of $0.07-0.12 and revenues of $30-36 mln, Reuters Research consensus is $0.04 and $23.2 mln, respectively
4:22PM Silicon Image guides below consensus (SIMG) 4.28 -0.14: Company guides below consensus for Q3 (Sep), sees a loss of $0.5 mln, Reuters' consensus calls for a $0.01 profit, sees revenues of $24.06-24.3 mln, consensus $25.2 mln. SIMG President Steve Tirado states, "A license contract which we expected to close before quarter-end slipped out of the quarter . The missed revenue and profit from this contract accounts for the difference between our reported results and Street estimates for the quarter".
9:45AM Komag started with an Outperform at Thomas Weisel (KOMG) 18.00 +0.60: Thomas Weisel initiates coverage with an Outperform rating, citing the following factors: 1) co is positioned to gain share in growing mkt, 2) further improvement in operations is likely, 3) debt restructuring should be accretive to EPS and would free co to add capacity, 4) checks suggest strong trends at all Komag OEMs and firm believes their ests for this qtr and next could prove conservative, and 5) attractive valuation. Firm's mid-point fair value est is $22.
9:35AM KVH Industries defended at Raymond James (KVHI) 22.46 -2.74: -- Update -- Raymond James maintains their Outperform rating following last night's preannouncement; firm says investors should not lose sight of the good news that was reported in the qtr (core satellite product sales up 40%, TracVision A5 momentum building), and may look to upgrade the stock if the sell-off becomes overdone; as the story shapes up over the next 12 months, firm can still envision a $35 price target.
Metrologic Inst (MTLG) : Co announced that it will exceed its Q3 projections; for the qtr, MTLG says sales rose 17% to $32.8 mln, which is slightly above co's previous guidance of $31-32 mln (Reuters consensus $32 mln). Based on preliminary analyses, co sees Q3 EPS of $0.22-0.25 vs previous guidance of $0.20-0.23 (consensus $0.24).
Entegris (ENTG) 11.78 +0.18: Before the open, reported Q4 (Aug) earnings of $0.02 per share, in line with the Reuters Research consensus of $0.02; revenues rose 11.7% year/year to $71.0 mln vs the $71.0 mln consensus. Co. expects Q1 sales for Y04 to be "slightly less then fourth quarter 2003 result". Q4 revenue was $70.9 mln, Reuters Research estimate is $68.9 mln.
3:56PM MDC Holdings (MDC) 59.00 +0.40: Small-cap stocks have been among the hottest groups of 2003 - with the Russell 2000 index higher by 31% year-to-date - and homebuilding shares have also topped the list of leading gainers. Thus it makes sense that the stock of a small-cap, home construction company would boast one of the top performances of the year - up 69% since January.
MDC Holdings, whose subsidiaries build homes under the name Richmond American Homes, can be considered a poster child for the homebuilding sector. The company has reached new highs in terms of operating profits, home closings, and revenues as the housing boom has shown no signs of cooling. Housing starts, as well as new and existing home sales, have hung near record highs and supported solid growth across most regions of MDC Holdings's territories.
Today, the company preannounced record Q3 (Sept) home orders, home closings, and quarter-end backlogs results. Management said orders, net of cancellations, rose 19% to 2,910 homes, and the backlog jumped 23% to 6,277 homes (with an estimated sales value of $1.650 bln). As a result, MDC Holdings expects to close approximately 11,000 homes in 2003, and looks for Q3 EPS to exceed the high end of analysts' estimates. The current range on Wall Street is from $1.48 to $1.73, as compared to last year's figure of $1.57 and the Reuters Research consensus expectation of $1.63.
Buyers' reaction to the news, however, has been lukewarm as the stock has edged only 1% higher. This slight move is hardly surprising considering the shares' phenomenal performance, and 18% run since the beginning of September (versus a relatively unchanged result from the S&P 600 Small-cap Index). Consequently, we would advise investors to book some profits at these levels, but retain MDC as a holding in their portfolios. The company's still regional presence - in Virginia, Colorado, and Arizona - leaves it plenty of room to expand, and plans to enter the Texas and Florida markets bode well for its growth story. -- Heather Smith, Briefing.com
3:25PM Looking Ahead : Tomorrow is the first Friday of the month, and while that means different things for different people, it means one thing for the stock market: the prior month's employment report will be released. In this case, we're talking September, and if the consensus estimate is hit, we're also talking an eighth consecutive decline in nonfarm payrolls. The table below provides a snapshot of how the market, and Briefing.com, expect the employment report to shake out. Added perspective on the key components of the employment report can be found on our Economic Calendar.
Component Briefing.com Estimate Consensus Estimate Prior
Nonfarm Payrolls -40K -25K -93K
Unemployment Rate 6.1% 6.2% 6.1%
Hourly Earnings 0.2% 0.2% 0.1%
Avg. Workweek 33.7 33.7 33.6
This report, which will be released at 08:30 ET, will set the tone for the day. As suggested in today's Page One Story Stock, a larger than expected drop in nonfarm payrolls will raise fears that the "jobless recovery" is not sustainable. An increase of any amount, on the other hand, could produce a bullish reaction similar to the one seen on Wednesday in the wake of the ISM release (the ISM Services number is due out on Friday, too). Our view is that job growth will pick up in the fourth quarter and that the economy will grow at a solid pace. Thus, while a decline in September payrolls is likely, that will not by any means prove that the economic upturn is unsustainable.
That bigger picture view, and the fact that employment is a lagging indicator, could very well get lost in the wake of a weak employment report since the market, at current levels, is keen on receiving economic news that validates the view that the economy is/will be gaining momentum. In truth, the real surprise would be if the employment report were strong as continued job losses in the manufacturing sector and an anemic level of hiring activity that is implied in the 4-wk moving average for initial claims (i.e. 404K) tips the scale in favor of an uninspiring report.
Market participants of late have been eager to find an excuse to take some profits. A weak employment report will provide that excuse, but ultimately, we would expect the market to re-group from a knee-jerk sell-off as it holds fast to the view that employment is a lagging indicator, that domestic manufacturers will gain a competitive advantage from the weakening dollar, and most importantly, that corporate profit growth is a precursor to a pickup in hiring.-- Patrick J. O'Hare, Briefing.com
1:38PM Helen of Troy (HELE) 23.01 -2.10: Shares of Helen of Troy have spiraled 8% after the personal care products company turned in a Q2 (Aug) report that seemed to raise more questions than it answered. Helen delivered strong headline numbers - topping the Reuters Research EPS estimate by $0.06 and issuing FY04 (Feb) and FY05 forecasts that were above the consensus expectation - but investors found some points in the release to take contention with.
To begin, the company's tax rate was much lower than in previous quarters - at 9.2% versus 24.4% in the year-ago period - and was responsible for much of the bottom-line's upside. In fact, it is debatable whether Helen of Troy would have met the consensus estimate of $0.36 using the historic tax rate. A poor performance from its Tactica division weighed heavily on both EPS and sales.
Revenues, in fact, missed the consensus estimate of $124.1 mln, and showed a slight 4% increase, to $115.8 mln. Sales at the Tactica arm fell 50% from the prior-year figure, to $10.5 mln, and resulted in an unprofitable quarter for the division. In response to such pronounced weakness, management announced that it is evaluating strategic alternatives for its investment in Tactica, which includes possible sale of all, or partial interest, of the group.
A final factor that has spooked holders of HELE has been the balance sheet. While cash was still healthy at $33.4 mln, it was down 61% from year-ago levels in an extension of the past two quarters' decline. Inventories were also higher by 50% in stark contrast to the 4% increase in total sales.
On its conference call, management addressed the above items on the balance sheet, saying that inventories increased substantially on account of the new Vidal business and the company's expectation for a strong fall selling season. As for cash, that number fell due to the jump in inventories, the acquisition of six brands from Procter & Gamble (PG), and advanced payments of its licensed products.
Despite these reassurances, HELE stock has been knocked off its nearly five year high in its biggest point move in over a year. Shares have appreciated 84% year-to-date, and thus it is fair to say that the stock is priced for perfection at these levels. Any chinks in the company's armor are bound to provoke sharp profit-taking activity.
As such, Briefing.com would stress that HELE's retreat is more rooted in valuation reasons, rather than concerns over the company's fundamental picture. We would agree that investors should reduce exposure at these prices, but would not advocate closing up positions entirely. Cash is still respectable at over $1/share, and the company's strong portfolio of brands (Revlon, Dr. Scholl's, Sunbeam, and most recently, Brut) and relationships with retailers such as Wal-Mart (WMT) suggest that the fall and holiday shopping periods will be more robust than the summer season. -- Heather Smith, Briefing.com
12:02PM UTStarcom (UTSI) 35.86 +2.95: Developing markets have much lower phone line penetrations than developed markets, generally less than 10 per 100 inhabitants vs. 60 per 100. The ability to rapidly and cost effectively deploy access is critical to economic and social development. UTSI's wireless, wireline and network access equipment is based on a flexible network architecture that allow service providers to rapidly build out their networks based on existing infrastructure and offer voice, data and internet access. What makes UTSI's PAS (Personal Access System) technology appealing is that it allows for migration from wireline to wireless and integrates with broadband technologies and 3G. For service providers, this means they can focus on rapid deployment and subscriber growth, and realize a faster return on investment compared to laying down copper and fiber, which is both costly and time consuming. For consumers, this translates into services that are generally affordable and consistent with the per capita income of the developing market.
UTStarcom raised Q3 guidance last night. Revenues went from $495-505MM to $570-580MM; EPS from $0.42-$0.43 to $0.44-$0.45. Management expects gross margins to be in the 32% range vs. the 34% guidance, given during the Q2 conference call, as handset sales account for an increasing percentage of overall revenues. Full year '03 revenues are expected to top $1.9B, up from previous guidance of $1.8B; meanwhile, EPS is anticipated to be $1.59 vs. previous guidance of $1.55. Separately, we note that UTSI was identified on our Tech Stocks page last night as a compelling investment idea.
We think UTSI, with deployments in China, Vietnam, Thailand and Africa, is an attractive play on both telecom equipment and developing markets. With a greater than 60% share of the fast growing China market (80% of sales), and a toehold in Vietnam, another rapidly developing market with a population of approximately 80MM people, half below the age of 30, UTSI is well positioned to continue posting double digit top-line growth over the next few quarters. At $35, UTSI is trading at 1.9x '03E sales and 1.7x '04E sales; 22x '03E earnings and 18x '04E earnings. This compares favorably against leading industry comps which trade at 1.9x '03 sales and 1.8x '04E sales; 94x '03E earnings and 26x '04E earnings.--Ping Yu, Briefing.com
10:45AM Ahead of the Curve: Millennium Pharmaceuticals (MLNM) 16.06 +0.16: Friedman, Billings came out yesterday with an upgrade to outperform. The basic thesis behind the upgrade is that new data provided by the company on prescription issuance and inventory levels support a higher projection of revenue and earnings. The target price set by Friedman is now $20, instead of $15. The real problem with target prices on Millennium is the market multiple to assign in the future. Millennium is already so extremely valued that high business success is already priced in. Using traditional target pricing techniques, which project predictable revenue streams and earnings models, the conclusion is that Millennium is pretty close to its full valuation. This is one reason why the stock has gone nowhere since the first meaningful treatment for cancer was approved. On those traditional techniques, it is hard to construct an investment premise for MLNM, despite the fact that it has the only real proprietary product for meaningful treatment of myeloma cancer.
The most meaningful investment premise for MLNM now, and what drives most of the current investors, is the extendibility of Velcade applications. Velcade was approved for only one type of cancer: multiple myeloma. If Velcade works on other cancers, and is approved, the market and potential for the drug could expand by orders of magnitude. At the moment, however, those ideas are still concepts and they make MLNM a concept stock.
What is the concept? Velcade is a proteasome inhibitor. Proteasome are molecular protein structures within a cell that destroy unwanted protein structures in a cell. You can think of them as the garbage disposal within an individual cell. In fact, they even look like a tube with flared ends. In healthy cells, the proteasome swallows biproducts of normal intra-cell chemistry, breaks them down, and deposits the unwanted molecules outside the cell and recycles the rest. (The full mechanics of how proteasomes work is still a major research project at many universities.) Healthy cells have a complex signaling mechanism whereby they reproduce and then die continually. New epidermal cells, your outer layer of skin cells, are created every three days, for example. Cancer cells are essentially cells where the normal cycle of reproduce and die has gone wrong and the cells reproduce rapidly and incorrectly. In unhealthy cancer cells, the proteasome begins destroying valuable proteins within the cell. Exactly why this happens is still unclear. It is also unclear whether the proteasome-gone-bad phenomenon is a result of the cell becoming cancerous or whether the proteasome's malfunction precedes the change of a cell to a cancerous state. It could be that the proteasome's action is a reaction to the already existing cancerous state, or it could be that the proteasome's turn to the dark side causes the cell to become cancerous. This core issue is still being studied and argued in academic circles.
The principal idea behind Velcade is to turn-off the proteasomes. What is agreed upon (mostly) in academics is that in a cancerous cell, the normal reproduce-then-die chemical signaling mechanism is upset, somehow. The remarkable idea by Julian Adams in the pre-Millennium days was that if you could only interrupt this signaling mechanism, you might be able to slow down cancerous growth. Since signaling within a cell is all chemical and primarily based on protein structures, turning-off the proteasome would drastically alter the proteasome chemical actions in the cell. After literally years of research, it turned out to be right, to the surprise of many in the academic world. Velcade stalls the proteasome from destroying wanted and unwanted protein structures in a cell. For some reason, still not understood, inhibiting the proteasome alters the signalling structure in cancerous cells in such a way as to slow down their rapid, uncontrolled reproductive process. Velcade does not stop cancerous cells from reproducing, but it does slow them down so significantly that the disease becomes much more manageable. However, since Velcade is applied systemically (into the bloodstream), it has an inhibiting effect on proteasomes in healthy cells, as well, which is probably the cause of the long list of side-effects. For myeloma, however, the benefits outweigh those side-effects.
Although this description is simplified, it captures the basic concept behind Millennium's concept and current valuation problem. Velcade was approved only for multiple myeloma cancer conditions. There is no real negative data that shows Velcade does not work for other cancers - multiple myeloma was only the first defined cancer condition where the data showed positive results. Since the proteasome inhibitor idea is so fundamental to the basic cancer process, might it work on other cancers? The idea that it will is why MLNM carries an excessive market capitalization of $4.8 billion. There are numerous clinical trials ongoing right now for Velcade use with other cancers, although a complete list is hard to come by. The risk with Velcade, in our uninformed scientific opinion, is that the side-effects of inhibiting proteasomes in healthy cells as well as unhealthy cells are too strong with some cancers. In other words, for lesser cancers, the positive results are offset by unintended side-effects. No one knows the answer to this question; that's what clinical trials are for. In the meantime, Millennium remains a stock whose valuation is based more on future potential than current business results, despite the fact that it owns the first real biotech treatment for cancer. If even first clinical trial results for Velcade applied to a different cancer comes in with poor results, the damage to the stock could be severe, while the upside might be minimal. As long as you recognize these risks behind the stock, it's okay to own it long term. But we think many MLNM holders don't really get that. - Robert V. Green, Briefing.com
10:22AM Ratings Briefing: ODP & SPLS : Banc of America downgraded Office Depot (ODP 14.00 -0.58) and Staples (SPLS 23.85 -0.55) to Neutral from Buy, but analyst Aram Rubinson wants you to know that the ratings changes are for very different reasons. Staples's call is based on a less compelling risk/reward ratio - the stock simply reached the firm's $25 price target. With shares trading at close to 20x FY04 (Jan) EPS, it's hard for Banc of America to argue for a P/E multiple greater than 20x - something it reserves for retail leaders such as Wal-Mart (WMT), Bed Bath & Beyond (BBBY), and CarMax Group (KMX).
As for Office Depot, the firm cites fundamentals and execution risk for that downgrade, and not valuation. Banc of America has little faith in the operational environment and believes that the departure of several management figures will only exacerbate the company's current problems - namely, stemming market shares losses in North America, catching up to Staples's performance, and integrating a recent acquisition in Europe.
Due mostly to the negative turn on Office Depot's story, shares of ODP are down 4% versus down 2% for SPLS stock. The implication that a retailer would continue to underperform in a strengthening economic environment certainly raises concerns about the company's competitive position. Conversely, a downgrade driven by valuation-reasons does not dilute the strength of a company's story - it simply suggests that investors take some profits, but continue to maintain exposure to the name.
To that end, Banc of America's call reiterates the need for investors to be selective in the current market environment, in which most stocks - regardless of financial metrics - have taken off. Momentum trading has lifted shares to progressively higher levels, and those companies that do not possess the fundamentals to support the moves are increasingly vulnerable to stock pullbacks. As such, we would continue to recommend caution at current prices, and advise investors to look for undervalued companies that possess solid growth potential in their buying decisions.-- Heather Smith, Briefing.com
9:58AM The Technical Brew : Despite the broad market rally yesterday as the Dow rocketed up 194.14, the S&P 500 up 22.25, and the Nasdaq up 45.31, the technicals on many sectors continue to look weak. Instead of seeing stocks breaking out of bases or bouncing off support levels (both signs of strength), many stocks just appeared to be making an expected short-term correction in light of the recent sell-off. The majority appeared to be rallying into resistance as they failed to break through their downtrends beginning from their September highs. Also of note was the moderate volume accompanying these large gains suggesting there was little power packed in their punch.
Of interesting note is the Fibonacci retracements seen amongst the DIA, SPY, and QQQ. Yesterday's rally saw a 50% retracement from the September highs for the DIA and SPY, but only a 38.2% retracement for the QQQ. This suggests weakness among Nasdaq stocks in the broad based rally, especially among the Semiconductor and Internet groups.
We saw strength in Home Builders yesterday with stocks like KBH, CTX, DHI, LEN, RYL, HOV, and MDC all trading up more than $2. Important to note is the Dow Jones Equity REIT Index broke out of its September base to a new annual high. The index continues to be in a strong weekly uptrend since its March lows.
Today I expect most of yesterday's gains to disappear since Fibonacci retracement levels were hit. Traders may look to short weak stocks in sectors that underperformed yesterday particularly in Defense (LLL, NOC, GD); Internet (UNTD, YHOO, DCLK, PCLN); and Semis (AMD, ALTR, LSI, XLNX). In the event of another market rally today, look to go long the strongest stocks in the strongest sectors, especially in Home Builders, Financials (C, MER, LEH, BSC), and Consumer Household Products (PG, CL, KMB, DL).
Any questions or comments can be emailed to Scott K. Smith, Briefing.com
9:17AM The Technical Take : The start of the new month/quarter brought the bulls back into the fray yesterday with solid gains posted across the board. After more than a week's worth of pressure, there was some logic to the recovery. First, we often see market participants/funds put some sidelined money back to work at the start of a new quarter. Second, after roughly a 5%-7% decline to supports (50 day averages, retracements etc.) which created a near term oversold posture, the indices were due for a bounce.
It is always encouraging to see the buying interest resurface but given the contributing factors above and the fact that volume declined on this big/broad rally, at least some question is raised as to the sustainability of this move. Other points of interest for today: data has turned mixed and with jobs tomorrow traders may be reluctant to become aggressive on the buy side again; last Oct 01 the market surged (had been trending lower at the time and also came on lower volume) and followed through in early action on Oct 02 but closed the day with a sizeable loss.
Nasdaq Composite: We suggested before the open yesterday that the index was overextended on a short term basis as it probed important support (50 day averages/50% retrace of Aug/Sep rally). The second suggestion was to watch the 20 exp mov avg on the hourly chart as it often provides signals for potential intraday trend development. Note the early jump yesterday in the chart below stalled near this average (and resistance at 1813/1812). Once cleared on the second attempt the index tacked on as much as 20 points.
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