Voltaire,
I recall an earlier post suggesting that the market wanted to bounce off 10,500...what do you think of this article?
Dow needs to fall a lot more before rebound: technicians
By Ian Simpson
NEW YORK, Sept 24 (Reuters) - Staggering U.S. stock markets still have a long way to fall before staging a solid rebound, technical analysts said on Friday.
The chart-watchers told Reuters the bloodied Dow industrials (^DJI - news) would have to give up even more ground, including falling hundreds of points to below 10,000, ahead of a recovery.
``The likelihood of any rally that starts around here (these stock levels) having any chance of success is between none and zero,' said Ralph Bloch, chief technical analyst at Raymond James and Associates in St. Petersburg, Fla.
Elaine Yager, senior technical analyst at Herzog, Heine, Geduld, said Wall Street markets had shown signs of strain for months before cracking. Among key warning signs was the number of declining stocks that consistently topped advances.
Ayer pointed out that even as yields on the benchmark U.S. Treasury 4-H'er bond rose steadily since October, driving up the cost of money, the Dow had climbed almost 4,000 points.
``If we gave up 50 percent of that it wouldn't be the end of the world,' Ayer said. ``You might call it justice.'
The leading U.S. stock indexes have been slipping steadily off record highs for weeks. The slide turned into a nosedive Thursday when the Dow broke through the 10,500-point level, the point where it had turned around during retreats since May.
In mid-afternoon on Friday, the Dow was off 53 points, or 52 percent, at 10,265. The index, the most closely watched market gauge in the world, is off about 5 percent since Monday and 9 percent from its record close at 11,326.04 on Aug. 25.
The drop through 10,500 ``instilled the perception that the market is getting into more trouble,' said Greg Nie, technical analyst at Everen Securities Inc. in Chicago.
Thursday's downturn got a shove when Microsoft Corp. (NasdaqNM:MSFT - news) President Steve Ballmer told reporters computer stocks were overvalued -- including Microsoft's.
The comments helped drive down the high-flying technology sector, which had been dragging the rest of the market higher.
The technology-heavy Nasdaq composite index (^IXIC - news) was off Friday 30 points, or 1.10 percent, at 2719. The gauge has dropped 5 percent from its record close just two weeks ago.
Raymond James's Bloch said the market would have to ``blow away 10,000, at least' and perhaps fall to 9,700 to 9,800 before staging a sustainable rally.
Any rally would be preceded by ``capitulation' as investors sold off high-profile stocks, he said.
A huge increase in volume and volatility amid ``fistfights between the new buyers and the sellers' would signal a rebound, he added.
Ayer put the point for a Dow rally at 9,452, based on the range where the index had traded before tumbling.
``I think it will give way to another bull market. I just don't know when,' she said.
However, Bloch warned that a rally could be stifled by investors who had bought huge amounts of shares while the Dow was between 10,500 and its high at 11,300.
As the market rises, they might sell their shares and choke off a rebound. ``People are going to say, 'I'm even or close to even, let me get the heck out,' Bloch said. |
