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Strategies & Market Trends : Mu Gamma Lambda -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (5245)	8/31/2001 6:58:24 AM
From: Rich1	Read Replies (1) \| Respond to of 10077

The Big Picture Friday, August 31, 2001 Sell-Off Kills Nasdaq's Rally Attempt Investor's Business Daily The Nasdaq kicked its latest attempted rally in the head Thursday as a broad sell-off battered the stock market. Weak personal spending data, more layoffs from former fiber-optic star Corning (GLW) and Sun Microsystem’s (SUNW) dour outlook doomed the market from the open. The Dow Jones industrial average sliced through the 10,000 level, which always makes for ominous headlines. The blue chip index dropped as much as 221 points, or 2.2%. It finished the day down 1.7% at 9919.58. The Nasdaq composite took out last week’s low on its way to a 2.8% loss. Volume increased on both the NYSE and Nasdaq, indicating yet another day of distribution by big investors. Until they exhaust their selling, the market has no chance for a meaningful rally. The Nasdaq’s failed rally shouldn’t be a surprise. Tuesday’s decline in higher volume all but assured Thursday’s lower low. Usually one day of distribution is all it takes in the first days of an upturn. Where will it end? The March and April lows are an obvious support level that may be tested. The Dow, S&P 500 and Nasdaq are anywhere from 4.4% to 10.6% above those key areas. But don’t get fixated on prior lows, moving averages or other technical levels. The market indexes will give the first all-clear signal with a confirmed rally. Leading stocks will follow up with successful breakouts. Until then, the best place for growth investors is on the sidelines, waiting patiently for the turnaround. You might be tempted to defy the market, especially when a few stocks seem to be standing up. Pharmacy benefits firm AdvancePCS (ADVP) hit a new high on good volume. Restaurant chain Applebee’s International (APPB) blasted ahead 1.80 to 32.30, departing a 14-week consolidation. Indeed, it may be inviting to try to hitch a ride on these powerful stocks, no matter what the market signals are. But this isn’t Powerball, where ticket buyers say “You can’t win if you don’t play.” The best investors know there are times when it doesn’t pay to play. Why? For every stock that works, two or three others crumple in failure. ResMed (RMD) held its ground even as the major indexes lost their footing in May. After the maker of sleep-disorder products zoomed out of a base on May 2, it moved sideways for 16 weeks. Then it hit a new high on heavy volume on Monday. But on Thursday, the stock fell 2.10 to 55.10, its third straight drop in strong selling. Anyone who bought at the pivot of around 59.09 is now sitting with a nearly 7% loss. University of Phoenix Online (UOPX) is struggling to stay above its pivot of 28.16. On Thursday, it fell 3.70 to 31.20, crashing through its 50-day moving average. Cabot Microelectronics (CCMP) got shoved back into its base, down 2.79 to 71.15 to notch its third straight decline on accelerating volume. If the market were healthier, these high-quality names probably would breeze to new highs.