From Briefing.com: Updated: 02-Dec-02 - General Commentary - So looking back, the Nasdaq has put together quite a run. This past week marks seven weekly gains now out of the prior eight weeks. The lone standout was a consolidation week in which the index dropped all of 1.4 points -- again for the week -- between October 28th and November 4th. So the markets continue to exhibit considerable strength in the wake of their pronounced, 31-month bear market.
Now in a piece written Friday morning, we addressed the present technical outlook on the Nasdaq. We noted the index was facing an important test of its 200-day simple moving average, which started the session at 1,497. Now conventional wisdom suggests this was -- and will continue to be -- a genuinely important test for the Nasdaq. It would have been somewhat surprising if the index had managed to clear this level on a less liquid, holiday-shortened session.
Yet note that as it turns out, the index did observe its 200-day simple moving average. In fact, the Nasdaq topped out intraday precisely on the 1,497 mark before turning modestly lower for a consolidation day. Keep in mind today's move came within three points of our intermediate-term target in the range of 1,500 to 1,520 identified on November 18th. Nonetheless, our near-term technical assessment remains essentially the same following Friday's thinly traded session.
Looking towards the upcoming week, in terms of identifiable catalysts the corporate earnings calendar is relatively light -- this means economic data should have a disproportionate impact on market direction. Keep an eye out for the ISM Index (Institute of Supply Management) due out Monday. The ISM is one of the first comprehensive economic releases of the month, and as it turns out for December, it precedes the employment report. While technically the ISM covers only the manufacturing sector, it also often provides accurate insights regarding the tone of subsequent releases.
Outside of the ISM Index, Friday should be an even more important day in which we'll be looking towards the marquee November Employment Report. This is the broadest indicator of economic activity released each month. Also keep in mind that the employment data is tied in closely to the consumer, as concerns over softness on the consumer side have become a more prominent argument of market bears. Now in the absence of any complete surprises, it's worth reiterating that we continue to view the near-term bias as higher so long as any upcoming sell pressure remains orderly and no significant technical damage is inflicted. Mike Ashbaugh
1:28PM Weekly Wrap :
Dick Van Patten would be the first to tell you that eight is enough, but it goes without saying that bullish investors certainly wouldn't mind seeing the Dow post a gain for a ninth consecutive week. Whether that happens remains to be seen, yet bullish investors are apt to be content just the same knowing that this week's winning performance by the Dow capped its best two-month run in 15 years.
The prospect of another weekly gain, however, looked doubtful on Tuesday when the market suffered a broad-based, and sizable, retreat on the heels of good economic news, namely the upward revison to Q3 GDP, the Conference Board's Consumer Confidence reading, and the New Home Sales report for October. The market's negative disposition that day was striking from the standpoint that such a response, after a strong run, often serves as a signal that the market is due for a pullback of some sort. Separately, we suspect the proximity of the Dow and the Nasdaq to a key resistance point in their 200-day simple moving averages (currently 9183.20 and 1494.84) is also stirring similar thoughts.
Even so, thoughts of consolidation were dismissed on Wednesday when the market staged a broad-based, and even more sizable, rally in the wake of another batch of encouraging economic data (initial claims, personal income, personal spending, Michigan Consumer Sentiment, Durable Orders and Chicago PMI) that undermined the double-dip recession argument and affirmed for investors that the economy is improving-- albeit gradually, but in a manner that should bode well for earnings prospects. With that in mind, investors bid stock prices noticeably higher in an advance that was aided by short-covering and asset re-allocation (out of treasuries and into stocks).
Reassuring mid-quarter updates from Novellus Systems (NVLS) and Sun Microsystems (SUNW) also contributed to the bullish bias on Wednesday as investors were enthused by the understanding that business conditions don't seem to be getting any worse in the technology sector. Although that understanding is a debatable rallying point, it has been a motivating factor for some time now as the market has run on the expectation that a notable improvement in the economy, and earnings, is no more than a couple of quarters away.
We will be provided with added insight on that matter next week as the economic calendar remains a focal point. Key reports include Auto & Truck sales (Monday), the ISM Index (Monday), the revision to Q3 Productivity (Wednesday), ISM Services (Wednesday), Initial Claims (Thursday), and the November Employment Report (Friday).
Consistent with the implications embedded in this week's encouraging economic data, many of the leadership groups, like airline, paper, steel, auto, and aluminum, were those that are tied more closely to the economic cycle. On the flip side, the majority of underperforming groups were those that are seen as safe-havens during trying times for the economy and/or the stock market. They included the likes of the beverage, household products, drug store, managed care, and gold groups.
The earnings calendar next week is devoid of companies with market-moving stature, but the events calendar isn't. AOL Time Warner (AOL) will be holding an analyst meeting on Tuesday and Intel (INTC) will be providing its mid-quarter update after the close on Thursday. Another event next week that should draw plenty of attention is the European Central Bank meeting on Thursday where more than a few market participants would like to see the stubborn body do its part to promote global economic growth with an interest rate cut.
YTD chart of major stock indexes
Index Started Week Ended Week Change % Change YTD
DJIA 8804.84 8896.09 91.25 1.0 % -11.2 %
Nasdaq 1468.74 1478.79 10.05 0.7 % -24.2 %
S&P 500 930.55 936.31 5.76 0.6 % -18.4 %
Russell 2000 399.28 406.38 7.10 1.8 % -16.8 %
Close Dow -35.59 at 8896.09, S&P -2.56 at 936.31, Nasdaq -9.15 at 1478.79: The equity market finished slightly lower for the session, but it was still good enough to give the Dow its 8th straight week of positive finishes, and the Nasdaq and S&P 500 their 4th straight week of net gains... The indices spent the better part of the shortened trading session fluctuating around the unchanged mark, in large part due to a lack of corporate, economic, or research news... As a result, this uneventful day translated into lackluster trading action on the part of investors ...
Thin volume levels, combined with a dearth of leadership from influential groups, only added to the equity market's ennui... Additional impediments to buying interest included discouraging news out of United (UAL) that its machinists voted to reject pay cuts vital to the carrier's request for $1.8 bln in government financial aid, in addition to yesterday's news of the bombings at an Israeli holiday resort in Kenya ... At the open, technology came out of the gates relatively strong with the semiconductor group pacing the advance following a reassuring report from the Semiconductor Industry Association (SIA) that showed worldwide chip sales rose 1.8% sequentially in October ....
The Nasdaq's climb, however, ran out of steam when it bumped up against a key resistance point at its 200-day simple average (i.e. 1497)...Tech's subsequent retreat led the broader market's decline and put a damper on small advances in transportation and financial .. With that in mind, the market traded in a sideways fashion for the majority of session, until encountering some mild, late-day selling pressure ...
The Treasury market, for its part, endured an equally dull trading session, but finished the day higher with gains noted across the yield curve in a small flight to quality bid from news of the attacks on Israelis in Kenya... NYSE Adv/Dec 1545/1526, Nasdaq Adv/Dec 1556/1581
10:14AM Sector Watch: Semiconductor : The Nasdaq Composite has pulled back slightly with the pressure coming from the semi sector (SOX 378 -0.8%, slipped as much as 2.3% off its high). Weighing on the sector thus far are: LSCC -1.3%, KLAC -1.5%, TER -3.1%, NSM -2.3%, NVLS -1.7%, BRCM -1%.
9:56AM Nasdaq testing 200-day simple moving average : -- Technical -- Nasdaq is testing its 200-day simple moving average, which currently rests at 1,497. Look for the 1,497 to 1,500 range to serve as a pivot point today. If the index should break 1,500, watch for subsequent overhead at 1,520 which matches up with a 50% retracement of the index' March to October sell wave. To the downside, look for initial support at 1,494 followed by a subsequent floor at 1,487. Please click here for a more comprehensive assessment of the technical outlook.
9:35AM Infineon downgraded at Solly (IFX) 10.28 -0.02: Salomon Smith Barney in a pre-open note downgraded IFX to In-Line from Outperform due to the worsening DRAM environment.
8:14AM Nokia valuation is stretched - Lehman (NOK) 19.48: While Lehman believes that the co's strategy update and mid-quarter update should offer support to the share price in the near-term, over the next 3 months firm expects to see the share price trend down based on their view that valuation has now become stretched and that expectations may have run too high in recent weeks.
finance.yahoo.com^SOXX+ALTR+AMAT+AMD+BRCM+IFX+INTC+KLAC+LLTC+LSCC+LSI+MOT+MU+MXIM+NOK+NSM+NVLS+TER+TXN+XLNX+^IXIC+^NDX+^SPX+^VIX+^VXN+SMH&d=t
Thanks for the tables Don. I had a great Thanksgiving. Now I need to start the diet back up so I can over indulge again at Christmas.
RtS |
