My commentary: The biggest thing in my estimation that should cause this rally to fail is lack of volume. Friday was a very real high volume turning point for the market but perhaps that will not become immediately evident. By next week it should be painfully evident to anyone who has not taken money off the table from the long side. JMHO and I definitely reserve the right to be completely and totally wrong.
Compare the volume Today to yesterday and Friday.
Today was much lighter. Here are the final figures:
NYSE Volume: 1.28 bln...Adv: 2285...Dec: 1014
Nasdaq Volume: 1.78 bln...Adv: 2051...Dec: 1135
From Briefing.com: Tuesday was light on market catalysts, and the intraday price action showed it. Nonetheless, on a session largely driven by technicals, the major averages ultimately registered respectable gains. So from a technical perspective, the near-term outlook has improved on that late day buy interest.
Recall Tuesday morning we suggested the immediate bias would improve to the extent the index can reestablish a posture above 1619 on a closing basis. In the intraday chart below, you can see the index' response to 1619 area. Note the index touched an intraday high at 1618.6 on two distinct tests, before making its most pronounced move of the session in the final fifteen minutes. So at this point, the index is holding towards the middle of our original bias range spanning from 1619 to 1632.
Looking towards Wednesday, note the Fed's Beige Book is set for release during the trading day at 14:00 ET. Now more often than not, the details of that report come through as a non-event from the standpoint of immediate market impact. Nonetheless, the Beige Book has been known to spark reaction from time to time, which makes it radar screen material at the very least -- something to be aware of.
On the corporate earnings front, the calendar remains essentially empty. For a more detailed look at upcoming reports, please visit Briefing.com's Earnings Calendar and Economic Calendar. -- Mike Ashbaugh -- Briefing.com
4:34PM Microchip reaffirms Q1 revs in line with consensus (MCHP) 22.32 +0.01: Company reaffirms Q1 revenues of $157-164 mln vs Reuters Research consensus of $159.7 mln.
Close Dow +74.89 at 9,054.89, S&P +8.91 at 984.84, Nasdaq +23.70 at 1,627.67: An up open and very narrow trading ranges until a final half-hour push took the indices to their highs of the day...selected stocks making moves on news included General Motors (GM 36.30 +1.00) on reaffirmed profit guidance, Fannie Mae (FNM 69.87 -1.44) down on continued Freddie Mac concerns from yesterday, Micron (MU 13.15 +0.84) on positive comments at a tech conference, Boeing (BA 34.31 +1.14) on an upgrade, and Nokia (NOK 17.71 -0.25) on a mild warning on revenues...there were also sector moves...
the SOX (383.09 +4.25) semiconductor index rose despite Banc of America Securities downgrading a number of stocks...but overall, it was a rather listless day with not much volatility until that final push...bonds were hot again, as the 10-year note rose 23/32 to yield just 3.19%...bonds were helped when Fed Governor Donald Kohn said inflation was falling faster than the Fed's model expected...there is now talk that the Fed will cut short term rates 50 basis points (1/2%) at the June 25 FOMC meeting...volume started decent, but NYSE finished with just 1.3 billion shares changing hands...
a solid bounce as the indices recouped most of yesterday's losses, and the Dow closed back above 9,000...NYSE Adv/Dec 2285/1014, Nasdaq Adv/Dec 2051/1135
2:14PM Broadcom seen supplying Bluetooth components to Ford (BRCM) 25.90 +0.22: Fechtor Detwiler believes that BRCM may soon be supplying Bluetooth components to Ford. According to firm, Johnson Controls (JCI) is Daimler's lead provider for its Bluetooth based, in-vehicle phone system (which utilizes a BRCM Bluetooth chipset which gets somewhere in the range of $10 per unit). Firm's sources suggest that JCI has sealed a second major deal with Ford.
9:39AM Broadcom valuation appears stretched -- CIBC (BRCM) 26.15 +0.47: CIBC is pulling its price target and retracting its positive tilt toward the stock in light of recent 75% run since 4/1. While still expects a strong JunQ and positive outlook, believes valuation is getting a bit stretched.
9:11AM Adams Harkness downgrades semi equipment stocks : In addition to Banc of America's semi equipment downgrades (7:32), Adams Harkness downgrades AUGT to Buy from Strong Buy, downgrades AEIS, AMAT, ASYT, BRKS, ESIOE, ENTG, HELX, IFCN, MKSI, NANO, NVLS, and VSEA to Mkt Perform from Buy, and downgrades ATMI, KLAC, KLIC, NEWP, and VECO to Reduce from Mkt Perform; firm says a second half disappointment is quite possible given that inventories are building and demand remains tenuous, and firm thinks that the stocks will struggle to move significantly higher from their current levels as stock prices shift to earnings-driven valuations on 2004-05 earnings.
9:05AM LM Ericsson cut to Sell from Hold at Wells Fargo Securities (ERICY) 10.33: Well Fargo Securities downgraded ERICY from Hold to Sell citing concerns prospect of continued losses from operations and uncertain pricing and demand trends. The analyst believes the co should trade at approximately its book value of $5.13. Specific risks associated with owning the shares are its pure play on infrastructure, the co has to stay abreast of rapidly changing technologies, pricing falling and not being able to procure top talent.
8:53AM WFS downgrades NOK from Hold to Sell (NOK) 17.96: Wells Fargo Securities downgraded Nokia from Hold to Sell citing downside risk as significant and establishing a $12 price target. The analyst believes the co is appropriately valued at 16.0x FY04 EPS estimate of $0.75 per share or $12.00 with no positive catalysts for the co in the foreseeable future. Specific risks in owning the shares are described as financial risks of new mobile system orders being pushed out or if customers become insolvent, the costs associated with leading edge R&D and being able to recruit top talent.
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