RealTime IT News

Stocks Roll Over

Stocks gave back strong gains Wednesday on fears of Japanese bank troubles and Fed comments that stocks have priced in more of a recovery than the economy is showing.

The ISDEX http://www.wsrn.com/apps/ISDEX/ managed a 1-point gain to 198, but the Nasdaq fell 10 to 2044, 54 points off its high. The S&P 500 declined 5 to 1155, and the Dow lost 56 to 10,094 after being up 120 points earlier. Volume surged to 1.5 billion shares on the NYSE, and 2.3 billion on the Nasdaq. Decliners led 16 to 15 on the NYSE, and 19 to 16 on the Nasdaq.

Oracle surged on a positive outlook, and SAP rose on better than expected results.

Broadcom boosted communications chip makers with a positive outlook.

Cisco initially traded higher despite company comments that business remains weak, but ended the day down.

Hutchinson surged after guiding higher, and Parametric also rose after raising guidance.

Applied Materials rose on a contract win in China.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the internetstockreport.com story link at the top of the newsletter.

The indexes all rolled over today and once again failed at major resistance points. While that's happened before in this rally without major consequences, one sentiment indicator, the weekly Investors Intelligence survey, hit even more extreme levels today than it hit over the summer, showing 52% bulls and 22% bears, a new five-year low for the bears. That level of complacency suggests that the market may be due for a strong pullback soon. Several charts to watch today. The big resistance here remains the S&P 100 (first chart), which has been unable to take out critical 600 resistance after five attempts. The big negative remains the Nasdaq 100 (second chart), which is now in a clear negative divergence with the Nasdaq, putting in a lower high to the Nasdaq's higher high. Similar divergences marked major tops in March and August 2000 and January 2001. The Nasdaq (third chart) closed right on support at 2040; if that goes, 2000-2010 is the next significant support. The index topped out at 2098 today. The S&P (fourth chart) had the one worrisome breakdown today, falling back below its September 2000 downtrend line. That will now be resistance at around 1158-1160, and 1150 looks like important support for tomorrow. The Dow (fifth chart) is also sitting right on critical support; another index with no downside room for tomorrow. First significant resistance is 10,175. And finally, it's not quite there, but the SOX (sixth chart), the semiconductor index, is closing in on a level that has stopped previous rallies.

Special report: For a free introduction to technical chart patterns, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.