Another Rally Fails

A promising rally was cut short for the third straight day on Thursday, as the Dow continued to struggle with 10,300 resistance.

The ISDEX slipped 1 to 144, and the Nasdaq fell 20 to 1731. The S&P 500 slipped 3 to 1106, and the Dow lost 21 to 10,106. Volume declined to 1.36 billion shares on the NYSE, but rose to 1.96 billion on the Nasdaq. Advancers led 16 to 14 on the NYSE, but decliners led 18 to 16 on the Nasdaq.

After the close, Novellus reaffirmed guidance and Integrated Device raised guidance.

During the day, Genesis Microchip plunged 42% after the company raised revenue guidance, but preannounced much lower than expected earnings due to tax and acquisition issues.

PeopleSoft fell 8% on rumors of an SEC investigation.

Internet Security dropped 8% on rumors of the departure of key salespeople.

Gateway lost 10% on another warning.

Intel fell 4% to close below its 200-day moving average at 29.22.

eBay gained 6% on an analyst upgrade, as analysts continued to do battle over whether the company’s business is slowing.

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

Today makes three failed rallies in a row, and three straight potential reversal candlesticks on the indexes. The Dow (first chart below) has such strong resistance in the 10,200-10,300 area that it’s not surprising that distribution is occurring here, increasing the likelihood of a pullback. The index closed right on a rising trendline today; any move below 10,090 tomorrow would be a negative, and a move below 10,030 bearish. Resistance is 10,200 and 10,275. The Nasdaq (second chart) is forming an almost perfect downtrend channel. 1724 is support and then 1673-1690. A close above 1770 would look pretty bullish. The candlesticks on the Nasdaq look pretty bearish the last three days, however. The S&P (third chart) remains stuck right in the middle of 1098-1102 support and 1125 resistance.


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