Continuation Rally Fades

Both the Dow Jones Industrial Average and the Nasdaq Composite Index rallied at the opening in a continuation of last Friday’s triple-digit gains in both markets. The Nasdaq jumped ahead by nearly 32 points and the Dow advanced by 38, but both spurts faded quickly, and by midday, both markets remained in the red.

By midday, the ISDEX (ISDEX) had slipped three percent to 365, as losers led gainers by three to two. Among the early day leaders, five stocks sported gains exceeding five percent:

The Nasdaq Composite Index, was down by 1.8% at midday, sinking back 44 points and falling below the psychological 2500 level, to 2473. The downturn continued after an early morning comeback rally failed. The Dow Jones Industrial Average fell 20.5 points back to 10615, off just 0.2%. In the broader market, the S&P 500 gained a point and held above the 1300 level at 1306.

Trading volume reflected the fact that many market participants remained on holiday. Midday volume was 342 million shares on the NYSE and 724 million on the Nasdaq. Declining issues led advancing issues by a slim margin on the NYSE and by better than five to three on the Nasdaq. On the NYSE, up volume exceed down volume by a five to four margin and conversely, on the Nasdaq down volume led up volume by nearly two-and-a-half to one. In a similar pattern, reflecting two different markets, NYSE new highs outnumbered new lows by two-and-three-quarters to one, 180 to 65, but on the Nasdaq, new lows still outpaced new highs by nearly three to one, 209 to 71.

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Despite the downward bias on the Nasdaq, three stocks were ahead by a third or more:

  • In the absence of any new company news, Blue Martini Software (BLUE), an e-commerce software and services provider, advanced 35.7%, benefiting from the Barron’s effect after the company received a favorable mention in the weekend financial paper.

  • Educational Development Corporation (EDUC), also rose sharply in the absence of fresh news, up 33.3%. Last week, the company’s direct selling division, Usborne Books at Home, reported record sales for the month of November 2000, and will report a 19% increase in sales for the quarter ended November 30, 2000, compared to the same period last year. Previously the largest November sales month for that division was November 1996. The increase was primarily due to the addition of more 1,000 new sales associates who have joined the Company from a competitor who ceased operations August 31, 2000.

  • European Micro Holdings (EMCC), an independent, focused distributor of microcomputer products, gained 33.0%

Elsewhere, Yahoo (YHOO) reported that holiday sales to its shopping areas showed multiple increases, jumping nearly two-fold in the U.S. and better than six times overseas. The announcement spurred early interest in other Internet retailers such as Amazon (AMZN)

which rose 8.8% and EBay (EBAY) which fell back to even, after an early gain.

Note: Technical market commentary will return tomorrow, Wednesday, December 27, 2000.

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