Unexpected weakness in the NAPM service sector survey dragged stocks lower on Friday.
The ISDEX http://www.wsrn.com/apps/ISDEX/ lost 2 to 209, and the Nasdaq fell 21 to 2066. The S&P 500 slipped 6 to 1214, and the Dow declined 38 to 10,512. Volume fell to 938 million shares on the NYSE, and 1.24 billion on the Nasdaq. Decliners led 15 to 14 on the NYSE, and 19 to 16 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.
The weaker than expected NAPM service sector reading showed that the one-month bounce in the sector may have been short-lived. Separately, July unemployment numbers came in slightly better than expected with a loss of 42,000 jobs.
The big story in tech continued to be the anticipation of Cisco’s earnings on Tuesday. Bernstein analyst Paul Sagawa, who has made some very good calls during the market downturn, said Cisco’s guidance isn’t likely to be as bullish as investors hope. Cisco slipped .20 to 20.05.
eBay surged 3.50 to 64.30 on speculation that the company will raise guidance at an August 13 presentation.
Micron , off 1.45 to 43.45, was pressured by continued weakness in DRAM pricing.
Exodus climbed .36 to 1.65 on takeover speculation.
Storage stocks were pressured by EMC’s aggressive pricing strategy and rumors that Brocade
may be trying to get analysts to reduce estimates.
Some technical comments on the market: Note: We include charts in the technical market commentary. If you can’t get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html
The Nasdaq may have formed a fairly reliable candlestick reversal pattern today called an Evening Star (see first chart below). The three-day pattern is a white candlestick, followed by a gap up that forms a doji (basically a + sign), and then a black candlestick. That same pattern marked tops in January and May. Going into a significant turn next week, the evidence seems to continue to support the bearish case here. The Nasdaq also broke down out of a rising wedge in the intraday chart (second chart), and may have slipped back below its broken downtrend line (third chart). A strong move above 2105 would negate the bearish reversal; otherwise, the index could be headed to 1900 in the near-term. The Nasdaq 100 held its downtrend line breakout (fourth chart), but also may have formed a reversal. The S&P 500 (fifth chart) remains trapped in a range between 1225 and 1200, and the Dow (sixth chart) continues to struggle around its downtrend line. 10,600 is resistance on the Dow, and 10,430-10,475 is support.
Special report: For a free introduction to technical chart patterns and an overview of last year’s action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.
