Economy, War Catch Up With Stocks

Stocks fell sharply Monday as a host of worries caught up with investors.

An impending default by Argentina, this week’s looming consumer confidence, GDP, NAPM and unemployment reports, and the slow pace of the war in Afghanistan all weighed on stocks. But one of the best explanations for the sell-off was a simple one: with the mutual fund year closed as of last Friday, fund managers had no further reason to prop up the market today.

The ISDEX fell 8 to 146, and the Nasdaq dropped 69 to 1699. The S&P 500 fell 26 to 1078, and the Dow lost 275 to 9269. Volume declined to 1.1 billion shares on the NYSE, and 1.6 billion on the Nasdaq. Decliners led by 20 to 10 on the NYSE, and 23 to 12 on the Nasdaq.

After the close, Openwave , CSG and Macrovision fell on warnings.

During the day, eBay led the way, falling 4.48 to 52.52 after guiding 2002 estimates to the lower end of the range.

InVision rose 1.06 to 14.89 on positive federal trials of the company’s bomb detection equipment.

Cisco fell .87 to 16.42 on a downgrade.

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:

Last week’s bull flag breakouts were all negated today, but we still think the market may have one more leg up in it before a substantial correction. Critical dates where a top could occur are the November 2-7 timeframe, although there’s plenty of market-moving news this week, from GDP on Wednesday to unemployment on Friday. The Nasdaq (first chart) fell back below 1752-1755, the top of the big bearish engulfing candlestick from two weeks ago. First support is 1691 and then 1670-1675, and first resistance is 1720. ADX on the Nasdaq came very close to turning up on the recent rally, which would have been a sign of a strong trend. The Dow (second chart) could find support at 9250 and then 9180. First resistance is 9350. The S&P (third chart) faces resistance at 1092, and support is 1060. Note that the Dow and S&P both fell back below their 50-day moving averages; important levels to watch. Also, ADX on both of them have gotten low enough so they could begin a strong trend at any time. Finally, the NYSE (fifth chart) did not give an On Balance Volume buy signal, despite coming very close last week. Another negative here.

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