Investors first bought and then sold the news that Fed Chairman Alan Greenspan thinks the economy is on the mend, sending the market on a wild ride only to finish the day unchanged.
The ISDEX http://www.wsrn.com/apps/ISDEX/ slipped 1 to 146, and the Nasdaq fell 14 to 1751. The S&P 500 was unchanged at 1109, and the Dow gained 12 to 10,127. Volume rose to 1.52 billion shares on the NYSE, and 1.89 billion on the Nasdaq. Advancers led 19 to 12 on the NYSE, but decliners led 18 to 17 on the Nasdaq.
After the close, Genesis Microchip raised guidance.
During the day, Greenspan said the economy appears to be recovering, but once again said the recovery may be a modest one. One interesting quote from his testimony suggests that the Fed chairman views the current bounce in the economy as no more than an inventory build-up after last year’s sharp liquidation, with demand yet to reemerge: “But that impetus to the growth of activity will be short-lived unless sustained increases in final demand kick in before the positive effects of the swing from inventory liquidation dissipate,” Greenspan said. The Dow surged 140 points during Greenspan’s testimony, fell 200 points shortly after he finished, and ended the day unchanged.
One reason for the midday decline may have been rumors that Intel was issuing cautious comments at a conference, but the negative comments may have come from a brokerage firm instead.
Cisco fell 8% on negative comments by Wachovia.
eBay fell 7% on negative analyst comments.
Juniper lost 7% on comments from SoundView.
Ariba surged 16% on a JP Morgan upgrade to long-term Buy.
Veritas fell 6% despite reaffirming guidance, and Semtech
rose 4% after matching estimates.
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 Dow (first two charts below) continues to whip around several upper trendlines. Levels to watch for tomorrow are 10,090-10,100 and 10,030-10,040 to the downside, and 10,160 and 10,220 to the upside. One thing to note in the first Dow chart is potential negative divergences in On Balance Volume (OBV) and Accumulation/Distribution, which are setting lower highs as the Dow retests its January 7 high. A better index to watch for tomorrow may be the S&P 500 (third chart), which is trapped between 1125 to the upside and 1098-1102 to the downside. The Nasdaq (fourth chart) is another index caught in a range, with a gap from 1790-1805 to the upside and another gap at 1724-1731 to the downside. On the bullish side, the cyclicals (fifth chart) continue to hold yesterday’s breakout. And finally, IBM (sixth chart) is sitting right on its 1993 trendline, which marks the company’s spectacular recovery in the 1990s. A critical support level for Big Blue.
/
Special report: For a free introduction to technical chart patterns, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.
