Market Looks Past Recovery To Higher Rates

Comments Thursday by Fed Chairman Alan Greenspan that an economic recovery is well underway caused stock and bond markets to begin to worry about higher interest rates.

The ISDEX slipped fractionally to 166, and the Nasdaq lost 8 to 1881. The S&P 500 slipped 5 to 1157, and the Dow gave back 48 to 10,525. Volume edged higher to 1.51 billion shares on the NYSE, but slipped 1.89 billion on the Nasdaq. Advancers led 16 to 15 on the NYSE, and 18 to 16 on the Nasdaq.

After the close, Sun and Intel both reiterated guidance. Sun edged higher on the news, while Intel slipped. There is some speculation that Intel may have benefited last quarter from a channel stuffing effort to win shareholder approval for the Hewlett-Packard-Compaq merger; investors had hoped that Intel would raise guidance.

During the day, Hewlett-Packard slipped and Compaq rose after their merger proposal won FTC approval. Hewlett’s credit rating was cut by S&P.

IBM fell 2 points on investor nervousness ahead of the company’s 10-Q filing on Monday.

National Semi rose 4% after beating estimates.

Microsoft slipped on an Xbox recall in Japan.

Juniper rose 2% in above average volume despite a downgrade.

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.

In weekly charts, the weekly close is everything, and there are three indexes flirting with some critical levels this week on the weekly chart, so how they close tomorrow is important. The S&P (first chart) must close above 1150-1155, the XMI (second chart) above 1060 and the SOX (third chart) above 620 for a trifecta of weekly breakouts. Even if that happens, however, options expiry could cap this rally for the next week or so. In the short term, the Dow (fourth chart) has resistance at 10,600, 10,700 and 10,800, and support at 10,480, 10,425, 10,380 and 10,330. The S&P (fifth chart) has resistance at 1173-1177 and support at 1150 and 1145. The Nasdaq (sixth chart) has support at 1880 and 1850, and resistance at 1911.





Special report: For a free introduction to technical chart patterns, visit,1785,2571_500051,00.html.

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