Stocks Battered Again

Stocks fell on rising volume for the second straight day on Thursday, as a rising trade deficit and a warning from Genzyme outweighed a positive manufacturing report.

The ISDEX fell 3 to 106, and the Nasdaq lost 32 to 1464. The S&P 500 dropped 13 to 1006, and the Dow fell 129 to 9431. Volume rose to 1.37 billion shares on the NYSE, and 1.7 billion on the Nasdaq. Decliners led 17 to 14 on the NYSE, and 19 to 14 on the Nasdaq.

After the close, Cognos beat estimates but fell on a secondary offering. IBCO matched estimates, and GlobespanVirata warned.

During the day, IBM hit another new 52-week low, and Intel closed at 19.24, just 28 cents above its September low.

Qualcomm lost 6% on yet another downgrade.

Synaptics plunged 29% on a downgrade by underwriter Bear Stearns.

Extreme Networks fell 14% on concerns about Japanese weakness.

CheckFree fell 14% on pricing concerns.

Sycamore climbed on an upgrade despite a revenue warning.

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.

Note: The Market Commentary will return Thursday June 20 after a three-day hiatus.

If tomorrow is another day like yesterday and today for the Dow and the S&P 500, the indexes would form “three black crows,” a reliably bearish pattern that could mean more downside ahead for next week. Foreign money is likely fleeing the U.S., judging by the continued weakness in the U.S. dollar (see first chart below), which seems like it will hit our 103-105 target sooner rather than later. On the plus side, Monday’s light-volume rally had the best NYSE internals we’ve seen in this bear market, with 88% upside volume and a 3-1 advance/decline line. Another day like that with some volume behind it and the bulls could be onto something. We’re also closing in on our June 21-28 window for a bottom. With high closing TRIN readings on both the NYSE and the Nasdaq today (the second straight high TRIN close for the Nasdaq), and another -1000 TICK reading on the NYSE, we’re slowly putting together the kind of bottom we’d like to see. A breach of the September 2001/October 1998 lows on the Nasdaq (1387/1357), a retest or breach of the September lows on the S&P (944-965; 923 was the October 1998 low), and 8800 or lower on the Dow would be ideal, but we’ll see what the market gives us in the next week or so. Index futures expire tomorrow morning, so that could be one bit of selling pressure removed for now. Futures expiry marked the bottom in September, but came a week before the bottom in March 2001. Also, we’re still looking for that elusive +DI reading under 10 on the Dow as another sign of capitulation. Recent lows in the market were 1445 on the Nasdaq, 981 on the S&P, and 9260 on the Dow. Today saw breakout failures on both the Dow and S&P (second and third charts), and a borderline one on the Nasdaq (fourth chart), potentially bearish developments for the near-term.




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