Stocks Fall On Light Volume

Stocks fell on light volume on Friday, as warnings and mixed economic reports cut short a pre-holiday rally. The Dow had its fifth straight lower monthly close for the first time since 1981.

The Nasdaq fell 20 to 1314, the S&P 500 declined 1 to 916, and the Dow slipped 7 to 8663, down 73 points for the month. Volume fell to 907 million shares on the NYSE, and 1.08 billion on the Nasdaq. Advancers led 18 to 13 on the NYSE, but decliners led 17 to 15 on the Nasdaq.

Sun Microsystems fell 3.7% on a warning, but Novellus edged higher despite warning.

Flextronics ended lower despite reaffirming guidance.

BellSouth fell 3.8% on a warning.

Intel slipped 2.7% ahead of the company’s mid-quarter update next Thursday.

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.

The Dow closed lower on the month for the fifth straight month for only the eighth time in the last 72 years. Only one of those times did the market go on to post a gain in the following month (1937). The other times, it continued to fall for another 1-4 months. It will be interesting to see how the Dow fares in September, historically the worst month of the year for the stock market. The index looks like it should at least start the month a little rough, since the intraday chart (see first chart below) looks like a bear flag projecting at least another 350 points of downside. That would set up a test of 8350 support (see second chart below), with 8200 and 8050 important levels below that. 8785 is critical resistance. The Nasdaq (third chart) appears range-bound between 1290-1296 support and 1345-1360 resistance. Below 1290, 1263 is critical support, and 1388 is significant resistance. The S&P 500 (fourth chart) has support at 915, 895-903, 875 and 840-853. 930 is major resistance.




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