Stocks were mixed Wednesday on a much better than expected – but still negative – GDP reading.
The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 2 to 143, and the Nasdaq gained 22 to 1690. The S&P 500 was unchanged at 1059, and the Dow declined 46 to 9075. Volume rose to 1.32 billion shares on the NYSE, and 1.89 billion on the Nasdaq. Advancers led by 19 to 11 on the NYSE, and 22 to 11 on the Nasdaq.
After the close, GlobeSpan topped estimates.
During the day, tech stocks spent the whole day in positive territory, but blue chips were volatile on the -0.4% GDP reading. Revisions to the number will likely send it lower next month.
Microsoft slipped .73 to 58.15 as a Nov. 2 settlement deadline approaches.
IBM fell .58 to 108.07 on a downgrade, and slipped further after hours.
Adobe fell 2.35 to 26.40 on an earnings warning.
Manugistics and PeopleSoft
rose after reaffirming guidance.
Dell climbed .74 to 23.98 on positive comments by Prudential.
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: http://www.afterhourstrading.com/column.html
We still expect one more leg up in this rally, but the Dow sure is going to have to do better than today to make that happen. This correction can take about one more small leg down before it becomes something more bearish; a lot of indicators in the four charts below are threatening to begin new downtrends. The Dow (first chart) is forming a potential bearish broadening top. A close below 9000 would be bearish. First resistance is 9223-9260, and first support is 9063. The S&P (second chart) has critical support at 1052 and resistance at 1075. The Nasdaq (third chart) has support at 1667-1677, 1646 and 1626.26. Resistance is the index’s downtrend line, which should be at about 1710 tomorrow. The Nasdaq’s indicators look the strongest of the major indexes. Its old economy counterpart, the NYSE (fourth chart), is hanging on by a thread, and the indicators look bearish. And finally, to answer the question we hear most often: is this a bear market rally, or the start of a new bull market? We lean heavily toward the bear market rally camp. The buying that has occurred during this rally has not been of the explosive nature that has accompanied major bottoms in the past, and in the last three weeks, the rally has turned sloppy and overlapping, further suggesting a corrective nature. However, we still expect another leg up, and we don’t see a strong trend developing in the cycles until mid-December to early January. We’ll be on the lookout for a strong trend developing before then, however; the November 2-7 timeframe has some promise. What do we need to see to turn bullish? A combination of advancing over declining issues and up volume over down volume totaling 1200% or higher. Every major bottom of the last 35 years has met that standard, per the work of John Roque; this one has not. We also need to see commercial futures traders go net long on the big index futures; they have yet to do so.
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