Stocks shook off early losses Friday after the steepest drop in producer prices ever recorded raised deflation fears.
The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 3 to 163, and the Nasdaq was up fractionally to 1828. The S&P 500 added 1 to 1120, and the Dow climbed 20 to 9608, its highest close since before the September 11 terrorist attacks. Volume declined to 1.09 billion shares on the NYSE, and 1.52 billion on the Nasdaq. Advancers led 15 to 14 on the NYSE, but decliners led by 18 to 17 on the Nasdaq.
After the close, Ciena announced a conference call for Monday, raising the possibility that the company may warn.
The 1.6% drop in the PPI was the largest in the 54 years that the government has tracked the data. However, stocks recovered from early losses after the Northern Alliance captured a key city in northern Afghanistan. The Michigan consumer confidence survey came in better than expected at 83.5, up slightly from last month.
NVIDIA surged 3.45 to 53.20 on better than expected results, and Palm
rose .38 to 2.65 after announcing the resignation of its CEO and reaffirming guidance.
Intel , off .40 to 27.88, failed at its 200-day moving average (28.42) for the third straight day.
Critical Path soared .99 to 2.12 after securing additional funding.
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
Everyone knows what a doji looks like at this point, right? A day that trades both higher and lower and ends unchanged forms a doji, reflecting indecision. After a long trend, such days can mark reversals. The Nasdaq and S&P (first and second charts) both formed them today, one indication that the market might be ready for a pullback. All indexes also broke sharp uptrends today. Max-Pain on the Nasdaq 100 tracking stock, the QQQ, is 35, about 7% lower than here. A move toward that level is likely some time before options expiration a week from now. One thing that’s tough to figure out here is the volatile sentiment. The CBOE put-call ratio hit 1.39 on the open this morning, a very high number – but then pulled back to close at .74, a modest level. From fear to complacency in one day is a wild swing, and fits with the broadening tops forming in the Dow (third chart) and S&P. However, another run at that upper trendline on the Dow is possible, and the index may consolidate for a while before declining. If you have a copy of Edwards & Magee, Technical Analysis of Stock Trends, see Figure 247 (page 576 in the 7th edition) for a chart of a broadening top that formed in the Dow in 1957 right before a nasty decline. Picture perfect, just like this one. For the Dow, first support is 9520, first resistance is 9630, and the broadening top should meet the index’s May downtrend line just under 9800 on Monday, if it can get that high. The S&P has support at 1110 and resistance at 1123-1126. The Nasdaq has support at 1810, resistance at 1840, and critical support at about 1720-1725.
Special report: For a free introduction to technical chart patterns and an overview of last year’s action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.
