The Bears Are Back

Stocks were battered on Friday as they continued to give up the bulk of Wednesday’s huge gains.

The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 4 to 117, and the Nasdaq lost 49 to 1600. The S&P 500 dropped 18 to 1054, and the Dow lost 97 to 9939. Volume rose to 1.18 billion shares on the NYSE, and 1.83 billion on the Nasdaq. Decliners led 20 to 11 on the NYSE, and 22 to 12 on the Nasdaq, and up volume trounced down volume by 8 to 1 on the Nasdaq.

United Online gained 10% after reporting a surprise profit.

Cisco and QLogic continued to hold up relatively well after Wednesday’s 25% gains.

Microsoft fell 4% on European antitrust concerns.

IBM was down slightly on news that it could lay off up to 8,000 employees.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the internetstockreport.com story link at the top of the newsletter.

There isn’t much left to the bull case after today. The last hope for the bulls is Tuesday’s lows of 1049 on the S&P and 1560 on the Nasdaq. If those levels can’t hold, a retest of the September 1387 Nasdaq low becomes increasingly likely. About the only hope here for the bulls is that the VXN (first chart below), the measure of Nasdaq options volatility, is as high as it was on Tuesday, when the Nasdaq was lower, forming a minor bullish divergence in sentiment, which gives Tuesday’s lows a chance to hold. Support on the Nasdaq (second chart) is 1573-1578, 1560, and 1507-1528, and resistance is 1613-1628, 1640, and 1696 (a biggie). The Nasdaq’s failure to even come close to the April 11 low of 1724 is a negative. The Dow (third chart) had a bearish breakout failure today, the second one in a month. Support is 9800, and resistance is 10,000. The S&P (fourth chart) has support at 1049 and 1030, and resistance at 1063, 1074 and 1089-1091. Another index that failed to take out its mid-April low.

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