Weak Retail Sales Sink Stocks

Weaker than expected retail sales sent stocks sprawling on Thursday, as investors worried that consumer spending may be weakening.

The ISDEX http://www.wsrn.com/apps/ISDEX/ slipped fractionally to 109, just 3 points above the September low, and the Nasdaq lost 22 to 1496. The S&P 500 fell 10 to 1009, and the Dow lost 114 to 9502. Volume declined to 1.41 billion shares on the NYSE, and 1.56 billion on the Nasdaq. Decliners led 19 to 12 on the NYSE, and 21 to 12 on the Nasdaq.

After the close, Adobe and Genesis Microchip fell on warnings.

During the day, Lucent fell 5% on yet another warning.

Microchip gained 3% after raising guidance.

IBM gained on positive comments from SG Cowen and UBS.

i2 fell 24% on a downgrade.

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.

Not much more to say that we haven’t said already: index futures that are under water will continue to put pressure on the market at least until expiration on June 21, and possibly a week longer than that. In the short term, this rally may have one more pop left in it, but that looks to be about it. The good news is that we are getting some signs of capitulation here: the Investors Intelligence survey of newsletter writers shows bulls down sharply this week, from 49% to 43%, and bears up from 31% to 35%. Not quite an inversion yet, but a step in the right direction. There were more bears than bulls for most of 1974, and bears reached 70% at the bottom that year, but hopefully we won’t need readings that extreme. The most extreme readings in the last 5 years were 47% bears and 32% bulls. For the Nasdaq 100 (first chart below), support is 1089 and 1063, the September 2001 and October 1998 lows. Resistance is 1140 to 1160. The S&P 500 (second chart) has support at 1102, 995, 990, 965 and 944, the September low. Resistance is 1020 and 1030-1033. The Nasdaq (third chart) has support at 1474, 1450-1460, 1400 and 1387, the September low. The index’s long-term trendline is at roughly 1100-1200 this year (fourth chart). Resistance is 1510 and 1525. Notice how yesterday’s move down created a parallel down channel on the Nasdaq. A close below 9500 on the Dow (fifth chart) would likely set up a move to 9000, although 9250-9300 is also support. Resistance for tomorrow is 9650. The XAU (sixth chart), the gold and silver index, bounced at its uptrend line at 73 today. That is critical support for gold bugs.





Special report: For a free introduction to technical chart patterns, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.

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