Does Volume Really Precede Price?

June 6, 2003
Vincent Mao

What a
day! The major indices were all well in the green at the start of the
session. Better-than-expected reports from the still lagging job market lit up
buying interest and took the Dow up 170, S&P up 21, and Nasdaq up 38 points
early in the session. However the indices started to fade after an hour into the
session and the major indices ended up giving up all of the day’s gains and then
some. In the end, only the Dow remained in the green.

The economy lost fewer jobs
than expected while the unemployment rate rose as expected. And April’s 48K
decrease in payrolls was revised to flat. During today’s session, theÂ S&P 500
(
$SPX.X |
Quote |
Chart |
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PowerRating) broke above-based with tech issues leading the charge after
Intel’s mid-quarter update. Oracle’s
(
ORCL |
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(
PSFT |
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also helped software stocks. However, when the tables stated to turn, housing,
telecom, oil, and biotechs were among the first sectors to turn red. Today’s
late reversal could be the start of much-needed pullback. Since the March 31,
2002 lows, the Dow has gained 16.22%, S&P 19.95%, and Nasdaq 21.33%
respectively. Volume was the heaviest of the year with Nasdaq volume reaching
almost three billion. Bonds ended lower but off the lows of the day after the
economic reports. Gold nearly erased yesterday’s gains.

In economic news, Nonfarm
Payrolls for May came in at -17,000 versus -30,000. Unemployment Rate for May
came in at 6.1% as expected vs. April’s 6.0%. The unemployment rate stands
near a nine-year high.

The 10-year U.S. Note
is -050 at 119 035.

The dollar is +0.97 at
93.56.

Gold is -5.00 at 364.50.

Crude Oil +0.54 at 31.26

Volume is at
1,800,000,000 on the NYSE, and at 2,950,000,000 on the Nasdaq.

Market breadth is positive,
with NYSE declining issues over advancing issues by a ratio of 1.004, and down
volume over up volume by a 1.23 ratio. Nasdaq declining issues over advancing
issues at 1.21, and down volume over up volume is at a 1.63 ratio.

Top Dow stocks are:

Stocks in the news:

Anadarko Petroleum
(
APC |
Quote |
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PowerRating)
is lower by 4.6% on double its average volume. The oil exploration and
production company warned that its 2003 volume targets for crude and natural gas
will be lower than expected due to production problems in the Gulf of Mexico,
Algeria, and Qatar. Anadarko lowered its targets to 190 million barrels from 248
million.

Imclone
(
IMCLE |
Quote |
Chart |
News |
PowerRating) is
higher by 7.5% on more than double its average volume. The biotech firm revealed
that its has met with the FDA about filing an application of its highly
publicized cancer drug, Erbitux.

Chip giant Intel
(
INTC |
Quote |
Chart |
News |
PowerRating)
is higher by 4.10% today. Yesterday in the company’s mid-quarter update, Intel
tightened its second-quarter sales targets. Previously the company had a revenue
target between $6.4 and $7.0 billion, now Intel expects revenues to come in
between $6.6 and $6.8 billion. The company did not provide a target for its
bottom line, but they do expect margins to be around 48% to 52%.

Mcdonalds
(
MCD |
Quote |
Chart |
News |
PowerRating) is
higher by 8.5% on heavy volume. CIBC upgraded the stock from “sector
underperformer” to “sector performer” based on waning Mad Cow disease reports
and better sales momentum from the introduction of its premium salads.

Vincent Mao

Does Volume Really Precede Price?

BUY THE FEAR, SELL THE GREED

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