How You’ll Know The Next Rally Is Real
The
major indexes took losses for the day as price action slid for most
of the session, despite one rally attempt in the early afternoon. Gold and
silver was the big winner of the day with banks and airline stock also showing
gains. The biggest losers were software, semiconductors, Internet, and computer
technology.
Inappropriate accounting issues
dominated business headlines today as former heads of Worldcom
(
WCOM |
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PowerRating),
down 4.00% at 0.24, Bernie Ebbers and Scott Sullivan, testified before a
House Financial Services Committee, and the Wall Street Journal reported
that Merck Co. Inc
(
MRK |
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PowerRating), down 2.14% at 47.81, recorded revenue
before actually receiving it. Though the potential for double bottoms to form on
the S&P 500 and Nasdaq are still alive, Gary
Kaltbaum reminds us that one thing we need to see for a true bottom to form
is a rally on bad news.
The
Dow Jones Industrial Average
(
$INDU |
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PowerRating) closed down 1.11% at 9274.90. The
S&P 500
(
$SPX |
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PowerRating) closed down 1.21% at 976.98. The Nasdaq
(
$COMPQ |
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PowerRating)
closed up 2.94% at 1405.67.
U.S. Treasury Bonds were
up 11 at 103 ’00.
The highlight of economic news this week will come Friday
with retail sales and the preliminary number of the University of Michigan’s
sentiment index.
Market breadth was negative,
with NYSE advancing issues over declining issues by a ratio of 1.20, and down
volume over up volume by a 1.01 ratio. Nasdaq declining issues over advancing
issues came in at 1.70, and down volume beat up volume by a 4.41 ratio. The
VIX
was up 1.18 at 31.39. The TRIN
was up 0.86 at 1.20.
Below-average volume on the session had the Dow, the
S&P 500, and the Nasdaq shy away from their 20-day MAs and closed at the
bottom of their daily ranges. The Semiconductor Index
(
$SOX.X |
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PowerRating), shied
away from its 20-day MA and closed at the bottom of its range. The Broker/Dealer
Index
(
$XBD.X |
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PowerRating), tested above its 20-day MA, though closed at the bottom
of its range below this mark.
The top sectors of the
day were the
Gold and Silver Index
(
$XAU.X |
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News |
PowerRating),
up 3.88% at 72.55, and the Mexico Index
(
$MXY.X |
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PowerRating), up 0.82% at
93.76.
Losing
sectors
of the day were the GSTI Software Index
(
$GSO.X |
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Chart |
News |
PowerRating), down 4.97% at
105.72, and the Semiconductor Index
(
$SOX.X |
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Chart |
News |
PowerRating), down 4.42% at
375.86.
Communications services company Level 3 Communications
(
LVLT |
Quote |
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News |
PowerRating), up
50.86% at 4.36, is reported to be the recipient of a $500 million investment
from Warren Buffett’s Berkshire Hathaway. The cash will allow the company to
acquire struggling competitors.
Also in the communications services sector, Qwest Communications
(
Q |
Quote |
Chart |
News |
PowerRating),
up 15.38% at 2.10, announced that it will be replacing its chief financial
officer, including other management changes.
Drug maker
Merck Co. Inc. (MRK),
down 2.14% at 47.81, is being reported by the Wall Street Journal to have
recorded $12.4 billion in revenue from its Medco pharmacy benefits unit over the
past three years that the subsidiary never actually collected.
Online auctioneer Ebay (EBAY),
down 7.11% at 56.24, has announced that it will acquire PayPal in a deal worth
$1.5 billion in stock, valuing the acquired company at $23.63 a share.