In Tape We Trust
Make no mistake.Â
There is still a
great amount of uncertainty in this market, the recent lush gains in many techs
notwithstanding.
The still-punk trading volume tells
you that.
Fundamentally, the uncertainty is
linked to the Fed and the economy.
Toss in escalating crude oil prices,
which have spurted from $22.95 a barrel on April 11 to Friday’s high of $31.20,
and rising bond yields, and you have the ingredients of indecisiveness on the
part of institutional players.
But enough of the fundamentals.
As always, when it comes to
determining the health of the market, your best friends will be the big
averages’ behavior and the action of the leading stocks.
Thus, it will be critical to watch for
distribution in bells such as EMC
(
EMC |
Quote |
Chart |
News |
PowerRating), Intel
(
INTC |
Quote |
Chart |
News |
PowerRating), Nortel
(
NT |
Quote |
Chart |
News |
PowerRating),
and Oracle
(
ORCL |
Quote |
Chart |
News |
PowerRating).
These stocks serve as better
barometers of institutional sentiment than, say, WorldCom
(
WCOM |
Quote |
Chart |
News |
PowerRating) and
Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating).
The reason is that, technically, the
latter two are viewed as “damaged goods” by the institutional
community.
Their down trends indicate as much.
Elsewhere in the bells, the trend over the past few
sessions in Sun
(
SUNW |
Quote |
Chart |
News |
PowerRating), Tellabs
(
TLAB |
Quote |
Chart |
News |
PowerRating), Ericsson
(
ERICY |
Quote |
Chart |
News |
PowerRating), and
the Texan
(
TXN |
Quote |
Chart |
News |
PowerRating) has not been encouraging — not to mention Nokia
(
NOK |
Quote |
Chart |
News |
PowerRating),
which Friday came down on thick volume for the second day…
NOK fired a warning
flare Monday by breaking out of a seven-week base to a new high on turnover that
was merely average.
As for the indices, the Naz Friday
re-penetrated its recent, two-week shelf, though on dimmer activity.
Friday, in the bells, the a-d line ran
6-1 in favor of decliners.
Inside the vogue complex, things were
a hair brighter, with losers besting winners by 4-1.
Among the names, Broadvision
(
BVSN |
Quote |
Chart |
News |
PowerRating),
Brocade
(
BRCD |
Quote |
Chart |
News |
PowerRating), and numerous other glamours lost ground, but on duller
trade.Â
Celgene
(
CELG |
Quote |
Chart |
News |
PowerRating) appears to be
building a handle as it rests at the top of its three-month cup.
Cytyc
(
CYTC |
Quote |
Chart |
News |
PowerRating) broke down on
volume, rendering its breakout of a 3-month base two weeks ago a failure.
Elantec
(
ELNT |
Quote |
Chart |
News |
PowerRating) managed to stay
above the seven-day triangle that it cleared on Thursday.
JDSU
(
JDSU |
Quote |
Chart |
News |
PowerRating) hung in nicely.
Lattice Semi
(
LSCC |
Quote |
Chart |
News |
PowerRating) followed
through lower on Thursday’s failure of Wednesday’s breakout.
Ditto for M Systems
(
FLSH |
Quote |
Chart |
News |
PowerRating).
Ditto for Mercury
(
MERQ |
Quote |
Chart |
News |
PowerRating).
Nvidia
(
NVDA |
Quote |
Chart |
News |
PowerRating) came down on heavy
trade for the third day in four.
Redback
(
RBAK |
Quote |
Chart |
News |
PowerRating) showed good tone
for the entire session, a rare victor within the glamours.
Semtech
(
SMTC |
Quote |
Chart |
News |
PowerRating) closed below the
lip of its four-month base it had cleared on Thursday.
To sum,
the intermediate trader should be on the lookout for a few days of distribution
in: 1) the Naz and/or 2) the four key bells listed above and/or 3) more of the
speculative growth stock glamours that have not seen distribution up to this
point. Again, as mentioned above, the distribution in Sun, Tellabs, Ericsson,
and the Texan, does not bode well for the other bells. But, as usual, we will
take it one day at a time.
Going forward, there will be a lot of
talk about Tuesday’s Fed meeting as well as the upcoming June employment report
and the August Fed confab.
The key thing to remember is to trust
the tape — not the headlines.
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