What Is Price Action Predicting For Wednesday?
Price action on the major
indexes gapped down off the open, then quickly sold off again to where they
consolidated for most of the session, with another selloff going into the close.Â
The day’s strength was in gold
and silver.
The weakest sectors were oil
service, biotechnology, banks, Internet, semiconductors, and broker/dealers.
The month got off to a negative
start, as all three major averages fell below their 20-day averages. DespiteÂ
key technical levels being taken out, volume was on the light side, suggesting
less conviction for the move. Market breadth, on the other hand, clearly favored
the bears, with down-volume taking out up-volume by over a 10:1 ratio.
The
Dow Jones Industrial Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating) closed down 4.10% at 8308.05.
The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed down 4.15% at 878.02. The
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed down 3.88% at 1263.83.
The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 5.08% at 284.94, closed just above its 52-week low. The Broker/Dealer
Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 5.08% at 284.94, crossed below its 20-day moving
average.
U.S. Treasury Bonds
closed up ’10 at 110 ’28.
In economic news, the ISM
Index for August came in at 50.5 vs. an expected reading of 51.8.
Volume was low at 966,501,420
on the NYSE and 1,273,798,307
on the Nasdaq.
Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 4.20, and down–volume
over up–volume
by a 10.70 ratio. Nasdaq declining issues over advancing issues came in at 3.47,
and down–volume
beat up–volume
by a 15.49 ratio. The
VIX
was up 8.06 at 43.86. The TRIN
was up 2.21 at 3.42.
The top sector on the session was the Gold and
Silver Index
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), up 1.88% at 70.77.
Losing
sectors on the session were
the Oil Service Sector
(
$OSX.X |
Quote |
Chart |
News |
PowerRating), down 6.43% at 76.66, and the Biotechnology
Index
(
$BTK.X |
Quote |
Chart |
News |
PowerRating), down 5.75% at 326.46.
Semiconductor powerhouse
Intel (INTC),
down 4.85% at 15.86, received words of caution from Lehman Brothers, who lowered
its estimates for 2002 by a few cents and has reduced its 2003 estimates by 5
cents.
Computer hardware giant International Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating), down 4.01% at 72.35, announced that it is cutting 4,000 jobs while
completing its acquisition of PricewaterhouseCoopers LLC’s consulting division.
Also from the sector, Sun Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating) closed down 6.50% at
3.45, and Hewlett Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating) finished down 6.55% at 12.55.
Automaker Ford Motor
(
F |
Quote |
Chart |
News |
PowerRating), down 7.05% at 10.94, was
downgraded by UBS Warburg to “reduce”. Also in the auto business General
Motors
(
GM |
Quote |
Chart |
News |
PowerRating) fell 4.82% to 45.55.
Drug maker Amgen‘s
(AMGN),
down 4.61% at 42.95, anti–anemia
drug business is being reported by Barron’s as potentially taking away
market share from Johnson & Johnson due to a link to a rare blood disorder
found in Johnson’s product.
Also in the drug business, Bristol
Myers (BMY),
down 3.80% at 24.00, received FDA approval for its schizophrenia treatment
Abilify.
Financial company Citigroup
(C),
down 10.25% at 29.39, was downgraded by Prudential to “sell” from
“hold”.
United Airlines
(
UAL |
Quote |
Chart |
News |
PowerRating), up 2.43% at 2.94, rose on
news that it was hiring oil executive Glenn Tilton as CEO.
Fast food company McDonald’s
(
MCD |
Quote |
Chart |
News |
PowerRating), down 3.07%
at 23.03, announced it is taking out 48% of the fat from most of its fried
foods. The company said taste will not be sacrificed.