Where’s The Bounce?
Slow and steady selling continued in tech-land Wednesday as the Nasdaq sank
another 2.0% despite some extremely oversold conditions that indicated a bounce
might be overdue. Weakness in financials weighed on the S&P 500, which turned in a
0.3% decline.
Strength in cyclicals and defensive stocks helped the Dow remain in the green
for a 0.3% gain. Analysts were pleased to see the Dow and S&P holding above
its recent lows from March 22.
Volume again was fairly robust, with 1.43 billion shares trading on the NYSE
and 2.41 billion shares changing hands on the Nasdaq.
“I think yesterday’s action was part of a test of the March 22 lows, and
the market is trying to stabilize today. It’s going to have to show more
strength to be a convincing and successful test. That would be my view,”
said Phil Roth, Chief Technical Market Analyst, Morgan Stanley.
“The market got extremely oversold in late March, and we had a rebound,
and on the test there are signs of greater emotion and greater pessimism on the
part of the traders. That is one good sign for me thinking that we are
temporarily going to make a low here,” he added.
According to preliminary numbers, the Nasdaq fell 34.92 to 1638.08, the Dow
added 29.71 to 9515.42, and the S&P 500 eased 3.38 to 1103.08.
Top sectors were gold and silver
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up 3.6%, and chemicals
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Weakest sectors were were banks
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down 3.5%, and semiconductors
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Among standouts avoiding the downdraft were Verisign
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gained 2 3/4 to 30 3/4 on more than double average volume.
Also bouncing was America Online
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reverse its more than week long swoon. Volume was heavier-than-average.
Defensive stocks were up as were defense stocks. Tensions continue with China
over the return of the U.S air crew remain in the news, and that likely helped
Northrop
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John Roque of Arnhold and S. Bleichroeder put the lack of a bounce Wednesday
in perspective when he suggested that perhaps some deeper pressures are weighing
on many stocks.
“Everyone was thinking there should be some bounce Wednesday because
yesterday was as bad as it can get, right? We’re saying we should get some kind
of bounce unless this is a LTCM-type situation, or unless this is the 694 day
bear market that went from January 11, 1973 to December 6, 1974 in which there
was a buyers strike, and unless….you get the picture”
Dow winners were Caterpillar
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Pont
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Intel
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Looking ahead, all eyes will be on the March employment numbers which will be
released Friday at 8:30 AM ET.