Why Bears Lack Conviction
US
stocks put in a negative session, as price action headed south off
the bell, consolidated from 10:00 am to 2:00 pm ET, then sold off again into the
close.
The
Dow Jones Industrial Average (
(
$INDU.X |
Quote |
Chart |
News |
PowerRating) closed -2.53% at
8379.41. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed -2.47% at 886.90. The
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed -2.72% at 1279.64.
The day’s only gaining sector
was gold and silver
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), +4.29.
The biggest losers were semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), -6.03%, technology
(
$TXX.X |
Quote |
Chart |
News |
PowerRating), -3.79%, airlines
(
$XAL.X |
Quote |
Chart |
News |
PowerRating), -3.53%, Internet
(
$DOT.X |
Quote |
Chart |
News |
PowerRating), -3.34%, and biotechnology
(
$BTK.X |
Quote |
Chart |
News |
PowerRating), -3.33%.
Today’s retreats of the major
indexes from their 50-day moving averages isn’t encouraging for the bulls,
though volume was once again light, taking away from the bears’ conviction.
The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), -6.03% at 283.56, closed at the bottom of its daily range,
ready to hit new lows. The semiconductor sector had its estimates cut by Lehman
Brothers who now sees growth at 10% from previous estimates of 27%. And Piper
Jaffray reduced its estimates on the sector on concerns over the capital
spending market.
The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), -2.17% at 394.05, closed at the bottom of its daily range, just
above its 50-day moving average.
U.S. Treasury Bonds
closed up 1’01 at 112 ’23.
In economic news, Fed Chairman Alan
Greenspan told Congress that the economy has withstood severe blows,
though may suffer from lingering depressive effects.
Volume was light at  1,334,129,430
on the NYSE, and  1,154,040,905
on the Nasdaq.
Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 2.59, and down
volume over up volume by a 6.28 ratio. Nasdaq declining issues over advancing
issues came in at 2.0, and down volume beat up volume by a 6.67 ratio.
The
VIX
was +3.49 at 40.72 The TRIN
was +1.54 at 2.43.
The only Dow gainer was International
Paper
(
IP |
Quote |
Chart |
News |
PowerRating), +1.16% at 37.33.
Leading the Dow down were Intel
Corp.
(
INTC |
Quote |
Chart |
News |
PowerRating), -5.29% at 15.74, McDonalds
(
MCD |
Quote |
Chart |
News |
PowerRating), -4.82% at
20.31, Alcoa
(
AA |
Quote |
Chart |
News |
PowerRating), -4.60% at 22.77, JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating), -422%
at 22.01, and Walt Disney
(
DIS |
Quote |
Chart |
News |
PowerRating), -4.20% at 15.50.
Stocks in
the news:
Aerospace and defense
contractor Northrop Grumman
(
NOC |
Quote |
Chart |
News |
PowerRating), +0.77% at 126.80, was upgraded by
Bank of America to “buy” from “market perform,” with a new
price target of $145.
Fast food giant McDonalds
(
MCD |
Quote |
Chart |
News |
PowerRating), -4.82% at 20.31, hit a new 52-week low after industry analysts
challenged the company’s plans to boost US sales.
Biotech company Genetech
(
DNA |
Quote |
Chart |
News |
PowerRating), -2.15% at 28.55, was upgraded by First Albany to “buy” from
“neutral,” based on reduced near-term risk and valuation.
Hotel company Marriott
International
(
MAR |
Quote |
Chart |
News |
PowerRating), -3.60% at 31.25, was downgraded by JP Morgan to
“market perform” from long-term “buy”.
Furniture and fixture company
Leggett and Platt
(
LEG |
Quote |
Chart |
News |
PowerRating), -8.26% at 21.41, reduced its
earnings guidance for the third-quarter to $0.31 vs. an analyst consensus of
$0.34. The company cites higher costs for raw materials.
European owned Philips
Electronics
(
PHG |
Quote |
Chart |
News |
PowerRating), ,-7.85% at 17.00, announced that it has lowered
its estimates, as its semiconductor unit will be 13% to 15% lower in the
second-quarter. The announcement affected competitors Intel
(
INTC |
Quote |
Chart |
News |
PowerRating),
-5.29% at 15.74, and Advanced Micro Devices
(
AMD |
Quote |
Chart |
News |
PowerRating), -7.28% at 7.64.
Drug maker Johnson and
Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating), -2.72 at 53.97, was downgraded by A.G. Edwards to
“hold” from “buy.”
From TM’s proprietary Implosion
List, medical equipment and supplies company Baxter International
(
BAX |
Quote |
Chart |
News |
PowerRating),
-6.61% at 32.59.