Why Month-End May Trigger Move Up…
The
major averages were choppy in early trading, though maintained a
downtrend for the entire session with only a couple of weak attempts at rallies.
The only sector to close positive was the Dow REIT Index, while the losers were led
by networking, Internet, semis, and computer technology.
All three major indexes are
below their 50-day moving averages, with the 20-day averages now acting as
support. Volume has been well below average this week, giving many traders
reason to discount the significance of recent price moves. The next two days are
the last of the trading month, and are often used as mark up days by portfolio
managers. Conversely, for the last five years, these last two days of August
have been losing ones for the indexes, but nothing to hang your hat on.
The Dow Jones Industrial
Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating) closed down 1.24% at 8714.06. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed down 1.60% at 919.87 at. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
closed down 1.54% at 1326.97.
U.S. Treasury Bonds
closed up ’25 at 109 ’28.
There were no economic releases
for the day.
Volume was on the light side
at  1,127,404,900
on the
NYSE, and  1,109,210,371 on the Nasdaq.
Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 2.47, and down
volume over up volume by a 4.96 ratio. Nasdaq declining issues over advancing
issues came in at 2.05, and down volume beat up volume by a 7.48 ratio.
The
VIX was up 3.50 at 36.23. The
TRIN was up 1.01 at 2.51.
The top sector on the session was the Dow Jones
Equity REIT Index
(
$DJR.X |
Quote |
Chart |
News |
PowerRating) up 0.63% at 152.75.
Losing
sectors on the session were the Networking Index
(
$NWX.X |
Quote |
Chart |
News |
PowerRating),
down 6.13% at 126.68, and the GSTI Multimedia Networking Index
(
$GIP.X |
Quote |
Chart |
News |
PowerRating),
down 5.93% at 51.68.
Communications equipment maker Nortel Networks
(
NT |
Quote |
Chart |
News |
PowerRating),
down 15.44% at 1.04, warned that revenue will come in less than expected due to
a lack of technology spending. The company said it also intends to lay off 7,000
workers. Elsewhere in the sector, Corning
(
GLW |
Quote |
Chart |
News |
PowerRating), down 14.84% at 1.95,
Lucent Tech.
(
LU |
Quote |
Chart |
News |
PowerRating), down 10.58% at 1.69, JDS Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating),
down 6.89% at 2.70, and Ciena
(
CIEN |
Quote |
Chart |
News |
PowerRating), down 12.39% at 4.17.
Airline UAL Corp.
(
UAL |
Quote |
Chart |
News |
PowerRating), down 15.68% at 3.28,
fell on worries that the company will file for bankruptcy. Elsewhere in the
sector, Continental Air
(
CAL |
Quote |
Chart |
News |
PowerRating), down 4.20% at 10.25, American
Airlines
(
AMR |
Quote |
Chart |
News |
PowerRating), down 4.94% at 9.99, and Delta Airlines
(
DAL |
Quote |
Chart |
News |
PowerRating),
down 1.39% at 17.71.
Tobacco company Phillip Morris
(
MO |
Quote |
Chart |
News |
PowerRating), up 2.94% at
49.31, announced a dividend increase of 10.3% and a new chairman.
Bank Washington Mutual
(
WM |
Quote |
Chart |
News |
PowerRating), down 1.33% at 37.02,
announced that it will buy the National Bank of Australia
(
NAB |
Quote |
Chart |
News |
PowerRating), down
0.56% at 94.61, for $1.3 billion in cash.
Computer hardware company Sun Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating),
down 6.60% at 3.96, received bearish comments from Goldman Sachs ahead of its
earnings release Thursday. Goldman believes the company will hit the lower end
of earnings estimates.
School  Corinthian Colleges
(COCO),
up 6.80% at 34.20, beat its fourth-quarter earnings estimates by 4 cents with
profits of 27 cents a share. The company has also raised its earnings guidance.
Office supply company Office Depot
(
ODP |
Quote |
Chart |
News |
PowerRating), down
5.45% at 12.64, said that it is comfortable with current and full year earnings
estimates, though claimed back-to-school sales are sluggish.
Semiconductor company
Semtech Corp. (SMTC),
down 25.79% at 14.20, announced that one of its customers claims to have
suffered $42 million in damages due to faulty chips.
Elsewhere in the chip sector, Intel
(
INTC |
Quote |
Chart |
News |
PowerRating),
down 1.97% at 16.84, and Advanced Micro Devices
(
AMD |
Quote |
Chart |
News |
PowerRating), down 4.29% at
8.70, were hurt with negative comments from Prudential, who has lowered its
fourth-quarter outlook on the companies.
Personal financial services
company H&R Block (HRB),
down 1.74% at 50.00, beat its first-quarter pro forma earnings estimates by 11
cents, with profits of 1 cent.
Casino Mandalay Bay Group
(MBG),
up 3.76% at 29.48, missed its second-quarter earnings estimates by 1 cent, with
profits of 51 cents a share.
From TM’s Implosion List, computer retailer
CDW Computer
(
CDWC |
Quote |
Chart |
News |
PowerRating) is down 4.36% at 42.48.