Let The Market Dictate What You Do
On the first trading day after the
terrorist attack on America, the markets ended markedly lower on Monday.
Market action was as expected, as was the
Federal Reserve Board’s move to cut rates. The Fed slashed the Fed
Funds rate by 50 basis points before the markets opened. The European Central
Bank also slashed rates by 50 basis points as the bank said it was working in
unison with Greenspan and his crew.
As Larry Connors and I
wrote in the “Before the Market” piece, “If defense stocks,
security stocks and gold stocks don’t hold Monday’s gains, they may prove to be
one of the great short opportunities of the year. Why? Because if they don’t go
up on this past week’s news, when will they ever go up? Again, no predictions.
Let the market action dictate how to proceed.”
This is no time to be a hero and
putting your face in the fire, just because someone is saying it’s patriotic to
buy stocks. Remember, in order to buy, you need someone on the other side who is
willing to sell it to you.
Breadth for the day was negative. NYSE
decliners led advancers 2809 to 475, as for the Nasdaq, decliners led advancers
2741 to 618.
The CBOE Volatility Index
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rose 29.8%, while the Nasdaq 100 Volatility Index
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16.9%.
The broader markets all ended lower
for the session. The Dow Jones Industrial Average closed off 7.0% and the Nasdaq
Composite slid 6.8%. Volume was high today.
Sectors in the green were the Gold and
Silver Index
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the markets. The index climbed 2.6%.
The Pharmaceutical Index
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also was up in the session, as the possibility of increased demand for drugs and
other medical supplies became apparent in the aftermath of this horrific
turn of events. The index closed higher 0.1%.
Needless to say, the Airline Index {$XAL.X|$XAL.X]
fell 40.3% as anticipated.
The Transportation Index
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lost 14.3%, breaking all support levels made this year.
Ditto for the Chemical Index
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which slid 9.6%
Video Conferencing provider,
Polycom
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Many companies utilized video-conferencing technologies to conduct business with
firms out of state.
L3 Communications
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higher as shares closed up 38.0%.
Wakenhut
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And Patriot Missile maker, Raytheon
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shares rallied 26.7%.
On the Nasdaq, Engineered Support
Systems
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higher 45.0%.
As we saw in the index recap, the
Airline Index fell considerably with the help of Continental Airlines
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which slid 49.4%, Delta Airlines
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which closed off 52.0%.
Also associated to the group Atlantic
Coast Airlines Holdings
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39.4% and Northwest Airlines
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