Looking For A Bounce
The markets opened lower Friday after
a weaker-than-expected unemployment report. In August, 113,000 manufacturing jobs were
slashed and the U.S. jobless rate rose to 4.9%, its highest in four years.
Ideally, we would like to see unemployment insurance claims peak as this number
typically
leads the unemployment rate. If we consider that the employment numbers are
backward-looking, there is a possibility that the worst is over with regard to
layoff announcements.
Traders are now concerned about the retest of lows made in April. The Dow Jones Industrial
Average April low is at the 9300 level, while the S&P 500 closed below its low made in April. The re-test and holding of
these levels are important in that if we breach them (which the S&P has
already done), this could indicate a prolonged bear market. A very important test, to say the least.
Going into next week, with the markets so oversold, there is
a good possibility that we will see the markets bounce sometime next week.
Breadth for the session was negative,
with NYSE advancers falling behind decliners 875 to 2210, while Nasdaq
decliners led advancers by a ratio of 21 to 10.
As for the broader markets, all ended
the week on a down note. The Nasdaq Composite closed off 1.0% and the Dow Jones
Industrials fell 2.3%.
The CBOE Volatility Index
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closed higher 5.7%, while the Nasdaq 100 Volatility Index
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tacked on 1.1%.
Once again, not many sectors were in
the green. The Gold and Silver Index
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away from testing its lower channel on a weekly chart.
And the Semiconductor Index
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moved higher fractionally 0.4% as it appears to have formed a reverse
symmetrical triangle.
The Retail Index
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slipped lower 3.5%, breaching its April lows, as did the Cyclical Index
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which closed off 3.7%.
The Forest & Paper Index
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tanked and lost 3.9%.
Stocks gaining in the session were
Fresh Del Monte Produce
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FDP |
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Georgia Gulf Corp
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GGC |
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higher 4.6% after being upgraded by UBS Warburg from Hold to Strong Buy.
Also rising was GOTO.com
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which tacked on 10.6% after a positive call from analyst Safa Rashtchy of U.S.
Bancorp Piper Jaffray.
Drug maker MGI Pharma
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closed up 10.3%.
Losing ground was Quiksilver
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which fell 16.4% after being downgraded by First Union Securities from Buy to
Market Perform.
Retailer Circuit City
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got clobbered losing 21.8% after reporting sales fell 21% in the second quarter,
citing the company’s decision to stop selling major household appliances.
Also slipping was Family Dollar Store
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sales rose 7.9% from a year earlier.
On the Nasdaq, Emisphere Technologies
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oral insulin studies.
Software company Precise Software
Solutions
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