Nasdaq Runs A Fastbreak
The Nasdaq broke out of its narrow two-week-long trading range Monday and
powered 3.3% higher to close near its high of the day. Biotechnology and
semiconductors led the way, but in a very constructive sign of market breadth,
financials, drugs and telecom were also strong. The Dow and S&P 500 finished
the day up 1.0% and 1.5%, respectively.
Notably, both the Nasdaq and S&P 500 closed at levels not seen since
April 12 and are each solidly above their respective 50- and 200-day moving
averages.
Considering volume is typically lighter on Mondays, the Nasdaq traded 1.4
billion shares which roughly equaled Friday’s action. NYSE volume fell by about
24% from Friday’s level and traded 920 million shares. Given the sizeable Nasdaq breakout,
traders would have preferred to have had higher volume accompany the trading
action.
"We’re seeing the continuation of the separation of big-cap tech from
the rest of the technology market. That’s the game right now. People talk about
bear markets in technology, and yes we’re down a lot, but it’s hard to really
emphasize that case if you ex-out the dot-com disaster which no one really
follows anymore," said Barry Hyman, Chief Market Strategist, A. Ehrenkrantz
King Nussbaum.
"It’s hard to make the case that we’re having a terrible tech market
when you’re seeing EMC at a new high, Nortel approaching a new high, Intel
getting close, Sun Microsystems having rebounded quite dramatically, and seeing
some of the older infrastructure names that got hit down have rallied back
nicely," he added.
According to preliminary numbers, the Nasdaq tacked on 129.29 to 3989.85, the
Dow gained 108.54 to 10,557.84, and the S&P 500 rose 21.54 to 1486.00.
Top-performing sectors included biotechnology
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semiconductors
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and banks
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On the downside were cyclicals
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products
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and chemicals
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Genomic and biotech standouts that posted big gains and closed near their
highs of the day included Incyte Pharmaceuticals
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7/8, Affymetrix
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up 18 to 182, and Celera
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Leading the Nasdaq charge were the traditional tech stalwarts with Intel
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up 10 7/16 to 136 1/2, Sun Microsystems
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Other tech winners included Sycamore Networks
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7/8, Juniper Networks
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up 15 1/16 to 314 15/16, and Inktomi
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Among Dow stocks, Honeywell
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estimates for the company’s second quarter, and that sent Honeywell down 8 5/8
to 39 15/16.
Commenting on the staying power of today’s action, Stephen Shobin, Technical
Analyst, Lehman Brothers said "I’m not quite sure the bull market is ready
to resume yet. I think I would liken what has happened in the past couple of
months to a severe accident, and when one is in a bad accident, you need time to
convalesce, recuperate and rebuild."
"Aside from the short-term wiggles and squiggles, I think that the
market is going to be range-bound for a few months, and then later in the year I
think the bull market resumes," he added.
Looking ahead, the May trade gap figures will be released Tuesday at 8:30 AM
ET, and estimates look for a $29.6 billion figure. The week will be fairly light
in terms of economic news.