Stock Indexes Don’t Go Up, They’re Put Up

  • October 10, 2001
  • Marc Dupee

And so too are stock index futures. Pit sources say
Merrill Lynch was a heavy buyer of S&P 500 futures shortly after the open
and continued accumulating the contracts throughout the first half hour of
trading. Locals (independent traders) in the S&Ps pit followed Merrill in
getting long, resulting in an explosive 13.50 point rally in the first hour. 

Traders on Carolyn Boroden’s S&Ps
and Nasdaq Price Action Levels were already cognizant of the potential for a
rally off the lap-down opening because the opening prints came within one handle
of key cluster support.

The S&P 500 cash index is up 19.83 at 1076.58, the
Nasdaq Composite is up 39.20 at 1609.69, and the Dow is up 161 at 9214. 

The rally came despite more dismal corporate news from
Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating), the company kicking off this quarter’s earnings season. The
second largest mobile phone maker surprised analysts by saying it would lose
money for the fourth consecutive quarter and would slash its workforce by an
additional 7,000 to 39,000. MOT sank over 5% on the opening bar but recovered
with the broad technology sector to breakeven levels.

TradersWire Interactive (TWI) pointed out in the early
going strength in a key stock. American International Group
(
AIG |
Quote |
Chart |
News |
PowerRating) is the
seventh most heavily weighted stock on the S&P 500 Index and “triggered
out of a pullback from a one-month high in its opening bar.” The stock has
added nearly $1 since the opening post and is up 3.39 at 80.74. 

One of the most spectacular gainers in recent days,
Cepheid
(
CPHD |
Quote |
Chart |
News |
PowerRating), a firm that makes products to test for biological
contamination, jolted higher for its second straight session. But remember,
nothing goes up forever. The stock made a 200% gain in two days and found
resistance precisely at the 38.2% retracement of its July 2000 high through
September 2001 low, a good place to consider shorting overbought stocks. After
rallying 3.50 on the opening, the stock is being sold and is now down .63 at
7.56.

Networkers
(
NWX |
Quote |
Chart |
News |
PowerRating), +4.88%, oil services
(
OSX |
Quote |
Chart |
News |
PowerRating),
+4.43%, and transports
(
TRX |
Quote |
Chart |
News |
PowerRating), +4.40%, are the strongest sectors. Gold and
silver
(
XAU |
Quote |
Chart |
News |
PowerRating), -2.08%, is the session’s weakest. Gold is falling and stocks
rallying as major equity indices continue higher despite military action in
Afghanistan.Â