The Fear Factor…A Good Thing
The markets opened lower,
following the
lead of the overseas markets.
With the markets oversold, we still
could see a bounce in the markets this week. Looking at the CBOE Volatility
Index
(
$VIX.X |
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PowerRating) in the big picture, the VIX is near the 35 level.
Historically, a VIX close above this level, has led to a short-term market bottom.
With fear rising in the markets as indicated by the VIX and the “R”
word going being spoken on the Street, from a contrarian point of view, a bottom
may be near.
With the S&P breaching
its April lows last week, it gives us an indication that recovery will be
delayed and probably be slower than expected.
Breadth for the session was mixed.
NYSE advancers lagged decliners 1107 to 2006. Nasdaq decliners led advancers
1924 to 1207.
The CBOE Volatility Index
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$VIX.X |
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closed lower 1.4% and the Nasdaq 100 Volatility Index
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up 3.5%.
The broader markets ended mixed with
the Nasdaq Composite climbing 0.4% and the Dow Jones Industrial Average closing off
fractionally or flat for the session.
In our sector watch, the GSTI Internet
Index
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$GIN.X |
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The Interactive Week Internet
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$IIX.X |
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climbed 2.7%.
The Insurance Index
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gained 1.6%, and the Healthcare Index
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moved up 1.3%.
Sector lagging in the session were the
Forest & Paper Index
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$XAL.X |
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which fell 1.6%, and the Cyclical Index
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closed lower 1.5%.
Among individual stocks gaining: Louis
Dreyfud Natural Gas
(
LD |
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(
D |
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acquire the company for $1.8 billion in cash and stock.
Qwest Communications
(
Q |
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higher 9.7% even after cutting the company’s outlook and announcing that it
would cut its workforce by 6%.
And AOL Time Warner
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AOL |
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6.5%.
On the Nasdaq, Anadigics
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ANAD |
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shares moved higher 19.4% after it raised guidance for Q3 revenues to $16 million
as “previously expected” and in line with Thomson Financial/First Call
estimates.
Lifecore Biomedical
(
LCBM |
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16.7% still on Friday’s news that the FDA had wrongly rejected the companies gel
which is designed to reduce scarring after surgery.
On the downside, Coventry Health Care
(
CVH |
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PowerRating) slid 8.6% after Prudential Securities lowered its rating on the
company from Hold to Sell.
Circuit City Stores
(
CC |
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9.2% after reporting sales dropped 9%.
And Dobson Communications
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DCEL |
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lost 20.3% after being downgraded by Deutsche Banc Alex Brown from Strong Buy to
Market Perform and Dresdner Kleinwort Wasserstein to Hold from Buy.