Sector Investing

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SEESAW MARKET
By Harry Boxer, The Technical Trader (www.thetechtrader.com)

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We had a seesaw market today with the Nasdaq holding up better relatively than the Dow and S&P 500. This was the opposite of what we saw earlier in the week. The day started off with a move up early that immediately met some selling. We held minor support and rallied and double-topped on the NDX, but were not able to do so on the S&P 500, and then the following sell-off was much steeper, taking us to the morning lows on the S&P 500 and the NDX.

The market stabilized just before the lunch hour and then started a slow, ascending rally that took the Nasdaq 100 all the way back to not only the morning highs but just nominally above them. The S&P 500 and Dow, however, had trailed badly and were nowhere near the highs, which signaled to me we may be due for a pullback and I indicated that my subscribers. At that point the market did sell off and sharply into the last 15-20 minutes or so before snapping back late on what looked like some bargain hunting and short covering.

Net on the day the Dow was down 38, the S&P 500 down 6.30, and the Nasdaq Composite down less than half a point and the 100 down a third of a point.

The technicals were mixed, slightly negative on New York, slightly positive on Nasdaq. Advance-declines were 18 to 14 negative on New York, and 16 to 15 positive on Nasdaq. Up/down volume was 6 to 5 negative on New York, and 7 to 6 positive on Nasdaq. Total volume was about 1.2 billion on New York and about 1.4 billion on Nasdaq, so about average volume.

There were some outstanding gainers on my personal board today. Nam Tai Electronics (NTE) snapped back 1.14 closing at 22.84, and Qualcomm (QCOM) was up 1.07, along with QLogic (QLGC) up 60 cents, and InterDitial (IDCC), on a good earning reports, up 90 cents, but way off the early session high. Other highlights were lower-priced TiVO (TIVO) up 33 cents, and ATI Technologies (ATYT) up another 41 cents.

On the downside there were some fractional losers, with OmniVision (OVTI) dropping half a point and Exult (EXLT) down 44 cents. For the most part everything else was narrowly mixed.

Stepping back and reviewing the overall patterns, the rally of the last few days has taken the Nasdaq 100 back up toward resistance in the 1240-50 zone and it backed off two or three times there today. That index did hold support today and is in a sideways consolidation, but it’s important that it get back up through resistance or today's afternoon downtrend may extend.

The S&P 500 snapped back to resistance in the 985-90 zone and also backed off sharply this afternoon. It made slightly lower lows and came down and tested important short-term price support at 980 and did held that late, also holding the rising 40-day moving average on the hourly charts .

We’re now at a critical short-term position right now that could dictate the trend for the next week or two, depending on what we do in the next session or two. We’ll have to see whether or not the Nasdaq strength can reassert itself and pull the S&P 500 & Dow back up with it or not.

Good trading!

Harry