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CLOSING WRAP-UP, May 26
By Jody Osborne, Optionetics.com
5/26/2004 5:00:00 PM

http://www.optionetics.com/articles/article_full.asp?idNo=10459

Tech sector adds on to Tuesday’s rally, though the broader market closes near the flat line. The Dow ($INDU) finished the day with a loss of 7.73 points to 10,109.89. The S&P 500 ($SPX) was able to close the session in the red, but just by 1.90 points. The Nasdaq ($COMPQ) solidified its moved above its 200-day moving average, rising 11.50 points to 1,976.15, which was also the high for the day. Volume remained was light on the session, with the NYSE trading 1.36 billion shares and the Naz trading just 1.59 billion shares. Market breadth was positive by a 20-to-12 and 18-to-13 margin on the Big Board and Naz respectively.

Wednesday’s lack of selling could be considered bullish considering the gains achieved on Tuesday and the negative news that hit the Street this morning. Terrorism has taken a front seat once again after U.S. counterterrorism officials warned that Al-Qaida is planning an attack on the U.S. this summer. What really is frightening is that there are those that believe terrorists have been able to get biological and chemical agents.

Of course, terrorist concerns do put pressure on oil prices, which have already been reaching new highs. Nonetheless, after fluctuating throughout most the session, oil closed down 44-cents to $40.70 a barrel. The Energy Dept announced this morning that gasoline supplies fell last, while crude oil stocks remained flat. Traders are still trying to figure out what OPEC is going to do after the group pushed back a decision on raising production.

Economic news was disappointing today, with most reports failing to match expectations. The most notable miss came from the durable goods orders report for April. Economists were expecting durable goods orders to fall by 0.8 percent, but the actual drop came in at 2.9 percent. However, March’s figure was revised higher and orders were still strong on a year over year basis.

A 2.29 percent drop in shares of SBC Communications (SBC) hurt the Dow today. SBC was hurt by an earnings estimate cut at UBS. This came on the heels of the renegotiation of a labor contract that has been weighing on the stock. Shares of Verizon (VZ) also struggled today, falling nearly three percent. The company was hurt by news that Comcast (CMCSA) would make a push into areas that Verizon is currently strong in.

Overall, today’s trading was quiet, but bullish in nature. After such a large advance on Tuesday, it seemed likely that negative economic news would push stocks lower, but this didn’t occur. Nonetheless, it is difficult reading into the market’s moves when volume just isn’t there to confirm these moves.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site