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CLOSING WRAP-UP, Mar. 21
By Jody Osborne, Optionetics.com
3/21/2005 5:30 PM EST

http://optionetics.com/articles/article_full.asp?idNo=12112

Another bout of selling for the major market indices, though stocks did bounce off intraday lows. The Dow ($INDU) never saw positive territory Monday, closing with a loss of 64.28 points to 10,565.39. The S&P 500 ($SPX) also remained in the red, ending the session with a loss of 5.87 points to 1,183.78. The Nasdaq ($COMPQ) hovered near the flat line for most the session and closed there as well, down just 0.28 points to 2,007.51. Volume was light with just 1.45 billion shares trading on the NYSE and 1.63 billion shares trading on the Naz. Market breadth was negative by a 10-to-23 and 14-to-16 margin on the Naz.

Interestingly, the session was weak despite a number of merger announcements. In the Internet sector, IAC/InterActiveCorp (IACI) announced plans to buy Ask Jeeves (ASKJ) for about $1.85 billion in stock. In the chip sector Entegris (ENTG) agreed to buy Mykrolis (MYK) for $1.3 billion in stock. And in the pharmaceutical sector, Medicis (MRX) reached an agreement to purchase Inamed Corp (IMDC) for $2.8 billion in stock and cash. As is usually the case, the buyer saw its stock fall, while the seller experience gains.

Most the attention this week is on the FOMC meeting Tuesday, so traders were a bit hesitant ahead of this event. Nonetheless, the Dow has a fallen to nearly a two-month low and the Naz continues to test the 2K level. With the bulk of first quarter earnings still several weeks away, the economy and oil prices are garnering most the attention. Oil continues to trade near record highs, as does gasoline. This has a negative impact on the economy, with high fuel prices acting like a tax on consumers.

There were some stocks that experienced gains today; most notable was Rambus (RMBS). This tech stock rose 29.8 percent Monday after agreeing to a patent dispute with Infineon (IFX). The deal has IFX paying RMBS $5.85 million each quarter starting in Nov. 2005 and lasting two years. Overall, the Philly Semiconductor Index ($SOX) fell 0.17 percent today to close at 413.41.

Overall, the major market indices are showing weakness, but are holding support. For the past two sessions, the Naz has moved briefly below 2K, but has recaptured this level by the close. If the Naz were to close below 2K, it could be a sign that future declines are in store.

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