Here's a very good general market synopsis from Option Investor:
The markets rallied unexpectedly Friday in the face of more
probes, accounting concerns, warnings and possibly weakening
PC demand. Does this seem strange to anyone else? I mentioned
above that INTC was "richly valued" according to Dan Niles at
a PE over 30 with demand slowing not rising. The Nasdaq's fourth
weekly loss in a row is due to the same problems. With the
Nasdaq trading at 88 times 2003 earnings it is suffering from
PE compression on a grand scale. It is not just the sky high
flyers with triple digit PEs like EBAY, PNRA, NVDA and GNSS.
It is every tech stock as the market as a whole continues to
correct for three years worth of excesses. Every time a high
profile CEO/company makes a "no recovery in sight" speech like
the new IBM CEO did this week, those recovering PE ratios take
another hit.
The Nasdaq is now down -18% from the January high of 2098 and
is on the verge of breaking down even further. Some analysts
feel that only a successful retest of the September lows will
pave the way for future gains. They point to the fact that the
Nasdaq was already in a nose dive when 9/11 occurred and they
feel the tech bounce was artificial given the lack of an economic
recovery.
Next week there is a minefield of economic reports that could
fan the recovery flames or smother them depending on the results.
Batting cleanup for the economic week is Greenspan who will
give testimony again on Thursday on the state of the economy.
Is it a V bottom, a U or a W? Greenspan will try and tell us
it is could be all three and none are really bad as long as
we come out with an eventual recovery. Also on Thursday is the
Q4 GDP, which is expected to show that the recession is history
and on Friday we get the Consumer Sentiment numbers again. Do
you think Greenspan gets those in advance so he knows how to
slant his speech?
The bottom line for Friday was "short covering again." Actually
several traders said there was a buy program when the S&P bounced
above support at 1080 at 2:PM and that buy program scared shorts
from Thursday's plunge to cover rather than risk a Monday surprise.
Whether this was the case or not the facts remain. The Nasdaq is
struggling and may continue to be the anchor dragging us down.
The S&P may have bounced off 1080 yet again but it clearly has
a down trend of lower highs and 1080 is likely to remain under
pressure next week. The Dow on the other hand is behaving well.
It has a clear pattern of higher lows since Jan-30th and while
the top remains slightly over 10,000 the trading range continues
to narrow.
With the common indexes conflicting we need to look at a broader
indicator. The Dow is 30 stocks, Nasdaq 100, S&P 500. Of these
only the Dow is showing any strength. Using the Wilshire-5000 as
our tiebreaker, the broadest index of them all is showing the same
down trend as the S&P and Nasdaq. The index of 5000 stocks closed
Friday at 10179, only +100 points above critical support at 10080.
The Russell-2000 is also showing the same downtrend pattern and
closed only +5 points above support at 458. These broadest of all
indexes confirm the Nasdaq and S&P moves. The Dow, while being the
most reported measure of the market is not really since it only
consists of 30 stocks. Still it is the Dow that is keeping us
from falling into oblivion. Without the strength shown by this
figurehead a retest of the September lows would already be in
progress. The question here is "how long can the Dow continue
to carry the flag?" IBM is already under pressure along with
INTC, MSFT and the financials. None of that is likely to change
and how many +3.00 days can we expect MMM to provide?
News 
Market Data 
Discover 
