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NASDAQ suffers hangover from 2000

HAVING TROUBLE PRINTING?
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There may be some traders that know how the NASDAQ Composite feels this morning after recent New Years celebration. 2000 was anything but a celebration for the NASDAQ Composite and this morning it looks like it is feeling the effects of a rough 2000. With this type of activity taking place, hopes of a "tax-loss bounce" rally will have to be put on hold.

NASDAQ Composite Index Chart - 60-minute interval.

If the NASDAQ were a bottle of champagne, it is "on sale" and "very flat" this morning. There are some bearish traders that are taking a sip of the bubbly this morning and they like what they see here. Short-term upward trend has been broken and support is horizontal and yet to be tested.

Gold/Silver Index Chart - 60-minute interval.

Early in today's session, the XAU.X looked strong and has now moved above the 50-period MA (thin blue). The recent pullback to our upward trend looks to have served as support and a successful test of this trend. With the activity we're seeing in Treasuries this morning (lower yields) and what we're seeing in the above chart (buying gold/silver stocks) this should have equity bulls very concerned and bearish traders doing some shorting.

Cisco Systems Chart - last seven months.

We are not the only ones to label Cisco Systems (CSCO) as a "key technology stock" that traders should keep an eye on for the pulse of the technology investor. Level after level, CSCO has violated levels of horizontal "support", thus keeping bullish traders out of the "big technology" names. One would think if the market isn't buying CSCO, it probably isn't very interested in technology stocks.

Oil Index Chart - last seven months.

It's not all "gloom and doom" for traders that have done some homework. The Oil Index (OIX.X) recently broke a downward trend and is up better than 2.5% today. If the trend is your friend and you're trading it today, you're doing well. Traders that are fighting some of the trends we continue to see will have trouble.

Jeff Bailey
Staff Analyst

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