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Three Little Pigs

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Once upon a time there were three little pigs, the Dow, the Nasdaq, and the S&P 500. Mr. Bailey mentioned it earlier, but I'm going to expound a little on the recent difference between the Dow, S&P 500, and Nasdaq Composite.

Major Indices 60-Minute Charts

Sticking with my pig analogy, the Dow's house appears to be made of brick. The Dow was able to hold above the 50-period moving average, as well as the 38.2% retracement bracket. The S&P 500 has the house made of wood; it's weaker than the Dow, but stronger than the Nasdaq. The S&P 500 has a steeper downtrend, prices are below the 50-period moving average, and prices fell to the 50% retracement bracket. The Nasdaq house of straw has the steepest downtrend to contend with, and fell all the way down to the 61.8% retracement level. Oversold stochastics are supporting our current little rally, but they are going to have to break their own downtrends.

Yesterday I noticed the flip-flopping that was going on in the Nasdaq-100, and the pattern continues today. Reuters (RTRSY) was down 5.95 yesterday, and is up 4.25 today. Genzyme General, big loser yesterday, big winner today. Ciena was up 2.26 yesterday, down 1.47 today. You get the point. JDS Uniphase, Comverse Technology, and Intel are pushing the Nasdaq-100 lower today, and biotechnology continues to support the Nasdaq, with Veritas thrown in for good measure. Dow components are equally divided with winners and losers. Phillip Morris and Johnson and Johnson are leading, and DuPont and United Tech are lagging.

Jeffrey Canavan
Assistant Analyst

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