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Nasdaq Starting to Soften

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After holding above the nice round number of 2,000 for the better part of the day, the Nasdaq Composite has finally dipped below.

Nasdaq Composite Daily Chart

While a close above 2,000 would do a lot for investor psychology, all "hope" is not lost if we do not close above that level. We still have the gap that formed on 4/17 that requires a drop to 1940 to close, and Mr. Fibonacci is saying 1974 is the level to watch. But I doubt that Tom Brokaw will say in his newscast tonight, "The Nasdaq Composite closed 15 points above its 50% retracement level." The Nasdaq drops below 2,000 makes for a better headline, and it might be enough to spook Retail investors that are just getting home from work to log on to their online broker and sell some stocks tonight. Investors are already selling shares of Comverse Technology, Tellabs, and Siebel Systems, which are all down over $2, but the stock right behind them is the trouble spot. Microsoft has taken out yesterday's low, and is on the brink of dropping below $66. That would issue a spread triple bottom sell signal on its point and figure chart, and could most likely lead to more selling. The Dow is managing to hold above the 200-dma and the S&P 500 is 9 points above 1,200, but weakness in Nasdaq could drag the other indices down with it.

Halliburton Update

Halliburton has dropped below its 50-dma, so Premier Markets is profiling a covered call position using the July 45 calls (HALGI), currently bid at $1.05.

Jeff Canavan
Assistant Analyst
www.premiermarkets.com

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