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Stocks trying to battle back

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After a very rough first 30-minutes of trading, stocks look like they're trying to fight back off their lows. The bulk of the action looks to be in the technology sector with the NASDAQ-100 Trust getting the bulk of the volume at 13.4 million shares traded there.

Amazon.com (NASDAQ:AMZN) is getting hit to the downside after opening at $13.61. The stock did give bears some up-ticks to $14 and then fell apart to a low of $12.59 and currently trades right on upward trend at $12.90.

Amazon.com Chart - last seven months

With the CBOE Internet Index (INX.X) down 4.82% today and leading sector losers, a trader need look no further than Amazon.com (AMZN) to understand why. The first level of support from 61.8% retracement at $13.18 was broken this morning and the stock is trying to hold at upward trend. Volume is brisk with over 13.5 million shares traded so far.

NASDAQ Composite Chart - last six months

The NASDAQ Composite (COMPX) is trading right on its upward trend and this will be the ultimate test for bulls. The close below the 2,000 level is damaging to bull's psychology and the April lows continue to get closer. Look for market bears to try and get this index to crack the 1,934 level.

At this point, bears have the feeling that if money doesn't come poring into stocks soon, some of their downside goals are going to be achieved. Bears know the earnings outlook remains cloudy and investor psychology is shaky at best. Look for shorts and longs to continue to liquidate their holdings in stocks if we don't see some selling in bonds soon. The 5.7% and 5.8% YIELDS found in the 30-year Treasury within the past 6-weeks looked good at the time and don't look much worse today with the YIELD now having dropped to 5.513%. The question remains. "At what point are stocks more attractive than a 5.5% yield?"

I'll be keeping an eye on the bond market as well as stocks to find that answer.

Jeff Bailey
Senior Market Technician
www.premierinvestor.net

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