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Drifting Higher

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The markets drift higher, but nothing to get excited about. Well, bulls can be mildly excited about the Nasdaq slipping back above 2,000. The S&P 500 is up a whole 3 points, but 5 points shy of 1,200. The Dow remains mildly in negative territory, thanks mainly to Hewlett Packard (NYSE:HWP).

Hewlett Packard Weekly Chart

HP announced they are riffing (Reduction In Force) 6,000 jobs, and revenues will come up 14% to 16% shy, thanks in part to 3% negative currency impact. The stock is coming up $1.68 cents short today, and now below support at $26. The next level of support looks like the 1998 low of $20, and then the 1996 low of $15. When HP was at $15 in 1996, it took almost 2 years for the stock to double to $30. It's only taken one year for the stock to lose 64%.

Dow Jones Industrial Daily Chart

HP is holding the Dow back just enough that it can't take out the previous two days highs. Should that resistance level be broken tomorrow, or later this afternoon, a resistance zone between 10,444 and 10,503 should try to suppress any further gains. Above that we have the 200-day moving average, and then the May downtrend to deal with. On the plus side, we can at least draw an up trend on the Dow's chart now. The downtrend and up trend are quickly converging, so the Dow may have to make a directional choice soon.

Jeff Canavan
Assistant Analyst

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