Even though GDP didn't come in as bad as expected, traders have elected to go into sell mode. The Dow is down 70 points, and getting close to testing the July 11th low. The S&P 500 is 7.9 points lower, and sitting right at last weeks low.
Semiconductors, software, airlines, and banks are leading the decline, and only commodity stocks like oil, gold, and forest products are in positive territory. Most of the gains in forest product stocks are the result of the Mead (MEA) and Westvaco (W) merger.
The $3 billion dollar deal will combine two midsize paper companies into a paper behemoth, second only to International Paper. The new MeadWestvaco will generate revenues of $8 billion, but I think they could have done a little better name. Perhaps Westmead or Meadvaco, but I digress.
Mead Daily Chart
Mead has been bouncing around inside an ascending triangle for most of 2001, and today's news was the catalyst needed to push this stock out of the pattern. While Mead is now clear of the pattern, resistance sits close by at $33. If the stock can't garner enough moment to propel itself past $33, it could pullback to test the top of the triangle at $30.70 once the merger euphoria wears off.
Westvaco Daily Chart
Westvaco has had a challenging year, failing to climb above $27.50 on several attempts. Today the stock has handily taken care of that resistance level, and several others. Today's $2.93 gain has helped the stock to recoup over 62% of its losses that date back to May of last year. $34.75 should be the next significant resistance level, but the stock may need to consolidate before moving there, preferably above $30.