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Dow claws back from lows as NASDAQ holds onto gains

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As we approach the final hour of trading to mark the beginning of the second quarter, the Dow Industrials have managed to par earlier triple-digit losses and now trades down an even 50 points at 10,353.

Technology stocks have been the bright spot today as the NASDAQ- 100 (NDX.X) has been holding the high ground with a 20 point gain at 1,472 and the NASDAQ-100 Trust (AMEX:QQQ) $36.68 +1.65% trades relative light volume at just over 54 million shares.

NASDAQ Composite Chart - Daily Interval

It's a tough trade for bulls in the NASDAQ-Composite (COMPX) right now. Today's economic data sure looks to have some bears locking in some gains, but I'm expecting some formidable resistance near the 1,880 level. Bears that have gotten some decent short-term moves of more than 8% in a stock have been well served to snug down stops to help assure a profitable trade. With economic data still rather strong, bears have been rather quick to cover some trades where profits begin to erode on short- covering.

Emulex Corporation Chart - Daily Interval

Last week we noted that shares of Emulex (NASDAQ:EMLX) $34.44 +4.58% had tested their bullish support trend from the point and figure chart at $29, which also correlated with the lower end of our regression channel. Today the stock is trying to break out of this downward regression channel. A short-term trader can take a shot at EMLX to the bullish side here, with a rather tight stop just under the $33.42 level. Near-term target would be the rolling 50-day MA of $37.22 or 80.9% retracement of $40.89. Lots of bears short this one and the rebound looks to be getting away from them. If they chase it higher on any increase in volume, bulls could get a nice "pop" from the stock.

Jeff Bailey
Senior Market Technician
Option Investor

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