This morning's "pop" for stocks has lost its fizz as the broader- market averages sink to their session lows. The Dow Industrials dipped briefly below the psychological 10,000 level to a low of 9,990 and did find some buyers back to the 10,015 level, but bulls look to be rather cautious in early morning action.
Weighing on a bull's mind may be WorldCom's (NASDAQ:WCOM) $1.72 - 14.9% decline and retest of its 52-week low from last week at $1.66. The thinking here might be that if one of the largest telecom service providers is yet to find a bottom, then other stocks could also be vulnerable to recent lows.
That kind of thinking will most likely have bears still interested in establishing some short positions and bulls giving up and looking to protect remaining gains from Wednesday's rally.
Breadth is negative this morning with decliners outnumber advancers by an 18 to 10 margin on the NYSE. NASDAQ breadth is also negative with decliners showing an 18 to 11 advantage over gainers.
So far today, there have been 33 new highs and 30 new lows on the NYSE and 56 new high and 66 new lows on the NASDAQ.
Sector strength is limited with the Oil Service Index (OSX.X) showing a gain of 1.17%. Both the Gold/Silver Index (XAU.X) $78.87 +0.39% and HMO Index (HMO.X) 613.93 +0.34% hang on to fractional gains.
Noticeable weakness is found in the Wireless Telecom Index (YLS.X) 56.92 -5% as it leads sector decliners. Shares of Western Wireless (NASDAQ:WWCA) $3.31 -41.7% were cut nearly in half after yesterday's earnings announcement that the company posted widening losses of $96 million, or $1.22 a share compared with a loss of $22.9 million, or 29 cents a year ago. Merrill Lynch cut its mid-term rating on the stock to "sell" from "neutral."
Applied Materials Update
In this morning's market monitor, I suggested that bullish traders place a stop under shares of Applied Materials (NASDAQ:AMAT) $24.48 -3.08% at the $24.90 level to protect gains from previous bullish profile of $22.99.