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Stumbling stocks

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Stocks continue to stumble lower today as the major market averages have given back the bulk of Monday's gains over that last session and a half.

Market internals are tilted toward the negative as decliners edge out advancers on the New York Composite (NYA.X) 545 -0.45% with decliners having a 148 to 144 edge. Breadth is slightly more negative on the NASDAQ Composite (COMPX) 1,482 -0.94% with decliners having a 4 to 3 edge.

The Biotechnology Index (BTK.X) 350 -3.2% leads sector losers after Genzyme Corporation (NASDAQ:GENZ) $19.80 -23.5% warned late yesterday that it expects revenues of between $1.10-$1.15 billion, approximately 4% lower than the previous guidance range given. The company said it sees FY02 earnings in the range of $1.18-$1.23 per share, which was well below the consensus estimates of $1.36.

Exacerbating declines in the biotechs is the resurfacing of a rumor in regards to sector bellwether Amgen (NASDAQ:AMGN) $41.52 -3.53% getting ready to preannounce an earnings warning. It should be noted that this type of rumor has circulated in past weeks. Amgen (AMGN) is scheduled to report earnings on July 25 after the close of trading. Current Multex consensus is for the company to report EPS of $0.34 a share.

The Dow Jones U.S. Home Construction Index (DJUSHB) 386 +2.25% builds on some of yesterday's gains as the recent decline in Treasury YIELDS has investors favoring the sector on the thought of lower mortgage rates spurring demand for new homes and challenges the Gold/Silver Index (XAU.X) 77.40 +2.62% for this morning's sector gainer.

Gold stocks are getting a boost from a continuing weaker U.S. Dollar. The September Euro futures (eu02u) jumped to another high versus the U.S. $, at 95.30 and getting ever so close to a par value of 100 against the greenback.

June Gold futures (gc02m) are jumping 1.43% to $324.40 on today's currency action and trade deficit news.

Jeff Bailey
Senior Market Technician
Option Investor

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