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Mixed session on Election Day

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Stocks remain rather mixed with the Dow Industrials holding onto a 52 point gain at 8,624, while tech weakness has the S&P 500 Index (SPX.X) 910 up 2 points, but the NASDAQ Composite (COMPX) 1,387 losing 9 points and NASDAQ-100 Index (NDX.X) 1,037 near its session lows and lower by 9.75 points.

The Semiconductor Index (SOX.X) 312 -4.3% sinks to its session low, as chip bulls look to lock in some gains after Lehman Brothers warned investors that chip-equipment stocks trade rich relative to past trough valuations. A quick look at a bigger picture and weekly bar chart of the Semiconductor Index (SOX.X) hints that it will most likely take a technical break above 350 for a longer-term bullish move to take place.

Semiconductor Index Chart - Weekly Intervals

The SOX made a nice rebounding move from its lows of 209 set the first week of October, but currently trades just under major overhead resistance of 350. That trying to flatten out 10-week moving average gives hope that an intermediate-term change is beginning to take place. While my chart is not wide enough to show more historical data prior to April 1998, the SOX based between 350-200 for nearly 13-months before it embarked on a nice 18-month run. Near-term, bulls would like to see the SOX firm up near the psychological 300 level, which was the relative lows for August 2001.

On a broader scale, investors and traders look to be spending more energy on figuring out all the various voting ballots than they are on trading as volume is rather light.

NASDAQ volume just breached the 1 billion mark, while the NYSE shows volume at a meager 770 million shares traded.

Breadth is slightly negative at the NASDAQ with decliners outnumbering advancers by a 17 to 13 margin, while NYSE breadth is equally negative at 8 to 7.

NASDAQ continues to show some bullishness in the new highs versus new lows category with 36 stocks trading new 52-week highs versus just 13 stocks trading new lows. The NYSE is more evenly distributed and tilted slightly bearish with 22 stocks trading new lows versus 20 stocks achieving a new 52-week high.

Tomorrow, things might liven up a bit as the FOMC will announce its decision on interest rates at approximately 02:15 PM EST. Currently, the December 30-day Fed Funds futures (ff02z) 98.60 are unchanged and have the MARKET fully expecting a 25-basis point cut, with slight possibility for a 50-basis point cut. Current Fed Funds stand at 1.75%.

Treasuries are seeing modest selling across the maturities, with the 10-year December futures (ty02z) 113'145 -0.31% trading lower and YIELD edging up to 4.092%.

Jeff Bailey

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