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Dow Industrials edge into positive territory

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The Dow Industrials have staged a comeback in the latter part of the session and now edge into positive territory with a 34 point gain, as components Philip Morris (NYSE:MO) 39.44 +2.9%, United Technologies (NYSE:UTX) $63.08 +2.48% and Procter & Gamble (NYSE:PG) $86.45 +2.31% leading gains.

In the last 30-minutes, technology sectors rebounded from their lows after software giant Microsoft's (NASDAQ:MSFT) $56.93 +0.38% CFO said that it still sees modest growth in fiscal 2003 PC shipments. As the most heavily weighted stock in the NASDAQ-100 Inidex (NDX.X) 1,077 -1.06%, some relative strength from Microsoft during today's session has helped NDX and QQQ losses to a minimum.

Shares of RF Micro Devices (NYSE:RFMD) $10.78 -4.51% have rebounded from their lows of $10.12 after presenting at the CSFB technology conference. The company mentioned that they are already 50% booked for their March quarter and ahead of their own internal expectations. This news finds the Philadelphia Semiconductor Index (SOX.X) 339.45 -4.54% holding above its 21- day SMA of 334, after an earlier session low of 330. Still, I feel the "overbought" condition of the bullish % for this sector has downside risk to 300 on the SOX.X.

As the Dow leads to the upside, both S&P Indexes have moved into fractionally positive territory, bolstered by gains in Healthcare (HMO.X) 511 +4.82% and (RXH.X) 289 +4.74%. Also adding to late afternoon gains are retailers as depicted by the Retail HOLDRS (AMEX:RTH) $76.15 +1.64% along with transports as the Dow Transportation Average (TRAN) 2,363 +1.11% and narrower Airline Index (XAL.X) 40.43 +1.78% rebound from session lows.

Treasuries finished their trading session with price on the upside as the December 10-year futures (ty02z) 112'245 +0.40% rose, while the benchmark bond's YIELD ($TNX.X) 4.172% found intra-day YILED support near the 4.15% level, which had been identified late last month as a "neckline" in a reverse head/shoulder pattern. This action may be partially responsible for more significant stock weakness earlier this morning ahead of Thursday and Friday's employment data.

Volume has been brisk today, but not overly heavy with the NYSE turning just over 1.2 billion shares, while the NASDAQ has just reached the 1.6 billion shares traded mark.

Breadth is mixed with advancers have a razor thin margin over decliners on the NYSE at 16:15, while NASDAQ breadth has decliners outnumbering advancers by a 3 to 2 margin.

New highs versus new lows is marginally positive at the NYSE with 20 stocks having traded new 52-week highs, compared to 16 stocks trading new 52-week lows. NASDAQ remains impressive in this category with 44 stocks trading new highs, compared to 23 stocks trading a new 52-week low.

Jeff Bailey

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