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Back at unchanged

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Today's trading session has seen some weakness as stocks have pulled back to unchanged levels, in what looks very similar to Monday's trading session. While a bit frustrating to shorter- term traders, this type of action and subtle intra-day volatility has the look of stocks being pushed around with little conviction behind the moves.

The decline in stocks does come with Dow component Intl. Business Machines (NYSE:IBM) $78.80 -1.2% turning lower after a volume spike at approximately 10:15 AM EST, when roughly 300,000 shares were crossed at the $80.50 level and a decline in IBM's shares took place from there. Shares of IBM are currently matching drug-maker Johnson & Johnson (NYSE:JNJ) $53.94 -1.78% for the Dow's leading losers in today's session.

The NASDAQ-100 Index (NDX.X) 1,108.42 -0.47% currently trades down 4.8 points and was the first major market index to dip into negative territory this afternoon, with 3 of the top 3 index losers all having an "internet" flavor. Shares of on-line retailer Amazon.com (NASDAQ:AMZN) $20.20 -7.67% continue to lead the NASDAQ-100 loser's list on what many cite as some profit taking and richer valuation, while eBay Inc. (NASDAQ:EBAY) $67.72 -2.8% is the NDX's 2nd biggest loser on the session. Internet portal Yahoo! Inc. (NASDAQ:YHOO) $16.92 -2.59% is the NDX's 4th weakest stock in the NASDAQ-100. None of the three internet- related companies mentioned have news out, and may hint that today's declines are some type of "valuation" selling. The CBOE Internet Index (INX.X) 90.61 -2.24 is currently testing a session low with closes support being the 86-90 area, which was early December's relative lows.

Once again.... it is difficult to say that there's any "true meaning" behind today's action as volume on both the NYSE and NASDAQ are light.

NYSE volume is just now approaching the 600 million share mark, while NASDAQ volume is right at the 700 million mark. While I can't quantitatively say for sure, I'm thinking that about 1/2 of market participants are actually making any type of buy/sell decisions today, and this may be the case for tomorrow as well. It would not be a surprise to see this take place until after the beginning of the new year too and traders should be prepared for such intra-day swings where both bullishness and bearishness can be reversed in the matter of hours.

One area of concern for the broader equity market may be the dip to new lows in the US dollar as depicted by the U.S. Dollar Index (dx00y) 102.79 -0.44% as it breaks to another 52-week low. This finds gold stocks as depicted by the Gold/Silver Index (XAU.X) 78.23 +2.93% as today's sector winner, replacing the Airlines Index (XAL.X) 37.70 +1% as today's gainer, as airline stocks fade from their earlier highs.

While not trading a new contract high today, the February 2003 Gold Futures contract (gc03g) 349.40 +1.09% did close at a 52- week high. So far, the high for this contract has been $355.60, which was set on 12/19/02 and today's close looks further bullish for this commodity.

Jeff Bailey

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