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Industrials struggle, but try to break free

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It has been another tough session for the Dow Industrials (INDU) 8,320 +0.01%, but the "dirty thirty" are trying to post a move back into positive territory in an attempt to shrug off another "debacle" for a Dow component that has seen shares of AT&T (NYSE:T) $20.14 -20% pummeled to the downside after missing quarterly earnings estimates, which were released just minutes before today's opening bell. AT&T (T) reported a quarterly loss of $0.79 per share, which was wider than analyst's estimates for a loss of $0.40 per share.

This morning's news weighed on the Dow Industrials (INDU), but as I write, the Dow looks to have made of successful upside breach of intra-day resistance at the 8,300 level and this now has the S&P 500 Index (SPX.X) 884.63 +0.71%, S&P 100 Index (OEX.X) 449 +0.81% and NASDAQ-100 Index (NDX.X) 1,023 +1.70% looking to challenge their early morning highs.

Sector weakness has been limited for the bulk of the session, with AT&T's price action weighing on the North American Telecom Index (XTC.X) 459 -3.27%, which has this index holding today's sector loser spot.

Shares of Nokia (NYSE:NOK) $14.20 -4.95% quickly lost their marginal bullishness at the open, and price action here has kept the Wireless Telecom Index (YLS.X) 56.97 -0.62% marginally red for the bulk of the session. Shares of Qualcomm (NASDAQ:QCOM) $37.92 +3.37% are holding about half of today's gains, after trading a session high of $39.05 in the first 5-minute of trading.

Lucent Technology (NYSE:LU) $1.93 +6.07% extends yesterday's gains and is again the most actively traded stock in the market for the second consecutive session with volume approaching the 100 million mark. LU has not been able to trade much above the $2.00 level since falling below the $2-mark in July of last year. Telecom equipment sector traders will be monitoring LU's 200-day SMA, which is trending lower at $2.12, which may be a "destiny" level that LU should trade as it hasn't seen the 200-day SMA since multiple rally tests of $8.50 in November of 2001 and $7.50 in January of last year. At both of these times, volume was weak and for signs of some type of longer-term turnaround for this once-loved telecom equipment stock, a break above the 200-day SMA on 4 or 5-times averages volume would be a bullish sign. Fellow telecom equipment rival Nortel (NYSE:NT) $2.40 +2.12% is the third-most actively traded stock in the market. Back in May of last year, I had profiled a bearish trade in LU near $5 as it's price was higher than Nortel's (NT). Current price difference may have LU looking to play a little "catch up" to the upside, just as it eventually played "catch up" to the downside back in May.

Gold prices are on the move again today after hitting contract highs yesterday. The February 2003 Gold futures contract (gc03g) 364.60 +1.3% is hitting a consecutive 52-week high and has the Gold/Silver Index (XAU.X) 80.98 +4.22% challenging its recent relative high found in early January of $81.18. With the commodity itself hitting contract high, the XAU.X looks to have upside potential to its 52-week highs of 88.62 found in late May of 2002. With the February gold contract about to expire, I'm looking at Dorsey/Wright and Associates point and figure chart of the April Gold futures (gc03j) $365.50 +1.24%, and note the bullish vertical count for this contract is $381.00. This hints to me that the XAU.X may indeed have some upside to its past 52- week high in the coming months.

After trading contract highs in the past couple of session, Crude Oil futures for March expiration (cl03h) $32.25 -1.82% are taking a rest today. In last night's PremierInvestor.com market wrap, fellow trader and analyst at both OI and PI, Kent Barton, mentioned that some relief regarding striking oil workers in Venezuela may be on the horizon when tanker captains agreed to go back to work. While 90% of oil workers in Venezuela remain on strike, tanker captains reporting for duty may help soften talks between with that country's government.

Oil stocks as depicted by the CBOE Oil Index (OIX.X) 250 -0.04% trade relatively unchanged.

Jeff Bailey

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