Option Investor
Market Updates

Struggling to hold a gain

HAVING TROUBLE PRINTING?
Printer friendly version

It has been a rather sideways afternoon session as the major indexes struggle to hold gains with the Dow Industrials (INDU) 7,847 holding a 25-point gain, S&P 500 (SPX.X) 832 up just fractionally, and the NASDAQ-100 Index (NDX.X) 1,026 hovering either side of unchanged.

Market volumes are strong again today with the NYSE running at just over 1.3 billion shares, while NASDAQ is just over 1.35 billion and looks to press the 1.5 billion mark by today's close.

Sector action is mixed with weakness in both the HMO Index (HMO.X) 484 -2.01% and Morgan Stanley Healthcare Index (RXH.X) 254.09. Share of McKesson (NYSE:MCK) $22.96 -3.12%, which has been a "bearish favorite" of mine in intra-day commentary and the OptionInvestor.com market monitor has broken to multi-year lows. Yesterday's catalyst to the downside was a downgrade by AG Edwards.

Treasuries finished their session with modest gains in the longer-date 10 and 30-year issues, with the benchmark 10-year YIELD ($TNX.X) finishing lower at 3.707%. We saw some steepening in the YIELD curve as the shorter-date 5-year saw it YIELD ($FVX.X) fall to 2.687%. This steepening of the YIELD curve often keep a lid on equities, and seems to have come into play today. While I'm not a "big" YIELD curve follower, Wednesday's flattening of the curve did seem to help spark a mid-day rally that extended itself yesterday, and today's trade may well be some spreads being taken out.

Shares of Cisco Systems (NASDAQ:CSCO) $13.31 -0.74% are today's most heavily traded, and after a rally back to close above its trending lower 200-day SMA yesterday, this morning's gap higher found selling between a flattening 21-day and 50-day SMA of 13.69-13.90 respectively, and as we near the close, the stock threatens a close back below its longer-term 200-day at $13.22. On Wednesday, we made note that the stock had traded a triple- bottom sell signals at $12.50, which is a near-term sign of technical weakness, however the upward trending bullish support trend of $12.00 remains a hurdle for bears.

After being pummeled lower on Wednesday, shares of fellow networking equipment provider Black Box (NASDAQ:BBOX) $26.84 -1.72% has yet to find any type of aggressive buyer, despite the 31% decline on Wednesday, and I would think a bearish trader in CSCO remains optimistic that there may be some "looming" concern for network equipment providers in the current quarter.

Adding to the thought of weakness for telecom/networking equipment provider are shares of Allen Telecom (NYSE:ALN) $10.07 -25.8% being pummeled lower today after the maker of communications gear cut its quarterly outlook because of weak customer spending.

Not to be entirely negative in this update, a notable new 52-week high is found in internet retailer eBay (NASDAQ:EBAY) $83.66 +0.92% as the stock continues its march toward its bullish vertical count of $91. While the stock looks a little over- extended near-term, the first sign of weakness, which would negative the bullish vertical count first triggered $61, would be a trade at $76.

Jeff Bailey

Intraday Update Archives