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Round numbers and little change

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It has been a rather narrow range trade for the major indexes today with both the Dow Industrials (INDU) 9,005 +0.27% and NASDAQ-100 Index (NDX.X) 1,200 +0.34% hovering either side of some very round numbers of 9,000 and 1,200 respective for the bulk of today's session, giving momentum traders little emphasis at this point to make a move.

While stocks have been stuck in a rut today, most of today's action has come from the bond market with the shorter-dated 5- year YIELD ($FVX.X) plunging to fresh multi-decade lows with this bond's YIELD down a full basis point to 2.085%.

While bond bulls are aggressive across the maturities June fed fund futures (ff03m) 98.815 show the MARKET only seeing a 25% chance of a 25 basis point rate cut at the upcoming June FOMC meeting, but August fed funds futures (ff03q) 99.115 now have market participants building in a 45% chance of a 50 basis point cut at the August meeting.

The continued and rather torrid buying in Treasuries, combined with market participants further factoring in future Fed rate cuts certainly gives a look of caution toward equities, but as noted in recent weeks, the momentum trade for equities has been holding.

Market internals have been holding positive and little changed for the bulk of today's session.

The NYSE currently shows just over 934 million shares traded with advancers outnumbering decliners by a 2 to 1 margin, which has been holding steady since 12:00 PM EST. 259 stocks have traded new 52-week highs compares to just 3 stocks having traded a new 52-week low.

NASDAQ turns just over 1.3 billion shares with advancers still holding the edge over decliners by a 3 to 2 margin. 135 stocks have traded new 52-week highs compared to 3 stocks having traded a new 52-week low.

At the conclusion of yesterday's trade, or shorter-term indicator of new high vs. new lows breadth on a 10-day average basis reached a bullish cycle high for both the NYSE and NASDAQ with the NYSE NH/NL 10-day average at 98.7% and NASDAQ NH/NL 10-day average at 97.4%. We discussed this indicator of breadth leadership in a May 25, 2003 "Ask the Analyst" column. While this indicator shows "extreme" levels of bullishness, market leadership from the bullish side continues to be present.

Shares of Nokia (NYSE:NOK) $17.40 -3.1% have slipped below their shorter-term 21-SMA in today's trade after the company warned that top-line sales would not beat forecast, but that bottom lines earnings, helped by improved margins would come inline. Some concerns that top-line results have yet to show growing demand has started to show in other telecom-related stocks as depicted by both the Combined Telecom Index (IXTCX) 141.56 -0.19% and North American Telecom Index (XTC.X) 497.61 -0.05%, which now turn fractionally red and at session lows.

Jeff Bailey

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