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Holding steady, with Cisco at new highs

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While we've seen the indexes trade off their best levels of the afternoon, with the Dow Industrials (INDU) 9,254 -0.73% now back lower by 68 points and the broader S&P 500 Index (SPX.X) 1,006 -0.52% off 5 points, the tech-heavy NASDAQ-100 Index (NDX.X) 1,243 +0.28% continues to hold a fractional gain of 3 points, as the Networking Index (NWX.X) 195.58 +2.25 sees gains as sector bellwether Cisco Systems (NASDAQ:CSCO) $18.61 +3.4% jumps to a new 52-week high and is the second most actively traded stock at 58 million shares.

Cisco's gains look to be spurred not only be some short covering as May's book-to-bill ratio may have been disappointing to bears, but comments from RBC Capital saying recent data suggests that Cisco (CSCO) appears to be shifting to a sales strategy to gain market share in the SAN switch segment and looking to leverage its relationship with IBM (NYSE:IBM) $84.37 +0.08% to attack competitors McData (NASDAQ:MCDT) $13.64 -4.48% and Brocade (NASDAQ:BRCD) $6.89 +0.71%.

After ramping to a session high of $26.43, shares of Microsoft (NASDAQ:MSFT) $25.97 +0.04% have pulled back to the unchanged level and are today's most actively traded stock at 77 million shares traded. There's been no news on the stock today, but the session high came very close to 3-month horizontal resistance of $26.50, which may indeed be finding some selling considering the stock 7-session rise from $24.00. That's a pretty big move for the NASDAQ-100 heavyweight with a float of 8.9 billion shares.

Market internals are quite opposite at the NYSE and NASDAQ. The NYSE currently shows decliners outnumbering advancers by a 2 to 1 margin, with 193 stocks trading new highs compared to 5 stocks having traded new 52-week lows.

NASDAQ breadth is weak, but decliners show a more fractional upper hand on decliners by a 16 to 15 margin. 185 stocks have reached new 52-week highs, while just 3 stocks have traded new 52-week lows.

Volume levels would be considered "brisk," but not heavy with the NYSE just now reaching the 1 billion-share mark, while NASDAQ volume is 1.6 billion shares.

Precious metals stock traders, specifically gold, will note multiple "inside day" type of trade setups for tomorrow's session. I think this may be a trade worth of note for tomorrow as my past thoughts have been that there was a pending "short squeeze" type of trade looming in the sector, and recent session trade has shown bears getting squeezed to the upside. Today's is a bit of a consolidation day on this "inside day" type of pattern and a break either side of today's highs/lows could drive a pretty good move in either direction tomorrow. I think the "jury" is still out on "deflation" or "inflation" and this type of economic trade and uncertainty it can create may lend itself to some good up/down moves in the sector.

One stock I tend to view more bullish for an upside break tomorrow would be shares of Anglogold (NYSE:AU) $32.65, which just yesterday started to move up from a pullback low on its point and figure chart and gave a double-top buy signal. With many of the larger gold stocks at their 52-week highs, bears in this stock may be looking over their shoulder at the 52-week high of AU and tempted to make their move on a break higher tomorrow.

As I type, newswires just reported that the House voted in favor or repealing estate taxes.

Jeff Bailey

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