The very broad NASDAQ Composite (COMPX) 2,007.52 -1.48% managed to hold above the 2,000.00 by today's close, but the high volatility or "beta trade" has yet to gain favor as the NASDAQ Composite now holds a very fractional 4-point gain for the year.
Market Snapshot / Internals - 02/23/04 Close
Brief gains at the open for the smaller-caps and Russell-2000 Index ($RUT.X) 570.20 -1.67% along with the tech-heavy NASDAQ-100 Tracking Stocks (AMEX:QQQ) $36.45 -1.11% as well as the Semiconductor Index (SOX.X) 495.81 -2.74% were quickly erased in the first 30-minutes of trade, where weakness there helped pull the other major indices lower for most of today's session. A brief spat of buying toward today's close helped mitigate today's losses, with the large-cap S&P 100 Index (OEX.X) 564.58 -0.05% and Dow Industrials (INDU) 10,609.62 -0.09% finishing with fractional losses.
Pivot Matrix -
In Friday's evening's Market Monitor, I thought we might see a relief bounce for the major indices after the passing of February option expiration, and a couple of points at the open wasn't what I had in mind. I was looking for some type of relief bounce back near the WEEKLY R1s where institutions might look to right some at the money calls early this week. While that didn't unfold in today's session, it would still be a point where we might look for a relief bounce.
However, the Semiconductor Index (SOX.X) 495.81 -2.74% is back near its lows of the year, and has tested its ascending neckline of the potential head/shoulder top patter, where Thursday's trade did see a rather sharp reversal from the right shoulder level of 535, where sellers looked eager to sell the pattern.
Semiconductor Index (SOX.X) Chart - Daily Intervals
After trading the 535 level early Thursday morning after Applied Materials (AMAT) $21.21 -2.48% reported better-than-expected earnings and guided higher for the coming quarter, the SOX.X has shown little sign of strength and has moved quickly back to its early February lows. Every technician in the market sees the pattern, but will sector bulls defend the ascending neckline, or will bears flinch and lock in quick, but handsome gains after the recent decline?
Sector internals are weak with today's action seeing a net loss of 2.78% to Dorsey/Wright and Associates' Semiconductor Bullish % (BPSEMI) which currently reads "bear confirmed" at 64.39%. In December of last year, this sector bullish percent fell to 54% before reversing back higher to 82%, from which it has now reversed back lower again.
Traders and investors could make a sector bullish % tie with the December SOX low of 468 to current levels of bullishness to understand the implications of a SOX break below the 487 level, or WEEKLY S2.
NASDAQ-100 Tracking Stock (QQQ) Chart - Daily Intervals
While we track the SOX.X in our pivot matrix, its not just semiconductors that have been dragging down the QQQ. I do make note that today's trade in Intel (NASDAQ:INTC) has it breaking below its 12/10/03 relative lows, which at that time had the QQQ much lower than current trade at approximately $34.65. Meanwhile, chip-equipment giant Applied Materials (NASDAQ:AMAT) $21.21 -2.48%, which Intel is AMAT's biggest customer holds above its January 29th recent relative low of $20.78, where the QQQ would be trading below its January 29th intra-day low of $36.66. While some of today's weakness in INTC was largely attributed to news that the IRS may be auditing the company's past tax filings, broader technology has been weak.
S&P 100 Index Chart - Daily Intervals
I was somewhat surprised when an upside alert I had set at General Electric (NYSE:GE) $33.11 was triggered today, which had the largest cap-weighted component in the OEX moving to a two- week high. The top 10 weighted components saw a mixed trade and the OEX's losses were fractional due to GE's impressive gain.
Bearish trade action tomorrow for the OEX and SPX would be if we saw a trade at DAILY R1's reverse back below their Daily Pivots, where some downside momentum similar to what we've seen in the NDX/QQQ could build.
S&P 500 Index (SPX.X) Chart - Daily Intervals
The S&P Banks Index (BIX.X), KBW Bank Index (BKX.X) and S&P Insurance Index (IUX.X) 328.54 (unch) showed relative strength today and continue to trade strong, while the Securities/Broker Dealer Index (XBD.X) 715.53 -1.37% give back gains after new highs last week. Financials aren't the worry among SPX bulls, its technology weakness that weighs on the SPX to greater degree.
Dow Industrials (INDU) Chart - Daily Intervals
The INDU recouped just about 1/2 of its earlier session losses, where the Pentagon's canceling of a multi-billion dollar contract with Boeing (NYSE:BA) $43.62 -1.62% and United Technologies (NYSE:UTX) $93.80 -2.91% had one of the Dows most heavily price- weighted components (UTX) taking a rather large hit.
Mid-point of our regression wasn't tested during the mid-January pullback, and should be deemed a worth upward trending support trend, which currently intersects the INDU's WEEKLY S1.