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Nasdaq set yet another new 52-week closing high (1,933.53) on Monday. There was no particular news to account for the gain, but trading was too light due to the Columbus Day semi-holiday to attach much significance to it other than that there was no evidence of any significant ‘real’ selling.
Motorola (MOT) did announce decent quarterly results a day early to counter a S&P downgrade of its debt, but it’s difficult to say whether the news had much affect on the rest of the market.
Nasdaq closed moderately (7 points) off its intra-day peak as there was a fair amount of selling into the rally.
Volume was very light (1.49 billion shares). Breadth was strongly positive, with 2.26 gainers for each loser. Volume was too light to take the rally seriously, even with such decent breadth.
According to Thomson Financial I-Watch, institutional investors were net sellers of Cisco (CSCO), Intel (INTC), Oracle (ORCL), Nortel (NT), JDS Uniphase (JDSU), EMC (EMC), Brocade (BRCD), and Lucent (LU), but net buyers of Sun (SUNW). Institutions were selling into the rally, but they typically do that after buying recent dips.
The Wal-Mart (WMT) Weekly Retail Sales Update indicated that sales are on pace to meet its October forecast of 3-5% growth. This was a positive report. Sales started strong for the week ended October 10, but then slowed toward the end as warm weather crimped demand for fall-oriented merchandise.
The CBOE Market Volatility Index (VIX), which measures the level of anxiety in the market, rose by 0.47% on Monday to 19.33, which is modestly below the top end of the low anxiety (moderate complacency) zone (15 to 20). There was no significant change in anxiety. The bears will continue to beat their drums about the market being filled with the kind of excessive complacency that frequently presages a dramatic market decline. I wouldn’t bet the farm on that outcome, but it is a yellow flag.
The Nasdaq-100 After Hours Indicator had a slightly positive tone for the Monday evening session, closing up 0.24 points. There was no particularly negative news on this ‘holiday’ evening.
[10/7/03] The fed funds futures market suggests that the Fed will leave rates unchanged for the rest of the year, but possibly raise rates by a quarter-point in May. Fed funds futures are at best accurate no more than six weeks out, so those longer-term moves are purely speculative, at best.
The dollar rose moderately against the yen and rose very sharply against the euro. This wild trading may simply be due to volatility on a slow day when many market participants were out of the market due to the legal holiday. The dollar is quite sound and no true investor should lose any sleep worrying about whether the dollar is ‘weak’ or ‘strong’ on any given day, week, month, quarter, or year.
The price of oil fell slightly, but is still moderately above the $30 “comfort” level. In any case, the price of oil continues to be relatively well-behaved and no true investor should lose any sleep worrying about it.
The price of gold rose moderately sharply. In any case, there is nothing about the current price of gold that should give any true investor any reason to lose any sleep.
[7/29/03] The relative calm continues. Investors should always be prepared to buy any dip caused by panicky reactions by traders to any incidents.
[7/29/03] The eerie calm continues. There may continue to be attacks or alleged attacks abroad, but the U.S. “homeland” may be relatively immune, at least for now. Investors should always be prepared to buy any dip caused by panicky reactions by traders to any incidents or rumors of incidents.
[7/29/03] As messy as the mopping-up phase of the war continues to be, great progress is indeed being made and there is little need for true investors to fret over the negative news that so captivates the media. Over time, the economic impact of the war will be a large net positive, even if there is some short-term negative impact.
[6/25/03] I have suspended my dollar-cost averaging investment plan since my exposure to the market is now about where I want it to be.
Traders will continue to do a lot of positioning or profit-taking as the quarterly reporting season begins to gather momentum. We could see plenty of volatility.
My forecast for today is that Nasdaq will close in the range -40 to +50. Nasdaq came in at +18 on Monday, well above the midpoint of my range of -40 to +50.
The confirmed bull market for Nasdaq that began on October 9, 2002 (and was confirmed on June 16, 2003) has run for 254 days (1 year and 3 days). The market now has a longer-term upwards bias despite near-term volatility. The path of the market through the early fall is completely uncertain, but Nasdaq will likely be higher at the end of October. The important thing is that we continue to see inflows into equity mutual funds while the economy, revenues, and earnings continue to incrementally improve.
We set a new 52-week intra-day high for Nasdaq of 1,940.97 on October 13.
The confirmed up-leg for Nasdaq that began with the intraday low of 1,253.22 on March 12 (and was confirmed Monday, March 17) has run for 146 days. Nasdaq is at its closing peak of 1,933.53 on October 13 (previous peaks were 1,915.31 on October 10, 1,911.90 on October 9, 1,909.55 on September 18, 1,888.62 on September 8, 1,868.98 on September 4, 1,852.90 on September 3, 1,841.48 on September 2, 1,810.58 on August 29, 1,800.18 on August 28, 1,782.13 on August 27, 1,777.55 on August 21, 1,761.11 on August 19, and 1,754.82 on July 14) for the up-leg and for the overall post-October bull market. That closing peak is also the current 52-week closing high.
The confirmed minor up-leg of the Nasdaq advance that started on Friday, August 8 with an intra-day low of 1,640.88 is now 45 days old and at its closing peak. This is a minor leg nested within the larger leg that started on March 12 which is itself nested in the larger advance that started on October 9. This leg is now fully recovered since we set a new closing high at least 1% above the previous peak of 1,909.55 (1,909.55 + 19.10 = 1,928.65).
We have completely recovered from the minor correction off the September 18th 1,909.55 closing high since we set a new closing high at least 1% above the level where the correction started (1,909.55 + 19.10 = 1,928.65).
Wednesday, October 1st was Day 1 of a potential up-leg, with Nasdaq closing well above the intra-day low of 1784 (approximately). Thursday was Day 2, but it doesn’t matter what happens on days 2 and 3 as long as a new low is not set. Friday was Day 3 and we saw a really nice gain, but it doesn’t matter since that was another one of the days on which the market tries to find its feet before we really see a confirmation. Monday was Day 4, but the point gain and volume were too meager to constitute a confirmation. Tuesday was Day 5, but the moderate point gain and moderate volume were not enough to signal a confirmation. Wednesday was Day 6, but Nasdaq backtracked. Thursday was Day 7, but the closing point gain was somewhat short of 1%. Friday was Day 8, but the gain was too meager. Monday, October 13 was Day 9, but the gain was less than 1% and volume was too anemic. On days 4 through 10 we look for a confirmation of the new up-leg with a 1% gain on higher volume than the previous day. Until we get confirmation, Nasdaq is unlikely to move comfortably above the low 1900 level in a sustainable manner.
[8/19/03] The latest economic data continues to support the thesis that the U.S. economy is solidly into a gradual, zigzag, underappreciated, stealth recovery. What’s different lately is that there is now a slowly rising chorus of people basically saying “You know, this economy does seem to be improving and faster than we thought.” The recovery hasn’t been and won’t be as sharp as for a ‘traditional’ recovery, but will end up being far more durable and sustainable. The two key factors driving (or slowing for now) the pace of the recovery are the ongoing process of shutting down or restructuring ‘problem’ businesses and the pace of the formation of new businesses.
[9/1/03] Our Tech Stock ‘Safe’ Signal is still stuck at 0.00 (no safety) since none of the big tech companies are even hinting that they are seeing any significant improvement in demand. There does seem to be some sense of stabilization and a modest hint of improvement, but no clear and decisive indication of a dependable ramp up in revenues and earnings.
[5/25/02] DISCLAIMER: I cannot and do not offer any recommendations of stocks to buy or sell. I may on occasion discuss companies that I am considering or myself have bought or sold, but the reader must do their own research before making their own purchase or sale decision. It is never a good idea to buy a stock just because someone else tells you to or even merely mentions a company in a favorable light.
Jack Krupansky -- The Unrepentant Optimist (Click here for Jack's Bio)
Updated: October 13, 2003 07:35:30 PM -0400
Copyright © 2003 John W. Krupansky d/b/a Base Technology