ZLBT Chats

Saturday, January 30, 2010

WALL STREET >>> More Rumbles More Tumbles And Even More Humbled

The Dow Ended January Bear(ly) Alive; Nasdaq Hugged
Stocks fell this week as worries about technology company earnings and outlooks coupled with uncertainty about the political situation and concerns about sovereign debt stability weighed on sentiment and valuations.

Wall Street succumbed to another wave of tech selling on Friday as a flurry of strong economic indicators weren’t enough to wake the bulls from their three-week slumber.

U.S. Stocks had their worst month since February 2009. NYSE is just in an environment where good news is bad news. Last week they really broke the upward trend of the market.

Coming on the heels of the Dow's worst week since early March, this week's slide sealed the end of the blue-chip index's six-month winning streak and left it with its worst month since February.
The Dow lost 360.72 points, or 3.46% in January, and is off 5.19% during its three-week slide.

The Dow Jones Industrial Average fell 53.13 points or 0.5% on Friday to close at 10,067.33 for a weekly loss of 1%. The Nasdaq Composite Index fell 31.65 points or 1.5% to close at 2,147.35 on Friday. For the week the index was down 2.6%. The benchmark Standard & Poor's 500 Index fell 10.66 points or 1% on Friday to close at 1,073.87. The index fell 1.6% for the week.
The Nasdaq Composite took a much bigger hit as tech companies, which have rallied over the past month more than the broader markets, continue to respond negatively to earnings. Flash memory maker SanDisk plunged 12% after issuing a first-quarter outlook that fell shy of Wall Street’s hopes but met analysts’ estimates. Microsoft was also under heavy pressure even though its EPS of 74 cents soundly beat the Street’s view of 59 cents.
The negative reaction to earnings reports follows a trend this earnings season of better-than-expected numbers being met by selling pressure. It underscores how much stocks have run-up ahead of earnings season, suggesting the bar has been raised, and skepticism that companies will be able to repeat those results once the stimulus wears off.

The selloff in the tech sector overshadowed a largely positive day on the economic front.
Weekly Wrap-up - The Dow Jones Industrial Average Drops 105 Points on the Week
The day ends with the Dow Jones Industrial Average (DJIA) down 53 after trading in a low-to-high range of 195 points. The S&P 500 (SPX) lost just under 1%. The Nasdaq Composite (COMP) lost nearly 1.5%.

For the week
The Dow dropped 105 points, or just over 1%. The S&P 500 lost 1.6% while the Nasdaq Composite declined 2.6%. Th last post noted that the market is relatively oversold and that I am looking for an oversold bounce. Clearly that wasn't in the cards for today. With that still in mind, I want to revisit the weekly charts below .....

As noted then, I like to look at longer-term charts for perspective and am watching simple regression channels to help highlight the trend. The SPX, DJIA, and COMP are each at the lower rail. The RUT isn't too far from that mark. In other words, we will need to see some buying next week in order for the trends to remain intact. And that is where I will pick up next week.

Have a great weekend

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