Eight Straight Down Days

For eight straight days, the NASDAQ Comp has gone down, from a close of 2344.99 on May 8th to Thursday’s close of 2180.32.  For the arithmetically challenged, like me, that’s 164.67 points or 7% in just over a week’s worth of trading.  The Dow’s high close of the year came on Wednesday last week, that being 11,642.65 with an intraday high of 11,670.  Today’s close was a little lower than that at 11,128.29 for about 4.5% and over 500 points, all in about a week.  

Thursday’s market started out strong because you know that the market is oversold and must bounce.  The bulls bought that headline for the opening bell and tried to hold on but by the end of the day sellers came in and ruined the bull party.  We say that there is too much bullishness and, until there is some fear, there will be no sustainable rally.  That’s a bold statement considering that the NASDAQ Comp has been down eight days running.

Something else that we need to mention is that thing we have talked about before.  The worst points for the market are After an oversold condition, that’s when the biggest down moves occur.  The trading on Thursday showed that the bulls are definitely Not in charge right now and that down move in the afternoon must have spooked them.  

That was until after the bell when Dell announced that it was no longer going to be exclusively using INTC and would start using AMD processors in some of its high end servers.  [You don’t suppose they will put a sign on their computers that says “AMD Inside”, do you?]  That did a couple of things, one it masked the negative earnings report from Dell and popped the price of AMD about 12% (DELL was also up about 4%).  The other thing it did was, no surprise here, drop INTC about 5%.  So, the overnight market is doing just fine and the futures are signaling another positive opening tonight.  Where’s the fear?!?

In the news of the day, the LEI (leading economic indicators) actually fell 0.1% versus expectations of a small 0.1% rise.  The bonds liked that report and it also liked some of the tough Fed talk during the day.  The dollar seems to be trying to put in a bottom here after its recent slide from 92 to 84, but this could just be a lull in the storm.

Be careful out there…The NASDAQ Comp now is trading below all of the 2006 prices and is at its lowest close since early November.  

Have a great weekend and we’ll post again on Sunday evening.

Dow Industrials:  11,128.29  -77.32
RYVNX:   21.21
RYAIX:  23.56
TLT:  84.21
BEGBX:  13.58