Schaeffer's Trading Floor Blog

Final Figures

by 3/15/2005 4:32 PM
Stocks quoted in this article:

If the numbers you saw below were the only thing you paid attention to, you might not find today's action noteworthy...

Index Index Value Point Change Percent Change
S&P 500 (SPX) 1197.8 -9.1 points -0.75 percent
Dow Jones Industrial Average (DJIA) 10745.1 -59 points -0.5 percent
Nasdaq Composite (COMP) 2035.0 -16.0 points -0.78 percent
Russell 2000 (RUT) 626.8 -3.5 points -0.55 percent
CBOE Market Volatility Index (VXO) 12.85 0.23 points 1.8 percent

While the broad market indices were all lower, the losses were contained to less than one percent. Looking at the perspective below...

You still see mostly minor losses but may note how wide spread the losses were. However, even that may not be all too significant....

But if you consider today's action along with some of the signs of weakness I noted Friday you start to see underlying signs of selling pressure. Some may describe this as a distribution phase...

For most of the day we tracked the SPX relative to support near 1200. As I noted in the post below, this failed just before the close. However, the SPX is still fairly close to that level so tomorrow's action will be important to watch.

A few interesting charts came to my attention near the end of the day. I am going to dig into those now and that is where I will pick up tomorrow. Hint - two are in the retail space but have shown dramatically different charts...

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Closing View

by 3/15/2005 4:05 PM
Stocks quoted in this article:

Here is what the end of day picture looks like...


Chart Courtesy of Thomson/ILX

As you can see, the SPX bounced along 1200 until a late batch of selling pushed it through....

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Stocks quoted in this article:

Mike says - "The action in the markets has an investor like me very cautious. Do you have an opinion as to why the markets keep jumping around day to day?"

My response - I am glad you asked about opinion because that is all I have...of course there is an old saying about opinions being like armpits...but I digress....

What I do know is that I have seen a number of reports that detail how hedge funds are becoming an increasing part of the trading volume. With that in mind, consider what we saw yesterday. The market drifted sideways yesterday morning and then slid as oil moved higher. Then we see a burst of buying that hits when the Genentech news made the rounds.

While you can never say with certainty what is driving individual decisions, it feels like there is money chasing whatever seems to be moving but we don't have much in the way of strong underlying themes. The net result is churn as this money jumps around....

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Stocks quoted in this article:

I have received a number of emails in last few minutes so I wanted to tackle a few...

Mark says - "I just thought I would throw my hat into the ring with respect to the current market. The contrarian view tells me that when the bears are quiet and the bulls keep pointing out all the reasons not to worry about current market weakness, watch out. I haven't heard much from the bears lately but the bulls seem to keep on talking. This seems especially dangerous when, like the current market, major indexes are flirting with important support levels. Have you heard anything from the bears?"

My response - I don't see much in the way of concern being expressed. For example, one of the few bears I have seen on the television recently is my colleague Todd Salamone ...

Frank says - "Hi Nick, ELBO is up 4 what's interesting is that there is 1.5 million shares in the float and 2.5 million shares are short...I have never seen anything like this have you? "

My response - I looked into ELBO and I am not sure I understand what is going on with the data. I know Yahoo shows the stock's float at 1.5 million shares but last month the float was listed at 12.7 million. In fact, the float had been stable at around 12 million shares since April. Either the float dropped dramatically or there is a bad data point floating around. Does anyone out there have any info on that?

However, that aside, if the float was actually closer to 12 million short interest would still be around 19 percent of float which I would call high. The stock has been running all day so it could be a bit of a squeeze...

Sharlee says - "Now is the time for all the bulls to step up to the plate. The S&P is sitting on 1200 and the NDX is sitting on 1500. Speaking of plate, does the word "hamburger" come to mind ?"

My response - No comment...

Anjum says - "Nick, CRB is up, gold appears to be floundering any additional current events?"

My response - I don't have any special insight into the situation. On a longer-term basis, gold has been moving steadily higher since late-2001. More recently I noted these comments from Todd (of the television fame above) who is our in-house commodities expert.

Gary says - "1200 is shaping up to be HUGE!"

My response - This just came in...the SPX bounce off this level an hour ago and it right back to it...

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Stocks quoted in this article:

Earlier I mentioned the 1200 level on the SPX....


Chart Courtesy of Thomson/ILX

An alert just went off to tell me the SPX is once again flirting with this level. This is where the bulls stepped in yesterday so it will be worth watching what happens here...

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