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Nothing Much? Think Again - Money Matters for 10/13/05 Don Bravo | 10/13/05
Circle the 13th of October on your calendar because today was a seminal experience on US equity markets. While on the surface the indices were little changed, the New York Stock Exchange recorded a massive number of new 52-week lows (380) and only 17 new highs. The Nasdaq was not far removed from those awful numbers (see below) and the late-day rally that lifted the techs from the negative into the comfort of the positive was caused by... nothing in particular.
The rally, if one wants to call it that, boosted the NYSE a full 50 points. As it is, that index broke through its 200 day moving average in early afternoon trade and at the close was a mere 13 points above it. The NYSE has lost ground 8 of the last nine sessions and is nearing a congestion level between 7100 and 7250. The index's ability to bounce off this key support area will bear watching over the next few weeks.
The NYSE is off more than 350 points (nearly 5%) just this month after failing to make a new high the last day of September. This is a significant pullback off a double top.
The number of new lows so near recent highs is very telling of the relative strength of the entire index. In simple terms, there is no strength and little incentive to buy at current levels.
The Dow is in similar throes, quickly approaching the March 2005 lows, a key area, which, if broken, will signal an all out bust, as though there haven't been enough signals already. The Dow is a full 300 points below its 200 day moving average, which has been seesawing with the 50 day for most of the war hysteria rally which ended in January of 2004. It's been marking time for 21 months and counting.
Earnings reports released today were nothing special and didn't move markets. Tomorrow may be different, but the next two weeks will witness the largest number of firms reporting, so sparks are sure to fly.
Commodities all took another hit today. For oil, it's purely demand-related, whereas in the precious metals, it's primarily profit taking after a healthy runup in not only gold, but especially silver, over the past four weeks.
We're beginning to see two very different but related trends - lower energy prices and higher interest rates. They are not independent of each other, but they will work in opposite directions in the near term if only because of the confluence of economic cycles. More on this tomorrow.
BY THE NUMBERS
Dow Jones: -0.32; 10,216.59 close
NYSE Advancers: 1157
Nasdaq Advancers: 1499
NYSE New Highs: 17
Nasdaq New Highs: 29
Gold: -2.80; 473.80 close
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