With major indices up strong today, how can you tell if the action is just a fakeout, or the start of a recovery? The
was recently up 84.75, or 2.5%, at 3469.48, and the
TheStreet.com Internet Sector
index was up 28.44, or 3.5%, at 836.11.
If we could answer that question with certainty, we'd all probably be working somewhere else. So we'll look for answers from those people who get paid to know.
Bob Dickey, director of technical research with
Dain Rauscher Wessels
, said price action today was a normal bounce from three "punishing days," and price action the last hour of the day could determine whether the slide will resume.
"Today is fairly critical. It will tell us something about the quality of this low," he said.
Dickey said that a decent last hour, where the Nasdaq adds to gains, would increase his confidence level "to some degree" that the low was in, though with the market fixating on the
meeting next Tuesday, nothing was set in stone. If the Nasdaq does not build on the gains, the chances of testing recent lows would increase, he said.
Dickey said one of the positives is that the Nasdaq has been making higher lows back on the way down than previous lows. Wednesday's low of 3367 was above the intraday low of 3345 made on April 24. If the rebound fails, focus would shift back to the 3227 low from last month. Below there, he said he would expect a test of 2900, which was a resistance level the Nasdaq ran into a few times from June through October of last year.
In his daily commentary, Dick Dickson, technical analyst with
Scott & Stringfellow
, wrote that the decline over the last few days left the market oversold, so a rally today was "no surprise." Dickson was focusing on the volume in the market, writing that over the past three days the market has been going down on rising volume, which was "exactly the opposite of what you would want to see if looking for a bottom." And, he added, if this rally came on light volume of less than a billion shares in the Nasdaq, "it will almost certainly be just a countertrend move and should fail relatively quickly." If it was accompanied by heavy volume greater than 1.5 billion shares, he wrote, there was "a possibility that this latest phase in the correction is over."
Finally, he noted that even though volume has been rising the past few days, it has still been relatively light, which was a positive, and "could lead to a more sustained rally than the short-term swings up and down that have afflicted the market lately" if the lows do hold.
Among stocks on the move.
was building on gains made yesterday, up 4 23/64, or 3.7%, at 123 1/4. The superportal announced that it had added services for consumers and businesses to provide Web-site hosting, dedicated servers and domain registration. Also,
was up 6 15/16, or 15%, at 52 15/16. The company was presenting today at the
Chase H&Q Technology Conference
was up 4 3/16, or 9%, at 51 1/8 and
was up 4 1/4, or 8%, at 53 1/4. It also was presenting at the conference.