Regular readers of this space know that we are enamored with technical indicators. So with the market, and investors, in a state of flux, we asked some of our favorite technicians what they are thinking.
First the numbers. The
was up 85.56, or 1.92%, at 4543.45 in recent trading after trading as low as 4381.38. Ability to stay above yesterday's low of 4355.69 encouraged traders to buy into weakness.
TheStreet.com Internet Sector
index was down 10.81, or 1.0%, at 1084.53, while
TheStreet.com New Tech 30 was down 2.39, or 0.3%, at 715.29.
March 7, Elaine Yager, vice president and senior technical analyst with
Herzog Heine Geduld
, told us that it was time for investors to examine their holdings and determine whether they wanted to book profits in certain stocks. On that day, the Nasdaq closed at 4847.84, so looking back she was right on the money.
Today, Yager said the tech sector was torn between yesterday's "mini climax" that took the Nasdaq above the low from March 16 of 4455 on the close (note her support changed from 4466 back on March 7 to 4455 after the 4466 level was breached, though the Nasdaq did not close below there), and the key reversal top that was still in place from March 7. She said that yesterday's low of 4355.69 now must be breached on a closing basis to suggest a return to the downside. Next levels of support, she said, were 4291, which was the low from both Feb. 22 and Feb 15, then 4110, which is roughly a 20% correction from the all-time high of 5132 from March 10, then psychological support at 4,000.
If the index holds above yesterday's low, Yager said that the Nasdaq was still within the bounds of a trading bounce that would take the index at best to 4800. She said there was previous minor support at 4822 that would now provide resistance.
We already know the views of Robert Dickey, director of technical research with
Dain Rauscher Wessels
, who earlier this
week suggested that the Nasdaq could fall below the 4000 level. That's a decline of another 400 points.
In his daily commentary released before the start of trading today, Dick Dickson, technical analyst with
Scott & Stringfellow
, notes that the Nasdaq and tech sector were "clearly oversold and due some sort of technical bounce." He indicated that it should have occurred today (which it did on the open and has done recently), but still could be put off to Monday when all the end-of-quarter portfolio adjustments should be out of the way.
More importantly, Dickson wrote that trading early next week should provide a much better idea whether the recent weakness in the tech sector "was primarily a function of portfolio adjustments or something more significant. If the bottom fishing in the techs is met with strong selling again, then we are probably looking at a major correction in that sector. That means sharply lower prices for Nasdaq and raises the concern that further selling in the techs will carry over to the rest of the market."
And a plug for our own
, who wrote in a
column yesterday that while she does look at levels, she also is looking for what she called "positive divergences." Meisler notes that the most recent low on the Nasdaq was 4455 on March 16. "The day before this low was made, the Nasdaq had 154 stocks making new
52-week lows. A positive divergence would occur if the Nasdaq broke 4455 and there were fewer than 154 stocks making new lows." As of this writing, there were 177 stocks making new lows, though the Nasdaq was trading above 4500.