June 13, 2000
We stock market players are like junkies waiting for our next fix. This week, our fix begins with Tuesday's
retail sales number because for sure that will show us what the consumer is doing. But then we need a fix on inflation, so we'll lie in wait for Wednesday's
consumer price index number, and so on. And if all those economic numbers aren't enough to keep us going, then there's always pre-announcement season in the final two weeks of the quarter. All of this gives us something to do while we wait for the really big news that comes in just two weeks' time, when we have the next
We hope that the six rate increases in the past year have slowed the economy. Then we worry that the increases have slowed it too much and the soft landing will become a hard landing. And worst of all, what if the economy hasn't slowed at all and we aren't close to the end of the interest-rate increases? This uncertainty has helped stocks go absolutely nowhere for the past week or so.
The major averages have backed off from their
resistance levels. Has anyone even mentioned that the
quietly fell 30 points since June 2? It's just given back a little bit each day, without much fanfare. The
, thanks to
Procter & Gamble
, has drawn more attention to itself with its tumble of about 230 points, and Monday the
joined the downside club.
With both the
and the Nasdaq markets now in overbought territory, it's easy to see how the economic numbers this week, if perceived as bullish, will simply give us a retracing of what was recently lost. That is, the markets will continue the pattern of churning, making very little progress. However, if the numbers are not perceived as bullish, we aren't close enough to
support or being oversold to halt a move back to the bottom of the range. Such a move would indicate that in the near term, the market wasn't going anywhere on the upside and remained vulnerable on the downside.
Just as we watched for stocks that halted at their resistance levels on the upside, now we monitor the downside for signs that stocks might hold. Watch the number of stocks making new lows; this number will be key in telling us if stocks are holding their previous lows. Should this number begin to expand, it would bode ill for the market.
In the meantime, there are some positives to point out. For example, the number of stocks making new lows on the NYSE has remained steady during this past week's drift down, showing very little expansion. While the Nasdaq's new lows haven't expanded much either, its new lows Monday were the highest reading since June 1. It's barely visible on the chart right now but any further expansion in this number is certainly not what bulls want to see.
In addition to watching the stocks at new lows, I'm also watching the advance/decline line on the NYSE. Despite the 30-point drop in the S&P over the past week or so, the breadth of the market has remained positive, with a net differential of +275 issues. Should this trend continue, it's likely the S&P will hold support on this move down.
Where does that leave us? Still trapped in a trading range. Having gotten to resistance and not managed to get through, we backed off -- putting us back in the middle of the trading range. As far as the
oscillator goes, it has just reached an overbought reading (Friday on the NYSE and Monday on the Nasdaq), so we shouldn't look for an oversold condition for at least another week or more.
Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on TheStreet.com. Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at