Your love is fadin', I can feel it fadin' Oh away from me.
I can feel it in the air, it's there everywhere, ooh I'm losing you.
I don't wanna lose you but I know I'm gonna groove you Oh Lord I'm losing you, and I'm a losin' you
Your love is fadin', I can feel it fadin' Oh Lord I'm losing you...
SAN FRANCISCO -- Today's session began with a lot of promise for those long, but ended in disappointment. Also like a
Rod Stewart romance, more damage was done to folks' emotions than their actual pocketbooks. Still, we cannot discount the important of emotions, and this day had to hurt because it had the initial earmarks of a breakout session for the bulls.
All the macroeconomic forces seemed to line up in sympathy with equities today. Treasury Secretary-designate Paul O'Neill said all the right things about supporting a strong dollar during his confirmation hearings. A sharp decline in industrial production -- the biggest since June 1998 -- and a relatively tame
Consumer Price Index
report seemed to augur more easing from the
, and aggressive cuts if the Fed so desires.
Bonds rallied, sending yields lower, in anticipation. (More angst about the
California utility situation also contributed to the flight to safety trade.) Finally, crude prices fell as traders sold on the news of
Closer to home, stock traders were encouraged by
last night's earnings from
and the market's apparent analysis that
forecast wasn't as bad as feared. Juniper closed well off its high of $145, but still rose 6.4% to $136.19. Intel slipped 2.8% to $30.50 after trading as high as $33.06.
Juniper's session more accurately reflected that of broad market averages, but Intel's experience better evoked the mood at day's end.
"People were giddy this morning -- everyone was walking around, saying 'What do I buy next?' " observed one market participant. "As we're fading
toward the close, they were saying, 'What do I short?' We're still up on the day -- but that slow fade scared everybody."
Once as high as 2756.63, the
Nasdaq Composite Index
finished up 2.5% at 2682.78. The
ended up 0.2% at 1329.47 vs. an intraday best of 1346.98. After trading as high as 10,705.93, the
Dow Jones Industrial Average
shed 0.6% to 10,584.34, weighted down by
"The market is saying we need more profit-taking in the very near term," said Peter Green, market analyst at
Gerard Klauer Mattison
. "We're going to have more weakness tomorrow no matter what the
after the close. The slew of reporting companies included
, which (among others), bested expectations. Separately,
Advanced Micro Devices
(among others) disappointed.
Predictably, individual shares were mixed in the after-hours session, while both S&P 500 and
futures were recently higher in
Green's outlook for stocks is "constructive," but near-term "there's a push-pull between interest-rate cuts
and the anticipation for more and earning expectations," he said. "It seems to me that earnings, unfortunately, aren't going to come through until later on."
The market watcher believes most, but not all, of the bad news on earnings is "priced into" the stock market, and that more rate cuts already have been near-fully priced into bonds. "The problem is -- what's the catalyst" for higher prices? he asked.
From a technical perspective, Green was discouraged that tech bellwethers such as Intel,
, along with financial heavyweights such as
and "safety stocks" like
, failed to sustain early momentum today.
Additionally, he noted the Nasdaq failed to break above its 50-day moving average of 2771 and closed below 2700, a level considered a key point of technical resistance by some pundits. Similarly, S&P 500 futures failed to breach their 50-day moving average of 1352.50 -- settling at 1341.70 after trading as high as 1358 -- and the cash index couldn't eclipse 1348, Green observed.
Shiny, Happy People
On the other hand, Greg Nie, chief technical analyst at
First Union Securities
in Chicago, wasn't so concerned about Nasdaq 2700. Nie believes 2800 to 3000 is a bigger area of resistance and wouldn't advocate "taking trading money to the sidelines" until the average approaches the midpoint of that range. "I'm still bullish on the intermediate term."
Furthering the optimistic outlook, more stocks rose than fell today in both
and Nasdaq trading, and the
Value Line Arithmetic Index
hit its second-straight record close. The latter being "prima facie evidence of a bull market," according to John Bollinger, founder of
in Manhattan Beach, Calif.
Jan. 3, Bollinger predicted the Value Line index was heading for a new high. Today, he reiterated a belief the
S&P 400 MidCap Index
and S&P 500 would soon follow (in that order) the Value Line into the record books. He also repeated a belief that the Nasdaq will likely lag.
Nasdaq, buy the mid- and small-cap issues," he recommends.
Given most investors are unlikely to forget the Nasdaq, recall that when the Comp was trading between roughly 3000 and 3500 last fall, I said
repeatedly that traders would do better selling as the index approached the upper end of the range and buying as it neared the bottom. But long-term investors need not scramble to get aggressively long until the index definitively broke higher, which (of course) it failed to do.
The same advice holds today, as the Comp appears ready to soon "settle" into a new range of between 2500 and 3000.
I haven't forgotten about the
Guru of the Year, but the awards ceremony has run late (as these things often do). Stay tuned.
Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to
Aaron L. Task.