June 12, 2000
Once again, the markets backed off their
resistance levels, despite the in-line
Producer Price Index we got Friday, and now we're nearing a maximum overbought reading.
One question that comes up often these days is if the market is consolidating its gains at resistance. That is entirely possible. However, what appears more likely is that this is the first trip up to resistance and there are sellers up there -- and buyers who aren't so sure they want to "pay up."
One of the new hot stocks these days seems to be
, so perhaps it would be useful to have a look at the chart. You'll see that familiar pattern we find in many technology stocks these days: the sort of double top back in March, followed by the big plunge in late March. But notice what's different about SDL from many others; it didn't make a new low in the April decline. Now move your eyes over to the mid-May rally that halted right at resistance, around 210. That is where I think several technology names are right now, at resistance for the first time and churning. In SDL's case, it had quite a plunge following that first trip up to resistance, but you can see how the next time up the sellers were cleared.
There is still some room for the
to move before getting up to that resistance level around 3950-4000, and it hasn't yet reached its maximum overbought reading. But each day it churns, it loses the momentum to go through resistance with any oomph.
For an explanation of these indicators, check out The Chartist's
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