May 25, 2000
Well, that was certainly a better reversal than we saw on Monday. At least yesterday's 200 point rally (intraday) on the
Nasdaq Composite Index
showed the ratio of upside to downside volume as a positive. No, it wasn't great, but the relationship was positive, and that's more than we were able to say a few days ago.
The tech rally can continue, although I am still skeptical that it will make much progress. Many of the charts say rallies will bring out sellers, as layers of resistance exist all the way back up. And if tech is going to have a reprieve on the upside, then it's likely most of the other groups that have been acting well will fall out of favor.
Technology stocks are not leaders. These stocks act alone. They do not drag other groups higher along with them, instead they pull away from the crowd and move to the beat of their own drummer. So if the pressure is off of tech for the time being, then there is bound to be pressure on other sectors, such as drugs, foods and financials.
Just look at the chart of
Johnson & Johnson
. This stock has so much resistance at 90 that I cannot imagine it's going to keep chugging along. It needs to back off from this heavy resistance.
And the folks who have been buying that stock will move elsewhere, making the market one big group rotation, continuing to make very little progress as a whole.
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