ALCOA AND GATEWAY PULL MARKET LOWER
ALCOA IS BIGGEST DOW LOSER... Alcoa fell over 10% today -- on very heavy volume. Chart 1 also shows the big aluminum producer falling under previous chart support at its December lows. That breakdown helped set a gloomy tone for the Dow and the rest of the market. If that wasn't enough, bad news from Gateway had a similar depressing effect.
Chart 1
GATEWAY TUMBLES... Bad overnight news in Gateway hurt European stocks -- and contributed to today's lower open in the U.S. The computer stock tumbled in early trading. Volume was heavy. The stock is now retesting chart support along its October lows. The blue line shows why we watch moving averages. The recent bounce in GTW failed at its 50-day line before it started to rollover again. Prices now have to rise above the blue line to correct the recent technical damage. Unfortunately, the Gateway action had a negative impact on technology stocks.
Chart 2
NASDAQ BACKS OFF FROM 200-DAY AVERAGE... The tech-dominated Nasdaq Composite Index has backed off from a test of its (red) 200-day moving average. That's a major resistance barrier. Fortunately, today's weakness came on lower volume. And, the MACD lines are still positive. We'll now be watching to see if the index can stay over its (blue) 50-day average.
Chart 3
BANKS AND DRUGS ALSO TEST 200-DAY LINE... The Nasdaq isn't the only index testing its 200-day average. The Bank and Pharmaceutical Indexes are doing the same -- as shown in the next two charts. Here again, that represents a crucial barrier over those stock groups.
Chart 4
Chart 5
MGM GRAND LEADS GAMING STOCKS LOWER... MGM Grand tumbled to a 52-week low at one point today -- on massive volume. That contributed to heavy selling in casino stocks. International Game Technoloy was another big volume lower. Hotel stocks sold off as well. [Please see our midday update for a couple of hotel losers].
Chart 6
Chart 7
UTILITIES ARE UP--REITS ARE DOWN... The market suffered a down today. However, the losses were on lighter volume and no serious chart damage was done. The two groups that showed gains today were utilities and gold stocks. [Please see our midday update for charts of some utility leaders]. Gold jumped $6.00 today as the dollar fell to new lows. With stocks on the defensive, bonds rallied. Earlier in the week we showed the Morgan Stanley REIT Index climbing over its 200-day average. It fell back under that line today. There's apparently some question as to whether the high-dividend paying REITs qualify for the proposed exemption on dividend income.
Chart 8
MONEY MANAGEMENT UPDATE... We're happy to report that MurphyMorris Money Management accounts finished the year with positive returns for the third year in a row. We didn't make much this year, but we didn't have much to work with either. You can study the results by clicking on the "Money Management Performance table updated through Dec. 31st" in the yellow box on the upper right of the MurphyMorris Home page. While you're at it, you might also want to click on the Dec. 31st MM Model Update to view some of the indicators we use in our decision-making process.
