PEOPLESOFT AND TEXAS INSTRUMENTS SPARK TECHNOLOGY RALLY - AT&T SELL OFF DRAGS TELECOM STOCKS LOWER

John Murphy
by John Murphy,
Chief Technical Analyst, StockCharts.com

BIGGEST TECHNOLOGY LEADERS... PeopleSoft (PSFT) and Texas Instruments (TXN) were up significantly today which sparked a rally in technology stocks. PSFT (chart #1) surged over +11% and closed back above its 50-day moving average, which is bullish. The daily Stochastic (below chart) is oversold and turning up which suggests PSFT's rally could extend upward towards its previous high (see circle). Texas Instruments (TXN)(chart #2), one of today's N.Y.S.E. most actives, leaped over +13%. The stock gapped up this morning and appears to be challenging its 50-day moving average. Several technology stocks: Computer Associates, Hewlett Packard, Oracle, and Microsoft (to name a few) closed higher today as buying within the technology group spread.

Chart 1

Chart 2

AT&T DRAGS TELECOM STOCKS LOWER... AT&T's massive decline (see earlier update) sparked a sell off in several other telecom stocks today. Bellsouth (BLS), Sprint (FON), SBC Comm. (SBC), and Verizon (VZ) were all down on heavier volume as sellers scurried out of these holdings. VZ (chart #3) sliced through its 200-day moving average on heavy volume. Bellsouth Corp. (BLS) gapped down and closed below its November/December lows (see chart #4).

Chart 3

Chart 4

MARKET COMMENTS... The major averages closed up today as strength in technology stocks reversed earlier session weakness. Consumer staples, telecom service, and Financial stocks (see KRB chart below) were weak. Gold remains near 6 year highs and the Dollar at 3 year lows.

Chart 5

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John Murphy
About The Author:

John is a renowned author in the investment field and former technical analyst for CNBC. Considered the father of intermarket technical analysis, his books include “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Learn More 

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