ALCOA AND SEAGATE FALL -- NASDAQ IS OVERBOUGHT -- OIL AND GOLD JUMP -- NOBLE BOUNCES -- BOND YIELDS TEST FOUR-YEAR TRENDLINE
SEAGATE FALLS ON HEAVY VOLUME... Yesterday bad news from Nokia unsettled the technology sector. Today it was Seagate Technology. The stock opened sharply lower and fell to the lowest level in ten months. Volume was heavy. Although the stock closed near the top of its daily range, the heaviest volume took place during the morning selling as shown by the hourly bars in Chart 2. If Seagate is going to attempt a recovery, the first hurdle it will have to overcome is the overhead "gap" formed by this morning's plunge.
Chart 1
Chart 2
ALCOA WEIGHS ON DOW... The fact that the Dow had the biggest percentage loss today can be largely attributed to Alcoa, which fell 1.81 points today on rising volume. The stock is also back under its 50-day line. The relative line, however, shows that Alcoa has actually been underperforming the Dow since the start of January. The chart shows, however, that the stock still remains above its yearly lows and its 200-day moving average.
Chart 3
NASDAQ 100 PULLS BACK FROM OVERBOUGHT CONDITION... When all was said and done, the Nasdaq 100 Shares (and the rest of the market) had a relatively quiet day. Volume was light and breadth was only slightly negative. In my view, very little has changed over the last couple of days -- except that the market got a little overbought. The daily chart shws the QQQs meeting some resistance at their upper Bollinger Band. They're still well above their 50-day and 20-day moving averages. The daily stochastic lines are also in overbought territory over 80. The chart area around 37 also appears to be providing some resistance. The Nasdaq iShares have also recovered about two-thirds of the January-March decline, which is a logical spot to expect some short-term selling.
Chart 4
GOLD AND OIL CLIMB... Some dollar selling, and a drop in crude oil inventories, gave a boost to gold and oil today. Oil rose $1.18 to end back over $36. That caused buying the Energy sector today. Gold climbed nearly $4 to end at $423. That boosted gold stocks. Last week gold challenged its January high near $430 before pulling back. Its finding initial support, however, along the February peak which is a positive sign. Today's bounces in both key commodities may also have accounted for some nervous selling the rest of the market.
Chart 5
Chart 6
NOBLE DRILLING BOUNCES OFF 200-DAY LINE... One of the top percentage gainers in the oil patch was Noble Drilling, which has been in a downside correction for most of the last month. Today, however, the oil driller bounced impressively off its 200-day moving average -- and on rising volume. Energy was the day's stongest sector. Utilities were the weakest. That may have something to do with the prospects for rising interest rates.
Chart 7
BOND YIELDS ARE TESTING MAJOR TRENDLINE... The monthly bars in Chart 8 put the recent week's upmove in the 10-year T-note yield in good perspective. It shows a four-year trendline starting in early 2000 containing the drop in yields over that time span. So far, the line has held twice -- at the start of 2002 and last summer. That makes it a valid trendline. What's important is that yields are now testing that trendline again. Needless to say, any decisive upside penetration of that trendline would signal the end of the four-year decline in bond yields -- and the four-year uptrend in bond prices. The weekly MACD lines, which usually move ahead of the price action, have already turned up. Economists still don't see any signs of inflation -- despite the fact the the prices of imported goods during March climbed .9%, which was nearly double their estimates. Of course, if we take out the things that are moving up (like food and energy), the numbers don't look so bad. Wish we could do the same with our checkbooks each month.
Chart 8
