MARKET SEES RENEWED SELLING -- DOW IS BACK UNDER 10K -- CISCO AND SOX WEIGH ON NASDAQ
DOW FALLS BACK UNDER 10K... A record trade deficit for the month of March is contributing to renewed selling in the stock market today. In morning trading, the Dow Industrials have fallen back under 10K and their 200-day moving average. In contrast to yesterday's bounce when technology showed some resiliency, the Nasdaq is leading today's selling. The Semiconductor (SOX), which has been rebounding of late, is down -3.5% and is weighing heavily on the Nasdaq. A disappointing reaction to last night's good earnings report from Cisco is also hurting the Nasdaq. Cisco, which is viewed as a technology bellwether, is the most actively traded Nasdaq stock this morning and is being sold. A $5 bounce in gold is attracting some buying in gold shares. Energy and healthcare are also showing modest gains.
Chart 1
CISCO DISAPPOINTS ... One of the signs of danger in the market is when stocks react badly to good earnings news. Cisco reported good earnings last evening and offered an upbeat view of the next quarter. It wasn't enough to boost the stock. The daily chart shows the big technology bellwether meeting resistance at its (red) 200 day moving average. That disappointing reaction is weighing heavily on the market this morning.
Chart 2
SOX LOSES 3.5% --- NASDAQ BACK UNDER 1900... A rebound in the Semiconductor (SOX) Index over the past week has lent some support to the Nasdaq market. The SOX, however, still remains below moving average lines and is being sold heavily today. Its 3.5% loss is weighing heavily on the Nasdaq Composite Index, which is trading back under its March low at 1900. Today's early selling puts a lot of previous support levels at risk. The most important factor, however, will be where the market closes today. Morning losses aren't good. But afternoon losses are even worse.
Chart 3
Chart 4
