SOXS PULLS NASDAQ LOWER -- JABIL TUMBLES -- GE AND MICROSOFT BOOST DOW -- HIGH PPI AND RISING OIL WORRY MARKET
SOX HITS MONTHLY LOW... The Semiconductor (SOX) Index fell more than 3% today and pulled the technology sector down with it. Chart 1 shows the SOX hitting the lowest level in a month and also breaking a two-month up trendline. That opens up the possibility of a retest of its May lows. That had a lot to do with today's relative weakness in the Nasdaq 100. Three of its biggest percentage losers were in the chip sector.
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BIGGEST SOX LOSERS... Three of the biggest SOX (and Nasdaq) losers are shown below. All three fell sharply on rising volume. Downside volume was especially heavy in Novellus and Xilinx. The first two stocks appear headed toward their spring lows. Xilinx hit a new 2004 low.
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JABIL CIRCUIT TUMBLES ON MASSIVE VOLUME... Talk about falling on heavy volume. Jabil Circuits tumbled nearly 13% today on massive volume. The stock's price also fell beneath its December, March, and May lows. That puts it at the lowest point in ten months. That helped get the day off to a bad start on the big board.
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GE AND MICROSOFT BREAK OUT ... Two of the reason why the Dow held up better than the other stock indexes are shown below. General Electric broke through its April high to reach the highest level in nearly four months. And it did so on rising volume. Microsoft also broke through its April high on rising volume. The next resistance level for MSFT is its January high
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DIAMOND HOLDS UP -- QQQ DIPS... The strong price action in GE and MSFT helped the Diamonds (DIA) close unchanged. Volume was very light. Thanks to the falling SOX, the Nasdaq 100 Shares (QQQ) lost some ground. Volume picked up a bit from yesterday, but was still light. Despite the down day, the QQQs remain above chart and moving average support.
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XOI BREAKS OUT-- PPI COMES IN HIGH ... Crude oil jumped over a dollar today and caused more buying in the energy sector which was the day's strongest group. Yesterday we showed the natural gas and oil service indexes turning up. Today it's the AMEX Oil Index. That index broke through its early May high to reach the highest level in years. Its relative strength line has also turned up. Rising oil prices -- and energy leadership -- is something else for the market to worry about. The PPI number for May also came in higher than expected which got the market thinking about inflation again. There's always something.
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