DOW GIVES UP EARLY GAINS AND ESTABLISHES RESISTANCE AT 8000 DIA LOSES MOMENTUM OIL SERVICE HOLDRS CHALLENGE RESISTANCE NABORS AND BJ SERVICES SURGE ON BIG VOLUME SEMI HOLDRS HITS THE 200-DAY INTEL AND KLA-TENCOR MOVE HIGHER ON GOOD VOLUME
DOW FALLS SHARPLY IN FINAL HOUR... Led by weakness in financials, the Dow Industrials gave up its afternoon gains to close with a modest loss on the Wednesday. Chart 1 shows the Average trading at around 8040 in the late afternoon before plunging below 7900 in the final hour of trading. On this 10-minute chart, the Dow broke trend line support and closed below its afternoon low. A mini-breakdown occurred with a plunge in the final hour.
Chart 1
LOTS OF RESISTANCE AROUND 8000... For some perspective, Chart 2 shows daily prices over the last eight months. The Dow is meeting considerable resistance around 8000 over the last few weeks. Resistance in this area stems from the November trend line, the Jan-Feb consolidation and the 62% retracement mark. Notice that the Dow first exceeded 8000 on 2 April, but has not been able to remain above this level the last two weeks.
Chart 2
DIA LOSES MOMENTUM... Chart 3 shows the Dow Industrials ETF (DIA) gapping down three days ago and holding this gap. The ETF moved into the gap zone today, but failed to hold early gains and closed weakly. The Percentage Price Oscillator (PPO) moved below its signal line for the first time since early March. With this momentum oscillator rolling over, DIA looks vulnerable to a correction that could extend to the 75 area. Support in this area is marked by the 50-day moving average and the early-April low.
Chart 3
OIL SERVICE HOLDRS CHALLENGES RESISTANCE... The Oil Service HOLDRS (OIH) is showing signs of leadership with a resistance challenge over the last few days. Chart 4 shows OIH battling resistance from the November, January, February and March highs. The ETF moved above 90 intraday and traded at its highest level since early November, but fell back below 90 by the close. Within the group, Chart 5 shows BJ Services (BJS) breaking above its January high with big volume over the last few days. Chart 6 shows. Nabors Industries (NBR) also breaking above its January high with a huge volume over the last seven days.
Chart 4
Chart 5
Chart 6
SMH CHALLENGES RESISTANCE... The Semiconductor HOLDRS (SMH) provided a bright spot for the bulls on Wednesday. Chart 7 shows SMH surging back above 20 by gaining over 3%. Overall, the ETF is working its way higher within a rising price channel. I drew the lower trend line first and then made the upper trend line parallel. This upper trend line and the falling 200-day moving average mark resistance around 21. Within the group, chart 8 shows Intel (INTC) breaking above its Dec-Feb highs and challenging its 200-day moving average. The stock moved higher with above average volume the last two days. Chart 9 shows KLA-Tencor (KLAC) breaking above its Nov-Jan highs and its 200-day moving average over the last few days. Also notice that a large double bottom formed over the last six months. Today's breakout surge occurred on big volume and KLAC is showing upside leadership.
Chart 7
Chart 8
Chart 9
