Jon
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Joined: 13 Apr 2005
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| Techs lead modest relief bounce into wknd |
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NASDAQ continued its modest, low volume bounce off the 50 day EMA test, leading the market higher Thursday ahead of a 3-day weekend. All major indices moved higher, but the techs and small caps had the decisive advantage. Retail sales were in line, Michigan preliminary sentiment topped expectations by a nose, and some decent earnings helped keep the Wednesday �momentum� going despite the 10 year bond topping 5%, oil topping $70 (70.82, +0.73), gasoline futures surging further ($2.11/gallon, +0.02), and Fed governor Kohn worrying about demand and a �narrow margin of unused resources� (Phillips Curve talk, a.k.a. I never saw an expansion I liked). You have to wonder how long the consumer can be sanguine with gasoline hitting $2.70/gallon so early in the season, but this far it has not stalled enthusiasm. If oil hits $75/bbl, however, we could see the consumer choke point, particularly if that coincides with $3/gallon gasoline.
Thursday such thoughts were on the back burner as those few in the market were more upbeat. It was not enough to change the landscape much. Volume was very low once more. Breadth was decent on NASDAQ but negative on NYSE. SP500 could not clear its 50 day EMA and SOX failed a run at that level as well. NASDAQ and SP600 continued their bounces off support, but NASDAQ did not recover its breakout point. Basically it was no change in position from Wednesday with the indices still having to shake off the Tuesday distribution.
Leaders continued to hold pretty darn well with tests of the 18 day EMA and 50 day EMA the prior two sessions yielding rebounds Thursday. As with the indices there was no major change, but the ability to hold support and take a breather is always a good sign for a continued rise. With earnings starting in earnest this week the pullback is still a good thing, and the fact that many stocks held support (along with NASDAQ and SP600) keeps the upside potential alive.
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