Market Commentary for Tuesday, March 1, 2005

Despite the chatter about inflation, oil, "Mideast tensions", etc., the market decline on Monday was simply a technical "fluctuation" based on weak momentum. And when traders and speculators sense weakness in momentum, they reverse and work diligently to artificially push the market down, which has a snowball effect, especially as "technical support" is "broken" (which has nothing to do with economic or business fundamentals). There was no solid "reason" for the decline per se. The economic data was mixed, but still reasonably good.

The moderate 13.68-point Nasdaq decline was hardly more than profit-taking after the recent mini-recovery.

Nasdaq in fact bounced off its intra-day low shortly after 2:00 p.m., closing 14 points above that low, suggesting that either a big chunk of the earlier decline was due to good old-fashioned day-trading, or there actually was a heavy sell-off, but it was followed by a significant dip-buying rally. Take your pick, but neither is so bad for true long-term investors.

Nasdaq trading volume was heavy (2.16 billion shares), and breadth was moderately negative, with 1.40 losers for each gainer. This wasn't really a heavy sell-off, with only a moderate decline and only mediocre breadth.

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