Stock Market Commentary for Friday, March 18, 2005

Thursday was a classic in-between day or "rip-tide" market which bounced around wildly with little net change. This happens frequently after a significant sell-off. Market sentiment was still fairly negative, but the downwards momentum had petered out and the shorts were split between taking profits after their nice run (down) or pushing the market down harder to get a full break-down.

Nasdaq teetered very modestly above the intra-day low for 2005, but valiantly hung in their and even bounced a little (by a mere 0.67 points). With all the recent negative sentiment it's actually surprising that Nasdaq didn't crumble. This strongly suggests that a fair amount of the recent downwards move really was simple a technical "swing", and that short-term speculators really are bumping into the fact that enough stock mutual fund money has trickled into the market to keep the market from sinking ($318 million in the past week and a very modestly positive flow for seven consecutive weeks). Traders and short-term speculators can indeed push the market around wildly on merely a whim, but the longer-term money flows ultimately determine the long-term trend.

After hitting its intra-day low shortly after 10:00 a.m., Nasdaq actually recovered for the rest of the day, closing six points above the morning low. These are reasonably good signs given the recent "carnage".

Meanwhile, beyond all the mindless chatter, the economic reports were for the most part fairly decent.

Nasdaq trading volume was barely moderate (1.77 billion shares), and breadth was very slightly negative, with 1.003 losers for each gainer.

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-- Jack Krupansky