Stock Market Commentary for Monday, August 1, 2005

[Some minor changes in the actual column since Saturday]

Despite the chatter about oil and interest rates, the market continued to trade mostly on technical considerations on Friday.  In particular, traders pushed NASDAQ modestly above the psychological 2,200 level early in the trading session, but people decided to sell into that rally, causing traders and speculators to reverse and push the market down.  NASDAQ closed down a moderate 13.61 points.  This is typical of the technical trading patterns near a psychological level.  And this is typical of the volatility we see when trading volume is light.

The economic data was reasonably decent, hardly a reason for a sell-off, hence my belief that the selling was more technical than based on economic and business fundamentals.  The Q2 GDP report was decent, but everybody knows that it provides us with no clues as to how the economy will be performing in the coming months, which is what the stock market is trying to predict.

NASDAQ trading volume was very light (1.62 billion shares), and breadth was modestly negative, with 1.16 losers for each gainer.  The decline was disappointing, but on such light trading volume and with such thin breadth, the sell-off should not be much of a concern at all.

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-- Jack Krupansky

Stock Market Commentary for Saturday, July 30, 2005

Despite the chatter about oil and interest rates, the market continued to trade mostly on technical considerations on Friday.  In particular, traders pushed NASDAQ modestly above the psychological 2,200 level early in the trading session, but people decided to sell into that rally, causing traders and speculators to reverse and push the market down.  NASDAQ closed down a moderate 13.61 points.  This is typical of the technical trading patterns near a psychological level.  And this is typical of the volatility we see when trading volume is light.

The economic data was reasonably decent, hardly a reason for a sell-off, hence my belief that the selling was more technical than based on economic and business fundamentals.  The Q2 GDP report was decent, but everybody knows that it provides us with no clues as to how the economy will be performing in the coming months, which is what the stock market is trying to predict.

NASDAQ trading volume was very light (1.62 billion shares), and breadth was modestly negative, with 1.16 losers for each gainer.  The decline was disappointing, but on such light trading volume and with such thin breadth, the sell-off should not be much of a concern at all.

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-- Jack Krupansky

Stock Market Commentary for Friday, July 29, 2005

People chattered that the market's moderate rise on Thursday was due to earnings reports, but we're really simply seeing some continued technical speculation, and possibly some modest mutual fund inflows trickling in in the background.  NASDAQ rose a moderate 12.22 points, setting a new 2005 closing high of 2,198.44 and a new 2005 intra-day peak of 2,198.52.  Those are new four-year highs as well.

There were very modest net inflows into domestic equity funds last week.

The economic data was okay, neither great nor terrible.

NASDAQ trading volume was light (1.72 billion shares), and breadth was moderately positive, with 1.75 gainers for each loser.  Once again, this was hardly what would be considered a strong rally, but in some way these incremental gains more be more durable than the stronger rallies which tend to be more in the way of short-covering.

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-- Jack Krupansky

Stock Market Commentary for Thursday, July 28, 2005

Once again, the market continued to bounce around on Wednesday driven more by range-bound technical trading considerations than longer-term economic and business fundamentals.  NASDAQ gained a moderate 10.23 points, but has gone essentially nowhere over the past seven trading sessions.

The good news is that speculators attempted to push the market down, but were unable to set a new intra-day low below that of Monday.

The economic data was fairly decent, but even that didn't kick off a strong rally.

NASDAQ trading volume was moderate (1.82 billion shares), and breadth was modestly positive, with 1.15 gainers for each loser.  This was hardly what would be considered a significant rally.

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-- Jack Krupansky

Stock Market Commentary for Wednesday, July 27, 2005

Trading on Tuesday continued to be primarily technical in nature, possibly a little short-covering as too many speculators went short on Monday (hoping that a correction had begun). NASDAQ rose a moderate 9.25 points. People continue to wait for the market to move dramatically one direction or the other. This is called the "consolidation" process and frequently occurs after any significant advance (or retreat).

NASDAQ trading volume was light (1.74 billion shares), and breadth was moderately positive, with 1.38 gainers for each loser. This was hardly what would be considered a significant rally.

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-- Jack Krupansky

Stock Market Commentary for Tuesday, July 26, 2005

Monday was a slow summer day of technical trading, with NASDAQ falling a moderate 13.00 points, as short-term momentum speculators lost patience and bailed out while people wait for the next slug of money inflows to kick off yet another short-covering rally.  The market opened with fairly neutral sentiment, but when a modest mid-morning rally stalled, traders and short-term speculators took that as the cue to reverse and try to push the market down.

The economic data was fairly decent, but apparently people are discounting current strength and worrying that there might be some weakening in the months ahead.

NASDAQ trading volume was very light (1.53 billion shares), and breadth was moderately negative, with 1.63 losers for each gainer.

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-- Jack Krupansky

Stock Market Commentary for Monday, July 25, 2005

[Some minor changes in the actual column since Saturday]

People remain somewhat concerned as to whether the recent advance may have run out of steam and be on the verge of correcting. As a result, the market had a distinctly negative tone for much of Friday, but then recovered late in the day, with NASDAQ gaining a very modest 1.14 points. So, the uncertainty remains, but convincing evidence of a correction isn't here yet either.

NASDAQ trading volume was light (1.70 billion shares), and breadth was moderately positive, with 1.74 gainers for each loser. A very meager gain on moderately decent breadth suggests that smaller-cap stocks were outperforming larger-cap stocks.

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-- Jack Krupansky

Stock Market Commentary for Saturday, July 23, 2005

People remain somewhat concerned as to whether the recent advance may have run out of steam and be on the verge of correcting.  As a result, the market had a distinctly negative tone for much of Friday, but then recovered late in the day, with NASDAQ gaining a very modest 1.14 points.  So, the uncertainty remains, but convincing evidence of a correction isn't here yet either.

NASDAQ trading volume was light (1.70 billion shares), and breadth was moderately positive, with 1.74 gainers for each loser.  A very meager gain on moderately decent breadth suggests that smaller-cap stocks were outperforming larger-cap stocks.

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-- Jack Krupansky

Stock Market Commentary for Friday, July 22, 2005

Despite the chatter about bombs in London, China "dropping the dollar peg", and falling oil prices, the market declined on Thursday simply due to a failure of any significant real buyers to materialize.  After the recent extended advance, traders and speculators are primed to look for any potential weakness to push the market down into a correction.  NASDAQ fell a moderate 9.97 points, but not before first setting a new intra-day peak for the year (2,193.19 vs. 2,191.60 in January) and a new intra-day peak for the advance off the October 2002 low.  Unfortunately, letting a new intra-day peak en route to a decline is a moderate yellow flag.  This kind of "sell into any rally" sentiment is not the fuel for a durable advance, but it does help to relieve some of the pressure of negative market sentiment since those sellers have that much less to sell in the future.

The economic data was fairly decent.  There was no excuse for a market decline there, especially with oil prices receding.

NASDAQ trading volume was heavy (2.10 billion shares), and breadth was moderately negative, with 1.70 losers for each gainer.  This was not a heavy sell-off since there wasn't a sharp decline, but the heavy trading volume does suggest a lot of people taking a lot of profits.  I would add another moderate yellow flag for this behavior.

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-- Jack Krupansky

Stock Market Commentary for Thursday, July 21, 2005

Upbeat congressional testimony by Greenspan and a modest easing of oil prices enabled the market to shrug off disappointment over the quarterly reports from Intel (INTC) and Yahoo (YHOO) to continue to move higher on Wednesday, with NASDAQ gaining a moderate 15.39 points, to set a new closing high for the year as well as a new closing high for the advance off of the October 2002 low.

NASDAQ trading volume was heavy (2.03 billion shares), and breadth was almost strongly positive, with 1.97 gainers for each loser.  A merely moderate gain on such heavy volume suggests either significant rotation or an excess of day trading.

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-- Jack Krupansky

Stock Market Commentary for Wednesday, July 20, 2005

The sharp NASDAQ gain of 28.31 points on Tuesday was impressive, but the light trading volume tells us to be cautious about the durability of the gain.  There was probably a fair amount of short covering by people who were betting too heavily that NASDAQ had run out of steam and was due for a sharp correction.  I suspect that there was a modest amount of real buying to keep the market on a rising path.  NASDAQ set yet another closing high for the year (2,173.18).

The decent quarterly report from IBM (IBM) may have been one catalyst, and anticipation of the reports from Intel (INTC) and Yahoo (YHOO) may have been additional catalysts.

The economic data continues to be mixed.

NASDAQ trading volume was light (1.71 billion shares), and breadth was strongly positive, with 2.07 losers for each gainer.  Despite the sharp point gain, this was not a strong rally.

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-- Jack Krupansky

Stock Market Commentary for Tuesday, July 19, 2005

Although chatter about Citigroup's (C) quarterly report and anxiety in advance of IBM's (IBM) report were obvious weights on market sentiment on Monday, the truth is that the recent advance has begun to show its age and momentum traders are starting to bail out as they lose patience, independent of the news of the day. NASDAQ lost a moderate 11.91 points.

Curiously, weakness in crude oil prices didn't help the market.
The market is also on Fed Watch for Greenspan's congressional testimony on Wednesday and Thursday.

NASDAQ trading volume was very light (1.35 billion shares), and breadth was moderately negative, with 1.65 losers for each gainer.

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-- Jack Krupansky

Stock Market Commentary for Monday, July 18, 2005

[Some minor changes in the actual column since Saturday]

[There probably will be no column for Tuesday or Wednesday due to my traveling to Colorado]

The market continued to limp on in limbo mode on Friday as the recent run-up is gradually digested.  The good news was that there was no dramatic amount of negative sentiment evident in the market.  NASDAQ limped to a modest 3.96-point gain, setting yet another new closing high for the year.

The economic data was mixed, but reasonably decent.  No new news here.

NASDAQ trading volume was very light (1.54 billion shares), and breadth was modestly positive, with 1.08 gainers for each loser.

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-- Jack Krupansky

Stock Market Commentary for Saturday, July 16, 2005

The market continued to limp on in limbo mode on Friday as the recent run-up is gradually digested.  The good news was that there was no dramatic amount of negative sentiment evident in the market.  NASDAQ limped to a modest 3.96-point gain, setting yet another new closing high for the year.

The economic data was mixed, but reasonably decent.  No new news here.

NASDAQ trading volume was very light (1.54 billion shares), and breadth was modestly positive, with 1.08 gainers for each loser.

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-- Jack Krupansky

Stock Market Commentary for Friday, July 15, 2005

The moderate gain on Thursday was not as good as it first appeared.  NASDAQ did rise a moderate 8.71 points, to a new closing high for the year to date (2,152.82), but actually closed modestly (4 points) below its opening level and well below its peak for the day.  A lot of people are somewhat skittish and have a "sell into any rally" attitude.  Even a decline in oil prices coupled with a strong retail sales report wasn't enough to cause the market to rise off its opening level.

The economic data was mixed, but fairly decent.

NASDAQ trading volume was moderate (1.87 billion shares), and breadth was moderately negative, with 1.25 losers for each gainer.  A gain on negative breadth suggests a shift in bias from smaller-cap stocks to larger-cap stocks.

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-- Jack Krupansky

Stock Market Commentary for Thursday, July 14, 2005

Wednesday was yet another lazy Summer trading session, with people waiting for something, anything to happen.  NASDAQ went essentially nowhere, rising a slight 0.96 points, but at least it successfully resisted a fair amount of negative intra-day sentiment.

The economic data was mixed.  No new news there.

There is still no sign of any significant pickup of trading volume since the July 4th holiday weekend.

NASDAQ trading volume was very light (1.56 billion shares), and breadth was modestly negative, with 1.23 losers for each gainer.

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-- Jack Krupansky

Stock Market Commentary for Wednesday, July 13, 2005

The market is pausing to catch its breath after the recent rallying.  Traders and speculators did try to push the market down on Tuesday, but there simply wasn't any enthusiasm for a sell-off.  NASDAQ rose a moderate 7.72 points.

Contrary to my expectations, trading volume has not picked up since the holiday slowdown.

NASDAQ trading volume was light (1.67 billion shares), and breadth was very modestly positive, with 1.07 gainers for each loser.

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-- Jack Krupansky

Stock Market Commentary for Tuesday, July 12, 2005

There was some chatter about reasons for the rally on Monday, but since nothing really rang very true and since trading volume was somewhat anemic, I would say that it was more of a technical move than based on economic and business fundamentals.  NASDAQ closed up a sharp 22.55 points, to a new high (2,135.43) for the Spring (and now Summer) up-leg.

Now that NASDAQ has closed well above the psychological 2,100 level and is within striking distance of the early January peak, traders and speculators may stick with a bullish sentiment until momentum runs out.

NASDAQ trading volume was moderate (1.80 billion shares), and breadth was strongly positive, with 2.32 gainers for each loser.  This would have been a strong rally, but trading volume was still a little too anemic.  This has the feeling of some short-term speculators making a "run" with the market.

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-- Jack Krupansky

Stock Market Commentary for Monday, July 11, 2005

[Some minor changes in the actual column since Saturday]

Although the monthly employment report and a decent quarterly report from Alcoa (AA) (as well as falling oil prices) were nominally the reasons for the nice market rally on Friday, I would surmise that the true reason for the rally was relief that the market responded so well to the London bombings on Thursday.  I suspect that more than a few people remained short on Thursday and were forced to cover on Friday in a classic "short squeeze".  NASDAQ rose a sharp 37.22 points, closing well above the psychological 2,100 level (2,112.88).

Unfortunately, even such a sharp point gain is relatively meaningless given the lightness of trading volume.  This was more of a technical trading move than a durable advance based on true economic and business fundamentals.  The gain may stick, but I'd be cautious about betting on it.

The economic data was mixed.  No new news there.

NASDAQ trading volume was light (1.63 billion shares), and breadth was strongly positive, with 2.67 gainers for each loser.  This would have been a strong rally, but trading volume was way too anemic.

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-- Jack Krupansky

Stock Market Commentary for Saturday, July 9, 2005

Although the monthly employment report and a decent quarterly report from Alcoa (AA) (as well as falling oil prices) were nominally the reasons for the nice market rally on Friday, I would surmise that the true reason for the rally was relief that the market responded so well to the London bombings on Thursday.  I suspect that more than a few people remained short on Thursday and were forced to cover on Friday in a classic "short squeeze".  NASDAQ rose a sharp 37.22 points, closing well above the psychological 2,100 level (2,112.88).

Unfortunately, even such a sharp point gain is relatively meaningless given the lightness of trading volume.  This was more of a technical trading move than a durable advance based on true economic and business fundamentals.  The gain may stick, but I'd be cautious about betting on it.

The economic data was mixed.  No new news there.

NASDAQ trading volume was light (1.63 billion shares), and breadth was strongly positive, with 2.67 gainers for each loser.  This would have been a strong rally, but trading volume was way too anemic.

Click here to read the entire column.

-- Jack Krupansky

Stock Market Commentary for Tuesday, July 5, 2005

[Some minor changes in the actual column since Saturday]

The market continues to digest and recover from the Fed FOMC announcement.  The ISM manufacturing report did offer some boost to sentiment, but not enough to stir a lazy pre-holiday market.  The biggest excitement of the day was anticipation of the long holiday weekend.  NASDAQ rose a slight 0.41 points.

NASDAQ was up modestly at the open and spiked moderately upwards a few times, but there was enough lingering "sell into any rally" sentiment that prevented any breakout.

The economic data continues to be mixed and relatively lackluster.

NASDAQ trading volume was extremely light (1.24 billion shares), and breadth was moderately positive, with 1.24 gainers for each loser.  It's difficult for the market to get much more comatose than this.

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-- Jack Krupansky

Stock Market Commentary for Saturday, July 2, 2005

The market continues to digest and recover from the Fed FOMC announcement.  The ISM manufacturing report did offer some boost to sentiment, but not enough to stir a lazy pre-holiday market.  The biggest excitement of the day was anticipation of the long holiday weekend.  NASDAQ rose a slight 0.41 points.

NASDAQ was up modestly at the open and spiked moderately upwards a few times, but there was enough lingering "sell into any rally" sentiment that prevented any breakout.

The economic data continues to be mixed and relatively lackluster.

NASDAQ trading volume was extremely light (1.24 billion shares), and breadth was moderately positive, with 1.24 gainers for each loser.  It's difficult for the market to get much more comatose than this.

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-- Jack Krupansky

Stock Market Commentary for Friday, July 1, 2005

The market survived yet another Fed FOMC announcement on Thursday with the usually degree of choppy volatility, with NASDAQ losing a moderate 11.93 points.  Market reaction on an FOMC announcement day provides no clue as to the future market trend.

The economic data was rather mixed.  No new news there.

NASDAQ trading volume was light (1.66 billion shares), and breadth was moderately negative, with 1.27 gainers for each loser.

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-- Jack Krupansky