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