The major indices were bifurcated today, with techs (the NASDAQ) rising, and the ‘old economy’ stocks declining. The NASDAQ approached the 1425 level that I mentioned yesterday, but didn’t quite make it there. Techs were boosted by Microsoft and Intel’s earnings, but 3M and Coke weighed on the ‘old economy’ stocks. There were some red flags today. Volume was higher than the previous up days for the S&P and Dow, making this a distribution day for those indices, which both closed below their 200 DMAs. Even though the NASDAQ finished up for the day, I’d say the sellers won because it closed near the lows for the day. There are also several indicators showing that the market has reached overbought levels. There are also a good number of bearish candlestick patterns (bearish engulfing, dark cloud cover, and shooting stars) and on the charts of individual stocks. Earnings reports will continue to flood in next week, but I think the impact of the reports will lessen greatly b/c the most important companies have already reported. We can assume that the remaining companies will just echo what’s already been said by the big boys. The market will need a catalyst to get out of the muck in which it’s stuck.
