Baidu, RIM Drag Nasdaq 100 Below Key 50-Day Avg


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The tech heavyPowerShares QQQ ( QQQ ), tracking the 100 largest nonfinancial stocks on the Nasdaq, broke below its key 50-day moving average for the first time in 10 weeks Tuesday.

The technical level is widely watched by traders and often serves as a level of price support. Failure to hold that level begets market weakness. In afternoon trade, QQQ fell 1.46% to 67.35 in heavy volume.

SPDR S&P 500 ( SPY ) fell 0.71% to 144.60, but held above the 50-day line.

"This is a healthy correction. There's little reason to believe it's going to go lower," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab. "The big bottom of the market has been taken out by (European Central Bank President Mario) Draghi and (Federal Reserve Chairman Ben) Bernanke."

With no major economic news events happening this week, the market will likely level off in a day or two and start to go back up, he added. He sees the S&P 500 finding support at 1440 or 1430 -- near the low on Sept. 26. That level translates to $143 a share for SPY.

"It is noteworthy that stocks have not been able to follow through on the Fed-induced rally in the first of September," said Ted Barnhart of Barnhart Investment Advisory in Oak Brook, Ill. "In addition, last week's debate has likely increased the probability of a Romney victory, which many will conclude as plus for the economy as a whole, but is likely to stall some of the recent easy money policies."

ETF investors can expect more volatility as third-quarter earnings season gets under way withAlcoa ( AA ) reporting after the close Tuesday. The aluminum producer is likely to report a thin profit as its transport and aerospace products businesses help compensate for a weak global metal price environment, Reuters reported.

"We continue to advise caution in this environment as the market moves in a mostly sideways consolidation, as very few, if any, stocks have issued buy signals in recent days, while some leaders have come under pressure," Virtue of Selfish Investing wrote in a client missive.

Biggest Losers

Chinese Internet-search giantBaidu ( BIDU ), BlackBerry smartphone makerResearch In Motion ( RIMM )and surgical robotics makerIntuitive Surgical (ISRG) led the declines. Baidu shares gapped down 6.8%. It has been trending lower since April and trading under the 200-day moving average for most of that time. It reports Q3 results Oct. 17.

RIM gapped down 4.5%. It's experienced a brutal landslide since February 2011. But it started trading in a sideways range since June and may be forming a bottom.

Jefferies analyst Peter Misek warned that the company's make-or-break line of new BlackBerry 10 smartphones is unlikely to hit store shelves until March, weeks later than investors had hoped, Reuters reported .

Intuitive fell as much as 3.9% intraday before paring back losses to 2.7%. It's consolidating below its 200-day moving average and has been in a downtrend since early May. It's set to report third-quarter results Oct. 16.

Follow Trang Ho on Twitter @TrangHoETFs .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing ETFs
Referenced Stocks: AA , BIDU , QQQ , RIMM , SPY

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