Tech stalwarts NetApp (
) andSanDisk (
) along with office supplies giantStaples (
) fronted losses in the Nasdaq 100 and S&P 500 index ETFs
In afternoon trade
SPDR S&P 500
) was down 0.35% to 143.59. It fell as much as 1.6% in morning
trade before rebounding.
PowerShares QQQ (
), tracking the 100 largest nonfinancial stocks on the Nasdaq,
tumbled 0.61% to 68.34. It dropped as much as 2.4% intraday
before paring losses.
SPDR Dow Jones Industrial Average (DIA) slipped 0.2% to
"We have been in an uptrend since June and it is tiring,"
BullAndBearMash.com, which specializes in watching the Dow,
Nasdaq and S&P, told clients. "It is much easier to confirm a
top than pick a top. We are watching this closely as we expect a
top to occur very soon."
All three major ETFs are still trading above their 50-day
moving averages after going into the red for five straight days.
So far this has to be considered a normal, healthy pullback from
new highs. The number of stocks hitting new highs on the NYSE
outnumbered those hitting new lows by nearly 5-to-1. On the
Nasdaq, that ratio was bout 1.5-to-1. This suggests there's more
strength pulling the market up than down, which is bullish.
S&P Capital IQ Strategy
Any dips on fears of global growth slowing or disappointing
earnings results should be bought from now through mid-October,
Alec Young, global equity strategist at S&P Capital IQ in New
York City, wrote in a client note Wednesday.
"Even if the Street bakes in only mid-single digit
earnings-per-share growth for Q4 over the next few weeks, we
think stocks will rally into the election," Young wrote.
"Earnings expectations and stock prices have been negatively
correlated since the June low.
"And given widespread year-to-date buy-side underperformance,
we wouldn't hold out for a big pullback before committing to the
long side," Young added. "November and December total only 17% of
the calendar and yet since 1900, 63% of all election-year S&P
500 annual highs have come in those two months; since 1964 it's
been higher: 67% (of the time). While past performance is no
guarantee, we see 2012 following history's bullish script."
Ned Davis Research also released a bullish outlook based on a
study of the leading economic indicators in the world's largest
countries that shows global growth is picking up.
"Although the global economy remains fragile, we're beginning
to see signs that the worst of the recent economic soft patch
could be behind us," Alejandra Grindal, Ned Davis' senior
international economist, wrote. "This is supportive of our view
of a continuation of the cyclical bull rally in global
NetApp, down 4%, broke below its 50-day moving average in
heavy volume. It has been trending lower since February 2011. It
hit key price resistance at a 200-day moving average last week
after staging a countertrend rally off of a two-year low. There
was no other notable news.
SanDisk, off 3%, gapped below its 200-day line, which is very
bearish. JMP Securities downgraded the chipmaker to market
perform from outperform, citing "weakness in computing trends and
Staples, down 3%, followed through on the prior session's
heavy selling after it announced a major plan to cut costs by
closing down stores throughout the U.S. and Europe.
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