MARKET INSIGHT: Bulls Win Today’s Round
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Joel Addison, Optionetics.com
October 10, 2001
October 10, 2001
Without much in the way of positive news, traders still sent stocks much higher today. The Dow ($INDU) closed at 9,240.86 after gaining 188.42 points, a 2.08% gain. The Nasdaq ($COMPQ) led the charge however, jumping 56.07 points to close at 1,626.26 and closing right at its high for the day. The nice thing about today’s rally was the fact that market breadth was very strong and volume increased sharply over the last week of trading. It was also impressive to see strength even in the face of more negative news.
Chipmaker Motorola (MOT) announced earnings last night that met estimates, but then warned about its next quarter and stated 7,000 more jobs would be lost. Chip equipment makers were downgraded by J.P Morgan, yet the Philly Semiconductor Index ($SOX) gained 6.74%. Lam Research (LRCX) actually gained more than 3% today, even after telling investors it would not meet estimates for its fiscal second quarter.
Internet stocks rose ahead of Yahoo’s (YHOO) earnings announcement this evening and hardware stocks gained ground even though IBM (IBM) had its estimates cut by Goldman Sachs. EMC Corp (EMC) shares fell today after Dain Rauscher issued cautious comments about the storage company. The broker sees EMC missing estimates, which sent the stock down nearly 4%.
Though the rally is a nice gift for the bulls, don’t expect it to last. Things have not changed overnight and though the war in Afghanistan is going well, there still are many potential risks out there. The economy still has a plethora of weakness to overcome and the length and degree of this recession is still impossible to figure. As the war on terrorism does intensify, there are also concerns about further terrorist attacks on American soil. I don’t want to be an alarmist, but the fact is that there still are many factors that could take the markets lower. Traders need to trade according to their own time frame and market view. There is a strong likelihood that the broader market may trade in a range for the next few months as earnings and other concerns are worked out. Nonetheless, be smart and don’t let emotion rule your trading decisions.
Joel Addison
Staff Writer & Options Strategist
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