Wednesday, November 01, 2006

NASDAQ Technical Picture - Bulls Scramble

The NASDAQ was hit with a heavy dose of selling and the bulls got caught. After yesterday's surprising low PMI, investors are paying more attention to the economic data. This morning's lower than expected ISM index - 51.2% vs 53% consensus, sent a clear message that the economy is really slowing down. So investors decided to take profits. The selling was broad based and all tech sectors participated with disk drive, semis, and networking pacing the way down. The NASDAQ carved out a WR bearish engulfing bar on higher volume, but at the end of the day it managed to observe the 20 EMA as support on a closing basis. The next support level is 2325, followed by 2300. Tomorrow's economic data includes Initial Claims at 8:30 EST and Factory Orders at 10:00.

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