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March 01, 2006
Too Late to Blame it on Google
The Nasdaq and the Internet HOLDRS (HHH) have been sick long before the Google warning yesterday. This is just the icing on the cake. Google is trading near a support zone and key retracement, but needs to recover from yesterday’s losses to reverse the Jan-Feb downtrend.
Yahoo! peaked in early January and Google peaked in mid January. Both stocks have been moving lower ever since. While Google managed to bounce a couple times, Yahoo and the Internet HOLDRS (HHH) were not so lucky. These two just firmed for a while and then continued lower. Note: Google is not part of the Internet HOLDRS (HHH).
Yahoo! and the Internet HOLDRS (HHH) led the Nasdaq higher from September to November. Now, they are dragging it lower and I would not expect a serious rebound in tech stocks until the big internet players turn it around. Yahoo! is trading near support from the prior lows and February trendline. After firming the last few weeks, the stock got knocked again yesterday. As long as 34 holds, I would not take a bounce in the Nasdaq seriously.
The Internet HOLDRS (HHH) chart looks pretty much the same as the Yahoo! chart. The stock firmed after the February gap, but could not hold the gains above 61. Yesterday’s fall reinforces this resistance level and it would take a move above 61 to revive the internet horses and the Nasdaq.
Posted by Arthur B. Hill at March 1, 2006 06:17 AM