I mentioned that when the markets are healthy and moving higher, the Nasdaq 100 usually leads the way in both points and percentage ratio. If you recall, the spread had retraced exactly 62% (Fibonacci retracement number) of the selloff from August 2008 until December 2008.

From high to low, the spread fell about 80 points this week before rebounding over the past two days. The high on the spread (the Nasdaq 100 minus the S&P 500) was about 530 points – and for the indexes to turn bullish again, the spread should trade above 530.

Since the spread action can be a leading market indicator, what about the best leading indicator for the Nasdaq?

There are a couple that I use, but the one that has a bigger influence on the Nasdaq indexes is Semiconductor Index – and I use the ETF that represents it.

So take a look at the daily chart of the Semiconductor HOLDRs (NYSE: SMH)

As you can see, SMH has closed above its 200-day moving average a few times, but has since reversed and closed below its uptrend line last Friday.

It has also broken below its uptrend channel, drawn off the March lows. The stock looks like it’s still headed lower, at least over the short-term, with the next support around $18.40.

Always keep an eye on SMH as it could help in making your trading decisions.

Jim Stanton

Source: Ticker Of The Week: Semiconductor HOLDRs (NYSE: SMH)

Investors snapped up shares of technology bellwethers a day after the semiconductor index <.SOXX> fell for a fifth straight day. Apple Inc led the Nasdaq higher, climbing 1.8 percent to $121.59, while the semiconductor index gained nearly 2 percent.

Stocks in defensive sectors such as consumer staples and health care also advanced, with Coca-Cola Co (KO) up 1.6 percent to $44.34 and Pfizer Inc adding 0.8 percent to $15.39.

“What we’ve seen the past three days is not that money’s leaving the market, but just flowing in that (defensive) direction and trying to find the better deal,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

The Dow Jones industrial average <.DJI> was up 22.86 points, or 0.28 percent, at 8,307.75. The Standard & Poor’s 500 Index <.SPX> added 3.23 points, or 0.37 percent, at 887.15. The Nasdaq Composite Index <.IXIC> gained 12.78 points, or 0.77 percent, at 1,676.97.

Data showed the number of U.S. workers filing new claims for jobless benefits rose to 637,000 and was more than expected in the latest week, according to government data, pushed up by plant shutdowns related to automaker Chrysler’s bankruptcy.

In another report, the Labor Department said prices received by U.S. producers rose at a brisk pace in April, driven by a surge in food costs.

May 14 (Reuters)

U.S. stocks slipped in thin holiday trade on Friday after a streak of gains as investors nervously eyed post-Thanksgiving sales to gauge how retailers will fare this holiday season, while worries about global demand hurt technology and energy shares.

Chevron (CVX) fell 1.9 percent tracking oil lower as OPEC gathered to discuss potential further supply cuts to combat falling demand. U.S. crude dropped below $53 a barrel.

Technology shares slid after signs of a downturn in global chip demand as STMicroelectronics cut its fourth-quarter outlook. Industry sources said Taiwan companies want to slash costs. The semiconductor index shed 1.1 percent.

The U.S. stock market was closed Thursday for the Thanksgiving holiday and is trading for half the day on Friday. On Wednesday, stocks ended higher, capping the Dow’s biggest four-day percentage gain since 1932.

Stores across America hope to ring in billions of dollars in holiday sales beginning on the “Black Friday”, the day after Thanksgiving. But retailers fear a looming recession and mounting job losses could cost them dearly during the period that brings in up to 40 percent of annual sales.

“It’s a light volume day so you’re going to see some choppy trading, with so many people out,” said Robert Finkel, consumer trader at Stifel Nicolaus in Baltimore.

“I’m watching how things go from a retail standpoint today – we’ve heard a lot of speculation about how bad it’s going to be, now we’ll get some proper feedback.”

The holiday weekend will test the strength of consumer sentiment, a main driver of the U.S. economy, as the country faces its worst financial crisis since the Great Depression.

The Dow Jones industrial average fell 2.39 points, or 0.03 percent, to 8,724.22. The Standard & Poor’s 500 Index was down 2.39 points, or 0.27 percent, at 885.29. The Nasdaq Composite Index shed 14.26 points, or 0.93 percent, to 1,517.84.

The S&P’s retail index dipped 1.6 percent.

Chesapeake Energy Corp (CHK) fell 14.7 percent to $17.26 after a shelf offering to issue up to 50 million shares.

U.S. aluminum company Alcoa Inc’s (AA) fell after an executive said the company is not actively seeking to raise its stake in miner Rio Tinto Ltd (RIO) .

There is no U.S. economic data due on Friday nor any major companies scheduled to report earnings.

For the month, the Dow is down more 6 percent, the S&P 500 down more than 8 percent and Nasdaq down 11 percent.

By Kristina Cooke
NEW YORK, Nov 28 (Reuters)

We knew it was going to happen. Heck, we had the canary in the coal mine, the volatility index, investor sentiment, and a host of other technical indicators all screaming it was time to get defensive. And the screams came just in time…

Last week, the Dow Jones Industrial Average, the Nasdaq Composite Index, and the S&P 500 all lost about 3.5%. The semiconductor index was down about 5%. Retail and financial stocks fell more than 6%. Brokers lost 7%. And homebuilders gave up 10%.

The bad news, of course, is it’s going to get worse.

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Here’s another look at the monthly chart of the S&P 500 plotted against its 20-month exponential moving average (EMA)…

If the S&P 500 is trading above the line, then stocks are in a bull market. If stocks are trading below the line, then the bear is in charge.

Stocks entered a bear market back in December. The S&P 500 declined for five straight months, and then put on a blistering two-month rally.

Today, the S&P is back up near the line. If history is any sort of a roadmap, then investors are in for a very long summer.

Take a look at what happened in the last bear market. Stocks broke down, rallied back up, and challenged the line… then cascaded lower again.

Get ready for the cascade.

Of course, stocks don’t go straight down. After such a nasty beating last week, stocks should enjoy a brief bounce higher early this week. In fact, the odds look pretty good that we may see the S&P rally back up and test the EMA at about 1,407.

At that point, though, traders ought to look at exiting long positions and adding on a few short sales.

Best regards and good trading,

Jeff Clark

Source: Warning: Trouble Ahead