Stock Market Commentary for Thursday, May 26, 2005

Finally on Wednesday we got a little of the long-awaited "profit-taking", with Nasdaq falling a moderate 11.50 points.  It's always very difficult to tell whether a decline is simply profit-taking before a continuation of an advance or an indication that the advance is over.  Wednesday did look like simple profit-taking.  A market top is usually preceded by some number of trading sessions where the market opens sharply higher and then closes well below the opening level, and there is no sign of any of that, yet.

Nasdaq closed at the level it had fallen to by 10:20 a.m.  This is not the trading pattern of a true sell-off.

The economic data was quite decent.

Nasdaq trading volume was very light (1.55 billion shares), and breadth was almost strongly negative, with 1.90 losers for each gainer.  The momentum froth speculators certainly jumped ship, but this was not a heavy sell-off.

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-- Jack Krupansky