Blue Chips give back, Nasdaq counter-rallies

The Dow Jones Industrials were down more than fifty points by mid-day, but rallied to close with a minor loss of 6.89. The Nasdaq fared better, adding 5 points and change, closing positive for the 4th time in 5 sessions in the young year. The wider NYSE index lost 17.22 and that's where our counter-rally begins.

The Nasdaq is higher for the year, with the Dow and NYSE composite lower. The figures today are telling, with gainers outpacing losers on the NYSE, though down volume was 55%, up volume, 44%. Over on the Nasdaq the opposite was true.

As sure as Donald Trump dislikes Rosie O'Donnell, this is a sign of cyclical profit taking and reinvestment. Volume on the NYSE was far ahead of the Nasdaq, suggesting that massive profits are being pulled out of big caps and the only play is into smaller, albeit riskier issues. Much of the money taken in profits is being put aside until the market can be more reliably read and quarterly earnings get into full swing over the upcoming two weeks.

A good site for tracking earnings and lots of other useful advice is Earnings Whispers who also sees the Nasdaq counter-rally as indicative of a topping pattern. Finally, somebody with brains (and a web site) who agrees with us.