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The Nasdaq in a correction again

With today's 61-point loss to 2,574.46, the Nasdaq Composite Index is back at a drop of 10% from a recent high.

Technically, that means the index is in a correction. What it really means is that the recovery off lows reached on Nov. 26 is basically done.

The Nasdaq has had two corrections this year alone. The first was from mid-July until the middle of the day on Aug. 16, when the market abruptly -- and violently -- turned higher.

The second started after the index hit a 6-year high of 2,859.12 on Oct. 31. It dropped to a low of 2,540.99 on Nov. 26, rebounded back to 2,652 and fell back again.

What's caused this drop? Semiconductors are a definite problem. The Philadelphia Semiconductor Index is down 25% from highs reached in July. All 19 of the stocks in the index are lower with such stocks as Micron Technology and Advanced Micro Devices off more than 40%.  The closest thing to a winner since July 17 is Intel, which is down 1.3% since July. Of course, it's off 8.1% since Dec. 6.

The problem: There's an awful lot of production capacity around the world, and that's pressuring prices.

But chips aren't the only drag on the Nasdaq. Google is down 10% from its intraday high of $747.24 on Nov. 7. Research in Motion has dropped 27% from its high on Nov. 7. Both were among today's bigger losers.

Is there anything wrong with either company? Probably not. The charts of both suggest, however, that the stocks got very pricey. Research in Motion had gained 212% on the year by Nov. 7; Google was up 62%. 

A  lot of investors look like they'd prefer cash in hand than wait for a rebound.

• To see the Google chart, click here.
• To see the Research in Motion chart, click here.

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Comments

 

LOL as baby boomers retire and take 20,000 to 50,000 dollars a year out of the stock market only to be replaced by 2/3 of a minimum wage worker putting in at most 500 dollars a year the stock market will be going down for years to come.

Simple supply and demand law. There use to be a small supply of stocks and a high demand as local governments and companies started stock based pension plans and now we have 401k plans. With the economy growing at a mere 3 percent a year for the past few years how do you think the stock market returned 10 percent growth? It is a ponzi scheme pure and simple and if you do not sell out now you will never recover your money.

Karen Smith (Posted 12.18.07 9:33 AM)

Baby boomers won't be cashing in their IRA accounts when they retire. They will be staying in investments in some form to try and generate an income for the next 20-30 years. Pension plan, IRA or 401K - it is all basically the same, an investment account. New employess get in, ex-employees stay in, and the amount of stock worth buying ebbs and flows depending on how the markets are reacting. For the most part, more money flows in than the value of new shares can soak up, excluding short term fluctuations that can drive people nuts. A 3% growth in the economy leaves a lot of room for the market to grow since only a fraction of the companies that made up that 3% are publicly owned and have shares you can buy.

Richard Notari (Posted 12.19.07 7:39 PM)

I'm looking for a person with the heart to provide a six hundred dollar loan to a desperate parent...please, help! my e mail: cramirez_fai@hotmail.com

Carlos (Posted 12.20.07 5:35 PM)

Market Update

Dow | Nasdaq | S&P

Dow	11,220.96	+32.73
NASDAQ	2,255.88	-3.16
S&P	1,242.31	+5.48
10-Yr Note	102.41	-0.66

4:02 AM ET

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