Stocks Rise Again, But Trade Still Light

Stocks Rise Again, But Trade Still Light

BY JONAH KERI

INVESTOR'S BUSINESS DAILY

Posted 3/20/2007

Stocks rose for the second straight session Tuesday, but another bout of quiet volume dimmed the day's gains.

The S&P 500 climbed 0.6%. The index closed near its intraday highs and continued a rally attempt started March 14.

But NYSE volume ticked slightly lower. That was compared with Monday's already depressed level, the lowest total since the subdued holiday action in the final week of 2006.

The Nasdaq also rose 0.6%. Nasdaq volume closed slightly higher, though still well below average.

The market's recent action points to a continued lack of conviction among big-money institutional investors. Friday's decline in higher volume also counts as a strike against the market's current rally attempt.

Still, a few positive signs have cropped up. Leading stocks have started to regain their stride, after falling hard during the first few days of the correction. The IBD 100 gained 0.8% Tuesday.

That marked the second straight day that IBD's gauge of top-rated stocks outperformed the broad S&P 500. On Monday, the IBD 100 surged 1.8%, outpacing the S&P's 1.1% advance.

A few of the major indexes have also started to approach or pass former support levels. The small-cap S&P 600 picked up 0.8%, crossing above its 50-day moving average for the first time since the correction began Feb. 27.

Chip stocks were among the session's best performers.

MEMC Electronic Materials (WFR) jumped 2.84 to 57.19 on 2 1/2 times its normal trade. The producer of polished wafers used in chip production hit an all-time high. Silicon Motion Technology (SIMO) leapt 2.35, or 10%, to 25.41 on nearly four times its usual turnover. The Taiwan-based maker of system-on-a-chip devices also marked an all-time peak.

The Philadelphia semiconductor index rose 1% for the day.

Still, the SOX sits 11% off its 52-week high. Chip stocks, big leaders in the tech rally of the late 1990s and during parts of the bull run that started in 2003, have fallen behind other sectors.

Keep an eye on IBD's Industry Groups table, which appears today on Page B4. It tells you which groups are hot and which are not. When the market eventually turns for the better, you'll want to focus on stocks that hail from the top 50.

Elsewhere, a few energy-related groups took a hit after a profit warning from Halliburton. (HAL) The field services company shed 6% in heavy volume, as the stock continued its downtrend.

But the NYSE composite, which includes a large number of oil- and gas-related stocks, shrugged off the Halliburton blues, climbing 0.7% for the session.

After the close, bellwether software giant Oracle (ORCL) issued a bullish earnings report. The firm credited a passel of acquisitions for boosting its bottom line. The stock was up about 3% in early after-hours trading.

Wednesday marks the conclusion of the Federal Open Market Committee's two-day meeting on interest rates and economic policy. The Fed is widely expected to leave rates unchanged for the sixth straight time.