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Beaten-Down Nasdaq Index Flirts With the 3,000 Mark

Markets: Analysts say the sheer act of falling through that barrier could spark another wave of selling.

November 11, 2000|WALTER HAMILTON | TIMES STAFF WRITER

3,000.

That's the key number for the beleaguered Nasdaq composite index--and after another sharp drop Friday, it's getting perilously close to falling below that level.

Ever since the technology-laden index began correcting hard in March, Nasdaq has managed to hold above 3,000. That has given some solace to Wall Street bulls, who hope the 3,000 mark can be a floor from which the index eventually rebounds.

But though it stayed above that level Friday, closing at 3,028.99, Nasdaq still fell to a new closing low for the year.

What's more, the index gave every indication that it will sink below that point early next week, experts said.

Nasdaq closed at its low of the day as the rush of sellers out of technology stocks picked up steam at day's end. That means there could be pent-up selling pressure when the market opens Monday.

And falling below 3,000 is more than just a newspaper headline, analysts warn. Given that staying above 3,000 is critical to market psychology, the sheer act of falling below that level could trigger another wave of selling from shellshocked investors.

In market parlance, 3,000 has been a "support" level for Nasdaq. Each time the index threatens to sink below that mark, bargain hunters support the index by buying up its beaten-down tech stocks.

But some experts say it's only a matter of time before the support rallies fail and Nasdaq crumbles below 3,000.

"My sense is that ultimately the support will crack," said Gary Anderson, a technical analyst at Anderson & Loe in Eugene, Ore.

Not everyone is so bearish.

Technical analyst John Bollinger believes Nasdaq could slip below 3,000 on Monday or Tuesday. But he predicts it will rebound soon thereafter, potentially setting the stage for a longer-term recovery in the market.

"The most likely thing is we'll take out 3,000, which is a psychologically important number, and extend the losses a little bit," Bollinger said. "Then, we'll turn right back around and go back into the trading range."

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