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Market Sentiment, Tuesday, 01/20/2004

Stronger Than Expected
By J. Brown

The major averages don't tell the whole story. The Dow Jones was strongly red on the session after components MMM and HON both took some big hits. Meanwhile the NASDAQ managed another new high closing at levels not seen in 30 months. The strong market internals underline the strength not shown in the closing prices. Advancers pushed past decliners 18 to 10 on the NYSE and 2 to 1 on the NASDAQ. Up volume was twice down volume on both exchanges.

The selling was heaviest in the retail sector as the RLX dropped 1 percent after failing at the 380 level twice in the last three trading days. More sector indices were positive than negative and leading the way were the oil services stocks with the OSX up 4.7 percent. It's probably not a coincidence that crude oil futures rose 87 cents to $34.87 a barrel.

The XAU gold & silver index also posted a strong bounce, up 2.44 percent as gold futures soared nearly $6 towards $413 an ounce. As expected many of the XAU components followed suit but it remains to be seen if this is a buy the dip opportunity or just an oversold bounce.

The XNG natural gas index also produced a decent session with a 3 percent gain following El Paso corp. who jumped 15% after Barron's highlighted the stock over the weekend.

Oddly enough the NWX networking index saw no profit taking after Friday's big surge due to Juniper Network's incredible earnings report. Of course we'll hear from Lucent tomorrow and Nortel Networks in a few days and investors are probably just waiting to hear what these to networking giants have to say about their Q1 guidance.

Keep an eye on the DFI and DFX defense indices. General Dynamics leads off the defense sector's parade of earnings tomorrow and we'll continue to hear from the group over the next several sessions.


Market Averages

DJIA ($INDU)

52-week High: 10616
52-week Low :  7416
Current     : 10528


Moving Averages:
(Simple)

 10-dma: 10536
 50-dma: 10086
200-dma:  9365



	
S&P 500 ($SPX)

52-week High: 1142
52-week Low :  788
Current     : 1138


	
Moving Averages:
(Simple)

 10-dma: 1129
 50-dma: 1081
200-dma: 1008


		
Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low :  795
Current     : 1552



Moving Averages:
(Simple)

 10-dma: 1530
 50-dma: 1444
200-dma: 1302


		


In spite of some market weakness earlier today the volatility 
indices remain near their lows.

CBOE Market Volatility Index (VIX) = 15.21 +0.21
CBOE Mkt Volatility old VIX  (VXO) = 14.95 -0.32
Nasdaq Volatility Index (VXN)      = 20.49 +0.25



Put/Call Ratio Call Volume Put Volume Total 0.60 1,126,135 673,994 Equity Only 0.52 994,208 513,167 OEX 1.32 14,469 19,115 QQQ 4.75 24,131 114,718
Bullish Percent Data Current Change Status NYSE 77.9 + 0 Bull Confirmed NASDAQ-100 81.0 + 0 Bull Confirmed Dow Indust. 86.7 + 0 Bull Confirmed S&P 500 87.8 + 0 Bull Confirmed S&P 100 85.0 + 0 Bull Confirmed Bullish percent measures the number of stocks in an index currently trading on a buy signal on their point and figure chart. Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - Pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend
5-dma: 0.89 10-dma: 0.97 21-dma: 0.91 55-dma: 1.03 Extreme readings above 1.5 are bullish, and readings below .85 are bearish. These signals don't occur often and tend be early, but when they do, they can signal significant market turning points.
Market Internals -NYSE- -NASDAQ- Advancers 1804 2082 Decliners 1078 1042 New Highs 344 442 New Lows 6 3 Up Volume 1475M 1684M Down Vol. 710M 859M Total Vol. 2197M 2561M M = millions
Commitments Of Traders Report: 01/13/04 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts at the Chicago Mercantile Exchange and Chicago Board of Trade. COT data can be found at www.cftc.gov. Small specs are the general trading public with commercials being financial institutions. Commercials are historically on the correct side of future trend changes while small specs tend to be wrong. S&P 500 We don't have much more to report on for commercial traders this week other than slightly increased positions on both sides of the fence. Small traders followed suit. Commercials Long Short Net % Of OI 12/16/03 448,103 460,670 12,567 1.4% 12/22/03 400,066 405,240 (5,174) (0.6%) 01/06/04 403,721 408,729 (5,008) (0.6%) 01/13/04 405,558 411,361 (5,803) (0.7%) Most bearish reading of the year: (111,956) - 3/06/02 Most bullish reading of the year: 23,977 - 12/09/03 Small Traders Long Short Net % of OI 12/16/03 172,947 113,704 59,243 20.7% 12/22/03 147,537 81,596 65,941 28.8% 01/06/04 142,844 83,518 59,326 26.2 01/13/04 149,057 90,571 58,486 24.4% Most bearish reading of the year: (1,657)- 5/27/03 Most bullish reading of the year: 114,510 - 3/26/02 E-MINI S&P 500 The e-minis are seeing more action than the full contracts represented above. Commercial traders added more than 20K contracts to both longs and shorts but they remain net bearish. Small traders were more enthusiastic with a large increase in long positions, outpacing the increase in short positions. Contrarians might view this as a bearish development. Commercials Long Short Net % Of OI 12/16/03 330,273 361,316 (31,043) (4.5%) 12/22/03 128,801 213,021 (84,220) (24.6%) 01/06/04 175,489 240,865 (65,376) (15.7%) 01/13/04 196,858 263,845 (66,987) (14.5%) Most bearish reading of the year: (354,835) - 06/17/03 Most bullish reading of the year: 133,299 - 09/02/03 Small Traders Long Short Net % of OI 12/16/03 177,193 73,694 103,499 41.3% 12/22/03 125,248 43,482 81,766 48.5% 01/06/04 139,433 51,909 87,524 45.7% 01/13/04 191,241 62,711 128,530 50.6% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Ho-hum...commercial traders are still asleep at the wheel in the NDX futures. Meanwhile small traders have reduced their outstanding shorts. Commercials Long Short Net % of OI 12/16/03 61,343 73,153 (11,810) ( 8.8% 12/22/03 40,277 36,452 3,825 5.0% 01/06/04 42,892 37,801 5,091 6.3% 01/13/04 41,829 38,547 3,282 4.1% Most bearish reading of the year: (21,858) - 08/26/03 Most bullish reading of the year: 9,068 - 06/11/02 Small Traders Long Short Net % of OI 12/16/03 28,676 15,197 13,479 30.7% 12/22/03 22,656 14,544 8,112 21.8% 01/06/04 8,035 17,911 ( 9,876) (38.1%) 01/13/04 9,705 12,539 ( 2,834) (12.7%) Most bearish reading of the year: (10,769) - 06/11/02 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL There isn't much to report in the DJ futures either. It looks like commercials are just shuffling money around but the net result was a slightly more bullish stance on the Dow. In mirror-like precision small traders have slowly become more bearihs. Commercials Long Short Net % of OI 12/16/03 23,509 13,880 9,629 25.8% 12/22/03 14,088 9,998 4,090 17.0% 01/06/04 15,697 9,497 6,200 24.6% 01/13/04 16,501 8,724 7,777 30.8% Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 15,135 - 10/16/01 Small Traders Long Short Net % of OI 12/16/03 9,497 19,633 (10,136) (34.8%) 12/22/03 6,915 8,983 ( 2,068) (13.0%) 01/06/04 5,713 8,105 ( 2,392) (17.3%) 01/13/04 6,496 9,970 ( 3,474) (21.1%) Most bearish reading of the year: (10,136) - 12/16/03 Most bullish reading of the year: 8,523 - 8/26/03


 

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