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Market Sentiment, Sunday, 06/06/2004

Lights Are Green
By James Brown

The streetlight is green but the market might just be spinning its wheels. Friday's rally was very widespread with only the OIX oil index and the XNG natural gas index closing lower. Market internals were very bullish with advancing stocks beating decliners by 2-to-1 on both the NYSE and the NASDAQ. Up volume was more than 3 times down volume on both exchanges. Despite all the bullishness we didn't get very far. The Dow is still under 10,300. The NASDAQ has spent the last week and a half trying to breakout over the 2000 level. Positive news from OPEC, crude oil under $39 a barrel, and a jobs report that was just right still wasn't enough to fuel the move through resistance.

Don't get me wrong. I'm not complaining but merely making an observation. We needed to hear the OPEC news and whether or not their "extra" 2 million barrels a day will make a difference or not the price of crude has fallen. July futures for crude oil are testing support at $38.00 and its simple 50-dma. Oil is already down 9% from its closing highs. Don't look now but it could be due for a bounce. However, should crude breakdown under the $38 per barrel level it should be a big lift for stocks.

Investor sentiment should be pretty high. The economy is on track. Oil prices are slipping. Jobs are rising. Corporate profits are strong. If these factors can sink in then we might have a decent summer in front of us. Holding us back are rising terrorism concerns as we approach the June 30th handover in Iraq. Closer to home the market might be a little nervous about security surrounding the G8 summit in Georgia this week.

Next week's economic reports are not quite the market movers this week's were. The PPI and sentiment numbers at the end of the week are probably the most important but Wall Street will still be watching the wholesale inventories and import/export pricing numbers. We'll also hear from two fed governors this week. Thomas Hoenig speaks on Wednesday and Jack Guynn talks on Friday but both are liable to maintain their new mantra of slow and easy.


Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8871
Current     : 10242

Moving Averages:
(Simple)

 10-dma: 10145
 50-dma: 10257
200-dma: 10081

	
S&P 500 ($SPX)

52-week High: 1163
52-week Low :  962
Current     : 1122

Moving Averages:
(Simple)

 10-dma: 1114
 50-dma: 1118
200-dma: 1087

		
Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1180
Current     : 1445

Moving Averages:
(Simple)

 10-dma: 1448
 50-dma: 1444
200-dma: 1429

		



CBOE Market Volatility Index (VIX) = 16.78 -0.25
CBOE Mkt Volatility old VIX  (VXO) = 16.52 -0.77
Nasdaq Volatility Index (VXN)      = 23.84 -0.09


Put/Call Ratio Call Volume Put Volume Total 1.02 569,900 580,062 Equity Only 0.83 424,059 350,459 OEX 1.45 27,385 39,659 QQQ 3.05 45,241 137,780
Bullish Percent Data Current Change Status NYSE 64.8 + 0 Bear Confirmed NASDAQ-100 38.0 + 0 BULL ALERT Dow Indust. 66.7 + 0 Bear Confirmed S&P 500 61.6 + 0 Bear Confirmed S&P 100 62.0 + 1 Bear 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: 1.08 10-dma: 0.88 21-dma: 1.00 55-dma: 1.07 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 1873 1994 Decliners 911 1021 New Highs 60 62 New Lows 26 19 Up Volume 1018M 1048M Down Vol. 315M 325M Total Vol. 1344M 1389M M = millions
Commitments Of Traders Report: 06/01/04 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 Action in the large S&P 500 futures contracts has been slow. Commercial traders remain net short but the bearish interest has been declining for two weeks now. Small traders' positions are virtually unchanged. Commercials Long Short Net % Of OI 05/11/04 401,365 421,672 (20,307) (2.5%) 05/18/04 394,352 423,258 (28,906) (3.5%) 05/25/04 400,713 420,764 (20,051) (2.4%) 06/01/04 406,665 421,681 (15,016) (1.8%) 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 05/11/04 135,534 76,987 58,547 27.5% 05/18/04 139,647 74,597 65,050 30.4% 05/25/04 136,086 79,060 57,026 26.5% 06/01/04 137,100 79,583 57,517 26.5% 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 Wow! Commercial traders are completely undecided with a dead heat between longs and shorts. Meanwhile small traders have turned bullish. Commercials Long Short Net % Of OI 05/11/04 378,696 362,887 15,809 2.1% 05/18/04 390,484 357,157 33,327 4.5% 05/25/04 353,722 336,406 17,316 2.5% 06/01/04 325,865 325,274 591 0.0% 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 05/11/04 101,199 94,408 6,791 3.5% 05/18/04 62,216 87,269 25,053 16.8% 05/25/04 91,515 100,759 ( 9,244) ( 4.8%) 06/01/04 111,484 90,625 20,859 10.3% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Commercial traders have hit new bullish extremes we've not seen in many months. Right on track small traders have hit bearish extremes. Commercials Long Short Net % of OI 05/04/04 56,931 35,209 21,722 23.6% 05/18/04 58,376 37,528 20,848 21.8% 05/25/04 59,891 37,630 22,261 22.8% 06/01/04 59,944 34,784 25,160 26.6% Most bearish reading of the year: (21,858) - 08/26/03 Most bullish reading of the year: 25,160 - 06/01/04 Small Traders Long Short Net % of OI 05/11/04 9,716 21,072 (11,356) (36.9%) 05/18/04 9,843 18,935 ( 9,092) (31.6%) 05/25/04 10,184 20,653 (10,469) (33.9%) 06/01/04 9,755 30,025 (20,270) (51.0%) Most bearish reading of the year: (20,270) - 06/01/04 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL Not much action going on here with the commercial traders. They remain slightly bearish on the Dow. Small traders are growing more bullish. Commercials Long Short Net % of OI 05/11/04 22,614 21,507 1,107 2.5% 05/18/04 22,257 22,444 ( 187) (0.4%) 05/25/04 23,578 24,632 (1,045) (2.2%) 06/01/04 23,397 24,393 ( 996) (2.0%) 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 05/11/04 7,009 7,640 ( 631) ( 4.3%) 05/18/04 9,098 6,591 2,507 16.0% 05/25/04 9,623 6,614 3,009 18.5% 06/01/04 9,000 6,021 2,979 19.8% Most bearish reading of the year: (12,106) - 3/09/04 Most bullish reading of the year: 8,523 - 8/26/03


 

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