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Market Sentiment, Thursday, 09/09/2004

A Mixed Bias
By James Brown

Thursday proved to be an interesting day, especially if you were following oil stocks and technology stocks. The two sectors were the best performing spots in the market place. Oil stocks rose as crude oil price climbed more than 4 percent to $44.15 a barrel. Meanwhile the Texas Instrument (TXN) mid-quarter update last night ignited a bounce in the SOX that continued to climb throughout the session.

The strength in the SOX helped lift the entire technology sector, as it usually does, but the question remains, "is this a one-day rebound or start of something more?" Looking more broadly at the market in general it was a positive day with most sector indices closing in the green. Market internals were also bullish with advancing stocks outnumbering decliners by 17 to 10 on the NYSE and almost 2 to 1 on the NASDAQ. Up volume swamped down volume 10 to 6 on the NYSE and 13 to 3 on the NASDAQ. Overall volume was pretty decent and one of the best days we've seen in the last couple of weeks.

Aside from the strength in stocks today investors were also encouraged by the weekly initial jobless claims. The number dropped 44,000 to 319,000. This was the largest drop since December 2001. It's another clue that the economy is still improving, which should help cement another interest rate hike at the FOMC's September meeting. Yet the Fed isn't just watching jobs data. It's also watching the inflation picture and tomorrow brings the Producer Price Index for August.

Tomorrow is a mixed bag. The inability of the blue chips to turn around all day is certainly negative. An earnings warning from Dow-component Alcoa (AA) after the bell tonight certainly won't help matters. Wall Street was looking for 50 cents a share and AA now expects 30 to 35 cents a share. Alcoa will likely be the main drag on the Industrials tomorrow.

Meanwhile Oracle had some positive news after the bell this evening. The software giant has won its lawsuit against the U.S. Department of Justice to purchase smaller rival PeopleSoft (PSFT). A judge has declared the merger would not violate anti- trust laws. While the DoJ can appeal this is seen as a boon for ORCL and likely to spark a rally in the software sector tomorrow. Friday may prove to be a duplicate of today - blue chips down with technology stocks up.


Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9230
Current     : 10289

Moving Averages:
(Simple)

 10-dma: 10232
 50-dma: 10120
200-dma: 10274

	
S&P 500 ($SPX)

52-week High: 1163
52-week Low :  990
Current     : 1118

Moving Averages:
(Simple)

 10-dma: 1111
 50-dma: 1100
200-dma: 1113
	
		
Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1301
Current     : 1391

Moving Averages:
(Simple)

 10-dma: 1380
 50-dma: 1387
200-dma: 1440

		



CBOE Market Volatility Index (VIX) = 14.01 -0.05
CBOE Mkt Volatility old VIX  (VXO) = 13.75 +0.05
Nasdaq Volatility Index (VXN)      = 20.58 -0.70


Put/Call Ratio Call Volume Put Volume Total 0.91 616,250 558,939 Equity Only 0.72 483,669 349,029 OEX 1.21 22,035 26,692 QQQ 1.09 44,880 48,879
Bullish Percent Data Current Change Status NYSE 58.7 + 0 Bear Confirmed NASDAQ-100 38.0 + 0 Bull Alert Dow Indust. 56.6 + 0 Bear Correction S&P 500 56.6 + 0 Bear Correction S&P 100 55.0 + 0 Bear Correction 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: 1.02 10-dma: 1.21 21-dma: 1.12 55-dma: 1.28 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 1729 1957 Decliners 1094 1051 New Highs 100 81 New Lows 11 35 Up Volume 1061M 1293M Down Vol. 612M 299M Total Vol. 1694M 1650M M = millions
Commitments Of Traders Report: 08/31/04 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 The latest data shows commercial traders reducing their short positions just a tad. They remain net bearish by only by a small margin. Retail traders have upped both their longs and shorts and the net result has been a reduction in their bullish enthusiasm. Commercials Long Short Net % Of OI 08/10/04 397,576 419,734 (22,158) (2.7%) 08/17/04 398,472 416,109 (17,637) (2.2%) 08/24/04 402,599 420,478 (17,879) (2.2%) 08/31/04 406,637 416,778 (10,141) (1.2%) 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 08/10/04 135,689 93,897 41,792 18.2% 08/17/04 138,550 97,792 40,758 17.2% 08/24/04 135,151 100,351 34,800 14.7% 08/31/04 144,120 114,343 29,777 11.5% 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! We're seeing some action in the e-minis. Commercial traders or "smart money" has really upped their shorts while reducing their longs. This has produced the most bearish reading in a long time. Without missing a cue the retail traders have upped their longs to produce the most bullish reading in a while. Commercials Long Short Net % Of OI 08/10/04 369,547 441,055 ( 71,508) ( 8.8%) 08/17/04 404,065 457,372 ( 53,307) ( 6.2%) 08/24/04 392,065 473,911 ( 81,846) ( 9.4%) 08/31/04 372,071 543,100 (171,029) (18.7%) 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 08/10/04 179,940 89,239 90,701 33.7% 08/17/04 192,939 92,361 100,578 35.3% 08/24/04 211,995 76,184 135,811 47.1% 08/31/04 258,624 77,036 181,588 54.0% 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 appear to be happy to sit still in the NDX futures but small traders have increased their long positions. Commercials Long Short Net % of OI 08/10/04 43,968 38,351 5,617 6.8% 08/17/04 44,743 41,535 3,208 3.7% 08/24/04 48,624 43,222 5,402 5.8% 08/31/04 48,167 43,411 4,756 5.2% 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 08/10/04 10,081 10,858 ( 777) ( 3.7%) 08/17/04 12,256 8,352 3,904 18.9% 08/24/04 11,666 10,068 1,598 7.3% 08/31/04 14,635 10,572 4,063 16.1% 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 Traders don't seem very willing to change their bets on the Industrials. Neither the commercials or the small traders are shifting any money around. Commercials Long Short Net % of OI 08/10/04 30,634 22,994 7,640 14.2% 08/17/04 30,271 22,809 7,462 14.1% 08/24/04 28,919 23,658 5,261 10.1% 08/31/04 29,143 24,147 4,996 9.3% 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 08/10/04 6,450 8,488 (2,038) (13.6%) 08/17/04 4,388 7,089 (2,701) (23.5%) 08/24/04 5,052 7,214 (2,162) (17.6%) 08/31/04 4,929 7,122 (2,193) (18.2%) 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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