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Market Sentiment, Tuesday, 11/30/2004

Good Time for a Dip.
By James Brown

After an incredible run in the markets from late October through mid-November stocks are finally beginning to see some profit taking. We've been warning about a possible consolidation for a couple of weeks but the best (or worst) stocks could do was trade sideways. Today the technical indicators on the major indices have finally turned into bearish signals. Short-term traders looking at gains over the past month should strongly consider doing some profit taking of their own. Yet don't run far. We're not expecting the pull back to be very deep.

If you're a Fibonnaci trader watch the Industrials for a dip back toward 10,250. This would be a 38.2% retracement of its October- November run. Coincidentally this is also just above its simple 200-dma, which should offer technical support. The rest of the major indices look equally vulnerable to some profit taking. After all the month of November saw the Industrials gain 4%, the S&P 500 added 3.9% and the NASDAQ Composite soared for a 6.2% gain.

A dip this week with the host of economic reports would make sense. Disappointing or not traders could use the economic news as an excuse to sell. They certainly have their pick of reports to blame. Wednesday brings the ISM index, Fed's Biege book, construction spending, Personal Income and spending, Auto and truck sales. Thursday will bring the factor orders. Friday hosts the November jobs report, the ISM services index and more! On top of all the economic news we have the Intel mid-quarter update to watch on Thursday evening. Confidence is not running high as Intel and many in the semiconductor sector are heading south.

Fortunately, as Jim mentioned in the wrap tonight, analysts expect a large chunk of the multi-billion dollar Microsoft cash dividend to find its way back into stocks. The dividend is paid late this week so we can probably expect all this money to hit stocks next week just in time for a Santa Claus rally.


Market Averages

DJIA ($INDU)
52-week High: 10753
52-week Low :  9585
Current     : 10428

Moving Averages:
(Simple)

 10-dma: 10499
 50-dma: 10188 
200-dma: 10240 

	
S&P 500 ($SPX)

52-week High: 1188
52-week Low : 1031
Current     : 1173

Moving Averages:
(Simple)

 10-dma: 1178
 50-dma: 1138
200-dma: 1122

		
Nasdaq-100 ($NDX)

52-week High: 1581
52-week Low : 1301
Current     : 1571

Moving Averages:
(Simple)

 10-dma: 1569
 50-dma: 1483
200-dma: 1442

		



CBOE Market Volatility Index (VIX) = 13.24 -0.06
CBOE Mkt Volatility old VIX  (VXO) = 13.54 +0.08
Nasdaq Volatility Index (VXN)      = 18.84 +0.01 


Put/Call Ratio Call Volume Put Volume Total 0.89 597,404 529,019 Equity Only 0.69 480,231 331,968 OEX 0.71 18,722 13,328 QQQ 4.52 15,970 72,181
Bullish Percent Data Current Change Status NYSE 74.2 + 0.7 Bear Correction NASDAQ-100 74.0 - 1 Bull Confirmed Dow Indust. 66.6 + 0 Bull Confirmed S&P 500 72.4 - 0.6 Bull Confirmed S&P 100 72.0 + 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: 0.82 10-dma: 0.97 21-dma: 0.95 55-dma: 1.10 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 1244 1365 Decliners 1595 1671 New Highs 175 143 New Lows 8 7 Up Volume 825M 826M Down Vol. 1101M 1029M Total Vol. 1957M 1883M M = millions
Commitments Of Traders Report: 11/23/04 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 Commercials are growing more bearish despite upping both their long and short positions. As usual the small traders are headed the opposite direction by growing more bullish. Commercials Long Short Net % Of OI 11/02/04 446,192 441,676 ( 4,516) (0.4%) 11/09/04 447,779 449,171 ( 1,392) (0.1%) 11/16/04 452,149 468,048 (15,899) (1.7%) 11/23/04 462,408 491,384 (28,976) (3.0%) 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 11/02/04 136,290 132,040 4,250 1.5% 11/09/04 148,415 136,325 12,090 4.2% 11/16/04 166,862 156,751 10,111 3.1% 11/23/04 171,192 150,606 20,586 6.4% 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 Commercials have been consistently bearish on the e-minis but they've reached a new yearly high in their bearish bias. Small traders remain staunchly net bullish. Commercials Long Short Net % Of OI 11/02/04 307,053 580,081 (273,028) (30.7%) 11/09/04 337,164 672,903 (335,739) (33.2%) 11/16/04 371,282 796,279 (424,997) (36.4%) 11/23/04 412,724 849,091 (436,367) (34.6%) Most bearish reading of the year: (436,367) - 11/23/04 Most bullish reading of the year: 133,299 - 09/02/03 Small Traders Long Short Net % of OI 11/02/04 395,029 63,746 331,283 72.2% 11/09/04 392,253 58,999 333,254 73.8% 11/16/04 445,737 70,169 375,568 72.8% 11/23/04 400,995 62,080 338,915 73.1% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 No change here. Commercials remain net bullish. Small traders remain net bearish, although they've reached a new yearly high in their bearish attitudes. Commercials Long Short Net % of OI 11/02/04 53,002 31,231 21,771 25.0% 11/09/04 54,509 33,016 21,493 24.5% 11/16/04 55,737 33,683 22,054 24.6% 11/23/04 58,159 34,104 24,055 26.0% 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 11/02/04 8,886 36,621 (27,735) (61.3%) 11/09/04 10,213 38,251 (28,038) (57.8%) 11/16/04 10,533 37,660 (27,127) (56.2%) 11/23/04 11,153 39,712 (28,559) (56.1%) Most bearish reading of the year: (28,559) - 11/23/04 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL Both professional traders and small traders are growing more bearish on the Industrials. Commercials Long Short Net % of OI 11/02/04 25,319 24,261 1,058 2.0% 11/09/04 22,863 22,463 400 0.8% 11/16/04 22,004 23,744 (1,740) (3.8%) 11/23/04 22,527 25,537 (3,010) (6.2%) 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 11/02/04 7,952 6,306 1,261 8.8% 11/09/04 6,165 6,483 ( 318) ( 2.5%) 11/16/04 5,937 6,533 ( 596) ( 4.7%) 11/23/04 5,833 8,299 (2,466) (17.4%) 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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