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Market Sentiment, Tuesday, 12/30/2003

The NASDAQ Holds Its Gains
By J. Brown

Tuesday was a lackluster day for the markets. The general tone was bullish and there were plenty of new highs but covertly there was a sense of minor profit taking after Monday's big rally. Contributing to the mood were so-so economic reports. December's consumer confidence number slipped to 91.3 down from November's 92.5 and below estimates for a drop to 92.3. Chicago's PMI index fell to 59.2 from 64.1 in November. Plus the existing home sales report dropped an unexpected 4.6% to an annual pace of 6.06 million units.

The existing home sales drop was a surprise but home sales remain strong. The report probably caused some indirect profit taking in the homebuilders, who fluctuate on the new home sales numbers not existing home sales numbers. The consumer confidence number was a disappointment as well but not a blow out. The raised terror threat level and the lingering concerns over the job market were just too much to keep confidence at its peak.

Investors have nothing to complain about, despite the reports. The NASDAQ held on to its gains from Monday and its position above the 2000 mark. Year to date the NASDAQ is up a staggering 50% compared to a 25% gain in the DJIA and a 26% gain in the S&P 500. Coincidentally, the Japanese NIKKEI also closed the year with a gain of 26%. I'm not expecting much tomorrow with a half day for the markets and investors thinking about their New Year's Eve plans instead of last minute investments. Logically, at these levels profit taking would make the most sense but there may be a few nostalgic bulls hoping for the NASDAQ to close the year out above the 2000 mark.

It is interesting to note that after research group IDC raised their 2004 semiconductor sales projections from 16% to 18% and Smith Barney raised their estimates for 2004 chip sales to 20% from 14% that the SOX actually lost ground today.


Market Averages

DJIA ($INDU)

52-week High: 10450
52-week Low :  7416
Current     : 10425


Moving Averages:
(Simple)

 10-dma: 10298
 50-dma:  9896
200-dma:  9228



	
S&P 500 ($SPX)

52-week High: 1109
52-week Low :  788
Current     : 1109


	
Moving Averages:
(Simple)

 10-dma: 1092
 50-dma: 1059
200-dma:  990


		
Nasdaq-100 ($NDX)

52-week High: 1470
52-week Low :  795
Current     : 1470



Moving Averages:
(Simple)

 10-dma: 1436
 50-dma: 1415
200-dma: 1273


		


Believe it or not the volatility indices (VXO and VIX) have 
managed to stage a short-term "rally" off their lows around the
18th of December.  Yet they remain near historical lows and offer
little help today.

CBOE Market Volatility Index (VIX) =  17.68 +0.59
CBOE Mkt Volatility old VIX  (VXO) =  16.97 +0.93
Nasdaq Volatility Index (VXN)      =  23.36 -0.37



Put/Call Ratio Call Volume Put Volume Total 0.59 660,409 392,442 Equity Only 0.37 557,304 204,816 OEX 1.14 13,275 15,111 QQQ 1.48 22,126 32,675
Bullish Percent Data Current Change Status NYSE 76.4 + 1 Bull Confirmed NASDAQ-100 70.0 + 3 Bear Confirmed Dow Indust. 80.0 + 4 Bull Correction S&P 500 82.8 + 1 Bull Confirmed S&P 100 82.0 + 1 Bull 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: 0.93 10-dma: 0.89 21-dma: 1.01 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 1632 1678 Decliners 1169 1405 New Highs 545 313 New Lows 11 2 Up Volume 651M 892M Down Vol. 528M 560M Total Vol. 1219M 1505M M = millions
Commitments Of Traders Report: 12/16/03 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 Finally! The commercials are finally putting some money to work and we're seeing strong increases in both long and short positions. New longs soared about 50K contracts while new shorts jumped about 40K contracts. Overall, commercials remain net short. Small traders have also increased their net short positions but remain net long. Commercials Long Short Net % Of OI 11/18/03 393,893 414,442 (20,549) (2.5%) 12/02/03 394,531 414,223 (19,692) (2.4%) 12/09/03 396,882 420,859 (23,977) (2.9%) 12/16/03 448,103 460,670 (12,567) (1.4%) Most bearish reading of the year: (111,956) - 3/06/02 Most bullish reading of the year: 18,486 - 6/17/03 Small Traders Long Short Net % of OI 11/18/03 147,842 80,047 67,795 29.7% 12/02/03 154,788 85,776 69,012 28.7% 12/09/03 172,178 99,484 72,694 26.8% 12/16/03 172,947 113,704 59,243 20.7% 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 We are seeing the same surge of activity in the e-minis. Commercial traders opened another 35K long contracts but opened 72K new short contracts, tipping the scales from long to short. In contrast the retail traders reduced their shorts and opened another 35K longs. Commercials Long Short Net % Of OI 11/18/03 249,286 264,083 (14,797) (2.9%) 12/02/03 283,199 268,833 14,366 2.6% 12/09/03 294,006 288,385 5,621 1.0% 12/16/03 330,273 361,316 (31,043) (4.5%) 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 11/18/03 95,119 61,975 33,144 21.1% 12/02/03 119,555 77,609 41,946 21.3% 12/09/03 142,173 76,171 66,002 30.2% 12/16/03 177,193 73,694 103,499 41.3% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Again, we're seeing new money from the commercial traders. NDX futures have seen a bump in net longs and net shorts from both professionals and small traders. Commercials remain net short and small traders remain net long. Commercials Long Short Net % of OI 11/18/03 35,608 49,689 (14,081) (16.5%) 12/02/03 35,569 48,552 (12,983) (15.4%) 12/09/03 39,612 51,443 (11,831) (13.0%) 12/16/03 61,343 73,153 (11,810) ( 8.8% 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 11/18/03 32,034 10,356 21,678 51.3% 12/02/03 21,594 9,429 12,165 39.2% 12/09/03 25,842 10,228 15,614 43.3% 12/16/03 28,676 15,197 13,479 30.7% 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 Commercials are hedging their bets on the DJ futures. Both longs and shorts saw a bump of about 3K contracts each. Meanwhile, small traders have turned decidedly bearish. The surge of new shorts has produced the most bearish reading in the DJ futures since 2001. Commercials Long Short Net % of OI 11/18/03 20,746 11,080 9,666 30.4% 12/02/03 21,128 12,379 8,749 26.1% 12/09/03 20,378 11,934 8,444 26.1% 12/16/03 23,509 13,880 9,629 25.8% 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 11/18/03 5,655 8,607 (2,952) (20.7%) 12/02/03 6,667 9,302 (2,635) (16.5%) 12/09/03 6,858 12,006 (5,148) (27.3%) 12/16/03 9,497 19,633 (10,136) (34.8%) 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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