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Disk Drives clear first "hurdle"

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Yesterday on IndexSkybox.com I drew up a chart of the Disk Drive Index (DDX.X) and how the chart looked to be setting up a "cup and handle" chart formation on the 60-minute chart. We set up a bullish trade at 103 and bullish traders should be scouring the group for stocks that look technically strong and correlating those stocks with the index itself.

Disk Drive Index Chart - 60-minute interval.

I've "outlined" what looks to be a "cup and handle" formation in the DDX.X on its 60-minute chart. Our alert to get bullish came just before yesterday's close at 103 and today this index is jumping our first hurdle at 105. Hurdle #2 resided near 108 with our ultimate trading target at 117. If this index is going to 117, there should be some stocks in the group that will get it there. I have NOT screened any of these stocks, but they are stocks that compose the DDX.X.

Disk Drive Index Components

Hutchinson Technology (NASDAQ:HTCH) Iomega Corporation (NYSE:IOM) Maxtor Corporation (NASDAQ:MXTR) Quantum Corporation - DSSG (NYSE:DSS) Quantum Corporation - HDDG (NYSE:HDD) Read-Rite Corporation (NASDAQ:RDRT) SanDisk Corporation (NASDAQ:SNDK) Storage Technology (NYSE:STK) Western Digital Corporation (NYSE:WDC)

Watching the NASDAQ here!

The NASDAQ Composite is trying its "darndest" to get back on our aggressive upward trend and 2,900 will be a big test for this index. If the 2,900 level is cleared, 3,000 looks to be a distinct possibility. We're going to need some help from the bond market in the form of higher yields (selling in bonds), but so far so good.

NASDAQ Composite Index Chart - 60-minute interval.

The NASDAQ continues too look strong. Yesterday we liked the way this index held the 2,725 level. Right during that test, we witnessed the 5-year note (FVX.X) YIELD turn green and off to the races we went! Today, if we reach the 2,900 and the 5-year note starts to weaken in yield (strength in price), aggressive traders may want to start locking in profits on stocks that they have nice gains in.

Jeff Bailey
Staff Analyst

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