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Still Down

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The broader indices continue to sustain 3% declines, with few signs of that reversing. Semiconductor, disk drive, and Internet stocks are the weakest sectors, while only the gold and natural sectors are in positive territory.

Nasdaq Composite Weekly Chart

The Nasdaq Composite is down 3.03%, but trying to cling to October 1998 low. Select biotech stocks like Biomet (BMET), Genzyme (GENZ) and Abgenix (ABGX) are helping to prop up the tech index, as well as Juniper Networks (JNPR), Ciena (CIEN), and Comverse Technology (CMVT). Overall, decliners have a 2778 to 824 edge over advancers at the Nasdaq, with Ebay, NVIDIA, and Microsoft some of the biggest tech decliners.

Suiza Foods Point and Figure Chart

Got Milk? One non-tech stock that is doing well today is Suiza Foods (SZA). This dairy product manufacturer is up $1.39 today, which makes it the 10th best performing stock of the day. This Premier Investor long play has also reversed back into a column of Xs, but will need to crack resistance at $60 to move towards its bullish price objective of $63.

Phillip Morris Daily Chart

Phillip Morris, another Premier Investor long play, is trading on a sell signal, but the stock is slowly moving towards a buy signal at $51. Its down 63 cents this week, but relatively speaking, that's better than most stocks. Phillip Morris is one of the few stocks still trading above its bullish support line, and would have to drop to $46 to reverse into a column of Os.

Jeffrey Canavan

01:30 EST Update

Airline stocks remain weak

The AMEX Airline Index (XAL.X) leads today's sector losers and this group of stocks remains under some significant selling pressure. Many market participants feel an aid package is needed soon for many companies in this group to remain solvent. Here's a list sorted by most active and some of the damage being done.

Airline Index (XAL.X) - sorted by volume

The above stocks are not a complete list of publicly traded airline stocks, but they do represent some of the more active. Last week we discussed a hedge strategy for traders as it pertained to the buying of protective puts. Traders have had time to assess the damage and perhaps implement some hedge strategies since the opening of trading. Today's breaking of the $67.92 level now puts downside risk to $42 for the XAL.X.

AMEX Airline Index (XAL.X) - last ten months

The breaking of our retracement level at $67.92 may have further hedge strategies taking place. Some traders on Monday may have decided "we'll see if the lows hold and if they don't we'll hedge."

The U.S. Government has yet to rule on any type of aid package for the airline industry and the longer the lack of "certainty" is going to have this group under pressure. Several packages are being proposed and range from tax cuts to government grants and low rate long-term loans. Once an aid package is agreed upon (assuming an aid package is given) then investors can get a better handle on things. Until then, we'd suggest that any bullish call option plays or investments in the group be considered "aggressive" and the longer the time until option expiration or when those funds are needed, the better.

Jeff Bailey
Senior Market Technician
www.premierinvestor.net

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