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Oversold Bounce

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Stocks are getting a much needed bounce this morning after last week's sell off. A little bit of bargain hunting and a little bit of profit taking has the Nasdaq up 50 points, and the S&P 500 is within 7 points of testing 1,000. Whether these gains can be sustained remains to be seen.

Buying is widespread with advancers beating decliners 3 to 1 at the Nasdaq. Software and semiconductors are putting in some nice gains, as are Internet stocks.

Ebay Daily Chart

The Internet Index (INX) is also getting a nice percentage bounce, up 7.84%, and leading the way is Ebay (EBAY). Ebay looks to have found support at $44. If Ebay can sustain its gains, $50 should be the first resistance test. If not, holding above $44 will its task.

United Airlines Daily Chart

Airlines got an oversold bounce, but have lost some of its momentum. The Index is still up 5.37%, but off its high. United (UAL) is up 6.83% today, but still has a lot of work to do. UAL lost 43.6% last week, and most likely won't recoup those losses anytime soon. The first step would be to take out its recent congestion high of $20.50, and UAL is currently $2.16 away from doing that. Economic aid may help to keep the airlines running, but from an investment standpoint shouldn't experience much more than an oversold bounce.

Jeffrey Canavan
Assistant Analyst
www.premierinvestor.net

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