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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

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