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Stocks mixed to lower in first hours of trading

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Stocks are trading relatively mixed to lower as the first 90- minutes of trading unfolds. Earlier declines in the NASDAQ-100 (NDX.X) 1,304.69 -0.07% have all but vanished as big tech bears continued to do some short-covering on this morning's early weakness.

Trading in software giant Oracle (NASDAQ:ORCL) $9.10 +3.29% has already been a wild ride this morning. At the open, the stock dipped to a session low of $8.55 (-2.9%) before reversing higher to current levels after a trading floor rumor began to circulate that a "sell side analyst" had spoken with ORCL management and that management said it was comfortable with current consensus estimates for the soon to be completed quarter. On May 1st, we alerted bearish traders that Oracle had just achieved its bearish vertical count from the point and figure chart of $9.00 and to be looking to lock in gains. Current stance would be "neutral" on the stock and not looking for a trade currently.

Market breadth is slightly positive on both the NYSE Composite (NYA.X) 581.66 -0.17% and the NASDAQ Composite (COMPX) 1,725.55 +0.37%. On the NYSE, advancers lead decliners by a 15 to 13 margin, while NASDAQ breadth is just fractionally positive by a 15.4 to 15.0 ratio.

WorldCom (NASDAQ:WCOM) $1.30 +4.83% leads the NASDAQ most active list 80.5 million share, after yesterday's all-time record setting volume leader of 670.5 million shares. While the volume rate was impressive, it was rather meaningless on a stock trading just $1.30.

NYSE volume leader has shares of AOL Time Warner (NYSE:AOL) $19.04 +2.58% trading just over 16 million shares after Merrill Lynch upgraded the stock to "near-term buy" from "neutral" on view that AOL represents an attractive risk/reward profile. While the upgrade does not suggest that fundamentals of the AOL division have improved, it reflects the firm's view that the share price is appropriately discounting the downside and any hint of positive news flow should provide a significant lift to the stock.

Jeff Bailey
Senior Market Technician
Option Investor

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