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Diverging ways

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Today's trading represents a bit of a "mixed bag" as the Dow Industrials (INDU) 8,390 -1.08% trades lower as weakness in airline-related components Boeing (NYSE:BA) $34.60 -6.63 and United Technologies (NYSE:UTX) $59.40 -4.91% along with deeper cyclical weakness in aluminum producer Alcoa (NYSE:AA) $24.04 -5.25% and banking concern JP Morgan (NYSE:JPM) $23.57 -3.44% offset gains in Hewlett Packard (NYSE:HPQ) $13.62 +3.02% and retailer Wal-Mart (NYSE:WMT) $50.47 +3.63%.

The Dow's weakness is being offset by some strength in broader technology as the NASDAQ Composite (COMPX) 1,281 +0.94% and NASDAQ-100 Index (NDX.X) 921.94 +1.5% show gains.

NASDAQ-100 strength looks to be coming from Network Appliance (NASDAQ:NTAP) $8.43 +19.57% after the provider of enterprise network storage and data management solutions reported earnings last night that beat estimates by a penny. Salomon Smith Barney upgraded the shares to "buy" from "neutral" this morning saying it was "impressed" by the company's ability to keep Filer units flat quarter-over-quarter, sell larger systems, continue to penetrate the enterprise, and keep costs in-line. Salomon was so impressed with NTAP's recent performance that the firm cut its FY03 revenue estimates to $885.1 million from $944.3 million, and maintained its $10 price target on the stock.

Later tonight, fellow provider of network storage systems Brocade Communications (NASDAQ:BRCD) $14.40 +1.48% will report its quarterly earnings. Analysts are looking for the company to report EPS of $0.08 a share.

After trading a fresh 52-week low yesterday, the NASDAQ-100's second biggest gainer on the session has shares of software provider Compuware (NASDAQ:CPWR) $2.72 +6.25% showing gains on what looks to be short-covering related and bears locking in some gains. Yesterday, Moody's cut CPWR's senior debt to Ba1 from Baa2.

We've seen a rather tight range on the major market averages today and breadth is modestly negative.

NYSE breadth shows decliners slightly outnumbering advancers by a 17 to 13 margin, while breadth over at the NASDAQ is slightly negative with 8 decliners for every 7 advancers.

Stocks hitting new lows continues to vastly outpace stocks hitting new highs at both the NYSE and NASDAQ. The NYSE reports 109 stocks hitting new lows compared to 24 stocks achieving new highs, while the NASDAQ has 148 stocks hitting new lows (many under $1) compared to 18 stocks at new highs.

Jeff Bailey
Senior Market Technician
Option Investor

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