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Stocks hold session highs

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After a somewhat mixed open, the major market averages broke above their 50-day MA at the 11:00 EST hour and have extended gains marginally higher from earlier levels.

The NYSE Composite ($NYA.X) 505.99 +1.36% managed a break above its 50-day simple moving average at 501.78 and has traded their best levels of the session at 506.72.

The narrow and perhaps most widely quoted major market average has the Dow Industrials (INDU) 8,935 +1.78% also breaking above its 50-day MA of 8,850 and at its best levels of the session.

Dow breadth is decidedly positive with 27 of the 30 components showing gains. Dow gains are being lead by shares of JP Morgan Chase (NYSE:JPM) 26.75 +7.5% despite early morning news that Standap & Poors may cut the company's debt rating. Shares of Alcoa Inc. (NYSE:AA) 26.05 +5.16% also shrug off some "bad news" after Salomon Smith Barney removed the aluminum maker from its basis materials "recommended list."

Dow weakness is limited to shares of Coca Cola (NYSE:KO) $51.70 -0.93%.

Sector strength is rather broad today with the CBOE Internet Index (INX.X) 70.79 +4.10% and Semiconductor Index (SOX.X) 362.49 +4.02% leading gains. Close behind are telecom stocks as depicted by the North American Telecom Index (XTC.X) 385 +3.99%. Dow components SBC Communications (NYSE:SBC) 29.95 +4.18% and AT & T (NYSE:T) 10.68 +2.2% have both broken above their respective 50-day MA's in just the past couple of trading sessions.

Sector weakness has the Gold/Silver Index (XAU.X) 62.19 -5.41%, most likely under pressure after last week's speculation that the U.S. might launch an attack on Iraq, which didn't take place over the weekend.

After a bumpy start for the Biotech Index (BTK.X) 374.23 -1.36% at the open of trading on news that Astrazenca Plc's (NYSE:AZN) $31.85 -13.91% recently completed INTACT trials confirm that the trials were robust and well designed, but demonstrate that "Iressa" does not provide improvement in survival when added to standard platinum-based chemotherapy versus chemotherapy alone in advanced non-small cell lung cancer, the broader group that doesn't have "stock specific" risk to "Iressa" have rebounded. Still weak are "Iressa" stocks OSI Phamraceuticals (OSIP) $16.88 -48%, Abgenix (NASDAQ:ABGX) $8.00 -18.69, ImClone Systems (NASDAQ:IMCL) $8.23 -10.93% and Genentech (NYSE:DNA) $34.04 -3.83%. Only Genentech (DNA) are components of the Biotech HOLDRS (AMEX:BBH) $86.95 -1.57%.

Breadth on the broader market indexes has advancers outpacing decliners by a 2 to 1 margin at the NYSE, while gainers have a 3 to 2 edge over decliners at the NASDAQ.

For the first time in quite a while, new highs have a slight margin on the NYSE with 29 stocks achieving new highs versus 28 stock hitting new lows. The NASDAQ Composite however has 31 stocks hitting new highs versus 73 stocks achieving new lows.

Volume is rather anemic today with NYSE just barely above the 750 million share mark, while the NASDAQ shows just 929 million shares traded.

Jeff Bailey
Senior Market Technician
Option Investor

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