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In the red

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After a mixed open and some modestly positive action in the major market averages, the averages have turned lower with weakness in technology stocks, specifically the Semiconductor Index (SOX.X) 270 -3.4% and Networking Index (NWX.X) 110 -3.20%, which both break new 52-week lows.

Shares of Micron Technology (NYSE:MU) $16.03 -2.8% are one of the few names in the semiconductor group cutting a new 52-week low this month with a trade at $15.99, while other semiconductors names like BRCM, CY, CHRT, NSM, BRCM, AMD, ATML, AMCC, STM, LLTC, MXIM, MCRL, VSEA, PWAV, IFX, TQNT, UMC and MCHP hit new 52-week lows this month.

Stocks traded to their lowest levels of the session just after Fox news reported a shooting in the Time Square area. Details remain sketchy at this point, but there are reports that the shooting occurred in an office building and that 3 people are said to have been fatally wounded in what may have been a murder/suicide situation. Initial take is that this news is NOT being viewed as a potentially terrorist-related event, but the markets did trade down in correlative fashion with this news.

Only two sectors are currently showing gains with the Oil Service Index (OSX.X) $80.31 +1.3% showing a gain of greater than 1%, while the retailers as depicted by the Retail HOLDRS (AMEX:RTH) $82.55 +0.18% showing a marginal gain, with Target (NYSE:TGT) $36.56 +0.96% and Federated Dept. (NYSE:FD) $36.48 +0.96% building gains after Friday's retail sales data.

Traders and investors may be closely monitoring the NYSE Composite (NYA.X) 478.90 -0.72%, which has traded in the red most of this morning's session. On the $5 point and figure chart, a bearish trade at 470 would trigger a triple-bottom sell signal and violate the 475 level, which has served as support since mid- August.

Subscribers will remember a past triple-bottom sell signal in the S&P 500 Index (SPX.X) 881 -0.89% on its $5 point and figure chart at the 930, which we felt was technically bearish, and correlate similar type of action in the NYSE Composite should it also break similar pattern.

Treasuries continue to see buying today with the benchmark 10- year YIELD ($TNX.X) 3.870% firmly at new multi-year YIELD lows. In essence, cash appears to be looking for defensive areas to hide once again today.

Jeff Bailey
Senior Market Technician
Option Investor

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