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Near the lows

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It hasn't been a mass run for the exits as stocks continue to inch lower with the Dow Industrials (INDU) now off 157 points at 8,583 and the broader S&P 500 (SPX.X) 908.81 -1.52% down 14 points, but the major indexes look to close below their intra-day S2 support levels.

For bears that have "taken some heat" in the early part of January, a close near the lows of the session, in my view, should have bears holding positions overnight. However, those that may have felt a "little over leveraged" or "too bearish" during the recent rally, look to par back some positions on today's weakness as the major indexes edge back to their intermediate-term 50-day SMA's.

Volume on today's decline in my opinion is not heavy as both NYSE and NASDAQ volume show volume just over the 1.2 billion share mark at each exchange. I'm comparing today's 2.4 billion total (NYSE + NASDAQ) to advancing volume after the beginning of the New Year of roughly 1.4 billion to think that the playing field has been leveled out a bit.

New highs versus new lows remains rather bullish, especially at the NYSE with 109 stocks reaching new 52-week highs versus just 20 stocks hitting new low. This breadth indicator at the NASDAQ isn't as bullish, but hasn't been when compared to the NYSE. Today's action has 56 stocks hitting new 52-week highs compared to 31 stocks at new 52-week lows.

The more "defensive" Gold/Silver Index (XAU.X) 78.52 +4.09% is reversing recent session's losses, and shows today's largest sector gain. Also on the mend is the Natural Gas Index (XNG.X) 161.45 +1.89%, and the rather range-bound Dow Jones Home Construction Index (DJUSBH) 319.96% nears the upper end of three- month consolidation of 280-328.

While today's UBS downgrade of some baby bells sees weakness in the telecom service providers, we've seen the Fiber Optic Index (FOP.X) 50.97 -4.47% and Networking Index (NWX.X) 147.61 -4.27% take over today's sector weakness from the Semiconductor Index (SOX.X) 321.41 -3.61%.

Jeff Bailey

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