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What battery are you using\?

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Bulls are checking their batter power after earlier gains have been erased as the major indexes now trade with marginal losses after breaking to January highs and many of the indexes morning highs coming at their December 2 closing values.

I mention the December 2nd closing value, only because there has been no news on the wires that I see to explain today’s giveback of gains and I’m simply looking for some type of “technical” reason why the major indexes reversed from a session high.

Intra-day action has seen the major indexes all trade their intra-day “resistance 1” levels, and the late morning pullbacks have been back to their intra-day pivots.

In essence, the current morning pullback may have some bulls checking the batteries for power as the Dow Industrials, S&P 500, S&P 100 approach their longer-term 200-day SMA’s which are still at higher levels.

A quick check of the NASDAQ-100 Index (NDX.X) 1,084 –0.22%, which trades lower by 3 points and the NASDAQ-100 Index Tracking Stock (AMEX:QQQ) 26.96 –0.55% have both of these more heavily tech-weighted indexes looking to hold above the still trending lower 200-day SMA’s for a third consecutive session. In the coming sessions, bulls would like to see the still trending higher and more intermediate-term 50-day SMA at 1,046 trend above the 200-day SMA of 1,062 and provide somewhat of a “cradle” of support for any type of pullback.

While not a “market moving event,” shares of Energizer Holdings (NYSE:ENR) $26.30 –6.4% have taken a defensive turn lower after the battery maker’s chief rival Duracell announced a price-deal realignment program in the U.S. that will reduce and simplify the pricing of batteries, by lowering the level of its trade promotion activities and increasing the role of advertising in it marketing.

After some positive comments in this weekend’s Barron’s regarding LSI Logic (NYSE:LSI) $6.39 +3.7% and positive morning comments out of Salomon Smith Barney and raising of estimates on Intel (NASDAQ:INTC) $17.50 +0.45%, the broader Semiconductor Index (SOX.X) 338.55 –0.15% gives back morning gains from the 348 high.

Intel (INTC) is the second-most actively traded stock in the market, just behind networking giant Cisco Systems (NASDAQ:CSCO) $15.22 (unchanged). Earlier this morning, CSCO traded a session high of $15.52, which was 4-cents above it recent relative high of $15.48 set on November 21 and 6-cents above its December 2 intra-day high of 15.46. This observation gives traders the perception that there is 15.47. still some bullishness found in technology stocks, but a rather 15.48. cautionary approach being taken.

Sector action has turned quite mixed with a spackling of plus or minus 1.5 sector gains and losses. Fiber Optic (FOP.X) 58.59 +1.9% and Wireless Telecom (YLS.X) 61.88 +1.64% continue to exhibit sector leadership as has been witnessed in recent sessions. Utilities (UTY.X) 263.03 –1.91% are today’s sector loser, with Duke Energy (NYSE:DUK) $18.53 –11.76% leading sector losses after lowering guidance yet again this morning. As discussed in this morning’s market monitor, we will be monitoring Duke Energy (DUK) in the coming sessions for any type of continued weakness below the $18.32 level, which is where Duke place a secondary offering back on September 25. Since that offering, it has appeared that the underwriters have been able to defend that level, but with another round of lowered guidance, may become an action point for hedging activities if those bulls that took the secondary offering begin to fear some type of dividend reduction. It was noted in this morning’s 09:00 Update, that Duke Energy officials did say that given current guidance, the dividend was “safe.”

Jeff Bailey

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