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Stocks were just off their highs at the 01:00 EST Update and now they are at there lows of the session. A sell-off that looks to have been triggered by Iraq's Ambassador to the U.N., Mohammad Al-Douri saying that Secretary of State Colin Powell has wasted the U.N.'s time today as allegations of Iraq having possession of weapons of mass destruction lacked any names of sources or real proof that weapons exist in Iraq.

The market's response to the statements by Iraq's Ambassador certainly look to have once again turned intra-day tide toward the thought that Iraq challenges anyone to show proof, or reveal named sources to confirm U.S. allegations.

However, as Secretary Powell stated during his address to the U.N., surveillance tapes of Iraqi phone conversations were obtained by sources that risked their lives to obtain the information. Colin Powell's careful, but pointed comments regarding voice tapes of Iraqi conversations, hints that U.S. intelligence may still have intelligence gatherers in Iraq, and any revealing of names of those sources would most likely be of great risk to those sources.

While the major indexes declines are not great, the rather quick reversal of gains into losses has been rather quick. What took the bulk of a day and a half of trading has been erased in the last hour.

The Dow Industrials (INDU) 7,977 -0.45% currently shows a 36- point decline after trading a session high of 8,152, which fell just short of weekly R1 of 8,167. The rejection from the 8,150 level today now marks a third failed rally attempt at this level dating back to January 29th. Likewise, the Dow has been able to find support at/near the 7,950 level on three separate occasions during the same time period. This currently creates range of trade over the past week of roughly 200-points. It's my feeling that resolution of the range will be to the downside as I don't think there was any weakening in the U.S.'s position after today's U.N. address.

There really hasn't been a group of stocks that has been able to withstand the late round of selling, except for the homebuilders as depicted by the Dow Jones Home Construction Index (DJUSBH) 322.24 +1.68%, which now holds today's sector winner spot.

Earlier gains in the Semiconductor Index (SOX.X) 271.02 +0.47% have largely been erased.

Shares of Cisco Systems (NASDAQ:CSCO) $13.25 +0.44% are holding gains and remain today's most heavily traded stock at 105 million shares traded. The longer-term 200-day SMA of $13.54 held resistance and I'd view a close below today's open of $13.31 as bearish for the stock with downside risk near-term to $12.52.

What had been a rather light volume session has seen an increase with NYSE volume now over the 1.2 billion mark, while NASDAQ volume is running 1.1 billion shares traded.

Breadth that had been positive has now turned slightly bearish with decliners outnumbering advancers by a 5 to 4 margin. NASDAQ breadth is similar with decliners outnumbering advancers 5 to 4.

Slight divergence is seen in the new highs versus new lows category. While slightly positive, the NYSE is showing 47 stocks having traded a new 52-week high compared to 46 stocks trading new 52-week lows. NASDAQ is weaker in this category with just 41 stocks having traded a 52-week high compared to 70 stocks trading a new 52-week low. One note here that I did not mention in yesterday's wrap, was that for the first time this in (according to my notes), 100 stocks on the NASDAQ traded new 52-week lows, and I my records for this year don't show the NASDAQ having traded this many new lows this year. To me, this represents some further weakness taking place in many of the weaker NASDAQ issues, and is sign that there are not than many aggressive bulls trying to pick bottoms in 4 and 5-lettered stocks.

Jeff Bailey

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