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Treasuries close near highs in defensive move

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A bullish move in Treasuries just ahead of their 03:00 PM EST close sent stocks to new session lows in what looks to be a defensive move, most likely in relation to Iraq's continued defiance of U.N. weapons findings, in which chief weapons inspector Hans Blix recently changed his perceptions that Iraq was beginning to cooperate with inspectors. Earlier today, Times of London reported that Mr. Blix demanded that Iraq should begin destroying its al-Samoud 2 missile by Saturday and if Iraq fails to do so, Blix would call an emergency meeting of the Security Council.

The Dow Industrials (INDU) have extended losses to 100-points, the S&P 500 Index (SPX.X) is off 9-points at 830, while the tech- heavy NASDAQ-100 Index (NDX.X) 980.42 is down 18 having just traded its DAILY S1 level of support.

Share of semiconductor-equipment maker Novellus Systems (NASDAQ:NVLS) $28.66 -3.4% has darted to a session low ahead of tomorrow's mid-quarter update. In a research note released just this afternoon, Thomas Weisel Partners said it does not expect Novelus' management to revise its Q1 guidance during tomorrow's meeting, but says that current order exposure to DRAM manufacturers is a primary concern since memory prices have fallen precipitously over the past few weeks. Weisel said that while it hasn't heard of any push-outs from Samsung, Infineon or Micron Technology, they believe capital budget commitments could falter if prices don't rise in the near future.

Shares of Hewlett Packard (NYSE:HPQ) $15.38 -15.4% continue their intra-day slide and now trade well-below their flat 200-day SMA of $16.15 and move up to today's number-three most heavily traded stock. Bearish traders that may have played the stock ahead of last night's earnings for a short-term trade may look to take some gains off the table as HPQ's point and figure chart shows the bullish support trend of $15.50 being tested here. Still some downside risk left to the stock's bearish vertical count of $11.00.

Utility stocks dipped to a weekly low as depicted by the Utility Index (UTY.X) 234.47 -1.65%. While not a component of the Utility Index, shares of Allegheny Energy (NYSE:AYE) $5.48 shed 33% of their value on heavy volume of 15 million shares (avg. daily volume is 2 million shares traded). Earlier today, the company announced it had arranged new, restructured credit facilities, totaling $2.4 billion in order to help with current cash shortfalls.

Jeff Bailey

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