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Pakistan refutes rumors

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Stocks are holding near their highs of the session with the Dow Industrials (INDU) 7,719 +0.58% holding a 44-point gain after a "miraculous" recover from this weaker major market's WEEKLY S2 that may indeed have been a "buy level" when the Dow tested the WEEKLY S2 of 7,578, traded a session low of 7,562 and rocketed back higher after rumors began to circulate that two of terrorist Osama Bin Laden's sons had been capture and that a U.S./Pakistan team was tracking a caravan near the Afghanistan border, which is rumored to hold Osama Bin Laden.

News has been released from U.S. and Pakistan officials refuting these rumors, but the major indexes reached their best levels of the session within the past hour on talk that the White House's daily briefing is being pushed back until approximately 01:30 PM EST from its regular schedule. This has brought in some speculation that there may be an important announcement being made.

We've been following some of the U.N's Security Council meeting today, and much of the "talk" has been similar to recent meeting. Mr. Blix's report was that Iraq is beginning to "proactively" cooperate with the U.N.'s disarmament demands as outside pressures have been mounting. Secretary of State Colin Powell once again countered that the actions by Iraq are not "willful" and are due to the threat of military action, and that Iraq is in violation of weapons resolution and has run out of time.

Iraq has "clearly not" made the decision to disarm, U.S. Secretary of State Colin Powell said. He welcomed the signs of progress reported by Blix and by the chief nuclear weapons inspector, Mohammed ElBaradei, but insisted that diplomacy had run its course.

Trade volumes are "heavy" considering recent week's daily volume counts at this hour. NYSE volume has pushed the 758 million share mark, while NASDAQ volume is 835 million shares. This would compare to yesterday's NYSE 01:00 volume of 696 million shares and NASDAQs 714 million volume.

Market internals have NYSE breadth positive, with advancers outnumbering decliners by a 17 to 13 margin, while NASDAQ breadth is even at 14 to 14.

New 52-week lows on the NYSE are high, but have leveled out in the past hour. The number of stocks trading a new 52-week low on the NYSE is 156, which compares to 49 stocks trading a new high. NASDAQ breadth on this indicator shows 89 stocks having traded a new 52-week low, compared to 34 stocks trading a new 52-week high.

Sector action at this hour is mixed. Sector gainers have the Airline Index (XAL.X) 29.46 +2.79% and Biotechnology Index (BTK.X) 319.51 +2.27%, which held up the strongest at the open of today's trade showing gains. The S&P Retail Index (RLX.X) 251 +1.05% lags the Retail HOLDRS (AMEX:RTH) $66.28 2.52% gain.

Sector weakness has the Gold/Silver Index (XAU.X) 67.72 -2.89% today's leading sector decliner and despite the weaker open for the major indexes, this index never showed a bid this morning and has tested upward trend from its July lows of 55.00 this morning. Not long ago, we had alerted "gold bugs" that according to Dorsey/Wright and Associates, their sector bullish % for the precious metals sector (BPPREC) was at more "overbought" levels of 72% and had reversed lower into "bear alert" status at 70%. Current reading remains "bear alert" at 61.29%. Sector bulls looking to play the upward trend would be well served to follow with stops at XAU.X 65.00.

While the major equity indexes have seen a reversal from their morning lows, Treasuries did see a reversal of strong buying at their open. The shorter-dated 5-year holds gains with YIELD ($FVX.X) at 2.569%, after a morning low YIELD 2.501% set a 40- year low. The longer-dated 10 and 30-year trade relatively unchanged, with the benchmark 10-year YIELD ($TNX.X) now down fractionally at 3.639% after a session low spike of 3.578%, that didn't quite test its October low YIELD of 3.559%.

Most actively traded stocks have Cisco Systems (NASDAQ:CSCO) $13.17 -2.29% turning 67 million shares, Intel (NASDAQ:INTC) $16.04 -3.95% trading 66 million shares, and Microsoft (NASDAQ:MSFT) $23.52 +1.07% at 46 million shares.

NYSE volume leaders that aren't penny stocks have General Electric (NYSE:GE) $24.19 +1% trading 19.5 million shares and Ford Motor (NYSE:F) $7.30 -2.01%, which is approaching the penny stock level of $5.00 turning just over 16.8 million shares.

Jeff Bailey

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