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U.S. markets trade session lows as European markets tank

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The major U.S. equity indexes trade at their lows of the morning and continue to look vulnerable, despite the fact that the Dow DIAMONDs (AMEX:DIA) $74.82 -0.62%, which track the Dow Industrials (INDU) 7,468 -0.74% has achieved its bearish vertical count of $75 from its point and figure chart.

Today's achievement by the DIA to its bearish vertical count now has us turning closer attention to the S&P 100 Index (OEX.X) 402.94 -0.92% and its bearish vertical count of 390. Both the DIA and OEX were two "indexes" that achieved bearish vertical counts late last fall, marking lows before the November/December rally.

While the major indexes suffer declines again today in the U.S. foreign markets are getting pummeled on continued geopolitical concerns and squabbling over how to handle the Iraq crisis. An overnight assassination of the Serbian prime minister has sent European markets plunging lower.

Germany's DAX is under heavy selling pressure as it has fallen 106 points, or 4.6% in today's session, while France's CAC 40 has declined 90 points, or 3.62%. The United Kingdoms FTSE 100 is plunging lower by 171 points, marking a staggering 4.96% decline.

Here in the U.S. shares of networking stock Black Box (NASDAQ:BBOX) $28.51 -27.13%, which was a recently profiled bearish play at OptionInvestor.com is today's leading market decliner after the company reduced its quarterly earnings outlook. In this morning's market monitor, I mad note that BBOX's point and figure chart had a bearish vertical count of $26.00, and both Mark Philips and I have suggested that bearish traders in BBOX either look to lock in profits on today's plunge, or lower stops to a MINIMUM of $30 for the underlying stock.

The earnings warning from the BBOX has brought some cautionary comments from analysts regarding Cisco Systems (NASDAQ:CSCO) $12.67 -2.76%, which in recent sessions we have made note has fallen below its longer-term 200-day SMA. This morning, Solomon Smith Barney says that recent warnings from Dimension Data out of Europe and last night's warning from BBOX has Cisco's April quarter looking suspect. I agree and have taken a small put position in the Cisco July $12.50 puts (CYQSV), which would expire after CSCO's next quarterly earnings, which is scheduled around May 6th. CSCO's May 6th quarterly earnings date is NOT a confirmed date at this point, but the company should report earnings somewhere around that time.

On the U.N. Security Council front, there has been some talk late this morning that Pakistan may now have moved from "abstaining" from a U.N. Security vote, to siding with the U.S./U.K on their recently proposed resolution and may now issue a "yes" vote.

CNN has just reported that the Bush administration believes it is just one vote shy of having 9 of 15 votes needed on a U.N. Security Council resolution, that would set a Monday deadline for Iraqi compliance.

Jeff Bailey

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