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Rally has Internet retailers at new highs

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Trading curbs are in as the Dow Industrials (INDU) 8,052 +2.4% holds a 190-point gain, which is above the 170-point level where program trading curbs are limited, as stocks have rallied strong on thought that a U.S./U.K.-lead war with Iraq is soon at hand.

Stocks reversed from their lows on work that the a new U.S/U.K./Spain resolution will not be submitted to the U.N. and that President Bush will address the nation later this evening at 08:00 PM EST. The news of President Bush's address also comes after the U.S. has asked U.N. weapons inspectors to leave Iraq.

After having fallen near their lows of the session, just prior to the U.S. markets opening for trading, European bourses rallied strong into their close, with the U.K.'s FTSE-100 finishing with a 120-point gain and 3.35% rise by session's end. Other bourses had France's CAC-40 gaining 3.3% and Germany's DAX closing up 3.58%.

The Semiconductor Index (SOX.X) 322 +5.63% remains today's sector winner in the first half of the session, with the Networking Index (NWX.X) 147 +4.15%, Fiber Optic (FOP.X) 51.44 +4.29% holding near their best levels of the session. The Securities Broker/Dealer Index (XBD.X) 375 +4.12% has rebounded strong and challenges of one of today's top spots for sector winners.

While tensions for war with Iraq come to a head, today's action from the bond and stock markets here in the U.S. certainly look like that of "relief," that some type of resolution with Iraq is near. Certain Pentagon watchers expect some type of military action to take place within the next 72-hours, using President Bush's comments that the U.S. would give weapons inspectors 48- hours to evacuate Iraq as an early timetable for action.

Notable new 52-week highs in today's market certainly has an Internet theme with Yahoo! Inc. (NASDAQ:YHOO) $22.06 +6.62%, eBay Inc. (NASDAQ:EBAY) $86.08 +2.64% and Amazon.com (NASDAQ:AMZN) $25.87 +4.69% bolting to new 52-week highs. In today's market monitor at OptionIvestor.com, we looked at the bullish vertical counts of these three stocks and YHOO looks to have the most upside room to its bullish count of $33.50, as EBAY is getting close to its bullish vertical count from our point and figure charts of $91, while AMZN has come within $0.50 of its $26.00 bullish count. While these counts may be exceeded, and sometimes never met, the bullish counts give traders the ability to assess potential upside reward against risk to a point and figure sell signal, which would negate the bullish counts.

A rather impressive short-squeeze along with a catalyst from potential impact of burning of oil fields in Iraq by Saddam Hussein has share of Boots&Coots (AMEX:WEL) $1.32 +125.4% as on of the most actively traded stocks in the market, as well as the stock achieving a 52-week high. In today's 11:00 AM EST at OptionInvestor.com, I've suggest that this past profiled SPECULATIVE bullish play have traders taking at least 1/2 of their positions off the table to mitigate risk in the trade.

Another stocks that we've discussed in Flour Corp. (NYSE:FLR) $33.97 +5.79% is building gains and has moved above its bearish resistance trend. Traders that have taken 1/4 or 1/2 bullish positions in this name from prior profile can look to round up to full positions at current levels as the bullish vertical count continues to grow to $46.

In this weekend's "Ask the Analyst" column, we discussed how the Semiconductor Bullish % (BPSEMI) from Dorsey/Wright and Associates had reversed up into "bull alert" status from a low level of bullishness. I like shares of Intel (NASDAQ:INTC) $17.99 +4.77% as an "early" entry for bulls to get some exposure to the sector and look for a trade at $18.50 to get this semiconductor bellwether's point and figure chart back on a buy signal. I'm suggesting partial positions here and prefer the October $20 calls (NQJD) $1.70. Should Intel (INTC) trade the $18.50 mark, this would give us an initial bullish vertical count of $26.00.

With the NASDAQ-100 Index (NDX.X) 1,068 +3.69% looking to challenge it January relative highs of 1,100, I'm looking for some internal "confirmation" from its bullish % ($BPNDX) from www.stockcharts.com to reverse up into "bull alert" and gives the semiconductor sector as one of the more "oversold" sectors in technology being a group of technology that looks to benefit to the upside, not only from some further short-covering, but attracting bullish dollars.

Treasuries have seen a reversal of fortunes from early this morning and selling in the 10-year Treasury has its YIELD ($TNX.X) shooting higher at 3.793%. Today's aggressive selling begins to look very similar to that found on October 11th of last year, which is a date we discussed in prior Index Trader Wraps at OptionInvestor.com, and certainly looks as if a large asset allocation away from Treasuries has taken place today and should it continue to unravel on "bullish" response to President Bush's address and thoughts of a "quick and successful outcome" on war with Iraq, could continue to bolster equities in the coming weeks.

Jeff Bailey

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