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Lack of Saddam lift indexes

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The major equity indexes lifted to their best levels of the session when Iraq's President Saddam Hussein failed to appear on Iraqi TV after earlier reports in the day suggested that Hussein himself would make an address. Instead, an Iraqi government official read a prepared statement.

The speculation that Saddam Hussein is perhaps seriously injured if not dead gave a lift to equities as the Dow Industrials (INDU) 8,062 +0.86% rallied to a session best 8,095, while the broader S&P 500 Index (SPX.X) 856 +0.96% rose to 859 on speculation of Saddam's welfare. Technology sectors turned green, giving a lift to the NASDAQ-100 Index (NDX.X) 1,025 +0.62% and a session-best 1,030.

Helping give a lift to equities was a reversal of fortune for Treasuries, which earlier this morning saw buying and now selling with the 10-year YIELD ($TNX.X) 3.859% rising to an afternoon high of 3.873%. The break above near-term YIELD resistance of 3.83%, which was found in both the DAILY and WEEKLY pivots from our pivot matrix is viewed as near-term bullishness by me, as this was a level I wanted to see broken to the upside to really begin thinking that the recent testing of Dow 8,000 can hold some important support.

Sector action has turned broadly positive, with the Gold/Silver Index (XAU.X) 65.60 -1.97% the only sector currently showing a loss of 1% or greater.

After a recent two-week surge, both the Morgan Stanley Health Provider Index (RXH.X) 274 -0.36% and HMO Index (HMO.X) 530 -0.92% are taking a rest today, with the HMO Index currently battling a trending lower 200-day SMA at 533 as resistance.

I've had several e-mail questions from subscribers regarding the price action in United Health (NYSE:UNH) $90.58 -1.18%. The only news I see is a Barron's Interview of Robert Chapman who believes the market is still "richly valued" and he has a strategic short position in UNH. His price entry or net cost was not disclosed.

With UNH recently breaking above its 200-day SMA technicals begin to looks longer-term bullish. Shorter-term 21-day SMA is moving higher at $87 as is the intermediate-term 50-day SMA of 85.

Shares of networking giant Cisco Systems (NASDAQ:CSCO) $12.92 -0.6% are today's most actively traded stock after breaking back below its trending lower 200-day SMA of $13.22 yesterday. Current technicals in play as support have an upward trend from October lows to recent relative low of $12.33 being tested as support today, but a break of this trend leaves near-term downside risk to $12.41, which is a downward sloping trend that I've recently profiled as a potential descending neckline of a head/shoulder top pattern. Also in play is the bullish support trend from the point and figure chart of $12.50. As previously noted, the current bearish vertical count of CSCO's p/f chart is $10.00 and recent downside surprises from various networking related stocks, still has me cautious the stock from the bullish side, and holding partial bearish positions with my downside target being $10.00.

Jeff Bailey

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