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Flat-lined Ahead of Earnings

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Traders still monitoring the market can be commended for their patience and attentiveness. In spite of positive news (both economic and war-related), the major averages have been meandering in a directionless fashion for several hours. Nobody seems to want to place any bets with earnings season kicking off in earnest next week.

Sector indices:

As shown by the list above, the majority of sector indexes are trading within a percentage point of break-even. There is, however, some interesting divergence in the tech groups. The semiconductor index (SOX.X) has extended its downward march from Monday's high of 327 and is underperforming the NASDAQ with a loss of 1.8%. Also showing relative weakness is the biotech index. Steady downward movement this week has pushed the BTK.X below support at 330, near the 50-dma. The daily chart shows additional underlying support at 320 and 310.

Contrasting those displays of bearishness are the networking index (NWX.X) and internet index (INX.X). The former is being helped along by a 1% gain in CSCO. Meanwhile, residual bullishness from the recent positive YHOO news seems to be keeping a bid under the INX. One notable sector performer is Netease.com (NTES), a Chinese internet portal stock that's zoomed ahead to new all-time highs. Shares of Ask Jeeves (ASKJ) are also trading at long-term highs. Investors may be betting on an eventual buy-out of the search engine company, similar to what happened with Infoseek and Lycos in 1999/2000.

In the news this afternoon, Barr Labs (BRL) announced that it had received FDA approval to market and produce a generic version of Accutane, a drug manufactured by Roche Pharmaceuticals. The stock, which recently rolled over from long-term resistance at $60.00, isn't seeing much of a reaction to today's development.

Kent Barton

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