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Buffett begets buyers boycott

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The major indices finished near their lows of this session, with some notable technical damage done to the NASDAQ and broader technology as the Oracle of Omaha, Warren Buffett, said he finds little value in the current market environment, and warned investors in Berkshire Hathaway (NYSE:BRK.A) $94,209.99 +1.3% that results in future years will most likely be worse than in past years.

While Mr. Buffett's comments usually catch an investor's ear, Mr. Buffett's continued prognostications since the early 1990's have shown checkered results, especially in 2003 where Mr. Buffett found little value.

Even Berkshire Hathaway defied Mr. Buffett's predictions. For 2003, earnings nearly doubled to $3,531.32 per share and its book value increased by 21% the same year.

Mr. Buffett's comments regarding valuations, and his having a difficult time finding bargains that made sense, has Buffett and his shareholders sitting on roughly $44.2 billion in cash, just waiting for the right opportunities to invest.

Buyer among technology seemed disappointed in Mr. Buffett's "hard to find value" comments, where the Semiconductor Index (SOX.X) 485.27 -3.76%, Disk Drive Index (DDX.X) 127.26 -3.04% and Networking Index (NWX.X) 284.81 -2.29% paced sector declines, where by session's end, only the Oil Index (OIX.X) 341.08 +0.27% finished the day with a gain.

Market Snapshot/Internals - 03/08/04 Close

Today's volume on the NASDAQ of 2.013 billion shares was brisk, and heaviest since February 24th, when the NASDAQ Composite (COMPX) 2,008.78 -1.9% traded 2.04 billion shares, and traded its most recent relative low of 1,991.05. Today's trade and close was definitely DIVERGENCE from the mid-August timeframe we have been making comparisons against.

NASDAQ Composite (COMPX) Chart - Daily Intervals

The COMPX looks to undercut our upward trend, which should be stronger than the shorter-term RED downward trend from the January 26th high. However, weakness in the Semiconductor Index (SOX.X) and large-cap NASDAQ-100 Index (NDX.X) 1,441.12 -2.16% provide an alert that the COMPX's upward trend is vulnerable to being broken to the downside.

Semiconductor Index (SOX.X) - Daily Intervals

My profiled swing trade short in the Semiconductor HOLDRs (AMEX:SMH) $39.57 -4.07% came very close to being stopped out on Friday at $41.85, when the SMH traded a session high of $41.80, but sector bears find the lower low in both the SMH and SOX.X a sign of weakness. In this weekend's Ask the Analyst column, the Semiconductor Bullish % (BPSEMI) was "bear confirmed" and today's trade saw the bullish % fall further to 57.25%. As a sector bullish % benchmark; when the SOX fell to approximately 470 in December, the Semiconductor Bullish % (BPSEMI) from Dorsey/Wright and Associates fell to approximately 54%. I'm currently looking for some bearish swing trade profits in the SMH should the SOX trade 475, where we might look for a near-term bounce back higher to SOX 495 for another short entry, especially if the Semiconductor Bullish % (BPSEMI) has registered a 52% reading.

NASDAQ-100 Tracking Stock (QQQ) - Daily Intervals

The SOX and QQQ begin to look very similar, and have a dragging effect on the broader NASDAQ Composite, which is also comprised of mid and small-cap stocks.

S&P 500 Index (SPX.X) Chart - Daily Intervals

The SPX set a new multi-year high on Friday, so I find it difficult to say there is technical weakness. Still, it is somewhat apparent that large-cap technology may be having negative impact on the SPX, where I would have to view the MONTHLY Pivot of 1,142 as an important near-term support level, where support buying at that level could find the SOX.X and NDX.X firming on a near-term basis.

Dow Industrials (INDU) Chart - Daily Intervals

After rebounding above the 10,500 level in early February, the INDU went on to trade a new multi-year high of 10,750, but last week's slip below the mid-point of our regression and short-term downward trend has 10,650 a more formidable level of near-term resistance, as well as the MONTHLY Pivot of 10,590 and WEEKLY Pivot of 10,605.

While 6 of the 10 highest price Dow Components saw fractional gains, it was a 1.92% decline in IBM (NYSE:IBM) $94.59 (second highest priced) and 1.25% decline in 3M (NYSE:MMM) $77.67 -1.25% that left the "head" of the Dow inchworm trying to grab hold, as the "tail," or smaller priced components suffered with 9 losers and just 1 winner, with the tail slipping notably. INTC -4.31%, EK -3.45%, GE -2.86%, MSFT -1.97% and HON -1.31%.

Pivot Matrix -

This morning's highs in the SOX.X and NDX.X found suspicious selling at their respective MONTHLY Pivots, and in my mind, becomes a rather formidable level of resistance, which may have the major indices gains limited until broken.

Jeff Bailey

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