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SOX.X holding 408

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The Semiconductor Index (SOX.X) 420.44 +3.09% was today's sector winner, while the Dow Transports (TRAN) 3,034.72 -1.69% extended yesterday's reversal as worries over a potential lack of production from Yukos had September Crude Oil futures (cl04u) $41.46 +2.16% holding firm above the $40 mark.

Pivot Analysis Matrix - Daily Intervals

An upbeat outlook for Q3 from Altera (NASDAQ:ALTR) $19.73 +5%, in what tends to be a seasonally weak quarter for the programmable chipmaker had the SOX.X refusing to give up the 408 level for a fourth-straight session, where the ONLY way I can find support marked at that level is by taking a conventional retracement from the March 2003 pullback low to the recent high, where that retracement bracket would have 50% retracement marking current lows.

As each day passes, that 412 level and bearish price objective from the head/shoulder top pattern begins to eat away at some bearish traders.

Closing Internals - 07/22/04

Market internals finished negative at the A/D line, and it took some energy from buyers to get the major indices back above unchanged by the close.

Near the mid-May inflection lows for the NASDAQ Composite (COMPX) of 1,875, NH/NL indications were 12:196, where today's action looks similar, with bearish leadership firmly in control.

NASDAQ Composite (COMPX) - Daily Intervals

Altera (ALTR) may have saved the day for the NASDAQ, and with NH/NL indications almost identical to those found on May 10th, it may well take a MINIMUM of two weeks, give or take a few sessions for the COMPX to show any sign of strength, where there may still be some downside to 1,841, even if we are just seeing some trough lows from the NH/NL indications. So far, the COMPX hasn't wanted to CLOSE below 1,865 level, which was the reversal close found to the far left of the COMPX chart, where I've attached a conventional BLUE retracement low from.

If the COMPX is going to make it back to 2,050 as it did in late June, then its got to show a close of above 1,921.

I profiled a bullish trade in the QQQ Tuesday evening for 1/2 position, "certain" we wouldn't take out last week's low. That was a mistake, and had I waited for a close above 1,921 COMPX, and let some NH/NL bullish leadership present itself, then things might have unfolded similar to that found on May 25th.

Jeff Bailey

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