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Industrials finish flat, while small caps test May lows

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Gains in Verizon (NYSE:VZ) $36.50 +3.34%, Microsoft (NASDAQ:MSFT) $28.66 +2.24% and SBC Communications (NYSE:SBC) $24.75 +2.18% offset losses in Coca Cola (NYSE:KO) $44.30 -1.92%, Pfizer (NYSE:PFE) $31.74 -1.73% and 3M (NYSE:MMM) $81.63 -1.19% where the Dow Industrials (INDU) 9,961.92 finished unchanged, but small caps as depicted by the Russell 2000 Index (RUT.X) 533.49 -1.06% threaten their May 17th relative lows of 530.68 with the bulk of sectors closing lower as the Democratic National Convention gets underway in Boston.

Market Snapshot / Internals - 07/26/04 Close

Stocks attempted a morning bounce, but the hangover from last week's declines had buyers of many 4 and 5-lettered NASDAQ-listed stocks pulling the covers over their heads. Not helping continued weakness among technology was Bears Stearns saying its research showed chip foundries spending in Q4 would increase just 5% compared to earlier forecasted 10% levels.

Pivot Analysis Matrix -

BIG weekly ranges exist this week for the major indices, and at most, I think WEEKLY S1 to WEEKLY R1 defines a range for the MAJOR indices.

The S&P Banks Index (BIX.X) 347.10 +0.18% scratched out a fractional 0.65 point gain today, while the Securities Broker/Dealer Index (XBD.X) 116.46 -0.57% edged down 0.67 points, and tries to stabilize above its recent July 19 relative low of 112.97.

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

A "dead cat bounce" in my opinion would be SPX back toward 1,100, while a more bullish move would present itself above WEEKLY R1 (1,107) where past declines to 1,087 (weekly 61.8% retracement) have seen bullish gains build to 1,141 on closes back above 1,107 two separate times.

It may appear impossible to imagine SPX at 1,140 any time soon, and I would have to think to get there, then NH/NL breadth at BOTH the NYSE and NASDAQ would have to see bullish crossovers of their 5-day's above 10-day NH/NL average ratios.

Jeff Bailey

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