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Index Wrap

CONVENTIONally low volume

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Stocks traded broadly lower with traders seemingly nonexistent as neither the NYSE nor the NASDAQ was able to breach the one billion share mark as the "Wall Street elite" avoided showing up for work as the Republican National Convention begins in New York City under extremely heavy security.

U.S. Market Watch - 08/30/04 Close

While volumes were light, today's trade was largely defensive with bonds finding buyers, while stocks were basically shut out.

The Biotechnology Index (BTK.X) 491.09 -3.04% hit its session lows in early morning trade, and finished there by the close where sector news was largely negative.

MedImmune's (NASDAQ:MEDI) $23.76 -2.98% shares slipped back under their trending lower, but trying to round flat 200-day SMA ($24.05) after the company terminated its Phase II testing of Vitaxin. But it was Accredo Health's (NASDAQ:ACDO) $22.05 -20.68% fiscal 2005 earnings warning that triggered the bulk of the sector's declines after Accredo warned that earnings would suffer as Medicare reimbursements for United Therapeutics' (NASDAQ:UTHR) $29.85 -6.68% Remodulin drug, for treatment of a rare lung disease called pulmonary arterial hypertension, fell short of purchase costs.

The news had biotech and major pharmaceuticals under selling pressure as inventors contemplated the implications that future Medicare reimbursement limitations might have on drug pricing leverage.

Despite some dollar weakness, the AMEX Gold Bugs Index ($HUI.X) as well as industrial metals stocks gave back early morning gains as crude oil traded lower on news that earlier reported supply disruptions from the southern pipelines in Iraq had not been disrupted, where according to the Agence Rance-Presse, production remained stable at approximately 1.5 million barrels per day.

Earlier in the morning, a senior Iraqi oil official said pipelines in southern Iraq had come to a complete halt after insurgent attacks.

Market Snapshot / Internals - 08/30/04 Close

Internals at the advance/decline were negative throughout the session and closed that way where those traders that did show up for today's session were obviously in a non-buying mood.

Despite negative TRIN and VIX.X indications (above their DAILY Pivots and TRIN above 1.0) stocks held firm until lunchtime, then started slipping to the close.

The S&P Banks Index (BIX.X) 359.35 -0.18% edged higher to the 02:00 mark, trading a session best 361.14, but finished at its lows of the session as modest gains were fully erased in the final 2 hours of trade.

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

We're right back where we started last week's trade where the cart carrying last week's gains may well be bound between overlapping support (1,093) and resistance (1,107) in what most likely surmounts to the lightest weekly volume trade of the year.

This Friday we'll get a look at July nonfarm payrolls, where last month's release revealed a very disappointing and weak monthly payroll growth of just 32,000, where both May and June's figures were revised lower from previously higher reported levels.

Today's economic data had personal incomes rising just 0.1% in July, while consumers dipped into their savings as personal spending rose 0.8%.

The S&P Retail Index (RLX.X) 389.43 -0.74% found resistance at its conventional 61.1% retracement (393.10) on Thursday and Friday of last week, and while weaker today, holds above important near-term support and its rounding flat 200-day SMA (386.88) and 50% retracement (386.78), which I might eyeball as correlative to SPX.X 1,093.

It would have to be my thinking that the retailer moved up in advance of today's July personal spending figures. For the retailers to break the 393 barrier, then I would have to think a stronger-than-forecasted nonfarm payroll number is needed, where that might help solidify thoughts that consumer spending can continue to show gains as more Americans go back to work.

A quick review of this year's nonfarm payroll figures would have the SPX hitting its high in early March as February nonfarm payrolls were being released and showing just 83,000 jobs added.

It could be a difficult speech for President Bush on Friday, and a hard pill for equity bulls to swallow, if the economy hasn't produced at least 100,000 new jobs in August.

Should payrolls exceed 200,000 like that in May, then with oil prices abating, investor sentiment should be able to boost the SPX above the 1,107 level with ease.

Pivot Analysis Matrix -

I profiled a day trade long for the QQQ as the TRIN gapped higher to open at its WEEKLY R2 with an opening tick of 2.22, just shy of my WEEKLY R2 calculation, when the QQQ began edging off its morning lows of $34.02 and WEEKLY S1 at QQQ $33.10. The best the QQQ could do was three tries at $34.23 and I could never get my target back to the WEEKLY Pivot of $34.35.

On a light volume session, I was quick to pull the plug for a fractional gain at $34.14 as the Semiconductor Index (SOX.X) broke to a session low at 376.00 this afternoon.

Jeff Bailey

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