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Bearish leadership resumes at NASDAQ

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Higher oil prices brought by supply disruptions from recent hurricane activity near the Gulf of Mexico as well as Nigerian militants of an armed Islamic extremist group vowing to step up it rebellion against that country's government sent November Crude Oil futures (cl04x) higher to trade the $50.00 level late Monday, where the fallout of this weekend's destruction from Hurricane Jeanne weighed stocks lower.

U.S. Market Watch - 09/27/04

The Dow Industrials (INDU) closed back below the 10,000 level despite a mid-session attempt to bring things back to unchanged. Sellers seemed determined to have the Dow close back below 10,000 and peg the major indices lower to their close as the NYSE Short Term Trade Index (TRIN) 1.62 rose to the close depicting strong sell side volume in the final hour of trade.

Market Snapshot / Internals - 09/27/04 Close

Internals were weak from the opening bell where recent session's action along with today's has the NASDAQ's 10-day NH/NL ratio reversing back lower to 65.3%, its first signal that bearish leadership is reversing since this indicator signal a more meaningful resumption of bullish leadership at 24% on August 23.

NASDAQ Composite 52-week High/Low 10-day Avg. Chart - 2% box

Today's 78 new lows at the very broad NASDAQ Composite (COMPX) is the highest number of new lows dating back to August 16th's 119, suggesting some renewed softening at the bottom, while 46 new highs is anemic.

It has been our observation that the NASDAQ leads weakness and it would currently take a NYSE 10-day NH/NL ratio of 84% for that very broad market to show some sign that bullish leadership softens.

NASDAQ Composite Index ($COMPX) - Weekly Intervals

The NASDAQ Comp. (COMPX) gapped below its rising 21-day SMA (1,879), which served support into Friday's close and unless oil prices reverse their gush higher, the NASDAQ Composite (COMPX) looks vulnerable to its longer-term upward trend at 1,800, with the 50-day SMA (1,854) a near-term level of SMA support.

For pivot analysis traders, you'll want to know that NASDAQ Composite's WEEKLY Pivot is 1,895.49. On Wednesday of last week, the day after the FOMC announced its decision on interest rates, the COMPX moved below its WEEKLY S1 of 1,895 and found selling on each attempted bounce at that level.

Weekly Pivot Levels for the NASDAQ Comp. are 1,850, 1,865, Pivot at 1,895.50, 1,911 and 1,941.

Pivot Matrix -

The S&P 100 Index (OEX.X) 531.02 -0.62% traded and closed below its MONTHLY Pivot for the first time today. Market cap heavyweight and Dow component Citigroup (NYSE:C) $43.61 -1.22% (fourth-largest market cap weighting) has been on the defensive and trades well back from its recent bounce highs of $47.50 after Japan's financial regulators ordered the company to close its Japanese private banking offices after uncovering a series of problems, including a failure to prevent suspected money laundering.

General Electric (NYSE:GE) $33.12 -0.86% (largest market cap weighting) slipped back below its 21-day SMA ($33.46) on Friday, but managed to hold above its 50-day SMA ($32.96) by today's close, while Exxon Mobil (NYSE:XOM) $47.96 +0.27% has surpassed Microsoft (NASDAQ:MSFT) $27.23 -0.21% (third-largest market cap weighting) once again to hold the second-largest market cap weighted stock in the OEX.

Jeff Bailey

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