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Index Wrap

Bulls thrive above 545

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Stocks traded sideways in Monday's session as buyers and sellers contemplated last week's impressive rally for equities, where demand for equities was so strong, the broad S&P 500 Bullish % ($BPSPX) achieved bull confirmed status on Friday.

While the major indices treaded water for the bulk of the session, with the S&P 500 Index (SPX.X) 1,164.89 -0.10% edging down just more than 1-point, bears were raiding the Treasury market ahead of Wednesday's FOMC meeting, where most believe Friday's much stronger than expected nonfarm payroll numbers for October will have the Fed raising its fed funds rate 25 basis points to 2.0%.

Many Fed speakers over the past month have suggested that incoming economic data would have more of an influence on their decision than the price of crude.

December Crude Oil futures (cl04z) settled down 52 cents, or 1.04% at $49.09 on Monday as U.S. and Iraqi forces readied to mount an assault on the city of Fallujah, a stronghold for recent militant activity.

U.S. Market Watch - 11/08/04 Close

On Friday we saw a hefty 461 new highs posted on the NYSE, where volume was brisk at just over 1.72 billion share. Today's 210 new highs and lighter volume of 1.3 billion would suggest buyers and sellers were very selective with decisions and nibbling away rather than taking big bites. NASDAQ volume also abated from recent daily averages of 1.82 billion and while the number of new highs eased to 154, new lows were even with Friday's 25.

U.S. Market Watch - 11/08/04 Close

The U.S. Dollar Index (dx00y) 84.09 +0.09% edged off fresh multi- year lows found on Sunday, while the juggernaut Dow Transports (TRAN) recorded another multi-year high in Monday's session. The Utility Index (UTY.X) also traded a multi-year high, while the Defense Index (DFX.X) closed at an all-time high and posts a gain for the fourth-straight session.

Brokers were notably weak in Monday's session after the New York Times said the SEC was investigating pricing by several brokers on suspicion that they failed to secure the best possible price for stocks they were trading for their customers. Some of the firms mentioned were MWD $52.93 -1.52%, MER $55.82 -1.06%, AMTD $13.16 -5.11%, SCH $9.63 -0.92% and ET $12.77 -3.18%.

S&P 100 Index (OEX.X) - Daily Intervals

Buyers will most likely be aggressive on any OEX pullback at the 545 level. While the broader S&P 500 Bullish % ($BPSPX) achieved "bull confirmed" status on Friday, so did the narrower and large cap S&P 100 Bullish % ($BPOEX). With internals confirming the externals, bulls and bears will be competing for stock.

Pivot Matrix -

The Semiconductor Index (SOX.X) is the only equity-based index in our pivot matrix to not see trade at its MONTHLY R1. Advanced Micro Devices (NYSE:AMD) $17.37 +1.63% holds its analysts day on Friday and the Semiconductor Book-to-Bill report isn't scheduled to be released until Thursday November 18. I feel the pressure building in the semiconductors, where I think resolution will be to the upside. As of Friday evening, Dorsey/Wright and Associate's Semiconductor Bullish % (BPSEMI), which rose 1.25% on Friday was reading 33.13% and hadn't yet achieved "bull confirmed" status at 34%.

Jeff Bailey

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