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NASDAQ-100 Tracker gets new address December 1

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The AMEX-listed NASDAQ-100 Tracker (AMEX:QQQ) $37.92 -0.21% will get a change of address beginning December 1, 2004, when the "triple-Qs" move their official listing to the NASDAQ.

John Jacobs, CEO of NASDAQ Financial Product Services said the move is a win for NASDAQ because "we list all the companies in the NASDAQ-100, so the ETF will trade side-by-side with its component stocks."

The AMEX will continue to trade the QQQ on the basis of unlisted trading privileges or UTP. The move will not only boost the NASDAQ's trading revenue, but also the AMEX's bottom line because it will net the exchange additional revenue in market data fees.

Since its inception, the QQQ's daily trade volume has increased to 100 million per day from just 6.9 million in 1999 and currently represents roughly $22.1 billion in assets. The Qs are the second-largest ETF behind the S&P 500 SPDRs (AMEX:SPY) $116.88.

When the Qs move to their NASDAQ listing, the symbol will change to NASDAQ:QQQQ.

I've been trying out some nicknames, but "the Qs" will probably hold. "Quad-q" sounded good, "QQ-squared" a bit long, and while "4-Q" is short and to the point, that nickname is just too similar to 4-H (a program of the US Dept. of Agriculture).

NASDAQ-100 Tracker (QQQ) Chart - Daily Intervals

While I'm still not sure the QQQ ever traded $39.00 on January 20th (I think its a lasting bad tick, with $38.75 the recent high) I've placed a conventional retracement on the QQQ's chart and overlaid our MONTHLY Pivot analysis levels. Near-term support after this impressive run looks to be $37.69-$37.73.

The QQQ seemed to go into a "funk" back in February, and for some bullish % perspective, I went back an looked at various bullish % cycles we've been moving through and the QQQ achieved "bear confirmed" status on February 23. After that, we see the 50-day SMA suddenly became a point of resistance and the QQQ closed below that intermediate-term simple moving average for more than 5 sessions. I also went back to March 2003, and during the massive bull run from $25.00, the QQQ would violated the 50-day SMA on pullbacks, but always had a hard time closing below that intermediate-term SMA.

I've talked about the "3 strike rule" to trend, where after a trader draws three trends (up or down) and a security breaks our third-trend, its time to call it quits for the losing trend. It's probably just a coincidence, but the day after the NASDAQ- 100 Bullish % ($BPNDX) achieved "bull confirmed" status, my third trend (a cheater's trend) was broken to the upside.

With the NASDAQ-100 Bullish % ($BPNDX) now achieving "bull confirmed" status, the point and figure chart's bullish vertical count of $45, which was established in November of 2002 looks to be back in play.

A quick review of the Stock Trader's Almanac notes of historically bullish seasonality for the QQQ from October to January has shown an average gain of 13.9%. From the September 30 close of $35.14, a historical bullish target of $40.02 could be derive. The Stock Trader's Almanac also covers a longer period from October to June and an average gain of 18.9%. From a $35.14 benchmark, an additional upside target of $41.71 can be assessed. Hey! That might just mark end of the second leg of this bull market.

A couple of investors asked "why does this type of historical bullishness occur?" I'm not certain, but my explanation in the past has been that company's establish annual budgets, and as the end of the year draws near, it becomes a "use it, or lose it" play for many managers.

I remember when I was working for Mobil oil, we'd have big battles between the Rocky Mountain/California Offshore team and our friends that shared the mid-continent office space, for who got their hands on the leftover budget funds in the fourth quarter.

Remember our discussion regarding productivity and new jobs (Ask the Analyst "Economics 101). Should the rate of worker productivity ease and companies start hiring back more workers; we should see capital expenditures and budgets increase. This would be more of a "fundamental" reason behind the major indices recent gains.

Market Snapshot / Internals - 11/09/04 Close

It was a mixed trade for the majors today. Those little small- caps of the Russell-2000 Index ($RUT.X) held tough didn't they?

Shoot! I messed up this morning's 11:00 AM update, but when we fixed it, that's messed up the 01:00 PM Update when I tried to show this chart of the Russell 2000 iShares Growth (AMEX:IWO) $62.85 +1.19%, and forward trade guidance.

iShares Russell 2000 Growth (AMEX:IWO) - Daily Intervals

After establishing a partial bullish position in the IWO yesterday (Monday), I wanted to use some of the same retracement tools and techniques we've discussed in recent updates. The BLUE retracement on the IWO is conventional use of retracement where I've anchored the 0% at the recent Augusts lows and 100% at the recent April 2004 52-week high of $65.00. Now, my PINK retracement is anchored at the October 29 close, and I'm dragging its 100% retracement higher to $67.74, which would approximate a 12.9% historical average gain for seasonal bullishness that runs from November to the end of May. What this allows us to do is begin to look for areas that we might then add to our partial bullish position. Bulls like that "overlap" at $60.00 and right now, I'd view a "zone of resistance" from $62.52 to $62.96, which will be a next level to test for strength. Bulls can add to positions on any pullback near $60, or strength above $63.00.

U.S. Market Watch - 11/09/04 Close

Oil settled at its lowest price since September 22, and I wanted to quickly update traders and investors (not just oil/energy traders) on the Continuous Oil Contract ($WTIC) from Stockcharts.com. I also wanted to let investors know about the EIA's update to what it sees as average energy prices for heating oil, propane and crude as it would relate to the "tax" on consumers.

Remember! Tomorrow morning we'll get the EIA's weekly inventory figures. According to Bloomberg, the median estimate of energy analysts is for crude oil inventories to increase by 2 million barrels. Distillate inventories (of which heating oil and diesel fuel are derived) are expected to rise by 400,000 barrels, the first increase in eight weeks.

The U.S. Department of Energy raised its forecast for winter heating oil, propane and crude oil prices in the U.S. from its outlook a month ago.

Heating oil expenses for a typical Northeastern home this winter are now expected to average about 37% above last winter, up from the EIA's previous projection of a 29% increase. Residential heating oil prices are now seen averaging $1.88 a gallon from October to March.

Households using propane for heat are now seen paying about 26% more this winter, compared with the EIA's projection last month of 22% higher winter expenses.

Winter costs for natural gas-heated homes are expected to be around 15% higher than last winter.

Meanwhile, the Energy Department's statistics branch raised its projected fourth-quarter price for U.S. benchmark West Texas Intermediate crude oil by $5 to $51.09 a barrel. That's about $20 a barrel above the oil price in the same period last year.

OK.... the "one number" we can perhaps key on is the EIA's average price of $51.09. Let's use that as a psychological benchmark.

But let's tie that number back in with our point and figure chart that we've been tracking. Now, tonight I'm going to look at the conventional 25-cent box size. Get a little more detailed than the 50-cent box size we last reviewed in Wednesday's Index Trader Wrap.

Oil - Light Crude - Continuous Contract ($WTIC) - $0.25 box

Same "yellow zone" and oil's trade pretty much as we predicted. Isn't it? See where I mark the EIA's average quarterly price of $51.09. I point to a lot of the same price levels we've discussed in the 50-cent box charts, but I want to take the EIA's estimates of $51.09 (say $51.00) a little further.

If the EIA's mid-point, or average price for the quarter is $51.00 and we've already seen a high of $55.50, then I've got to think the "low end" of the quarter's range is about $45.50.

Oil traders will probably use the EIA's estimates to try and position themselves around, and if the quarter's "low end" of the range is $45.50, then we might be alert for some type of support at that level. The way I see the point and figure chart that darned 50-cent box size chart we looked at last Wednesday would have $45.50 as the bullish support trend, while my 25-cent chart above has support a little lower at $44.50.

I would think economists, and equity/bond market fundamentalists are also plugging in some of the EIA's quarterly energy estimates too.

Point here is that equity bulls that are monitoring oil prices along with their trades, they should be cognizant of some oil support from $44.50-$45.50.

Commodity traders are VERY supply/demand oriented. Do you see how recent "sell signals" (O below a prior column of O) has found selling on "bounce" back. This is a sign of net longs being a little more aggressive with their selling into rallies. It will last until a sense of equilibrium is found, or a shift in demand is seen.

First sign of meaningful strength on the 25-cent box scale is $49.75. My "trouble" level for equities, if not MARKET psychology would still be $52.00 or above. The $52.00 level is the "oh no, here we go again" level.

Pivot Matrix -

The Semiconductor Index (SOX.X) 415.80 -0.67% did see trade lower at its WEEKLY Pivot. While the QQQ didn't find any pivot resistance, I would only note that last week's high of $38.16 did find sellers unwilling to flinch.

With the FOMC announcing its decision on interest rates, and then issuing a brief statement, I'm setting a "downside alert" below the BIX.X's DAILY S2. The BIX.X traded in a very tight range, so I'll cut this interest rate sensitive group some slack where we still have WEEKLY Pivot and DAILY S2 correlation.

I haven't had a chance to look at any of Cisco Systems' (NASDAQ:CSCO) $19.75 -1.10% quarterly results, but last tick in after-hours was $19.24, and with the SOX.X trading WEEKLY Pivot today, we might expect some "tech weakness" at tomorrow's open.

Jeff Bailey

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