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Daily Newsletter, Monday, 11/10/2003

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The Option Investor Newsletter                   Monday 11-10-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Monday Markets Misstep
Futures Wrap: Orderly decline
Index Trader Wrap: Better late than never?
Traders Corner: The BP Boogie – A Few Corrections


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     11-10-2003            High     Low     Volume Advance/Decline
DJIA     9756.53 - 53.26  9824.38  9736.90 1.49 bln    950/1875
NASDAQ   1941.64 - 29.10  1973.08  1939.73 1.74 bln    995/2124
S&P 100   518.77 -  1.93   521.28   517.85   Totals   1945/3999
S&P 500  1047.11 -  6.10  1053.65  1045.58
RUS 2000  533.21 -  9.75   543.30   533.18
DJ TRANS 2953.25 - 26.04  2996.66  2952.99
VIX        17.62 +  0.69    17.88    17.53
VXO        17.95 +  0.39    18.40    17.87
VXN        26.49 +  1.29    26.56    26.15
Total Volume 3,569M
Total UpVol    947M
Total DnVol  2,555M
52wk Highs     600
52wk Lows       30
TRIN          1.41
PUT/CALL      0.91
*******************************************************************

Monday Markets Misstep
by James Brown

Monday felt rather slow for many traders but the trend was
negative from the beginning and only began to pick up speed by
the afternoon's close.  This was especially true for the tech-
heavy NASDAQ, which lost nearly 1.5 percent.  The selling was
widespread with only the utility, natural gas and insurance
indices managing to close in the green.  The heaviest selling hit
technology with biotech, semiconductors, and hardware taking the
most damage.  Homebuilders put together back-to-back losses as
investors took profits and even the airlines felt some turbulence
today.

Pressuring stocks were comments from Lehman Brothers over Dow
component Hewlett-Packard (HPQ) and a survey over technology
spending that suggested corporations were still cautious.
Chicago Fed President Michael Moskow's encouraging comments made
from Prague today merely reconfirmed that the FOMC would keep
interest rates low and were not enough to inspire new buying from
the bulls.  Meanwhile President Bush has a decision to make on
hits steel tariffs after the World Trade Organization (WTO)
issued a final ruling that the U.S. tariffs are illegal.  The
President levied import tariffs in March of 2002 and they are not
scheduled to end until March 2005.  The European Union (EU) is
threatening $2.3 billion in tariffs of their own if Bush doesn't
lift his steel tariffs by mid-December.  A Bloomberg article
notes that it is a tough choice for Bush who is trying to protect
the steel industry in Ohio and Pennsylvania.  The EU's looming
sanctions would hit industries in Florida and N. Carolina knowing
they are politically important states to his re-election.

Monday turned out to be a downer for the markets worldwide.
Asians stocks were lower with the Japanese NIKKEI falling 124
points to 10,504 after their country's recent election.  Hong
Kong's Hang Seng also closed lower.  German and English market
indices lost ground as well, both closing lower by almost one
percent.  Oil prices shot higher midday but were unable to
maintain their gains.  Traders speculate the rise was concern
over the weekend terrorist car bombing in Saudi Arabia and yet
another pipeline explosion in northern Iraq.

Market internals for U.S. markets were certainly bearish.  The
NYSE reported 18 losers for every 9 advancing stocks compared to
22 declining issues per 9 advancing stocks on the NASDAQ.  Down
volume was better than 2.5 times up volume on both exchanges.
Gold surged $3.10 to close at $386.70 an ounce while the dollar
fell against the yen.  Bonds continued to drift lower, which
pushed yields higher.  Bonds had to absorb the government's 3-
year note auction today and we'll see a $16 billion 5-year note
auction on Wednesday and another $17 billion in 10-year notes on
Thursday.

Chart of the DJIA:





Chart of the NASDAQ:





Twenty-three out of thirty Dow components were lower today with
HPQ leading the declines down 4.3 percent to $22.01.  Dan Niles,
a well-known analyst with Lehman Brothers, issued cautious
guidance for HPQ's first quarter numbers.  Meanwhile Goldman
Sachs wasn't hot on a key exec leaving HPQ and suggested
investors may want to sell if the stock reaches $25.  Meanwhile
the Forester Research IT spending survey offered mixed messages.
At least 32 percent of the 800 IT managers polled planned to
increase spending next year but growth was only estimated at 4
percent.

Management at Germany's Infineon Technologies, a chipmaker, also
produced some mixed messages today.  The company announced
earnings that beat by a penny.  While they see increased demand
and 18% growth for next year their CEO cautioned on becoming
overly enthusiastic.  Closer to home Dow-component Intel (INTC)
received an upgrade from J.P.Morgan from "neutral" to "over
weight" but shares failed to rally on the news.  Even Merrill
Lynch tried to offer positive comments by raising price targets
on several chip stocks (LLTC, MCHP, MXIM, SMTC, and XLNX) but
they too failed to rally.  As a matter of fact, all 18 stocks in
the SOX semiconductor index closed in the red, pulling the SOX
down nearly 3 percent for its first significant decline in two
weeks.

It wouldn't be a Monday if we didn't have merger news and a story
or two from the weekend copy of Barron's (or as some traders like
to call it Bear-ons).  Our Monday merger hails from the printing
industry.  R.R. Donnelley & Sons (DNY), printer for Sports
Illustrated and TV Guide, announced it would buy Canadian printer
Moore Wallace Inc for $2.8 billion in stock.  The Barron's
stories making the rounds today involved two tech companies.
Adobe Systems (ADBE), famous for its graphical-arts software, was
portrayed as a company investors should be wary of since ADBE
management has yet to curb their high-volume of stock option
grants to employees.  Barron's said the company issued options
from 2000 through 2002 that total more than 20 percent of the 240
million shares outstanding.  This is about ten times the average
for a large company and certainly dilutive to shareholders.  The
bigger Barron's story was a positive spotlight on Intl. Business
Machines (IBM).  The article speculated that IBM shares could
reach $100 as the company continues to be one of the best plays
to catch any increase in IT spending.  This pushed IBM to be the
second best performer in the Dow.

Looking ahead to tomorrow the stock market will have to run on
its own as the bond markets will be closed for Veteran's day.
Not that it is likely to matter.  Investors are already looking
ahead to Friday's economic reports.  It seems without constant
stimulation investors are prone to take profits.  What we
believed to be compelling price magnets at Dow 10K and NASDAQ 2K
may not be as strong as we thought.  Topping the headlines
tomorrow will likely be earnings reports from apparel retailers
Abercrombie & Fitch (ANF), J.C.Penny (JCP), May Dept. Stores
(MAY) and TJX Companies (TJX).


************
FUTURES WRAP
************

Orderly decline
Jonathan Levinson

It was an uninspiring, slow session, with volume lighter than
we've seen it lately.  However, the price action in equities was
down, and the surprising move was a failure of the indices to
bounce from their 30 minute cycle trough.  The US Dollar and
treasuries were weak, and gold and the CRB were strong.

Daily Pivots (generated with a pivot algorithm and unverified):


Note regarding pivot matrix:  The support, pivot and resistance
levels above are derived from the high, low and closing price
levels by a simple mathematical formula.  They are not intended
to be predictive of market turning points or to serve as targets,
but rather represent the range retracement levels as generated by
the pivot algorithm.  Do not think of them as market "calls"
or predictions.  Like any technically-derived indicator or price
level, the pivot matrix values should be regarded as decision
points at which to evaluate current market conditions.  Visit us
in the Futures Monitor for our realtime views of the various
markets covered here.

10 minute chart of the US Dollar Index


The US Dollar walked up off the lows in what is either a bear
flag or bear wedge pattern depending on how you choose to
interpret the rising resistance off the 11AM low, but in any
event it was a less-than-compelling upphase.  Commodities were
mostly flat, with the CRB -.32 at 250.71, while gold and silver
advanced.

Daily chart of December gold


December gold once again surprised to the upside, hitting an
intraday high of 387.80, closing at 386.80.  The move caused an
uptick in the otherwise downphasing daily cycle oscillators, but
cleared that 384 resistance nonetheless.  It appears that bulls
want to pose the 390+ question again, and this week is shaping up
to be an exciting one in the metals market.  Surprisingly, the
HUI dropped 2.05 to 208.34, XAU –1.2 at 96.19, despite the solid
bid in the metal all day.


Daily chart of the ten year note yield


Treasuries caught an initial bid but sold back to just below
unchanged, with the TNX adding 1 basis point to close at 4.46%,
holding above the broken trendline from Friday.  The picture was
somewhat blurred with the bond market closed tomorrow, and
another 23.79B in treasury notes auctioned today.  The treasury
sold 23.79B worth of 3 year debt, generating a high rate of
2.625% and a bid-to-cover ratio of 2.11.


Daily NQ candles


It looks pretty good on the chart, but the selling predicted in
the weekend Futures Wrap was lacklustre and entirely uninspiring.
This owes itself to the persistent attempt of the 30 minute cycle
oscillator to begin the now-overdue upphase.  The NQ sold off for
a 1.19% decline of 17 points, but it took all day in what was an
uncertain drift lower.  The lower wedge trendline at 1412 was
touched but not broken, while the daily cycle oscillators gave
the first indication of the end of the upphase.  Volume on the
COMPX was 1.76B, and it was a quiet session.

30 minute 20 day chart of the NQ


The 30 minute candles shows a steady slide today that looks a lot
steeper than it felt.  The NQ closed a few points above its low
of the day, and most traders were waiting for some kind of a
tradeable bounce that never came.  That said, the oscillators on
this timeframe, which have a tendency not to trend at the end of
an up- or downphase, are as oversold as they've been in weeks,
and I'm expecting a bounce too.  However, given the nascent top
being printed on the daily cycle oscillators above, the bounce
may be very weak or even non-existent, depending on the shape of
the downphase to come on that longer timeframe.  The 30 minute
cycle bounce should be tradeable, but it wasn't today.  If it
doesn't get going quickly tomorrow, bulls could wind up with a
big headache. 1412 support held, and we see strength at that
level for the past 2 weeks.  If it fails, 1392 would be the next
likely stop.

Daily ES candles


The ES also drifted lower, but it was enough to end that
irritating daily cycle upphase that had caught so many, myself
included, by surprise.  Like many, I've become conditioned by the
endless saves, flagpole rallies, miracle bounces and pattern
failures to expect a bounce where it's needed most.  Well, this
lower trendline at 1045 is one such spot.  The daily oscillator
is rolling over, but the 30 minute is already overdue for a
bounce from its cycle trough, and another bounce is expected.  A
lower high would be an excellent shorting opportunity, as it
would confirm the beginning of the daily cycle downphase.


20 day 30 minute chart of the ES


We see the 30 minute cycle bounce starting on the 30 minute
candle chart, with resistance at 1056 currently, support at 1044,
below which 1034-37 support is targeted.


150-tick ES


We see the timid, narrow-range trading on the intraday chart.
Little direction is apparent here, which makes it look like the
"moment of weightlessness" nested within the turning 30 minute
cycle.  If so, then another visit or two to today's lows can be
expected, but the 30 minute cycle bounce can start anytime.  A
sustained break below today's lows will invalidate this analysis,
and suggest that the daily cycle downphase is dominant, in which
case we'll be dusting off our helmets and preparing for a
potentially steep ride.  Next support at 1034-7 would be the
immediate target.


Daily YM candles


Nothing to add on YM.


20 day 30 minute chart of the YM


Tomorrow could be a sleeper, given that the bond market will be
closed.  However, the markets closed at important resistance, and
if it breaks, we could see the first meaningful selling in weeks.
The trend within the rising wedges on the daily charts is still
up, but bears continue to hear the clock ticking for the fat,
happy, complacent bulls.  When the bulls hear it too, we could
see a stampede. See you at the bell!


********************
INDEX TRADER SUMMARY
********************

Better late than never?

Today's upgrade of chip giant Intel (NASDAQ:INTC) $33.39 -1.41%
to "overweight" from "neutral" was seen by some as being better
late than never, but for some of grief JP Morgan received when
potentially calling the top on Intel and perhaps the
Semiconductor Index (SOX.X) 510.63, the call was actually a
bullish add-on to the firm's September 26th upgrade to "neutral"
from "underweight" when the stock opened for trade at $27.50.

In the world of broker upgrades and downgrades, it may seem like
JP Morgan was just getting bullish today, but in fact, their
upgrading of the stock on September 26, before the opening bell,
is where JP Morgan actually turned bullish the stock.

Still, such upgrades, even from late September from a major
brokerage house with a lot of research capabilities does raise
the question on whether the bullish call comes too late.  But
when weighed against recent improvement from the labor markets,
JP Morgan's call has some technology bulls wondering just what
kind of increases are going to be seen in corporate IT spending
this quarter, as corporations upgrade their computer technology
in what JP Morgan sees as a new product cycle just getting
underway.

A weekend cover story in Barron's highlighted IBM (NYSE:IBM)
$89.95 +1.91% helped IBM buck the broader market downtrend in
today's session, with the company spotlighted as being one of the
major beneficiaries of next year's expected recovery in IT
spending.

Some of Friday's concerns regarding heightened alerts to
terrorism did come to fruition after this weekend's suicide
bombing in Saudi Arabia.

Despite the heightened geopolitical unrest, the AMEX Gold Bugs
Index ($HUI.X) 208.34 -0.97% and the CBOE Oil Index (OIX.X)
277.27 -0.75%, which might have benefited from such unrest in the
Middle East, found similar losses as the major indices.

Pivot Matrix





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



Technology stocks look to have lost some of their upside momentum
near-term and has the SPX vulnerable back to the 1,035 level.
Would be looking for bullish entries there as Stochastics reach
oversold levels.

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





Dow Industrials (INDU) Chart - Daily Intervals



Looking for INDU support to firm in the 9,650 to 9,700 range.
This would be a normal pullback on the INDU's PnF chart, and make
for some needed pullback for a bounce back higher for an eventual
test of 10,000.


NASDAQ-100 Tracking Stock (QQQ) Chart - Daily Interval



I profiled and took a late bullish trade on Friday at $35.63,
with thought we'd see a little bounce back near $36.00 today
should Japan's Nikkei-225 trade higher after its country's
general election this weekend, and that there would not be any
terrorist activities over the weekend.

I was wrong on both counts and was stopped out this morning when
the QQQ traded $33.58.

With such tight ranges this week from WEEKLY S2 to WEEKLY R2, the
decline from the new WEEKLY Pivots has the bullish side of me
looking for entries back lower in the WEEKLY martix to build the
upside needed for the higher levels of bullish %.

Jeff Bailey


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**************
TRADERS CORNER
**************

The BP Boogie – A Few Corrections
By Mike Parnos, Investing With Attitude

I realize I should probably do more proofreading than 80-proof
reading.   As was brought to my attention by a gaggle of CPTI
students (bless you, my children), I didn't catch a few errors and
was a little vague in my explanation of the BP Boogie.

Below is a corrected version of the explanation.  Basically, our
adjustment (in the published example) should be a bear call spread
as opposed to a bull put spread.
______________________________________________________________

If the OEX becomes a PIA and starts to trend in the other
direction:
1. We wait until it gets to a point where it costs $12 to close
out the bull put spread.  At that point, we close the bull put
spread (both the short and long put) for $12.  Why do we wait that
long?  We wait for a large of a movement because we hope, if the
short strike is violated, that a new trend has begun.  We don’t
want to be whipsawed back and forth.

Now what?  We were wrong about the initial direction.  So what?
It’s not the first time and certainly won’t be the last. It broke,
the chart lied, but it’s fixable.

2.  Now look over to the call side of the option chain.  Let's
find a bear-call spread, at or above the current OEX value, which
will enable us to take in a credit of $6.00 – and sell 20
contracts.  That will effectively replenish the $12 we just spent
to close the original bull put spread.

In order to achieve a $6.00 credit in the new bear-call spread, it
might be necessary to widen it a bit – thereby increasing your
maintenance requirement.  For example, instead of a $15 difference
between strikes, it might require a $20 difference between
strikes.  If you took in $600 per spread, your risk would be
$1,400 per spread.  Twenty contracts would require $28,000 in
maintenance. Sounds like a lot, but it’s not really at risk – if
you follow the plan.  It’s just to give the broker some peace of
mind.
______________________________________________________________

I'll leave you with a final thought (courtesy of Jane – long time
CPTI student):
How do you order a cannibal cocktail? Ubangi on the bar....
______________________________________________________________

Happy Trading!
Remember the CPTI credo: May our remote batteries and self-
discipline last forever, but mierde happens. Be prepared! In
trading, as in life, it’s not the cards we’re dealt. It’s how we
play them. Your questions and comments are always welcome.

Mike Parnos
CPTI Master Strategist and HCP
_____________________________________________________________

And, of course, we can't forget this:

Couch Potato Trading Institute Disclaimer

All results reported in this section are hypothetical. While the
numbers represented here may have been achieved or beaten by our
readers we make no representation that any individual investor
achieved these exact results. The tracking for the plays listed in
this section uses closing prices for the day the newsletter is
published and it is not meant to imply that any reader actually
received those prices or participated in these recommendations.
The portfolio represented here is hypothetical and for investment
education purposes only. It is only an illustration of what type
of gains a knowledgeable investor might receive utilizing these
strategies.


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The Option Investor Newsletter                   Monday 11-10-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: ATH, AZO, JBLU
Dropped Calls: FD, LOW, QLGC
Dropped Puts: None
Play of the Day: Put - ATH
Watch List: Strong Trends

Updated on the site tonight:
Market Posture: DMA Decay


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*****************
STOP-LOSS UPDATES
*****************

ATH - put
Adjust from $70.05 down to $69.50

AZO - put
Adjust from $97.75 down to $96.25

JBLU - put
Adjust from $58.51 down to $56.75


*************
DROPPED CALLS
*************

Federated Dep Store - FD - cls: 48.50 chng: -0.12 stop: 47.00

With earnings looming on Wednesday before the close, FD held up
much better than other Retail stocks on Monday, suffering a mere
12 cent loss on the day and holding above the $48 level.  The
stock might make one more stab higher tomorrow or it might drop
ahead of earnings.  Either way, it is time to drop the play to
avoid any earnings-related risk.  This has been a rather slow-
moving play, but it did work out moderately in our favor.  Use any
strength tomorrow to nab a better exit point, but make sure to
exit the play before the close.

Picked on October 9th at     $45.60
Change since picked:          +2.90
Earnings Date              11/12/03 (unconfirmed)
Average Daily Volume =     1.86 mln


---

Lowe's Companies - LOW - close: 57.99 change: -1.01 stop: 58.00

LOW has proved to be a real disappointment in the time we've been
covering it.  The stock did deliver the breakout over $59 we were
looking for, but after briefly cresting $60, it has been steadily
losing strength.  Today's sharp drop took out last Thursday's
intraday low and violated our stop enroute to effectively closing
at the day's low.  This introduces the risk that LOW will break
back under the consolidation zone that held through the middle
October.  Our tightened stop did the job it was intended to,
namely keeping our risk in the play contained.  Needless to say,
LOW is a drop tonight.  If still holding open positions, use any
early rebound tomorrow to effect a more favorable exit.

Picked on October 23rd at    $58.65
Change since picked:          -0.66
Earnings Date              11/17/04 (confirmed)
Average Daily Volume =     3.82 mln


---

QLogic Corp. - QLGC - close: 55.73 change: -1.76 stop: 55.85

Monday was not a favorable session for Semiconductor stocks, with
the SOX getting hit for a 3% loss.  QLGC broke from its ascending
price pattern and lost just over 3% as well.  Right up to the end
of the day, it looked like the bulls might defend support just
below $56, but in the end they lost that battle.  Today's sharp
decline violated our stop and more importantly, dragged the daily
Stochastics over into a clear bearish decline.  There's no
question that it is time to bid farewell to the play.  QLGC may
drop back to find support in the $53-54 area, but that's just too
much risk to take from the recent peak just under $59.  We still
escaped with a small gain, and we'll keep our eye on this one for
another potential play in the near future.

Picked on October 21st at    $54.21
Change since picked:          +1.53
Earnings Date               1/14/04 (unconfirmed)
Average Daily Volume =     4.40 mln



************
DROPPED PUTS
************

None


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*********************
PLAY OF THE DAY - PUT
*********************

Anthem, Inc. - ATH - close: 65.21 change: -1.34 stop: 69.50

Company Description:
Anthem is a health benefits company serving over 7 million
members, primarily in Indiana, Kentucky, Ohio, Connecticut, New
Hampshire, Colorado and Nevada.  The company owns the exclusive
right to market its products and services using the Blue Cross
Blue Shield (BCBS) names in these states under license agreements
with the Blue Cross Blue Shield Association.  ATH's product
portfolio includes a diversified mix of managed care products,
including health maintenance organizations (HMOs), preferred
provider organizations (PPOs) and point-of-service (POS) plans, as
well as traditional indemnity products.  The company's managed
care plans and products are designed to encourage providers and
members to select cost-effective healthcare by utilizing the full
range of its medical management services.

Why we like it:
We certainly can't be disappointed with the initial action in our
bearish ATH play, as the stock did as we expected and dropped on
Friday.  It wasn't much (about 1%), but it was a larger drop than
seen in any of the major indices and that keeps the premise of
relative weakness intact.  When we initiated coverage, we set a
trigger of $66 and while close, Friday's dip to $66.19 wasn't
quite enough to get the job done.  That leaves us with the same
action plan for next week.  Wait for the trigger to be satisfied
and then enter according to your trading style.  Momentum traders
will want to enter on the initial break, while those with a more
cautious stance will want to wait for a subsequent failed bounce
in the $67-68 area.  There's likely to be some mild support found
in the $63.50 area, but once below there, ATH should seek out
strong support near $60.  Maintain stops at $70.05 and wait for
the trigger to be hit before taking action.

Why This is our Play of the Day
The price action in ATH late last week was certainly sending
signals that the $66 support level was going to be tested this
week and we didn't have to wait long.  The stock gapped slightly
lower this morning, dipped below $66 and caught an immediate
rebound that quickly failed.  From there into the close, it was a
consistent slide lower, with the stock closing just above its low
of the day on volume that was 60% above the ADV.  That looks like
a solid breakdown to us, and it certainly provided ample
opportunity to get onboard early in the day.  Adding to the
bearish picture, the column of O on the PnF chart lengthened by 2
boxes today (stretching the bearish price target down to $52),
solidifying the break below the bullish support line.  There is a
chance of a mild rebound from the $65 level, but the next
significant support to deal with is found near $63.50.  But with
volume on the rise and price falling steadily, we're looking for
our $60 target to be achieved before the bulls are able to mount
any sustained recovery.  Failed rebounds below the $66-67 area
look the best for new entries, while the momentum approach below
$65 can certainly work.  Lower stops to $69.50 tonight, just above
last week's intraday highs.  More conservative traders might even
use a tighter stop at $68.75, at last Thursday's intraday high.

Suggested Options:
Aggressive short-term traders will want to focus on the November
65 Put, as it will provide the best return for a short-term play.
Longer term traders will want to look to the December 65 Put, as
it should provide ample time for ATH to move in our favor without
time decay becoming a major factor.

! Alert - November options expire in less than two weeks!

BUY PUT NOV-70 ATH-WN OI=2083 at $5.00 SL=3.00
BUY PUT NOV-65 ATH-WM OI= 565 at $1.30 SL=0.60
BUY PUT DEC-65 ATH-XM OI=2476 at $2.65 SL=1.25

Annotated Chart of ATH:



Picked on November 6th at    $67.22
Change since picked:          -2.01
Earnings Date               1/26/04 (unconfirmed)
Average Daily Volume =     1.61 mln




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Watch List
**********

Strong Trends

Kohl's Corp - KSS - close: 50.65 change: -1.26

WHAT TO WATCH: Eight sessions in a row.  That's how many times
shares of KSS have declined.  The stock peaked at its 50-dma and
has continued to fall.  Today's drop was inspired by a downgrade
from Goldman Sachs.  If you look at the weekly chart of KSS, draw
a trendline from the October 2002 low and extend it across its
lows in March and June.  You'll see it lines up with today's lows
near the $50 support level.  A breakdown from here could be bad
news and bears are sure to notice.

Chart=


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Praxair Inc - PX - close: 69.72 change: -0.65

WHAT TO WATCH: Looking vulnerable at what appear to be all time
highs is PX, which after a week of slowly consolidating higher
towards the $70 mark just lost it again.  Short-term traders may
want to keep an eye on the $69.00 level.  A breakdown there could
lead to a retest of support near 67.50 and $65.00.

Chart=


---

Fortune Brands - FO - close: 67.59 change: +0.99

WHAT TO WATCH: The relative strength in shares of FO is
incredible.  However, even a helium balloon will fall if stuck
inside a descending elevator.  That's just another way of saying
if the markets continue to fall it's going to be harder and
harder for FO to eke out gains.  Bulls can look for a bounce from
the 10-dma.  Bears may want to look for a break under the $65
mark.

Chart=


---

Briggs Stratton - BGG - close: 65.70 change: -1.67

WHAT TO WATCH: BGG is another stock that has run with incredible
relative strength.  The rising trend from its April lows is
amazing.  Bulls can use the market weakness to wait for their
next entry point.  A good bet may be the simple 30-dma near
63.50.  Bears might want to wait for a break under $62.50 before
evaluating potential plays.

Chart=



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MARKET POSTURE
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DMA Decay

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