Option Investor

Daily Newsletter, Monday, 12/08/2003

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The Option Investor Newsletter                   Monday 12-08-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.

In Section One:

Wrap: Investor focus: FOMC or Dow 10K?
Futures Wrap: Dow Rally
Index Trader Wrap: Indices gain on Industrial revolution

Posted online for subscribers at http://www.OptionInvestor.com
MARKET WRAP  (view in courier font for table alignment)
     12-08-2003            High     Low     Volume Advance/Decline
DJIA     9965.27 +102.59  9970.16  9859.57 1.44 bln   1890/ 910
NASDAQ   1948.85 + 11.03  1948.94  1926.94 1.56 bln   1623/1430
S&P 100   527.67 +  4.16   527.95   523.51   Totals   3513/2340
S&P 500  1069.30 +  7.80  1069.59  1060.93
RUS 2000  543.04 +  4.03   543.15   536.52
DJ TRANS 2929.47 + 18.89  2930.95  2906.70
VIX        16.54 -  0.55    17.59    16.52
VXO        16.31 -  1.03    17.73    16.13
VXN        27.55 +  0.50    28.35    27.55
Total Volume 3,389M
Total UpVol  1,932M
Total DnVol  1,351M
52wk Highs     567
52wk Lows       30
TRIN          1.19
PUT/CALL      0.93

Investor focus: FOMC or Dow 10K?
by James Brown

Stocks ended the day higher as bulls piled on the gains while a
large section of the east coast was still digging out from this
weekend's blizzard.  The weather may have been to blame for the
low volume but the rally was widespread.  Only the Internets and
gold stocks closed in the red and only with minor declines.  The
strongest buying was concentrated in homebuilders, banks, natural
gas, defense and airlines.  The airlines enjoyed a nice rebound
when JetBlue Airways (JBLU) did its best impression of a dead-cat
bounce (+7.5%) after two analysts upgraded the stock this
morning.  The FOMC meeting tomorrow and the strong drop in the
U.S. dollar dominated the headlines.

The new lows in the U.S. dollar wreaked havoc in the Asian
markets.  A low dollar means Asian goods become less competitive
here in the U.S., the world's biggest importer.  The Japanese
NIKKEI average lost 328 points or 3.16% to 10,045.  The Hong Kong
Hang Seng followed with a 137-point loss to 12,177.  The same
weak-dollar export pressure hit Europe to a lesser degree.  The
English FTSE lost 7 points to 4359 and the German DAX dropped 35
points to 3806.  Meanwhile, futures for platinum reached 23-year
highs breaking above the $800/an ounce level.  Gold futures
remain strong near their highs at $407 an ounce.  Bonds pulled
back as money appeared to rotate into equities.  The yield on the
10-year note rose to 4.278%.

The Dow Jones Industrial Average (DJIA) added 102.5 points to
close at an 18-month high.  The venerable index is just 35 points
away from the 10,000 mark - an easy reach for excitable bulls
tomorrow.  The NASDAQ followed with an 11-point gain to 1948 and
the S&P 500 added 7 points to close at 1069.  Market internals
eventually closed bullish.  Advancing stocks outpaced decliners 2
to 1 on the NYSE and 16 to 14 on the NASDAQ.  Up volume lead down
volume but the difference wasn't that spectacular.

Chart of the DJIA:

Chart of the NASDAQ:

The rebound in technology stocks was impressive today.  The
NASDAQ index was under water a good portion of the session after
a survey unveiled less than exciting news for I.T. spending.
Considering the strong pace for economic growth this past year
and the expectations for growth next year investors are looking
for business spending to pick up steam.  Unfortunately,
technology spending is likely to end up lukewarm according to a
Gartner-SoundView technology survey.  Overall they estimate
capital spending to be up 1.6 percent in 2004 with the largest
companies estimating budgets to be flat or down.

The U.S. dollar is moving at a strong pace too, a strong pace
downward.  It was a rough day for the dollar.  It hit new three-
year lows against the yen (107.26), a new seven-year low against
the Swiss franc (1.266), a new 11-year low against the British
pound (1.73) and a new all-time low against the euro (1.2239).
As a matter of fact this was the seventh straight record low
against the euro.  A low dollar makes U.S. investments much less
appealing to foreign investors and a report out today from the
Bank of International Settlements showed a very significant chunk
of OPEC funds being repatriated out of dollars.  In a note out
this morning Citigroup agreed that the U.S. dollar was likely to
see even more declines.  However, they offered an upbeat picture
for the future claiming the recovery was well on its way and we
should see a strong surge in job growth in the next few quarters.

This week's big event takes place tomorrow.  No, I'm not talking
about Dow 10,000 although that could certainly take place and
there are plenty of traders just waiting to short this
psychological level.  I'm referring to the FOMC meeting, which is
set to conclude at 2:15 PM ET.  No one expects the Federal
Reserve to lift rates from their 40-year lows at 1% so the
market's entire focus will be on their post-meeting comments.
Will Greenspan & Co keep the "considerable period of time"
language in their message to the markets?  Will they replace it
with something else?  What will they say about the incredibly
strong economic growth in the last quarter?  Will they hint that
a rate hike may be nearer than expected?  Do they know the
whereabouts of Saddam and if he's been captured?  Just kidding.
There was a Saddam rumor going around today that some traders
were blaming for the sharp rise this afternoon.

Normally I would expect the markets to be subdued and trade in a
narrow sideways fashion ahead of the Fed meeting tomorrow as we
wait for their outlook.  However, the Texas Instruments (TXN)
news after the bell tonight could change things.  Chips stocks
were at a pivotal level with the SOX hovering near the 500 mark
just above its simple 50-dma.  We could see a strong bounce
tomorrow now that TXN has raised their earnings guidance.
Earnings estimates had been for 18 to 20 cents a share on
revenues of $2.49 to 2.70 billion.  Strong consumer demand is
likely to drive TXN's fourth quarter net income to 25-27 cents a
share on revenues of $2.64 to 2.765 billion.  It's possible this
can spark a run in Dow component Intel.  Intel had closed under
its 50-dma today so maybe tonight's TXN news can scare some
shorts into covering early tomorrow.

Whatever happens be prepared for a "sell the news" affect if the
Fed doesn't say anything material.  This caution is even more
important if the Dow does reach the 10,000 mark.

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Dow Rally
Jonathan Levinson

Despite weakness for most of the day in the NQ, the YM and ES
were rock solid, with the YM trading in positive territory all
day until a series of high volume buy programs lifted the YM and
its peers on a one-way trajectory upward for the remainder of the
session.  Bonds and the US Dollar fell, gold and foreign
currencies rose.

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 Index broken 89 support in an ongoing exacerbation
of what is now being regarded as a "sure-thing" short by many
traders.  The level of bearishness in the dollar has reached
levels from which a reversal to the upside should be expected,
but none came Friday, and none came today.  The CRB added more
than 3 to close at a 7 year high of 260.61, led by natural gas,
heating oil and crude.

Daily chart of February gold

February gold hit a high of 410.30, finishing fractionally higher
at 408.  The move carried gold to upper resistance in its bear
wedge, and a gap higher could blow out the upper trendline
tomorrow.  The FOMC will be hardpressed to argue about the
absence of inflationary risks with the CRB and gold setting new
multiyear highs.  HUI closed above 251, -.92 and the XAU above
111, -.31.

Daily chart of the ten year note yield

Treasuries sank with the dollar, presumably in anticipation of
the Fed reiteration of its commitment to rising prices in
everything but the currency.  The TNX rose 6.3 bps to close at
4.278%, bouncing from the lower support line.  The daily cycle
upphase continues to curl but is not over, and tomorrow is set up
to be another exciting day for bonds.  With support and
resistance nearing an apex here, we could get a breakout on the
Fed's announcement.

Daily NQ candles

Whether it was rumors of Saddam's capture again, or the White
House's announcement that it intends to spend more money it
doesn't have, the indices made outstanding moves today.  The
divergence between the YM and the NQ may have been one of the
widest I've seen this year, and the Keltner band violations in
overbought territory were also the largest and lasted longer than
any I've seen.  The Fed added 6.5B to refund 3B in weekend repos
expiring, and perhaps that money found its way into the futures
pits.  Perhaps it was an extended buy program, with an agent bank
gunning the tape off the opening low to capture a bonus on the
spread between its early buys and the closing prints.  We can
only guess.  But the YM came within spitting distance of 10K,
even as the NQ languished near unchanged for the bulk of the
session.  The move felt so entirely hokey and unsustainable that
I fear for bears here, as NQ 9960 / ES 1069 prints felt like no-
risk shorts.  The high put to call ratio could be early evidence
of a massive short squeeze still to come.

The NQ struggled and just barely regained the rising daily
support line on a bullish hammer.  1420-25 is still resistance,
and the divergence between NQ and YM indicates that either the
rally is going to fail, or that the NQ has abdicated its
leadership role.  1398.50 is the low of the day, and is close
enough to provide a good target to confirm a downside range
break.  The daily cycle oscillators gave further indications of
their readiness to roll over from a lower high.

30 minute 20 day chart of the NQ

The 30 minute NQ broke north out of its bull wedge, targeting a
possible 1450 if it fulfils.  The 30 minute cycle upphase kicked
off well behind the ES and YM, and first resistance appears at
1430.  However, the upphase has plenty of room to run, and if it
is merely lagging its peers, then the upper projection of the
bull wedge should be doable.  However, with the daily cycle
oscillator looking weak, the bulls cannot permit a retest of
today's lows.

Daily ES candles

On the weekend we wondered whether 30 minute downphase would end
in time to allow another punch higher out of the daily cycle
upphase.  This is what occurred, and while that daily cycle
upphase remains weak, it was enough to give us a large bullish
engulfing candle from the ES today.  Last week's small downtrend
was not violated, but any further upside will do the trick and
bring 1072 resistance into play.  For the moment, both the daily
and 30 minute cycles are in gear to the upside, and therefore
project to further gains tomorrow.  It's difficult to imagine
that today's rocket launch in the futures is going to be
sustainable, as it had all the makings of a terminal blowoff on
these cycles.  However, shorting ahead of the cycle turn is very
risky, and only gunslingers should be trying it.  With Dow 10K so
obvious a target, it's easy to imagine a summit push tomorrow.

20 day 30 minute chart of the ES

The bull wedge break above 1063 projects back to the year highs,
but the 30 minute cycle upphase is running out of time, and more
particularly, the intraday cycles got trashed by the huge move.
A move to 1072 would fit the current setup, and with the daily
also pointed north, that move could take the shape of a quick
spike higher. Above 1074, shorts could begin covering and add
fuel for the next stage of the rally, but the cycles, from weekly
on down, do not suggest that much upside from here.

150-tick ES

The move at 2:30PM (to the minute) printed what appears on the YM
chart and even on ES as one of the more extreme Keltner
violations I've seen on this short timeframe.  Needless to say,
all intraday cycles are maxxed out and looking for downside from

Daily YM candles

The YM blew through the upper wedge resistance and closed at a
new high, just 35 points from 10K.  The cycles are in gear to the
upside, and 10K looks like a given on the daily chart. Look for
support at former 9945 resistance.

20 day 30 minute chart of the YM

Who let the dogs out?  The 30 minute cycle appears to have peaked
with the closing print, but the YM closed above all intraday
resistance.  Once again, 10K looks like a given, but the 30
minute cycle needs a pullback now to avoid trending in
overbought, which it tends not to do on these settings.

The rumors and news today, with the FOMC setting to issue a
statement tomorrow indicates the extend of the externalities
currently in play.  If today's move is any example, traders
forgetting their trading and account management rules are playing
with fire.  The stage is set for a summit push at the open,
followed by a pullback and then the obligatory FOMC volatility.
The VXO dropped over 1 point to close at 16.31 today, and risk
remains very high for bulls.  Today reminded us that it is so
for bears as well.  Plan your trade and trade your plan.


Indices gain on Industrial revolution

The Dow Industrials (INDU) 9,965.27 +1.04% posted an impressive
102-point gain in today's session with Boeing (NYSE:BA) $39.12
+2.94%, General Motors (NYSE:GM) and International Paper
(NYSE:IP) $40.23 +2.26% leading the Dow's gains, as investors
looked optimistic ahead of tomorrow's Federal Reserve meeting by
pushed the Dow Industrials closer to the psychological 10,000
10,000 level.

Within the Dow, advancers bested decliners 24 to 6.  Chip giant
Intel (NASDAQ:INTC) $31.64 -1.43% and McDonalds (NYSE:MCD) $25.62
-1.42% were the only blue chips closing down more than 1%.

Technology stocks, which struggled throughout the better part of
today's session rebounded late with the tech-heavy NASDAQ-100
Index (NDX.X) 1,418.05 +0.79% gaining 11 points after testing
round number support of 1,400.00 at the midpoint of today's
session after a Gartner/Soundview survey forecasted a more modest
1.6% growth in capital spending on information technology next
year.  A statement released along with the survey said,
"Controlled spending and a strict focus on return on investment
will remain the rule in 2004. For the largest companies, the
budget outlook for 2004 appears to be flat to down."  The NASDAQ-
100 Tracker (AMEX:QQQ) $35.23 carved out a 19-point gain to
finish just off its session high of $35.33 after slipping to a
session low of $34.78 with just over 90-minutes left in today's

The broader S&P 500 Index (SPX.X) 1,069.30 +0.73% gained 7.8
points by the close, with a bond market closing burst taking
place just after today's bond market close, which saw Treasuries
closing near their lows of the day as the benchmark 10-year YIELD
($TNX.X) rose 6.3 basis points to 4.278%.  From the opening bell
to the 03:00 PM EST mark, the broader S&P 500 Index (SPX.X)
traded in a very tight 4-point range of 1,060.93-1,064.98, with a
late burst of buying at the 03:00 PM EST mark sending the SPX
back higher to its close.  The narrower S&P 100 Index (OEX.X)
527.67 +0.79% gained 4-points.

Here's a quick look at today's hourly market internals

On a very broad scale, we can see that the NYSE internals were
much stronger if compared to the NASDAQ, which if anything hints
of a slightly greater sell bias towards 4-lettered stocks on the
NASDAQ.  Still, when the bond market closed at 03:00 PM EST,
stocks got a late session boost, with NASDAQ breadth turning
positive by the close.  The Dow Industrials paced the way higher,
with each hour of trade building gains and perhaps keeping
investor psychology from turning overly negative at the broader

For those traders holding my bearish swing trade short in the
NASDAQ-100 Tracking Stock (AMEX:QQQ) $35.23 +0.55% from Friday's
bearish entry of $35.05, where in today's 11:00 AM EST update I
updated this trade and made some adjustments to current stop
$34.45 and target of $34.67 (just above QQQ WEEKLY R1), the above
internals suggest weakness exists, but my main point of concern
right now with this trade, is the positive market psychology that
comes from the Dow Industrials, and SPX/OEX.

We have seen in the past how the major indices will tend to feed
off each other, and at times, have seen the QQQ trade weak, to
only then be snapped back higher when bullish leadership is shown
from the INDU/SPX/OEX.  I think this was apparent in today's
trade, and while we might expect psychological resistance at the
Dow 10,000 level, a bearish trader in the QQQ would be well
advised to not necessarily count on Dow 10,000 resistance serving
as a brick wall of resistance, and trade the volatile QQQ with a
disciplined stop as outlined, or a stop you deem appropriate.

Today's action comes against the backdrop of tomorrow's meeting
of the Federal Reserve.  While a rate cut isn't expected,
investors will be paying close attention to the language of the
Fed's statement, looking for any change in the "considerable
period" language pertaining to keeping interest rates at their
historically low levels.

With gold breaching the $400 level earlier this month and
February Gold futures (gc04g) $407.50 +0.5%, which edged up
$0.20, holding above the $400.00 level, economists and Fed
watchers have started to debate on what kind of talk investors
should be expecting from the Fed.

The "no change in Fed tone" economists, say that despite the rise
in gold and other metals prices, which often has the market
signaling inflation is just around the corner, has gold prices
higher mainly due to the dollar's weakness, which has been
exacerbated by the growing deficit, which in the early part of an
economic recovery, combined with record levels of productivity,
should have the Fed holding it current stance for low rates for a
considerable period of time.

The "prepare for tightening" economists, citing gold and metals
prices, along with the still weakening dollar, are calling for
some Fed talk toward near-term tightening (maybe as soon as
spring 2004), which would help firm the falling dollar, where the
dollar's decline has become a growing concern not only for
equities, but the U.S. Treasury market as the U.S. Dollar Index
(dx00y) 88.69 -0.5% hit multi-year lows again today.

Pivot Analysis Matrix -

When I updated the pivot matrix and posted it in Friday evening's
Market Monitor, I thought there was a chance that we would see a
morning bounce higher, but then see a continuation lower into the

It has been awhile (I can't remember when) that we've seen such a
difference in how the major indices are trading relative to their
WEEKLY Pivots.

The SPX/SPY/OEX are butting up against their WEEKLY R1s, and I
really did not think that for a trade back lower to WEEKLY R1s
this week, that we would see as much strength from the SPX/OEX
above their WEEKLY Pivots, as we did today.  I've marked today's
highs in the SPX/SPY/OEX as an observation of how close the
SPX/OEX is to their correlative WEEKLY/MONTHLY R1 levels of
resistance, and if these are taken out to the upside, as the Dow
Industrials have done, then upside to WEEKLY R1s is in play.

For the QQQ, I've marked tomorrow's DAILY R1, which at $35.45,
would mark my slightly lowered bearish swing trade stop, where I
simply derived that stopping point as what I felt I would allow
as a stopping point with some cushion above the QQQ's WEEKLY R1
of $35.79.

If not obvious form the following charts of the major indices,
the Dow Industrials continue to be a leading index, the SPX/OEX
tend to be following, and right now, the NDX/QQQ is the laggard.
But it is the current leadership/strength present in the
INDU/SPX/OEX which should have the QQQ bear, or QQQ trader alert
to a potential snapback rally, should the QQQ's suddenly decide
to catch up.

Let's start with the weaker NASDAQ-100 Tracking stock (AMEX:QQQ)
$35.23 +0.55%,

NASDAQ-100 Index Tracker (QQQ) - Daily Intervals

While the INDU closed above its WEEKLY R1, and the SPX/OEX close
right at their WEEKLY R1s, the QQQ closed just below its WEEKLY
Pivot.  With Stochastics approaching "oversold," I'm very eager
to close out a bearish trade in the QQQ should I see trade at
$34.67, where target was derived from the WEEKLY 80.9%
retracement.  I really did think we would see greater follow
through to the downside in today's trade, in a more cautious
market environment ahead of tomorrow's FOMC meeting, but truly
feel the strength in the INDU/SPX/OEX has the market viewing
things different, and perhaps not as cautious as I thought.

Of the three prior QQQ tests of its rising 50-day SMA, two tests
have been rather firm, while the last test saw some downside
violation of the 50-day SMA before the ramp higher.

While I think market bears are thinking we will see selling from
Dow 10,000, I'm going to play it very safe in my QQQ bearish
trade, and while giving some room above the QQQ's weekly pivot,
will stay firm with a stop at $34.45, as a above the WEEKLY
Pivot, I think the Q's have rally potential back to their highs.

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

The OEX passed a rather important test in today's trade.  I
thought Friday's break below 524 would certainly have the OEX
seeing follow through to the downside, but OEX didn't give up an
inch in today's trade.  While I'm looking for resistance below
the correlative WEEKLY/MONTHLY R1s, where I would expect some
institutional computer selling, a break above the 528.70 level
has OEX rally potential to 532.  I view the 520 level as becoming
more formidable support with each passing day.

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

I've marked 1,071 as resistance on the SPX, but I would have to
say with the SPX still pressuring 52-week highs, I'd have to view
it as rather tentative.  Last week we had correlative WEEKLY
Pivot/MONTHLY Pivot support, but strong gains early last week and
ability of SPX to hold those gains now finds WEEKLY S2 providing
formidable support.

Dow Industrials (INDU) Chart - Daily Intervals

While only 30-stocks, the INDU at this point has greater impact
on market psychology than anything, and the closer to 10,000 it
gets, the more positive market psychology gets.  Same is true for
levels above 10,000.

Jeff Bailey


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The Option Investor Newsletter                   Monday 12-08-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

In Section Two:

Stop Loss Updates: BCR, KSS
Dropped Calls: None
Dropped Puts: None
Play of the Day: Call - BCR
Watch List: Bulls Rule on Monday
Market Posture: Pump Up the Volume


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C R Bard - BCR - close: 78.71 change: +1.43 stop: 76.00*new*

Company Description:
C.R. Bard, Inc., (www.crbard.com) headquartered in Murray Hill,
N.J., is a leading multinational developer, manufacturer, and
marketer of innovative, life-enhancing medical technologies in
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products. (source: company press release)

Why we like it:
Medical device makers have been strong in this market and BCR is
no exception.  The company has a positive trend of earnings
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have appreciated but investors are still buying the dips.

We added this play on Tuesday with a TRIGGER at $78.01.
Currently, the play is unopened as we wait for BCR to trade at or
above our trigger price.  Until then more aggressive players
might want to look for a dip to the 50-dma near $76.00 as an
alternative entry point.  BCR does have a fresh buy signal in its

Split fans will note that BCR has not split its stock since 1988.
Shares are well over there previous split price and the company
could announce one at any time.

Why This is our Play of the Day
After stalling just under resistance, BCR has been taunting the
bulls, unable to decide whether to actually head higher.  That
indecision ended in a big way on Monday, as the stock launched
through our $78.01 trigger at the open and hit an early high just
over $78.50.  After a brief midday pullback to confirm the $78
level as new support, the stock pushed higher into the close,
ending at its high of the day and looking like it wants to stretch
up towards $80 resistance.  That breakout today was the ideal
entry and now the best approach will be to target entries on
another pullback and rebound from above that $78 resistance-turned
support.  With the 10-dma ($76.74) crossing up through the 20-dma
($76.51), that area near the bottom of last week's consolidation
zone should now serve as solid support.  That gives us the freedom
to raise our stop to $76.00, just under the 50-dma ($76.14).

Suggested Options:
There are only 2 weeks left for December options so our
preference will be the January strikes.  Our favorite is the
January 75 call.

! Alert - December options expire in 2 weeks!

BUY CALL JAN 75*BCR-AO OI= 88 at $4.60 SL=2.75
BUY CALL JAN 80 BCR-AP OI=767 at $1.70 SL=0.75

Annotated Chart of BCR:

Picked on December 02 at $78.01
Change since picked:     + 0.70
Earnings Date          10/15/03 (confirmed)
Average Daily Volume:       324 thousand


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Watch List

Bulls Rule on Monday

Omnicom - OMC - close: 83.95 change: +0.49

WHAT TO WATCH: After a strong week last week, shares of OMC
managed to hold on to most of its gains.  Now traders are buying
the dip from Friday.  We liked the breakout above resistance at
$82.00 but was hoping for a retest as support to consider bullish
positions.  OMC may not pull back as expectations for a strong
2004 advertising environment continue to grow.



MedImmune - MEDI - close: 27.82 change: +0.78

WHAT TO WATCH: Shares of MEDI have soared in the last couple of
sessions, reversing a multi-month decline over significantly
lower expectations from its FluMist launch.  Now the tables have
turned.  The growing outbreak of flu in 13 states is likely to
worsen and the U.S. is already out of traditional flu shots.
That has doctors and patients turning to FluMist as an
alternative.  Investors are betting on a new and improved outlook
for the product both this year and the next.  Shares have broken
back above resistance at $27.00 and its 50-dma.



Fortune Brands - FO - close: 69.25 +0.07

WHAT TO WATCH: It's a little tough to get excited over a stock
that's barely positive when the DJIA is up triple digits on the
session.  Yet the bullish trend in FO is still very much in
place.  Watch for a bounce from the $68.00 level or a move back
over $70 as potential entry points.



Autozone - AZO - close: 92.33 change: +0.70

WHAT TO WATCH: This might be a bullish entry point in AZO.  We've
been watching it for a pull back to the $90 level again. This
time shares are finding support closer to $91.50.  There is some
overhead resistance at its 50-dma and traders might want to look
for a move over $94 before evaluating an entry point.  A very
short-term target would be $98.00.



Freeport McMoran - FCX - close: 46.24 change: +0.98

WHAT TO WATCH: Showing absolutely no weakness is FCX.  This gold
and copper mining operation has soared from its spring 2003 lows.
Shares are drastically overbought and bullish plays are best
considered on a pull back to its simple 30-dma, which currently
lines up with support near $41.00.


RADAR SCREEN - more stocks to watch

ETR $54.75 +0.02 - We're still watching and waiting for that
breakout over $55.35-55.50.

S $47.93 -1.03 - The selling continues for a third day in a row
for Sears.  The stock did bounce from $47.24 and its 100-dma.
Traders might want to look for a failed rally under $50 for new
bearish positions.

INTU $51.80 +1.65 - INTU is up 3.33% and breaking out above MAJOR
resistance at $51.50-51.75 dating back to January 2003.  Shares
have failed at this level half a dozen times and the push today
could have shorts on the run.


Pump Up the Volume
by - Nich Sheldon

While all but two of the indexes closed in positive territory,
most of the gains added on Wall Street occurred on less than
average volume.

None of today's gainers added more than 2 percent on the day.  In
fact the biggest gains were seen in the XAL Airline Index, which
flew +1.77% higher ending a four-day losing streak for the index.
The stochastics indicator notes the XAL being a few points below
the oversold mark and we could see an oversold bounce soon.

The DJUSHB home construction index also added 1.77% on the
session.  The index is bouncing from the 600 mark and approaching
its all-time highs near 622.

The third largest gains were produced by the DDX Disk Drive Index,
which added +1.54 percent.  On today's action the DDX also ended a
four-day losing streak and bounced from the 120 level of support.

Coming in third was the XNG Natural Gas Index, which tacked on
+1.38 percent.  Today's close was a new 52-week high for the index
and traders should note that the last time the XNG hit 210 was in
August of 2001.

Also noteworthy is the fact that the INDU Dow Jones Industrial
Average was able to add more than one percent on today's
lackluster volume, closing at a new 52-week high.  The stochastics
on the INDU are in overbought territory but the MACD remains in a

Today's losers were the INX CBOE Internet Index, which dropped -
0.30 percent and the XAU Gold and Silver Index, which fell -0.27


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