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  Jeff Bailey   7/8/2003,  4:13:34 PM
Micron Tech (MU) $14.00 +1.74% ... got upside alert right at the close here at $14.00. Have this one on the "buy list" for tomorrow for partials only, but could be the breakthrough at longer-term downward trend. Link

Relative Strength vs. SPX close to giving a "buy signal," so partials only. Link

Will treat with similar bullish caution as children's retailer PLCE Link and triple-top at $19.50 when we looked for trade at $20 to help negate possibility of "bull trap."

  Linda Piazza   7/8/2003,  3:59:04 PM
Now comes the question of whether to hold overnight or not. I don't have much of a cushion on the OEX call position. In fact, I have none when you add the cost of the bid/ask spread into the mix. The daily candle is a doji sitting high against the previous day's candle. That's a potential reversal signal. Balanced against that ominous sign are some bullish-appearing oscillators on the daily chart. My stop hasn't been hit, but neither has my profit stop. Still, I'm not overleveraged and I'm inclined to follow my original plan and hang around for another day.

  Linda Piazza   7/8/2003,  3:51:53 PM
Here's an update of the OEX 30-minute chart I posted earlier today. Although there's been an upside breakout of the flag, I wouldn't be surprised to see a retest of the flag's support. Link

  Linda Piazza   7/8/2003,  3:37:09 PM
At least I no longer have to say I bought an OEX call position at the high of the day. That's progress, but I need to see more. Because that OEX descending channel has been descending, the OEX has now popped above the top of the channel. I hesitate to call this a confirmed upside break of the channel, however, at least until the OEX breaks above yesterday's 506.53 high.

  Jeff Bailey   7/8/2003,  3:35:52 PM
03:15 PM EST Update posted at this Link

  Linda Piazza   7/8/2003,  3:24:20 PM
RSI on the five-minute OEX chart had flatlined. It's not often you see that happen, but it's indicative of the kind of trading we've been having this afternoon. Changes I do note, however, include support found both at the midline level of the OEX descending regression channel and at the five-minute 100-pma. I'm not giving too much weight to these changes as yet, though. There's a temptation to assign too much significance to small changes when you're bored or when nothing much has happened. The truth is that the OEX still trades within the descending regression channel that may or may not be a bull flag. That's about all that can be said with conviction.

  Linda Piazza   7/8/2003,  3:15:39 PM
Yesterday, the Russell 2000 traded within cents of the June 5 high of 565.73, and today the Russell adds to its gains, currently trading at 472.61. This is its highest level since the middle of June 2002. The daily chart shows oscillators indicating overbought conditions, but still pointed straight up as the Russell breaks out of its recent trading range above 460. However, it's popping above the upper Bollinger band. That may predict a pullback to the 21-dma, but we can't know when that is going to occur until it starts pulling away from that upper Bollinger band. Until then, it may continue to climb it from the underside.

  Linda Piazza   7/8/2003,  3:05:40 PM
The volume patterns have stabilized again, with adv/dec ratios measuring a neutral 1.1 on the NYSE and a bullish 1.6 on the Nasdaq. Up volume is a neutral 1.1 times down volume on the NYSE and a bullish 2 times down volume on the Nasdaq. Total volume is 1.1 billion on the NYSE and 1.5 billion on the Nasdaq. New highs on the two exchanges number a bullish 689 and new lows number 13.

  Jeff Bailey   7/8/2003,  3:01:49 PM
Guidant (GDT) $44.85 +0.8% .... "popped" to $45.21 after company announces it received FDA approval for Contak Renewal 3 system.

  Jeff Bailey   7/8/2003,  2:58:34 PM
NASDAQ Composite (COMPX) 1,738 +1.05% ... best levels of the session here and major indexes look to be trying to put a session ending bid together.

CBOE Internet Index (INX.X) 152.29 +3.9% edging to session high with Dow Transports (TRAN) 2,555 +3.93% looking to challenge opening hour high of 2,558.67.

  Linda Piazza   7/8/2003,  2:53:51 PM
The OEX made it back above the midline resistance and the five-minute 100-pma. If the OEX should continue to rise, next comes the top of the regression channel, currently near 505.75 but descending during the day.

  Jeff Bailey   7/8/2003,  2:46:22 PM
Procter & Gamble (PG) $90.30 -0.53% ... announced it will raise annual dividend 11% to $1.82.

  Jonathan Levinson   7/8/2003,  2:42:07 PM
The put to call ratio printed .70 again for the past half hour. Treasury yields have slipped a little lower but still comfortably in the green. QQV is up .25, VXN +.56, VIX -.51. The TRIN.NQ and TICK.NQ are in neutral bullish territory. Interesting that the VIX is the only negative volatility index today. Someone is dumping Dow/S&P puts. The put to call ratio staying in this current area tells us that it's more calls being dumped than puts, but this is very soft analysis, mostly educated guesswork.

  Linda Piazza   7/8/2003,  2:31:46 PM
The OEX challenges the midline resistance on the regression channel and the five-minute 100-pma. Once again. And once, again, it may be turning back from those levels.

  Linda Piazza   7/8/2003,  2:19:46 PM
I really don't mind being stopped out of plays. I just wish it would happen quickly and decisively. That's not happening as yet on the OEX, as it still trades down within the descending regression channel that is a potential bull flag. Although 30-minute candle bodies are finding support along the lower line of the regression channel, shadows are beginning to pierce that lower support line and the midline is now serving as resistance. The thirty-minute chart shows the 21(3)3 stochastics having been tugged down out of the overbought level, and both MACD and RSI are declining now. Both decline at the kind of gentle slope that sometimes gets turned back up again, however, and the 5(3)3 stochastics have now reached levels indicating oversold conditions. On the 60-minute chart, oscillators look more bearish, too, with the 5(3)3 stochastics rolling over again and the RSI sloping gently down. There's no commitment there to the downside yet, but that may be coming soon if the OEX heads back down to test the lower trendline of the channel again, this time without having risen to the midline before rolling.

  Jonathan Levinson   7/8/2003,  2:15:46 PM
It is stunning how little is occurring here. The put to call ratio is back down to .70, with the QQV up .15, off its highs, VXN +.62 and the VIX -.42. Treasuries are pretty much parked, FVX +4.1 bps, TNX +3.8 and TYX +2 bps. The futures are flat, fluttering around unchanged. This looks like bullish action to me following yesterday's huge run, but then, that's standard fare for a flagpole rally. Shorts are afraid to sell, bulls are afraid to buy, and the range continues. Whether it winds up being consolidation of gains or distribution of shares, we'll have to let the tape tell us.

  Linda Piazza   7/8/2003,  2:00:25 PM
The five-minute OEX 100-pma continues to serve as resistance, as it did earlier this afternoon.

  Jeff Bailey   7/8/2003,  1:57:15 PM
10-year YIELD ($TNX.X) 3.757% bond sees selling with YIELD higher by 5 basis points here. "Big test" for YIELD resistance coming at the longer-term 200-day SMA of 3.825% in next couple of days.

While stocks have held bulk of yesterday's gains today with selling in Treasury and even the U.S. Dollar Index (dx00y) 95.94 +0.45% shows dollar strength, equity gains have not been broad, but more sector specific.

This has me rather uncertain as to what, if any, a 10-year YIELD move from 200-day SMA might have on markets and it may largely depend on the "rate" of move from the 200-day SMA. Link

Early look will most likely be provided form the 30-year YIELD ($TYX.X), which sees selling today and YIELD higher by 2.4 basis to 4.752%, with 200-day SMA just ahead at 4.789%. Link

Traders will note the 10-year YIELD a little "tighter" trade in past at 200-day. Hey... it's the "benchmark bond."

  Linda Piazza   7/8/2003,  1:49:59 PM
Currently, the OEX challenges the five-minute 100-pma, an average that has been serving as either support or resistance much of the day.

  Linda Piazza   7/8/2003,  1:45:12 PM
The 1:45 push should be occurring at any moment, although of course the time varies by a few minutes either direction.

  Jeff Bailey   7/8/2003,  1:44:59 PM
HMO Index (HMO.X) 736.01 +0.6% ... moving to all-time highs here.

Will see if this can get Oxford Health (OHP) $42.87 -1.03% out of its "funk" today.

  Linda Piazza   7/8/2003,  1:43:39 PM
The regression channel shown in the chart linked to my 13:34 post did look like a regression channel. (Thanks for the input, Jane.) On a five-minute chart this morning, it even appeared the OEX was breaking out to the upside or I wouldn't have entered a call play. I don't usually cheat on entries, and didn't think I was on this one. Waiting until a move over yesterday's high would have been wiser if I was going to take this risky call play. Jonathan quoted Jesse Livermore this morning, and I think I dimly remember something about how a play should work for you from the very beginning. . .

  Jane Fox   7/8/2003,  1:37:01 PM
Linda that looks like a bull flag to me.

  Linda Piazza   7/8/2003,  1:34:30 PM
Here's something I noticed on the OEX 30-minute chart: Link

  Linda Piazza   7/8/2003,  1:22:54 PM
The midline of the OEX regression channel did serve as resistance, as I was afraid it might. The OEX now approaches the bottom of the regression channel again. Advancers still lead decliners, but the margin by which they lead is growing smaller on the NYSE, although holding fairly strong on the Nasdaq.

  Linda Piazza   7/8/2003,  1:18:51 PM
How about a report on European markets? The FTSE 100 closed down 1.20 points or 0.03%, at 4073.60, and the CAC 40 closed down 4.22 points or 0.13%, at 3177.97. The DAX currently trades up 0.03 points, at 3332.90.

  Linda Piazza   7/8/2003,  12:59:43 PM
I'd waited until the OEX crossed 506 to enter the call position, hoping to avoid the DMZ, but I got myself stuck right in the middle of it after all. The OEX currently trades inside the descending regression channel. Earlier today, it kept finding support at the midline of that channel. Now, it's back at that midline level. Let's see if it's now resistance.

  Jonathan Levinson   7/8/2003,  12:42:34 PM
The US Dollar Index has launched to 96.06. Treasuries are off their lows, FVX =3.2 bps, TNX +3.7 and TYX +1.9. Volatility remains mostly up, QQV +.72, VXN +.63, VIX -.21.

  Jonathan Levinson   7/8/2003,  12:35:40 PM
Put to call ratio drops to .70.

  Linda Piazza   7/8/2003,  12:25:35 PM
Volume patterns remain bullish, but tentatively so. Adv/dec ratios are 1.1 for the NYSE and 1.4 for the Nasdaq. Up volume is 1.4 times down volume on the NYSE and a less tentative 2 times down volume on the Nasdaq. Total volume as of a few minutes ago was 638 million on the NYSE and 986 million on the Nasdaq.

On reflection, OEX 501 may make a more logical stop for my call play. That's because the potential bull flag should break to the upside near or before 501. I'll have to think about whether I want to lower my stop, however.

  Linda Piazza   7/8/2003,  12:16:15 PM
The OEX now tests the bottom support line, headed down toward the day's low. A move below the day's low will have me exiting my call position.

  Linda Piazza   7/8/2003,  12:13:44 PM
For the first time since 10:30 this morning, the OEX is below the midline support of its descending regression channel, and headed down to test the lower support line.

  Jeff Bailey   7/8/2003,  12:12:08 PM
Autozone (AZO) $78.55 +2.23% .... have upside alert set at $79. After challenge of 52-week high, nice pullback into trend. Good candidate to institutional buying on this pullback. Look for another challenge of $90. Link

Bar chartist will note stock also pulled into longer-term 200-day SMA support. I like these types of setups with longer-term bullish support trend and 200-day SMA to find buyers at support. Link

  Jonathan Levinson   7/8/2003,  12:08:08 PM
Treasuries are getting slammed along with gold, with FVX now up 5 bps, TNX +4.9 and TYX +3 bps. That move seems to be bypassing equities so far, with ES up a paltry .75 of a point on the day.

  Jeff Bailey   7/8/2003,  12:07:32 PM
Children's Place (PLCE) $22.09 +6.5% ... children's retailer continues to be a "standout." Stock benefits today from upgrade at Brean Murray to "buy" based on their belief that the worst is over for PLCE. Firm says stock appears to further appreciate from lows with important back to school season about to begin. Sees improving comps trend, with a return to positive comps likely to occur by July. Places target of $24.

  Jeff Bailey   7/8/2003,  12:01:07 PM
CBOE Internet Index (INX.X) 151.54 +3.39% .... continues to build gains and moves above the 150 level, marking a 23-month high.

Amazon.com (AMZN) $40.56 +3.9% making yet another strong move to 52-weeker.Link

  Jonathan Levinson   7/8/2003,  11:49:36 AM
Poor old GE is down 1.02%, just can't get it together.

  Linda Piazza   7/8/2003,  11:47:58 AM
The OEX five-minute chart has a bit of an inverse H&S look to it, with a second right shoulder perhaps being formed now. This is far from being confirmed and patterns formed on five-minute charts are often not reliable, as was demonstrated often yesterday. It's possible to draw a couple of necklines, one slanting and one not. The slanting neckline would be confirmed last, and would require a move over 506.35, with that slanting neckline rising as the day progresses.

  Jonathan Levinson   7/8/2003,  11:47:45 AM
Johnathan, Look at these longterm index charts with a 104 week ema. What do you make of it?






It looks like we are at or approaching critical levels, and that the onus will be on bulls to power above and hold what is a very significant resistance (104 wk MA). Bulls will see the charts bullishly and bears bearishly. I see more the latter than the former, but either way, they're critical "pivot" levels on the charts.

  Jeff Bailey   7/8/2003,  11:42:08 AM
Lockheed Martin (LMT) $46.87 -2.5% ... session lows here after CNBC reports that there has been a shooting at a LMT facility in Mississippi. Early report is 10 dead, including the shooter(s).

  Linda Piazza   7/8/2003,  11:35:04 AM
The OEX is turning back from its test of the upper boundary of the potential bull flag formation, but is so far finding support at its five-minute 100-pma, as it has been doing since about 10:30. We'll see if that holds. Don't you hate being wrong on an entry immediately?

  Jeff Bailey   7/8/2003,  11:29:20 AM
11:00 Update posted at this Link

  Linda Piazza   7/8/2003,  11:23:16 AM
The OEX now attempts an upside break out of the potential bear flag formation. It has not yet breached yesterday's high of 506.53, however. Disclosure: Although a more conservative entry would have been on a move above 506.53, I am long OEX calls on a break above 506, looking for a move toward 510-512. With 30-minute and hourly oscillators showing overbought conditions, I consider this a risky trade and am noting it only in the interest of disclosure.

  Jonathan Levinson   7/8/2003,  11:13:49 AM
Gold is getting hammered again, now down 3.40 to 345. XAU -.87, HUI -1.47.

  Jonathan Levinson   7/8/2003,  11:11:15 AM
Put to call ratio .73.

  Linda Piazza   7/8/2003,  11:07:28 AM
The OEX has been testing the upper boundary of its descending regression channel. While it's been unable to break through that boundary, since 10:30, it's also been finding support at the midline of the channel. Either support or the upper boundary eventually has to give way. Which is it going to be?

  Jonathan Levinson   7/8/2003,  11:03:14 AM
ES seems to be flunking at a lower high.

  Linda Piazza   7/8/2003,  10:59:34 AM
Volume patterns continue to improve, with advancers now leading decliners on both the NYSE and the Nasdaq, and with up volume ahead of down volume on both.

  Jonathan Levinson   7/8/2003,  10:56:39 AM
Yields are well off their lows, almost back to flat.

  Jonathan Levinson   7/8/2003,  10:52:15 AM
The US Dollar Index has been headed south off its highs all morning, and August gold continues to hold its recovery from its morning lows, now down 1.50 at 346.90. XAU is down .39 to 78.45, and HUI is down .52 to 153.44. HUI is particularly impressive, holding above the 150 s/r zone throughout this correciton.

  Linda Piazza   7/8/2003,  10:47:47 AM
Volume patterns are improving slightly.

  Linda Piazza   7/8/2003,  10:44:23 AM
The OEX just turned back from a test of the top of the regression channel, the potential bull flag. We're still in the DMZ here. I'm watching next for a test of yesterday's high, 506.53.

  Jonathan Levinson   7/8/2003,  10:41:36 AM
The put to call has jumped to .70 for the past half hour. QQV is up .66 to 29.73, VXN +.71 and VIX -.38.

  Jeff Bailey   7/8/2003,  10:39:34 AM
Extreme Networks (EXTR) $5.24 -15% ... stock lower after company announced late yesterday that CFO, Harold Covert, resigned effective August 31, 2003. Mr. Covert intends to pursue other opportunities that will enable him to spend more time with his family.

  Linda Piazza   7/8/2003,  10:34:20 AM
I think I am going to have to label that 30-minute OEX regression channel a potential bull flag again. The OEX is so far surviving its test of the channel. Not only are the 30-minute 5(3)3 stochastics attempting to kick back up again, but the 60-minutes are doing the same. RSI is, too, on both charts, turning up along an ascending trendline formed from higher lows. I wasn't sure there would be much downside possible below 501.25 or maybe 500.80, but the OEX hasn't even tested those levels so far.

  Linda Piazza   7/8/2003,  10:31:34 AM
As of a few minutes ago, total volume was 210 million on the NYSE and 416 million on the Nasdaq. Decliners led on both exchanges, with adv/dec ratios at a bearish .64 for the NYSE and a slightly bearish .84 for the Nasdaq. Down volume was 1.9 times up volume on the NYSE and 1.3 times up volume on the Nasdaq. New highs on those exchanges numbered 312, though, and new lows only 5.

  Jonathan Levinson   7/8/2003,  10:31:03 AM
Thanks, Jane.

  Jane Fox   7/8/2003,  10:30:33 AM
Jonathan here is a take on the Richmond Fed Survey:" Manufacturing activity in the Fifth Federal Reserve District was nearly flat in June. The shipments index turned positive for the first time since January, however new orders were flat and backlogs remained decidedly negative. Further, while still positive, manufacturers became somewhat less upbeat about the outlook for activity in six months."

  Jonathan Levinson   7/8/2003,  10:28:43 AM

  Jonathan Levinson   7/8/2003,  10:28:01 AM
I'm looking for the results of the Richmond Fed data released at 10ish. I assume that it wasn't bullish, but am digging for the story.

  Linda Piazza   7/8/2003,  10:27:23 AM
Just as the ES contract is testing the bottom of its violated channel, the OEX is doing the same. In the case of the OEX, it appears to have bounced back inside the regression channel. I may have to start calling it a potential bull flag again if this continues. I'll have to see how this test progresses, though, before I make too many assumptions.

  Linda Piazza   7/8/2003,  10:19:13 AM
The OEX now has had two five-minute closes beneath the potential bull flag, which now gets degraded to a regression channel without those bullish implications. However, this brief move drove the 30-minute and 60-minute 5(3)3 stochastics far toward levels indicating oversold conditions. The longer-term and more reliable 21(3)3's have not yet been turned out of levels indicating overbought conditions. Both 30-minute and 60-minute RSI's have turned down, but haven't yet violated their ascending trendlines. My best guess is that we could see a test of that 50% retracement of yesterday's range, near 501.25, or perhaps a move down to the 500.80 support. I'm just not sure about further downside beyond that until we get further into the trading day and see how volume patterns shape up. The fast line of the 30-minute 5(3)3 stochastics is already trying to kick back up again.

  Jonathan Levinson   7/8/2003,  10:18:52 AM
The put to call ratio was .48 at the open, a perfect setup for the type of plunge we've just seen. Lower trendline support is holding so far, and despite the fed drain, there's still net buying in treasuries, with FVX -1.7 bps, TNX -2 and TYX -1.8 bps.

  Jeff Bailey   7/8/2003,  10:08:26 AM
Dow Industrials (INDU) 9,171 -0.49% .... Dow slips below WEEKLY R1 of 9,189.50, then MONTHLY 38.2% retracement.

Breadth negative at 28 to 2 with T -2.2%, KO -1.22%

  Linda Piazza   7/8/2003,  10:03:06 AM
The OEX now threatens to fall through the bottom of the potential bull flag, negating the bullish implications, of course, if it does so. It has not yet done so, however, but this bears watching, of course.

  Jonathan Levinson   7/8/2003,  10:01:15 AM
Easy Al just ponied up another 3.75B from his pocket rocket via 2 day repos. With 6.5B in expiries today, it's a net drain of 2.75B.

  James Brown   7/8/2003,  10:01:07 AM
VRSN - also from a recent OI watch list, this software stock has finally produced a bullish MACD signal while edging above the $15.00 level (and breaking out of its bull flag consolidation pattern).

  Jeff Bailey   7/8/2003,  9:59:42 AM
Frontier Airlines (FRNT) $12.03 +5.4% ... opened down 2%, action here looks like short squeeze potential to $13.87. Short interest had been building ahead of yesterday's upside guidance surprise. Link

  James Brown   7/8/2003,  9:59:28 AM
PIXR - from a recent OI watch list, PIXR continues to build on gains and a new triple-top breakout from its point-and-figure chart. Approaching all time highs set in 1998.

  Linda Piazza   7/8/2003,  9:59:27 AM
The earliest volume patterns showed more declining than advancing issues on the NYSE, although advancers were slightly ahead on the Nasdaq. Down volume led slightly on the NYSE and up volume led slightly on the Nasdaq. The volume was so light, though, that the numbers can't yet be trusted.

  Jeff Bailey   7/8/2003,  9:57:28 AM
CNF Inc. (CNF) $27.89 +6% .... another "trucker" posting early gains.

  Jeff Bailey   7/8/2003,  9:56:47 AM
Knight Transport (KNGT) $27.65 +4.7% .... gapped higher to open $27.29. Bullish action most likely attributed to YELL/ROAD deal. If anything, the YELL/ROAD deal gives impression that trucking stocks are "deep discount" to a willing price paid for merger.

  Jeff Bailey   7/8/2003,  9:54:17 AM
General Motors (GM) $36.80 +2.5% .... Dow standout early on after hovering around converging 50-day SMA and 200-day SMA near $36. Quick move here to trying to trend higher 21-day SMA of $36.85. Could spark a move higher for the Dow.

  Jeff Bailey   7/8/2003,  9:52:22 AM
CBOE Internet (INX.X) 147.97 +0.95% ... tech-sector strength early. Looks to challenge a double top of 150 set back in December 2001 and January 2002.

  Jeff Bailey   7/8/2003,  9:49:27 AM
Morgan Stanley Cyclical Index (CYC.X) 513.44 +1.63% ... number 2 sector winner in early going. Component Dana Corp. (DCN) $17.15 +42.6% is driver after auto parts maker ArvinMeritor (ARM) $21.00 launched a $2.2 billion hostile takeover bid for Dana Corp.

  Jeff Bailey   7/8/2003,  9:46:03 AM
Roadway (ROAD) $45.60 +51% ... resumes trading. Has Dow Transportation Index (TRAN) 2,540 +3.36% early sector winner.

  Linda Piazza   7/8/2003,  9:44:53 AM
Here's what I'm watching on the OEX 30-minute chart: Link

  Jeff Bailey   7/8/2003,  9:41:30 AM
Yellow Corp. (YELL) $24.49 .... halted for trade. Trucking company announced before the bell that it will buy Roadway (ROAD) $30.14 (halted) for $966 million or roughly $48 per share (50/50 stock/cash).

The merger will create one of the worlds largest shipping companies.

  Jonathan Levinson   7/8/2003,  9:38:19 AM
Yields are red, FVX -2 bps, TNX -2.3 and TYX -1.7 bps. TRIN.NQ .62, TICK.NQ +149, QQV +.29.

  Linda Piazza   7/8/2003,  9:35:50 AM
The first five-minute move on the OEX spanned from a low of 504.13 to a high of 505.53. The 50% retracement of that range lies at 504.83.

  Jeff Bailey   7/8/2003,  9:30:57 AM
Per Jonathan's 08:40 and 08:43 postings. Would link up pretty good with retracement work from this weekend's "Ask the Analyst" column, but has to get below 991.00 to unfold?

  Jeff Bailey   7/8/2003,  9:22:18 AM
09:00 Update posted at this Link

  James Brown   7/8/2003,  9:21:17 AM
AGN - Current OI call play, Allergan, has been started at a "neutral" by CS First Boston. Shares are not yet trading on the news.

  Jonathan Levinson   7/8/2003,  9:10:45 AM
Gold has recovered nicely, bouncing from just above 343 to 347.30 currently. Support in that area has held yet again.

  James Brown   7/8/2003,  8:51:56 AM
CHKP - CheckPoint Software. It's a bit cheap to be playing options on but CHKP was just upgraded to a "buy" at Prudential (PRU). Shares had been consolidating in a pennant-like formation with lower highs and (slightly) higher lows. Today's upgrade has shares breaking out of that pattern moving higher, above $20.00, in pre-market trading.

  James Brown   7/8/2003,  8:30:32 AM
Below is an excerpt from the Lehman Research note out this morning:

Semiconductors & Communications (Sector Positive): ...We are upgrading our communications/semis industry rating from a [Neutral] to a [Positive] as we believe that fundamentals are improving...and would overweight the sector given positive order trends, low inventory levels and relatively conservative estimates for 2H03 and 2004. We are also upgrading Broadcom, Marvell, Agere and Silicon Labs to "Overweight" ratings from "Equalweight" ratings. At this time, we recommend investors overweight companies with above average growth rates or companies that are undervalued vs peers. - Lehman Technology Research Highlights

  Jonathan Levinson   7/8/2003,  8:27:18 AM
It reminds me of last week's loan from GE Capital to Air Canada. Air Canada is in dire financial straits, and it appears to me that GE is trying to keep it afloat as a short term fix to avoid having to eat that much bad debt now- an ominous sign if it's the case.

  James Brown   7/8/2003,  8:25:15 AM
Another interesting note... General Motors has chosen to extend their 0% financing offer through July 31st. This can't be a sign that demand is picking up for their vehicles.

  Jonathan Levinson   7/8/2003,  8:13:48 AM
Yes. That "HUGE collapse" was apparently the largest on record. It was for the SPX.

  James Brown   7/8/2003,  8:12:42 AM
Actually, we made a note of the drastic changes in the COT report here (Sunday, June 29th, 2003): Link

  James Brown   7/8/2003,  8:11:03 AM
Coincidentally, shares of EBAY are trading slightly positive in pre-market hours to $114.03. This is on top of yesterday's big gains (and the gains from the day before, and the day before that and the day before...)

  Jonathan Levinson   7/8/2003,  8:10:33 AM
On that note, James, in the last COT report, the commercials switched from net long to net short (forget which contract, though), marking the largest single week position change on record. I don't have a link to back me up, though, but a fellow trader caught it.

  James Brown   7/8/2003,  8:07:28 AM
Interesting note... from a contrarian perspective the following is very bad news. According to at least one source, investors are the most bullish today, correction, investors are the least bearish today as they have been in 12 years.

  James Brown   7/8/2003,  7:58:31 AM
Chip upgrade - potentially adding to yesterday's strength in the chip sector are new upgrades by Lehman Brothers. LEH raised MRVL and BRCM to "overweight".

We like BRCM and its recent bullish breakout from a flag consolidation pattern looks tempting. See a chart here: Link

  Jonathan Levinson   7/8/2003,  7:56:07 AM
U.S. chain store sales rose 0.7 percent in the week ended July 5, according to Bank of Tokyo Mitsubishi and UBS. Sales had fallen 0.5 percent in the previous week. On a year-on-year basis, sales were up 1.1 percent in the latest week. BTM-UBS said weekly chain store sales continue "to paint a picture of an uneven improvement in non-automotive consumer demand." Most retailers will report June sales on Thursday.

This is the first time I've noticed the BoJ doing US economic reporting, but I guess it all makes sense in the grander scheme. Gold is getting clocked, down 5.30, yet the futures are down too, ES -1.50 and NQ -3.50.

  Linda Piazza   7/8/2003,  7:39:10 AM
Good morning. The Nikkei opened just below 9900 and hit 10,027.60 within the first half hour of trading. Twice more during the afternoon, the Nikkei climbed above 10,000, but each time the Nikkei fell back. After the third attempt at 10,000, the Nikkei dropped more than 100 points, still closing up 103.56 points or 1.06%, at 9898.72.

In last night's Market Wrap, I mentioned a Goldman Sachs survey that indicated that 2003 technology spending might stay stable as compared to last year, rather than dipping 3.2 percent as was previously expected. The study predicted that tech spending would rise 3.5 percent in 2004. That GS study was partially credited with the climb in Asian bourses, with tech stocks leading the gains. In addition, the Japanese May core private-sector machinery orders climbed 6.5 percent from the previous month and 12.2 percent from the year-ago levels. That was a better-than-expected result.

Techs were leading, but banks had a more difficult time in Tuesday's trading in Japan. Barely recovering from last spring's fear that declining stock markets would undermine their holdings and from a necessary rescue of Resona, they now face plunging bond prices, increasing fears that their losses will now increase due to their bond holdings. The government was to hold an auction of five-year bonds today. Last week, an auction of ten-year bonds proved to be a disaster. Mizuho Holdings traded down 4 percent.

Most other Asian markets closed up, too. Taiwan's Weighted closed up .86% and South Korea's Kospi gained 0.58%. Singapore's Straits Times gained 0.19%. Hong Kong's Hang Seng gained 1.02% as a despised anti-subversion bill was withdrawn. According to a Marketwatch.com article, many now ask for the resignation of the territory's chief executive due to his efforts to pass the hated bill.

Most European markets currently trade slightly down or near the flatline. Tech stocks, semi-related stocks in particular, gained in early trading. Germany's Deutsche Telekom and French ad group Publicis declined on news that euro convertible bonds would be launched by a German state bank and Publicis. The German state bank and the German government together own 43 percent of Deutsche Telekom.

Economic numbers showed German unemployment easing and new car registrations rising throughout Europe. In Western Europe, those car registrations rose 0.5 percent, and outside Western Europe, they climbed 5.5 percent. After intensive efforts by the German government to ease unemployment, the June German jobless rate fell to 10.6 percent. Those efforts included a revamping of the government's placement services and incentives to add new low-paying jobs. According to a Bloomberg.com article, those efforts also extended to a program that assisted the jobseekers in setting up one-person companies.

As of this writing, the FTSE 100 trades down 7.50 points or 0.18%, to 4067.30. The CAC 40 trades down 4.85 points or 0.15%, at 3177.34. The DAX trades down 1.28 points or 0.04%, to 3331.59.

  James Brown   7/7/2003,  10:24:07 PM
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