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OI Technical Staff : 9/16/2006 9:59:59 PM

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Marc Eckelberry : 9/16/2006 5:30:55 PM

Momentum looks good and hedge funds are obviously chasing performance while they still can (i.e before earnings) to make up for a dismal year in techs. ES monthly R2 is 1350 and that would be very possible if 1320 holds. But I refuse to get complacent when I see the SOX/SMH still below their 200 DMA's while NDX/QQQQ and COMP are above. In fact, all our problems this year have come from the semis underperforming, just look at the charts in March/April of this year, when the Q's were advancing above the 200 dma while the SOX was still struggling there. Yes, we could rally another week or two, but after that? Do you really want to get fully invested with this hanging over the markets? Trade it, sure, but don't invest in it quite yet. If the SOX suddenly jumps 20 points while the rest slows, or the market falls while the SOX holds up, then yes, bulls have something to really cheer about. Right now, I remain cautious. I am not about to throw away the only indicator that has worked all these years. If there is a new paradigm and software replaces semis as the leading indicator, then fine with me. But for now, I will stick to what has worked for 15 years. Conclusion: trade it, don't love it. Except gold: at some point, you want to own it fo the long haul, especially going into year end. When ECB is done by 9/26, we will really see what the bullion is made of. There is risk to 539 if the lows of the year break, but I frankly don't see it going much lower than that for years to come. The specter of stagflation has not disappeared and oil is certainly not as dead as everyone keeps telling us.
NDX 1630 is both 10 month MA and 200 DMA. That is your fulcrum going forward and it is right where we are.
This is not a contest as to who is right or wrong, but a just a quiet word of caution since preservation of capital is your main objective in this game. You will be glad to have it when there is real value, a trade that just screams at you, as did the entire tech sector in July, and you know I was pushing everything from INTC to NVDA and TXN. I think that trade will be gold and maybe oil, but I won't rehash that story. I think the oil leap trade Jim put in is spot on.

Marc Eckelberry : 9/16/2006 2:48:54 PM

SAN FRANCISCO (MarketWatch) -- Moody's Investors Service on Friday placed ratings of Freescale Semiconductor Inc. on review for possible downgrade after news that a private equity consortium is buying out the company for $17.6 billion. Moody's said its review will focus on the operating strategy of the company under new ownership and the proposed financing and capital structure arising from this acquisition. The agency added that the ratings could be subject to a multi-notch downgrade depending on the level of debt incurred in the transaction. Link

Jeff Bailey : 9/16/2006 4:25:52 AM

Here's Dorsey/Wright's NASDAQ-100 Bullish % (BPNDX) chart Link

See where it turned "bear confirmed" at 58% in February (just after blue 2), and in April (blue 4) that was when bears really took control.

The playing field is 0% to 100%. Levels below 30% are deemed "oversold" and bears have the greater amount of risk. Levels above 70% are deemed "overbought" and bulls have the greater amount of risk.

Here's a PnF chart of the $NDX Link .

And the INTERNALS are just starting to really strengthen!

Ozzy Osborne's hit song Crazy Train starts out .... "Are you ready, all aboard, ha, ha, ha, ha " ... then the big guitar intro begins and things start to rock.

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