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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (9677)	5/3/2003 12:39:16 AM
From: Return to Sender	Respond to of 95652

Market Internals: Stocks are gathering some upward momentum and the Dow Jones Industrial Average ($INDU) performed well in the latest week of trading. During the past five trading sessions, the Dow rose three times, fell twice, and rose 275-points or 3.3%. However, the performance of the Dow was not really indicative of the market’s inner strength. Up volume outpaced down volume by a significant margin (see table above) throughout the week on New York Stock Exchange [NYSE]. By Friday, up volume outpaced down volume more than five-to-one and the ratio of advancing to declining issues was nearly four-to-one positive. In addition, total volume is picking up. The combination of improving market internals and increasing volume is a technical indication that the market’s recent advance is gaining strength. The performance of the Nasdaq Composite Index ($COMPQ) was even better than the industrial average. The Composite index rose during all five trading sessions and gained nearly 70 points, or roughly 4.75% for the week. Up volume topped 1.0 billion shares on three occasions on the Nasdaq Stock Market. In addition, on Friday, total volume surged to 1.8 billion shares—which was the busiest day of trading on the Nasdaq Stock Market since March 21. Internet, software, networking, and biotech stocks all helped lift the Nasdaq with solid weekly gains. Sentiment Data: Many of the major averages are in the process of rising above key technical levels. For example, the Dow Jones Industrial Average is rising above 8,500, the Nasdaq Composite closed above 1,500 for the first time since June 2002, the Russell 2000 small cap index ($RUT) is breaking above the 400 level, and the key PHLX Bank Sector Index ($BKX) is breaking above 800. And, while the major averages are breaking above critical resistance levels, volume is increasing and market internals are solid. This is clearly a case of the market building a head of steam and it may be a situation where getting in front of the bulls (by betting on a quick turnaround or move to the downside) might feel something like stepping in front of a moving freight train. For the purposes of discussion, however, it seems like a precarious situation because the sentiment data is clearly pointing to high levels of bullish sentiment—or the type of market psychology that we have seen at or near previous market tops. For example, the latest survey of newsletter writers conducted by Investor’s Intelligence shows bullish sentiment at 48.3% (compared to 42.7% the week before) and bearish sentiment falling below 30% (to 29.2% from 34.8%). Such low levels of bearish sentiment from Investor’s Intelligence often occur at or near the end of a market advance. Meanwhile, the 5-day Trader’s Index ($TRIN), which has been a reliable indicator prior to major turning points, is now at 4.33. Readings of 4.00 or less are almost always followed by market declines. Finally, the index put-to-call ratio fell to .88 on Wednesday and readings of less than 1.00 are generally considered bearish for the market going forward. The majority of the other sentiment data was unchanged from the week before and continues to suggest far greater bullishness, rather than bearishness, which is generally considered a negative for the stock market going forward. In sum, the sentiment data is at odds with the technical conditions of the market. Specifically, while the sentiment data is urging caution, the technical action of the market is showing strength. Investors are growing more bullish and the result has been increasing trading volumes, improving market internals, and a strong performance by the major averages. This strong powerful upward momentum can continue for a long time even though the sentiment data suggests that bullish sentiment has reached an extreme. So, given the mixed signals, strategists might want to consider alternatives to directional trades and focus on more neutral strategies like straddles, strangles, and ratio backspreads. optionetics.com

To: Return to Sender who wrote (9677)	5/3/2003 1:45:17 AM
From: Kirk ©	Read Replies (1) \| Respond to of 95652

I guess the point I was making is that the volatility lately has allowed the market to regroup each time it has become overbought but this can only go on so long unless we have indeed put the bear market behind us. Technically the action in the market has been tremendously positive. The volume today was awesome. The Wilshire5000, which is THE market, looks to have hit an "official bull market level" today as it is up 20% and over a 6 month or greater period. cbs.marketwatch.com Zeev is now "neutral" and more and more bears are slowly melting... As long as most the "experts" on CNBC are scratching their heads... we are probably OK. :) Velociraptor has been quite accurate and he is predicting we roll over early next week, but we've already gone much higher than he thought not too long ago. SteveLee and Larry Dudash have had good success in the bear with their "models" but they are both sitting on large losses in their last shorts now. Those are four people who have done well as bears that I've followed and none "went long" from what I can tell last October where the QQQs are now up 40% from that date. This might be the sign of a turn when we'll get a new set of guru's or the market will make them right again. <G> My only concern is that while the majority of the BP charts suggest that the market can continue to get more overbought every other chart says we are in top mode. Make sure you now look at charts back to 1990, or at least 1994, to see how the indicator behaved before you base conclusions on it....