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                               $INDU                    $SPX              $COMPQ

Monthly Momentum     Positive                    Positive            Neutral

Weekly Momentum      Positive                    Neutral             Negative/Neutral

Daily Momentum         Positive                 Positive          Positive

Note: The trading ranges of late have been so narrow as to make this indicator very sensitive to minor changes on a monthly basis. The bias however is still fairly reliable, so it should be taken into consideration.

Markets continued higher on reasonably strong volume yesterday and look to be attempting a real upside breakout of sorts. The leadership is still somewhat muddled, but reversals continue in the same sectors we have mentioned over the last few days. Telecom (CHT, AT, SKM, and TRO), electric utilities (CIG), auto parts (AAP, AN), healthcare (DP, WST, HAE) and specialty chemicals (CRDN) made the initial screens. One insurer (AMH) also was discovered this morning. We think that software stocks are making bullish extension moves (BMC, RHAT), but in our view, many of these stocks are not cheap on an earnings or cash flow basis. Foreign banks (HDB) may also be sneaking into the reversal picture.

Statistics today are not nearly as strong as they have been over the last few sessions. We still are in a pretty confused sector leadership pattern currently, and that is reflected in the trading model pattern statistics. In the unique case of CRDN, the stock gapped down on an apparently erroneous report of a drop in sales of armor products. What that should make traders realize is that in this tense environment of volatile commodity prices and shifting interest rates that even erroneous negative news can damage a trading position. SNY suffered a similar fate the evening before last when an after-hours allegation was made that a clinical report was released prior to a legally acceptable public presentation. Care must be taken to track news. It is sometimes impossible to do so consistently, but it has to be done.

Here is what the nets saw today:

CIG 5.09/1 65.7% (relatively short trading history)

TRO 3.14/1 60.0%

CRDN 3.08/1 65.2%

DP 1.85/1 56.4%

CHT 1.85/1 56.4%

That's it for now. Perhaps we have understated the breadth of this international telecom rally, but because some of these companies have marginal fundamentals, it is still kind of a crap shoot to pick just any telecom stock and run with it. We are still not comfortable with the level of sector and stock volatility, but that is the way these markets are running currently. If one is to navigate these markets like a Class VI rapid, one must either decide to paddle, drown, or get out of the water.

FOR FULL DISCLOSURE: The MrSwing Trading Team took profits in SNY and XRTX yesterday on tight protective stops. The MrSwing Trading Team still holds positions in TEX and established positions in SGK and NDSN yesterday. 

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