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The Morning Cup of Jo


Come-on. Gimmy somethin'!


Trademark Pending

Last Friday's 'Jo' had Hoofy at the top yellin' "Pump up the Volume!" and talked about the 3 majors sitting right below their ST downward trends. Sammy, the wise man (snake) stated, "Don't shoot 'till ya see the whites of their eyes." That couldn't be closer to the truth. The volume on Friday came in nothing short of anemic followed by Monday, which gave us markets that started higher, and by 2PM dropped to the lows of the day. The NYSE's volume was 1.28B, 12% shy of ADV (1.46B). So here we are, back again to the notorious trading range.

However, there was some good news in the markets yesterday - besides OSI Pharma. Inc. (OSIP: NASD), which increased almost 52 points (137%) yesterday - the AMEX Biotechnology Index broke out of a Cup and Handle base. There seemed to be a lot of excitement surrounding this sector yesterday. As Professor Miller pointed out in 2 separate articles (Important tipping point for biotech valuations and The ASCO disclosure dance) there are many changes and upcoming events within the industry that could affect many of the stocks within this index. For those of you who haven't read D.M.'s articles, I HIGHLY suggest doing so! David has put a lot of pertinent information regarding this sector in his articles that every investor should know prior to investing in Biotechnology. Let's look at the chart.

This index is one of the few indices that didn't breakdown through its IT trend during the so-called correction and/or consolidation. The Index fell back to retest the Floors & Ceilings of the last major base, held, then proceeded to form a Cup & Handle base, which it broke out of yesterday.

WONDA Copyright 2004 William O'Neil + Co. All rights reserved

Onto another seemingly positive note, the article professor McGuirk put out yesterday from 'Downunder' called "Go for Gold?" Another "Must Read" if you're involved with either the physical commodity or equities within the Phlx Gold/Silver index. This index, since late March, has seen an unabated nasty freefall from 106 down to where it sits today at 88.5 (17% correction).

As you can see from the chart below, the index looks as if it may find support around this level. Technically it's in poor shape, however, Professor McGuirk has given some interesting theories (not advice) on why the physical commodity may find support around these levels. Also, as I pointed out in the April 16th 'Jo,' the US Dollar Index would be hitting severe resistance around the 200 DMA (approx. 92-93) and this could bode well for Gold.

With this particular index, as previously stated, there is a lot of technical work to be done if it's going to start making a bottom. A break of this level puts the index in much greater danger of falling to the last major consolidation, around 80. Keep a mindful eye.

WONDA Copyright 2004 William O'Neil + Co.Inc. All rights reserved

As for the 3 Majors, only time will tell. Watch, wait and anticipate (either way) what you're going to do if and what happens.

I hope this helps.

Until next time...


No positions in stocks mentioned.

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