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Morning Sickness

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Good morning. The fat is in the fire it seems. Today Fannie Mae (FNM: NYSE) quickly broke the 65 level we've been watching on the short-term chart, then fell through 64 to give a sell signal on the longer-term chart. Key support for the stock from here is 60.

Among other things going on, I want to point out the Internet sector this morning which is acting a bit heavy. Continuing with my glass half-empty theme, if we go back to last October when the intermediate bottom for the market formed, this is the group that really asserted leadership.

Like most people, I consider the sector bellwethers to be the big three Amazon (AMZN: NASD), Ebay (EBAY: NASD) and Yahoo! (YHOO: NASD). AMZN reports earnings after the close today. EBAY reports after the close on Thursday. YHOO, which has already reported earnings, is up 220% since October 1 to lead the trifecta.com. Interestingly, however, the stock recently gave a sell signal on the point & figure chart (half-point) at 30.5. That is the stock's first sell signal since September of last year. EBAY has also not given a sell signal since September 2002. And on July 24 AMZN will mark the one-year anniversary of its last sell signal. That's right; AMZN last gave a sell signal on its point & figure chart in July of last year.

Naturally these stocks are due for some consolidation. What I want to watch for is consolidation that accelerates into technical damage.

As mentioned, YHOO is already on a sell signal. EBAY has support in the 96-97 area, a print of 95 would confirm a sell signal. AMZN has support at 33 and 32 would confirm a sell signal and breakdown.
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Position in FNM.

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