QQQQ LEADS MARKET REBOUND -- APPLE AND INTEL POWER BIG TECHS -- NOKIA HITS 52-WEEK HIGH -- SEAGATE BREAKS RESISTANCE -- OIL SURGES ON INVENTORY NUMBERS -- BULLISH PERCENT INDICES FOR NDX AND THE DOW

NASDAQ 100 LEADS REBOUND... Today's Market Message was written by Arthur Hill. John Murphy will be back tomorrow. - Editor

Large-cap tech stocks led the market higher on Wednesday as the Nasdaq 100 ETF (QQQQ) recovered after Tuesday's drubbing. The ETF surged almost 3% and filled Tuesday's gap. Despite this rebound, the ETF is not out of the woods just yet and remains stuck in a moving average sandwich. The 50-day marks resistance just above 48 and the 200-day marks support around 45.5. Trading has turned mighty violent the last four weeks and the bulls are refusing to go quietly. My eyes are on Tuesday's gap, last week's high and the 50-day. A move above 48.24 would exceed all three and call for a reassessment of the August breakdown. The second chart shows the long-term picture and there is considerable support around 45.5 from the July trendline, broken resistance and the 40-week moving average, which is equivalent to the 200-day. A move below 45.5 would break all three and this would be quite bearish.

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APPLE AND INTEL LEAD BIG TECHS ... Before looking at Apple (AAPL) and Intel (INTC) separately, I would like to show a chart with QQQQ (gray bars), AAPL (green) and INTC (red) together. These two stocks are tracking QQQQ quite well and this makes perfect sense. Both are key components of this ETF with Apple weighing over 9% and Intel is over 3%. Apple is a powerhouse on its own and Intel represents the semiconductor group, which carries significant influence. I would watch these two closely for clues on QQQQ.

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Apple surged back above 134 today and fully recovered Tuesday's losses. The stock also moved back above its 50-day average and further strength above last week's high would be open the door to a test of the late July high. The Jul-Aug decline was the first major setback since January and buyers have taken full advantage of this discount over the last two weeks.

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Intel is showing good relative strength and moved to a new high for the month of August. The stock found support from broken resistance around 23 in early August and mid August. There was also support in this area from the 50-day moving average. There was quite a battle around 24 the last five weeks and today's surge above 25 breaks the stalemate. The stock also shows good relative strength as the price relative broke to a new high for the year. The price relative measures the performance of Intel relative to the S&P 500. Many fund managers use the S&P 500 as a benchmark and stocks that outperform the S&P 500 attract more interest.

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NOKIA AND SEAGATE LEAD NYSE TECHS ... Tech action was not confined to the Nasdaq. Nokia (NOK) and Seagate (STX) trade on the NYSE and these two stocks both surged today. STX, the world's largest hard drive manufacturer, raised guidance today and this sparked a rally in other PC related stocks including Intel (INTC), Advanced Micro (AMD), Dell Inc (DELL) and Hewlett Packard (HPQ). STX gapped up and closed above its July high. Trading has been wild since late July, but today's breakout is bullish and the January-February highs are the next target.

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Nokia (NOK), the world's largest maker of mobile handsets, surged to a new 52-week high after the company announced its entry into music and gaming. Sounds like Nokia is trying to keep up with the Apples -- and doing a pretty good job of it. The stock held support around 27 in June, July and August. Nokia never broke down and was already challenging its August highs last week. The price relative actually moved to a new high in early August and recorded another new high today. Nokia is showing excellent relative strength and this is bound to catch the attention of fund managers.

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OIL AND OIL SHARES SURGE ... Gasoline inventories fell more than expected in today's Energy Department report and this sparked a big rally in oil. The U.S. Oil Fund ETF (USO) gapped up and surged over 2.5%. USO is up over 5% in the last four days. On the price chart, the ETF formed a falling wedge that retraced 62% of the prior decline. Both the pattern and the retracement are typical for corrective rallies. The break above the upper wedge trendline signals a continuation higher and the early August high around 59 is the next stop. Oil shares followed crude higher as the Oil Service HOLDRS (OIH) advanced over 3% and reclaimed its 50-day moving average. There is still resistance around 176-177 from broken support and the early August highs. A break through 177 would open the door to the July high around 191.

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BULLISH PERCENT... The bullish percent indicator shows the percentage of stocks within a particular index that are currently on Point & Figure buy signals. Stockcharts.com computes bullish percent for 6 key indices and 10 sectors and these can be found at the bottom of the market summary page. The percentage is found by diving the number of stocks with Point & Figure buy signals by the total number of stocks in the index. Using the S&P 500 as an example, if 300 stocks were currently on Point & Figure buy signals, then the bullish percent would be 60 (300/500 = .60 = 60%). The other 200 stocks (40%) would either be Point & Figure neutral or on a sell signal. A list of the different Point & Figure signals can be found on the list of "Predefined Scans Definitions". This is a great place to find technical setups for specific stocks.

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POINT & FIGURE BUY SIGNALS... Before moving on to the bullish percent chart for the Dow, I would like to review one of the many Point & Figure buy signals. The "triple top breakout" is one of my personal favorites and these candidates can be found on the "stock scans" page, which is updated daily. This scan looks for stocks that broke above two prior highs or two columns of X's. As an example, Omrix Biopharmaceuticals (OMRI) came across the triple top breakout scan today with a break above resistance at 32. The stock also broke above the bearish resistance line and showed good relative strength on Tuesday. This is especially impressive considering market conditions on Tuesday.

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DOW BULLISH PERCENT ... Now let's look at the bullish percent charts for the Dow Jones Industrials ($BPINDU) and Nasdaq 100 ($BPNDX). Commonsense tells us that 50% is the cut off for the bulls. The bulls have the edge when 50% or more stocks are on Point & Figure buy signals. Conversely, the bears have the edge when fewer than 50% of stocks are on buy signals. For the Dow, the bullish percent index dipped below 50% twice in 2004, bounced off 50% in 2005 and held above 50% in 2006. The index recovered quickly after the dips below 50% in 2004 and never dipped below 45%. There is a lot of support around 45-55% and a move below 45% would clearly turn the tide in favor of the bears. Bullish Percent for the Dow is still hanging on -- by a thread. The Bullish Percent Index for the Nasdaq 100 found support at 50 in August and this was the only Bullish Percent Index that did NOT break below 50. There were wild swings and deep dips in 2004, 2005 and 2006, but the indicator held up well in August 2007 and big techs still show relative strength.

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