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Bond YIELDS are higher, so are stocks

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All three of the major bond YIELDS we watch on an hourly basis are all seeing selling this morning and their YIELDS are rising this morning. The 5-year YIELD is right back near that "critical" level a bullish trader wants to see this YIELD above at 4.525%. Equity futures are looking strong this morning with S&P futures (SP01M) up 11, NASDAQ futures (ND01M) are higher by 39 and Dow futures (DJ01M) are up 98 points.

S&P 500 Futures (June 2001) Chart - last eleven months

At the OptionInvestor.com expo, we talked quite a bit about the health and "overbought" and "oversold" conditions of the SPX. Traders that got a taste of the bullish percent indicator from point and figure charting also know that this indexes bullish percent has reversed into a column of X's and is beginning to show some internal signs that stocks in this index are beginning to show some buy signals once again. Current status is "bear correction" and tells a bullish trader that he or she could expect a trading rally, but there's some work to be done before we get too bullish.

A sector I like

I like the drugs currently and think this is a place where a bullish trader should be looking for some upside gains short-term. Here's another index/sector I talked about at the OptionInvestor Expo this weekend. One of the stocks I like Sunday evening for a trade to the upside was shares of Forest Labs (NYSE:FRX) with a short-term bullish target of $64. Yesterday, shares of FRX traded up 4.5% and if it can get above 61 today will be back on a point/figure buy signal.

Jeff Bailey
Senior Market Technician

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