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Futures fall fractionally

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"Triple F" this morning as equity futures are fractionally lower. Currently we're seeing S&P 500 futures (SP01M) trade lower by 2 points, NASDAQ futures (ND01M) are off 21 points and Dow futures (DJ01M) are lower by 3 points. Fair value for the S&P 500 is $5.66. That price will not change during the day. Computers are set for program buying at $7.26 and set for selling at $3.86.

Bond YIELDS lower

Bond YIELDS are also fractionally lower this morning across the three major maturities we follow on a daily basis. One level I'd be watching today is the 4.641% level on the 5-year YIELD (FVX.X). This 4.641% level was the low YIELD on April 12, 2001 and a break below there would tell me that bond buyers are getting a little more aggressive with their buying. Anytime the MARKET begins getting aggressive on the buy side with bonds, then I begin thinking that there will be less money available to buy stocks.

Bull Correction for NASDAQ-100

Yesterday's session did see the NASDAQ-100 bullish percent reverse 3-boxes to the 76% bullish level and this now had the NASDAQ-100 in "bull correction" status. This tells us that a recent reading of 82% (82 of the 100 stocks were on point/figure buy signals) has been slipping in recent days and now 75% of the stocks (75 out of the 100) are currently on buy signal. Since we chart this indicator on 2-percentage point scale, we only fill in the O's to 76%. You can get a free bullish percent chart on the NDX at www.stockcharts.com by using the symbol $BPNDX.


Yesterday we got fairly aggressive with our shorting and attempts to short some biotechnology names. This was a group of stocks that we had on our list early in the morning that we though looked suspect. Currently we're holding a short on shares of Amgen (NASDAQ:AMGN), but we also talked about Celgene (NASDAQ:CELG), Protein Design Labs (NASDAQ:PDLI) and the Biotech HOLDR's (BBH) as good short candidates. This is a group I'd look to again today on sector weakness.

Steel stocks

Yesterday after the market closed I noticed that several steel related stocks shot higher. At 09:30 EST we'll have some commentary on potential plays in this sector. USX US Steel (NYSE:X) and Bethlehem Steel (NYSE:BS) were a couple that showed some impressive percentage gains. This is a sector I think a bullish trader can me selective in and perhaps make some money in the coming sessions. The bullish percent for this group is at 50% and just reversed back up into "bull confirmed" status.

Jeff Bailey
Senior Market Technician

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