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Green across the board

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Stock futures are higher this morning across the three major averages we follow every morning. Currently we're watching S%P futures rise by 10 points, NASDAQ futures are higher by 42 points and Dow futures are up 3. Also green are bond YIELDS. We're seeing selling in the three major maturities with the 5-year YIELD (FVX.X) at 4.790%, the 10-year (TNX.X) YIELD is rising to 5.263% and the 30-year YIELDS is higher to 5.742%. Fair value for the S&P 500 today is $5.36. That price will not change during the day. Computers are set for program buying at $7.06 and set for selling at $3.86.

10-year YIELD Chart - last eleven months

Yesterday I was using the 10-year YIELD to help understand what was going on with stocks. Months ago I place a "waterline" on the 10-year YIELD at the 5.2% level. This waterline was derived from both historical levels dating back to August 1998 and the "Asian Flu" along with analysis of key economic events taking place in late 2000 and earlier this year. Yesterday the NASDAQ and NASDAQ-100 really seemed to have some problems with this YIELD dipped below 5.2%. The current trend on the above chart is still up, but longer-term trend is down. You can see how YIELD on this bond has been consolidating in recent sessions and ties in nicely with what we've been seeing in the NASDAQ Composite. Use it to your advantage.

Jeff Bailey
Senior Market Technician

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