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5-year Treasury sees selling

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The first thing I wanted to observe this morning to get a follow through response from yesterday's 25-basis point Fed rate cut was the bond market. This morning we're seeing bond YIELD higher across the three major maturities we follow and this is something a bullish trader in stocks wants to see continue. This morning, the 5-year YIELD has rallied higher caused by selling in this bond. The early rally has taken the YIELD on this bond back above long-term downward trend and right up under its 50-day moving average.

5-year YIELD chart ($FVX.X) - last eleven months

Bond YIELDS are headed in the right direction for bullish traders to be thinking about doing some buying. More importantly, the higher bond YIELD should have bears doing some buying too as they too know that there is some money freed up from bonds and that money could find its way into stocks.

Stock futures higher

Stock futures are higher this morning with S&P futures trading higher by 9 points, NASDAQ futures are up 32 points and Dow futures are bid 65 points higher. Fair value for the S&P 500 today is $7.57. That price will not change during the session. Computer programs are set for buying at $8.94 and set for selling at $6.09. Fair value for the NASDAQ-100 is $15.98.

Macrovision Chart - last eleven months

Shares of MVSN are being bid $64 this morning in pre-market trading and I'm thinking that the selling in bonds and a higher relative high will find this stock performing nicely again today. We've talked about MVSN and some of the powerful supply/demand characteristics this stock has been showing on its point and figure chart. Yesterday's break above the 200-day may have bearish traders calling it quits and admitting their mistake.

Jeff Bailey
Senior Market Technician

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