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Stock futures showing gains, but so are bonds

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Stock futures are bid higher this morning with S&P 500 futures (SP01U) up 12 points, NASDAQ futures (ND01U) are higher by 65 points and Dow futures (DJ01U) are up 70 points. Fair value for the S&P 500 for today is $6.44. Computers are set for buying at $7.74 and set for selling at $4.78. Fair value for the NASDAQ- 100 today is $13.04.

Bonds are higher this morning as YIELDS are lower. The 30-year YIELD ($TYX.X) is currently down to 5.659%, the 10-year YIELD ($TNX.X) is down to 5.251% and the 5-year YIELD ($FVX.X) is down to 4.755%. Bond YIELDS are lower most likely because initial jobless claims rose 42,000 to 445,000 from the previous week's upwardly revised 403,000. Many economists were looking for a number closer to the 399,000 level and this number looks to have spooked the bond market.

Bearish signal reversed chart pattern

Planar Systems (PLNR) - This stock gave the "bearish signal reversed" pattern on June 28th at $25. The stock finished yesterday's trading at $2669 and currently has a bullish price objective of $39. Bullish support trend is just below at $19.50. First sign of real trouble is at $19.

Pulte Corporation (PHM) - This stock gave the "bearish signal reversed" pattern on June 26th when it traded $43. The stock recently tested, then bounced off of bullish support at $38, which marks the first test of this trend. Yesterday, the stock closed at $42.26 and the bullish vertical count indicates $57. First sign of real trouble is $37.

Ultimate Electronics (ULTE) - This stock gave the "bearish signal reversed" pattern on June 18th at $27 and broke bearish resistance at the same time. The stock then shot higher to the $33 level and just recently pulled back to the $27 with the broader market and finished yesterday's trading at $28.18. The bullish price objective from vertical count indicates a long-term price objective of $58. First sign of real trouble is $20.

XM Satellite Radio Holdings (XMSR) - This stock gave the "bearish signal reversed" pattern on June 28th at $15. From there, the stock ran to the $17 level where it has been turned back now for the 4th time. The recent pullback has the stock sitting at $13.29 and just above the $12 level where the stock made a nice run to $17. Bullish support is just below at the $10.50 level. Should this stock ever be able to trade $18, its current bullish price objective of $27.50 isn't out of the question. First sign of real trouble is $10.

Note: The above stocks ideas were generated only after the recent good news from Microsoft (MSFT). I selected the "bearish signal reversed" pattern as a Purdue University study indicates that this pattern is profitable 92% of the time, with an average gain of 23.2% in a period of 2.5 months on average. These are not guarantees and should not be taken as such. However, it does provide a trader with some bullish trading ideas where I feel current market conditions are conducive to this pattern.

"The Bearish Signal Reversal" is recognized by point and figure chartists as a chart pattern that develops from a series of lower high and lower bottoms. A quick reversal up and the stock begins a sharp advance higher. No accumulation occurs. The recent market environment has put a damper on the upward move in some of the above chart patterns, but today's news from MSFT and potential selling in bonds might get these stocks moving higher.

Ideally, a trader would like to recognize the "bear signal reversal" pattern before it occurs (at the buy signal), but by at least looking at some of these charts and perhaps following their progress, our subscribers may recognize this pattern in other stocks they are considering investing in.

You can review these point and figure charts for free by visiting www.stockcharts.com.

Jeff Bailey
Senior Market Technician

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