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Stock futures lower

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Stock futures are lower this morning as we're seeing S&P futures trade down 4 points, NASDAQ futures are off 5 points and Dow futures are lower by 20 points. Fair value for the S&P 500 today is $4.77. HL Camp & Company has their computers set for program buying at $6.53 and selling set at $3.41. Fair value for the NASDAQ-100 is $10.20.

Jobless claims fall in latest period

First-time claims for unemployment fell by 51,000 in the latest week and marked the largest drop in new claims since March. The level of claims fell to 366,000 in the week ended July 21st, which is significantly lower than the 414,000 level expected by economists. The summer period is a volatile period for these numbers as automotive and textile plant furloughs leaves weekly statistics volatile as plants will shut down for retooling and then come back online. The four-week average did decline with the latest weekly data, down 6,250 to 409,000. The labor department said, "There is nothing unusual in the data. Volatility is to be expected."

A separate report from the Labor department showed the second quarter employment cost index rose by a smaller-than-expected 0.9%. Economists had expected the index to have risen 1% in the period.

Bond YIELDS are mixed

This morning we are seeing bond yields mixed across the three major maturities we follow every day. Currently, the 5-year YIELD ($FVX.X) is lower, the 10-year ($TNX.X) is unchanged and the 30-year YIELD is up fractionally. Yesterday after the close I looked at some bond YIELD charts to try and help understand what had the markets finding their rally in the last 2 hours of trading and do believe the action in the 10-year YIELD gives great insight. I covered this yesterday in my market wrap for PremierInvestor.com and will share that in the next update for other subscribers as I think it really does show just how closely some big money is watching YIELDS and making some buy/sell decisions. If a trader can pull up a 15-minute chart of the 10- year YIELD ($TNX.X) and study the action at the 01:50 EST intervals and rise in YIELD there, they may correlate the recovery for many stocks soon after.

Today, I still believe equity bulls need to see a follow through in selling of bonds. Today's unemployment numbers seem to be being shrugged off by many as a short-term phenomena. Today, Hewlett-Packard (NYSE:HWP) announced they will be cutting 6,000 jobs and Lucent (NYSE:LU) also recently announced job cuts.

Jeff Bailey
Senior Market Technician

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