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Stocks firming after Anthrax jitters

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Stocks have firmed after this afternoon's jitters regarding the reported case of Anthrax detection of an NBC employee in New York. The Dow Industrials have rebounded from their worst levels of the session and now trade down just 133 points at 9,277.

Dow Industrials Chart - 60-minute interval

The Dow Industrials managed to hold tough at the 9,208 level. While we did see a dip below 9,208 and 9,194, we've seen a bit of a rebound from session lows. The retracement bracket from above will not replace our original retracement bracket we've been using, but I will continue to use the above retracement bracket along with the Swiss Franc futures discussed in today's 01:00 EST Update. It may come in handy in the future. Shorter-term traders might find the chart above more useful if they're incorporating Swiss Franc action into their trading scenarios.

Swiss Franc

I'm running late on this update, but suffice it so say that we have seen a pullback in the Swiss Franc (sf01z) December 2001 futures and that action correlates with the slight rebound we've seen in the Dow. I like today's action between the Swiss Franc and stocks. I think we will keep monitoring this relationship in the future as it is giving us some good observations of market psychology.

Gold/Silver

We're also seeing gold/silver stocks as depicted by the Gold/Silver Index (XAU.X) trade back off their best levels of the session. This type of action is also very correlative with the Swiss Franc and gives some insight into how the market views things near-term and even longer term. As we've said before, gold can be viewed as a hedge against inflation, but also an investment that investors turn to in times of "panic" and uncertainty. We differentiate the two (inflation vs. panic" by monitoring bond YIELDS and other interest rate sensitive stocks and sectors. Right now, the market looks rather rational, but cautious. We should trade/invest accordingly.

Jeff Bailey
Senior Market Technician
Option Investor

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