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Stock futures show fractional gains

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Stock futures are showing fractional gains this morning with S&P futures trading higher by 4 points, NASDAQ futures are up 15 points and Dow futures are higher by 40 points. Fair value for the S&P 500 today is $2.42. HL Camp & Company has their computer set for program buying at $4.08 and set for selling at $0.96.

Microsoft downgraded

AG Edwards is downgrading shares of Microsoft (NASDAQ:MSFT) this morning, just before the software giant is scheduled to report earnings after today's trading session. AG Edwards downgrade from "buy" to "hold" is valuation based as the firm feels Microsoft is a mature and its pipeline of new software products will take time to contribute to meaningful revenue and earnings growth near-term. With that said, AG Edwards feels recent earnings reports from Intel (NASDAQ:INTC) and IBM (NASDAQ:IBM) suggest the PC market might not be as bad as everyone anticipates; believes the company (MSFT) does have some promising products in the pipeline.

Texas Instruments warns

Yesterday after the close of trading, Texas Instruments (NYSE:TXN) warned that it expects a larger-than-expected loss for the fourth quarter while reporting a narrower loss in its third quarter. Merrill Lynch lowered its rating on the stock this morning to "accumulate" from "buy."

Bond YIELDS mixed

The bond market is open for trading and we're seeing mixed YIELDS among the major maturities. Yesterday the 30-year YIELD dipped below the 5.34% level and is edging lower this morning with a YIELD of 5.309%. It has been our thought that a dip in YIELD below the 5.34% level would be bearish for stocks as it is indication to us that money may begin rotating out of many stocks and back toward the safety of Treasury bonds.

Jeff Bailey
Senior Market Technician
Option Investor

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