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Bond YIELDS higher as are stock futures

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In last night's market wrap, we talked about the possibility for a nice bullish rally in stocks if we found bond YIELDS higher at the open of their trading. This morning, that's what stock traders are looking at as YIELDS are higher. In last night's wrap, we discussed how bond YIELDS in the 5-year and 10-year had both traded right to/near our levels of "YIELD support" from retracement work.

Currently, the YIELD on the 5-year YIELD ($FVX.X) is higher at 4.409%, well above yesterday's closing YIELD of 3.956%. Also higher in YIELD is the 10-year YIELD ($TNX.X) at 4.739%, which is also a meaningful move higher in this bond. Newer subscribers should understand that a higher YIELD is caused by selling in a bond.

Stock futures are posting gains as S&P futures trade higher by 4 points at 1,151. NASDAQ futures are up 18 points at 1,659, while Dow futures are higher by 15 points at 9,942.

Fair value for the S&P 500 today is $0.48. HL Camp & Company has their computers set for program buying at $1.49 and set for program selling at $-1.03. Fair value for the NASDAQ-100 today is $1.56.

Salomon Smith Barney raises S&P 500 earnings

For the first time in nearly two years, Salomon Smith Barney analyst Steven Wieting raised his S&P 500 earnings-per-share forecast to $45.35 from $44.50 (+1.91%) for 2001 and raised his 2002 estimates to $47.50 from $46.50 (+2.15%). Mr. Wieting's estimates for 2003 EPS remained at $54. Wieting said the move comes as the "scope and timing of the current recession becomes increasingly more discernable." Wieting also sees a "major reversal in relative strength" towards cyclical industries in 2002, but still expects an overall decline in profits in the first half of next year.

Jeff Bailey
Senior Market Technician
Option Investor

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