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Consumer confidence surges to 110 reading

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The broader market averages have turned decidedly positive after this morning's 10:00 AM EST release of March consumer confidence numbers jumped to 110.2 from February's 95 reading and surprising economists that were looking for a confidence reading of 97.2. The closely monitored expectations index surged to a reading of 109.3 versus consensus of 94, while the present situations index improved to 111.5 from 96.4, marking the largest single-month jump in 25 years.

The Airline Index (XAL.X) 102.81 +2.75 leads sector winners after this morning durable goods orders showed a 47% jump in commercial aircraft orders as the sector recovers from the September 11th terrorist attacks.

The deeper cyclicals snapped back from early session weakness and have shown the strongest gains since the surprisingly strong consumer confidence numbers. The Dow Transports (TRAN) 2,862 +1.6%, Forest and Paper Products (FPP.X) 362 +1.28% and the broader Morgan Stanley Cyclical Index (CYC.X) 571 +1.65% have reversed earlier session lows and now trade at their highs of the session.

One stock I like for bulls to be looking long after the release of the stronger-than-expected confidence numbers were shares of International Paper (NYSE:IP) $42.40 +1.77%, when the stock was trading near $41.93. Here's a quick look at what I'm thinking with a near-term target of $44, but upside exists to upper-end of regression at $47 over the next couple of weeks.

I like the recent little pullback in shares of International Paper (IP) at the bottom part of its regression channel. While MACD is still trending lower, this is somewhat similar to that found in mid-January when the stock pulled back after a nice move from the September lows. Breaks above the 50-day MA (thin blue) have had the stock finding buyers and sending the stock higher. I liked shares of IP as bullish for short-term traders with a nice tight stop just under this morning low of $41.20. A swing- trader willing to give the stock a little more room below the $41 level will be targeting the $45 level (mid-regression) and if bullishness gets "carried away" then a test of 52-week highs of $46 or upper-regression of $47 isn't out of the question.

Jeff Bailey
Senior Market Technician
Option Investor

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