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Economic data strong, but inflation fears have stocks mixed

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As the session progresses we're starting to see some bids come to the market as the market begins to digest this morning's stronger than expected ISM (Institute for Supply Management) data, which showed a steady expansion in March.

What seemed to "spook" some bulls earlier this morning was that the prices paid index rose above 50% for the first time in 13 months to 51.9%, which was a significant jump from February's reading of 41.5%. That jump has some fearing that the Fed will be more inclined to a tightening bias on interest rates going forward and perhaps putting a lid on a more robust economic recovery.

Treasuries are seeing selling across the board, with the shorter- end 13-week YIELD ($IRX.X) jumping to 1.77%, which is back above the current Fed Funds rate of 1.75%. The benchmark 10-year YIELD ($IRX.X) is also higher (selling in the bond) to 5.44%.

Gold/Silver stocks are finding buyers once again today with the Gold/Silver Index (XAU.X) 71.76 +1.2% setting a new 52-week high earlier in the morning and trading as high as 72.61. Shares of Newmont Mining (NYSE:NEM) $28.58 +3.21% have vaulted to a new 52- week high today and traded as high as $28.87.

Technology stocks are hanging tough as some of the larger capitalized names in the NASDAQ-100 (NDX.X) 1,449 -0.24% are trading mixed. Helping bolster NASDAQ gains is some strength in the Fiber Optics Index (FPP.X) with Ciena (NASDAQ:CIEN) $9.36 +4%, PMC Sierra (NASDAQ:PMCS) $17.17 +5.46% and Brocade Communications (NASDAQ:BRCD) $27.93 +3.4% showing gains.

Technology weakness is rather limited today to the GSTI Software Index (GSO.X) 163 -1.3% as sector bellwether Microsoft (NASDAQ:MSFT) 59.52 -1.3% trades lower, despite last Thursday's Financial Times report that MSFT is claiming it is winning the internet portal war in Europe, beating local and international rivals such as Yahoo! Inc. (NASDAQ:YHOO) $18.63 +0.86% and America Online (NYSE:AOL) $23.09 -2.36% (subsidiary of AOL Time Warner).

The Dow Transports (TRAN) 2,854 -2.16% are seeing some weakness today as crude oil continues to show price gains as the May Light, Sweet Crude Oil futures (cl02k) jumps above the $26/barrel level to $26.88, after trading as high as $27.40 earlier this morning. Shares of Dow component and multinational oil/gas producer Exxon Mobil (NYSE:XOM) $43.85 +0.04% trade fractionally higher.

Jeff Bailey
Senior Market Technician
Option Investor

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