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Treasury surplus slightly below expectations

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Stocks are back near their session lows after today's Treasury Budget surplus was reported. The Treasury surplus came in at $67.2 billion, which was slightly below the $69 billion consensus among economists. In recent months and especially after the September 11th terrorist attacks, economists have become concerned that the U.S. may begin running a budget deficit due to increased spending on national security that is offset by lower tax collections due to the slower economic environment.

Treasuries did see some buying into the close, driving the YIELD on the 10-year Treasury ($TNX.X) down to the 5.189% level, but still above last week's closing low YIELD of 5.187%.

Interest sensitive utilities and the Utility Index (UTY.X) 326.07 +1.58% are getting a boost today. Not only from some bullishness in recently pummeled Dynegy (NYSE:DYN) $8.60 +22.36, but in other more technically strong and higher dividend paying stocks like Ameren Corporation (NYSE:AEE) $43.97 +1.3%, which we discussed as bullish in past commentary. Today, the stock is breaking to some relative highs.

Ameren Corporation Chart - Daily Interval

I liked and like shares of Ameren (NYSE:AEE) $43.99 +1.35% for a bullish trader's retirement account. The stock carries an attractive current dividend YIELD of 5.85% and the supply/demand chart is bullish longer-term to $52. After recently completing a secondary offering on February 27th priced at $39.50, I liked the bullish action from that secondary offering, hinting that the MARKET still had an appetite for the stock. Bulls looking for a little extra dividend may look to sell the June $45 covered calls (AEEFI) if/when the stock traded our 50% retracement level of $44.54.

Jeff Bailey
Senior Market Technician
Option Investor

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