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Stocks hold early gains

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The broader market averages are holding early gains as the Dow Industrials (INDU) trade at their best levels of the session at 9,394 +112 (+1.21%) bolstered by gains in Alcoa (NYSE:AA) $31.77 +3.18%, Intel (NASDAQ:INTC) $19.89 +2.91% and Home Depot (NYSE:HD) $37.78 +3.02%.

The S&P 500 Index (SPX.X) 1,004 is up 11 points (+1.18%) and back above the psychological 1,000 level and getting a nice broad rally from financial along with technology. Financial components are putting in a good showing as the S&P Banks Index (BIX.X) 311.51 +1.22% (regional banks), KBW Banks Index (BKX.X) 840 +1.5% (multi-national/money center banks) and Securities Broker/Dealer Index (XBD.X) 425 +2.32% all show gains.

Technology gainers have the GSTI Software Index (GSO.X) 108.39 +1.25% showing the largest gains among the various technology sectors. Sector bellwether Microsoft (NASDAQ:MSFT) $54.63 +0.86% bested yesterday's high and traded at a session high of $55 in the past hour.

The NASDAQ Composite (COMPX) 1,467.94 +0.52% is lagging the major market averages a bit and finding some resistance at yesterday's session high of 1,476 in the early going. Weakness in the Internet stocks as depicted by the CBOE Internet Index (INX.X) 75.82 -1.34% hints that the market lacks any overly aggressive participants.

Sector weakness today is found in the Gold/Silver Index (XAU.X) 76.26 -2.66% as the broader market averages hold gains and near- term "bearish sentiment" has faded somewhat.

Helping bolster stock investor sentiment for the broader markets is a slight rebound in the US$ as the session progresses. After reaching a level of 107.81, the US Dollar Index (dx00y) 108.19 - 0.01 has rebounded somewhat in the past hour.

Economic news released this morning came in line with expectations. June consumer came in at 106.4, which was in line with consensus looking for 106.3. May's previously reported 109.8 reading, was revised slightly upward to 110.3. While June's reading was below May's, it was perhaps not as low as some may have thought given the stock market's performance for June. In past reports, stock market performance has been one of the key drivers of consumer confidence.

Existing home sales for May came in a little higher than expected. Economists were looking for 5.68 million, and the - 0.3% decline to a 5.75 million rate has stocks moving to their best levels of the session.

Market breadth in the early going is positive. On the NYSE, advancing stocks outnumber decliners by a 2 to 1 margin, while the NASDAQ breadth is fractionally positive with advancers outnumbering decliners by a 8 to 7 margin.

Jeff Bailey
Senior Market Technician
Option Investor

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