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Stocks pegging session highs just like Friday

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It's enough to make any bear wonder what gives as Treasury YIELD close at their session highs again today, mimicking Friday's close. The action in the Treasury market is being "confirmed" by stocks as they too peg a session high.

Some good correlation can perhaps be made between the recently discussed retracement on the S&P 100 Index (OEX.X) 447.98 +4.93% and the Dow Industrials (INDU) 8664.39 +4.83% at each chart's 50% retracement level.

Currently, it looks like the OEX.X is destined to test its 50% retracement near 460 and the Dow Industrials (INDU) may test near-term resistance at/near 8,856 at some point tomorrow.

Dow Industrials Chart - Daily Interval

While we didn't have a bearish vertical count to tie into with our S&P 100 chart, we did have one from the Dow Industrials point and figure chart, up until today that is. The retracement I've been working with was a "conventional" retracement on the Dow Industrials from its March highs and anchored to the recent bearish vertical count of 7,050. We noted last week that the Dow Industrials had seemingly "reversed course" near the 80.9% retracement of 7,740 when the 5-year YIELD achieved its bearish YIELD objective last week. The action between the Dow and 5-year gave some credence to the "asset allocation" shift.

Traders monitoring the OEX.X 50% retracement at/near 460 can begin tying that in with the Dow Industrials at its 50% retracement of 8,856.

With Treasuries seeing strong selling into today's close, look for bears to continue locking is some past gains and getting accounts squared into today's close.

Jeff Bailey
Senior Market Technician
Option Investor

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