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Dow Industrials 180 point gain has trading curbs in

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Trading curbs have been put in place since the Dow Industrials (INDU) 8,667 +2.5% (+212 points) gained more than 180-points from yesterday's close of 8,456, and it now becomes a "humanized" market. Trading curbs will stay in place unless the Dow Industrials trades back to the 8,546 level, which is 90 points above yesterday's close.

The Dow's gains continue to be lead by Citigroup (C) $33.85 +7.42% and JP Morgan (NYSE:JPM) $25.97 +6%, which have added to gains since our earlier updates. The bullish action in the Dow now has breadth decidedly more positive with 28 of the 30-stocks in positive territory. The two stocks showing losses have Home Depot (NYSE:HD) $26.95 -4.52% and McDonalds (NYSE:MCD) $22.65 -3.03% showing losses.

The major market averages have all broken to intra-day highs and those breaks higher found some volume coming into the markets at that time, as aggressive bulls and jittery bears turned more bullish.

Volume leaders have the NASDAQ-100 Trust (AMEX:QQQ) $23.50 +3.07% active at over 91 million shares. Networking giant Cisco Systems (NASDAQ:CSCO) $12.20 +2.15 is the second most active at 803 million shares. Other most actives are handheld device maker Palm, Inc. (NASDAQ:PALM) $0.81 -17.3%, semiconductor giant Intel (NASDAQ:INTC) $18.17 +2.53% and computer maker Sun Microsystems (NASDAQ:SUNW) $4.18 +9.4%.

NYSE most actives have Lucent (NYSE:LU) $1.52 +4% trading just over 38 million, which isn't a lot in dollar terms, but Best Buy's $19.20 -37% volume at just over 38 million has this stock taking the number 2 spot on the big board. Other actives have Home Depot (NYSE:HD) $26.97 -4.5% and General Electric (NYSE:GE) $32.06 +4.29% running volume of over 26 million shares respectively.

I've mentioned GE as a bearish candidate in recent sessions. While the stock has not broken above last week's relative high of $32.29 (today's high has been $32.20) a break above the $32.30 level could see a flood of short-covering, and bearish positions on the underlying stock need to assess upside risk to $34.60 or the 200-day MA at $35.18. GE bulls will be looking long on the break higher, with retracement support at $30.17.

Into the close, intra-day internals have improved markedly as breadth is positive at both the NYSE and NASDAQ. Advancers now have a more decisive edge at the NYSE with advancers leading decliners by a 2 to 1 margin, while NASDAQ breadth has reversed earlier weakness and now has gainers outnumbering advancers by a 3 to 2 margin.

Treasury YIELD closed at their session highs with selling found in all the maturities. The benchmark 10-year YIELD rose to 4.415%, which was back above retracement YIELD resistance of 4.365%, and now has the 4.6%-4.635% YIELD level in play should selling continue. Today's action in the Treasury markets will keep bearish equity traders on their toes, and bullish equity traders may be looking for some stocks to be breaking out of consolidation bases to find short-covering pushing stocks higher.

Jeff Bailey
Senior Market Technician
Option Investor


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