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Post Laboring Bears

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Technically speaking the market seems to have a few things to worry about. The Market Volatility Index (VIX.X) has once again moved above 40 with today's negative trading. Further, the KBW Bank Index (BKX.X) fell below the 50-dma in today's session. Also, the Biotech Index (BTK.X) stumbled below the 50-dma today; this is the first time the BTK.X has traded under the benchmark moving average in 17 days.

The 30-Year Treasury Yield seems to falling in reckless fashion. The most recent relative low for the yield is 4.827%, which was made on August 14th. The TYX.X broke the August 14th low this morning at 11:46 am. Previously, on November 1st, 2001, the yield traded as low as 4.662%.

Chart of: 30-Year Treasury, Daily.

This morning, the Challenger Report was released by Challenger, Gray and Christmas. The report indicated that layoff activity increased in August for the first time since last February. There were 118,067 job- cuts in August versus 80,970 in July. The report indicates sustained weakness in the economy, and points out that Corporate America is still wounded. The forthcoming employment reports this Friday should be fairly important for inquiring economists. The Challenger report combined with the ISM release today, do not give the markets much to jump for joy about.

Chart of: U.S. Dollar, Daily.

The U.S. Dollar has been trading with weakness throughout the session. The greenback has fallen on the day, trading around $105.61 at the time of this update. With the daily Stochastics having recently entered the oversold region, technical bears could be keeping an eye on the U.S. currency. Today's move also brings the dollar underneath the 50-dma.

In other news, Prime Minister Tony Blair has promised to publish a "dossier" of evidence that Iraq has been attempting to acquire (and has), weapons of mass destruction. The comments come at a time when Blair faces growing UK opposition for any attempt to topple Hussein. Blair said: "The United States should not have to face this issue alone, we should face it together."

December Gold Futures (GC02Z) are trading higher on the day at $315.30. On the daily chart, gold is attempting to close above the 50- dma at $315.04.

Mark Whistler
Option Investor


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