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Greenback Bulls

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Strength in the Dow this morning may be attributed to the Labor Department reporting that the unemployment rate dropped to 5.7 percent versus 5.9 percent in July. In addition, the U.S. economy increased by 39,000 jobs in August. For the day, the Nasdaq has tacked on +45.40 so far, while the Dow is trading up +142.60.

Gainers on the day are: Dow Jones Home Construction, Gold, Pharmaceuticals, Oil Service, Forest Paper & Products, Defense, Software, Telecom, Banks, Oil, Biotech, Semiconductors, and Transportation. The Market Volatility Index ($VIX.X) has slipped to 40.21 during the session.

Treasury yields are trading positive with the 30-year note gaining +0.91 at 4.863%, the 10-year yield increasing +1.14 to 4.023%, and the 5-year elevating +1.28 to 3.054%.

S&P 500 fair value for the day is $.16, with potential buy programs kicking in at $1.52, and possible program selling initiating under $-1.42.

According to the ECRI future inflation gauge (FIG), the report indicated that cost pressures are apparent in the manufacturing sector. The index increased to 109.0 from 107.0, driven by strong growth in real estate loans and more robust job expansion.

Chart of: Kbw Bank Index, Daily.

The Bank Index is attempting to close above the 50-dma, even with recent bad news in the finance sector. Daily Stochastics have stalled at the lower region, and seem to be reversing in trend. Bulls could be encouraged if the index closes above the 50-dma, potentially alerting technical buyers to a feasible rally. Further, the U.S. dollar is trading positive on the day at $106.56. Nominal bulls will find themselves optimistic if the greenback can close above the 50-dma at $106.52.

Mark Whistler
Option Investor

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