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Dow holds 250-point gain

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The Dow Industrials (INDU) 8,127 +3% hold onto a 250-point gain after component Citigroup (NYSE:C) $32.87 +8.3% surged as high as $34.50 after beating Wall Street's expectations on earnings, thanks to strength in its consumer business and aggressive cost- cutting efforts.

Financials are showing strong gains as depicted by the S&P Banks Index (BIX.X) 277 +4.6%, KBW Banks Index (BKX.X) 720 +5.8%, Securities Broker/Dealer Index (XBD.X) 388 +5.43% and S&P Insurance Index (IUX.X) 262 +5.29%.

Bank of America (NYSE:BAC) $64.76 +6.67% shows strong gains after handily beating the Street's estimates on earnings, while shares of Bank One (NYSE:ONE) $39.18 +5.52% trades just off its intra- day $39.98 high after meeting Wall Street's estimates on earnings.

Mortgage Financing titan, Fannie Mae (NYSE:FNM) $68.50 +3.03% is just off its morning high of $69.87 after beating earning's estimates by 5-cents a share and also indicated that 2002 earnings growth would be above the long-term trend. FNM said revenues rose 0.5% to $2.99 billion versus consensus of $2.77 billion, while noting that Q3 credit losses fell to an 18-year low.

After dipping marginally red after beating estimates by a penny, shares of Johnson & Johnson (NYSE:JNJ) $59.07 +2.16% turned higher to break this morning's high of further higher above this morning's high of $59.00. Point and figure chartist's are looking for a trade at $60.00 to market a second consecutive buy signal with current bullish vertical count of $74 still in play.

Speaking of vertical counts, shares of Forrest Labs (NYSE:FRX) $96.00 +2.67% gapped higher after handily beating recently revised higher earnings and today's trade at $96.00 has the stock achieving its bullish vertical count of $96, which was identified in past commentary from the $74 level. Bulls still holding some call options on this name should be looking to take some profits at current levels or snug up stops to $88.00, which would be the first sign of weakness on the point and figure chart.

Trading-collars, which restrict index-arbitrage trading, were in place when the Dow Industrials gained more than 160 points. Should the Dow give back current gains to within 80 points of yesterday's close (7,877.40) then trading curbs would be lifted. That would take a Dow trade at 7,957.50.

Despite limited program trading, volume is brisk at both the NYSE and NASDAQ with volume running 690 and 772 million shares respectively.

Breadth is decidedly positive with advancers outnumbering decliners by a 4 to 1 margin at both exchanges. New highs versus new lows is a dead heat at the NYSE at 26:26, while NASDAQ shows some improvement in this category with 26 stocks trading new 52- week highs versus just 44 stocks trading new lows.

Jeff Bailey

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