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Treasuries finish flat, but stocks hold gains

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After some selling in the Treasury bond market earlier this morning and some buying later in the afternoon, bonds finished relatively unchanged across the 5, 10 and 30-year maturities.

Within the last 2 hours, the Dow Industrials (INDU) 8,398 +29 points did dip into negative territory, but has since moved back above the break-even level. Shares of Wal-Mart (NYSE:WMT) $53.70 -4.9% continue their intra-day decline and now trade at their session low.

Shares of IBM (NYSE:IBM) $78.40 +2.16% near the $80 level and their longer-term 200-day SMA of $83 as computer and telecom- related technology stocks continue to hover just off their session highs.

The Securities Broker Dealer Index (XBD.X) 406 +0.5% fell into negative territory after it was reported that Credit Suisse First Boston was dropping investment coverage of IBM. There is speculation that the dropping of coverage on IBM is that the investment firm may be further laying off employees. Some market participants may have made that assumption and jumped to the conclusion that things remain slow in the investment business as brokerage stocks did dip to session lows.

That news and speculation of dropped coverage of IBM follows this morning's comments from Wachovia and downgrading of investment banks Citigroup (NYSE:C) $36.90 +1% and Goldman Sachs (NYSE:GS) $72.53 +0.22%.

While stocks have tended to trend higher today, its been on rather light volume. With 45-minutes left in the session, NYSE volume has breached the 1.1 billion level, while NASDAQ shows 1.3 billion shares traded.

Breadth is positive at the NYSE with gainers outnumbering decliners by a 19 to 12 margin, while NASDAQ breadth is equally positive at 3 to 2.

There have been 21 stocks trading new highs at the NYSE versus 42 stocks hitting new lows, while this NASDAQ indicator remains surprisingly positive with 46 stocks reaching new highs versus an almost identical 49 stocks trading new lows.

In recent Index Trader Wraps, we've noted that on a broader scale, we've seen the bullish % indicators, which monitor supply/demand buy and sell signal tapering off a bit. Today's action will be interesting to see if some stocks are achieving some new buy signals, or if current action is more indicative of some range-bound trading.

Jeff Bailey

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