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Industrials build 100-point gain

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The major indexes have built gains to their best levels of the session on what looks to be a purely technical move after the major indexes have stretched away from their daily "pivots" from and moved quickly to their daily R1 levels in a 20-minute time span.

After hovering around their intra-day pivot of 8,033 for the better-half of this afternoon's session, the Dow Industrials (INDU) 8,098 +1.35% has built a 108-point gain rather quickly to a session high of 8,101, which is just under today's R1 of 8,107.

In the past eight trading sessions, the Dow Industrials haven't been able to hold, let alone post a 100-point intra-day move, and while we earlier commented that traders were rather "skeptical" ahead of tonight's State of the Union address from President Bush, it looks like there may also be some bears willing to lock in some gains after the recent declines on uncertainty ahead of the President's speech. Shares of drug giant Merck (NYSE:MRK) 54.98 +6.2% continue to build on their earlier gains, while Eastman Kodak (NYSE:EK) $30.37 -2.09% now takes over today's "Dow loser" spot after guiding analyst's lower last week after reporting earnings.

Sector action has been building positive as the trading session comes to its close, with the Gold/Silver Index (XAU.X) 78.34 -1.54% still today's sector loser. Shares of Harmony Gold (NYSE:HMY) $15.91 -5.35% are relatively weak on trader talk of a potential 8 million share secondary offering.

Shares of networking giant Cisco Systems (NASDAQ:CSCO) $14.26 +4.01% are today's most actively traded stock and leading the Networking Index (NWX.X) 155.12 +2.92% to its best gains of the session. Yesterday, shares of Cisco (CSCO) dipped to a session low of $13.56 to test its trying to round flat 200-day SMA of $13.60 and are getting a nice bounce back through its 50-day SMA ($14.13) and challenging its trending higher 21-day SMA at current levels. Today's bullishness is CSCO is most likely attributed to this morning upgrade of Ciena (NASDAQ:CIEN) $6.35 +8.54% by UBS to "neutral" from "reduce."

We've seen an improvement in breadth in the latter half of the session, with the NYSE now showing advancers outnumbering decliners by a 5 to 3 margin, while NASDAQ has seen breadth improve with advancers outnumber decliners by a 19 to 13 margin.

While advance decline number have improved, traders are seeing some "stretching at both ends" form the new highs versus new lows category with the number of new highs building to 45 at the NYSE (33 at 01:00 PM ET) while 74 stocks trade new 52-week lows (63 at 01:00 PM ET). Once gain, almost identical breadth in this indicator at the NASDAQ with 43 stocks trading new 52-week highs compared to 75 stocks hitting new lows.

Notable new 52-week lows for the NYSE on an intra-day basis are found in Dow components Home Depot (NYSE:HD) $20.48 -0.53%, McDonalds (NYSE:MCD) $14.75 +0.34% and Coca Cola (NYSE:KO) $41.32 -1.12%.

Jeff Bailey

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