The major indexes have reached their best levels of the session after Secretary of State Colin Powell made his case for war against Iraq before the United Nations. While the speech contained evidence of verbal communications between Iraq officials and movement of weaponry prior to U.N. weapons inspections, and satellite imagery that showed what the U.S. thought was an increase in activity based on months of surveillance of trucks loading some type of product from known weapons plants just days before weapons inspectors were admitted.
Just after the conclusion of Powell's speech, the Dow Industrials (INDU) 8,100 +1.08% jumped to a session-best 8,152 as Treasuries saw a sharp round of selling, which had the benchmark 10-year YIELD ($TNX.X) jumping back above the 4.0% YIELD mark to 4.033%, but currently settles back with a YIELD now at 3.99%.
Gold stocks have started to show some firming at their lows after they saw further selling at the conclusion of Powell's speech. The Gold/Silver Index (XAU.X) 76.99 -3.32% has pulled back to the mid-portion of upward regression channel, and much like a teeter- totter has been moving inverse of bond YIELDS for the bulk of the session, giving shorter-term traders a rather "wild" intra-day swing, not only for gold stocks and Treasuries, but the major indexes as well.
Sector action remains bullish today, with the Semiconductor Index (SOX.X) 277.74 +3.02% holding near its session highs. Also seeing some renewed strength are Fiber Optic (FOP.X) 51.53 +2.85% as this group tries to get back above a starting to round flat 50-day SMA of 51.81, after losing this intermediate-term moving averages support yesterday.
Sector weakness today has been limited to the aforementioned Gold/Silver Index (XAU.X), Natural Gas Index (XNG.X) 162.53 - 1.98% and marginal weakness in the Oil Index (OIX.X) 249.48%.
As it relates to trading in gold stocks, the U.S. Dollar Index (dx00y) 100.00 +0.86% had gotten back near the 100.00 for the first time three sessions and current action may either be caused by some short-covering in the dollar on "lack of smoking gun" from Colin Powell's speech, or renewed confidence in the greenback.
The U.N. meeting is not over, and various countries officials continue to comment on their "feelings" as it relates to the U.S. "evidence" presented today. French officials continue to lean toward further weapons inspections, while Britain and Russian officials tended to make comments toward "something has to be done with Saddam Hussein" based on belief that he has been less than honest with weapons inspectors.
A quick look at the broader PHLX Defense Index (DFX.X) 148.81 +0.31% shows marginal gain. Tight price range here is very difficult to make any type of conclusion toward "thoughts of war" as is the bulk of today's trade in the major indexes, gold, the dollar or treasuries.
Current assessment is that there may be some "fine tuning" to positions that were placed ahead of today's speech by Colin Powell, but market action doesn't seem to reveal any type of major sway in the market's thinking toward a U.S.-lead attack on Iraq.
As I write, Germany begins its comments on Colin Powell's speech. Germany has been one country that has been more in favor of continued weapons inspections instead of any type of immediate military action. We will see if the German's thoughts have been swayed.