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Eight and counting!

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Treasuries finished their session higher for an eighth-strait session after a volatile mid-afternoon session with the 10-year March futures contract (ty03h) $117'130 +0.24% finishing up 9/32 and closing at a new contract high.

A quick look at the "safer" 5-year YIELD ($FVX.X) 2.563%, which now nears its multi-year low YIELDS found on October 10th of 2.53% further hints that market participants continue to be "defensive" among the plethora of war-related news. I say this as the March Fed Funds futures (ff03h) 98.77, which is a pulse on the markets perception of what the Fed will do with interest rates, still shows the MARKET looking for the Fed to keep rates "unchanged" at 1.25% (100 - 98.77 = 1.23) near-term. If we look a little further out, the June Fed Funds futures (ff03m) 98.875 show some sign (50% chance) that the MARKET may be looking for a rate cut (100 - 98.875 = 1.12%). Still, since their December highs, this shorter-dated YIELD has fallen from 3.404% to current levels, with a recent break of trend at 2.775% picking up steam to the downside since February 25th.

The major indexes have been able to hold above their break-even levels and the Dow Industrials (INDU) 7,741 +0.49% has seen a late afternoon rebound back from the 7,400 level after Secretary of State Colin Powell concluded his comments that the U.N. Security Council should be pressed to use military force against Iraq.

The broader S&P 500 Index (SPX.X) 827 +0.66% holds a 5-point gain and just off its best levels of 829. The SPX was right at its session highs when Secretary of State Powell began his address, fell to 822 during his talk, and then rebounded to current levels at the conclusion of Powell's speech.

The NASDAQ-100 Index (NDX.X) 989 +0.64% holds a 6-point gain, with similar fluctuations having been seen here as in the Dow and SPX during Powell's speech. Session high has been 829, which was smack-dab between our DAILY Pivot and R1 levels of intra-day resistance.

Shares of drug maker Shering-Plough (NYSE:SGP) $16.60 -3.15% are lower after being halted when the stock was trading higher at $17.36. The company requested a trading halt before it warned that Q1 EPS would be $0.10 per share, which was well below the consensus of $0.25. Looking forward, the company also warned that 2003 EPS would be between $0.75-$0.85 per share, which was below consensus of $1.00. The company cited the negative impact of the loss of their Claritin profit stream to generic competition, which came at the same time they were introducing their Zetia cholesterol drug. Also attributing to bottom line weakness was that the company's hepatitic C treatments were seeing lower-than-expected results in Japan.

Jeff Bailey

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