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Futures rise as war effort proceeds

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Traders are looking at a higher open for stocks as the coalition effort to oust Iraq's President Saddam Hussein progresses with overnight success. U.K. Defense Secretary Geoff Hoon told BBC Radio Five Live that the allies are "seeing significant signs of a breakdown in the organization of Iraqi leadership elements at the center.

S&P futures (sp03m) are gaining 9.8 points at 884.60, NASDAQ futures (nd03m) are jumping 12.5 points at 1,094, while Dow futures (dj03m) are rising by 63 points at 8,325.

Fair value for the S&P 500 today is $-0.91. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.29 and set for program selling at $-2.78. Fair value for the NASDAQ-100 today is $3.25.

Economic data released this morning had the February consumer price index (CPI) rising 0.6%, with the core rate, which excludes the more volatile food and energy components gaining a modest 0.1%. The 0.6% jump in the headline number was slightly above the 0.5% forecast of economists, but given that it was mainly due to energy prices, with crude oil prices now falling, the reaction from the futures markets has been minimal. The modest rise in the core rate leaves the annual growth rate at 1.7%, which is the lowest in nearly 40-years.

Early morning trade in the Treasury markets have found sellers in Treasuries across the major maturities, with YIELDS rising. The benchmark 10-year YIELD ($TNX.X) is rising and now above the 4% level at 4.031%. I view this morning's action as bullish for equities.

As noted in last night's Index Trader Wrap at OptionInvestor.com, the very narrow Dow Industrials Bullish % ($BPIND), narrow NASDAQ-100 Bullish % ($BPNDX) and S&P 100 Bullish % ($BPOEX) along with the broader S&P 500 Bullish % ($BPSPX) have reversed up into more bullish phases from "oversold" levels of 30% and continue to show internal repair with demand outstripping supply for equities. In past updates, we looked at the S&P-100 Index's (OEX.X) WEEKLY interval chart, which gives us a "bigger picture" of the S&P-100. An important level of resistance looks to be tested today and perhaps the next couple of weeks.

S&P 100 Index Chart - Weekly Intervals

The S&P 100 Index (OEX.X) has rallied to a rather major level of resistance as it looks to test not only its longer-term 200-day SMA, but the upper-end of a long-term regression channel that was taken from the all-time high found in March 2000 at 846.40. The two recent higher lows are encouraging and hints that a longer- term bottom has been achieved. However, the longer-term trend is still down and must be honored and respected. A break much above 455 and the downward regression channel would set the stage for a second test of the "490 level." For a technician to call a "new bull market," then a series of higher lows and higher highs must be achieved. The OEX has been able to put together two higher lows, but not yet able to give bulls the higher highs. How bullish would it be if the OEX were able to make the break near- term above the 455 level when the U.S. economy looks to be struggling and a war with Iraq is currently underway? I'd say "quite bullish."

Just as the OEX itself has been setting a series of higher lows, so too has the OEX's Bullish % ($BPOEX) chart, which on Wednesday reversed back up into "bull alert" status from a March 12 reading of 21%. While this indicator of internal strength is signaling a cyclical bull is upon us, the above chart also hints that a potential longer-term bull market is at hand.

Jeff Bailey

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