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"Live cat bounce"

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The major indexes are "bouncing" higher or holding fractional gains after a rather mixed open, and I'm calling it a "live cat bounce" and not a "dead cat bounce," which many traders and investors have come accustomed to in recent years. The reason I call this morning's slight recovery a "live cat bounce" is the cat had been on the move higher in prior weeks, and the recent pullback was a most welcome decline by bulls and perhaps bears that had yet to participate.

The Dow Industrials (INDU) 8,266 +0.64% has moved to its best levels of the morning and notches a 52-point gain, while the broader S&P 500 Index (SPX.X) 872 +0.94% rebounds with an 8-point advance. Larger cap technology stocks as depicted by the NASDAQ- 100 Index (NDX.X) 1,064 +1.61% advances 16 points.

This mornings gains come on the heels of some economic reports that came pretty much inline with economists forecast.

The Conference Board's March consumer confidence slipped again ahead of the start of the Iraq war, falling to a 10-year low amid uncertainty about the length of the conflict and its impact on the economy.

The board's consumer confidence index slipped to 62.5 in March from 64.8 in February. It is the lowest reading since October 1993. The cutoff for the survey of 5,000 households was March 18, two days before the first bombing. The expectations index fell to 62.5 from 65.7 (the lowest since January 1991) while the present situation index dropped to 62.4 from 63.5 (the lowest since December 1993). The 62.5 reading from the confidence index was slightly better than economists forecast of 62.0.

Some of the subsets of the survey have those polled saying that the economy is "bad" virtually unchanged at 29.8%, while those saying it's "good" was unchanged at 13.8%.

Those saying jobs are hard to get rose to 32.3% from 30%, while those saying jobs are plentiful was unchanged at 11.6%.

The expectations part of the survey, which looks six months ahead slipped slightly in the latest month. Those saying the economy would be "good" fell to 13.3% from 14.9%, while those saying it is "bad" rose to 19.9% from 19.1%.

The number saying jobs would be plentiful in six months dropped to 11.1% from 12.4%, while those saying jobs would be hard to find also fell to 26.1% from 28.5%.

Other economic data released came from the existing home sales market. The National Association of Realtors said that sales of existing homes fell about 4% to an annual rate of 5.84 million in February from a record 6.1 million in January. Economists expected a larger drop off to about 5.78 million and has today's data showing an upside surprise to economists forecast.

As this morning's economic data has been release and further new is digested from Iraq, the bulk of sectors we follow on a daily basis are showing gains with strength found in the Airline Index (XAL.X) 32.02 +3.86%, Biotechnology (BTK.X) 344 +2.7% and Combined Telecom (IXTCX) 122 +2.43%. Only the Defense Index (DFX.X) 140 -0.3% shows a fractional loss.

Treasuries are still finding fractional buying at this hour, after a stronger round of buying earlier this morning. The longer-date 30-year YIELD ($TYX.X) 4.929% has moved back near the unchanged level, while the benchmark 10-year YIELD ($TNX.X) 3.961% has found some selling come into the bond after a morning low YIELD of 3.913%.

After taking a day off yesterday, this morning's time was spent reviewing the various bullish % charts, and to my "surprise" the bullish % charts were either unchanged or showed modest gain after yesterday's trade. This gives me the distinct impression that yesterday's action was similar to a good round of profit taking and there was no internal damage done.

Jeff Bailey

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