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Markets rebound on renewed optimism

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The major indexes are at their best levels of the session with the Dow Industrials (INDU) 8,300 +2.8% jumping 230-points, S&P 500 (SPX.X) 882 +2.6% gaining 23 points and tech-heavy NASDAQ-100 (NDX.X) 1,065 +4.0% rising 42-points as coalition forces overnight success and advance on Baghdad has renewed investor's optimism.

The gains in equities have come at the expense of Treasuries, which have seen a strong round of selling today. The June 10- year futures contract (ty03m) $114'040 -0.64% is lower by 25/32 and has the benchmark bond's YIELD ($TNX.X) having risen to a session high of 3.94%, and currently trading with a 3.932% YIELD. This action is view as bullish for equities in my opinion, as some levels from our pivot matrix have been broken to the upside. From here, I continue to monitor this bond's YIELD and look for further selling to YIELD of 3.984% to have many of the major indexes achieving a bullish index trader's initial targets of WEEKLY R1 levels that have been discussed in the OptionInvestor.com Index Trader Wrap last night.

Sector action is broadly positive with the Semiconductor Index (SOX.X) 317 +6% moving back above its downward trending 200-day SMA of 309. The Airline Index (XAL.X) 32.18 +6.5% is this morning's sector winner with shares of American Airlines parent AMR Corp. (NYSE:AMR) $3.85 +26% leading sector gains.

Financial sectors are seeing a strong round of bullishness and helping drive gains in the S&P 500 (SPX.X) and S&P 100 Index (OEX.X) 448 +2.8%, with the Securities Broker/Dealer Index (XBD.X) 407 +4.0% leading gains. Also showing some renewed bullishness in our pivot matrix is the S&P Banks Index (BIX.X) 275 +2.30% as it nears its WEEKLY R1 of 277 and jumps back above a trending lower 50-day SMA of 272.30.

Sector weakness is limited with the Gold/Silver Index (XAU.X) 64.03 -2.2% and CBOE Oil Index (OIX.X) 250 -1.06% as two of the four equity sector/indexes showing declines. Oil Service (OSX.X) 84.79 -0.92% and Natural Gas Index (XNG.X) 171 -0.35% round out sectors exhibiting marginal energy weakness in today's trade.

Some notable new 52-week highs are found in stocks we've discussed as bullish candidates the equity bulls perhaps looked to for leadership. Dow component 3M (NYSE:MMM) $134.22 +2.58% jumped to an all-time high of $135.63 in early morning trade, while shares of Forest Labs (NYSE:FRX) $56.06 +0.64% traded a new 52-week high and all-time high of $57.13 earlier this morning.

Most actives have Microsoft (NASDAQ:MSFT) $25.77 +5.79% turning just over 339 million shares, Cisco Systems (NASDAQ:CSCO) $13.60 +4.7% back above its 200-day SMA on volume of 296 million shares and Concord EFS (NYSE:CE) $12.58 +5.98% trading over 29 million shares and adding to yesterday's gains after the Wall Street Journal had reported that First Data (NYSE:FDC) $34.64 -0.11% might be in talks with Concord to purchase the company for $7 billion in FDC stock.

Jeff Bailey

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