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Market Pauses For War Games

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The growing momentum of Coalition forces as they approach and enter the outskirts of Baghdad has captured a worldwide audience. What appear to be easy victories over several groups of Iraqi divisions and Republican Guard elements has many hoping there will be a lot fewer hostile forces to root out once the main Coalition group prepares for the what looks like the "end game" in Operation Iraqi Freedom.

The financial markets have stalled as investors worldwide turn to watch their televisions and live coverage of the war. This isn't too surprising after two strong days in the markets on continuing victories for the allies. The Dow Jones Industrials, at the time of this update, was up 1.26 points to 8286 but below its 200-dma. The NASDAQ Composite was up 8.58 points at 1405. The S&P 500 index was +0.59 at 881 and directly below its 200-dma.

The advance-decline numbers show the waiting game on Wall Street with advancing stocks out pacing declining issues by a narrow margin. Meanwhile, up volume is significantly out running down volume across both the NYSE and the NASDAQ, which may be an underlying level of bullishness.

Current headlines are touting the blackout in Baghdad. The U.S. is claiming they are not responsible and some talking heads on T.V. are actually speculating that a coup attempt may be underway. What is likely to keep the bullish market environment alive are any new and growing reports of the Iraqi people choosing to support the Coalition forces, much like the major religious leader in southern Iraq has done. This sort of "grass roots" support for the Coalition could lift the global markets with the hopes a quick end may be nearer than many believe.

This of course sets the markets up for a fall should the ground fight for Baghdad turn both long and hard for U.S. forces. We're approaching the weekend and traders with bearish positions may choose to start unwinding any shorts for fear of a decisive news story over the weekend in favor of the Coalition troops.

Broader indices are growing weaker as we finish this intraday update.

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