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Economy grew at modest pace in first quarter

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Stock futures had been slipping lower and now trade fractionally lower to mixed after this morning's release of the preliminary first-quarter gross domestic product (GDP) data that shows the economy grew at a 1.6% real annual rate after growing 1.4% in the fourth quarter. The 1.6% annual rate of growth was below economist's forecast for a 2.3% annual rate of growth.

Concerns for the SARS virus has taken its toll on Asian markets in today's trade as Asia/Pacific indices drip red with Tokyo's Nikkei hitting a fresh 52-week low and falling 155 points (-1.97%) to 7,699.50. South Korea's Seoul Composite is falling 3.69% to 566.63, while Taiwan's Taiwan Weighted is lower by 3.23% at 4,233.

Here in the U.S., S&P futures (sp03m) are edging up 0.10 to 909.90, which gives the look of a flat open for equities. NASDAQ futures (nd03m) are off 5.5 points at 1,102.50, while Dow futures (dj03m) are lower by 19 points at 8,390.

Fair value for the S&P 500 today is $-0.59. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.52 and set for program selling at $-1.76.

While stock futures don't look to have had too great a reaction to this morning's GDP report from the Commerce Department, and the bond market is also rather calm, with the 5-year note seeing fractional buying, while both the 10 and 30-year bonds find fractional selling. The 10-year Treasury June futures contract (ty03m) $114'175 are currently lower by 2/32 with the benchmark bond's YIELD ($TNX.X) edging up at 3.916% after finishing yesterday's trade with a 3.905% YIELD after testing its 80.9% retracement from our WEEKLY pivot analysis retracement bracket as support.

Let's take a quick look at the Dow Industrials ($INDU) bar chart with conventional (pink) retracement overlaid from the October lows and December highs, along with this week's WEEKLY pivot analysis retracement.

Dow Industrials Chart - Daily Interval

As noted in several Index Trader Wraps at OptionInvestor.com, Treasuries have been a little more defensive this week that the price action we've seen from the major indexes. As it relates to the WEEKLY pivot (blue retracement), the 10-year YIELD fell to its 61.8% retracement yesterday and has me assessing near-term downside risk in the Dow to 8,328. As I type, the 10-year YIELD ($TNX.X) is starting to edge higher still at 3.917%.

Jeff Bailey

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