Option Investor
Market Updates

Bulls battle back

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An impressive turn higher for the major indexes has been sparked just after the lunch hour, and I've found little news to explain the sudden reversal back higher.

While it's rather difficult to think that an immediate asset allocation shift from bonds to stocks has taken place in today's trade, that's about the only thing that makes sense to me at this hour as the 10-year YIELD ($TNX.X) after falling to its April lows and "old" downward trend, has seen selling, which has lifted YIELD back higher to 3.859%, and now unchanged on the session. The "sudden" intra-day turn higher considering today's economic news, in my opinion, could have only been triggered by some pre- determined type of selling at a key technical level.

The Dow Industrials (INDU) 8,459 -0.24% is the only major index currently showing a loss on the session, and the 20-point current decline, is well off this mornings low of 8,340, when the Dow "kissed" its MONTHLY pivot and afternoon rally now finds intra- day resistance at our MONTHLY pivot analysis retracement of 8,476. A move back above the 8,480 would be a major intra-day technical move to the upside after this morning's decline to the MONTHLY pivot.

The broader S&P 500 (SPX.X) 917.59 +0.07% currently holds onto a fractional 0.67 gain and just off its highs of 919. As it relates to our newly added MONTHLY pivot retracement, the SPX has been able to break back above this retracement's 38.2% retracement level of 914.34.

The NASDAQ-100 Index (NDX.X) 1,114.05 +0.74% has been the most impressive in today's comeback as this index did manage to briefly pierce yesterday's session high of 1,116.85 with an afternoon high of 1,119.67. The 1,119.67 high came just short of our DAILY R2 of 1,121.60, which may have only been somewhat correlative with the WEEKLY pivot analysis 19.1% retracement of 1,117.60. For those options traders that do NOT use stops on their options, I'm continuing to suggest any partial positions established earlier today in 3-month expiration puts for in/at the money expiration.

Sector action which had been broadly negative has taken on a more even look at the 03:00 hour. The Gold/Silver Index (XAU.X) 67.60 +3.52% continues to hold today's sector winner's list, while Combined Telecom (IXTCX) 130.34 +1.36%, Airline Index (XAL.X) 39.44 +1.22%, Software (GSO.X) 112.5 +1.12% and Biotechnology Index (BTK.X) hold gains greater than 1%.

Still weak on the session, but off their lows is the Dow Jones Home Construction Index (DJUSHB) 359 -1.7%, Forest/Paper (FPP.X) 275 -2.04% and S&P Retail Index (RLX.X) 295.52 -1.35%.

I'm just now seeing where Jim Brown is posting in the market monitor that there is RUMOR circulating that WorldTribune.com has reported that Osama Bin Laden has been captured. The article says "might" have been captured in its reporting.

Jeff Bailey

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