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Yesterday's highs revisited

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The major indexes are back at yesterday's highs after the Chicago PMI data showed expansion at the industrial level with a 52.2 reading, which was above economists forecast of 49.0. While traders take "pleasure" in the beating of economists' forecast, it's the above 50.0 level and signs that some expansion in manufacturing having taken place that grabbed trader's attention.

The Dow Industrials (INDU) 8,711 +1.53% show a 133-point gain after coming within fractions of yesterday's high of 8,862.58, with an early morning high of 8,862.16. Current levels of trade have proved resistance the prior two sessions, and bulls still have some work to do in order to extend today's session gains.

Yesterday's anemic action in the S&P Banks Index (BIX.X) 301.74 +1.59% looked to have put a lid on yesterday's broader market morning rally, but I've been monitoring things here and the BIX.X looks to bid today, but found early resistance at its WEEKLY R2. As noted in this morning's market monitor, the major indexes along with a closely monitored BIX.X look to be at a level of resistance, that if broken to the upside could have today's session being the most bullish of the week.

The broader S&P 500 Index (SPX.X) 962.80 +1.38% has been able to make its move above yesterday's highs and now edges above its WEEKLY R2. This has the MONTHLY R2 of 972 in play as a next level of pivot analysis resistance, and per last evening's Index Trader Wrap, would be indicative of a "blow off" type of move that perhaps has some bears looking to capitulate as the SPX continues to chug higher.

The narrower S&P 100 Index (OEX.X) 484.14 +1.4% in similar fashion to the S&P 500 has also been able to trade its WEEKLY R2 of 484.51 in today's session, something both the SPX and OEX fell just shy of yesterday.

Sector action has all sectors with the exception of the Gold/Silver Index (XAU.X) 71.98 -1.59% seeing gains. The sector gains are very evenly distributed with the Biotechnology Index (BTK.X) 447.43 +2.16% the early sector winner. I count 19 sectors on my U.S. Market Watch screen all showing gains better than 1%, thus the observation of broader and evenly distributed gains.

The NASDAQ-100 Index (NDX.X) 1,195 +1.15% is actually the major index that is "trailing" this morning's move higher, after bucking the trend yesterday with a gain. Session high has been 1,199.09 and perhaps finding some round number 1,200 selling to keep things in check. I will note that our DAILY pivot analysis does have DAILY R1 at 1,196, with DAILY R2 higher at 1,210, which may now serve as a daily target.

While the Dow Industrials sports a 1.53% gain, smaller caps as depicted by the Russell 2000 Index (RUT.X) 439.42 +1.56% challenge the Dow for the major index winner's list in this morning's trade.

Treasuries, which started the session out rather flat, have really seen a pickup in selling and finds YIELD higher. In recent weeks there has been somewhat of a "disconnect" as money has been flowing toward Treasuries, while equities still managed to build gains. However, today selling may free up some cash, and with the U.S. Dollar Index (dx00y) 93.48 +0.83 gaining some ground back today, today's bond/dollar action certainly has the look that cash is available to push equities higher still.

Jeff Bailey

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