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Index Wrap

It even looked like Rudolph!

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Stocks, Treasuries and the dollar all found gains on Tuesday with the Dow Industrials (INDU) 10,759.43 +0.91% notching its first 52-week high in just over 10 months, as bulls look to have gotten an early start to an end of year Santa Claus rally.

The only thing I saw that resembled a "Grinch-like" trade was the color of the sectors in our U.S. Market Watch, where positive breadth at 29 to 1 for the Dow Industrials had Rudolph guiding a bull's sleigh.

Dow Industrials Component - Sorted by Price 12/21/04 Close

It takes some doing to get a team of reindeer set into motion at once, but other than Johnson & Johnson (NYSE:JNJ) $62.95 -0.19%, which represented Rudolph's nose, the other 29 components all traded higher in Tuesday's trade.

It has been a year of change, and some trials and tribulations for the Dow 30. IP, EK and T were discarded and replaced with AIG, VZ and PFE. I'll bet there's more than one Dow bull that missed EK and could have done without PFE in 2004.

I placed B DD by stocks that were this year's "Big Dow Dogs" and L DD by those that were this years "Little Dow Dogs" for the popular Dow Dog Theory for the highest 10 dividend yielding stocks. (see 01/04/04 Ask the Analyst)

In the far right column, I've started to list the highest dividend yielding stocks for the Dow as we near the end of the year. General Motors (NYSE:GM) $39.54 +1.61% currently boasts the largest dividend yield of the Dow 30. General Electric's (NYSE:GE) $37.17 +0.16% hefty 20.3% gain may have one of last year's "Little Dogs" becoming just another Dow component in 2005.

SBC Communication (NYSE:SBC) $24.90 +0.34% looks ripe for a little bullish run into the New Year. It doesn't look like a tax gain/loss sell candidate, and sports a hefty 4.98% dividend yield.

Heck! You can't get that in the 10-year Treasury yield ($TNX.X), which fell 3.1 basis points to finish out with a 4.168% yield.

Dow Industrials (INDU) Chart - Daily Intervals

The Dow Industrials (INDU) now look to spring from their WEEKLY Pivot and with overhead supply limited, end of year buying among some higher dividend yielding stocks might well have the Dow Industrials being a strong performer as this major index looks to play "catch up."

U.S. Market Watch - 12/21/04 Close

I'm admittedly surprised that buyers showed up in such force ahead of tomorrow's energy inventory figures and economic data slated for release on Wednesday and Thursday.

Market Snapshot / Internals - 12/21/04 Close

At 11:00 AM EST, it looked like a range-bound and lackluster trade was going to be the likely scenario and I have to wonder if somebody didn't get hold of the November FOMC meeting notes just before noon as Treasuries started to find buying and stock began their pace higher.

With the very broad NYSE Composite ($NYA.X) 7,167.03 +0.7% closing at a new all-time high, and just above its previously set all time high of 7,159.65 found on 12/15/04, a quick check of today's NH/NL ratios against the 12/15 338:5, has today's bullish leadership indications lagging a bit, but 5-day ratios are stronger than 12/15 91.4% and 10-day ratios of 89.5%.

February Crude Oil futures (cl05g) - Daily Intervals

Chuckling to myself. After spending some time preparing for this week's oil trade, wouldn't you know it that January Crude Oil futures expire, and roll to February. So, here's the February Crude Oil futures (cl05g) which finished little-changed on Tuesday (today).

One note from looking at an intra-day chart is that this week's WEEKLY Pivot at $44.83 would mark Friday's low, but perhaps more importantly, last Wednesday's session intra-day session high after the last weekly EIA report. My thinking here is that with the SPX.X closing at my "key level" of 1,205, then the potentially further bullish catalyst from a lower oil trade could well be marked with a February oil settlement below that WEEKLY Pivot.

As a correction to "then its 1,124 by December 31 at noon," from last night's Index Trader Wrap, should Crude Oil still settle below Friday's high of $46.80, I meant "then its 1,224 by December 31 at noon."

Pivot Matrix -

I didn't mark all tentative support levels like that marked for the BIX.X at its WEEKLY R1 and DAILY Pivot, but INDU/SPX and OEX would show similar levels of early support.

Gut feel based on some intra-day observations is that there was some bullish stop hunting going on just below SPX 1,198 this morning before the move higher. I say this as the last 1/2 bullish position I had profiled in the Market Monitor for Morgan Stanley (NYSE:MWD) $54.55 +1.58% took place just as MWD traded a session low, undercutting my 38.2% fitted retracement level of $52.95.

Jeff Bailey

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