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Morning Market Update, Friday, 6/15/2001 - 11:30 am ET

Market Commentary

Asset allocation?

The recovery we're starting to see may have been triggered by an asset allocation buy program that we were first alerted to when the 30-year YIELD turned green. We alerted traders in the "hot list" to be alert for a reversal in stocks and for shorter-term bearish traders to watch out as a rally could occur.

30-year YIELD Chart - 60-minute interval

It's tough to tell if its the triple-witching effect that had the 30-year YIELD reversing course so drastically, but it sure gave a heads up that stocks might turn around if you believe in the sell bond and buy stock theory. We immediately started looking for sector strength and thought the Biotechnology sector was where a bullish trader should be focusing.

Biotechnology Index (BTK.X) - 60-minute chart

Almost immediately after the 30-year YIELD turned green, we alerted traders that the Biotechs were probably the best place to begin focusing. We thought we could see a quick pop to the 600 level and that a bullish trade in the Biotech HOLDRs (BBH) and the July 130 calls (GBZGF) when offered at $7.70 might make for an attractive risk/reward bullish trade. We can't profile the trade in our portfolio as we didn't have it outlined prior to today's activity. Perhaps we should have considering this morning's 09:00 trading scenario for a potential 150-point rally in the NASDAQ-100.

Jeff Bailey


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