STOCK INDEXES CHALLENGE TOP OF THREE-MONTH TRADING RANGE -- FRIDAY RALLY LED BY FINANCIALS AND TECHNOLOGY -- RISING BOND YIELDS BOOST DOLLAR AS COMMODITIES SLIDE

GOOGLE SPARKS INTERNET BREAKOUT... The major market indexes are testing the top of their three-month trading range (Chart 1). Today's stock gains are being led by financial and technology stocks. A 17% jump in Google is pushing the Interactive Internet Index to a three-month high (Chart 2). Financials are also having another strong day. Chart 3 shows the Financials SPDR moving up to test its March high at 27. Stock buying continues to coincide with bond selling which is having a ripple effect in the currency and commodity markets.

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RISING YIELDS BOOST DOLLAR BUT HURT GOLD ... Rising bond yields (and firmer stocks) are giving a strong boost to the U.S. Dollar today. As a result, bond prices and foreign currencies are dropping. Chart 4 shows the 7-10 Year Treasury Bond Fund dropping to a two-month low. The biggest foreign currency loser is the Japanese yen which has fallen back below its 50-day line (Chart 5). Falling foreign currencies (and a rising dollar) are causing profit-taking in gold and other commodities. Gold prices are down $27 today (Chart 6). MORE LATER.

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