CLOSING THOUGHTS

There you go, one weird day as the NAZ closes slightly lower with positive internals, the SPX closes down 3 with flat internals and the DJIA closes down 32 with 6 higher and 24 lower. And of course the IWM closes up about .5% to make put the icing on the cake.

Anyhow, the SPX closes with a 2 day RSI of 3 and is back at the 1,365 inflection point. The DJIA is acting a bit worse and is a bit below the 12,000 mark. Keep your hat handy as it may cross again next week when the "journalists" at CNBC cheer lead the big caps higher.

Sector winners today included oils, metals, small caps and biotechs. Biggest losers, retail, brokers and trannies.

WEIRD MARKET STUFF

Markets are offering up one of their stranger days in quite a while as we have these facts:


DJIA lower by 36 or .2%.

NAZ COMPQ lower by 8 or .3%.

NAZ breath slightly green.

NYSE breath red by 350 with a negative skew from the fixed income stuff.

IWM green.

DJIA has 7 stocks higher and 23 stocks lower.

Whoever has this figured out today has my sincere congratulations.

Otherwise, the oil patch is excelling with the OIH back over the $135 level and probably getting set to retest the $140 level next week. Colder weather in the Northeast in November, the reappearance of some geo political tensions after the election and finally my (going out on a limb) prediction of $60 crude before $50 crude.

Sector winners include oils, metals, small caps and semis (barely). The biggest losers include software, brokers, retail, biotechs, drugs and consumers.


And of course to top of our market day, we have all the Volatility indexes lower on the day.

LATE MORNING THOUGHTS

Markets have sold off pretty hard after the opening strength on the heels of the goldilocks jobs numbers. Not sure why the selloff unless its just another bear phase in the markets that began late last week. I don't know what number would have made the bulls happy but I guess the answer is there wasn't one.

Interesting how the IWM is still slightly green with the DJIA -42, NAZ-13 and SPX-4.

Market internals red by 500 with all 500 being on the NYSE. Yes, probably slanted by the fixed income stuff again as that group sells off big time with the rate on the 10 year going from 4.6% to 4.7%.

The big sector winner today is the oil patch as the OIH is up $3 or 2.3%. The only other major green sectors are metals and financials (barely).

The worst groups are software, brokers, retail, biotech, internets and tech.

The TICKS again find most of the activity below the zero line with a few readings below -800.

Many folks are now questioning the jobs numbers and wondering how meaningful the data is when there are so many big revisions. Don't know how anyone can question government data which comes out a few days after the end of the month for which the data is gathered. It's not like the government is the most efficient entity.

THE REVERSAL OF THE REVERSAL

Markets opened higher on the great jobs news (not to hot not to cold) but have since flipped to flat on who knows why. The DJIA is about 30 points off its high at +22, NAZ+4 and SPX+2.5.

Market internals have flipped from yesterday by starting out at a bullish +2,000 and now showing a +1,300. Yesterday, they rapidly flipped from -2,000 to -1,000, so something beneath the surface may be brewing as volatility is accelerating.

Strongest sectors include oils, oil service, small caps, semis, tech and metals. To the downside, software, internets and drugs.

Also note many TICKS below the zero line, so for now it looks like traders are in the "sell the rally" mode.

One question is why is the NDX so weak? How much is WFMI (-20%) impacting the overall index?

Jay at globaltechstocks.com is pounding the table on CTSH on the downgrade. He of course has been pounding the table for years on the stock and has made lots of folks lots of money on it.

JOBS JOBS JOBS

The futures are higher this morning on the news of an ok job number (+92K), a politically good 4.4% unemployment rate, and numbers that were revised higher for prior months.

DJIA Futures higher by 37, SPX+4.5 and NAZ +4.

How can they come out with accurate numbers 2 or 3 days after the end of the month for which they are tabulating? Yes, they can't.

Funny how yesterday's crummy retail sales numbers are but a distant memory.

The 10 year Bond rate has spiked up from 4.60%, on crummy same store sales numbers, to 4.68% on a decent jobs number and bullish revisions. How long before they worry that the economy is too strong and rates go too high and the Fed raising rates is back on the table?

And how about the great call by Cramer on WFMI just mentioned by Becky? Don't forget to tell us about the ones don't pan out. Throw 10,000 lbs. of something and crow about what sticks. Makes for great TV, not sure it works so well for the growth of one's portfolio.

CLOSING THOUGHTS

The markets hit their lows near the open and traded slightly above those levels for the rest of the boring day. The IWM and QQQQ have been the bright spots as they traded flat or a bit higher.

The best performing sectors were the internets, metals, brokers, drugs, consumers and cyclicals. Worst of the bunch- airlines, financials, retail and trannies.

EBAY LEH YHOO PAAS SSRI MER GS all solidly green while BBY INTC TGT WMT KLAC KSS and GE all red.

The action in the semis is interesting as INTC was downgraded but the SOX and the SMH are only slightly red. Maybe the smell of a bottom in the sector and with the positive action in the brokers, just maybe a rally is close.

The DJIA 30 finds 12 closed higher and 18 lower with only WMT and INTC moving more than 1%.

Market internals started out ultra ugly (-2,000) and did not flip to green but improved to -900 near the close.

Volatility indexes continue to hover a bit north of the 11 level and about 5% above their 10 day SMA's, so maybe another tell of temporary bottom.

The 2 day RSI on the SPX continues to hover near the 5 level and the 21 day SMA has so far been a back stop. Maybe tomorrow.

NOON LOOK

Markets have come up off their lows with the NAZ and the IWM being the best performing major market indexes. The QQQQ and the IWM have been in positive territory for most of the morning and may be hinting at an end of the day rally.

The market internals started the day very poorly with over 2,000 more losers than winners but have gradually improved to a reading of red 900 at the noon hour.

Sectors outperforming include metals, internets, brokers, software and drugs. The worst groups include airlines, retail, oils, biotechs, finanicials and trannies.

Brokers are sticking out as the XBD is up about 2/3% and GS is plus $1.57, LEH+$1.27 and MER is +$.7. The brokers have been crushed the last few days after a great run but maybe now signifying a bounce in the general markets.

OPENING THOUGHTS

The DJIA 12,000 is now in the rear view mirror and probably lots of unhappy folks who bought the greed at higher prices.

The charts sticking out on my screen are the adv/dec lines for both the NAZ and the NYSE. Both are ugly at more than 1,000 more losers than winners and it seems a bit early in the day for them to be so negative. My guess, before too long today the buyers will show and give some kind of bounce to the markets.

Sectors higher include metals, oils and drugs while the worst groups include retail, airlines, trannies, biotechs, brokers and financials.

The SOX along with GOOG, KLAC EBAY and YHOO are trading flat to slightly green so maybe another little hint of a snap back rally before the end of the day.

ONLY THE BEST

Markets look to open lower this morning on the heels of worse than expected retail sales numbers. Most of the big box shops including WMT and TGT missed their numbers and few were expecting these "misses". Many investors/traders must be wondering what ever happened to all the savings from the lower gas prices.

Anyhow, now on CNBC, the head bubblite (Mark Haines) is asking strategists if we should be selling equities because the markets are extended. Of course when the market was going through the period of never another down day, Mark was asking "where is the retail trader and just maybe the DJIA crossing the 12,000 level will bring them back to the equity markets." If only these "journalists"would play tapes of their old shows, old meaning 10 days ago.

As mentioned yesterday, the SPX is now sitting at its 21 day SMA and with a 2 day RSI of 5, a buying opportunity may be at hand. I will be watching for the faces of my favorite CNBC journalists for the all clear signal.

THE SPX CHART

UGLY CLOSE

Markets close ugly again with the DJIA just 31 points away from the 12,000 level. Question, what will CNBC journalists do with their DJIA 12K memorabilia (hats etc.

Market internals very bearish with about 1,400 more losers than winners on NAZ and 1,000 more red than green on NYSE. Internals on NYSE would have been worse if not for the drop in interest rates. The 10 year Bond is back at 4.56% which may also signify time for a bonds to stocks allocation adjustment.

Best sectors today was GOLD and SILVER; the worst everything else but small caps, brokers, airlines, SOX, retail and tech were the worst of the worst.

The 21 day SMA on the SPX is at hand ( no picture as another pristine day for GOOG blogger) and many a trader/technician pays attention when that level is hit. The 2 day RSI on the SPX is also at a nice buy level of 6. So maybe turnaround Thursday - tomorrow.

Our friend Liz Ann Sonders was back on bubblevison this afternoon crowing about it being time to be defensive. She also likes tech. Here is what Liz Anne said back at the summer lows; funny how she didn't mention those comments, but she did mention she has been cautious.

Final note, I have been watching BLOOMBERG primarily and have only switched to the Bubble station when I get pinged of some upcoming or present amusement. Bloomie, to those who have it available, offers more knowledgeable hosts, more informative information and guests who actually get asked challenging questions; and no cheerleading. What a relief not having to hear Haines et al constantly cheering the markets higher.

NOT AGAIN?

Jimmy Cramer out with an article this AM about the shortage of stocks- I think I have read that before. Here goes:

"Isn't the question, why aren't we down more?

I think I have an answer: There is a relentless amount of money coming in from the public and a relentless amount of supply coming out of the market because of buybacks and takeovers.
We used to get big money in at the end of October as the public breathed a sigh of relief that two bad months were behind them. That stopped years ago. It seems to be back.

In the meantime, we get deals that are so huge that you have to shudder. You lose HCA's (HCA) stock. You lose Clear Channel's (CCU) stock. You lose Kinder Morgan's (KMI) stock. You lose Freescale's (FSL) stock. With many more to come.

We are in a pure supply/demand-driven market; the market is craving more supply and there's not enough going around.

Very telling."

Jimmy wrote that this morning. Now check what he wrote about the gold stock shortage back on May 9:

"When I got into this business there were, literally, dozens of investible gold mines. The South Africans traded like water. The Canadians were plentiful. The Americans were so plentiful that you never knew which to reach for.

Now you can count the number of truly investible gold companies on one hand. And that's the problem.

Who knows how high Goldcorp (GG:NYSE) , Barrick (ABX:NYSE) and Newmont (NEM:NYSE) could go. There is not only a gold shortage, but more acutely, there is a shortage of gold stocks!
Let's take Goldcorp. Everyone acknowledges this is the best of breed. It isn't hedged out like Barrick and it isn't challenged to find gold like Newmont. Given that's the case, it can go up endlessly as gold goes higher. It is the Occidental (OXY:NYSE) of the group, the one most levered to the underlying commodity. I know I have championed the stock for 20 points.
I keep waiting for IPOs in the group, but there aren't any. I keep waiting for the secondaries, but we don't get them either. Supply of these stocks is as tight as the supply of the precious metal itself, and demand is as strong for the shares as for the bullion in Iran, China and India, the three most voracious gold bugs on earth.

I usually like to say that the bull market will last until all of the equity deals get prices -- that's what happened with pretty much every other bull market in the last 20 years, destroyed by supply. Not going to happen in gold.

We just don't have enough of either!"

Check the chart on GG, yes he did it; I just hope he is not top ticking the equity markets. That would just be unfair. I am long too many equities.

AFTERNOON THOUGHTS

The markets did not "buy" my buy the dip theory and continue to trade lower and are now approaching/near/at yesterday's lows.

Market internals have flipped big for the bears as about 500 more red issues on NYSE and 900 red on the NAZ.

Sectors doing best include GOLD and SILVER with just about all others in the red and led lower by oils, airlines, SOX, small caps, biotechs and retail.

Some smart folks are looking at the 21 day SMA as a good buying area and we are not far from those levels on the major indexes. Here goes, 1,367 on the SPX, 12,000 on the DJIA, 12,040 on the YM and 1,710 on the NDX.

An afternoon snap back rally with beginning of the month money would not surprise me, but lately more wrong than correct so we will see.

OPENING LOOK

Markets open higher with the NAZ leading the way again followed by Big Caps.

Metals are again the leading sector followed by trannies, brokers and drugs. To the downside, retail, oil service and consumers.

Market internals are solidly bullish on the NYSE with about 870 more winners than losers. A bit more even on the NAZ with 200 more winners than losers.

The oil inventory numbers come out at 10:30 EST, so watch the reaction in the 0il patch.

GS is acting well again this morning as the price crosses over the $191 level and probably on the way to the $200 mark.

MRK MSFT HQP C DD the best performers on the DJIA while the worst of the group includes AA T JNJ AIG although none of the losers are down more than .5%.

PRE OPEN THOUGHTS

Markets look set to open higher with DJIA Futures trading at 12,151, or about 100 points off of yesterday's lows. SPX Futures up 4 and NDX+7.5.

The typical trade on days like this is to fade but my strategy will be a different, if we do pullback a bit and other "tells" look bullish I will be buying as I suspect lots of underinvested folks are going to want to jump aboard. The biggest fear of all is probably the fear of underperforming and now a chance to get on board with the beginning of the month money and the strong November December months, why not.

Interesting how now the media is fixated on the John Kerry flap about under achievers ending up in Iraq when the real story is probably "how in the world did we let the AK-47's and various other small arms (14,000) go missing in Iraq and probably get in the hands of the insurgents."

THE CLOSE

Markets finished the day very close to where they began with much volatility in between. The DJIA Futures traded between 12,146 and 12,053, about a 100 point range and the cash index closed down 6.

In my humble opinion, more "evidence" of a demand for equities as the markets rallied off the close in the final hours and hit a number of high "TICK' numbers (+1,200).

I expect the markets to rally for the rest of the week as the money starts to flow in from 401K and retirement plans. Tell the CNBC crew and Mark Haines especially that is called Retail participation.

Market internals flipped to near flat as there were about 150 more losing issues than winners on the two big exchanges; a reversal from the negative 800 earlier in the day.

The other reversal on the day was in the oil patch as crude and the OIH/XLE group all flipped to green. Just maybe another low put in the OIH as 130 holds for now.

Sector winners today included tech, metals, oils, biotechs, semis and the NAZ. Red included small caps, trannies, airlines, drugs, retail, cyclicals and GOOG.

ALLIGATOR TRADE

Markets have dipped lower on the heels of crummy guidance from PG and a stock buyback announcement by IBM. Of course one item is bearish and one bullish so take your pick.

Sectors doing best include METALS, biotechs, oils, oils service, semis, tech and financials. To the downside, trannies, airlines, drugs, retail, small caps and cyclicals.

Market internal a negative 850, which is crummy but certaintly not extremely bearish.

On the bright side, the 2 day RSI is finally giving some buy signals for the major indexes. We have the DJIA at 9 and the SPX at 21.

Note also the outperformance of the Financials, SEMIS and TECH. Generally if they hang green it won't be long before the rest of the markets rebound; I expect that tomorrow as the beginning of the month money comes in to drive prices back up.

While the DJIA/SPX complex is sinking today, the 10 year BOND rate has dipped back to the 4.61% area. Of course as rates fall, the value of equities should rise as the P/E should expand and companies get cheaper borrowing costs and that should add to the bottom line.

The asset alligator trade should also kick in as those holding bonds sell and switch or allocate more money to equities and lock in the bond gains.

The flip side is that the economy is weakening and folks are willing to pay higher prices for bonds and the sure thing of interest paid by the government of the U.S.A.

TIME TO BUY?

Markets continue to meander around the flat line with rallies being sold and dips being bought. My primary trading vehicle, YM, has traded in a fairly wide range this morning between 12,075 and 12,146.

The primary sector tells also continue to meander with BKX XBD SOX all trading ever so slightly green but in no way giving hints of a a ramp up. The tech index, MSH, probably trades the best of the best tell group up about .5% along with NAZ Futures.

Market internals trade negative with about 900 more issues lower than higher.

Strongest sectors include metals, biotechs, tech, semis, finanicials and brokers. To the downside, drugs, trannies, oils, airlines and retail.

The DJIA is now trading at a 2 day RSI of about 10 and that is the buy area so maybe time to s for a quick short term trade as we are only 50 points above the DJIA 12,000 level.

Beginning of the month money starts to show tomorrow and I think under invested bulls and long only investors will want to buy expecting a year end rally.

THE OPEN

Markets open slightly higher with another morning of NAZ over DJIA/SPX.

Market internals are not confirming a big upside day as the NAZ shows an equal number of winners and losers and NYSE about 300 more ups than downs.

Important sectors are a tad higher with BKX+.5%, XBD+.3%, SOX+.3% and MSH+.65%.

GS is up a buck and the DJIA Futures trade in a fairly tight range between 12,120 and 12,140.

Sector winners include airlines, financials, biotech, tech and brokers. To the downside, drugs, oils and oil service.

Looks to be another day where the major market indexes just bounce around and don't get traction either way.

Interesting how JNJ gets zero traction on the heels of the announcement the BRK took a big position.

THE CLOSE

Major indexes close near the unchanged level with the exception, the "tech heavy" NAZ which closed up about 1/2%.

Winning sectors included airlines, SOX/SEMIS, tech, metals, retail, trannies and brokers. To the downside, oils, biotechs and drugs.

Market internals close with about 400 more winners than losers evenly split between NYSE and NAZ.

In addition to tech and the NAZ, the small caps were the best performing major market index as the IWM closed the day up about .5%.

Back at the DJIA, VZ WMT and MRK were the worst of the thirty while GM HPQ UTX and MCD did the best.

VXO unchanged on the day with the VIX up 4% or 45 ticks, but still no buy or sell signals as they both trade at/near their 10 day SMA's.

Tomorrow brings the last day of the month and generally the "no markups allowed" sign is on the door so I don't expect much upside momentum. Then, the beginning of the month and new money may appear to spur the averages to new highs.

A few bothersome things today, oil sold off hard and the yield on the 10 year Bond backed down to a 4.67% rate; if the markets can't rally on this news, hmmmmmm.

Anyhow, as a general rule, November and December are strong months but this year has seen the calendar turned upside down as August and September are typically lousy but hardly the case this year.

AFTERNOON MARKETS

Markets continue to meander with NAZ higher and DJIA/SPX flat.

For those looking to short, BEWARE, BKX XBD GS SOX SMH SWH IWM all green. TICKS spending overwhelming amount of time above the ZERO line and recent high TICKS looks like the bulls want to make a run. Also, keep in mind this is the day before the end of the month - Don't be surprised by MARK UPS.

Market internals still flattish with 200 more winners than losers.

Best performing sectors include airlines, metals, semis, brokers, trannies, retail, consumer and banks. Worst of the groups, oils, oil service, biotechs and drugs.

VZ and WMT still the biggest drag on the DJIA stocks while BA HPQ and GM are the best of the thirty. Breadth on the DJIA evenly split between winners and losers.

YHOO KLAC and AMGN act well on the NAZ while the OIH in the oils service sector is trying to get up off the floor.

SHOCKER

Markets have turned around and are higher as I type with the first tell of the turn coming in the SOX/SEMI sector which was green all morning and is now higher by 1.3%/1.5%.

The YM Pivot mentioned in the final post on Friday was hit a few moments ago at the 12,140 level and it should be interesting to see the market action for the balance of the day as the NAZ and Tech are the strongest indexes/sectors.

TICKs also have been bullish spending most of the morning well above the ZERO line with several readings above 800.

Market internals have flipped to neutral with about 250 more winners than losers.

Sector outperformers include airlines, internets, metals, semis, tech and retail. Lower are integrated oils, oil service, drugs and biotechs.

Winners in the DJIA include BA HPQ GM MSFT and INTC while losers include WMT VZ MRK CAT JNJ and XOM.

And some breaking news on the War in Iraq, Check this out from CNN:

Thousands of weapons the United States has provided Iraqi security forces cannot be accounted for, and spare parts and repair manuals are unavailable for many others, a new report to Congress says.

The report, prepared at the request of the chairman of the Senate Armed Services Committee, Virginia Republican Sen. John Warner, also found that major challenges remain that put at risk the Defense Department's goal of strengthening Iraqi security forces by transferring all logistics operations to the defense ministry by the end of 2007.

A spokesman for Warner said the senator read the report over the weekend in preparation for a meeting Tuesday with Stuart W. Bowen Jr., the Special Inspector General for Iraq Reconstruction.

Warner, who requested the report in May, "believes it is essential that Congress and the American people continue to be kept informed by the inspector general on the equipping and logistical capabilities of the Iraqi army and security forces, since these represent an important component of overall readiness," said Warner spokesman John Ullyot.
The inspector general's office released its report Sunday in a series of three audits finding that:
Nearly one of every 25 weapons the military bought for Iraqi security forces is missing. Many others cannot be repaired because parts or technical manuals are lacking.
"Significant challenges remain that put at risk" the U.S. military's goal of strengthening Iraqi security forces by transferring all logistics operations to the defense ministry by the end of 2007.

"The unstable security environment in Iraq touches every aspect" of the Provincial Reconstruction Team program, in which U.S. government experts help Iraqis develop regional governmental institutions.

The Pentagon cannot account for 14,030 weapons -- almost 4 percent of the semiautomatic pistols, assault rifles, machine guns, rocket-propelled grenade launchers and other weapons it has been supplying to Iraq since the end of 2003.

The missing weapons will not be tracked easily: The Defense Department registered the serial numbers of only about 10,000 of the 370,251 weapons it provided -- less than 3 percent.
Missing from the Defense Department's inventory books were 13,180 semiautomatic pistols, 751 assault rifles and 99 machine guns.

The audit on logistics capabilities said there is a "significant risk" that the Iraqi interior ministry "will not be capable of assuming and sustaining logistics support for the Iraqi local and national police forces in the near term." That support includes equipment maintenance, transportation of people and gear and health resources for soldiers and police.

The audit on Provincial Reconstruction Teams said that, because of security issues, they "have varying degrees of ability to carry out their missions." Auditors reviewed nine teams and four satellite offices and found "4 were generally able, 4 were somewhat able, 3 were less able and 2 were generally unable" to accomplish their goals.

Rummy's answer over the weekend "Just Relax."

LOWER OPEN

Markets open lower on crummy sales news from WMT and lower prices in Europe.

Sectors doing best include internets, semis, airlines and metals. Worst performers include oils, retail and biotechs.

Stocks acting well include YHOO KLAC and EBAY while WMT AAPL GS KSS and TGT are all lower.

Market internals show about 1,000 more losers than winners equally divided between NYSE and NAZ.

The key to the markets will be to recognize how anxious the dip buyers and under invested bulls will be to jump aboard after many never got a chance to buy over the past few months as the markets rarely pulled back.

Lower oil may also jump start the bulls as crude trades down a buck or so and the 10 year is back to a low 4.68% yield which is also bullish for equities.