PM SNOOZEFEST

Markets were all over the map this morning but this afternoon brought a complete about face as the markets seem stuck with the DJIA +34, NAZ +13 and SPX +3.5.

The big tell triumverate of GS GOOG and AAPL are all green with GS retracing most of yesterday's selloff.

Sector leaders include brokers, internets, oil service, software, biotech and tech with metals and the semis leading to the downside.

Market internals have flipped to flat a green 220 on NAZ and flat on the NYSE.

The 10 year Bond has sold off big on the heels of the higher dollar and the rate now approaches 4.55%.

Most of the DJIA stocks are higher with C, the target of Jim Cramer's wrath, higher on the rumor of executive departures or a break up. Other DJIA winners include MCD AXP AA PFE and VZ. Losers include MMM HON DD HD and HPQ.

Interesting how Jimmy calls a number of folks at C and at the New York Football Giants clowns. Real clown, Jimmy, is in your reflection as you perpetuate the fraud that recommending a thousand stocks a year is a way to make a lot of money (mad money). Note, Jimmy's Action Alert portfolio up about 6% for the year, but when I asked the rm.com folks about the track record they blame it on trading restrictions. Now why don't the folks at CNBC flaunt the performance of his portfolio? Oh no, we only talk the winners- the losers don't count. Always something.

NOON ROLL

Low and behold the bulls bought the dip led by tech and the NAZ and up up and away we go. The tell of the GS GOOG AAPL threesome worked better than the initial crummy internals and I am curious to see how far the markets go today. My gut says not very far as I anticipate an afternoon reversal.

Market internals are bullish with +400 on NYSE and +500 on NAZ.

Sector leaders include tech, oils, big biotech, software, brokers, internets, retail and small caps. To the downside are metals and trannies.

Some chatter that C is ripping higher on talk of either a bust up or a new top empolyee formerly from BAC.

From my pals at Minyanville.com- "there are 21 new IPO's coming to market next week that will raise $3.2 billion."

THE MAP

Futures traded higher on the jobs number, sold off before the open, ripped higher on the open and now are trading a bit lower, so maybe the return of volatility is upon us.

Anyhow, the DJIA is -18, NAZ-5 and SPX -1.5.

Leading sectors include oils, metals and internets while semis, airlines, biotech, drugs, trannies and tech lag.

Market internals are red 500 on the NYSE and red 600 on the NAZ, so not so looking so great for an up day. On the stock specific list, GS GOOG and APPL are all higher so hmmm. Also, interesting to note that half the DJIA components are trading green.

I am watching the semis as the key tell today. If they can get some mojo in light of the bad news out of the sector, the markets will probably flip the green switch.

JOB WATCH

Markets were trading near fair value before the jobs report and are now higher on the heels of the 132k increase vs 110k consensus. The 10 year Bond is trading at 4.52% up about 4 bps from yesterday's close as this 20k "beat" is bullish on the economy and bearish for bonds as one of my favorite commentators Jack B says "welcome to the soft landing"- sure until we get the next set of economic numbers like ISM or PMI which will indicate something different.

In the oil patch, note the OIH trading higher to the $147 level in light of the colder weather in the northeast (18 degrees in Westchester County NY as I type). Warmer weather is predicted after today but we will see how the oil patch reacts. Also, the XLE is only about $.5 short of all time highs at $61.4 and I guess the action in XOM will dictate whether that target gets tagged.

And thanks to John Lennon.

CLOSING NUMBERS

Markets ran into another bout of selling this PM on the heels of selling in recent favorites AAPL GOOG and GS.

Sector winners were trannies and metals while semis, tech, software, internets, biotechs and brokers led the losers.

Market internals flipped from nicely green in the morning to a red 1,250 into the close.

The QQQQ has now plummeted to a 2 day RSI near 15 as it tumbled to 43.75. The buy signal typically kicks in at a reading under 10, so with a weak open tomorrow, we should hit it, unless of course the NAZ is in a sustained downturn, then don't buy it.

Another signal coming up is the VIX stretch as it is now at the 110% of the 10 day SMA. There you have it, on the heels of two buy signals.

Just a little rehash of the performance of some of the equities/indexes often mentioned on this site as of sometime today:


SPX +12.8%

QQQQ +8.3%

IWM +18%

HHH -19%

SMH -6%

GOOG +16.66%

GS +57%

INTC -17%

SSRI +102%

MSFT +11%

OIH +13.4%

XLE + 20%

So it goes.

TRUTH IN BLOGGING

I wrote earlier about the LVLT stock being constantly pumped by Jimmy Cramer and he may be right in spite of my brief morning homework. Apparently the value investors at Southeastern Asset Mgt have recently disclosed a 22% stake in LVLT upped from a 15.6% stake back in July. These guys have a good record witnessed by the Longleaf family of funds and LLPFX, their value holding and a 5 star value fund as rated by Morningstar. The fund is closed but has a return of about 24% ytd and about an 11% return over the past five years. Be aware I still wouldn't own it.

NOON TOUGHNESS

George W. Bush making big news today as he appears to refuse to "alter" his policy on Iraq and the reaction in the markets is not to go higher but just sit at the morning lows.

The tech sector is underperforming again and AAPL has broken down under the $89 level despite an upgrade from Caris with a $100 price target. Some where I saw the reason for the weakness being a delay in the IPHONE.

Strongest sector include banks, big caps, consumers and DNA MER WYNN WMT and MGM on my watchlists. The weakest include oils, semis, software, small caps, homies and metals.

The DJIA being in the red, has 20 issues higher and 10 lower led by MCD CAT MO GE and KO on the plus side and MRK HD XOM BA and GM leading lower. GOOG and GS look to be heading higher so maybe a small hint of an afternoon rally.

Market internals have flipped, although hardly pointing to a crushing and now show -220 on NYSE and -400 on NAZ.

Note the 2 day RSI on the NDX/QQQQ is under 30 and it hasn't been there in a while so if you are a believer in the year end rally it may be time to dip in the toe.

HIGHER OPEN

Markets open higher putting yesterday's drop quickly in the rear view mirror. I am a bit skeptical again though as the big cap SPY/DJIA are leading the "tech heavy" NAZ which has quickly flipped to red.

Strongest sectors include drugs, airlines, semis, brokers, financials and small caps. To the downside metals, oils and retail.

Market internals are good although off their highs especially on the NAZ. NYSE is +500 and NAZ +100.

The NAZ market has begun to bother me a bit as it has underperformed of late and is probably now in a downtrend. Remember, the NAZ leads.

As far as LVLT, it appears that someone has fleeced the opening buyers as the "equity" has already lost 3% from its $5.9 high of today.

A THING OF BEAUTY

Jimmy "Guru" Cramer out last night on mad money with yet another plug for LVLT calling it his favorite and a thing of beauty. Since he recommended it on RM on October 27, the stock is up about twenty cents to $5.61.

Far be it for me to criticize a guru like Cramer but I did check the Balance Sheet of LVLT as of June 30, 2006 and it is NOT a thing of beauty. Current assets $3.2 Billion, PPE of $5.5B and Liabilities of about 9 Billion, zero shareholders equity and a market cap of 6.5 B. No doubt the PPE is worth more than the 5.5 B as this is the "depreciated number" but most of it was no doubt bought back in the gogo day of 1999 and Y2k. This is his favorite- I wanna hear his worst.

Keep in mind his other two favorite plays, ARNA at $15.41 and Q at $8.61. Current quotes $13.46 and $7.56 respectively- unless of course you were stopped out earlier.

PPT

I was surfing around last night and found this interesting article from Kevin Haggerty on the TradingMarkets.com site. TM was one of the first websites for traders and originally had some great articles and courses on trading but has recently become uninteresting and mostly unhelpful as they started stock contests for Playboy Playmates. They do have a nice stock screener but then again who doesn't?Anyhow, Kevin is looking for some weakness and then a nice rally into year end. He was the head of trading at Fidelity for several years and has written at the TM site for many years. I have no idea about his record but his take kind of coincides with mine through year end:

"There is no edge for traders right here, as yesterday was the 5th day off the 11/28/06 1377.83 low, and there is a negative momentum (5-RSI) divergence. The internals remain short-term overbought as the 4 MA's of the volume ratio and breadth were 64 and +1101 on Monday, declining yesterday to 60 and +819. The 5-RSI closed at 73.83 versus 92.26 at the SPX 1389.45 high and 86.04 at the previous 1407.89 high on 11/22/06 (see chart). The Federal Reserve and the Working Group on Markets (PPT) will do their best to keep the markets from any significant decline while the US dollar remains under pressure. Also, the generals have every incentive to mark-up what is a very good 2006 with the SPX +13.3% year-to-date. Any short-term weakness into mid-December will reverse to the upside. However, for you and I, the numbers only count when you book it or lock in a certain percentage of your gains."

I love the "working group" comments or the PPT aka The Plunge Protection Team. For those that don't don't know, there are many theory's that the Fed/Treasury buys or gives money to foreign governments to buy stocks "in size" when they fear a major dip in markets- hence the Plunge Protection Team.

CLOSING THOUGHTS

The stage was set for an afternoon rally as the brokers were green led by GS (new all time HI), semis green, internals flipped from a bearish red 1,600 to flat, small caps flipped to green, and GOOG marched higher all day. But no deal as the major market indexes couldn't get any jig past the flat line and closed lower.

Strongest sectors were brokers, semis, oils, homies, airlines and retail. Weakest were metals, software, internets, trannies, tech and drugs.

I bought some DJIA Futures in the middle of the day expecting the typical rally for a gain of 40 or so but no dice as the long side was wrong for the first time in quite a while. And how about the recent crummy action in MSFT as it hit the brick wall at thirty. Not helping the NAZ at all. And is there any chance that the new appearance of the new CNBC.COM marks the end of the recent bull market. Stranger things have happened.

XOM the new Jimmy Cramer must own stock into year end as all the funds had to be buying it is the big loser today as it is down $1.75 or the most in quite a while. Funny how there was no mention of that into the close on CNBC as they only report Jimmy's winners.

For all the Googleoonians, note that GS hits a new high up $3.62 today while GOOG lags way under its recent highs at $490 and change.

NOON CHECK

Markets continue to trade lower although off their lows with the SPX type outperforming the NAZ group and the small caps.

Sector leaders continue to be brokers, oils, retail, semis and biotechs while metals, internets, trannies, drugs and tech lag.

Market internals have improved dramatically from the open with NYSE at -145 and NAZ at -225. The fixed income group is not helping the NYSE as the 10 year Bond is lower with a rate at 4.47%.

The oil service group is bouncing around with a green bias after the release of the bullish inventory numbers.

I suspect a better than 50/50 chance of an afternoon run up in equities since that has been a high probability trade since the summer lows.

DJIA components are trading with 12 up and 18 down with the winners being HD CAT VZ BA and HPQ while the losers are MRK XOM MMM HON GM DD and INTC.

LOWER OPEN

Markets open lower the small cap complex taking the brunt of the selling. DJIA -22, NAZ-10 and SPX-3.

The small cap IWM is down about double the large cap guys so if you think stocks are heading lower, go to cash not large caps.

Sector winners are kind of surprising in light of the downdraft with brokers (GS), homies on the C upgrade, and retail trading in the green. Most all other sectors are lower with metals, internets, semis, tech, trannies and drugs acting worst.

Market internals are bearish with about 1,600 more losers than winners and fairly evenly divided between NYSE and NAZ.

Oil and oil service are trading flat to pink with the oil patch numbers coming out at 10:30- I suspect higher oil stock prices regardless of the inventory numbers.

Some interesting price targets by C on the homie call as they call for TOL at $42, PHM at $45, HOV at $63 and CTX at $68. Nice prices if you can get them there.

TECHNICALS-NDX/SPX

Not sure if anyone is noticing but what I have seen lately is the SPX starting to outperform the NDX. Market technicians will generally tell you that they want NAZ and TECH to lead market rallies. From the mid summer bottom, the NDX has led and is up much more than the SPX DJIA or IWM. If you check the charts above, the NAZ is now having a hard time making new highs and if you take it a step further and look at the semi group, the SMH hit its high back in the middle of October while the SOX made its high in mid November.

Don't get me wrong, I am not guaranteeing a market melt down but I am giving a heads up to tighten up stops and be careful out there as stranger things have happened.

CLOSING

Markets chopped around in the green for most of the day but really couldn't muster much as it feels like it is losing a bit of its oomph going into the middle of the week.

The ticks repeatedly hit over 1,000 and even got to the +1,300 level without mustering any further upside so just a little more on why it seems like the oomph is gone for now. In addition the IWM couldn't get anything going and finished the day flat. The NAZ Futures closed up a whole 4 points in spite of Maria's excitement.

One hint that the markets would have some problems was the NAZ breadth which traded green but near the flat line all day. NYSE breadth was green at +850, so better action at the DJIA SPX duo. Just another heads up that small guys/NAZ probably lead and maybe signaling lower for the balance of the week.

GOOG AAPL and GS were all green although way off their highs as was the SMH that again ran into a brick wall near the $35 area.

I wouldn't be excited about putting on more long positions at these levels until I saw better action in the NAZ/IWM and the NAZ internals.

Sector leaders were trannies, internets, semis, homies, oil, drugs and retail. Leading lower were metals and airlines.

Final note- courtesy of minyanville.com, closing level of SPX 4 years ago today - 907; crude $27.27- gold $324.5 and the DJIA 8,623. Fun stuff.

AFTERNOON THOUGHTS

Markets continue higher with DJIA +30, NAZ +7.5 and SPX +4.5. The small caps are underperforming the bigger indexes and they may be giving us a hint of a little sell off to come.

Checking the sectors, techs is doing well with semis up over 1% and internets (HHH) up a little less than 1%. Other winning areas include coffee (SBUX), homies, brokers, retail, drugs and trannies. Worst groups include metals and oil service. In light of the red OIH, I am contemplating adding to my long or selling some puts near these levels.

Market internals continue to trade green with +900 on NYSE and +450 on NAZ.

If one is a little bored with the markets I recommend the Gates hearing on CSPN 2. Mr. Gates is actually answering hardball questions. Interesting stuff.

CHOP CHP DAY

Markets have opened mixed but have climbed higher on the ISM number. DJIA +32, NAZ+5 and SPX +4. Please rembember that days after strongly trending days tend to be choppy and I expect today to be no different.

Leading sectors include metals, internets, semis, oils, drugs and retail. Lower are gaming, airlines, brokers, biotechs and trannies.

Market internals have flipped nicely green on the news to +1,100 on the NYSE and +660 on the NAZ.


DJIA winners include KO MCD XOM MRK HD and DIS while GM AXP DD VZ and MMM lag.

The 10 year rate is up to 4.456 and that might be a headwind later in the day.

I suspect that this rally will be sold but have no plans to short as I thinkbetter prices will appear soon enough.

BIG GUYS

With all the blah blah blah about the how well the big cap stocks are acting, check out the action in the small cap Russell 2K index. It is up about 19% off the summer lows which compares pretty favorably against the SPX and the DJIA, which are both up about 15% from the lows. The NDX 100 would have been better yet up about 24% off the summer lows, but that would have been a major bet on big tech.

Obviously all the indexes are overbought again and waiting for another pullback is probably the way to go.

On the research front, STN is downgraded at B of A, MHP target raised to $80 at FBR, SIRI downgraded to hold at Morgan Joseph, ACF target raised to $34 at FBR, UBS upgrades SBUX and AG Edwards downgrades AXP.

THE CLOSE

Markets finish the day a bit off the highs except for the IWM which closed at the high of the day.

The IWM was the best performing major index even though the DJIA and SPX did very well.

Market internals were very bullish from the get go closing with about 3,000 more winners than losers.

The NDX closed a bit off their highs as the SMH ran into a problem again at the $35 area.

Strongest sectors were gaming, brokers (GS over $200 again), semis, airlines, small caps, metals, financials and tech. Worst performers were drugs and oils although off their lows.

With healthcare being Jimmy's favorite sector, isn't it interesting that the only 2 losers on the DJIA were PFE and MRK. Also check the action in the gaming stocks including my favorite, MGM +5.5% today.

The VIX closed the day down about 3.5% to a bit above 11. The markets may have more to go as the VIX recently hit a low just above 9 so a move back down to those levels means higher prices for equities.

The 2 day RSI for the SPX is back to 85 and we know that has recently been over 99, so maybe we go a bit higher as the we are now above the important 1,407 level.

NOON UPDATE

The theme over the past several months is that economic news is meaningless and every dip is bought in size. That is all one had to know to make lots of money in the markets since the June lows. Not much reason to expect it won't continue as folks probably learn to trade what they see and not what they think or some big picture bearish scenario. The goal is to make money and not make macro economic predictions.

The big winners today are in the tech and small cap sectors as the semis caught a bid after dipping to neutral territory in the early trade.

The gaming group led by WYNN LVS and BYD are leading the markets with semis, internets, small caps, brokers and financials all very strong. Oils and drugs are lower.

Market internals are very bullish with a +1,500 reading on NYSE and +1,100 on the NAZ.

Daily resistance on the SPX is near the 1,407 level while the DJIA level is 12,265, and I intend to buy pullbacks from those levels. Monday pullback buying with strong markets and strong internals has been a very high probability trade.

DJIA winners total 27 with IBM AXP INTC UTX and HON leading with PFE MRK and XOM the biggest losers.

OPENING CHECK

Markets open higher putting the crummy ISM and PMI numbers from last week. The NAZ and the IWM are the leading indexes while the SPX and DJIA trail.

Market internals are very green with +1,000 on the NYSE and +800 on the NDX.

Sector winners include gaming, banks, brokers, internets, metals, tech and small caps. Leading losers include drugs on the heels of the bad PFE news. Oils and oils service also trades lower.

Keep an eye on the thes semis as the SOX and the SMH both turn red after opening higher.

GOOG and GS are green while AAPL is red, so just a heads up and my guess is pullbacks today are to be bought if one plans to daytrade.

I briefly perused the CNBC.COM site and it looked fairly interesting and probably worth a look even though I rarely tune in anymore. Yes its BLOOMBERG OVER CNBC.