THE BARRON

Barron's with some interesting stats regarding the selloff - here are some quotes:

"HISTORY SUGGESTS THAT STOCKS MAY DO WELL in the next two months. There have been 38 days since 1979 when the S&P 500 has suffered a single-session loss of 3% or more. The average gain in the ensuing 60 days has been 6.9%, with the index rising in 31 of the 38 cases, according to Citigroup research."

"Where does value lie? Investors have a choice. They can play the economically sensitive industrial, energy and materials sectors, where many stocks are available for about 10 times earnings. Or they can buy blue-chips for 15 to 20 times profits. Another alternative is financials, now valued at 10 to 15 times estimated 2007 profits.

Tom McManus, the equity strategist at Banc of America Securities, favors "high quality, large-capitalization stocks with diversified, defensive earnings streams." He notes the price-earnings multiple of the market's largest stocks, the top 150 companies in the broad S&P 1,500 index, is much lower than the P/E of the smallest 150 companies.

One place to hunt for value is the top 12 U.S.-listed stocks ranked by market value. Half the top 12 -- ExxonMobil (XOM), Citigroup (C), Bank of America (BAC), Pfizer (PFE) and American International Group (AIG) -- trade for just 12 times earnings or less. The richest stock among the dozen, Procter & Gamble (PG), fetches 19 times earnings.

Citigroup and Bank of America have among the lowest P/Es in the banking sector, carry yields of 4% and have lagged behind their peers in the past year. The heat is on Citi CEO Chuck Prince. If the company continues to disappoint the Street, Prince could be gone, perhaps by year end, and the company could be broken up. Both developments likely would boost the stock."

If one buys into the "large caps" argument, one could buy the OEX index etf (OEF), which was up 16% last year but is down 3.8% as of Friday's close, or one could cherry pick some recent underachievers, such as:


C, which is down about 10% in 2007, was up 14.8% last year, pays a dividend of 4.2% and has a 2007 estimated P/E of 11.3.

GE, which is down 6% in 2007, was up 6% last year, pays a dividend of 3.2% and has a 2007 estimated P/E of 15.8.

PFE, which is down 4.3% in 2007, was up 11% last year, pays a dividend of 4.6% and has a 2007 estimated P/E of 11.3.

MO, which is down 3% in 2007, was up 15% last year, pays a dividend of 4.1% and has a 2007 estimated P/E of 15.

Also, some chatter about slowing economic growth and lower fed funds rates. According to Barron's, "ML economist David Rosenberg wrote in a client note Friday that he sees 2007 growth of just 2.2%, below the 2.7% consensus estimate. The good news from any economic slowdown likely will be easier monetary policy. Rosenberg sees the key Fed Funds rate ending 2007 at 4%, versus the 4.75% now discounted in financial futures markets. The rate is now 5.25%."

If Rosenberg is correct, the financials and the brokers should benefit along with all those homeowners with HELOC's/ adjustable rate mortgages and owners of real estate in general.

All stocks would no doubt benefit with the banks and financials getting an added kick. A nice way to play, the IAI etf, which holds all the big brokers (GS MER MS LEH BSC LM) along with exchanges CME NYX NMX CBOT ICE ISE and NDAQ. The big three brokers, GS ML and MER, make up about 24% of the fund.

My guess is over a long period of time, the broker index ETF will be tough to beat.

CLOSING LOWS

Markets closed at their lows for the day but above the worst of the week as the SPX hit a low of 1,380 yesterday and closed at 1,387 today. I suspect many were scared of a black ugly Monday and if that doesn't happen, it may turn out to be turnaround Monday.

The DJIA closed down 120, NAZ -36 and the SPX -16.

Strongest sectors included retail, banks and biotech while the worst were the silver stocks, metals, gaming, brokers, airlines, internets, reits, small caps and semis.

Market internals closed near the worst levels of the day as the NAZ/NYSE had about 3,300 shares net red and both the OEX and the NDX had 1 up for each 9 down while the SPX had 40 of the 500 in the green.

Volatility indexes closed up about 18% on the day and now trade about 40% above their respective 10 day SMA's.

The forgotten and apparently unusable 2 day RSI now at 7 on the SPX and 6 on the DJIA. Hard to believe that just a few short weeks ago it was repeatedly over the 90 level.

I didn't do much except for take out some insurance buying the QID as a hedge against a weekend fiasco. Hopefully it will be a big loser.

WEAKNESS CONTINUES

Markets trade lower as chatter continues concerning "not being long into the weekend."

Not sure what will/can happen during the weekend so probably a short term buying opportunity.

Strongest sectors include retail, biotech and utilities. The weakest are silver stocks, metals, gaming, oils, internets, brokers, small caps and tech.

Market internals are very weak again with the NDX internals showing 15/85 up to down. SPX and OEX show about 1 up for every 4 lower.

Overall, 2,600 more lower than higher on the NAZ and NYSE.

Biggest winners - SNDK SHLD SPLS SYMC LOGI COST AIG WY TGT WMT and DELL.

Biggest losers - EP ATI EMC CSCO SEPR AKAM NMST ALTR WYNN and EBAY.

Volatility indexes up about 12% on the heels of the coming "weekend fiasco" and silver favorites PAAS and SSRI both down 5% and I am dipping.

OPENING LOOK

Markets open lower on the heels of crummy overseas markets and more skittishness from traders/investors.

The DJIA is -16, NAZ -10 and SPX -4.

Strongest sectors inlcude airlines, retail, biotechs, trannies and defense while the weakest are metals, internets, reits, small caps and homies.

Market internals are very weak with about 2,000 more losers than winners between the NAZ and the NYSE.

Major indexes- the NDX with 30 green; SPX 120 green and the OEX with 20 up.

Strongest stocks include AIG HON DELL TGT SNDK NYX SHLD LVLT ROST LBTYA PLL and KSS.

Weakest include MNST ALTR SEPR VMED INFY LINTA ATVI EXC EP WMB IP and GOOG.

Volatility indexes higher again but not soaring.

My strategy for the day; sit on my hands and wait as it seems to many are expecting another big selloff leading me to think its not happening.

CLOSING RED

I didn't get my green close but good enough as I suspect an intermediate bottom is in at SPX 1,380 as we close 23 points off the low. Of course no guarantees but the chart looks ok to me.

Strongest sectors included gaming, oils, software, utilities, homies and defense. Weak were silvers, biotechs, metals, semis, drugs, retail, brokers, airlines, financials and internets.

Market internals flipped back to bearish as a net 750 red on NYSE and about 1,000 net red on the NAZ.

NDX had 23 green; OEX 35 and SPX 170.

Best major index was the MID followed by OEX/DJIA/SPX big caps as the small caps and NAZ lagged.

Best performing stocks included DISH LBTYA AAPL ORCL SNDK S C DELL MS and AEP.

Worst were AMGN LTD F NSM ATI ABT INTC DOW AMLN SPLS and LVLT.

Volatility indexes also way off their highs with the VIX/VXO combo up about 2% on the day and now trading 30% above their 10 day SMA's. How much money will be made when/if the VIX/VXO return to a single digit handle?

AFTERNOON JIG

Markets have rallied back to the flat line and I think what happens this afternoon is important as many traders/investors may see an "all clear sign" as volatility eases.

Strongest sectors are oils, gaming, brokers, software, utilities, homies, tech and reits while silver, biotech, metals, European equities, drugs and retail lags.

Market internals have flipped to near flat as the NYSE shows -150 and the NAZ a -580 after being much worse in the morning.

The NDX is 50/50 up to down; OEX almost 60/40 and the SPX also about 50/50 between green and red.

Key stocks - GS flat, GOOG AAPL BOT CME MER MS RIMM BIDU HHH all green KLAC INTC and Don Hayes' semis, red.

Volatility indexes are now only up about 1% after hitting pretty extreme levels in the early trade although still way above the 110% of their 10 day SMA levels.

I am staying with my "they close green" call from earlier today.

SEEING GREEN

Markets all over the board again and giving updates is not all that beneficial. I am not daytrading as one could get wiped out trying to figure out the way of the trend but I am continuing to buy for the intermediate term (EWA IWM) and a green close to the day's trade would not surprise me at all as we went under Tuesday's low and traded higher wiping out those stops.

Strongest sectors (not necessarily green) include the OEX/DJIA biggest caps, gold, software, silver, drugs, oils, defense and large cap value. Weakest are gaming, biotech, brokers, reits, emerging markets, retail and small caps.


Market internals are rapidly turning green as the OEX big caps started out with zero green now showing 20 up. The SPX also rapidly flipping with about 50 green and the NDX doing the worst with 10 up.

Big caps in the green as I type include ORCL S EP MDT COP BMY PEP MRK BA MO KO GE PG and BA.

Biggest losers include GM IBM AA UTX LTD AMGN NSM ATI AES F CAT and COF.

Volatility indexes way off their highs with VXO/VIX combo now only up about 15% after being up about 25% earlier.

I guarantee nothing but I will go out on a limb and say we close in the green on the OEX/DJIA/SPX complex, you know the flight to quality group.

BIG CAPS BIG CAPS!!!!

February is punched and yet again the worst performance was in the loved big caps. Here is various performance data for the year through yesterday:

OEX -2.5%

DJIA -1.6%

SPX -.8%

NDX FLAT

RUT +.7%

MID + 4.2%

Large Cap Value -1.9%

Large Cap Growth -.6%

Small Cap Growth +3.8%

Small Cap Value -3.2%

GE -6.2%

C -9.6%

XOM -6.5%

BAC -4.8%

GOOG -2.4%

CSCO -5.1%

MSFT -5.7%

INTC -2%

AAPL FLAT

HPQ -4.5%

MGM +24%

SOX +1.2%

SSRI +10%

PAAS +19.3%

SLV +9.8%

GLD +5.2%

VLO +12.5%

BROKERS (XBD) -1.2%

BANKS (BKX) -1.7%

DRUGS (DRG) FLAT

RETAIL (RLX) +2.7%

BIOTEK (BTK) -1.6%

HHH (internets hldrs) +6%

GS +1.2%

MER -10%

XLK -1%

EEM -3.1%

EFA +1.3%

IYR (DJ Real Estate) +5.7%

CLOSING TAILS

Heard some great stuff on CNBC today including, Don Hays suggesting that the SOX semi index will double before the end of the year. Lets see, the index is now at 475 so that would be 950 in the next 10 months. I just wish I could take the other side of that and I would give him 10 to 1.

Cramer said the stocks he gave on the Today show this morning, XOM PG MO or KO and were THE BEST performers on the SPX today. Checking the SPX, PG is 10 XOM is red and either KO or MO was the third, KO ranked 205 and MO 67. Why does this guy not tell the truth?

Anyhow, markets closed higher with the DJIA +51, NAZ+8 and SPX +8. The real winner was the OEX, the biggest of the big caps higher by about .6% as the mids/small were the worst of the major indexes, barely in the green.

Strongest sectors were gaming, emerging markets, metals, brokers, oils, reits, defense and big caps. Biggest losers were homies, biotech, airlines and small cap growth.

Market internals closed strong with 1,000 net green on the NYSE and 400 net green on the NAZ.

The above mentioned OEX had the best internals also with 75 up / 25 down; NDX with 60/40 and SPX also excellent at 330/170.

Key stocks had a pretty good day with GS +4.5, GOOG +1 AAPL +1, ICE+8, CME +29, and MS +1. Only loser was KLAC.

The 10 year Bond was a bit higher closing near the 4.55% level.

Volatility indexes with a nice sell off as the VIX/VXO tandem lose about 16% of yesterday's pumped up prices. They now trade at about 135% of their 10 day SMA's.

Markets probably continue higher despite the protest of many TV gurus as these volatility indexes probably fall further and get near their 10 day SMA's. Buying puts yesterday was not the play.

Not much to say except markets are higher and every guru interviewed says wait to buy as I expect lower prices with the SPX trading down to the 1300/1325/1350 levels.

Not sure if that is going to happen (probably won't) as the market rarely accomodates gurus and TV strategists.

The bright light today is the action of the internals in the big cap indexes. The OEX shows 80/20 green to red; SPX 375/125 and NDX 70/30. The best tell of all is "usually" the internals so maybe higher prices before the day is done.

Strongest sectors include exchanges, gaming, emerging markets, metals, brokers, defense and reits. Leading lower are homies, semis, growth stocks, airlines and utilities.

CME BOT ICE MA AAPL GOOG GS MS RIMM BIDU all acting well while NYX MER KLAC INTC all lower.

Biggest gainers overall include BEAS LINTA ORCL SYMC CTSH S ATI NSM PG ORCL and DIS while AA AES MCD MEDI LEH IBM and HD are the leading losers.

Volatility indexes generally around 15% lower and a few more days like this and they will be back at their 10 day SMA.


And Baseball is back as the NY Mets are on SNY.

MORNING MEANDERINGS

Markets, as expected are all over the board with leadership being found in the biggest of the market caps. The OEX is acting best, higher by 1% followed by the DJIA/SPX while the mids and small caps are generally flat.

Key stocks looking good with GS+3, AAPL +1, MA +2, CME+21, RIMM+3 and GOOG +3.5.

Strongest sectors include emerging markets, gaming, oils, drugs, reits and drugs. Weakest are homies, airlines and small cap growth.

Market internals are +650 on the NYSE and flat on the NAZ.

The index internals show a bit different story with the OEX leading with 80 up and 20 down while the SPX has about 360 up to 140 down. The NDX is the worst with about 65/35 up to down.

Volatility indexes are indicating some market stabilization with the VIX/VXO combo down by about 14%.

My take here is to be very careful with shorts as most "strategists" (including him) interviewed this morning on bubblevision were very leery and expecting lower prices after a higher open. Just wondering if the short term lows are in and again we leave those looking for a further correction behind.

OPENING TALK

Futures on the major market indexes are flat with fair value as I type but lots of data coming in this morning including GDP (spot on at 2.2), Chicago PMI,new home sales, an oil inventory report at 10:30 and a talk by Big Ben in front of Congress. Make no mistake, it will be a volatile day.

Anyone watching the futures on the DJIA yesterday knew something was amiss when the YM DJIA Futures were down 450 while the DJIA cash was down 250. So cramer et al can yelp about an unfair system but anyone watching the screens and the futures knew something out of the ordinary was coming.

Lots of folks expecting the "higher open" (maybe) to be sold as the risk managers tell the traders to take some off and wait for some stabilization before commiting more capital to equities. So I will probably sit on my hands waiting until I think its appropriate to deploy more capital.

Anyone curious to what I bought yesterday, FCE.A ITA EWA and a little IAI.

CLOSING RECORDS

One of the more annoying days on wall street has come to an end as the DJIA closed down 415, NAZ down 97 and SPX down 50. Not sure where we go from here but a lower open with a nice close tomorrow would not be surprising.

The best of the bad sectors were drugs, biotech, homies, large cap value, utilities, semis, midcaps, financials and defense. The worst were emerging markets, brokers, silver stocks, gaming and small caps.

The internals on the major indexes were kind of interesting as 2 stocks were up on the SPX; 1 on the NDX and zero on the OEX.

There were about 725 issues higher and 5,800 lower on the NAZ and NYSE.

Volatility indexes were way up with the VXO/VIX combo up about 70% and trading at 170% of their 10 day SMA's, something I haven't seen.

Its interesting listening to the guru's hedge on whether its time to buy or time to sell. This blogger says scale in to stocks because it won't be long before you will be kicking yourself for not so in the not so distant future.

Keep in mind that the QQQQ is back down to the January lows while the SPX/DJIA complex is back at the December lows. Also check the action in the Midcaps, that group outperformed all the major indexes including the big cap OEX/SPX/DJIA complex.

MORE MORE MORE

Not much has changed since the open except markets are a little lower after giving a head fake that just maybe the worst of the day was hit.

The DJIA down 180, SPX down 23 and NAZ down 55. The good news for bubblevision and its various "time for big caps" guests is that they are finally outperforming. Yes, they are doing better than small/mid caps as the OEX/SPX is only down 1.5%/1.6+% vs. the 1.9%/2.2% sell off in the MID/RUT.

Checking sectors, the best of the bad so far include oils, large cap value, drugs, banks and reits while emerging markets, gaming, brokers, airlines, biotechs and homies are acting the worst.

Market internals as ugly as ever with 4,500 net red on the NAZ and NYSE.

The NDX has 3 winners, the OEX with 4 and the SPX with 15.

The TRIN at 4.7 as I type, about as high as I have seen.

Volatility indexes, all up 20% plus and the VXO now stretched 30% above its 10 day SMA. More overbought on a relative basis than I have seen since I started tracking back around 2001.

The 10 year Bond has fallen to the 4.562% area and I bet it won't be long before we get the allocators buying stocks and selling bonds.

The Wall Street Journal blog with this on rate cuts:

"Interest-rate cuts are most assuredly back on the docket after todays news of a slump in new orders of durable goods. As recently as the end of January, federal-funds contracts traded on the Chicago Board of Trade were discounting no change in Federal Reserve policy for all of 2007, but the worm has turned, so to speak.

August contracts traded on the CBOT now put 57% odds on a rate cut to 5% by the Aug. 7 Fed meeting, compared with 37% odds at the close of trading yesterday. The odds for September were already nearly 100% and now they are past that, fully pricing in a rate cut and partially pricing in a second rate cut.

If the demand for goods remains below the economys ability to produce goods and services the only resolution would be for the Fed to lower interest rates, says Tony Crescenzi, chief bond market strategist at Miller Tabak. "

NERVOUS?

Markets open lower with some heavy selling yielding some pretty higher Volatility index readings. The VIX/VXO/VXD combo giving the highest readings since late last summer/early fall and are now stretched more than 20% above their respective 10 day SMA's.

Strongest sectors include drugs, utilities, large cap value, oils, semis and banks (all lower but relative outperformance); weakest are emerging markets, gaming, metals, brokers and small cap value.

Market internals kind of weak with 4,400 more losers than gainers on the NYSE and NAZ.

The OEX has 3 stocks in the green, GE CL and ABT while the NDX has 6 in the green, MRVL ERTS CHRW XLNX LLTC and NVDA. The SPX has 20 green and 480 down with RSH STR ERTS RDC PPL SE acting best.

The worst of the key stocks are ICE NYX BIDU MS GS LM and MER while the best of the bunch is MA CME and SMH.

I dipped in again and bought some IAI, and am trying to buy some ITA and will cover any remaining shorts before the day ends.

One can listen to pundit after pundit but I like to follow the signals and the 2 RSI on the SPX/DJIA/IWM is now 1, 1 and 4 respectively. My guess is buying yesterday and today will eventually pay off nicely.

STRETCHING

Markets are set to open lower this morning on the heels of a crushing in China (lower by 10%) and crummy durable goods orders reported at 8:30 this morning.

The DJIA Futures are down 82, SPX down 11.5 and NDX down by 26 as I type. So what happened with yesterday's lousy buy signals? Well I am not ready to abandon the ship just yet.

The last time the markets had a severe correction was mid June/ July 2006. The VIX/VXO combo got stretched to about 125% of their respective 10 day SMA's at their worst and I am eagerly watching this morning to see how near we get to those levels. Yesterdays close was stretched by about 110% at its worst and we closed about 106.5% above the 10 day.


On another note, with the crummy durable goods orders and the probablility of a fed rate cut moving to 40% this morning from 20% yesterday, how long before the lower rate probability bring rallying markets?

CLOSING STOCKS

Markets closed lower with the big caps finally following the traditional pattern of losing less on down days than small caps or mid caps.

The DJIA closed down 13, SPX down 1.5 and NAZ lower by 11.

Note however there was more up volume than down volume on the NYSE and the TRIN under 1, so the volume is going to the stocks that are moving higher.

Strongest sectors were utilities, homies, oils, metals, drugs, large cap value and biotechs. Leading lower were gaming, trannies, brokers, internets, airlines, reits and tech.

Market internals were bearish most of the day with the NYSE closing near the flat line and the NAZ red by 620.

Internals on the major indexes were weak with the NDX closing with 30 green and 70 red; the OEX with 40 up 60 down and the SPX with almost 2 up to 3 down.

RIMM KLAC and BIDU were green while GS GOOG AAPL MA ICE NYX BOT CME MER MS and IAI were all red.

Biggest winners included LVLT PTEN AMLN CELG LRCX XRAY WY EXC DOW MRK and TYC while the biggest losers included FDX MS MER LTD NSC C TWX EMC WYNN EXPD ERTS and SBUX.

Most major indexes gave off buy signals as they traded at very low 2 day RSI readings. Volatility indexes also traded at/near 110% of their 10 day SMA's, so buy signals galore.

The action in the brokers/exchanges is a bit worrisome to the bulls, although they have had a huge run during this bull market and my guess is before long things will return to normal and they will continue their move higher.

SHORT TERM BUY SIGNALS!!

Here we go as the 2 day RSI on the SPX is now under 5; the VIX/VXO combo are at/near the overbought 110% of 10 day SMA so looks like time to dip in the toe. Also we are trading at the 21 day SMA, another area where short term traders may be focuses. And check out the latest research from Trading Markets on the 2 day RSI system.

THE NOON TRADE

So not sure if the guy formerly known as the Maestro is holding the markets down with his comments, or if its commodities heading up, or general intermediate term overbought conditions holding the markets back in light of the brisk takeover action. Anyhow, we are trading primarily lower.

Strongest sectors include utilities, oils, metals, drugs, large cap value and biotechs. Weakest are trannies, gaming, airlines, brokers, defense, reits, semis and tech.

However, with all that said, my portfolios are heading higher thanks to the Barron's Bounce (BAM) and nice action in TIF CHK XTO PAAS OIH FTO XLE NOV and VLO.

Key stocks are mainly lower with poor action continuing in IAI GS MER MS LM GOOG MA AAPL CME and BOT. RIMM BIDU and ICE are moving higher.

Market internals remain mixed with the NYSE flat and the NAZ -500.

The internal action on the indexes is also mixed with the NDX 35/65; SPX 200/300 and the OEX 50/50.

One equity that I am scaling into is RWX, an ETF that invests in international real estate companies. I like the diversity and suspect some of the holdings will be home runs over the next few years. There are mutual funds in the space like FIREX and EGLRX but I like this ETF better. Also, I anticipate this will be a very long term holding (4 ever).

And who exactly is going to miss Jan Ullrich on the Tour de France?

MORNING FLIP

Markets trade mixed after a higher open on the heels of 2 huge buyouts, TXU and DOW.

Higher oil and gold may be weighing on the markets as most commodities trade higher.

Strongest sectors are utilities, homies, oils, metals, large cap value, drugs, internets, biotech gaming and reits. Leading lower are semis (told ya), trannies, airlines, defense, tech, brokers, retail and financials.

Market internals also opened strong but have since flipped to red on the NAZ and flattish on the NYSE. The NDX shows 40/60 up to down; SPX and OEX with about an equal number of winners and losers.

Volatility indexes a bit higher but not giving any buy signals yet.

I suspect the markets will gather some steam later in the day as the end of the month mark up guys find a perfect opportunity to unleash some dry powder.