AFTERNOON SNOOZE

Markets continue to trade lower after an initial attempt at a morning rally failed. The DJIA-100, NAZ -15 and SPX -11.

Strongest sectors are brokers, biotech, large cap growth and airlines while internets, Australia, real estate, emerging markets, banks and homies lag.

Key stocks- ICE RIMM CELG GS NVDA MSFT green while UA AMZN MA INTC MGM NYX MTW BAC and MER are red. Overall half up and half down.

NYSE- 1480 net losers;

NAZ -1135 net losers;

OEX-20 WINNERS;

NDX -28 WINNERS;

IBD 100-40 WINNERS;

WINNERS- GIGM FMCN WFR STP RIMM PCLN GME FSTR KOP SNDA GENZ BIIB ERTS NVDA MSFT CCU LEH TWX DIS MS CL HET DELL;

LOSERS- BDK DOW LTD AA DD HAL INTC IP WY PFWD WX SID SNCR BCSI SNHY BBL BHP MTL CPLA LVLT EBAY NIHD ADBE PCAR SHLD;

VIX -FLAT;

Down volume 3X Up volume;

Market seems to be fairly resilient as everyday there is more bad news but the markets hang in and don't tan.

Technically, we continue to hold above the 50% retracement on the SPX at 1475 and the DJIA at 13,360. I almost feel like turning off the machines and coming back on Monday although maybe buying some EWA RSI (2) at 10. So yeah, buying it.

THE OPEN

Another ugly open for equities as inflation numbers were again unwelcome and it looks like the FED has a real problem on its hands. The DJIA is -88, NAZ -18 and SPX -9.5.

All the sectors in the red with brokers, biotech, oils, utils and large cap growth the best of the bad while emerging markets, metals, banks, homies, retail and semis act the worst.

Key stocks- mostly lower with ICE RIMM GS BIDU NVDA VMW and MSFT green while INTC TIF MTW C DECK KLAC AMZN leading the laggards.

NYSE -1750 net losers;

NAZ -1235 net losers;

OEX- 20 GREEN;

NDX-20 GREEN;

IBD 100-26 GREEN;

WINNERS- RIMM STP GIGM TTES MEE BIDU GSOL LEAP ATVI CSCO GENZ NVDA VRSN GS DIS CCU TWX BA TXN LEH HET;

LOSERS- BDK IBM AA LTD INTC WY HD WB PFWD SNCR EJ BHP BBL SID TDG TELOZ ITEX PCAR NIHD SHLD SNDK VMED MNST;

Down volume about 4X Up volume;

VIX- up only 2% and trading 3% above the 10 day SMA;

Haven't seen the high TICKS like yesterday so maybe the sellers are taking a little break. Anyhow, continuing to watch 1,475 on the SPX and it continues to hold. Green stocks such as GS AMTD LEH CME ICE NMX maybe hinting of a little snap back before too long.

THE CLOSE

The markets indexes did indeed bounce off their 50% retracement levels but one could hardly tell by looking at the internals on the NYSE. More than twice as many losers as winners on that exchange while the OEX showed about an equal number of advancers as gainers. The NDX, a different story with 30 up and 70 down while the IBD 100 was worse with 3 losers to every winner.

Strong sectors included airlines, homies, trannies, gaming and defense while emerging markets, metals, real estate and biotech were the worst.

VIX - closed FLAT at 22.6;

Technically, the indexes made some progress for the bulls as the SPX closed a hair under the all important 1,490 level and regained the right side of the 200 SMA.

The DJIA actually closed at its 50 SMA and above the 200 SMA.

The NDX was the weakest index and closed below the important 2,105 level.

Just guessing that not much happens tomorrow and maybe we can regain some upside momentum next week.

MIDDAY MARKETS

Markets continue to trade lower with continued poor action in the average stock as indexes continue to outperform.

Strongest sectors- airlines, utils, trannies, gaming, defense and big caps-emerging markets, metals, brokers, real estate, banks and retail the worst.

Key stocks- mostly lower - winners include MA MSFT ICE GRMN LVS CME WYNN and KO while VMW MER NVDA MS C ISRG BAC TIF DECK the biggest losers.

Market internals awful all around as NYSE/NAZ show a net of 3,100 losers while NDX/OEX show about 25 winners on each index. IBD 100- worse with 15 winners.

VIX - up about 6%;

We are at an interesting junction technically as the DJIA/SPX are both trading at the 50% retracement level between the highs on October 11 and the lows on August 16. GS also 50% between the recent high at 250 and the low at 157.

Bottom line, if you want to take a shot on a long side, this may be a good spot with defined risk as markets tend to bounce from these technical levels.

RSI (2) on various indexes at low end of ranges but no buy signals yet:

SPX 23

DJIA 21

OEX 25

RUT 20

MID 17

NDX 23

NAZ 24

THE OPEN

Markets open lower on the heels of lower prices in the the foreign markets and less than great news on this morning's inflation numbers.

Every sector I follow is in the red this AM with emerging markets, brokers, airlines, biotechs, real estate and homies acting the worst while gaming, defense, internets and tech are the best of the bad.

Key stocks- mostly lower with ICE GRMN MSFT MA MTW AMZN RIMM CAT MCD WYNN LVS in the green while CELG MER NVDA MS VMW BAC GS POT NYX acting the worst.

NYSE -1,750 net red;

NAZ-1,170 net red;

OEX-23 GREEN;

NDX-30 GREEN;

IBD 100- 22 GREEN;

WINNERS- CYNO ITEX FCSX GRMN MA CF DOW HON CSCO MSFT DD TYC XMSR SIRI XRAY CDNS PCAR AMZN MCHP;

LOSERS- BIIB MICC COST NIHD CELG QCOM INFY RF COF AIG AA AXP GM MS MER EMC WX HRBN BTJ EJ GIGM BBD MR SNHY;

VIX - higher by 3% and trading a hair above the 10 day SMA;

Lots of high negative ticks yesterday afternoon and this morning and the internals show much worse numbers than the actual indexes. Those facts don't usually predict higher prices in the short term.

SPX PE/EARNINGS NUMBERS

I have mentioned a number of times that stocks are cheap especially when compared to instruments like the 10 year Bond. Hopefully, the following numbers will shed more light as they are from the S&P website and updated last week:

SPX earnings- 2004- $67.67

2005- $76.44

2006- $87.72

2007- $88.94 Estimated

2008-$102.78 Estimated

PE on SPX -end of year close:

2004 17.91 1,211.92 close;

2005 16.33 1,248.29 close;

2006 16.17 1,418.3 close;

2007E 16.7 1,485E

2008E 14.5 1,485E

Ten year Bond Rate December 31:

2004 4.22%

2005 4.395%

2006 4.71%

2007 4.08%

2008 ?

Earnings for 2008 clearly no sure thing - take $5 or 7$ from the $103 estimate, the P/E is still pretty low.

The estimates seem a bit optimistic in the consumer discretionary (+25.4%), financials (15.5%) and Telecom service sectors (+32.7%) so a $5/7 haircut is probably more realistic.

All the numbers on the SPX earnings and forecasts available here.

FUN FUN FUN

A dizzying day in the markets as the DJIA closed +42 after being + 275 and -90, while the SPX closed +9 after being +35 and -9.

Best performing sectors, telecom, oil service, China, emerging markets, semis, internets and biotech while airlines, banks, retail and real estate lagged.

The components of the IBD 100 were the real stars of the day as they were very green all day and closed with 76 issues in the green. Strongest stocks were HRBN EJ TELOZ TKC STP SNHY VMW CLB VIP and ARD.

Also interesting how the components of the OEX/NDX were much stronger than the average stocks. OEX/NDX with 140 of the 200 issues in the green while the NYSE/NAZ finished near the flat line.

VIX- with all the volatility closed down 4%;

Volume- 10 up to 7 down on the NYSE on high volume of almost 1.75B shares;

Technically, we closed a bit below the important 1,490 line on the SPX after bouncing back from under the 50% retracement area at 1,475. Note the close a hair above the 200 SMA.

The DJIA also went under the 50% retracement at 13,360 but closed above -as it almost kissed the 200 SMA at 13,285.

The NDX was the strongest of the major indexes in light of the strong performances by big cap tech such as AAPL CSCO EBAY INTC MSFT NVDA RIMM etc.

No great wisdom going forward but I still think higher before year end.

SELL THE GAP

Markets have gone straight south since the open and support levels have been taken out yet again. The DJIA +50, NAZ +23 and SPX +10.

Sector strength- telecoms, oils, emerging markets, tech, biotech and metals; Weakness- financials, banks, airlines, retail, reits, real estate and homies;

Key stocks- 63% higher led by MTW NVDA LVS XOM RIMM ICE GS; Losers- C BAC GRMN MCD ISRG DECK MA DECK TIF;

Market internals - NYSE- 600 net winners; NAZ 325 net winners;

NDX- 65 WINNERS;

OEX -65 WINNERS;

IBD 100-80 WINNERS;

IBD 20- 15 WINNERS;

Winners- WFT PCP GILD GENZ DE MCHP CSCO NVDA MXIM JNPR GILD QCOM T MMM SLB ORCL CVX HPQ ROK PEP TELOZ EJ HRBN MTL TKC FTK TKC SNHY FMCN MEE STP;

Losers- CYNO ITEX GRMN BLK HMSY BTJ ISRG MR GIGM C WB COF BAC EK RF BA LEAP AKAM UAUA PETM CHKP ISRG JAVA BBBY WFMI NIHD;

VIX- down 5%

VXV - down 3.5%

Up volume a bit ahead of down volume;

Sitting on my hands as I wait but not interested in shorting and not interested in buying until I see some stabilization. Note the SPX trading at the 200 SMA and the NDX has slipped below the 50 SMA and below the 2,105 level. So just watching.

THE MORNING TRADE

Markets are trading up on the heels of Big Ben's new ideas to fight the credit crisis. The DJIA is +200, NAZ +48 and SPX +25. And crude up almost 2% to the $92 area pre inventory news.

Strong sectors- China, emerging markets, energy, homies, real estate, brokers and tech.

Weakest sectors- airlines, banks, utils, gaming, retail and drugs.

Key stocks-37 out of 40 green led by MTW VMW NVDA GS BIDU MS ICE AAPL AMZN and XOM- lower are BAC C MCD.

NYSE/NAZ internals- 3,500 net winners;

NDX- 91 WINNERS;

OEX-88 WINNERS;

IBD 100-96 WINNERS;

BIG WINNERS- EJ MTL VMW TKC FSTR DRYS CPLA MCHP NVDA JNPR CSCO JOYG MICC BIIB T GS EMC CSCO EP MMM SLB MS CVX AA;

LOSERS- WB BA BAC MCD COF C MRK CPB HET TGT ITEX CYNO SXE AKAM UAUA BEAS VRSN XMSRCHKP COST;

Interesting how the banks with problems such as BAC C WB are down 1%+ while the supposed good banks such as JPM MA MTB USB WFC are all solidly higher. Note the brokers also, all up 2 to 4% with GS higher by 4.25% after yesterday's big selloff.

VIX -21 and down a quick 11% while the new VXV is down almost 8%;

Up volume trouncing Down volume by 4X;

Technically, we are way above the 1,490 level and inter day resistance seems to be near 1,510. Note the 50 SMA at 1,500 level. The NDX looks good above 2,105 with resistance near 2,130. DJIA resistance near current levels with the 50 SMA below at 13/530.

Buying pullbacks to support areas looks like the way to go for now as the relevant moving averages are generally below these levels.

PRE MARKET

Markets are looking to open much higher and regain part of yesterday's ugly sell off. Interesting how the SPX topped yesterday at 1,523, the level of weekly resistance. Weekly support on the SPX is at the 1,473 level and we didn't quite get down to that level.

The 1,490 area still looks very important and if we regain that level the markets may pick up steam. That was the level of old support and near the blast off area from the first rate cut in September. The 2,105 level on the NDX is also the important level on that index and it is also close.

My strategy will be to buy pullbacks if these levels can be taken as I think we will rally into the end of the year. The QQQQ buy yesterday (51.5 area) doesn't seem so horrible now.

Captain Kirk has assembled a group of quotes from some market mavens about yesterday's Fed move.

Barry Rithholtz with his own Letterman humor.

Some analysis from Adam on the new VXV and even some Cramer humor.

Has Tax Hike Mike peaked?

And the latest Guru grades from CXO. Note how Cramer not quite at coin flip status.

THE UGLY CLOSE

Ben may want to revisit today's move as the markets closed at/near the worst levels of the day as Big Ben did not come through with a 50 bps cut in the Funds or Discount rate. The DJIA closed down 295, the SPX 38 and the NAZ 67.

Pretty easy to find the worst sectors, homies, real estate, banks, brokers, airlines and retail while drugs, tech, semis, gaming and internets lost the least.

BEN BSC ETFC GS LEH LM MER MS CFC MTB WB and WFC all down more than 5%. Yesterday, they were the strongest area in front of Fed day so just goes to show.

Key stocks- 5 in the green including CELG MCD VMW MA NVDA- biggest losers- MS GRMN GS MER MTW BIDU C BAC;

Market internals - awful with about 4,000 net losers on the NYSE/NAZ;

OEX- 7 WINNERS- T MCD CSCO TXN CL HET EMC;

NDX-9 WINNERS- JNPR CELG BIIB EBAY MNST CSCON LINTA NVDA EBAY MXIM ERTS;

IBD 100- 8 WINNERS- ITEX CPLA SNCR VMW MA FCSX WFR MORN ABAX;

Technically, I was looking to buy lower near 1,490 on SPX and 2,105 on NDX. Well held most of my fire as I purchased some QQQQ near the $51.5 level but not much else and my guess is we are still ok technically and a dip tomorrow probably gets bought by those who wanted to get longer in front of the santa rally.

Note we are again below both the 50 and 200 SMA on the SPX as they are 1,500 and 1,485 respectively and the 50 day on the NDX lies at 2,121 while the 200 day is way below at 1,961.

Despite a slowing economy, stocks remain inexpensive in my opinion and I will continue to try to buy lower. Note the RSI (2) on the various indexes:

SPX 20

DJIA 23

NDX 15

RUT 20

QQQQ 18

MID 21

VIX closed up 14% at 23.55 and is now 4% above the 10 day SMA. No buy signal there but as I said, looking to buy if they dip in the morning.

The volume on the NYSE was about 1.5B shares and that is hardly huge volume so maybe a small consolation for the bulls.

PRE FED LOOK

The anticipated pre fed snoozefest has materialized as the markets trade near the unchanged line at the noon hour.

Best sectors include internets, metals, tech, oil service and large cap value while airlines, banks, homies, brokers and retail lags.

Key stocks- 50/50 with MA CELG VMW AMZN BIDU and NVDA higher while GRMN MER KLAC BG MTW MS UA LVS WYNN and MGM are lower;

NYSE- 540 net red;

NAZ- FLAT;

NDX- 45 WINNERS- JNPR CSCO CELG BIIB EBAY AMZN ERIC NVDA SEPR CTSH;

OEX-35 WINNERS- T TXN HAL MCD EMC BHI CL WMT PEP NSM;

IBD 100-53 WINNERS- SNCR MA MORN ABAX WFR CPLA BCSI GSOL EDU FCSX;

VIX- up 2% to 21.15 and about 5% below the 10 day SMA;

Up volume 2/3 of Down volume;

Financials continue to lag after acting very well yesterday so any rate cut today may be baked in the markets cake. Biggest losers in the group include CFC MTB WFC BEN BSC MER and MS.

Green stocks are found in tech with AAPL nearing the $200 line and in the oils as crude is trading up almost $2 and nearing the $90 number.

SLOW OPEN

Stocks are trading slightly higher in front of the 2:15 FED announcement with the RUT and NDX acting the best and SPX/Large Cap Value lagging. Financials also reversing as most trade lower with the exception of MER and MA.

Strongest sectors- internets, metals, tech, oils, trannies and small caps while banks, gaming, biotechs, real estate and drugs are lagging.

Key stocks- mixed with CELG AMZN MA NVDA POT VMW and MCD higher while BG LVS GRMN WYNN MTW UA KLAC BAC C GS trade lower.

Market internals:

NDX -50 WINNERS;

OEX-45 WINNERS;

IBD 100- 57 WINNERS;

NYSE- 200 net winners;

NAZ -300 net winners;

VIX -FLAT;

Up and Down volume even;

Pretty boring so far and probably won't change much through the FED announcement. Remember, markets are overbought, (RSI 2 at 90+) in the short term and a sell the news, what ever it is would not be surprising to this fish. Levels I want to buy -SPX- 1490/1500.

THE CLOSE

Markets closed the day a bit off their highest levels but strong nontheless with financials, brokers, homies, real estate and oil service leading the way. Weak links included internets, China, drugs, biotech and gaming.



Key stocks strong led by MS VMW MCD CAT GS MA BAC NYX GRMN and UA;



Market internals were strong all day led by the OEX with 75 winners and the IBD 100 with 65 closing green. Tech and biotech lagged as the NDX closed with only 65 green stocks.



NYSE 880 net green and NAZ only 360;



VIX -FLAT;



Up volume almost triple the Down volume on the NYSE;



RSI (2) levels:



SPX 90

DJIA 97

RUT 91

OEX 88

NDX 93

COMPQ 90





Technically, the markets are strong and refuse to pull back to areas of support which would be 1,490/1,500 on the SPX, near 2,105 on the NDX and DJIA levels near the 13,500/13,600 areas.



Tomorrow looks like a 25bps move lower by the fed and turnaround Tuesday (selloff) would not surprise me. And if it is I will look to be buying some futures, hopefully, near those support levels.

NOON LOOK

Markets are holding in well as the financials continue to lead. Banks, brokers, homies, metals and real estate the best performers while internets, drugs, retails, airlines and defense lags.

Key stocks- 34 out of 40 higher led by MS VMW CAT BIDU UA NYX LVS MA POT and BAC while CELG TIF AMZN RIMM MGM are lower.

Market internals are pointing to a strong afternoon session as NDX has 7/3 up to down, OEX 7.5/2.5 green to red while IBD 100- also 7/3.

NYSE/NAZ - 1,600 net green;

VIX down slightly and about 10% under the 10 day SMA;

Up to Down volume- 2.5/1 in the green;

All the banks brokers and exchanges still green which should bode well for another leg higher this afternoon. A move lower later in the week would not be surprising as markets are definitely over bought in the short term.

FINANCIALS

If you are a big believer in the theory of financials leading the markets, check this action as every broker/bank/xchange that I follow is in the green:

BAC +2.3%

C +1.9%

JPM +2.6%

MA +1.9%

MTB +2.3%

USB +2.5%

WB+2.45%

WFC +3%

BEN +1.8%

BSC +4%

ETFC +6.3%

GS+2%

LEH +1.9%

LM +2.1%

MER+1.8%

MS+2%

TROW +2%

CME+.45%

ICE+1.5%

NDAQ+1%

NYX +2.6%

NMX+.5%

THE OPEN

Markets open higher but traders seem to be holding their breath waiting on the news from MBIA as the stock is halted again. The DJIA is +40, NAZ +5 and SPX +4.

Strong sectors include metals, brokers, banks, oil service and large cap value- weak links include airlines, retail, biotech, semis and trannies.

Key stocks- generally higher led by MA VMW NYX MCD NVDA POT BAC and DECK while CELG BG TIF AMZN INTC UA BIDU and MGM are red.

VIX -UNCHANGED;

Internals are creeping up as I type with NYSE +500 and NAZ +350;

NDX -50 GREEN;

OEX-60 GREEN;

IBD 100- 75 GREEN;

WINNERS- MR GIGM STP FMCN HRBN BGCSI BAP DRYS CTRP FSTR VMED ERTS NVDA MICC CTSH CEPH JPM ALL WB MCD C GS LEH RF;

LOSERS- AMGN LTD HD INTC BA TXN BA TELOZ AHGU EJ CCH CHL AMZN FLIR CELG UAUA LVLT SEPR SNDK YHOO AMZN;

The NDX is no cooperating as it is the one major index that is lower - getting hit on CELG AMGN news while semis are lower.

Technically, the markets continue to act well and pullback are probably low risk trading opportunities. Levels that may be buyable should the markets retreat include 2,105 on the NDX, 1490/1,500 on the SPX and 13600/13,630 on the DJIA.

RSI (2) are still way overbought as most indexes trade with reading at/near 90. Doesn't seem like they will ever come in but I bet they do.