THE STRETCH

Checking on some math for next week, markets seem a bit over sold after this week's crushing. The SPX about 6.5% below the 50 SMA while the XLF is off about 9% on the week.

And if you think its a bad time to try a long side trade in the financial sector check this out from Cramer from around 2:30 this afternoon:

"Remember, if you are at a big bank you aren't allowed to kitchen-sink anymore. You can't "restructure" and take a $20 billion hit, because that's why we have Sarbanes-Oxley. The government got tired of companies taking massive hits for the future and then adding back the gains on a quarter-to-quarter basis. You have to take the hit now for what has gone bad, but not for what may go bad.

Consequently, as long as the stuff in the mortgage bonds goes down, you are going to have banks' bottom lines be impacted ... negatively.
You want to sidestep it? Sell the Bank Index." (BKX 88.02).

Of course a way way back on Feb 1, 2008 he said this about the banks in an article called "A BULL CASE FOR BANKS."

"Banks -- not leaving them.
Period." (BKX 96.11).

And of course on January 30, the day of the 50 bps cut Jimmy offerred up this at BKX 91.15.

Of course Jimmy also told us recently that he was going to be more of a long term investor for the CNBC audience.

RSI (2) levels end the week as follows:

SPX 30

DJIA 18

NAZ 52

NDX 62

RUT 39

MID 53

BKX 26

XLF 18

NYX 20

Have a nice weekend.

THE FOOD

In light of the trashing the markets and the financials have experienced this week, I am dipping in to XLF and NYX - and I will consider them to be the Shark catch of the week.

XLF is down about 9% for the week while NYX is off about 15% for the week and more than 20% on the year.

For NYX I am going to use a STOP near $65 and for XLF I will go with somwhere near $25.5.

Always do your own due diligence.

AFTERNOON LOOK

Tough for the markets to rally with the financials acting so lousy. And that is what we have with all the big banks and big brokers low. Tech is primarily green as are the metals and oils but keep one eye focused on the XLF as that most likely will give us the ultimate direction of the major indexes.

Market internals also flipped to solid red so if you are trading the long side, keep it quick.

VIX/TRIN also giving bearish signals;

Down vol not quite 2X up volume;

Strong stocks- MTL AUY SWN MON ART URBN RIMM BOOM CTSH EXPE INFY AMZN HPQ XRX MCD GOOG AA AAPL SLB UA TIF MA MSFT KO;

THE OPEN

Markets open mixed with the NDX and RUT/MID's out performing while the DJIA and large cap value under performs.

Strongest sectors- metals, internets, oil service, retail and ags while drugs, gaming, utils and biotech lag.

Key stocks- 25/40 higher- led by TIF AMZN BIDU RIMM MSFT UA MCD DECK AAPL- laggards- MGM MS CME MER GE PG WYNN C GS;

NYSE- 200 net winners;

NAZ- 540 net winners;

NDX -60 WINNERS;

OEX-35 WINNERS;

IBD 100-70 WINNERS;

Crosscurrents yet again as tech/oils/metals/small caps lead while banks and brokers trade flat to red. Looks like another day of high volatility and if you don't have a quick finger its probably not a good time to trade.

THE CLOSE

A wild ride on wall street as the markets closed higher with the DJIA +46, NAZ +14 and SPX +10. Check out the RUT which closed up 1.46% with the Small value stocks leading the way higher by 1.71%.

Strongest sectors- retail, airlines, gaming, reits, real estate and banks while drugs, ags, utils and metals lagged.

Key stocks- 30/40 higher led by ICE CME DECK LVS WYNN GRMN AMZN UA CAT and TIF- lower - BG MA MSFT VMW C MTW AAPL POT GE;

NYSE- 850 net green;

NAZ- 444 net green;

NDX-70 WINNERS;

OEX-68 WINNERS;

IBD 100- 65 WINNERS;

VIX -down 4.5% and about flat with the 10 SMA;

TRIN- .98

Up volume about 2X Down Vol;

Technically, for now rallies are for selling/shorting and the next level that looks good for the shorts is at/near 1,340 on the SPX. On the NDX - 1,780 looks like a short term top.

BACK TOMORROW

THE CHAMBER

Markets closed at near the lows of the day as the DJIA closed -65, NAZ -31 and SPX -10. Leading sectors included airlines, metals and trannies while semis, homies and gaming lagged.

Key stocks- generally lower with CELG VMW BG UA CAT higher and CME BIDU ICE AAPL ISRG DECK AMZN all crushed.

Market internals flipped to red late in the day with 1,700 net losers on the NYSE/NAZ.

CSCO giving the market some jig in the after hours as the NQ Futures are trading up 15 and CSCO is +.80 cents.

The big down trend continues and for the time being pullups are for shorting and any money being put to work on the long side continues to dissappear.

MIDDAY CHECK

Another day with market internals acting well while financials/brokers/exchanges all act mediocre at best.

Sectors- airlines, metals, ags, trannies, retail, homies and biotech the winners while semis, staples, real estate and insurance the losers.

Big cap tech spitting the bit today also as AAPL BIDU GOOG MSFT RIMM YHOO all lower;

Big losers- CME ICE NMX;

NYSE- 900 net winners;

NAZ- 540 net winners;

NDX 65 WINNERS;

OEX-70 WINNERS;

IBD 100- 63 WINNERS;

Suspect another run higher before the end of the day but not exactly betting the ranch.

THE OPEN

Markets are higher after an initial dip after the initial gap higher with the DJIA +60, NAZ +20 and SPX +8 as I type. RUT a hair better.

Sectors- winners- metals, ags, airlines, oils, trannies,retail and semis while losers include honmies, real estate, staples and insurance.

Key stocks- 25 out of 40 higher -leaders- UA GRMN CELG VMW BG LVS TIF DECK AAPL CAT- losers- CME ICE BIDU AMZN MA GOOG ISRG MTW MER C PG XOM;

NYSE- 760 net winners;

NAZ- 540 net winners;

NDX-75 GREEN;

OEX-75 GREEN;

IBD 100- 70 GREEN;

VIX- FLAT;

TRIN- .95

Up vol about 2X Down vol;

Internals are looking pretty good on the big indexes so this market may climb its way higher before the day is over and buying dips for a day trade may be profitable (quick). Also quite a few high tick readings indicating buyers are around.

And look who is declaring victory in last nights Democratic national primary.

ANOTHER CRUSH

Another day in paradise, I mean Wall Street as the markets get crushed yet again. The DJIA closed down 370, NAZ -73 and the SPX -44.

The only strong sector on the screens- gaming with LVS+9% and WYNN+7%.

Key stocks- 5 GREEN - LVS WYNN GOOG VMW and ISRG- LOSERS- NYX ICE GRMN C BIDU GS MER MS NVDA.

NYSE/NAZ- 3,600 net losers;

NDX-8 WINNERS;

OEX-7 WINNERS;

IBD 100-5 WINNERS;

VIX- higher by 8.7% and a mere 3% above the 10 SMA;

TRIN- 2.96 UGLY;

Down vol about 12X Up vol;

Ugly ugly selloff and markets are hardly near the recent lows of 11,700 on the DJIA and 1,270 on the SPX. I guess those lows eventually get retested but that should be a nice set up for the bulls when and if. In the meantime - here are updated RSI (2) levels:

SPX 13

DJIA 12

RUT 21

MID 22

NAZ 12

NDX 11

Oh, and how bout this from Cramer late Friday (market top) as he was all excited about the markets:

"The money coming in must be huge. That's what happens when you cut those rates -- people find excuses to buy, and they buy S&P funds. You can see that in the broad-based nature of this rally.

Some of these moves smack of shorts scrambling because there's not a lot of stock around and there are value-buyers everywhere.

These are dramatic moves.

Yet I want to tell you that I am not getting positive vibes from any of the managers I talk to, except the value managers, who are seeing an unbelievable infusion of cash, as the beaten-up sectors -- retail, housing and banks -- are their expertise.

What an amazing move, and yet it inspires no believers.

What a shame.

This is a real good one. "

I just don't understand why no one at CNBC checks Cramer's homework and sees the value of the drivel. Market probably bottoms when CNBC figures it out and dumps this clown.

QUESTION

Why is the RUT/MID doing better than the large caps today and year to date? Obviously not a big difference - but definitely worth watching.

YTD as I type?

DJIA -6.4%
SPX -7.7%
RUT -6.8%
MID -6%
NAZ -11.5%
NDX -13.5%

THE CRUSH

Markets are way down on the heels of the ugly ISM services index. Not sure why folks should be surprised that the economy is slowing but it is what it is. DJIA -200, NAZ -30 and SPX -23 as I type.

Strong sectors- gaming and airlines- laggards- emerging markets, telecom, insurance brokers, metals, banks and oils.

Key stocks- 12/40 GREEN- leaders- LVS WYNN MTW UA ISRG GOOG VMW POT AAPL CME TIF BG- laggards- NYX GRMN C MS MER GS NVDA INTC MGM BIDU;

NYSE- 1750 net losers;

NAZ-1,200 net losers;

OEX-6 WINNERS;

NDX-10 WINNERS;

IBD-100 -12 WINNERS;

VIX-+6.5% and still not near over bought levels;

TRIN-1.52

Up Volume about 1/8 of Down Volume;

SPX- support still near 1,340 and after the big ramp off the lows we have had a breakdown to those levels is probably baked in the cake.

No reason to be a hero yet and I will probably either short some pullups for a daytrade or figure out another way to spend the day.

THE CLOSE

There it was, a dreadful performance by the financials weighed on the major indexes despite market internals that were actually ok.

Strongest sectors- commodities, oil service, utils drugs and healthcare while airlines, banks, homies, retail and gaming the biggest losers.

NYSE 600 net losers;

NAZ 420 net losers;

NDX- 20 WINNERS;

OEX-30 WINNERS;

IBD 100- 45 WINNERS

VIX-higher by 7% - and approaching the 10 SMA;

Down volume a little move than 2X Up volume;

TRIN- 1.53;

Markets may be giving the clue that the rally was lots of short covering and futures rallies for now will be shorted and technicals/charts are the thing to watch.

Technically, looks like the SPX could head back to the 1,340 levels.

RSI (2) levels:

SPX 50

DJIA 49

NAZ 42

NDX 37

RUT 63

MID 67

GOOG spanked yet again and down about 4% on the day and after hitting a high near $750, the stock has been hammered by 34%. My question- any shot that a bunch of MSFT/YHOO software engineers could possibly provide a better mousetrap/search engine. And if so, will GOOG suffer the same consequences of just about every other tech stock - including this short list- SUNW DELL DEC NOVL CSCO EBAY PMCS AMCC ARBA INTC MSFT YHOO and on and on. Tech stocks seem to eventually get out done technoligically and I suspect GOOG will be no different. If not MSFT/YHOO some other company.

Finally, some chatter at Adam's site about the bloggers and their traffic. My take, the traffic seems to follow the VIX - it gets to extreme levels when the participants are the most bearish.

MIDDAY MARKETS

Markets continue to trade lower with the DJIA -90, NAZ -22 and SPX -12. RUT/MID's outperforming the big caps.

Sectors- leaders- oil service, china, utils, internets, drugs and ags while airlines, homies, banks, retail and brokers lag.

Key stocks- 12/40 higher- GREEN- BIDU RIMM POT VMW ICE CME MTW MA NYX ISRG- RED- LVS UA TIF CELG GOOG WYNN GS NVDA.

NYSE-540 net red;

NAZ-220 net red;

NDX-23 GREEN;

OEX-30 GREEN;

IBD-100- 50 GREEN;

VIX- +6%;

Up vol- half Down vol;

TRIN- 1.54

Big banks really ugly today with BAC-2%, JPM-4%, WB-7.5% and WFC -6.75%- market internals on NYSE /NAZ much better than overall mkt and index performance. Why- no clue.

An afternoon move higher would not surprise in light of those internals but financials really ugly. So the usual X pointing up and Y pointing down.

THE OPEN

Markets open lower with the small/mids taking the brunt of the selling. The DJIA -57, NAZ-13 and SPX -9.

Strong sectors- China, internets, utils, healthcare and drugs while homies, banks, metals, retail, real estate and gaming lag.

Key stocks- 17/40 green- leaders- BIDU ICE MTW RIMM NYX AAPL PG AMZN ISRG POT- red- LVS TIF WYNN GOOG C BAC MCD BG SMH XOM GS;

NYSE- 770 net losers;

NAZ- 480 net losers;

NDX- 33 GREEN;

OEX- 33 GREEN;

IBD 100- 45 GREEN;

VIX- 25.35 and higher by 5%- after coming into the day very oversold and the 90% of 10 SMA level;

Down vol- 3X Up volume;

TRIN- 1.56

Markets are over bought in the short term as VIX and RSI (2) levels are at/near sell levels- not sure I would get aggressive selling as I anticpate the dippers will be back to do some buying before the markets fall to far.

And of course now that an old NFC team has won - its a no brainer that the markets end the year higher.

THE OUTLOOK

While perusing the Feb 6 issue of S and P's Outlook newsletter a few things hit at me. First, S&P has increased its "chance of recession" number from 40% a few weeks ago to 60% in the current issue. In addition, since there is a high probability of recession, one should overweight staples (12.5%), health care(13.3%) and utils (4.6%) and underweight consumer discretionary (7.9%), financials (17.1%), industrials (10.7%) and information tech (14.8%).

Looks to me like rear view mirror investing and my guess is underweights will outperform overweights going forward.

And an interesting comment out of the guy at Thomson Financial this morning- he sees a shot that financials may have to "write up" some of the loans they wrote down last year - I wonder what the market reaction would be to an event like that?

SUPER BOWL 42

18-1- How bout those fish.