TWO MONTHS PUNCHED

The month is done thank goodness and maybe the next one will be a bit better- YTD numbers as follows- bottom line- few places to run and hide:

SPX -9.4%

OEX -10.5%

DJIA -7.5%

NAZ -14.4%

NDX -16.3%

RUT -10.4%

MID -8.1%

SMALL VALUE -8.3%

SMALL GROWTH -8.9%

LARGE VALUE -8.9%

LARGE GROWTH -11.4%

DBA +26%

DBC +14.4%

OIL +6.1%

MSH -14.9%

SMH -12%

HHH -11.5%

XLK -16.9%

GOOG -31.9%

AAPL -36.9%

BIDU -35.5%

BKX -7.4%

XBD -12.5%

XLF -10.7%

GS -21.1%

C -19.5%

BAC -3.7%

CME-25.2%

NYX -25.2%

OIH -6.7%

XLE-4.2%

VLO -17.5%

XTO +20.2%

XOM -7.1%

RLX -6.1%

XRT -5.3%

GLD +16.6%

SLV +33.8%

GDX +15.9%

PAAS +14.5%

FCX -1.5%

BHP +2.8%

MGM -26.7%

LVS -19.2%

WYNN -10.2%

HGX -6.1%

XAL -8.2%

TRAN -FLAT

DFX -5.9%

IYR -4.6%

EFA -7.8%

EWA -7.9%

EEM -7%

EWZ +3.5%

Based on the above, it wasn't really financials, real estate and retail (the culprits as defined by the media) that was the biggest problem in the first two months of the year- it was Big Cap Tech and I think we can look for the reversion to the mean trade since tech has been pounded so hard.

THE CLOSE

In bear markets,the general rule- markets that are weak tend to close at/near the lows. Well that was the case today as the DJIA closed down 316, NAZ -60 and SPX -37. And farewell to the long month of February which was the 4th month in a row for a lower close on the SPX.

Every sector on the screen closed in the red and that was the case just about all day and another signal it was going to be an extremely weak day in the major indexes.

Market internals- 7 losers to every winner on the NYSE- and 4/1 on the NAZ.

NDX - 8 WINNERS;

OEX -0 WINNERS;

IBD - 2 WINNERS;

TRIN- 2.74- generally - a reversal area;

VIX +13% and about 9% above the 10 SMA;

RSI (2) levels:

SPX 6

DJIA 8

RUT 7

MID 7

NAZ 8

NDX 7

Oddly enough, for all the grief, the month of February had a pretty narrow range on the SPX of 80 points between 1,396 and 1,317 - compare that to January when the SPX traded between 1,470 and 1,270 a 200 point range. There was a 40 point range today, so again- lots of movement during the day but all within an over all tight range and the coiled spring continues to turn.

Keep in mind the sell signals work better than buys in bear markets and that is where we are at.

MIDDAY PEAK

Markets continue to trade lower with very little in the way of bounces during the morning. One sector has emerged in the green, gaming, as there is finally some good news out of Macau.

Market internals continue to be terrible with 5/1 losers/winners on the NYSE and 3/1 losers/winners on the NAZ.

NDX- 8 WINNERS;

OEX- 7 WINNERS;

IBD -6 WINNERS;

DJIA - 1 WINNERS- MCD;

WINNERS- TITN KOP AFSI URBN AFSI LKQX FSTR GILD LEAP AKAM TLAB FWLT WYNN BIDU BEAS FDX KFT MCD HNZ DIS TGT;

LOSERS- S ATI BK EP LEH DELL AES BHI CMED HMSY ABV ARD RIO RTI CNQR PCLN ADSK HANS IACI JNPR RYAAY STLD VRTX CTSH DELL SHLD;

VIX +8%;

TRIN 1.81

Down Volume 9X Up volume;

The SPX continues to hold 1,340 and it will be interesting to see if it holds the rest of the day. Oil down about 85 cents while the OIH is down $5.5 or 3%- that is probably a nice buy if it gets to the low 170's.

THE CRUSH

Markets open way down and every sector on my screens are red with insurance, homies, brokers and oil service the worst.

Market internals very ugly with 5 losers to every winner on the NYSE and 3 losers to each winner on the NAZ.

The OEX with 100 losers out of 100 issues as I type, a first, NDX with 7 winners and the IBD 100 with 8 issues in the green.

Support on the SPX should be near the 1,340 level but with all the selling - I doubt it holds today.

VIX finally getting some jig to the upside as its up 7%;

TRIN1.65:

Down volume 10X Up volume;

RSI (2) levels coming back to buy territory with most major indexes at/near the 9 to 11 range.

THE CLOSE

Markets close near the lows as it was in the red all day. The DJIA -112, NAZ -22 and SPX -12.

Strongest sectors- metals, oils and biotech while airlines, homies, banks, gaming and retail led lower.

About 2 losers for each gainer on the NYSE and NAZ while the NDX/OEX duo showed 4 down for each 1 up.

WINNERS- AAPL HAL VZ T EP SLB BUD ATI COP WMB LEAP GILD VMED DISH FMCN STLD LBTYA GENZ;

LOSERS- HANS MNST BRCM MRVL AMZN SNDK LOGI APOL S RF LEH WB MER CSC HIG BAC HD WFC MS C;

VIX - up almost 4% and digging its way out of oversold territory;

TRIN 1.21;

Down Volume 3X Up Volume on light overall numbers again with barely 1.4 B shares traded- so much for the "markets going down on heavier volume" yapping;

After dropping 4% today, VLO announced a $3B share buy back- so I guess things not so horrible there;

SPX closed right at recent support/resistance of 1,367 and a break lower from here could send us back to the 1,325 levels. I suspect this dip will be bought and we may hover under the 1,380 level for the next few days.

STUFF

Dougie Kass getting a bit bearish on the markets after the rogue SOCGEN trader bottom in late January. Why he be bearish- Dougie gives us 10 reasons including:

Credit conditions are worsening;

The powers that be fail to address the housing depression;

Core inflation no longer remains well-anchored;

Profit margins are eroding;

The U.S. dollar is in a freefall;

There are threats on the political spectrum. The continued strength in Senator Obama's candidacy raises the increased possibility of higher tax rates for individuals and corporations;

And if your Bullish- latest SP Outlook issue with its TOP 10 Portfolio:

KO CVD CVS EBAY HOLX LH MTW MCD MSFT PG;

According so S&P, these stocks are well positioned for solid "risk adjusted" returns over the next 12 months. The portfolio was very good in 2007 with a 36.3% return v 5.5% for the SPX. 2008, not so great, through Feb 15, -13.3% v -7.8% for SPX.

And creeping while your sleeping- Crude +2.5% to $102.13 and the NDX- up a point while the DJIA/SPX are both lower by .7%. This NDX/SPX trade looking pretty pretty good on a reversion to the mean.

UGLY UGLY

Markets are getting slapped down this morning as both Ben and W dominate the screens. The DJIA -150, NAZ -27 and SPX -16.

Financials, brokers, banks homies and real estate all getting smoked. Trading higher, the usual suspects- oils and metals.

Crude trading at/near $101.5 and T Boone's position has been getting redder ever since he tried to push prices lower by talking up his short position a few days ago.

Watching Big Ben this morning - a few things struck me- his FED mandate is as follows- "to promote effectively the goals of maximum employment, stable prices and moderate long term interest rates." Not so easy.

WINNERS- LEAP AAPL VMED DISH BIIB GRMN YHOO HAL VZ T BUD SLB COP EP CVX CTRP LIFC NGS RRC SWN SPN FMCN SID KWK;

LOSERS- MXB HMSY FSTR GFIG MRVL AMZN MNST EXPE APOL BBBY EXPD BRCM S LEH RF WB HD MER MS;

VIX +3% after giving a pretty good sell signal the other day;

Down Volume 3X the up;

TRIN 1.02;

Declining shares about 3X Advancers;

So after acting great yesterday, the brokers are getting hit big time with GS giving back more than half yesterday $8+ gain- hmmmm. XLK looking good for a long portion of a LONG/SHORT combo trade.

THE OPEN

Markets open way down but the out performance of the NDX/NAZ may have begun as it is doing less worse and GOOG AAPL BIDU GRMN WFMI SHLD WYNN are all higher.

Strongest sectors- oils, telecom, metals and ags while financials, banks, brokers, homies, retail and semis lag.

Key stocks - higher- AAPL BG POT GRMN DECK WYNN- lower- MER ICE MS NVDA AMZN BAC KLAC BAC;

NYSE- 1250 net losers;

NAZ- 950 net losers;

NDX -25 GREEN;

OEX -20 GREEN;

IBD -40 GREEN;

TRIN-.97;

RSI (2) levels:

SPX 35

DJIA 38

NAZ 45

NDX 66

Oils and metals continue to trade well while tech is starting to outperform. Note the XLK down .13% this AM while the DJIA/SPX down about .75%.

Downward sloping 50 SMA still seems to be big resistance on major markets but getting long some tech may be a nice trade.

CHANGING TIMES

Markets closed the day mixed with the NAZ higher and the SPX lower by a bit. The DJIA up 9 and unchanged.

Strong sectors- metals, semis, homies, insurance, brokers and tech while airlines, gaming, utils, trannies and energy lagged.

WINNERS- BIDU JNPR LVLT CSCO RIMM AAPL BRCM GS C XRX MS GOOG IBM ALL LKQX CEDC AZZ BABY MR LIFC GGB ITU AUY;

LOSERS- TITN NGS MXB SPN DSX CTRP ARGN S AES ETR AMGN CBS MRK WB WMB EXC MCD ATI ADSK LAMR LEAP NIHD UAUA AMLN FWLT;

VIX - up 4%;

TRIN- .83;

Up and Down volume about equal with low overall again at 1.4B;

Note the picture above where it shows pretty clearly the out performance since late last year of the SPX over the NDX- my guess is times they are a changing and the NDX/NAZ will start to have its way with the other major indexes. Note also XLK tech SPDR - down about 14% on the year and long XLK short SPY may be a pretty pretty good trade.

Also, note how the SPX had a big problem with the 50 SMA - it may get through it on a gap higher but in the mean time- I will be watching.

NOON CHECK

Markets continue to trade higher on the heels of the FNM/FRE news and money seems to be flowing out of the energy sector and into financials and tech - XLF +1.14% and SMH +1.8% as I type.

Strongest sectors- metals, semis, brokers, homies, tech, insurance and banks while airlines, gaming, utils, energy and drugs lag.

Key stocks leaders- BIDU RIMM MS GS MTW C GOOG NVDA AAPL and CAT while UA MA MGM BG WYNN LVS TIF PG AMZN and GRMN lag.

About 900 net winners between NYSE/NAZ while both the NDX/OEX show about 65 out of 100 in the green.

VIX flat and over sold- about 10% below the 10 SMA- Adam with more on where the VIX stands;

Up volume about 2X Down volume;

TRIN - .75;

Just a little shy about buying here for a quick trade as markets are over bought and plenty of resistance above - Note the down sloping 50 SMA on the SPX at 1,391- here and now - almost.

OPENING BATTLE

Markets open lower on the heels of crummy durable order numbers and an over bought market. The DJIA -40, NAZ -9 and SPX -5.

Leading sectors include homies, metals, semis and defense while airlines, ags, gaming, retail and drugs lag.

Market internals near the flat line as some buy programs hit as I type and as Bernanke stuff gets released.

Key stocks mostly lower led by BIDU RIMM CELG C GS MTW DECK on the up side and UA TIF MA AMZN VMW INTC on the downside.

WINNERS- BIDU HANS XLNX APOL CELG LLTC ALL AA S GM DD GS C LDQX CEDC AUY BABY ITU GGB;

LOSERS- ENS TKC WFR DSX CTRP FCSX MA CHTT ADSK LAMR UAUA LEAP NIHD COST AKAM FWLT CBS WB AMGN BNI MRK AES;

Internesting how the recent losers such as GS BIDU GOOG LEH MS C are higher while the markets are red but improving.

Watch the key 1,367 level on the SPX as that area should provide support. To the upside- 1,390/1,395 should cap pushes north.

While perusing Forbes this morning, I found a few articles that looked interesting. One on REITS, one on High Yield funds and a third on FTO. Check out this little fact on GLD which seems to be headed for the 1k mark. And who would have thought this stock wasn't recession resistant or this guy would be looking for interns.

CLOSING NUMBERS

Markets again all over the board but closing much closer to the high than the lows. The DJIA +115, NAZ +17 and SPX +9.5.

Strong sectors- homies, metals, oils, semis, trannies and insurance while MOO internets, airlines, real estate and banks lagged.

Key stock leaders- INTC DECK VMW KLAC UA SMH MSFT MGM PG IBB KO- laggards- GOOG ICE GS MA POT AMZN GRMN BIDU MS;

Market internals closed with 1,950 more winners than losers on the NYSE/NAZ;

VIX -4.7% and now sitting in way oversold territory 11% + below the 10 SMA;

Low volume again with Up about 3X Down;

TRIN .81;

Markets are at/near resistance with the 50 SMA on the SPX right above at 1,393 and the 38.2 FIB also providing resistance at 1,387. RSI (2) levels also way over bought with all major market indexes trading near the 90 level. Therefore, don't be surprised to see a pull back over the next few days as markets are definitely overbought and heading near major resistance.

MIDDAY HEADS UP

Markets have taken off higher on the IBM news which broke earlier ($15B buyback) as the DJIA +130, NAZ +25 and SPX +12.

Strong sectors- homies, semis, oils, retail, metals, small caps, biotech and mid caps;

More than 2,500 net gainers on the NYSE/NAZ;

NDX/OEX- over 80 of the 100 in the green;

Interesting how the former leaders are down and out today including GOOG GRMN MA BIDU AMZN GS- New life coming to INTC KLAC SMH MSFT C NYX TIF PG;

Congrats to the guy in the picture for being bullish every day he has been employed at CNBC - for finally nailing it. Bullish and suggesting buying the markets every day since DJIA 14K.

And a heads up as the 50 SMA on the SPX about 8 points away at 1,392. Oh and it is down sloping and down trending- Should bring in sellers unless we gap above later in the week.

THE OPEN

Markets are trading lower as I type with the DJIA down 34, NAZ -10 and SPX -5. RUT/Small cap value out performing and in the black. Question number 1- lets see if 1,360 can hold on SPX.

Strongest sectors- homies, semis, retail, biotech and metals while internets, telecom, MOO, brokers and real estate lag.

Key stocks generally in the red with VMW MGM KLAC INTC TIF PG SMH MCD IBB green and GOOG GRMN BIDU AMZN ICE AAPL CME MER RIMM GS- all red;

WINNERS- HOLX APOL SBUX SHLD PETM MNST CCU TGT TXN INTC AMGN EMC WMT JST ANSS FCSX MTL VIVO HOS SLT;

LOSERS- DRYS PDA ENS KWK BABY SID TITN FWLT GOOG SNDK GRMN BIDU DISH AMZN PAYX AAPL MER COF EP ATI GM AA;

NYSE- 60 net losers;

NAZ- 180 net winners;

NDX- 40 GREEN;

OEX-25 GREEN;

IBD- 40 GREEN;

VIX- FLAT;

TRIN- 1.33

Down volume a bit more than Up volume;

Finally some talk on bubblevision about the recent lousy performance of AAPL and GOOG- and yes very ugly as GOOG is down $35 and trading near $450 and down 34.5% on the year;

Also talking about whether the markets can rally with out the financials. Well breaking news for CNBC- the NAZ/NDX are down about 14% on the year while the XLF is down about 6%. My point, look for the NAZ/NDX to start to out perform on the reversion to the mean trade.

MORE NUMBERS

Markets rallied Friday and yesterday on the heels of some good news out of the ratings folks on MBI and ABK. In light of the rally, the SPX has moved closer as a percentage to its 50 SMA than it has been since December 31, only about 1.6% below.

Volatility indexes have of course moved lower and now most are trading in over sold territory near 9% below their 10 SMA's.

And if your one of the traders that looks at volume, well nothing good there as the rally of the last two days has come up light with about 1.45B shares traded.

RSI (2) levels after yesterday's close:

SPX 84

DJIA 86

RUT 80

MID 87

BKX 76

XBD 83

BTK 78

CMR 86

DRG 89

HUI 84

OIH 84

RMZ 87

HGX 86

RLX 84

SMH 82

TRAN 83

XAL 36

GOLD 28

SILVER 99

SPX Materials- 89

SPX Energy- 84

SPX Financials- 72

SPX Industrials- 85

SPX Tech- 76

SPX Staples- 76

SPX Utilities- 62

SPX Healthcare -83

SPX -Consume Disc- 79

EWA 94

EFA 95

EWH 59

EWZ 96 (up over 5% in 2008)

CLOSING POP

Markets closed near the highs of the day as the DJIA was +190, NAZ +24 and the SPX +18.5.

Strongest sectors included ags, biotech, reits, energy, retail and small caps while utils, gold, metals and financials lagged.

Leaders among the key stocks- TIF POT ICE VMW CELG MER MS MGM BG IBB and XOM while GOOG UA MA C BIDU GRMN GS and NVDA lagged.

NYSE- 1635 net winners;

NAZ - 1050 net winners;

NDX-75 WINNERS;

OEX-90 WINNERS;

IBD 75 WINNERS;

VIX -4%

TRIN .5

Up volume about 6X Down volume on a typical total near 1.5;

So on a day where the DJIA is +190 GS is red and GOOG is down 22 points or 4.2%. Funny how that is rarely mentioned at CNBC central- although it was great at 750. That chart is now bubble like- hummmm.

Briefing.com with some technical analysis today indicating the SPX needed to close above 1,367.25 for a nice technical break out. Not sure they are right but over 1,360 looks good to me and 1,385/1,390 looks like a next stop if the momentum keeps.

MIDDAY FLAT

Markets have flipped to flat as I type with the financials/brokers continuing to be a big strain on the markets.

Strongest sectors- biotech, MOO, defense, energy, semis, homies and retail while financials, airlines, banks, brokers, metals and emerging markets lag.

Market internals also near the flat line;

VIX- flat;

TRIN- 1.12;

WINNERS- NGS SWN KWK WDC MOS VIVO AA AVP HAL F DELL HD VRTX MRVL CELG JNPR NTAP AMLN FWLT HES ZMH GENZ DVN;

LOSERS- MA ABX WFR NUE ERTS LVLT BIDU UAUA GOOG DISH HRBN ARGN SID AZZ PCLN MTL DRYS SDA C RF GS COF;

Not much mention of GOOG anywhere of late, but that dog has really been ugly and now with a 4 handle. BIDU and AAPL also ugly.

SPX 1,360 rejected again but there is still 3 hours to go in the trading day. It will be nice if it gets put in the rear view mirror.

THE OPEN

So much for follow through to Friday's bounce as financials get pounded especially hard. The DJIA +17, NAZ FLAT and SPX -1.

Strongest sectors include biotech, defense, drugs, semis, large cap growth and small caps- lagging are airlines, financials, banks, brokers, metals and trannies.

Key stocks- 15/40 higher-leaders- CELG IBB MSFT POT PG ICE KO KLAC- laggards- UA C BIDU GS MA BAC GOOG AAPL;

VIX +2%;

TRIN1.25

Down volume about 50% more than up;

NYSE- 100 net green;

NAZ- 250 net green;

NDX- 50 GREEN;

OEX- 60 GREEN;

IBD - 50 GREEN;

Market making a bit of a comeback on the heels of the housing report which wasn't horrible.

Next level to watch -1,360 on SPX - been tough resistance of late and if we can punch through there- maybe we have something.

BARRONS BOUNCE

Barrons with more good stuff this weekend and a nice interview with one of my portfolio managers, David Winters at WGRNX. Winters is bullish on WYNN CTO BRK.A JAPAN TOBACCO and JARDINE MATHESON. The former two stocks trade in Japan and Singapore.

Other stocks Barrons was bullish on included DIS and CELG- also a nice article on a bunch of foreign stocks with high dividends including AIB AZN AXA BBV STD BCS CHT DEO ENSTY FTE GLS ING LYG NSANY RDS.A SNY TSM TI TEF and TOT. Several of these companies pay dividends well over 5%.

Stocks still in the IBD 100 list include:

WDC FSTR CMED BUCY POT CHTT CTRP VIVO DE AUY DRYS PCLN ESRX ITU AGU OXY GME ISRG HES RIMM RIO MOS MA BLK MTW NDAQ DSX CNQR and BOOM;

And check some of the best performing stocks during the big rally in the final 45 minutes of trading on Friday. Any shot they will out perform if the bail out does happen?

RSI (2) levels on most major indexes at/near 60;