ANOTHER STRETCH

Markets had nice moves on Thursday and Friday and now appear to be over bought in the short term. The SPX is about 5% above the SMA 50 which is the most it has been stretched over this SMA since the all time highs in early October.

RSI (2) levels at 90, VIX about 9% below SMA 10, moving averages on adv/decl lines not as stretched to the plus side as one would surmise in light of the rallies- bottom line- overall indicators say market is stretched and due for a pullback.

Also, SPX under the SMA 200 (1430 level) while the DJIA and the NDX/COMPQ are both a hair above the 200. IWM still way under and the MDY a good amount over and congrats to the MID for being the best performing major average for 2008- almost even on the year.

And for anyone waiting for the bottom in the financials, I believe your wait is over as the XLF is now 24% off the bottom hit 6 weeks ago- and anyone who bought GS at the bottom - (140) it is 43% above the bottom while the IAI is +34% off the BSC bottom.

BACK ON MONDAY

THE SELL OFF

That was quick as markets sell off hard after the FED announcement- a delayed reaction as markets were initially trading higher.

No idea - why but maybe a sell signal as the DJIA touched 13,000 and the SPX was back over 1400 for a moment or two.

Also, as I suspected the dollar getting crushed into the carnage while commodities make their way higher off the earlier lows. Note the best performing sectors as I type- metals, steel, emerging markets, energy and ags.

The NAZ after being higher by about 25 points, trading down about 12 while the SPX is back at support near 1385 after being well over 1400.

And if you want more food for thought- the SMA 200 on the various major indexes- DJIA 13,060/ NAZ 2455 and SPX 1407/ GS 196.

How about that call at 2:40 by Kramer as he insisted there would be mark ups by institutions "now that the FED is out of the way and didn't surprise." NICE!!!

THE WAIT

Markets are trading near the highs led by airlines, telecom, gaming, brokers and defense while homies, oils, gold and retail lags.

NYSE- 975 net winners;

NAZ- 680 net winners;

NDX- 60 GREEN;

OEX- 65 GREEN;

IBD-60 GREEN;

VIX- flat;

Up volume a bit more than down;

TRIN- 1.24 - kind of surprising as volume is flowing to the days losers;

SPX 1400 remains a big battleground as we continue to trade under- while DJIA 13K is probably the next fight on that index. NDX/NAZ doing just fine as they are now down about 7% on the year after being lower by nearly 20% at the market lows.

Oils and metals still heading lower but just wondering if we aren't going to mark the short term lows with this FED announcement.

And Bill at VIX+MORE is looking at a bullish yield curve according to history.

OPENING SHOT

Markets are trading modestly higher with strength in the metals, ags and oils and weakness in the financials, retail, airlines and gaming sectors.

Key stocks- 19/40 higher led by MON V PG GOOG MA NVDA AAPL and XOM while C KLAC GS WYNN MS UA AMZN are weak.

NYSE- 685 net winners;

NAZ- 390 net winners;

NDX- 50 GREEN;

OEX- 55 GREEN;

IBD -75 GREEN;

VIX- flat;

Up volume 1.5X Down;

TRIN- 1.23;

CRUDE- 116;

GOLD -874;

10 year Note- 3.8%;

Trading ahead of the fed news the financials are pretty pretty heavy with BAC C JPM MTB USB WB BEN BSC GS JEF LEH LM MER MS TROW all lower.

Tech land a bit better but nothing great with AAPL GOOG IBM INT green and HHH SMH AMZN BIDU MSFT RIMM YHOO all lower.

The oils rebounding nicely with OIH +1.3%/XLE +1.4%/DIG +2.5%- may be a day to buy the dips in that sector as I suspect folks haven't quite given up on rude crude.

Links:

The Fast Money on the Bubble;

The Quant on markets reactions to the FED;

Dr. Brett on shifting market sectors;

T Boone on $125/$150 oil;

THE CLOSE

Markets closed mixed with the NAZ/NDX higher and the DJIA/SPX lower as tech led and energy/materials/metals/ags lagged with the dollar rallying.

Strongest sectors- airlines, telecom, tech, trannies and gaming while ags, metals, steel, energy and real estate lagged badly.

NYSE- 500 net losers;

NAZ- 470 net losers;

NDX- 65 GREEN;

OEX-50 GREEN;

IBD-18 GREEN;

VIX- higher by 3% and at/near the SMA 10;

Down volume slightly better than up on overall light volume yet again;

Late in the afternoon GS got some jig and ended higher by $1.46 despite the crummy financials.

Markets still over bought but slowly working off the condition- question now- what will happen to the leaders as they are all getting crushed as most are assuming that the interest rate cuts by Big Ben are nearing the end- leading to a higher dollar and lower prices for stuff. We will see but buying the OIH today down $6+ probably works out as a nice trade.

MIDDAY TECH

The strongest major index today- clearly the NDX- as the QLD is higher by almost 1% while all the other major indexes are lower.

Internals on the NDX- also green with about 60+ led by INFY HANS MCHP WFMI CTSH BIDU VRTX APOL and SBUX. Most of big cap tech also higher led by SMH AAPL BIDU GOOG RIMM and YHOO.

Energy and metals trading ugly with the OIH down about 3% and gold down 2%+.

GS also acting very well in light of crummy financials as it trades near the flat line.

THE OPEN

Markets are trading lower as they have drifted straight down since the open. The culprit seems to be another lousy consumer confidence number and of course over bought markets.

Key stocks- 11/40 higher led by MA LVS BIDU XOM WYNN RIMM- biggest losers- UA MTW MON POT MS BG AMZN MER C MSFT;

NYSE- 800 net losers;

NAZ- 490 net losers;

NDX-35 GREEN;

OEX-35 GREEN;

IBD- 20 GREEN;

VIX- higher by 4% at 20.4;

Up volume .5X Down volume;

TRIN 1.11;

Watch the financials/brokers- unless some jig higher there the markets will probably continue to head lower. As I type each and every big bank/broker is red with the sole exception of WB.

Tech not so bad led by SMH AAPL BIDU GOOG IBM RIMM- all green.

Trying a little NOV long near the $70 level for a quick flip as the group seems to be at/near over sold territory. OIH RSI (2) levels at 6.

Pre Open

Pre market futures are trading lower as I type - NQ -6.25, ES -3.25 and YM -48.

In the news:

MA soaring to 260 +18 following earnings while V sells off;

GOLD lower by 11 at 885;

CRUDE at 117+;

EURO -1.556;

Gapping up- ACTU FLS ACTS APOG RDS.A TXRH TSON MCHP GTLS TSO ABT GPRO ETN;

Gappin down- DGII LDSH UCTT TRID MDR CHINA AATI TITN SFN V MRK DHT THC FHN ININ ATHR FTI HIG PRE ABB POT DB NO;

WAB- profiled in today's IBD New America section- a rail and transit equipment supplier;

Retail sales rose .9% v a week ago according to Redbook and +1.9% v a year ago;

Linked In:

Is this the all clear for Hillary?

Trader Mike with his recap;

The biggest bust ever?

The High Yield take;

Note markets are over bought here and now with the DJIA hitting its 50% retracement yesterday and falling back while SPX was rejected at 1400.

CLOSING SLIP

An unfun day in the markets as they reversed course in the final 90 minutes and gave up all the early gains as the 1,400 level on the SPX and short term over bought conditions were too much for the markets to overcome.

Strongest sectors- airlines, homies, trannies and biotech while ags, metals, oil service and internets lagged.

NYSE- 420 net winners;

NAZ- 200 net winners;

NDX- 55 GREEN;

OEX-40 GREEN;

IBD-55 GREEN;

VIX- flat;

Up and Down volume about equal with total volume very anemic at 1.1B;

RSI (2) levels:

SPX 76

DJIA 68

NAZ 71

NDX 73

RUT 90

MID 93

Markets still over bought here and probably not much significant activity until the FED news comes out on Wednesday. In the meantime its probably buy the dips and flip em quickly.

MIDDAY SNAZ

Looks like money flowing into the NAZ/NDX as it was the big loser on Friday. Strength in AAPL AMZN GOOG RIMM AKAM and YHOO.

Strongest sectors- airlines, homies, biotech, trannies gold and telecom while ags, oil service, utils and gaming lags.

NYSE- 700 net winners;

NAZ- 450 net winners;

NDX-70 GREEN;

OEX-60 GREEN;

IBD-58 GREEN;

VIX- flat;

Up volume almost 2X down;

GOLD-895

CRUDE- 119

NAT GAS- 11.43

Strong action in the NDX/QQQQ/QLD probably finds this part of the market closing at/near the highs.

THE OPEN

Markets open flat with the NAZ/NDX acting a bit better than the DJIA/SPX group.

Strongest sectors- metals, oils, biotech, brokers and drugs while airlines, homies, retail, ags and gaming lags.

Key stocks- mixed with ISRG CELG C GOOG RIMM NYX higher and POT BG MON CME MSFT NVDA and MGM lower.

NYSE- 230 net green;

NAZ- flat;

NDX- 55 GREEN;

OEX- 53 GREEN;

IBD- 70 GREEN;

VIX- higher by 1.5%

Up volume a bit better than Down;

Financials not leading today and maybe a good omen for the NAZ and tech stocks QLD/QQQQ may be the way to play today on pullbacks.

Market overall still over bought with high RSI (2) readings and a fairly low VIX- so trades for me today are for the day.

PRE MARKETS

Futures are trading higher this AM with the NQ +10 and the ES +7.25 on the heels of the presumed Buffet for WWY $22B deal. Crude also near the $120 level before selling off.

The dollar lower by .35% at 72.54 and the EURO up to 1.5664.

Mentioned positively in Barrons this weekend TEX JOE COV ABG.

Cramer bullish on PCP BEAV CMI SIRI COP OXY MRO AEM ENER HCBK UBRN and AAPL and bearish on MSFT ING SIRT TSFG and CXW.

IBD top 10:

BUCY POT WSCI TITN BIDU PCLN RIMM KOP MDR AW;