BACK ON TUESDAY

AFTER NOON TRADE

The fun continues as S and P puts ABK/MBI on financial review for potential downgrades. Markets reaction- sell off but I suspect we get back to the highs of the day before 4:00 eastern time.

The DJIA +36, NAZ +30 and SPX +6.

Strongest sectors- semis, oil service, internets, biotech and gaming while banks, metals and drugs lag.

NYSE- 430 net winners;

NAZ- 670 net winners;

NDX- 90 GREEN;

OEX-68 GREEN;

IBD- 55 GREEN;

VIX-flat near 20.15;

TRIN- 1.07 with up volume 1.25X the down;

Watching the NDX internals and they are strong suggesting we get a nice push on the NAZ/NDX before the day ends and that is the way I am playing long QLD.

SPX up and acting pretty well as the financials stay green despite the SP downgrade watch- GS LEH MS green while all the big banks are red.

OPENING DASH

Markets open mixed again with the DJIA slightly higher and SPX flat. The NAZ/NDX continues to lead as they don't have the financial baggage of the SPX/DJIA.

Strongest sectors include oil service, gaming and semis while banks, steel, homies, coal and metals lag.

NYSE- 400 net losers;

NAZ- 125 net losers;

NDX- 70 GREEN;

OEX-50 GREEN;

IBD- 35 GREEN;

VIX- flat near the 20.5 line;

TRIN- 1.03 with down volume slightly higher than down;

Keep a watch on the financials as again that will be the place that leads the markets either up or down- for now its a mixed bag with C JPM GS MS higher and LEH LM MER MRJF WFC WB USB MTB BAC all red-

SPX 1370 also a big level to watch but so far holding.

THE CLOSE

Markets closed lower but well off their worst levels as the DJIA closed down 101, NAZ -11 and SPX -8.

Strongest sectors included homies, real estate and retail while oils, metals, defense and banks lagged.

NYSE- 630 net losers;

NAZ- 390 net losers;

NDX-40 GREEN;

OEX-30 GREEN;

IBD- 30 GREEN;

VIX- up 2% at 20.3;

Down volume not quite 2X up volume and light again at less than 1.3B shares.

LEH the story of the day as rumors were out they went to the window - and the market tanked- and then they denied they went to the window and the market rallied. Shades of BSC as rumors are all over the place and how many folks are going to decide to leave LEH and let some one else be their client.

In addition, the important May lows held so maybe some good news for the bulls.

THE SWOON

So much for dull as the market is down 125 DJIA points and 10 SPX points on a 1) awful GM sales; 2) OBAMA reaching the magic number per AP; 3) further weakness in LEH; 4) crude down over $2.5; - or something else- what ever its way down and my suspicion about not buying yesterday or this morning proved to be a wise move.

RSI (2) levels hitting oversold areas as follows:

SPX- 10
DJIA -6
NAZ -18
NDX -19
RUT -16
MID -22

Brutal spree of selling with the next support area near the 1370 level on the SPX- not sure that will hold this afternoon as everything looks ugly.

DULL

Markets continue to trade slightly higher with the DJIA +5, the NAZ +14 and the SPX +5.

Strong sectors include ags, internets, steel, insurance, homies and reits while defense, telecom, telecom and gaming lags.

NYSE- 300 net winners;

NAZ- 300 net winners;

NDX- 60 GREEN;

OEX-60 GREEN;

IBD-70 GREEN;

VIX- down 3.5% at/near 19;

Up volume a hair more than down;

TRIN- .92;

10 year Note- 3.99%;

Gold- $886;

Crude- $125.8;

Not much happening as the financials continue to hover near the flat line with JPM MTB WB WFC LEH MER CME ICE all red while C USB GS LM MS RJF TROW NDAQ NYX are all green - but nothing with conviction.

DJIA leaders- GM AIG WMT INTC HPQ- laggards- BA MCD VZ T-

Looks like a pretty pretty boring day- not much else.

THE OPEN

Stocks open flattish with the DJIA +5, NAZ +4.5 and the SPX +2.

Strongest sectors include homies, trannies, utils and internets while metals, oils, semis and telecom lag.

Key stocks- mixed with MON DECK CME POT BG NYX BIDU green and MA NVDA LVS WYNN RIMM UA KLAC lower.

NYSE/NAZ internals slightly green with 500 net winners;

NDX-60 GREEN;

OEX-60 GREEN;

IBD-45 GREEN;

VIX- flat;

Up and down volume about equal;

Treasury rates up after the Big Ben speach with the latest quote on the 10 year Note at 4.013%- commodities also took a hit with GOLD down $16 and CRUDE lower by about $1.5.

Jeff Saut with some new thoughts on stuff stocks;

Ranking the Newspaper sites;

The Newsletter take;

Toddo on Crude realities;

Kellner on the housing turn;

More on the VIX;

Hard to see how the markets will get much traction with oil and the financials lagging as they are both big chunks of the major indexes. Sitting on my hands waiting for better entries.

THE CLOSE

Markets closed lower but off the worst levels as a surge in the final thirty minutes brought the DJIA back by 70 to close down 134, NAZ down 31 and the SPX down 15 after testing its SMA 50 at 1380.

Strong sectors were solar, metals, oils and biotech while brokers, banks, gaming and real estate lagged.

NYSE- 1160 net losers;

NAZ- 1140 net losers;

NDX- 15 WINNERS;

OEX-8 WINNERS;

IBD- 50 GREEN;

VIX- up 11% at 19.8 and trading about 7% above the SMA 10;

TRIN- 1.46 with down volume about 3x up volume- light volume over all;

Not ready to buy yet as I suspect the beginning of the month 401K money came in to lift the markets into the close. A lower low tomorrow would not be surprising to this fish and as always I will be keying on the BKX/XBD.

Hopefully some made some good dough on the SKF downgrade as SP downgraded. Probably goes higher but as usual not in a straight line.

NOON SWOON

So just as Ned Riley tells every one what a great place financials are to invest -in comes SP with their down grades- and an ugly sell off ensued. Ouch- although pretty pretty good for the SKF longs - which is up about 5% on the day as I type.

The DJIA -190, NAZ -49 and the SPX -21 and a hair under the SMA 50- the close will be interesting.

Strongest sectors include- solar, metals and oils while financials, brokers, banks, gaming and real estate lags.

NYSE- 1430 net losers;

NAZ- 1540 net losers;

NDX -5 GREEN;

OEX- 5 GREEN;

IBD-45 GREEN;

Remember, markets that are weak all day tend to close at/near the lows and I will give it an underline when the financials are particularly ugly like today.

BESPOKE with some new charts.

And how about this from Dougie Kass on the banks last week.

THE OPEN

Markets open on the ugly side with the DJIA -95, NAZ -20 and the SPX -10.5.

The strongest sectors include solar, metals and semis while banks, real estate, brokers, shipping and gaming lag.

Key stocks- 6/40 higher with POT MON BG NVDA INTC CELG KLAC green and DECK CME TIF UA C BAC NYX ICE red.

NYSE- 1250 net losers;

NAZ- 1125 net losers;

NDX- 15 GREEN;

OEX- 8 GREEN;

IBD- 35 GREEN;

VIX- started the day in the middle of its 10 day range and up a whopping 11% in the first hour to 19.8;

TRIN- 1.08 - Down volume about 3X the up;

So with oil down $1.5 - no follow through in equities as the financials put out more ugly news. My positions for now LONG SKF QID - and looking to cover at SPX near 1380 - which will approximate the 50 SMA - which has acted as support before.