GONE FISHING

AFTERNOON SWOON

Not much good can be said about today's action as the financials give back a lot of yesterday's gains along with the brokers, homies, reits and real estate.

FRE/FNM look to be heading to hat size prices as they both get pounded - and is any one wondering if the US is heading to a Japan type economy- note their market peaked at/near 30K almost 20 years ago and now trades near 13k.

Note the 10 year heading straight down to the 3.84% area while the dollar heads lower and what ever happened to the talk of raising rates to save the dollar and hold back inflation- ? Not today.

Gloom and doom as we appear to be heading back to the recent lows near SPX 1240 as the bulls run out of steam. Some feel that 1260 needs to hold - that number looks like toast as few will likely want to buy on a day such as this.

Barrons on the VIX;

More on the Bear;

And check out these top funds;

MORNING CHOP

Big surprise as all the brokers and banks are trading lower (10:40 EST)- crude a smaller than expected draw and distillates in line with estimates- and crude trades at $137.3+1.2 ;

Strong sectors- steel, ags, metals, oils, shipping and utils while gaming, reits, real estate and financials lag;

NYSE- flat internals;

NAZ- 220 net losers;

NDX- 30 GREEN;

OEX- 35 GREEN;

IBD- 80 GREEN;

VIX- slightly higher;

Up and down volume about equal;

Don't be surprised to see the markets chop around for most of the day as that is typical action after a big move.

Big cap tech, which was strong yesterday - lagging this AM and maybe hinting to what we can expect later in the day.

Drug stocks continue to act well - check the charts on SGP AMGN etc;

THE NUMBERS

Markets were pretty good yesterday and the only question is if its a one day wonder or the start of something meaningful for the bulls.

Checking the charts, the SPX looks pretty good up until the 1290 area where selling appeared - also happens to be the 23.6% retracement area.

Crude - could see a bounce near the $132 area which is the 38.2% retracement area;

DIG - looks like a very good set up with a stop under yesterdays low- ditto for XLE and OIH;

VIX- has dropped under the SMA 10 after spiking yesterday to the 26 level-

TRIN- surprisingly the TRIN has been below the 1.00 level on 5 o of the last 7 trading days- not very bullish;

Bottom line - this rally probably has some legs but I wouldn't get excited about SPX 1575 any time real soon as there is a ton of over head resistance beginning near the 1290 level.

MORNING WHOOSH

Market very choppy with a lower bias as financials are again lower- still sitting on the sidelines waiting for a long entry-

Strong sectors- drugs, biotech and defense while steel, ags, oils and metals lag.

NYSE- 400 net red;

NAZ - 150 net green;

NDX/OEX- 100 GREEN;

IBD- 15 GREEN;

VIX- flat at 25.75;

Down volume about 2X up;

Markets selling off as I type and maybe the whoosh down before the buyers step in - eh;

Obviously market way over sold - so waiting yet again;

ITS OBAMA STUPID

Futures markets pointing to another weak opening as overseas markets get crushed yet again.

So is it time to get bullish or is just dumber and dumber?

VIX +MORE sees something bullish;

The Quant on another extreme;

Barry wondering if the markets are pricing in an Obama win or possibly something else:

1) the housing debacle;

2) the credit crisis;

3) $145 oil;

4) 6 consecutive months of negative employment data;

5) nearly $5 gasoline;

6) 40% devaluation of the dollar;

7) massive financial sector write offs;

8) an exhausted U.S. consumer;

MORE STRETCH

Here we go again- the fish looking for capitulation- the SPX about 9% below its SMA 50- 1365 V. the close of 1252- pretty pretty far stretched- note that at the January bottom 1445 V. 1310 or also about 9%- so we will see.

Doug Kass at realmoney.com with some interesting tidbits this morning:

One would think that a tradable bottom is close at hand based on the absence of stress in many of the classic credit market indicators, an inflating negativity bubble (oscillators are moving into deep oversolds, the five-week moving average of advancing stocks is at the lowest level since 2002, Lowry's selling/buying pressure is at an extreme, Investors Intelligence's market letter bears at 44.8% is at the highest reading in 12 years, AAII bears are double bulls similar to prior trading lows, Ed Hyman's ISI hedge fund survey reveals a lowly 45% net long exposure, expanding put/call ratios, etc.), the general lowering of profit expectations from even the most bullish cabal, and the speed and magnitude of the recent decline. Thin-reed indicators out of the media also signal the possibility of a rally (e.g., Barron's bear cover this weekend and the somber preoccupation with a 20% DJIA drop as a tipping off point to a bear market is the polar opposite of CNBC's DJIA 14,000 celebrations).

Time will tell but I think Dougie has it right this time - even though he was a bit early on his call on the financials.

THE CLOSE

Another wacky day as the markets close lower after rallying in the final hour - big swings the mood of the day.

Sector strength in internets, gaming, steel, tech and ags while banks, financials, brokers, homies and metals lagged.

VIX closes up 4% near the 25.75 line and over bought;

Down volume 2X the up;

Haven't put on the long yet but tomorrow looks like the day as Turnaround Tuesday sounds right and if oil can continue lower the market may rally nicely.

NOON SWOON

Another brutal day for the longs as the markets make a round turn and are now down a the lowest level on the SPX in two years.

NYSE/NAZ market internals at 2800 net red;

NDX/OEX- 40 GREEN;

VIX- higher by 8% and soaring near the 27 level- and 13% above the SMA 10;

Down volume 3.5X the up;

Crude $141.5

Hard to believe the SPX was almost 100 points higher on June 25, about 6 trading days ago at 1336-;

I will be looking to scale in to some long positions either at the close or tomorrow morning- Turnaround Tuesday sounds about right especially with RSI (2) at these levels:

SPX 6

DJIA 20

NAZ 5

NDX 15

RUT 1

MID 1

MORNING MARKETS

Equiities are trading higher on the heels of lower crude which is down to $141 or lower by about $3 - so far.

Strong sectors include chinese stocks, steel, internets, airlines, semis and tech while metals, banks and drugs lag.

NYSE 735 net winners;

NAZ 685 net winners;

NDX-80 GREEN;

OEX- 80 GREEN;

VIX flattish at 24.95;

Up volume 2X down;

Financials not participating with the broad markets so far and that doesn't bode well - GS LM MS BAC JPM MTB WB all red- .

Looks like the place for today is the NDX and a day trade on QLD could work on pullbacks.

Some interesting facts on markets so far in 2008- SPX range 220 points low to high;

2007- total range - 1576-1364 or 212 points;

2006- total range 1432-1220- 212 points;