THE SURGE

The move out of commodities and into US equities continues as the dollar moves on up while the EURO hits about 1.50 down from nearly 1.6 a short time ago.

The DJIA +240, NAZ +46 and SPX +22- The RUT the best of the big indexes -higher by 2.4%.

Strong sectors - the usual suspects- retail, gaming, homies, trannies and brokers while laggards include metals, oils, steel, ags and emerging markets.

Almost 2,500 net gainers between the NYSE/NAZ;

NDX/OEX- about 165 green out of 200;

VIX- diving about 4.6% and heading to the 20 level;

Up volume 2.5X down;

Looks like a dip buying day as folks seem to think the move in commodities is over and the move into U.S. Equites is just beginning- not sure as more lousy new probably coming- only question is the reaction to the news.

THE OPEN

The ride continues as markets trade higher despite the crummy news out of FHM- the good news- oil and metals/commodities are tumbling as the dollar moves higher on the heels of an expected out performance by the US economy.

Best sectors include trannies, gaming, retail, real estate and brokers while commodities lag.

NYSE- 660 net winners;

NAZ -800 net winners;

NDX/OEX- both with 80 out of 100 winners;

Clearly the dollar is driving stocks and it looks like the place to be is the NAZ/NDX- money seems to be flowing there and out of commodity type stocks- for now.

THE DROP

Markets cratered this afternoon on the heels of AIG WMT TGT and finally AXP which was downgraded by a ratings agency.

Technically, 1260 was to be initial support but didn't hold and next stop - well hopefully a rebound tomorrow-

And all those looking for that evasive bottom- I think not as more bad stuff is coming and no doubt more writeoffs for big cap financials that whether you like it or not are levered to the real estate industry- and if you think that the lowest prices are in need to think again- IMVHO.

MORNING TRADE

Markets are trading lower but off their worst levels of the morning.

Leading sectors include semis, oils, utils and homies while shipping, insurance, emerging markets and financials lag.

NYSE- 1200 net losers;

NAZ - 600 net losers;

NDX- 35 GREEN;

OEX- 20 GREEN;

IBD - 35 GREEN;

VIX - moving up with 21 the next target- higher by 3%;

Down volume double the up;

Looks like the NDX is out performing and I have bought some QLD for a day trade- as I doubt oil/nat gas is going in a straight line higher - so buying dips selling rips -

PRE MARKETS

Markets look to open much lower on the heels of a lousy initial jobless claims number (+455,000), underwhelming sales news from WMT/TGT and the stuff last night from AIG-

In addition, the WSJ with some interesting mortgage facts- mortgages made in the first part of 2007 are going bad at a pace that far outstrips those made in 2006- Facts from the FDIC shows that .91% of prime mortgages from 2007 were seriously delinquent after 12 months while the 2006 number was .33%. Seriously delinquent defined as in foreclosure or 90 days past due.

Anyone looking for a bottom in financials is looking in the wrong place if they don't focus on housing. Financials generally make/hold loans and that paper is generally secured by real estate- if the real estate goes down in value so do the loans- hence when real estate bottoms the financials will bottom- obviously those assets continue to decline in value- and looking at other data points for a bottom is probably the wrong place.

THE RESISTANCE

Markets were again rejected at the SPX 1290 area and tomorrow may not start out so great as AIG seems to have spit the bit in the after hours with a much wider than expected loss.

Otherwise, curious to see if we get follow through in the commodity stocks-

AFTERNOON LULL

Markets have moved up and are now trading near the flat line on the SPX/DJIA and solidly green on the tech heavy NAZ/NDX.

The turnaround happened on the heels of lower crude prices this AM although crude is trying to bust back into the green.

Lots of resistance over head on the major indexes as the SPX finds its down trending 50 SMA at 1300 and prior tops at /near 1290. DJIA SMA 50 about 100 points higher at/near 11,720.

Also note the oversold RSI (2) levels with most major indexes at/near 85.

Bottom line- equities are held hostage by the moves in crude as they seem to move tick for tick in opposite directions.

THE USUAL

We are getting the follow through we expect in this bear market as the DJIA is down 71, NAZ -11 and SPX -6.5.

The leaders- the exact opposite of yesterday with steel, metals, oils, ags and utils higher and banks, brokers, internets, gaming and trannies lower.

NYSE- 860 net losers;

NAZ- 750 net losers;

NDX - 15 GREEN;

OEX- 25 GREEN;

IBD- 55 GREEN;

VIX- 21.5 - higher by 2% and a bit over sold;

Down volume about 1.5 up;

Crude supplies up more than expected while gasoline had a bigger draw-- higher crude would not be surprising as the move has probably been a bit too far too fast.

Markets probably take their cue from crude but 1290 still looks like big resistance with support hanging at 1260.

THE CLOSE

Markets close at the highs as the FED keeps the big rates unchanged- and who isnt big time BULLISH after a day like this. SURE.

Strong sectors include gaming, banks, retail, insurance and trannies while metals, steel, ags and oils lagged.

NYSE/NAZ 2600 net winners;

OK markets over bought as we have RSI (2) levels at near 80 on most major indexes and with the 1290 area on the SPX just a stones throw away- it may be getting time to put on the shorts.

CHECK THAT BOTTOM

So yesterday at around 2:40, Cramer writes a post on realmoney.com explaining why he is now bearish despite his bottom call early last week:

"So what happens? We have to go back to being radically oversold before these stocks stop going down, and we are nowhere near that. It is easy right now to say, "There is no hope."

I would rather say, "There is a trade coming up to the long side after we go down a lot, but right now the short side is the easy side."

I will offer this, he seems to be in pretty pretty good contrary indicator mode for now-

THE OPEN

Markets are trading way higher on the heels of another move down in commodity prices. The DJIA +160, NAZ +31 and SPX +16-

Strong sectors include gaming, retail, trannies, homies and banks while metals, ags and oil service lag.

NYSE- 1400 net winners;

NAZ- 1,000 net winners;

VIX- down 4% at 22.5;

Up volume 4X the down;

Nice to see a big up day - note however the largest gainers seem to be the most heavily shorted including AIG GM BAC C MGM WYNN LVS- etc.

Look for resistance at /near the 1290 area on the SPX still far away -

CLOSING CALL

Another down day in the markets despite the $4 drop in the price of crude and the crushing in other commodity based equities. Sounds like some hedge fund liquidation and a nice quote from Rick Santelli- "from long commodities to long margin calls" about appropriate.

Strong sectors included drugs, semis, gaming, internets and retail while oils, shipping, ags, steel and metals all were lower.

Market internals weak all day closing with 2000 net losers on the NYSE/NAZ;

Check out the price action in XLE which is back to the March lows at/near $70 and look where oil was at the time- kind of comical.

Tomorrow another day and day trading looks like the way for now-

THE USUAL

The theme continues to be no place to run no place to hide as equities are lower as are metals, energy and commodity stocks.

Strong sectors include drugs, semis, techs and utils while brokers, energy, steel, ags and banks all lag.

NYSE- 1130 net losers;

NAZ- 925 net losers;

NDX- 30 WINNERS;

OEX- 40 WINNERS;

VIX- 23.75 and higher by 5.4%

Down volume more than 2X up;

Maybe some SPX support at the next round number 1250 - and markets are oversold with RSI (2) levels at near the 20 level- and don't forget the Cramer bottom call a few days ago when the markets were considerably higher.

Low rates on CD's - stocks seem to go down every day as does real estate and commodities so what does one do with the cash- seems like the mattress is a good idea for now.

JULY PUNCHED

Seven months down in this brutal year for long term investors and some interesting stuff:

SPX -14.2%

DJIA -14.6%

NAZ -12.9%

NDX -12.4%

RUT -6.5%

MID -6.7%

Small Growth -4.3%

Small Value -12.4%

Large Growth -13%

Large Value -15.5%

EFA -16.7%

Small and Mid caps faring far batter than the big cap/tech heavy/European indexes;

AMGN +35%

IBB +9%

XLE -6.3%

XOM -14.9%

OIH +2.9%

GS -15.4%

BKX -24.1%

HUI -4.7%

GOOG -32.3%

MSFT -28.5%

GE -23.9%

RLX -14.5%

XAL -38.6%

TRAN +8.3%

Also, hard to believe how poorly XOM XLE are faring in light of $125 oil- XLE is down about $18 from its May High while XOM is down under $80 after hitting $96+ in late May;

Note the bounce of the small caps off the recent bottom compared to the SPY and how the VIX is unchanged for the year.