TECHNICALS

Markets are higher but off their best levels as traders may have decided to take profits before the rush.

Strong sectors- banks, brokers, telecom, trannies and retail while metals, oils and homies lag.

Market internals also well off their best levels with 2,000 net winners on the NYSE/NAZ compared to +2600 earlier in the morning.

Ultra light volume again and next week probably worse as Labor day only 10 days away.

Checking the VIX/SPX looks like resistance right above at the 1300 level and VIX also getting a little washed out here near the 19 level- note we were about 10% below the SMA 10 earlier and have since bounced from those levels-also note the financials are starting to roll over with LEH about 5% off the best levels and AIG MTB WB BLK red.

MORNING HEADS

Markets soaring on the heels of bullish words out of Buffet on US stocks and Bove on LEH - and expecting a $20 bid over the weekend.

DJIA +175, NAZ +29 and SPX +14.

Strong sectors include financials, retail, telecom and real estate while metals, oils and steel lag.

NYSE- 1465 net winners;

NAZ- 1150 net winners;

NDX -90 GREEN;

OEX-80 GREEN;

DJIA- 28 GREEN led by JPM BAC C AXP GM VZ T BA CAT UTX - losers include AA JNJ;

VIX- sinking 6% at near 18.7 and careful out there as we are at/near recent low territory on vol indexes;

SPX surging on the talking heads and also be careful as we approach the recent highs near the 1310 level on the SPX- I guess all is swell again in banks/broker group-

VOLATILITY

Markets look to be heading higher but I am dubious of any sustainable rally as the brokers and banks continue to trade ugly and the internals refuse to confirm any upward movement as they continue to be skewed to the downside-

My strategy for the day- fade the rallies and buy the inverse ETF's;

Strong sectors- oils, metals, gaming and homies while brokers and financials lag;

NYSE- 850 net losers;

NAZ- 830 net losers;

NDX/OEX 25 GREEN on each;

VIX- lower by 1% at/near 20.25;

Down volume 1.5X the up;

Crude- up $5+ at $121;

Gold Up $22 at $837;

Looking for volatility but a lower close and fading the blips - banks/brokers probably going lower and SKF looks like a nice play;

SAME OLD SAME OLD

Markets are trading lower this morning led down by banks, brokers and insurance while metals, oils, and ags are lagging.

NYSE- 875 net losers;

NAZ- 600 net losers;

NDX-20 GREEN;

OEX- 23 GREEN;

IBD - 20 GREEN;

VIX- 1% higher at 20.65;

Down volume 1.5X the up;

FRE /FNM are both higher but I suspect that won't last long and folks shorting those stocks will ride them to zero.

Crude - higher by over $4 as the EURO moves on up to the 1.487 level;

Gold higher by $23 to the $840 area - as it didn't spend much time under the $800 level;

Still watching for 1255 area on SPX and have bought some DXD/SKF on the ticks higher- and where is the connection between the SPX and oil- looks a lot more like a connection to financials-

Be careful - as it is prime vacation season and the markets may get pushed around big time on the light volume.

THE CLOSE

Markets closed higher on what appears to be an over sold bounce- SPX +8, DJIA +69 and NAZ +5.

Market internals- not so great - closed flat with an equal number of winners and losers;

Best sectors- solar, china, steel, oils and banks while gaming, semis and trannies brought up the rear.

VIX- down 4% at 20.43 and a hair under the SMA 10;

Up volume about 1.5X the down;

10 year Note- 3.799%;

Cramer with a good idea on realmoney.com- suggesting buying the natty gas cos like XTO etc. as they are probably big take over candidates with nat gas at/near $8 down from almost $13;

Cramer also probably right on FRE/FNM - stop the nonsense and the trading of these stocks already- they are ZERO - perpetual options - let the government take them out and let the equity holders get the well deserved proceeds as they have been warned for years about the toxicity of these stocks.

Some think that a takeover of these two stocks will yield a big rally in financials- not sure but worth pondering.

Bottom line for today- another low volume day where folks push around prices, and they do - which is why we go up and down and generally end no where- although we are now digesting the over sold state of the markets;

MIDDAY SNOOZE

Markets are trading flat as the sell off in oil did not get the markets moving higher as the story continues to be the FNM/FRE situation-

DJIA +30, NAZ +3 and SPX +2;

Strong sectors- steel, ags, oils, telecom and utils while gaming, brokers, real estate and drugs lag;

NYSE/NAZ flat internals;

VIX- down 3% at/near 20.7;

Up volume a shade better than down;

Tough to call the afternoon as the markets just seem to want to oscillate between green and red-

THE OPEN

Markets, as usual, start the day lower with more fear in the financial sector as both FRE and FNM trade down another 20% - and they are running out of 20% moves as they become penny stocks under the $5 level-

Strong sectors include steel, oils, metals and ags while gaming, banks, trannies and homies lag.

NYSE- 500 net losers;

NAZ- flattish internals;

NDX- 50 GREEN;

OEX- 35 GREEN;

VIX- flattish at 21.35;

Up and down volume near even;

Note the jig in some of the old natty gas favorites- XTO CNQ -maybe foretelling another move higher in nat gas.

Market bouncing as I type with the NAZ/NDX/RUT leading and for now looks like an over sold bounce as markets did reach RSI (2) levels under 10 - also the 50% retrace on the SPX at/near 1255 got close at 1261;

Bottom line- I expect a short term bounce - but expected that to be sold soon enough- as it becomes clearer that the financials are eventually going lower with some going to zero.

INSANA ON THE BRINK

A few things this morning- first- never realized how controversial Bob Brinker was- he made some nice calls in 2000 and 2003 - but apparently folks aren't happy with his recent timing. Check out these blogs that follow his stuff- and apparently he also isn't happy with bloggers who quote him or discuss his prior record:

Beehive Buzz;

Bob Brinker Fan Club;

And now on to Ron Insana- Ron is folding the tent on his fund of funds hedge fund- after 14 months - why? according to the letter

"our current level of assets under management, coupled with the extraordinary difficult capital raising environment, make it imprudent for Insana Capital Partners L.P. to continue business operations."

Haven't heard anything of this on CNBC- nor a mention that he is gone as a "contributor" and will be working for Stevie Cohen at SAC Capital. Not sure what a guy like Ron has to offer Stevie Cohen.

Oh- and futures this morning- trading up but well off their best levels while crude is up another $2 to $116+

Trading up on the DJIA - HPQ GM BAC INTC HD XOM- lower are AA C JNJ BA VZ- all on light volume.

GS CUTS FINANCIALS

GS cutting the Q3 estimates on MS to $.85 from $1.1, MER to (-$4.75) from (-$4.40), LEH to (-$2.75) from $.68, C to flat from +$.17, JPM to $.40 from $.64, - also say they favor going long MS and short C- also cut LEH for the year to -$9.65 from a -$2.1.

The real news is there is no reaction to the cuts in the after hours so no one probably shocked by this news as the financials have been ugly the last few days.

One other tidbit- note the action in XLE- it refuses to bust the $70 level on a closing basis and was up 3.5% today - it stopped going down over two weeks ago despite the continuing drop in crude- FWIW.

THE DOGS

Another day in paradise as the market closes lower with the biggest carnage in the small caps and the value areas.

The SPX down 12, DJIA -131 and NAZ-33.

Strongest sectors included oils, metals,utils and steel while gaming, homies, banks, brokers and retail lagged.

NYSE- 1400 net losers;

NAZ- 1325 net losers;

DJIA - 3 WINNERS;

VIX- higher by 2% at/near 21.35 and a whole 3% above the SMA 10;

GOLD higher by $14 at/near $820;

EURO 1.478;

CRUDE- $115 and over $2 higher on the day;

Markets still attached at the hip to the dollar and crude - or so it seems- SPX approaching the 50% retracement level with a close near 1265- only 10 points lower to go;

Its still about financials as they move so goes the market- and they are trading/rentals and now maybe approaching another short term bottom for a move higher as FED's are about to reinstate the "no naked shorting" rules.

As for this fish - I sold my DXD and will be watching in the morning for buy sell or watch as the RSI (2) levels hit the 10 level on most major indexes.

As for the dog in the picture- my guess is he comes in last in NY ratings - behind Kay and Francesa- other two much more listenable.

ON THE BRINKER

Was at the library yesterday reading the August issue of Brinker's Market Timer and just a bit surprised by his commentary.

According to Bob, oil is the key to the markets and not the financials- I definitely do not agree- guess I have facts on my side now as oil has fallen from $147 to $112 and the markets have barely moved off the 1216 closing low in mid July.

Bob says the following in his letter:

The July 31 closing SPX price of 1267.38 represents a P/E ratio of 14.6 X our 2008

operating earnings estimate of $87. Investors are increasingly looking at 2009 earnings prospects at this time of year, and our 2009 estimate is currently $97. Based on this estimate, a price earnings ratio of 16 is required in order for the SPX to challenge its historic record closing high of 1565. The SPX now trades at a P/E of 13.1 X our 2009 estimate. We regard the price of oil as the critical variable in determining whether the SPX can challenge its record high next year. In any case, we expect significant upside market progress into next year relative to current market price levels.

In summary, we continue to regard oil prices as the key variable for stock prices. Lower oil prices combined with low interest rates would provide the basis for an improving economy next year. We believe such a scenario would be embraced enthusiastically by investors. We rate the market attractive for purchase on any weakness below the SPX 1240 level. Above that level we recommend a dollar cost average approach for new stock market money.

Not sure how the financials are going to get anywhere near their old highs as their earnings power has been severely impaired - and since they are still a big part of the SPX - just don't follow Bob's logic that it is all about oil- I think its all about housing and until that shows a believable bottom we don't move much higher.

THE LEFT WING

Markets continue lower and I suspect we close at/near the lows- and in the mean time still opportunity to short the blips.

Anyhow, DJIA -136, NAZ -31 and SPX -13- while crude is up $3 on the heels of a drop in the $$$$ and a surge in the EURO that began around 11:00EST.

NYSE- 1560 net losers;

NAZ- 1325 net losers;

NDX- 15 GREEN;

OEX- 15 GREEN;

10 YEAR -3.83% as inflation news gets worse- hmmmm;

GOLD -$818;

VIX- higher by 4% and at 21.9;

Volume very light again as most are at the beach but down volume 3X the up;

Wish these CNBC geniuses would stop talking financials already- one need not be a genius to figure out that as real estate goes so goes financials- after all loans are generally against the real estate-

SPX trading at 1268 and a few points above my short term target- and its good to know that lefty sees some opportunities in the markets including real estate- soon they will ask Al Michaels for advice on shorting.

Oh and Mad Dog probably with some great stock picking also - tune in for more great power lunch.

THE OPEN

Markets are again weak and the 1255 objective on the SPX is getting closer and closer- the DJIA -100, NAZ -21 and SPX -10 at 1269.

Strong sectors- oils, utils and metals while gaming, banks, financials and real estate lag.

NYSE- 1550 net losers;

NAZ- 1210 net losers;

NDX- 20 GREEN;

OEX- 20 GREEN;

DJIA -4 GREEN CVX XOM JNJ AA;

VIX- higher by 5% at/near the 22 level;

Down volume 4X the up;

Looks like another ugly day and my 1255 target on SPX seems to be just around the corner- however not the "relative" jig in AAPL and GS- both green. All the other financials down between 1 and 4%.

I suggest that the bottom callers in financials read this article- makes sense- why would financials bottom if they are leveraged to real estate- and if that falls another 10% aren't they doomed?

If you want to daytrade, keep this in the back of your head- markets that are weak all day tend to close at/near their lows.

THE CLOSE

The bell sounds and the markets are lower yet again with the DJIA -175, NAZ -36 and the SPX -19.

Strong sectors- metals and utils while gaming, homies, banks, brokers and internets lagged.

NYSE- 1500 net losers;

NAZ- 1100 net losers;

NDX- 15 GREEN;

OEX- 5 GREEN;

VIX- higher by 7.5% at 21;

Total volume under 1B with 5/1 down to up;

All the financials closed lower as did every one of the DJIA 30- and markets getting over sold yet again with the 1280 trend line on the SPX almost holding-

Could be turnaround Tuesday tomorrow -but I am in show me mode as I still expect SPX 1255 -maybe before the end of the week- and that would get me to cover my shorts.

MIDDAY MOVES

Markets continue to trade lower and just off the worst levels of the day- All the big financials trade red - the list includes BAC C JPM MTB USB WB WFC GS LEH LM MER MS RJF CME ICE NDAQ NYX BEN BLK TROW- so unless something starts to turn there expect the major indexes to finish at/near their lows.

Strong sectors- metals, ags and oils;

NYSE- 970 net losers;

NAZ- 800 net losers;

NDX- 20 GREEN;

OEX- 10 GREEN;

DJIA - 1 GREEN (XOM)- losers- GM AIG C BAC HPQ AXP HD JPM;

VIX - moving on up (8%) and now at 21.15-

Down volume 3X the up;

TRIN- 1.62

Trend line support on the SPX at 1280- a line of the lows since the recent bottom in July- which I suspect won't hold - may hold today but going forward still looking at 1255 area;

RSI (2) levels on major indexes:

SPX 25

DJIA 22

NAZ 23

RUT 28

LOWER OPEN

Markets flipped to red at the open led down by the financials as my screens show them all to be lower led down by FNM/FRE which are both down over 10% - and of course no mention of that on CNBC.





Speculators are buying metals, ags and oils and selling financials homies, brokers, gaming and real estate.





NYSE- 425 net losers;


NAZ- 420 net losers;


NDX- 30 GREEN;


OEX- 33 GREEN;





DJIA- 9 GREEN led by XOM CVX CAT AA BA MSFT MRK MMM with GM AIG BAC HPQ HD C AXP JPM all lower;





Winners- include -FMCN CDNS HANS JOYG STLD FWLT BRCM ATI AES COP AVP XOM SLB AEP CVX;





LOSERS- RF LEH WB MER S BK CBS HIG BAC USB SNDK UAUA SIRI VMED SYMC IACI DISCA LBTYA WFMI YHOO DISH;

VIX moving up by 5% at/near the 20.6 level;

Down volume 1.5X the down;

The SPX was again rejected at 1300 and that continues to be a tough area for the markets to get through-on the b0ttom - still looking for 1255 area as that is the 50% retrace from the 1200/1313 recent rangs. Toddo at Schaeffers also with some work on SPX 1300 and worth a read.

THE NUMBERS

Pre market futures are trading modestly higher as oil fluctuates between green and red, natty gas down 19 cents and gold/silver higher.

The SPX trading at a RSI (2) level at near 75 and the VIX a bit over sold at 19.58 and almost 7% below the SMA 10.

Volume has been very light of late and this week will probably be even weaker- note the volume last week on the NYSE barely hitting 1B share per day-

BESPOKE- on global P/E's and Dividend yields;

Farrell's rules;

Morningstar on the media;