PERFECTLY PRICED

Markets moving on up again but seem to be leaving the average stock behind as the DJIA is +100, NAZ +21 and SPX +8.5.





Problem - check the market internals as there a net of 100 green on the NYSE and 350 green on the NAZ- DOESN'T pass the smell test.





Sector strength in steel, shipping, trannies and oils while gaming, brokers, telecom and banks lag.





Comment by Dylan this AM on why the bad news isn't all priced in to the financials- well LEH was $16 a week or so ago and BOVE was pushing for a sale of Neuberger and a $10B price - and a $20 target on LEH once the deal got done- didn't excactly work out that way and the bad news clearly wasn't in the stock.

Taking a few days out at the beach and will be back on Monday- good trading and don't keep the trades on for too long either way.

THE OPEN

Markets trading up but I doubt most traders have great confidence that we will be significantly higher any time soon.

Strong sectors- steel, shipping, oils, emerging markets and metals while gaming, telecom, banks and brokers lag.

NYSE- 575 net winners;

NAZ- 450 net winners;

NDX- 60 GREEN;

OEX- 60 GREEN;

VIX- down about 2% and about 12% above the SMA 10;

Up volume about 2X the down;

SPX trading at/near 1230 and about 30 points above the recent lows- will they hold- I doubt it as sometime over the next few weeks I suspect they go lower on the next bit of bad news- which probably comes shortly from MER MS GS.

THE DISASTER

Markets closed at the lows and that should have been pretty pretty clear in the early afternoon.

LEH is the reason of the day as it dipped under Bove's target price of $20 to $7+ and it probably gets taken out for the standard price of $2- not sure by who but its probably coming.

No sectors in the green- with brokers, metals, steel, oils and homies the worst performers.

NYSE- 2400 net losers;

NAZ- 1700 net losers;

The exchanges very ugly with NYX ICE both down over 10% with NDAQ CME down about 7%- exchanges going out of business.

SPX at/near the 1225 level and approaching the all important 1200/1170 areas- bear market/bull market lows- and 50% retrace at 1170.

Yesterday was a pretty good tell that today would be ugly- just wish I was short more coming in but it is what it is- and everything going down as the world levers down.

Finally, now that Hank and his team have bought up FNM/FRE- where are the remaining bullits to stop a downward spiral? Oh and Jimmy looking for another bottom - now that all his others never held.

UGLY DAY

Markets have turned pretty ugly and its pretty clear that someone was doing something yesterday afternoon causing the DJIA to go higher while most stocks didn't.

Witness the A/D line today with 1700 net loser on the NYSE and 900 net red on the NAZ;

NDX/OEX- each with about 20 GREEN;

VIX- still no much fear at a hair under 24;

Down volume swamping up 5/1;

All the big banks/brokers/exchanges way down and Vince Farrell still defending his multi bottoms call in the financials- not sure why they keep putting him on TV;

LEH- down 35% and everyone wondering why- well not sure it matters as I doubt they get much business going forward and folks probably pulling their accounts in a repeat of the BSC fiasco- and how about Bove telling us this AM how smart he was telling everyone to buy BAC in the 20's forgetting how he told us to buy LEH at twice the price about 10 days ago.

Sectors in the green- none- with brokers, metals, steel, shipping, ags all crushed.

OPENING MOVES

Markets are generally higher with the DJIA/NAZ solidly green and the SPX flat -

Strong sectors- telecom, retail, biotech, drugs and tech while metals, ags, steel, oils, shipping and brokers lag.

NYSE- 250 net losers;

NAZ- 460 net winners;

NDX- 70 GREEN;

OEX- 50 GREEN;

IBD- 64 GREEN;

VIX- flat at 22.7 area;

Down volume a bit ahead of up;

Markets not giving me lots of confidence as the breadth on the NYSE continue to be red while the financials aren't participating- note GS and all big banks /brokers trading red.

Also, beginning to feel that if we don't go up near 1290 SPX soon - we are going back down near the 1215 lows from the other day-

THE CLOSE

Nice day for the SPX/DJIA crowd as they closed a little off the best levels but the RUT/NAZ/NDX not so much as they didn't get nearly back to the highs.

Strongest sectors- homies, banks, real estate, retail and insurance while metals, oils, ags, and shipping lagged.

Not mentioned on taut TV- the ugly action in GOOG RIMM AAPL - all down big today;

NYSE- 920 net winners but well off the 2,000 net green near the open;

NAZ- 600 net green compared to the +1500 near the open;

My suspicion is the PPT was back in business today- so in addition to grabbing FNM/FRE our money may have been spent on other equites as well.

I suspect that this rally is going to run its course shortly as this feels like back down we go when a day or two passes of the great bail out. Also a bit leery of DJIA dominated rallies - note of the 1.7B shares traded- over 50% was downside volume. Something is a little fishy on a huge upday.

THE TREND

Markets continue to confound most traders as we are well off the lows and the highs with the homies, banks, real estate, retail and utile leading while metals, oils, steel, ags and tech lags.

NYSE- 775 net winners;

NAZ- 425 net winners;

NDX- 45 GREEN;

OEX- 80 GREEN;

VIX +2% with the DJIA +170- a bit unusual;

Three big horses on the NAZ all trading ugly GOOG $420 -5% and looking a three handle - AAPL -3% AT $155 and RIMM down 6% at par;

The trend seems to be down on the day with pullups worth shorting - just could get tricky- still no great confidence either way.

And for what its worth- the best sectors per IBD:

MEDICAL RETAIL FOOD ELECTRONICS SCHOOLS LEISURE and INSURANCE-

TOP 10 IBD Stocks:

TITN CNQR CMED EZPW APEI DXPE ISYS BKE BABY QSII AFAM;

MID MORNING LOOK

Tough day so far as traders sold the open and wonder what to do now- My take - no clue from here if we close at the highs or the lows so sitting on hands.

Strongest sectors- homies, banks, retail, real estate, gaming and large value while oil service, semis, metals and steel lags.

NYSE- 1775 net winners;

NAZ- 1175 net winnners;

NDX- 75 GREEN;

OEX- 90 GREEN;

VIX- down 3% at/near 22.4;

Up volume 4X down;

Crude and gold a bit higher;

SPX resistance looks to be back at the 1290 number and so much for falling through support at 1200- thanks to Hank et al.

PRE MARKETS

Markets set to open way up with the SPX +35 or about 3%, NDX +30 or 1.7% and the DJIA +270 or 2.4%- surprisingly the biggest boost for the RUT - with those futures +24 or 3.5%.

The biggest winners look to UYG XLF IAI and all the big banks/brokers.

Oil and Gold both trading up about 2% while the EURO is down a bit at 1.422;

No idea if this will hold or not for now- so watching-

THE WEEKEND

Checking the charts - pretty pretty interesting as the NAZ/NDX seems to be falling as the dollar is climbing- many tech sales are over seas - hence negative exchange rates and lower profits and not going unnoticed.

The XLF also not going unnoticed - seems to be sticking with the bottom on July 15 (so far) while other indexes may not be dipping below (SPX 1200) but are getting pretty pretty close. And with FRE/FNM news out before the session tomorrow - these stocks could rip higher tomorrow like they did in the after hours on Friday.

Oil seems to be following the dollar or vice versa- but either way the trend is down- and even strong hurricanes don't seem to impact the price. And its kind of dumb to think the $100 level will hold since the 15 month range has been between $60 and $147.

Barrons with some good stuff this week starting with an interview of Charles Maxwell - an energy analyst at Weeden -

Maxwell sees a pretty pretty high price of oil going forward and the following are some highlights from the interview:

How high do you think the price of oil will go from here?

We will see $300 a barrel -- or roughly $250 in today's dollars -- because oil supply will be so short. If you want that oil, that's what you will have to pay for it. That will be in 2015, after the peak of oil [supply]. But even earlier, around 2010, more than 50% of the non-OPEC world will have peaked in its production of oil so the dependence on OPEC will become extreme. That will give OPEC a chance, I'm afraid, to lift prices rather more quickly on us than they are doing today.

Where do you see energy investment opportunities right now?

The tar sands, particularly those in western Canada, will be one area where the oil industry will continue. That includes companies like Suncor Energy (ticker: SU) and EnCana (ECA), both of which are on my buy list. They are integrated energy companies with big exposure to natural gas. EnCana has a deep asset base, huge North American land holdings and a disciplined management team. My target price, which is for the next 18 months to two years, is $112, compared with around $67 recently. My price target for Suncor is $90 (versus about $50 last week) but it might take three or four years to get to that level.

What kind of world can we expect to live in with all of these changes?

It will be a little simpler. Your friends are going to be a little closer to you than they were before. Your vacations are going to be a little closer to home. You are going to have lower temperatures in the house. We will drive smaller cars with less horsepower, but they will get 60 to 80 miles to the gallon, enabling us to stretch gasoline supplies a lot further. There are going to be thousands of new adjustments leading to new investment opportunities. But the adjustment to that rising oil price, which could take as long as 20 years, will be a very harsh social experience -- not only for our society, but for every society.

BESPOKE on the trade of the day;

Traderfeed on a new divergence;

The Big Picture with some good stuff;

The Pollster with the all the latest polls;

538 with lots of commentary and analysis;

Intrade- still showing about 58/42- with all the Sarah hoopla/nonsense;