GONE FISHING

MIDDAY LOSSES

The choppy day has now turned into a fairly ugly down trend - with ugliness in GE leading the way lower.

Sector strength in utils, biotech and drugs while energy, real estate, metals and semis lag.

NYSE- 300 net losers;

NAZ- 500 net losers;

VIX- lower by 6% despite the plunging DJIA /SPX;

Not playing the rest of the day as it may surge higher - so for now out and waiting for next week.

RSI (2) levels -

SPX 39;

DJIA 30;

NAZ 45;

RUT 57;

THE OPEN

Markets are bouncing around near the flat line with the DJIA +10, NAZ +2 and SPX +1.

Strong sectors- homies, drugs and utils while oils, real estate, gaming and semis lag.

NYSE/NAZ - flat internals;

NDX- 50 GREEN;

OEX- 60 GREEN;

VIX- down 5% at 47;

Commodities lower as the $$$$ seems to have a hit a short term support area;

Not expecting much follow through in either direction as most folks have probably folded the trading tent for the week- areas of interest on the long side DGP AAPL GS UYG-

THE CHOP

The choppy trade continues although I suspect the bulls may have won the day when the closing bell rings.

Strong sectors- small caps, ags, trannies, metals and shipping while real estate, utils, defense and banks lag.

Market internals - flattish;

VIX- down a bit at 50;

Up and down volume about even and small cap growth the big winner on the day.

The SPX 905 area looks to be support for now as its also the SMA 50- and for now the trade continues to be "buy the dip."

THE OPEN

Markets open lower but are off their worst levels- the DJIA -75, NAZ -14 and SPX 8.

Strong sectors- metals, shipping, ags, trannies and gaming while real estate, semis, defense and utils lag.

NYSE- 600 net losers;

NAZ- 270 net losers;

NDX- 25 GREEN;

OEX- 15 GREEN;

VIX- flattish at 51.4;

Down volume about 2X the up;

Gold continues to move higher at $870+ in light of the crushed dollar- EURO now at 1.43 and $$$$ index trading under 80 for the first time in quite a while;

Expecting a choppy day today with bulls trying to buy dips and bears shorting rallies in light of yesterday's massive ramp- I will probably playing UWM and SSO.

And Abby Joe is bullish expecting a year end 2009 SPX target of 1150 - Bob Doll - also bullish expecting a double digit return in 2009 from where ever the SPX ends the year. VALUE - any shot they replay what they said at this time last year? Unlike the bloggers- those archives will never see the light of day.

THE FIDDY

Kewl day in the markets for the longs as the SPX jumped over the SMA 50 and check what happened to the $$$ as interest rates are more attractive elsewhere.

Some good links today:

BESPOKE with before and after on SPX targets from analysts;

Morningstar and their DJIA discount;

Kiplinger with 6 reasons on why now;

Dr. Brett on the TICK;

KIRK with his EGGNOG;

CLOSING BELLS

Markets closed the day near the highs as the DJIA was +360, NAZ +82 and SPX +44.5.

Sector strength found in financials, brokers, real estate, gaming and ags while oil service and utils lagged.

Market internals very strong all day;

VIX- down 10% at 51;

Total volume ok at 1.5B and up volume swamping the down;

Next areas to look for on SPX include 945 on the upside as that is the next FIB retrace area- 1K by year end would be quite a move but its on the radar-

RSI (2) levels at near 85 on major indexes so don't be shocked by a pullback - probably quick and providing a good entry point.

THE MOVES

Markets are soaring on the heels of the FED statement and a 75bps rate cut- dollar dipping - EURO soaring- and SPX 900 in the front view-

Market internals never blinked and show 1700 net winners on the NYSE and 1300 net green on the NAZ.

VIX- down 5% at 54;

Up volume 9x the down;

Going forward - a buy the dip markets as fighting these rates and this fed activity may not be the wisest move- so probably time to get on board and stay long and strong.

THE OPEN

Markets are higher as Turn Around Tuesday strikes again with the DJIA +90, NAZ +26 and SPX +12.

Strong sectors- gaming, ags, brokers, intenets and banks while metals, real estate and oil service lags.

NYSE- 1560 net winners;

NAZ- 1200 net winners;

NDX- 90 GREEN;

OEX- 85 GREEN;

VIX- drifing lower- a hair below 56;

Up volume 6X the down;

SPX trying to break through the 883/885 area and stops may trigger on any break above- looking to go long SSO on pul backs as I suspect we may have a nice move higher before the day ends.

THE STRATEGY

The WSJ with an article this morning on how/why ETF's are driving the market and uh oh - messing with some of my strategy. BESPOKE with a little analysis on why "weak markets close at/near the lows and strong markets close at/near the highs. Its those darn steroided ETF's- doesn't really matter- as long as it works.

And if you hadn't seen it - check out the new strategy in Detroit.

THE CLOSE

Markets got a little jig in the final thirty minutes and closed well off the lows as it appeared that someone knows something that got them bullish.

Tomorrow is FED day and the anticipation of a 50 BPS cut is baked in the cake. My guess, yes a 50 point cut and probably higher stock prices (turn around Tuesday).

Still looking for an end of year rally in the last two weeks as low volume up days probably will be the recipe.

THE CHOP

The bulls can't seem to get this market higher but then again the bears can't seem to get it lower either so maybe every is waiting for what the FED guys have to say tomorrow.

Anyhow, DJIA 60, NAZ -33 and SPX -11.

Sector strength found in metals, oil service and shipping while financials, semis and telecom lag.

Market internals pretty constant at a bit more than 1,000 net losers on both the NYSE and the NAZ.

VIX higher by 5% at 57+;

Very weak volume with about twice as many to the downside.

A bit dull today but some bloggers are actually discussing the RSI (2) trading system- I like it for telling me how overbought or over sold the market may be - not a pure trading system.

The system says over sold at /near 25 on most major indexes- and looking for choppy trade for the balance of the afternoon.

THE OPEN

Markets are trading down as the 885 level on the SPX was sold - old support - new resistance- the DJIA -45, NAZ 17 and the SPX -6.

Strong sectors- energy, metals, gaming, shipping and ags while semis, banks, telecom and real estate lags.

NYSE- 650 net losers;

NAZ- 480 net losers;

NDX- 15 green;

OEX- 25 green;

VIX higher by 4% at 56.5;

Down volume about 1.5X the up;

Small cap value and tech the big losers so far with each down over 1%;

The sell off occurring a bit early so looking to buy the dip for an afternoon bounce- hey the bull market started a few weeks ago.

TECHNICALS SPX

Markets sank in the after markets on Thursday as news of the Madoff fiasco hit the wires. An ugly day was on the horizon but before trading ended - the markets flipped to green and ramped further after the close as the SPX Futs hit near the 885 level.

If you check the charts of the last few days, that 885 level was solid support until Thursday afternoon when the markets went straight down in the last few hours (rumors of the Madoff news).

Anyhow, we should open Monday somewhere near the 885 level unless some other piece of news hits before 9:30AM - and that 885 should be initial resistance as the old support area becomes new resistance. If we get past the 885 level - look for more resistance a hair above 900 and the SMA 50 at/near the 905/910- and one more - the 61.8 retrace from the 1,008 high to the 740 low near the 945 level on the SPX.

THE POMBOY

Barrons with a decent issue this weekend - highlight - the Stephanie Pomboy interview- these are the parts that I thought were particularly insightful:

Any other important longer-term trends you expect?

We are going to see a secular rotation from paper assets to hard assets like gold. The whole global competitive currency devaluation, including that of the dollar, plays right into that.

Do you see any asset classes besides junk bonds benefiting from a short-term rally?

There is a chance that equities participate in that rally as well, although I think investment-grade corporate credits look much more attractive than stocks. But when you think about pension funds that are trying to make 8% annual returns, they are not doing it by getting 1% on two-year Treasury notes. They can't use the secret sauce of leverage anymore.

If I was going to hold my nose and buy anything, I probably would buy higher-quality corporate credits. If you want to get long socialism, one of the next segments of the market that will be given a guarantee will be municipal bonds. That's because state and local governments are a huge share of total [gross domestic product] and employment, and we can't afford to have them down for the count.

So if foreign investors stop buying Treasuries, or even significantly pare their buying, that means higher rates in the U.S.?

That's correct. But then [Bernanke] will start buying Treasuries to arrest the rise in interest rates. I've always had a very simplistic view about this:

Either we are going to pay for our policy sins via higher interest rates or a weaker dollar. And for an economy that is as levered as the one in the U.S. is, the former choice is not an option. We can't pay through higher interest rates; we barely got to 4.5%, 5% before the whole subprime crisis erupted. So a weaker dollar is the natural valve. But right now, we are enjoying some real competition in the ugly contest from the currencies of the European Union and the United Kingdom, and that will probably persist for a while because they are in pretty bad shape, and they are a little bit behind the curve relative to us.

BESPOKE with some interesting work on the recent rally;

The not so ROSIE outlook;

Dr. Brett on munis and on Trading Screens;