THE OVERSOLD

Equities way oversold as of the close Friday with an RSI (2) reading on the SPX at 1- also note the SPX is about 10% under the 10 day SMA - so a bit over done to the down side.

Market internals - ways over done to the downside with a 5 day moving average of the advance/ decline line near a negative 1,500- and one doesn't see those kind of over sold numbers often.

The VIX - not so frightful as we are just under 50 and only about 8% above the 10 day SMA.

The NAZ/NDX continues to act way better than the SPX as it was about flat yesterday while the SPX lost 9 points or well over 1%. Not that many financials in the NDX 100- to be exact there are zero and now that is a pretty good thing.

Real Estate and REITS had a monster rally in the final 2 hours (+6%) and I suspect that was all about some week end short covering and that area may be ripe for shorts on Monday.

THE CLOSE

Markets rallied but couldn't close green as the SPX was down 9 at 770 and the NAZ at 1441 down about 2.



Strong sectors - real estate, metals, telecom, internets and semis while shipping, defense, energy and utils lagged.



NYSE- 1575 net losers;

NAZ- 1170 net losers;



VIX- higher by 5% at 49.45 and about 8% above the SMA 10;



GOLD up $20 at $994.



Should be an interesting weekend but if nothing good happens I expect a sell off on Monday and a retest of today's lows.



RSI (2) levels on most major indexes near 1 except the NDX which is at 25 - so yest that long NDX short DJIA has worked very very well.



RUT very ugly and if the rally comes that will probably be the best place to be.

THE RALLY BEAST

Beast of a rally as the rumor is that JC FLOWERS will inject money into BAC - just how much and will they become part of the government?

Note as the market flips to green the internals are still showing 2,000 net losers between the NYSE and NAZ.

Should be an interesting last 60 minutes.

Also, remember how BOVE who just said BAC was the buy of a life time declared LEH a great buy based on the value of Neuberger Berman- Bove V Whitney - I give it to Whitney who said yesterday that C was worthless.

THE FEAR

Markets set to close at/near the lows as market internals are all a disaster- check the following stocks:

GE - hitting an 8 handle and down 10.5%;

BAC $2.75 and down 31%;

C $1.66 and down 33%;

WFC $9.19 and down 24%;

RUT - down 3.35% and worse than the DJIA SPX NAZ NDX just for what its worth.

THE OPEN

Markets recovering off the lows as the gap fills on the NDX and the NQ futs- presently SPX -7 and NAZ -2.

Strong sectors-semis, gold, telecom, gaming, internets and tech while banks, ags, brokers and shipping lags.

NYSE- 1800 net losers;

NAZ- 720 net losers;

NDX- 50 GREEN;

OEX- 10 GREEN;

VIX- flat at 47.3;

TRIN- 1.16- down volume 5x the up;

Gold UP $16 at $992;

Markets diverging and the long NAZ short DJIA back in play as tech and semis start to lead. Not expecting a great rally today as its Friday and typically not a day when folks load the boat with longs. So probably some chop but probably play it from the long side with QLD and the short side with the financials or DXD.

MORE NUMBERS

Futures tanking again in the early morning hours with YM -96, ES -11 and NQ -15.

RSI (2) levels on those futures:

ES 1

NQ 3

YM 1

TF (RUT) 1

Checking on some performance numbers over that past few weeks - how have various country indexes fared:

Januray 28 (general recent highs) through yesterday-

SPX -10.9%

NDX-5.5%

VIX +18.7%

EWA UNCHANGED

EWZ -2.7%

EWC -12%

FXC -3.4%

EFA -11%

FXI -1.4%

GLD +9.6%

So for all those looking for a safe haven in asset rich Canada not so much as the places to be were China Australia and Gold.

KASS THE BULL

KASS THE BULL!!!!!!!

THE UGLY

Markets closed near the lows as Whitney from Whitney co- scared us all with the C is worthless rant with Maria- well exactly how far does it have to fall to zero -thanks.





Anyhow, market internals started the day very green and ended very red- one big loser on the day GE - ugly at $10 and if that continues to fall - ugh.





I know that Dougie Kass is about as bullish as he gets with all kinds of bullish posts and a favorite long in SSO- a tough trade so far.





NYT just announces they are suspending their dividend- well at $3+ for a share - we know when that dividend is coming back.





Just wondering what will get us a decent rally and just can't come up with anything yet-so probably tomorrow- sold some TWM today- and will probably reload if this market ever does rally for a longer term trade.



Just a few more links:

The Inevitable;

The Sluggish VIX;

THREATDOWN;

More Pivot Points;

More Roubini;

MIDDAY SNOOZE

Markets bouncing a bit off of SUPPORT at SPX 780 but not sure it will hold for the close.

Strong sectors- energy, ags, telecom and retail while homies, banks, semis and tech lags.

NYSE- 600 net losers;

NAZ- 275 net losers;

NDX- 35 GREEN;

OEX- 45 GREEN;

VIX - down 4.5% at 46.25;

TRIN- 1.05- Down volume 1.5x the up;

Gold down $9 at $975;

Markets bouncing around and tough to say what will happen by the end but this fish is expecting a bit of a bounce before long. Maybe even one that doesn't get sold immediately. Long DIG 23.65.

THE OPEN

Markets are higher but hardly ripping with the SPX +8 and the NAZ +13.

Strong sectors - energy, shipping, ags, telecom and retail while metals, banks, tech and semi lag.

NYSE- 1150 net green;

NAZ- 860 net green;

NDX- 80 GREEN;

OEX- GREEN;

VIX- lower by 5.5% at 45.85;

TRIN- 1.22 - Up volume double the down;

Markets just bouncing around as oversold rallies get hit my by a bad number - (philly fed) - out of my SRS trade for a small gain - just waiting now for another chance.

PRE MARKETS

Futures are ripping higher in the pre market as the HPQ news is old and the over sold condition looks to take hold.

Some links from the overnight session:

TOP 30 of 30;

The Oracle - not such an Oracle any more;

Five states that could go BROKE;

East Europe on the BRINK;

Investment grade Default risks;

Reasons for Optimism;

Michele Bachmann - back in the news;

Another false hope?;

The Missing Cousin Vinny?

Good money after Bad?;

PRE 4 ENDING

A fairly uneventful day in the markets as equities flip flopped between the flat line depending on the news and the speaker,

NYSE - 1350 net losers;

NAZ- 600 net losers;

VIX - down 5% at 46 despite flat markets;

Down volume about 2x the up;

TRIN- .75;

Gold - up $16 at $986+;

RSI (2) levels under 5 on most of the major indexes while the VIX is about 5% above the SMA 10;

Seems to be a day traders market for now and that is what I intend to do tomorrow- will gauge direction when I see some numbers.

FALSE RALLY

Markets are trading slightly lower but the internals are telling quite a different story.

NYSE -1385;

NAZ -525;

OEX 33 GREEN;

NDX 50 GREEN;

As I mentioned on my TWITTER page- country CDS rates soaring and EURO sinking as lots of folks now fearing Eastern European debt-

COUNTRY CDS SWAPS AS FOLLOWS- IRELAND 395 GREECE 285 ITALY 198 SPAIN 170 US 94 FRANCE 85 GERMANY 77-

Closed out my JPM for a nice gain and looking to short the pullups for now as the internals are telling a pretty grim story.

THE OPEN

Markets chopping near the unchanged line but internals on the NYSE show a different story.

Strongest sectors- banks, ags, tech and internets while metals, homies, shipping and midcaps lag.

NYSE- 900 net losers;

NAZ- 220 net losers;

NDX- 35 GREEN;

OEX -45 GREEN;

VIX - up 1% at 49;

Down volume 1.5X the up;

TRIN- 1.01

Gold down $6 at $964;

Shorted some JPM as banks rallied but that is now turning my way- looking to short REITS on a bounce SRS- and FWIW - sectors turning red in a hurry as I type.

TRADING UP

Futures are trading up a bit and are a hair above fair value. Markets are way oversold with RSI (2) readings of 4 on SPX and 6 on the NAZ.

Dick Arms on realmoney.com looking for a turn:

"The best that can be said of yesterday's market is that after the initial decline, it held, just above the November lows. The weakness late last week, and continuing into this week, has been enough to put the averages below the October lows, and therefore negate the possible inverse head-and shoulders we were hoping to see. But we are still trying to make a stand at the old lows. In the meantime, it is interesting that even the most discouraging news is having a smaller effect than it would have had in October and November.

One positive is the very oversold condition of the Arms Index moving averages. Because of the very big number that went into the series last Thursday, the five-day and the 10-day remain at extreme levels, suggesting a rally is imminent. Also, the longer-term indicators suggest we are in an important basing area.

Another encouragement in the midst of despair is the lack of heavy volume to the downside. The slide is due to a lack of buying rather than heavy selling. That continues to imply we are likely to soon turn higher."

Some good links:

TICKER SENSE with a look at SPX 800;

ROUBINI in the WSJ;

Telling when the economy is improving;

The RIGHT thing;

$30 B to avoid failure;

IF only;

The TEST;

Best and worse since 11/20;

THE CLOSE

Markets did what they were supposed to do - close at/near the lows and anyone who weathered the volatility and waited for the end of the day to dump shorts was well rewarded.

VIX- higher by 12.6% at 48.4 and about 10% above the SMA 10;

Market internals horrific and their moving averages are way over sold;

One guy who decided to get way long today - Kass - and if you get the realmoney.com site- his article is pretty pretty good.

As for the aforementioned longs QLD/DIG- not yet as the market just rolled over big as I published.

THE LONGS

Markets making a small recovery into the close and this fish will buy some longs near the bell-

RSI (2):

DIG 1

QLD 9

Both with tight stops under today's lows.

THE LOWS

For all the DJIA watchers and FWIW - check this- the recent low on the DJIA 7450 - and we are about 2% above as I type.

Check the other recent lows on the major indexes:

SPX 741 or about 7% below;

NAZ 1295 or about 14% below;

RUT 371 or about 16% below;

NDX 1018 or about 17% below;

CNBC still watching that all important DJIA bottom-

MIDDAY LOOK

Markets still a way down with very little in the way of a bounce. SPX -33, NAZ -56 and the RUT -16 and out performing the other indexes.

Strong sectors - gold, drugs, biotech and corporate bonds- weakest- banks, ags, oils, shipping and semis.

NYSE- 2630 net losers;

NAZ- 1720 net losers;

VIX- higher by 16% at 50;

TRIN- 1.22 - down volume about 18x the up on the NYSE;

GOLD higher by $31 at $973;

Only question for the day is if we close at/near the lows and my suspicion is yes.

THE OPEN

Markets, as expected, crushed in the opening 30 minutes of trade as all sectors except gold are lower.

SPX -33 and NAZ -60.

Worst sectors- shipping, ags, financials, energy and brokers.

NYSE- 2455 net losers;

NAZ- 1640 net losers;

NDX/OEX- 2 GREEN on each;

GOLD at $970;

VIX - higher by 19% at 51;

Down volume about 20x the up on the NYSE'

TRIN- 1.6;

We have broken below 800 on the SPX and way below 1200 on the NDX- not expecting much of a bounce today but shortly as markets are way oversold yet again- and betting short from these levels hasn't been a winning trade.

THE FUTURES

Markets look to be clobbered at the open as most foreign markets are way down:

Nikkei-1.4%

Hang Sang-3.8%

FTSE -1.6%

DAX -2%

WMT beats by 4 cents - misses on revenue and guides Q1 EPS in line;

SPX futures hovering just above the 800 level while the NDX is a hair above the old support area of 122;

RSI (2) levels on the futures as follows:

ES 6

NQ 12

YM 6

RUT 6

Trader Mike with his technical take;

Hulbert looking at some good news;

The weakest housing markets;

The usual for Donald as I believe every publicly traded corp of his has ended the same;

And the biggest news out of Tampa;

ANOTHER CRUSH

Looks like it was a good thing that futures closed at 11:30 EST time as they tanked and looked like they were heading to ultimate support on the news out of Japan courtesy of the WSJ;

"Data released early morning Asia time showed Japan's gross domestic product contracted 3.3% during the October-December period from the previous quarter, more than the 3.1% forecast in a Dow Jones Newswires poll. It declined 12.7% on an annualized basis. The double-digit drop marked the economy's third straight quarter of shrinkage, and was the fastest contraction since January-March 1974."

I suspect this dip get bought in the morning- if not tonight.

EVEN UGLIER

Some ugly year to date numbers and my guess is the markets are actually worse than the media admits:

SPX -8.5%

DJIA -10.5%

NDX +2.1%

NAZ -2.7%

RUT -10.2%

MID -6.1%

BKX -41%

C -48%

BAC -60%

JPM -22%

XLF -29%

GS +14%

MS +43%

IYR -23.7%

RMZ -27%

MSH +3.2%

SMH +2.8%

GOOG +16%

AAPL +16%

WMT -17%

GE -29%

Tech acts well and out performs big time - lets see for how long - and maybe some reversion to the mean (doubt it).

And the chart- GE vs. SPX.

THE WEEKEND

Its the weekend and a long one at that so some stuff-

Barrons telling us all how to fix the economic mess:

"IF PRESIDENT OBAMA AND TREASURY SECRETARY GEITHNER want to fix America's financial system and pull us out of recession, they should take $200 billion of "TARP" money and give it to banks and other institutions that hold subprime mortgages and related securities. The government would do this on the condition that the money be used to cut the principal amount of the nation's roughly $850 billion of subprime mortgages by about 25%. Monthly payments would be trimmed accordingly. This would give homeowners in the subprime category a better chance of repaying their mortgages, and in many cases it could put their principal amount below the current market value of their homes, reducing the temptation to walk away from their obligations. The plan helps the banks and other mortgage holders by giving them funds that could be used either to invest in the credit markets, make new loans or absorb the losses required to sell off the toxic subprime mortgage assets. Banks could also use the funds to offer relief to troubled borrowers who have prime mortgages. All of these activities would bolster the economy."

I think its a fine idea- but how many Republican votes would one get for this type of plan- my guess- about the same as voted for the current stimulus plan a few days ago.

Barrons also with some top dividend paying stocks to accumulate:

RAI 8.7%

EQ 7.8%

MO 7.7%

T 6.7%

VZ 6.2%

IGT 5.9%

MDP 5.9%

LO 5.7%

PPG 5.7%

BMY 5.5%

LLY 5.4%

MRK 5.2%

WHR 5.2%

HNZ 4.8%

JWN 4.7%

KFT 4.6%

KMB 4.6%

ETN 4.4%

PFE 4.4%

VFC 4.4%

The problem with the list is that many of the companies were probably on a similar list a few years ago when the dividend yield was a lot lower and the prices a lot higher.

In addition I bet some similar lists were printed elsewhere with names like GE JPM C BAC GM et al also looking like safe smart dividend plays.

Barry with the stimulus package explained;

BESPOKE on the sector winners and losers;

DR BRETT with some good daytrading stuff;

Finally- Farley from RM Columnist Conversation and his newsletter:

"all major indexes have printed weekly Stochastics crossovers at oversold levels, despite Friday's chop and slop session. This is a bullish signal that might herald the start of a bear market rally up to the three- month highs. At a minimum, the signals are warning us to avoid the short side, except for a few targeted plays, and to shake off our negativity for now.

Well ok - I think the NAZ/NDX is even in a slight up trend and on days when the DJIA out performs the markets, I would put on Long NAZ/NDX vs. Short DJIA.