BACK ON MONDAY

MIDDAY CHOP

My trading platform (TS) still with issues so just watching the chop and losing dollars to it- anyhow:

CNBC all excited about the 3 cent dividend raise at JNJ - clearly a bull market in pain relief and band aids. I think UPS is the real story of the day and just wondering if they or AAPL is the true tell of the day. Anyhow- JNJ down 2% as I type.

Gold also quite the story today as it moves on up through $900 and is testing the $910 level.

Market internals continue to worsen- NAZ- 900 and NYSE -440;

Other economic readings -not so great:

The IMF just downgraded its global growth outlook … again: The group now expects the world economy to sink 1.3% this year. That comes against its January projection of +0.5% growth. This time last year, the IMF was looking for global growth to come in at 3.8% in 2009. Advanced economies are expected to continue to lead the global economy on the way down, shrinking 3.8% this year. Emerging economies are forecast to eke out a 1.6% growth rate this year. Witnessing an outright contraction in global GDP, as the below chart attests, is unprecedented (data back to 1970). Take a look at page A9 of today's Wall Street Journal, "IMF Says Global Recession Is Deepest Since Great Depression".

Universities fall on hard times: Some colleges across the country are so financially-strapped that some are selling off school radio stations, paintings and dipping into their endowments to stay afloat, causing anger among many donors. Have a look at the front page of today's WSJ, "New Unrest on Campus as Donors Rebel".

If the earnings out of the nation's big health insurance companies are any indication, Americans are losing their health insurance at a rapid rate. According to the Kaiser Family Foundation, for every percentage point increase in the unemployment rate, the number of uninsured grows by roughly 1.1 million. For more, take a look at page B1 of today's WSJ, "Health Plans Lose Members Due to Layoffs".

OPENING CHOP

Markets open lower on the heels of a mixed bag of earnings news - good from AAPL EBAY RTN and bad from UPS.

Strong sectors- gaming, banks, metals, internets and real estate while biotech, semis, homies and shipping lag.

NYSE- 260 net losers;

NAZ- 650 net losers;

NDX- 30 GREEN;

OEX- 40 GREEN;

VIX- flat at 37.8;

Gold higher by $9 at/near $900;

Lots of cross currents and lots of chop this morning as the ES held the 833 level and is now heading back to the pivot at 842. Clearly some heavy over resistance remains at the 860 area so plenty of chop probably for today and tomorrow.

My platform having some issues this morning so probably going to sit on the sidelines and watch the chop closely.

CLOSING BITS

Market turned tail in the final hour and gave up all the gains except for the NAZ/NDX which continues to be the strongest area. SPX -6.5, DJIA -85 and NAZ +2.

Strongest sectors- gaming, semis, homies, trannies and telecom while real estate, banks, drugs, utils and brokers lagged.

NYSE- 90 net green;

NAZ- 200 net green;

NDX-60 GREEN;

OEX- 33 GREEN;

VIX- higher by 2% at 37.85;

TRIN 1.5- and down volume about 1.5x the up;

Ugly turn around after a strong morning rally led by big cap tech- which still finished mainly green but not nearly as strong as the AM prices.

SPX areas to watch - the 840 area for support and if we bust under - the next stop is the 825/828 level- and then 805- I doubt we get there but those are levels to watch.

Note the strength in semis with the SMH closing up 2.75%.

AAPL earnings this evening and that should be an interesting tell for sell the news watchers- and its trading down at 4.10 pm.

More fun stuff from Rosie:

According to the IMF, global losses from the credit crisis could hit $4.1 trillion by the end of 2010. Banks will shoulder about 61% of the writedowns with insurers, pension funds, and other nonbanks assuming the rest. The IMF projects losses of $2.7 trillion at US financial institutions. That's up from their $2.2 trillion estimate in January and $1.4 trillion estimate in October. For more, see the Bloomberg News article on this file, "IMF Says Global Losses from Credit Crisis May Hit $4.1 Trillion". Probably doesn't bode well for the fins- eventually.

Retail sales looking very soft again: ShopperTrak reported that year-on-year retail sales plunged 11.5% in the week ending April 18th. We see that another part of consumer discretionary -- media -- is also under downward pressure (U.S. newspaper print advertising plunged 20.6%).

For a look at how the problems in commercial real estate are likely to intensify, look no further than page C1 of today's WSJ, "In Atlanta, Irrational Building Exuberance". Four upscale office buildings are scheduled for completion within a year and none of them have any leasing activity. Another $600 million outdoor shopping mall underway has suspended construction to save money.

Home appliance shipments sink in March: According to the Association of Home Appliance Manufacturers, shipments of major home appliances sank 11.7% YoY in March, with declines in electric ovens and dishwashers leading the way. We would also point out that the outlook for home appliance sales does not look good either. In the Conference Board's latest consumer confidence survey, the segment measuring plans to buy a major appliance within six months dropped to 24 in March from 25.0 in February.

For a look at how the problems in commercial real estate are likely to intensify, look no further than page C1 of today's WSJ, "In Atlanta, Irrational Building Exuberance". Four upscale office buildings are scheduled for completion within a year and none of them have any leasing activity. Another $600 million outdoor shopping mall underway has suspended construction to save money.

AFTERNOON FAKE

Markets sold off after the opening euphoria and are now trading flat on the DJIA, +5 on SPX and +21 on the NAZ.

Strong sectors- gamings, semis, homies and trannies while drugs, real estate, utils and banks lag.

NYSE- 1050 net green;

NAZ- 520 net green;

NDX- 75 GREEN;

OEX- 55 GREEN;

VIX- near the unchanged level at 36.6;

TRIN- .97 with up volume about 2x the down;

Gold higher and crude lower;

Markets in the buy em lower sell em higher mood as the trend followers are now getting whipsawed ugly-

Decent day trading day with good profits on QLD - small loss on IYR and still riding MS - a close near the highs- ? Don't be surprised as the internals have held up through all the down drafts- and it seems there are lots of folks leaning short - and having to cover.

THE EUPHORIA

Markets open lower on the heels of crummy news from MS but quickly turn to green led by the NAZ/NQ as all the big cap tech stocks trade up.

Strong sectors- semis, tech, homies, telecom and brokers while drugs, utils and junk lags.

I guess if you want to write a script for a bull markets - those are the sectors that you want leading and lagging.

NYSE- 700 net green;

NAZ- 325 net green;

NDX- 75 GREEN;

OEX- 55 GREEN;

VIX- down 2% at 36.4;

TRIN- .7 with up volume about 3x the down;

Gold and crude near flat;

Looks like a nice bull market once again as the lower open was quickly bought led by techs and semis- I sold my QLD a little quickly but looking to buy pull back and I expect to get plenty of opportunities-

RSI (2) levels at 65 on major indexes and of course we have the SPX 875 resistance to contend with eventually - probably business for next week.

THE CLOSE

Markets closed at the highs as all the bad news from yesterday and this morning seems so far away- SPX +17.5 and NAZ +35.6.

Strong sectors- banks, real estate, brokers, homies and energy while metals, drugs and biotech lagged.

NYSE- 1760 net green;

NAZ- 1350 net green;

NDX/OEX- about 80% green;

VIX- down 5% at 37.3;

TRIN- .55 with up volume about 7x the down and fairly heavy at 1.6B + shs traded;

ES continues to move higher in the after markets as the highs from a few days ago come back on the radar- SPX 875- although lots of work to do between now and there about 20+ points.

Earnings tomorrow from MS and that will be interesting - sell the news? Probably- and got long some IYR in the final hour for a day trade and that thing trades like a 3X ETF even though its a single- and a fun trade.

AFTERNOON TRADE

Markets are higher but seem to have moved into some stiff resistance at/near the 845 pivot area on the SPX - corresponds with around 842 on the ES. SPX +9.5 NAZ +22 and DJIA +62.

Strong sectors- banks, real estate, brokers and homies while metals, semis, biotech and drugs lag.

NYSE- 1400 net winners;

NAZ- 1100 net winners;

NDX- 75 GREEN;

OEX- 70 GREEN;

VIX - lower by 5% at 37.35;

TRIN- .55 with up volume about 5x the down;

Gold and crude near unchanged;

Looking for chop the rest of the day as t SPX 845 appears to be stiff resistance- on the down side probably no lower than the 825 area seen early this morning - My trade this AM was IYF and am gone now- MS interesting into earnings and the FM crew all over it- we will see.

MORNING TRADE

Markets open lowered but quickly flipped to green and have settled back in the red except for the NAZ/NDX and the RUT- The SPX -2.5 and the NAZ +4.5.

Strong sectors- shipping, internets, defense and brokers while banks, gaming, drugs and real estate lags.

NYSE- flat internals;

NAZ- 250 net green;

NDX- 60 GREEN;

OEX- 45 GREEN;

VIX - flat at 39.5;

TRIN- 1.45 with down volume almost double the up;

Gold up about $5 and crude down another buck at $47.5;

Markets looking like a slow choppy drip lower day but not as exaggerated as yesterday- support areas at 825 on SPX - and expecting lots of opportunity from both sides-

PRE MARKETS

Markets set for a lower open as earnings pour in and they aren't looking so great.

ES-6.5;

NQ-6.25;

YM-67;

Yesterday was ugly and it brought back memories of pre March trading- just a drift lower all day and a close at/near the lows.

The VIX is above the SMA 10 as it moved up about 15% yesterday and the RSI (2) level on major indexes is over sold and trading near 15.

BAC - trading down another 6% this morning at around $7.5 per share - folks apparently not happy that the government may want to convert the preferred to common and dilute the current owners- Also a fear that the balance sheets of the big banks are actually not improving but getting worse - hmmm - where is Kudlow and his mustard.

GS MS JPM RF BK C WFC CAT MRK DD AXP IBM GE all trading lower -

A few other things:

Student loan defaults surge: According to the Department of Education, default rates for federally guaranteed student loans are expected to hit 6.9% for 2007. That's up from 4.6% in 2006 and is the highest rate since 1998. Default rates on student loans are jumping as graduates buckle under rising tuition costs and a weakening jobs market. For more, see page D1 of today's WSJ, "Student Loans: Default Rates Are Soaring".

Commercial real estate crumbling: According to Moody's, commercial property prices in the US dropped 21.5% through February from their October 2007 peak. Properties acquired in 2005 are now falling enough in price that, on average, most are worth less than when they were purchased.

As a sign of just how sharply the high-end real estate marketing is crumbling, take a look at page A6 of today's WSJ, "Sign of the Times: Manor Price Cut by $50 Million". In what may be the biggest home price cut ever, the Greenwich, CT manor house of the late Leona Helmsley is now going for $75 million. A year ago it was listed at $125 million.

Dougie Kass apparently coming out with a portfolio on his rm site- not sure why its much different than SPY + cash.

BESPOKE with an analysis of yesterday's trading and clearly the best became the worst.

Bill on commercial real estate.

And of course the BIG LEAK from yesterday- and it better not be true-

The A/D line and trend/range trading environments;

JIM ROGERS- i don't think so;

THE UGLY CLOSE

Markets closed at/near the lows - the SPX anyway as it closed down 37 at 833 while the DJIA was down 290 and the NAZ -65.

Strong sectors- metals, bonds, utils and drugs while fins, real estate, shipping and homies lagged.

NYSE- 2500 net red;

NAZ- 1860 net red;

NDX/OEX- 7 GREEN out of 200;

VIX - up 16% at 39.4;

TRIN- very ugly at 2.9 with heavy volume and 30x to the downside;

The words most bulls don't want to here is how the market closed way lower on heavy volume - and that is what we had today.

Next areas of support at/near 825/830 on SPX as the 90/100 SMA's come into play. And the fins were just awful - as BAC was down 24% BKX red by 15% and JPM -10%;

So all eyes will be on the financials tomorrow to see if they can get their jig back.

MIDDAY DOWNER

Markets continue to trade lower as the DJIA is now down 255, NAZ -60 and SPX -33.

Strongest sectors- metals, bonds, utils and drugs while banks, shipping homies and real estate lags.

NYSE- 2460 net losers;

NAZ- 1800 net losers;

NDX- 4 GREEN;

OEX- 3 GREEN;

WINNERS- SO ABT HAL JAVA AMLN CHKP NTAP;

LOSERS- FLEX LINTA FWLT STLD MICC VMED NIHD WYNN C BAC RF COF WFC USB AXP XRX;

VIX- higher by 15% at 39.1;

TRIN- 2.08- down volume over 20x the up;

Gold higher by $18;

Market internals as bad as they get and a close at the lows is probably in the cards- presently short SRS and SDS and looking to add on pullups;

Heading to oversold territory as the RSI on the SPX has already gone under the 20 line.

THE OPEN

Markets open lower and trend day after the open as the SPX is down 23 and the NAZ -45.

Strongest sectors- metals, bonds, drugs and internets while energy, real estate and fins lag.

NYSE- 2200 net losers;

NAZ- 1560 net losers;

NDX 10 GREEN;

OEX- 15 GREEN;

VIX higher by 10% at 37.45;

Gold up and crude down;

Areas of support on the SPX seem to be at 840 and 830 after that which is the SMA 100. Its pretty ugly for now and unless the bulls get some jig quickly it could be one of the down 300 days and a close on the low.

PRE MARKETS

Equity markets set to open much lower this AM as over bought is probably the word - in addition ORCL to buy JAVA-

ES -13.25;

NQ -23;

YM-106;

Gold up a bit while crude is near the unchanged line.

Checking the technicals on the SPX - the 875 area was the high on Friday and the high area on January 28 and Feb 9- in addition the 23.6% FIB retracement from the 1575 high in 2007 to the March 2009 low of 666 - is about 880- so just a heads up.

BAC with earnings this AM and the sell the news seem to be the trade as it is trading down 7.5% at $9.8 while JPM is down 3% at $32.25. GS/MS also down about 2.5% as folks take some profits.

Elizabeth Warren with Jon Stewart the other day and she had some great analysis - and some commentary on how to avoid future shocks to 401K holders.

BACK FROM THE BEACH

Markets continue to move up with hardly a hiccup - and as one would expect they continue to be overbought-

RSI (2) levels on major indexes as follows:

SPX - 86

DJIA 81

NAZ 88

NDX 85

RUT 88

MID 90

In addition, the VIX is finally heading lower as it sits more than 10% below its SMA 10 which has been a useful sell signal in the past- Of course in the days of 2X and 3X ETF's - it hasn't worked as well-

Why buy options when one can buy those over leveraged ETF-s that don't expire - and don't exactly match the movement of their underlying benchmarks either.

In Barrons- David Rosenberg from BAC (MER) still not a big believer in the rally- these are his thoughts and comments as told to Abelson:

He points out that the two groups that paced the sharp upswing were financials and consumer cyclicals, in which there are, respectively, net short positions of 5 billion and 2.7 billion shares. Which strongly suggests that not an insignificant part of the rally has been provided by shorts running for cover.

He also points out that the Russell 2000 small-cap index is up 36% since the March low, and has outperformed the S&P by some 980 basis points. As David says, "the last time it pulled such a massive rabbit out of the hat" was in the stretch from late November to early January, and the major averages proceeded to make new lows two months later.

Another amber light he spots is investor confidence. Over the past five weeks, he reports, Rasmussen, which takes a daily reading, has seen its investor-confidence index surge 32 points, an unprecedented climb in so short a span. This could be, he suspects, a "fly in the ointment for a sustained equity-market rally."

David has four markers that will signal to him that the economy is finally making the turn and starting an extended expansion. The first is home prices. The second is the personal-savings rate. Marker No. 3 is the debt-service ratio, and No. 4 is the ratio of the coincident-to-lagging indicators of the Conference Board.

Aggregating those four markers, he calculates that we are roughly 44% of the way through the adjustment process. That is a tick up from where we were last month. However, the improvement, he laments, has been very modest and very slow.

We should add that he also stresses that it's critical for both the economy and the market that payrolls stop shrinking. All the talk about jobless claims "stabilizing" is so much poppycock, he snorts. That number of claims, he notes, is still consistent with monthly payroll losses of around 700,000. As with industrial production, which is also in a vicious slump, employment must stop falling before a recession typically ends.

"Call us when claims fall below 400,000," he says, which is his estimate of "the cut-off for payroll expansion/contraction."

Until then, he warns, "the recession will remain a reality. Rallies will be brief, no matter how violent, and green shoots are a forecast with a very wide error term attached to it."

A few quick links;

VIX+MORE on capacity utilization;

The usual great stuff from BESPOKE;

The magic at Citi;

How long before this hits the radar big time?;

Best of luck to Alpha and Upside;