MORNING LOOK

Markets have traded predominantly red this morning with some fits and starts higher and lower. As I type - SPX -8, NAZ -29 and the DJIA 34.

Strongest sectors include - drugs, biotech, metals and consumers- lagging are tech, internets, semis, homies, banks, real estate and oil service.

NYSE- 800 net losers;

NAZ- 700 net losers;

NDX 25 GREEN;

SPX 140 GREEN;

VIX flattish at 23.65;

TRIN - 1.15 with up volume half the down;

RSI 2 levels way down this morning with the SPX at 60 and the NAZ 50;

Looking for churn this afternoon and will be back at it on Monday as I doubt we go far in either direction the rest of the day.

NOT NORMAL

Despite the poor numbers from AXP AMZN and MSFT last night futures are trading slightly higher as I type but below fair value. Strength probably attributable to overseas markets which are ripping higher again.

The SPX is about 8.5% above the SMA 50 and the last time we had a stretch that far was back in the beginning of June - at the prior highs and just before a significant sell off.

Really don't have to mention how overbought we are - but FWIW the RSI has closed over 90 on the SPX for the last 8 days - not sure what kind of record that is -- but it quite unusual- just like the sell offs last year - overshooting to the downside and now the viscous rally to the upside -

Larry Connors commented on Wednesday that about once a quarter the markets will go on a one way move - but there has never been a time where the market didn't reverse to some degree on a short term basis-

I suspect today is going to be turnaround Friday - not sure I want to short - but I do want to get longer wants some short term oversold conditions hit - and they will.

CLOSING NUMBERS

Markets closed mixed with the DJIA -35, NAZ +10 and the SPX -.51.

Strong sectors- homies, semis, internets, trannies, brokers and banks while oil service, energy, ags, biotech and drugs lagged.

WINNERS- SBUX ISRG EBAY LLTC LBTYA GRMN WYNN C AAPL USB DOW RF TGT LMT F;

Some kewl numbers on the NDX as it closed with an RSI 2 of 100 for the last three days and a number of 99 for the three days prior to the last 3- interesting and overbought as it ever gets.

The VIX closed at 23.47 and about 9% under the SMA 10- oversold - but was more oversold a few days ago.

Dougie Kass tweeted that his short book is as big as it has been since some time in February. OK -

Nat gas also moving up and don't be surprised if it tags $4 before the week is over- its cheap and its not going bankrupt.

I am long some SDS and eventually it should be a good trade - and I think this afternoon was an indication that a short term turn is just about upon us.

How low do we go - either we go down where no one wants to buy (the usual) or maybe the EMA 20- near 925 and rising.

GONE FISHING

MORNING THOUGHTS

Markets are muddling along with the DJIA leading and the NAZ/NDX lagging-

SPX +1, DJIA +58 and NAZ -3.

Strongest sectors- ags, materials, biotech, oil service and drugs while banks, semis, real estate and metals lag.

NYSE- 150 net green;

NAZ- 475 net red;

NDX- 38 GREEN;

SPX 225 GREEN;

VIX- flattish at 24.7;

Gold crude etc flattish while the dollar is flat lining after dipping earlier.

Looking for selling this afternoon as lots of folks have lots of gains to protect and we remain very overbought.

THE USUAL

Here we go with the usual -good earnings numbers are moving the futures higher yet again - leading the earnings parade CAT +9.4% and MRK/DD both up about 2.5% in the pre markets.

ES +3.25;

NQ +3;

YM +38;

Of course it is also turnaround Tuesday - so careful as market are even more overbought with RSI 2 levels at/near 100 on most major indexes- IT WILL NOT CONTINUE at those levels- I don't think- (it won't).

Some good links:

Dr. Brett on the laggards;

BAC with more stuff to come;

Dougie with some surprise updates;

7 reasons housing isn't bottoming;

Some good news on high yield spreads;

Winners and losers in the world of employment;

NAZ going for 10 days in a row;

BTW- I have some QQQQ's and some UWM all going to be sold today - no matter what- can always buy back and intend to buy back AT LOWER PRICES.

MIDDAY THINKS

Markets moving up again led by biotech, metals, real estate and brokers while banks, semis, oil service and drugs lag.

Internals improving with 380 SPX stock green and 72 NDX stocks trading up.

RSI 2 levels near 99 on most major indexes so any trade should be quick - as I suspect when this market drops it will be quick as lots of folks know how over bought we are.

Know doubt Pisani who was telling us this AM how all the risk is with the shorts- will no doubt tell us later in the week how "of course the market is selling down - we were very over bought."

Anyhow, looking at buying dips in SSO for a sell later in the day;

Gold and silver much higher as dollar is crushed on the return to risk trade gets implemented.

THE OPEN

Markets kind of fooling everyone this morning as volatility is supreme- the market opens way up flips to flat and moves way back up - and now heading down yet again.

SPX +1, NAZ +3 and the DJIA +13.

Strong sectors- biotech, metals, real estate, brokers and materials while oil service, semis, banks and defense lags.

NYSE- 900 net green;

NAZ- 400 net green;

NDX - 51 GREEN;

SPX - 285 GREEN;

VIX- up 4% at 25.4;

TRIN- 1.08 with up volume about double the down;

Markets are extremely over bought and that is probably the reason why we had the initial selling on the gap higher- so expecting lots of volatility as lots of folks want to get aboard the train - and lots of folks want to sell to those coming in late to the party.