OH CANADA

Equities were pretty ugly yesterday as the SMA 50 on the SPX was quickly passed and now sits about 15 points above the close.

The VIX as ugly as it gets moving up 24% at 30.69 and about 28% above the SMA 10- VERY OVER BOUGHT.

All that said - SPX about 6% off its 1101 high from October 21-

Barron's with a nice article on the Canadian banks and how they are in better shape than ours - of course Canada also has lots of resources including metals and oil- and probably a better place than ours for investment - note the pullback on the EWC - probably a pretty good place to buy some - for a long term investment.

VIX+MORE with his pullback/VIX take;

How bout that uptrend?;

BESPOKE with lots of great stuff;

Cheney- just can't recall- and just won't go away;

THE DIP

Markets seem to have resumed their recent downward bias as the SPX is down 11, NAZ -17 and the DJIA -87.

When the market opened it was bobbing near the flat line but the internals were bad right from the get go. Now as follows:

NYSE- 1425 net losers;

NAZ- 1000 net losers;

SPX- 106 GREEN;

NDX- 20 GREEN;

Strong sectors- gaming, nat gas, bonds, biotech, junk and drugs while metals, banks, emerging markets, energy and small caps lag.

VIX- up 4% at 25.75 and about 10% above the SMA 10 again.

TRIN- 1.55 with down volume about 4x the up.

RSI 2 levels between 30 and 40 on most major indexes.

So with Chicago PMI index beating and Michigan confidence in line the market falls way down- not sure the impetus for this and maybe the bulls show before the end of day - but for now it doesn't look good in the short term as many seem to have shorted yesterdays big rally.

And how about those IMUS FBN numbers- not what anyone expected.

UPSIDE IT IS

Markets are bouncing off very over sold levels and the SPX 50 day SMA at 1050- yesterday they pushed it underneath but today bouncing back on the heels of a better than expected GDP number.

SPX +19, NAZ +34 and the DJIA +154.

Strongest sectors- gaming, Brazil, metals, emerging markets, homies and retail while bonds, drugs, internets, consumers and tech lags.

NYSE- 2025 net winners;

NAZ- 1400 net winners;

SPX - 445 GREEN;

NDX- 85 GREEN;

VIX- down about 11% and there go those buy signals from the VIX;

TRIN- .69 with up volume about 7x the down.

Market looks strong and those pullbacks looking like typical bull market action - so I am trading accordingly and as long as the action remains typically bullish - to the long side I trade.

THE MUCK

Watching the afternoon muck as equities continue to act heavy - but they do trade near the SMA 50 on the SPX - as I type - SPX -13, NAZ -38 and the DJIA -59.

Strongest sectors- bonds, drugs. trannies and consumers;

Weak links- gaming, emerging markets, energy service, homies, biotech and airlines;

NYSE- 2100 net losers;

NAZ- 1450 net losers;

SPX- 80 GREEN;

NDX- 9 GREEN;

VIX- higher by 7% and trading about 17% above the SMA 10.

TRIN- 1.16 with down volume about 5x the up.

Gold down 9 @ 1031.

Dollar up .33% at 76.54 while the EURO is down about .5% at 1.473.

Not much to say except that the SMA 50 area on the SPX is holding for now- and we might see some buying into the close as folks believe that it will hold as the bulls line in the sand - and where is the end of month mark ups - lots of folks waiting for that also- this fish now waiting and thinking about buying later in the day.

MIDDAY UPDATE

Markets are flopping around near the noon hour as the DJIA is +60 while the NAZ is down 11- just a bit messy as tech lags.

Strongest sectors- energy, drugs, biotech, bonds, banks and defense;

Weakest links- gaming, retail, internets, brokers, tech and trannies.

WINNERS- AXP UNH DVN XOM DD LIFE VRTX IACI CEPH ILMN GENZ LBTYA;

LOSERS- BIDU WYNN EXPE PCAR SBUX AMZN EMC NOV BK BNI WAG MS;

NYSE- 225 net losers;

NAZ- 100 net losers;

NDX- 33 GREEN;

SPX- 260/235;

VIX- 24.5 and about 10% above the SMA 10;

TRIN- 1.02- up and down volume almost even with a slight nod to the downside;

RSI 2 levels clearly over sold with the SPX at 30 and the NAZ/NDX between 8 and 10.

Gaming stocks getting whacked hard as MGM is down 9%+ - didn't investigate as to why - but its ugly-

Overall- still expecting a bounce over the next week and a retest of the 1100 level on the SPX - of course if the dollar continues higher - it is not going to happen- the dollar now +.20% on the day and very over bought with an RSI 2 near 90.

THE CLOSE

Markets did a complete U turn in the late morning as the dollar began to rally - causing the market to tank- the SPX closed -12.6, NAZ -13 and the DJIA -104.

Strongest sectors- internets, semis, retail and junk while nat gas, metals, banks, airlines and biotech lagged.

NYSE- 1555 net losers;

NAZ- 800 net losers;

SPX - 100 GREEN;

NDX- 27 GREEN;

VIX- 24.3 and up 9% on the day and at the 110% of the SMA 10 level.

TRIN- 2.29 with down volume about 8x the up.

RSI 2 levels as follows:

SPX -14

DJIA -17

NAZ -18

NDX-20

RUT -13

XLE -6

XLK -18

XLF-17

BKX 14

EWA 17

EWC 6

EWZ 21

EEM 14

RSI 2 and the VIX giving clear signs the markets are over sold here and worth a shot on the long side - I bought some SSO near the close at 35.04 and feel pretty good about the purchase.

EWA EWC EWZ also looking good as buy on the dip candidates and we will probably see some very good support at the SMA 50 on the SPX should it get there (probably wont) - at 1048 level.

THE MOVE

Markets are trading up as buyers have decided to buy this recent small dip- SPX +9, NAZ +24 and the DJIA +83.

Strongest sectors- gaming, internets, energy, real estate, retail and semis while nat gas, banks, airlines, bonds and brokers lag.

NYSE- 1400 net winners;

NAZ- 1000 net winners;

SPX- 430/70 up to down;

NDX- 90% GREEN;

VIX- 22.25 - flat and 2% above the SMA 10;

RSI 2 levels:

SPX- 60;

NAZ -78;

NDX- 82;

DJIA 63

RUT 54

Small caps continuing to under perform - so watching that chart closely- not buying or selling this morning although if the markets dip down and fill half this gap - I would buy looking for a close at the highs.- the banks making me a bit nervous as they lag big - but will probably take a shot later.