The first chart we will look at today is the post 9/11 market impact, which included the enormous liquidity surge at that time. Three weeks later, the DJIA had lifted almost +20 pct. Clearly, the economy was slowing at that time, worsened considerably by the events of 9/11, but, with the liquidity boost, stock prices soared.

You will hear terms today such as “fine-tuning operation” and “stabilization move” by various central banks. This is spin, and ought to be ignored. The fact is that there has been a surge of liquidity injected into capital markets, which will lift prices.

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Stocks of the Cara 100 In Focus

You can re-size your screen to see these charts or go to http://BillCara2.com and enter this string into the Tech Chart window: GS LEH C FITB WMT COST JCP KSS DIS HOV

On another note, I have removed E*Trade (ETFC) from the Cara 100 and replaced it with Interactive Brokers (IBKR). E*Trade, unfortunately, got involved in sub-prime lending that today is giving rise to concerns about the future of the company. Therefore, I no longer rate it a Global top-quality company.

Interactive Brokers, or IB as it is known in the securities industry, is a customer favorite. Arguably the broker with the best trading technology in America, IB has extended their platform to markets all around the world, despite having only about 600 employees. IB is, I estimate, about the 12th highest capitalized company among Wall Street brokers, with a solid credit rating. For active and hyper-active traders, I recommend them on the basis of tech facilities and cost.

I have also recommended to those in the Cara Community who wrote me this week-end, a switch from E*Trade to OptionsXpress, which is another Cara 100 company. OptionsXpress is a full-service broker with an excellent technology platform, but also one that offers full-service order entry at the same commission cost. So, you pay more than at IB, but you have the comfort of humans at the ready to serve you.

In Canada, I recommend a company I played a major role in building and managing in 1999-2000, Qtrade Canada. Rated # 1 by the Globe & Mail Report On Business, Qtrade was rated #4 of 13 in its first year. It offers the industry’s best technology platform and a very high customer satisfaction rating in independent surveys. The company is now full-service.

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In light of concerns the US consumer is slowing the economy and trading losses and increased provisions for losses are being taken by HB&B, here are two sector ETF’s to review each day as we muddle through a cycle top in the US stock market:

Financials (XLF)

Consumer Discretionary Spending (XLY):

Credit conditions are tightening for the Average Joe, but on the other hand, energy costs are falling, and interest rates are being kept in check in the US. There are serious issues facing the US economy in the months ahead, but, so far, personal incomes and employment have not been dragging it down.

Traders need to monitor the next week or two in these important ETF’s to determine if and how the new liquidity that has been injected into the financial system is applied to the market. I believe that prices will continue lifting this week.

Longer-term, just like post-9/11, the fundamental issues in the economy will flow into the stock and bond markets, causing prices to soften after this initial surge that will push the index levels back to former highs, I believe.

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International Economics Review

This is a week when important economic data is to be released in the US. I haven’t taken the time to look into each report because I believe the spin at the time has already been scripted. The term “Wall of Worry” is likely to apply as stock prices lift, as it did immediately post-9/11.

US Economic Calendar for next week

Econoday Weekly International Report

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International Equity Markets Review

After the rhetoric over the “crisis” in credit markets has been cranked to the maximum, and a pull-back occurred, today, as anticipated, the indexes across Asia-Pacific equity markets are green.

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Asia-Pacific

Here is the latest session data for the Asia-Pacific stock exchanges.

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Here is the latest chart for the Japanese Nikkei 225 index.

The Nikkei Dow moved up +0.21 pct to 16800. The technical support level held for now.

The Mar-07 16600 support level for the Nikkei 225 of the very important Japanese market is the critical one to watch this summer. I believe the successful test will set up a brief rally.

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Here is the latest chart for the Singapore index .

Today, Singapore was up +0.64 pct to 3381.6. I mentioned last week I could see “some bids arriving.”

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Here is the latest chart for the Shanghai Composite index .

Last Friday morning I wrote: “Some bids came into the Shanghai market late in the session too. But as Shanghai Fly has reported this morning, “Market breadth is still terrible here, despite Shanghai being down "merely" 0.1%, Shenzhn was down 2%. 199 stocks advanced in Shanghai while 652 declined.” So somebody is trying to prop up Shanghai and Singapore. Central banks perhaps?”

Yes, central banks have brought in the bids. The Shanghai Composite rallied +1.49 pct today to close at 4820.

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Here is the latest chart for the Hong Kong Heng Seng index .

The Hong Kong market sold down sharply at the open of Friday’s session, but then held its ground. Today, the index gained +0.45 pct to close at 21891.

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Here is the latest chart for the India BSE 30 index .

Today, the Bombay Stock Exchange BSE 30 Sensex index gained +1.00 pct to close at 15017.

Download Astaire Weekly Report on India (dated August 7) courtesy of Deepak Lalwani.

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Here is the latest chart for the Australian All Ordinaries index .

The All Ordinaries index of Australia gained +1.04 pct today. On Friday it had lost -3.6 pct as basic materials sold off.

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Europe>

Here is the latest session data for the bourses of Europe.

All green arrows at 8:41am ET. The recovery has started, as anticipated here.

Here is the latest chart for the UK FTSE 100 index.

At 7:41am ET, the FTSE is up +2.07 pct.

In mid-week last week I opined that “this index was over-sold and that there might be a recovery back to the 6500-6600 level, but it now appears that support at 6000 must first be tested.” In fact, it did hold with a low of 6038.

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US Dollar Review

Here is the chart of the recent trading.

The trade-weighted USD has lifted to 80.92 at present (7:30am ET), and I expect it to stay strong as long as the central banks are pumping money.

Later, however, the injected liquidity must come back out, and the USD will fall.

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Oil Review

Interactive Chart of Weekly Crude Oil:

Here is the e-miNY Sept-07 Crude Oil chart.

The e-mini September contracts are rising and are up to 72.35 at 7:45am ET.

As traders went to cash, prices of these commodity contracts fell, and now they are putting cash back to work, prices are rising.

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Gold & Precious Metals Review

Here is the Recent Spot Gold chart.

Spot gold has remained flat since Friday mid-day, but is now ready to rally into the 680+ level, then 690+ in the days ahead.

The spot price is 671.80 at 7:50am ET.

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Here is the Recent Spot Silver chart.

Spot silver is moving up here at 12.86 at 7:51am ET, which is still down from Thursday, but on the rise after the Fed and other central banks injected liquidity into markets.

Silver and Gold are rallying even as the USD is stronger. They will rally faster after the USD starts to weaken.

More volatile than gold, the silver metal is a precious metals bellwether.

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Here is the The Goldminers stock index chart.

Last Thursday after the pull-back, I wrote: “Gold stocks are going to recover soon. The index (has) tested that 143-144 level I talked about a couple weeks ago. “

As I wrote last Friday morning, before the first bump higher in goldminer stocks, “(As) central banks stem the selling wave in the broad equity markets, I see precious metals holding the line here. I believe it is a good time after another dip this week to bottom pick the stocks of high quality miners. I did a report last evening to help the process.”

On Friday, the index moved from Thursday’s 142.64 to 144.33. Today it will move higher again, and the pace is likely to pick up.

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Have a good trading day. If you are bullish, things are looking up. If you are cautious and/or negative, the next couple weeks and months will provide you plenty of opportunity to sell into strength.

“Buy into weakness; sell into strength” is a successful traders mantra.

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