Lehman lowered their current quarter earnings outlook for Bear Stearns (BSC) by -56 pct, and for most of the others (by a lesser amount), citing quality of asset and marked-to-market issues.

There are various sources for up/down grades by broker-dealers. One is at Briefing.com.

Traders ought to check everyday for ratings changes. That website is updated later in the morning.

Yesterday in US equity markets, and earlier today across Asia-Pacific and European markets, stock prices enjoyed a major rally albeit on light volume.

The Dow (+247.4 +1.90 pct) and Nasdaq (+62.5 +2.50 pct) surged into the closing bell as an energy and technology rally spearheaded broad market gains. Earlier in the day, the Asian markets closed lower across the board, which followed the huge previous session losses in the US. European stocks gained on the session as it became obvious that the US markets were going to boom yesterday; the German DAX closed up +0.12 pct, the UK FTSE 100 lifted +0.49 pct, and the French CAC 40 advanced +0.84 pct.

Crude Oil ($WTIC) jumped over the $73/bbl mark after the US Department of Energy reported that gasoline inventories fell by a very high -3.6 million barrels in the week ended Aug. 24. Crude oil inventories fell by -3.5 million barrels, distillates increased by -900,000 barrels, and refinery utilization fell by -1.3 pct to 90.3 pct.

On the deal front, Altria (MO +1.06 pct) announced it is spinning off its Philip Morris International division, which gave a boost to stocks Wednesday.

On the earnings front, there were several disappointments, however. Williams-Sonoma (WSM) 2Q net income dropped -27 pct to $26 million; the Heineken (HINKY) net income dropped -30 pct to EUR302 million; and Borders Group (BGP) reported a 2Q loss of -$25.1 million.

Overall, I think traders can expect to see more losing quarters as either top line revenue or rising costs are hurting many companies. The question is how bad it gets for the Earnings Season that starts in early October. Clearly, today’s move to downgrade the big banks and brokers gives some foresight into that important group.

Yesterday, US Treasury prices dropped (yields lifted) and the USD advanced vs the Yen, but lost ground to the Euro. Early today, the situation has reverted. The Euro is down about -0.5 pct against the USD, while the USD is down vs the Yen.

Today, the Asia-Pacific markets were strong across the board except for a modest pullback in Singapore.

European markets were very strong earlier in the session, but have pared the gains after US equity futures gave indication of the market taking a pause to consolidate yesterday’s huge gain. The US equity futures presently show a slightly lower opening, probably due to Lehman’s sharply reduced earning’s estimates for its peer group.

October eMiNY Crude Oil is trading up almost to 74, but this three-week run may be running out of legs.

Precious metals spot prices this morning are showing modest losses from yesterday because the USD is strong against the Euro.

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International Economics Review

According to the Mortgage Bankers Association, mortgage applications were down -4 pct from last week.

US Economic Calendar

Another excellent Economic Calendar is provided by BMONesbittBurns.

Econoday Weekly International Report

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The Cara Global 100 Stockwatch

Here are the Wednesday session Cara 100 gainers.

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Here are Cara 100 losers from Wednesday.

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There were no Cara 100 stocks that hit 52-week intra-day highs or lows in the Wednesday session.

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Here are the Cara 100 stocks that had extreme volume changes.

It pays to watch the price and volume extremes, ie, Money Flow, especially when markets start trending.

“What the market gives you quickly, it often takes away just as quickly.” And sometimes gives it right back. … We could call the game PONG.

On Tuesday, I presented four very large large-cap China stocks that were bursting out: China Mobile, China Telecom, China National Offshore Oil and PetroChina. The market cap for these four approximates $600 billion in total. I wrote, “If you noticed, it’s only the China stocks that ballooned the volume yesterday, and they also led the Cara Global 100 gainers.

CHL gained +4.87 pct on Monday; lost -7.19 pct Tuesday, and gained +4.91 pct yesterday.
CHA gained +4.72 pct on Monday; lost -8.26 pct Tuesday, and gained +7.93 pct yesterday.
CEO gained +5.57 pct on Monday; lost -8.36 pct Tuesday, and gained +6.46 pct yesterday.
PTR gained +3.55 pct on Monday; lost -6.91 pct Tuesday, and gained +4.89 pct yesterday.

The capital markets are failing as effective pricing mechanisms. Traders feel they might as well be playing a casino slot machine. In any case, if you can adopt a system like the RSI/MACD and stick to the stocks of high-quality companies, you will ultimately succeed as a trader, and the evidence will show up in your portfolio.

It’s not easy, but it can be done. You just need to keep the faith in your discipline and not over-trade when emotions run amuck at times.

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Key Stocks plus Cara 100 In Focus

There are various sources for up/down grades by broker-dealers. One is at Briefing.com. Traders ought to check everyday for ratings changes. That website is updated later in the morning.

I am appreciative to the folks at KNOBIAS, Inc for providing the Cara 100 summaries.

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Relative Strength Index (RSI) analysis of the Cara 100 company stocks .

Notice that there are only two stocks with RSI-7 > 70 and one < 30. That omission of extremes is a good sign for the Bulls, although I suppose you could say the same for the Bears. There is room to move either way before an over-bought or over-sold condition can be said to exist.

Because the last plus or minus 250 point move in the DJIA was a plus and it happened yesterday, I naturally assume that the Bulls are in control for now. Later today, the way this market is going like a ping-pong ball, maybe the Bears will get to take control.

Oh, call me a perma-Bull (LOL), I just have to believe that prices are going to rally, that is until the rally fails and the primary Bear takes the next swipe at portfolios.

RSI > 70 (2)

RSI < 30 (1)

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Here are the Cara 100 stocks trading with the highest and lowest RSI-7, sorted by (i) daily and (ii) monthly values, for Wednesday:

“Chris,” used BillCara2.com data that is unsmoothed, unlike the data from Worden used by “David”.

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US Equity Markets Review

DJIA (interactive) chart

The DJIA boomed -247.44 points (+1.90 pct) yesterday to close at 13289.

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NASDAQ Composite (interactive) chart

The Nasdaq Composite boomed even more than the DJIA as it went up +65.52 points (+2.50 pct) to close at 2563.

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International Equity Markets Review

Asia-Pacific

The indexes across Asia-Pacific equity markets were all strong today, except for Singapore.

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 was up +0.88 pct at 16154.

The Yen was a little weaker this morning. Yen strength hurts Japanese exporters, including the auto manufacturers. Recently, I wrote that I would bottom-fish the top quality Japanese auto makers, but only if, as, and when the Yen appeared to be starting a weakening trend, which it seems to be doing with the Bank Of Japan liquidity injections, and a return (for now at least) of the Carry Trade.

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Here is the latest chart for the Singapore index .

Today, the Singapore STI was down -0.41 pct at 3321, which has now consolidated recent volatility. This index looks ready to move higher.

Indonesia gained +0.74 pct to 2150.7.

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Here is the latest chart for the Shanghai Composite index .

The Shanghai Composite gained +1.14 pct to 5167.9, flirting with a new record high.

After a series of fresh all-time closing record highs, yesterday was a day to hold back, but the move today shows the mo-mo continues in Shanghai.

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

The Hong Kong market gained +2.02 pct to close at 23484, flirting with a new high.

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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 +0.86 pct to 15121.7.

I continue to be impressed by the Indian equity market, and the confidence shown by traders in the economy.

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

The All Ordinaries index of Australia gained +0.60 pct today to close at 6138.

“I continue to believe that a new rally will take the Aussie bourse to a return to July highs (6469). For that to happen, however, the Basic Materials sector will have to take the lead.”
I continue to believe it will.

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Europe>

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

There are higher prices today (7:02am ET) across Europe, but in the past few minutes those gains have dissipated.

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

The FTSE is up +0.08 pct at 6137 today in mid session (1:06pm local time). I do not think that the FTSE will return quite to the former high of 6754 before the start of the next downwave in global equity markets.

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US Dollar Review

Here is the chart of the recent trading.

The trade-weighted USD is up early this morning at 80.918, after volatile moves. It is weaker against the Yen (not so good for gold or broad equity prices) and stronger against the Euro (not good).

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Oil Review

Interactive Chart of Weekly Crude Oil:

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

It is presently (about 7:00am) at 73.625, stronger for the past couple weeks.

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Gold & Precious Metals Review

Here is the Recent Spot Gold chart.

Spot gold is presently (about 7:10am) at 664.95, about the same as at this time yesterday, and looking like it needs to find a weaker USD (say below 80.50) before rallying.

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Here is the Recent Spot Silver chart.

Spot silver is stronger today (7:11am ET), presently at 11.82.

I think silver will trade above 12 in the near future, then 13… 14, but it needs a weaker USD to do that.

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Chart of US Goldminers Index $XAU :

The $XAU goldminers index rallied sharply (+3.35 pct) yesterday. Equity market rallies will continue to be led by Precious metals miners, I believe. And when the glitter goes away, so too will equity prices. Goldminer stocks are usually the last to pack it in as the Bear market starts.

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On August 16, when Brazilian miner (Cara 100) CVRD (RIO) dipped to 34, closing at $38.21, Credit Suisse Research stepped up with a report that read something like: “In light of the market volatility (meaning sell-off), we wish to re-iterate our investment case for CVRD”.
Download CVRD Report.

The stock bumped quickly to 49, now at 48. The CS 12-month Price Target (PT) is 68.

I want to say I fully concur with the Credit Suisse position with espect to CVRD.

CVRD is part of an oligopoly that, via supply, can influence the price of metals more than any other factor. Following their excellent $19 billion acquisition of Canada’s Inco, the company is strong in nickel, which I think soon is going to move higher in price. Their main product is iron ore, which is in strong demand, particularly from China.

In any case, in my Friday August 17 Daily Report, with RIO at $38.21, the RSI-7 was under 30 for the Weekly and 16 for the Daily. That indicator plus the Credit Suisse report, had you read it, would have been a compelling reason to buy on that Friday at around 39. A week later, as I said, the stock was 49.

Yesterday, RIO gained +6.42 pct. The stock is late in the cycle but still likely to have gains before the Bear market unfolds.

Chart of CVRD :

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Wrap-up

While in town yesterday, I bought some AA batteries for my camera. My rechargeable batteries finally gave out.

Here are photos of Watt II, a 48 foot fishing yacht by the name of "Mag", my camp for a few days until I find a suitable condo. Earlier this week, I discovered there are three potential choices, so my search is likely to be successful before I leave the island on September 15 to go to Toronto for my son's wedding.

A few days ago, I showed 31 photos of Watt HQ, “Long Bay”, a fine 10 bedroom, 10-bathroom home on a hill in Nassau. I prefer the boat, at least until a Caribbean hurricane shows up on the NOAA website.

Apparently Jim Watt likes the boat more too because as soon as he sells the house, he’ll be off in the boat on a journey through the Bahamas Family Islands. There are a lot of islands too because this country covers 500 miles by 200 miles (100,000 square miles) stretching from 50 miles off West Palm Beach Florida to a few miles north of Haiti and Cuba.

The photos here are in and out of the boat and along the dock. You’ll notice at my work desk, the chair is a fisherman’s chair, which goes out on the rear deck while the boat goes to work fishing. Darn. (LOL)

Directly across the harbour is Kerzner’s Atlantis resort. One photo shows the dual bridge between Nassau and Paradise Island. Other than going over to see the new Cove at Atlantis with my lawyer for drinks one night, I haven’t been into the resort this summer at all. Having lived in the 90’s just a three-minute walk from the casino, in the first villa complex up Paradise Island Drive, and returning to Atlantis many times in the years since, including a few months ago, I know the place like the back of my hand.

The last photo (taken before my batteries died) is of my friends who crew on the Aqua Cat returning last Thursday or Friday from a weekly dive charter, going past the Nassau Harbour Club. The boat, which has a website, was a fully-equipped $4.25 million purchase in 2002 from Australia.

Fishing, diving, resorts, big homes, small homes, 700 islands and cays, its all available here. It’s a great lifestyle.

On Friday I get down to work with staff of the Swiss private bank EFG to create some marketing materials. I have to work sometime you know. :-)

Have a good one.

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