Yesterday, encouraged by the boom in Asia-Pacific markets, the broad market was up for most the day on normal August volume. The Bulls gave up small early losses on concerns that recent funds pumped into the market by the Fed were not reaching mortgage and commercial paper markets. But, at the end of the day, the Bulls were back in control. Extremely low volatility, seen by the volume table below, was the highlight of the session.

The DJIA (+42.27 +0.32 pct) and Nasdaq (+3.56 +0.14 pct) lifted as Basic Materials (XLB +1.87 pct) and Industrials (XLI +1.45 pct) took leadership among sector performers. Financials (XLF -1.33 pct) were weak, but came off intraday lows by the end of the day.

Lowe's (LOW +6.1 pct) announced higher net income rose amid housing industry troubles, but lowered its full-year earnings outlook. Traders saw the glass more than half-full.

HSBC (HBC) announced it has entered into talks to purchase a majority stake in Korea Exchange Bank from Lone Star Funds.

After volatile trading last week, as almost a dozen commodities clearing firms were threatened by the Sentinel bankruptcy, ended the day mixed. A Chicago judge has ordered $300 million funds owing these trading firms be released.

Comex gold was flat, and copper gained $1.55. Nymex crude ($WTIC) pulled back -$0.86/bbl (-1.20 pct) to 70.96, as Hurricane Dean was observed missing key energy infrastructure in the Gulf of Mexico.

Long-term Treasury prices advanced, with yields dropping, while the 30-day T-Bill yield recovered some. The two-year yield ($IRX) dropped a phenomenal -18.5 pct to 2.95 pct.

European markets yesterday gave up most of their early gains after US stocks opened down a bit, but still retained limited gains. The German DAX gained +0.40 pct and the FTSE was up +0.24 pct. Today those European equity markets are above water in France and Germany, but in the past few minutes have weakened a bit, taking the FTSE (UK) below yesterday's close.

The Asia-Pacific markets today were mostly strong except for India. US equity futures look like a positive open. Spot Gold has been lifting in the past hour or two, but so far still in a 655-660 band.

US Treasury Secretary Paulson is now (9:06am ET) making a report to the world via CNBC interview. Let's see how this one plays out.

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International Economics Review

Yesterday, the Chicago Fed National Activity Index swung to -0.10 in July, from +0.06 in June, on weaker employment, consumption, and housing indicators. However, the independent Conference Board reported its leading indicators composite index lifted +0.4 pct in July, helped by positive consumer expectations, vendor performance, and initial claims for unemployment insurance.
US Economic Calendar

Econoday Weekly International Report

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The Cara Global 100 Stockwatch

Here are the Monday session Cara 100 gainers.

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Here are Cara 100 losers from Monday.

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

Following some capitulation up to 1pm last Thursday, the market has been strong.

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Key Stocks plus Cara 100 In Focus

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 .

RSI > 70 (0)
RSI < 30 (10) (Without ASD post spinoff)

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

Moody’s (MCO) has dropped into the Accumulation Zone. A BUY ALERT would be signalled as soon as there is any strength in the Daily that would take the RSI-7 up over 30.

“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 lifted +0.32 pct.

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NASDAQ Composite (interactive) chart

The Nasdaq Composite lifted +0.14 pct.

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International Equity Markets Review

The indexes across Asia-Pacific equity markets were sharply mixed.

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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 rallied +1.07 pct to 15901 today. The index still has a long way to go to recover, but the good news is that there is not that much volume of the past week to eat through.

The recent Yen strength really hurt the Japanese exporters, including the auto manufacturers. As I wrote last Thursday, I would be bottom-fishing the top quality auto makers, if, as, and when the Yen weakens, which it has now with the Bank Of Japan liquidity injections, and a return (for now) of the Carry Trade.

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Here is the latest chart for the Singapore index .

Today, Singapore was down sharply -2.82 pct to 3228 today.

Indonesia sold down a further -2.38 pct to 1993.

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Here is the latest chart for the Shanghai Composite index .

The Shanghai Composite gained +1.03 pct today to 4955. The People’s Bank of China raised rates again. Inflation is a problem there.

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

The Hong Kong market lifted +0.62 pct to close at 21729.

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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 +2.02 pct to 14427.

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

The All Ordinaries index of Australia rallied +0.88 pct today to close at 5978.

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Europe>

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

There has been some weakness in the past hour (8:49am ET). FTSE is now down a bit.

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

The FTSE is sidetracking here today in mid session.

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US Dollar Review

Here is the chart of the recent trading.

The trade-weighted USD is flat with yesterday morning at 81.353.

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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 8:35am) at 70.60.

The movement of Hurricane Dean through to the west, avoiding the US energy infrastructure of the Gulf region, is helping push prices down. But Big Oil (XOM and CVX) prices are much lower on a relative basis. Either these prices lift soon or else $WTIC falls in the 60’s.

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Gold & Precious Metals Review

Here is the Recent Spot Gold chart.

Spot gold is presently (about 8:55am) at 658.25, about the same as yesterday. It’s sidetracking.

Soon to rally.

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Here is the Recent Spot Silver chart.

Spot silver is very weak today (8:57am ET), presently at 11.75, down almost 20 cts from yesterday morning.

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Wrap-up

These are interesting times. I do not recall a time when there was so much talk of failures by large financial institutions and/or their subsidiary companies. However, traders have to focus on prices. We also ought to be discussing news reports of credit ring problems and failures of hedge funds because market risk is one thing, and capital risk quite another.

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International Equity Markets Review

Some of the Asia-Pacific equity market indexes were down sharply again today.

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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 sold down -1.99 pct to 16148. The technical support level was broken.

The Yen strength is really hurting the Japanese exporters, including the auto manufacturers.

While I did point you to the Mar-07 16600 support level for the Nikkei 225 as a very important level, please note that trading is more art than science. Mathematical systems that use specific price points pay too much attention to mathematics and too little to what is happening at the moment. So, while I think these systems are important as to their principles, I always call them indicators only.

For Japan, I would be bottom-fishing the top quality auto makers if the Yen begins to weaken.

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Here is the latest chart for the Singapore index .

Today, Singapore was down a large -3.70 to 3152 after being down -3.35 pct yesterday.

Indonesia, which sold down -6.44 pct yesterday, was down a further -5.94 pct today.

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Here is the latest chart for the Shanghai Composite index .

The Shanghai Composite lost -2.14 pct today after a rally of +1.49 pct on Monday, and a further +1.09 pct Tuesday. Today it closed at 4765.5.

The Shanghai Fly sent the following report this morning:

“Rumors/news are flying around about a $200 billion special gov bond issuance. If verified, it might hit the Western media sometime, if it hasn't yet.

Indices are choppy, they appear to have lost their ability to price stocks, crazy intraday volatility. “

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

The Hong Kong market has pulled back to just below the first level of support. Today, the index lost -3.29 pct to close at 20672.

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

Today, the Bombay Stock Exchange BSE 30 Sensex index dropped -4.28 pct to 14358, after being closed for a day’s holiday.

Download the Deepak Lalwani “Confidence and Optimism” Report on India .

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 lost -1.54 pct today after a loss of -3.03 pct yesterday, because commodity prices are falling, and the Aussie dollar falling.

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Europe>

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

Solid red arrows at 9:22am ET. There is not much to say.

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

At 9:23am ET, the FTSE was down -3.0 pct.

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US Dollar Review

Here is the chart of the recent trading.

The trade-weighted USD has lifted again to 81.716, which is a reaction to market volatility and safe-haven plays in US Treasuries.

I expect it to stay strong as long as the central banks are pumping money. Besides, the Carry Trade (which had weakened the Yen) is unwinding because equity markets are making traders nervous. A rally in stocks, however, would probably see another round of Carry Trade activity, and a weakness in the USD.

With the drop in commodity prices, the $USD was very strong against the Australian and Canadian Dollars yesterday.

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Oil Review

Interactive Chart of Weekly Crude Oil:

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

It is presently (about 7:50am) at 72.95.

Futures contracts expire today. Markets may be volatile as a result.

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Gold & Precious Metals Review

Here is the Recent Spot Gold chart.

Spot gold is presently (about 7:50am) at 664. This is an excellent opportunity to buy. The futures market has not been as weak as the spot (cash) market, which has been depressed as financial institutions are being squeezed for liquidity. So, I perceive they are selling spot and buying forward.

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Here is the Recent Spot Silver chart.

Spot silver is very weak today (7:55am ET), presently at 12.49.

Take a second look at what will be the last time in this cycle that traders see such low spot silver prices, I believe.

The extreme $USD strength in recent weeks, based on the so-called flight to quality, is throwing much confusion into these precious metals markets.

But, note that gold and silver futures have not caved in. Let the $USD strength play out, and then watch the rally in silver.

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Have a good trading day. If you are bullish, the strong end-of-day rally after plunging prices is likely to continue.

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