The story of the day yesterday was the VIX retreating for the third straight session, showing that the Fed's recent moves to mitigate recent volatility are working and may have worked enough to release the equity market to trade more freely.

Telecom (IYZ) and consumer discretionary (XLY) moved up, while industrials (XLI) and energy (XLE) dropped down. Traders watched the emergency meeting called between Fed Chairman Bernanke, Secretary Treasury Paulson, and Banking Committee Chairman Chris Dodd in the morning

Traders also got their fill of positive earnings reports from several retailers.

The DJIA (-30.49), Nasdaq (+12.71), and S&P (+1.57) were mixed.

The ICSC-UBS Chain Store Sales Index rose +0.2 pct in the week ended Aug. 18 from the prior week, bolstered by back-to-school shopping.

The Johnson Redbook Index fell -0.7 pct in the first two weeks of August compared to July, less than the projected -0.9 pct estimates.

As for those retailers, (Cara 100) Target (TGT) reported net income increased +13 pct to $686 million compared with $609 million a year earlier. Staples Inc. (SPLS) 2Q net income lifted +11 pct to $178.8 million versus $161.2 million for the period ended July 29, 2006. BJ's Wholesale Club Inc.'s (BJ) 2Q net income jumped +37 pct to $36.3 million from $26.4 million a year earlier.

The 30-day US Treasury Bill yield recovered from Monday’s plunge below 2 pct to push above 3 pct.

Commodities were mixed. Crude Oil plunged -$1.39/bbl to close below $70 /bbl as Hurricane Dean struck the Yucatan peninsula of Mexico, missing the US energy infrastructure of the Gulf region; weekly crude, gasoline and distillate inventories are due out today.

Comex gold dropped just -$0.30, but silver futures were off -$0.23, while corn surged +$6.25.

European markets edged up on the day; the FTSE closed higher +0.12 pct and the DAX was +0.23 pct higher. Today at 9am ET, the FTSEand DAX are up well over +1.0 pct. Earlier today, Asia-Pacific markets were very strong, except for the Nikkei 225, which was flat.

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International Economics Review

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 Tuesday session Cara 100 gainers.

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Here are Cara 100 losers from Tuesday.

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

Friday and this week, the VIX has gone quiet, and money flow is minimal in either direction.

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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 (9)

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) dropped into the Accumulation Zone, which I pointed out yesterday. Then the stock traded up +2.0 pct. The Daily RSI-7 is still at 27.9.

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 dropped -0.23 pct to 13091.

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NASDAQ Composite (interactive) chart

The Nasdaq Composite lifted +0.50 pct to 2521.

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International Equity Markets Review

Asia-Pacific

The indexes across Asia-Pacific equity markets were up, some strongly. Japan was flat, however.

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 flat at 15901.

Today, traders should watch (i) the Dollar: Yen trade; (ii) the EWJ (Japan ETF that trades in USD in NY); and (iii) the key Japanese stocks and ADRs that trade on the NYSE to determine how the Nikkei 225 is likely to open tomorrow.

The recent Yen strength has 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 at least) of the Carry Trade.

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Here is the latest chart for the Singapore index .

Today, Singapore was up sharply +2.88 pct to 3321.5, which is the amount lost yesterday.

Indonesia lifted strongly (+3.51 pct) to 2063.

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Here is the latest chart for the Shanghai Composite index .

The Shanghai Composite gained +0.50 pct today to 4980, which is an all-time closing record high. The People’s Bank of China raised rates again this week. Inflation is a problem there.

The Shanghai Composite has rocketed from 1000 to 5000 in just over 24 months. Pegging the Yuan to the declining USD has really helped.

Isn’t it something that the talk two years ago was that the Shanghai market would always be terrible because all those inefficient state-run companies would hold China back? Hmmm. Where are the critics today.

In any case, you can go back to the archives at that time and see how positive I was on China and how I wrote up several great Chinese companies.

The end of the Carry Trade and the strengthening of the Yen will hurt China because imports from Japan (and from other neighboring countries) will be more costly. A some point, either raised interest rates or a too weak Yuan will force the Chinese authorities to release the peg to the USD – at least much faster than they have been.

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

The Hong Kong market rocketed +2.84 pct to close at 22347.

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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 +1.86 pct to 14249.

I believe a new attempt at an all-time closing record high will be made over the next month. I continue to like HDB and IBN. The panic sell-off a week ago in those bank stocks set up a terrific buying opportunity, but also shows how volatile the Indian market can be.

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

The All Ordinaries index of Australia lifted +0.31 pct today to close at 5997.

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Europe>

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

There is a broad rally today (8:44am ET) across Europe.

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

The FTSE is up +1.15 pct to 6156 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 this week at 81.419.

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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 8:20am) at 69.80.

The response to Hurricane Dean and the simultaneous broad market sell-off in the US caused Energy to sell down to over-sold levels. I think there will be a recovery here over the next month, to put Crude Oil into the low to mid 70’s.

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Gold & Precious Metals Review

Here is the Recent Spot Gold chart.

Spot gold is presently (about 8:50am) at 658.15, about the same as yesterday except it is having a morning rally attempt here after an earlier pullback.

As I say, “Soon to rally”. In fact, there will not be a continuation of higher broad equity market prices without higher prices for the gold metal and the goldminer stocks. I am short-term bullish.

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Here is the Recent Spot Silver chart.

Spot silver is stronger today (8:53am ET), presently at 11.70 after opening at 11.49.

Room to grow. Time to buy the silver stocks.

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Wrap-up

The prices of equities and commodities will rise if, as and when there is money available to borrow. Apparently, the job being done by the G-20 central banks is making that process a likely one. Yes, the longer-term issues in credit markets will take months if not years to resolve, and we may even have an economic recession and a Bear market to deal with in the meantime. But for now, we can only deal with what we see. We are being forced to trade short-term. As I see it, the recent sell-off around the world is temporarily over, as I wrote last week, and this is the time to buy. In a month or four, it will be the time to sell. The difference is that we will buy a little now and sell a lot later.

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