Yesterday we discovered that worker productivity data was lower than consensus, and unit labor costs slightly higher. The unit labor costs suggest inflationary pressures, and the FOMC report stated that inflation remains the predominant concern of the Fed. They also stated they believe that the economy is expanding moderately, supported by employment and a robust global economy.

But the FOMC also leads me to believe they will lighten up on their approach to inflation (which will be good for precious metals) because, in addition to the foregoing report, they noted there are real housing concerns as credit tightens for some households and businesses. That’s like saying “we are between a rock and a hard place” – something we have said here before.

The housing sector suffered another significant blow Tuesday with the news that lenders are charging higher rates for jumbo rate loans. The higher rates on these loans, the loans that are considered the safe play in home mortgage lending, indicates the credit ills are spreading to other parts of the housing market.

Not unexpectedly, CIT Group (CIT) announced the company will write-off $45-$50 million related to home lending.

In the US equity market, the DJIA (+35.52 +0.26 pct to 13504) finished higher as did the S&P 500 (+9.04 +0.62 pct to 1476.7) and Nasdaq Composite (+14.27 +0.56 pct to 2561.6). Today, these levels will be eclipsed.

Yesterday, Energy (XLE + 2.35 pct) and Utilities (XLU + 1.81 pct) led the market higher while traders avoided the defensive play with consumer staples (XLP -0.26 pct) selling down. The Industrials (XLI) were flat, and all other sectors were winners on the day. Transports were very strong, and the Goldminers rallied modestly despite the USD rebounding against the Euro and Pound.

After the close, Cisco (CSCO) reported its earnings, closing up +0.68 pct, which was a positive for this morning’s open. Vodafone (VOD) announced it will not sell its $10 billion stake in Verizon (VZ), which is another positive today.

Treasury prices dropped (short and mid-term Bond yields lifted) after the FOMC report. Treasurys look to open weak as credit spreads tighten.

On the earnings front, Toll Brothers (TOL) revenue fell -21 pct (no surprise), Sprint (S) net income fell -95 pct (wow), and ING Groep (ING) saw profit rise a neat +27 pct.

Nymex Crude Oil sold down sharply early on yesterday before moving above $72/bbl. The EIA expects that US oil demand will increase +1.0 pct for the 3Q. I think there will be higher Crude Oil prices going forward.

Earlier yesterday, the international equity markets were positive as European stocks closed up and Japan finished marginally higher. But, markets were not demonstating much confidence yesterday. Today, after the FOMC announcement, was different as all these markets enjoyed their own form of rocket launch.

---

The Cara Global 100 Stockwatch

Here are the Tuesday session Cara 100 gainers.

---

Here are Cara 100 losers.

---

Here are the Cara 100 stocks that hit 52-week intra-day highs or lows in the Tuesday session.

---

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.

---

Key Stocks plus Cara 100 In Focus

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

---

Traders might want to watch the Cara 100 companies that hit 52-week high prices for the stocks yesterday to see how long the strength can continue.

Costco (COST) chart:

Paychex (PAYX) chart:

---

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

Here are the charts of up to a dozen stocks with RSI-7 above 70 and below 30, from Thursday.

RSI > 70 (7)

RSI < 30 (12 of 14) (WITHOUT ASD POST SPIN-OFF)

---

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

“Chris,” used BillCara2.com data that is unsmoothed, unlike the data from Worden used by “David”. Starting today, “Sergey” will be proving the Worden RSI data, as David is travelling.

---

International Economics Review

US Economic Calendar for next week

Econoday Weekly International Report

---

US Equity Markets Review

DJIA (interactive) chart

Following Monday’s almost triple-triple Dow rally, yesterday’s session was a modest win.

When you annualize yesterday’s S&P 500 gain of +0.62 pct, or the DJIA or Nasdaq Composite, the performance was actually more than modest. Moreover, on the heels of an almost 300 point gain in the Dow 30 on Monday, any gain at all was a positive. Normally, markets consolidate those extreme gains by taking some profits.

I think traders will have to watch markets, especially the FTSE and the Russell 2000 small caps to see if there is going to be a rally follow-through. This morning, that certainly appears to be the case.

---

NASDAQ Composite (interactive) chart

---

International Equity Markets Review

I think the global selling wave is over for now, but yesterday in the Asia-Pacific markets, there was a general lack of enthusiasm. This morning, however, there was a monster rally across the board there.

---

Asia-Pacific

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

---

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

The Nikkei Dow lifted +0.64 pct today.

The Mar-07 16600 support level for the Nikkei 225 of the very important Japanese market is the critical one to watch this summer. The index is now at 17029.

---

Here is the latest chart for the Singapore index .

Today, Singapore (+3.37 pct) was very bullish.

---

Here is the latest chart for the Shanghai Composite index .

Shanghai was quiet. There is clearly a Shanghai Hedge on these days. Either Shanghai is booming or all the other Asia-Pacific markets are.

---

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

The Hong Kong market rallied hard (+2.87 pct).

---

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

Today, the Bombay Stock Exchange BSE 30 Sensex index rallied +2.51 pct, closing in on the recent all-time high, likely to be broken again in a few days.

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

---

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

The All Ordinaries index of Australia gained +1.85 pct today, which followed yesterday’s gain of over +1.0 pct.

---

Europe>

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

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

The FTSE is stronger again, presently up +0.8 pct to 6357.6 at 8:44am ET. The index must move back to its former trading range above 6500-6600 as a minimum in order to continue the Bull market. Judging from the rest of the international markets action, I’d say that is now more likely than not.

---

US Dollar Review

Here is the chart of the recent trading.

The trade-weighted USD has lifted to 80.424 at present (8:00am ET), but I think it will weaken as the higher equity prices take hold today.

---

Oil Review

Interactive Chart of Weekly Crude Oil:

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

The e-mini September contracts are down from yesterday morning to 72.250 at 8:30am ET, which is up an eighth of a dollar since yesterday morning at this time. Maybe the cycle has bottomed.

---

Gold & Precious Metals Review

Here is the Recent Spot Gold chart.

Spot gold has dropped back to 674.6 (8:33am ET), up a lot from 666.6 (yesterday at 9:43am ET).

Yesterday I said, “This weakness may persist until Prof. Bernanke gets through speaking, and maybe a day after that. Then back to reality.” Reality is here this morning, and prices of the PM group are rallying. And, without that rally, I habe been saying that the broad US equity market would not rally hard either.

Today looks great on both counts.

“If the gold market is to move “Onwards and upwards to 750 this quarter”, as I believe, it may have to move counter-cyclically to the broad equity market for a while. But, most of the time, the POG lifts with the broad equity market. “ Same old, same old.

---

Here is the Recent Spot Silver chart.

Spot silver is side-tracking here at 13.13 at 8:36am ET, up from 12.91 at this time yesterday. The “Silver Crazies” – the hard core silver crowd will likely crank it up now.

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

---

Here is the The Goldminers stock index chart.

Gold stocks are going to recover nicely today. The index tested that 143-144 level I talked about a couple weeks ago. Now the level is headed well above 150.

I hope that the price of the index breaks out of its trading range and goes on now to set record highs.

Ysterday, I wrote, “The $XAU index is quiet. Last week, I opined “I think it was a good time to re-enter. I think the rally starts now.” The gold market had that immediate initial burst to the upside I had been waiting for, then settled back, amid central bank precious metals selling. But, now that the broad equity market has been saved from the crash that had been looking likely, I believe the pressure is off the goldminers. So tomorrow I intend to offer a mini-report on the miners.”

I’ll have to do that tomorrow as today I have other more pressing matters.

---

Since I forgot to upload all the charts to the server, please hit the page refresh.