Yesterday, the DJIA (+76) and Nasdaq Composite (+15) were lifted by Telecom and Utilities.

The US Labor Dept told traders that Consumer prices fell for the first time since October 2006 as the CPI dropped -0.1 pct.

The US Commerce Department reported housing starts hit its lowest level since 1995, declining a less-than-expected -2.6 pct to a seasonally adjusted 1.331 million annual rate, which is an improvement after dropping -6.9 pct in July to 1.367 million.

One of the world’s largest financial services firms, Morgan Stanley (MS) announced its 3Q07 net income plunged -17 pct (to $1.45 billion) versus 2006.

Lehman Bros (LEH) announced that the worst of the mortgage meltdown is over. But they didn’t opine when the problems would be over, or how many more financial services companies and house builders will become insolvent/bankrupt later this cycle.

The FOMC may have cut rates, but today the Fed also cut their outlook for the economy and corporate profits.

As for the deals, Accredited Home Lenders (LEND) agreed to a revised $295 million takeover by private-equity firm Lone Star Funds.

On the earnings front, General Mills (GIS) 1Q net income lifted +8.2 pct to $289 million.

Treasury yields surged as traders sought to exit their safe-haven positions and grow their risk appetite after they watched the $USD rise against the Yen, Euro, and Pound.

Gold and Copper stayed bullish with Copper hitting a 6 week high.

Crude Oil moved almost back to a record-high $82/bbl after the Department of Energy reported that crude inventories fell by -3.8 million barrels (to 318.8 million) last week, gasoline inventory rose by +400,000 barrels, and distillates, which include heating oil and diesel fuel, grew +1.5 million barrels.

The Asia-Pacific equity markets rocketed up yesterday on the prior day’s FOMC announcement. Europe too was exceedingly strong.

My take is that real wealth has been created in the BRIC and supporting regional economies, and so the equity markets there will hang tough (ie, remain bullish for another intermediate-term cycle), but the US and European economies were boosted by inflated prices for real estate that could not sustain an economic return (ie, investment in real property was returning say +2 pct cash on cash returns, while investors were hoping to make up the difference by inflated price increases). That bubble has burst. Those equity markets will be the first to suffer in the jaws of the Bear.

The Bear has already started. Several weeks ago, despite some negative comments by a couple members of this community, I opined that there would be another (but final) rally to about the previous intermediate cycle high, and then the next down wave would be WORSE than the prior one. I also said that Gold would spike higher to about the 750 level and then be the last ones off the dance floor as the Bear would scare away most traders. Moreover, I said that I believed that American and European traders would sell their domestic holdings and buy the BRIC stocks for another cycle before exiting equities and bonds altogether. This scenario is playing out.

There are tough times ahead. You can blame the Administrations of war-mongering nations, central bankers, HB&B or whomever, but the fact is that traders trade prices. We can profit in Bear markets as well as Bull markets. Perma-Bulls and Perma-Bears are the losers. As you can see from my writing, the Sell-side needs you to be Perma-Bulls – they even misleadingly call you Investors to make you think that way.

They even call themselves Advisors, when we all know they are salespersons.

But, that is their culture – a culture of obfuscation and (too often) deceit. We trade prices – we trade them up; we trade them down. If we are honest with ourselves, we have the best hope of great financial success.

If I have one very long-term view, it’s that precious metals started a secular Bull market in 2002, which will carry through at least two primary cycles. The first one will end soon, and the next will start as soon as central bankers gather together to agree on massive money printing to try to grow their economies out of the worst of this next primary Bear cycle for equities and fixed income securities. How bad can it get? I think there will be a lot of talk of Depression. That’s how bad. How high will Gold go? Eventually (but not this cycle, which is almost over), Gold will be like Rob McEwen sees it, well up above $1000 an oz. Of that, I have no doubt. But, then we are looking ahead at 2010-12.

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International Economics Review

US Economic Calendar

FOMS Policy Decision Analysis by Econoday

US CPI Report from Econoday

Yesterday morning, the US Labor Dept reported that the Consumer Price Index dropped -0.1 pct in August compared to a +0.1 pct increase in July.

They stated that lower energy prices were responsible. Talk about spin. Energy prices include all-time record high levels for Crude Oil.

US Housing Starts Report from Econoday

Remember, Friday is a “quadruple witching” day, which ought to add to the volatility.

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The Cara Global 100 Stockwatch

Here are the Wednesday session Cara 100 gainers.

Note: Knobias has a problem with the CSCO and DELL data.

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Here are Cara 100 losers from Wednesday.

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Here are the Cara 100 stocks that hit 52-week intra-day highs or lows in the Wednesday session. The New Highs list is growing. Watch the Distribution Zone for Sell Alerts. Successful traders sell into strength (and buy into weakness), like any businessperson would do.

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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. Note how enthusiastic traders have become, with price increases on huge volume expansions. A lot of this is short-covering, and much of it is the action of so-called professional money managers playing chase the leader.

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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 .

RSI > 70 (12 of 47)

RSI < 30 (0)

The scoreboard now reads 47 to zero (>70 vs <30), which means traders are falling over themselves to chase stocks higher. Big mistake.

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

“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

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NASDAQ Composite (interactive) chart

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International Equity Markets Review

Asia-Pacific

The indexes across Asia-Pacific equity markets were positive today across the board (except Singapore, which was consolidating previous gains).

As I remarked yesterday, nobody is thinking concerns about bank solvency. With monetary expansionary policies, we will now pay with inflation, and ultimately higher interest rates. The banks are off the hook.

That’s the storyline traders want to hear, and will or a few days.

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 gained +32 points Thursday, which was a good thing after Wednesday’s +580 point gain. This has been a wild week in Tokyo.

The N225 is now at 16414. It closed two weeks ago last Friday at 16569, and was well over 18000 in July. This is a chance to sell into strength.

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Here is the latest chart for the Singapore index .

Today, the Singapore STI was down -1.17 pct, on a weak close after almost to an intra-day record high.

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Here is the latest chart for the Shanghai Composite index .

The Shanghai Composite gained +1.39 pct to 5470.06, which is a fresh new closing record.

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

The Hong Kong market was up +0.57 pct to 25701.13, which is a fresh record high close.

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

Today, the Bombay Stock Exchange BSE 30 Sensex index lifted a further +0.15 pct to close at a fresh record high 16347.95. India did not disappoint.

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

The All Ordinaries index of Australia gained +0.61 pct today to close at 6400.9, which was just shy of the record high close of 6469.2.

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

There are solid red arrows at this point (8:40am ET) today across Europe. The losses are not significant, yet, but they are focused in the Financials. Besides a record high Euro:USD rate is going to cause all kinds of econ problems in Europe as out-bound tourism will take hold, and exporters will have tougher times selling their goods, etc..

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

The FTSE is down -0.68 pct at 6415.7 in the early part of the session (8:43am ET).

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US Dollar Review

Here is the chart of the recent trading.

78.80 (at 8:15am ET) is a disaster for future inflation in the US. But it is what it is. Now this community can see just how bad off the Admin and the Fed were when they were misrepresenting the truth for the past year. So be it.

Bring it on! Gold, that is.

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Oil Review

Interactive Chart of Weekly Crude Oil:

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

Crude Oil is presently at 81.93, after setting a record earlier at 82.525.

“Wooden nickels will keep the OPEC producers asking for more of them.”

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Gold & Precious Metals Review

Here is the Recent Spot Gold chart.

Spot gold is presently (about 8:48am) at 731.30.

“Zeroing in on a cycle high, and perhaps an all-time record high – like Crude Oil.”

Don’t you enjoy this? But, watch the Euro. The ECB cannot let the Euro run amok vs the USD. They will have to sell gold and buy USD soon. That will be a temporary pull-back; the price will spike higher and then fizzle out as speculators get worried that the Financials are getting trounced, and need to be supported, which will scare the speculators.

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Here is the Recent Spot Silver chart.

Spot silver is stronger today (8:52am ET), presently at 13.25, a gain of +27 cents (+2.0 pct) since yesterday morning.

Recent Spot Silver chart.

I like the Kitco.com charts btw, but also need the ones at Yahoo Finance, StockCharts.com, BillCara2.com and ADVFN.com before making any opinion.

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Here is the The Goldminers stock index chart from yesterday.

The Weekly data chart is he important one to watch. If the prior cycle high of 171.71 can be beaten this week, then the top is open-ended. This could be a parabolic move, which will require your finger close to the sell button. You can make your whole year here in the next few days if that parabolic move occurs.

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Wrap-up

Aren’t capital markets interesting? The more you know; the more you want to know. It gets into your blood.

The power to manage your own wealth is exciting to independent traders who have accomplished that.

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