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Interesting that just when the major banks are about to report, the oil prices, which are controlled by the banks, sink. Then a progression of positive reports from State Street Bank, Wells Fargo Bank and now JP Morgan Chase et al have given more oomph to a well-engineered market rally.

Tell me we didn’t see this coming.

At the bell yesterday, the DJIA (+276.74 +2.52% to 11239.28), the S&P 500 (+30.45 +2.51% to 1245.36) and the NASDAQ Composite (+69.14 +3.12% to 2284.85) rallied strongly.

The winning sectors were Financials (XLF +13.1%) and Consumer discretionary (XLY +4.0%). In the Financials, the Banks ($BKX +17.3%) and Broker-Dealers ($XBD +13.2%) were exceeded only by the Airlines ($XAL +18.1%). For industry groups (containing good companies and bad) to be up so much is a reflection of (mostly) short-covering. Also strong on the day were REITs ($DJR +6.6%) and Retailers ($RLX +5.5%). These dogs have been running together.

The losing sectors, reflecting the commodity price pull-back in oils, were Energy (XLE -2.6%) and Utilities (XLU -2.0%).

The Energy stocks sell-off was led once again by NatGas ($XNG -2.2%) and Oils ($XOI -2.1%). The Goldminers ($XAU -2.6%) were hurt as $GOLD sold down -$16.00 per oz to 962.70. The Crude Oil contracts ($WTIC) sold off -$4.05/bbl to 135.32.

The winning Cara 100 stocks were OXPS +10.4%, CCL +9.8%, GS +9.5%, GOL +8.9% and ERJ +8.7%. The losers were SYT -5.8%, CCJ -4.4%, SLW -3.7% and CVX -3.4%.

Equity markets in the Asia-Pacific region were higher except for Shanghai: Australia (+0.60% to 4977.4), Shanghai (-0.78% to 2684.8), Hong Kong (+2.41% to 21734.7), India (+4.26% to 13111.9), and Japan (+1.00% to 12888.0). Traders decided to support the banks in keeping with the rally in the US.

At this point in the session (8:07am ET, 1307 GMT), the European bourses are rallying with buying and short-covering in the Banks. The UK FTSE is up +2.62% to 5286; French CAC +2.71% to 4225 and the German DAX +2.31% to 6297. As I noted yesterday morning, Europe’s turn seems to be occurring as prices are strengthening based on the Wells Fargo and State Street bank reports.

The $USD was stronger yesterday: $USD +0.37% to 0.7236; Euro -0.52% to 1.5822; Yen -0.48% to 95.11; Pound -0.29% to 1.9987; and Loonie -0.06% to 0.9979.

Crude Oil futures closed at 135.32, down -$4.05/bbl, which followed the previous day’s loss of -$6.41/bbl. This morning they are at 134.47, down a bit.

$GOLD yesterday lost -$16.00/oz to close at 962.70.

Precious metal prices (spot) at 8:13am ET for gold, palladium, platinum and silver are (compared to the prior two day’s morning prices): 959.65 (970.81, 984.43); 424 (432, 447); 1942 (1946, 2008); and 18.72 (18.74, 19.355), respectively.

The $USD and Euro/USD futures are presently (compared to yesterday morning) at the rates of 0.72245 (0.7192) and 1.5798 (1.5854), a little stronger for the $USD.