For the industry groups, Goldminers ($XAU +3.9%) and Oil Services ($OSX +2.9%) were strong; there were no particularly weak groups.

For Cara 100 companies, Garmin (GRMN +5.4%) and Goldcorp (GG) and SanDisk (SNDK) both up +5.3%) were the leaders. Electronic Arts (ERTS -2.4%) was a loser. But, yesterday was noteworthy that 9 stocks of the Cara 100 companies hit 52-week highs.

On the deals front, CBS Corp (CBS -2.38% to 24.23) agreed to purchase CNET for $11.50/share in cash. Yahoo (YHOO) is now in a proxy war with Carl Icahn.

Today, Fannie Mae (FMN) replaced a Dec.-07 policy that required a higher down-payment if the loan was for a home in a market with declining real estate prices. Now, Fannie says it will require down-payments of between 3- and 5% for all loans that it guarantees.

Treasury yields dropped. The 30-year bond ($USB) lifted +0.80%, closing at 116.42.

Crude Oil ($WTIC) closed down just -$0.29/bbl to 123.82 after hitting a low on the day of 120.65 following legislation in the US Senate closing an “Enron loophole”.

There was a significant ripple during the session as the $USD dropped and $GOLD surged +15.35/oz to 881.85, but the action was short-lived and the price had been up to 888.50. The chart has shown a couple surges in the past few days soon followed by equal sell-offs.

At the end of the day yeaterday, the $USD lost -0.07% to 73.30, but the Euro also lost -0.10%, as the Yen gained +0.29% to 95.47. The Canadian Loonie was up sharply +0.40% to 100.01.

Today the price of precious metals has started to fly in the past two hours (those prices in brackets): spot gold +896.65 (885.6), palladium 439 (433); platinum 2132.5 (2100); and silver 16.92 (16.80).

June Crude Oil has also popped +$2.57/bbl to 126.42. So far, the Euro is quiet at 1.5432. The June Dow 30 futures are up about +28 to 13024.

Comments & Outlook

Yesterday I stated: “The US Industrial Production report showing plunging manufacturing output is the dominant force this morning. Watch UPS and FDX.”

I said that because industrial production/manufacturing is probably 20% of the total US economy. When you see a bad economic number like that, knowing its impact on package delivery, you can anticipate weakness in the UPS and FDX stocks.

At the end of the day UPS and FDX closed down -0.34% and -0.23% respectively, which was not much, but the S&P 500 was up over +1%, and was strong across all sectors. Had the broad market been flat or down on the day, particularly if the price of oil lifted that day, the UPS and FDX stocks would probably have fallen by well over -1%.

As your knowledge of market relationships grows, you will come to have 100 or 200 of these simple analytical tools to try to make an educated sense of market trends and cycles. You are looking for confirmations or anomalies. Possibly you have been waiting for a trade. If I was looking to buy some FDX stock, say, I would be hoping for a weak industrial production/manufacturing number so that I could buy into weakness. Vice versa, if I wanted to sell that stock, I would have been hoping for strong data in that report.

Performance improvement in your trading will come as your knowledge of markets increases and becomes second nature to you.

As it does for Crude Oil ($WTIC), the chart for $GOLD looks susceptible to a pull-back and yet seem to get sudden, quick moves to the upside as both did again in the past two hours.

$WTIC and $GOLD, however, do not necessarily have to track together. This year, for example, they have not, as this chart shows.

These are difficult markets to assess. The commodity price data and macro-economic data have been very negative, and the banks, house-builders, retailers, manufacturers, and airlines are struggling to find stability. Besides, there are hyped-up presidential election campaigns underway. Nonetheless, it’s always a good time to view the markets as a learning laboratory.

Have a great day.