At the close, the DJIA had lost -236.77 -2.08% to 11147.44, the S&P 500 -29.01 -2.28% to 1244.69, and the NASDAQ Composite -59.55 -2.60% to 2234.89. The Russell 2000 small cap index plunged -2.8% while the Toronto Composite was down -199 or -1.44%.

Crude Oil ($WTIC) started the day strong, moving from 136.04 the prior day to a high of 138.28, based on concerns of an Iranian missile test. But then the $WTIC settled back to a gain of just +1 cent at 136.05.

$GOLD futures gained +$5.30/oz to 928.60.

There were no leading industry groups of note. The losers were the REITs ($DJR -7.1%) after Goldman Sachs issued a scathing report on the future of real property in the US, plus Broker-Dealers and Banks ($XBD -6.2% and $BKS -5.7%) and Airlines ($XAL -5.9%). This was a reversal of fortune from the previous day’s trading.

For the extreme Cara 100 stocks, the winners were NUE (+3.8%) and IMO (+2.1%). The losers were BC (-9.0%), JC Penny (-6.1%) after Sachs didn’t look too good, CSCO (-5.7%) and CCL (-5.4%).

The 30-year US Bond ($USB) gained +0.29% to 117.19. The yields on all Treasury issues were down a bit as traders moved from equities to fixed income.

The US Dollar index ($USD) lost -0.52% to close at 72.62. The Euro gained +0.50% to 1.5745, Yen +0.75% to 93.71, Pound +0.69% to 1.9829, and the Cdn Loonie +0.86% to 0.9891.

Earlier today, the Asia-Pacific equity markets dropped back except for Hong Kong and Japan, which were up modestly. The Australia All-Ords lost -1.35% to 5020.5; the Shanghai Composite lost -1.54% to 2875.5; the Hang Seng of HK gained +0.07% to 21821.8; the Indian Sensex 30 lost -0.27% to 13926.2; and the Nikkei 225 was up just +0.12% to 13067.2.

European stocks this morning at about 8:00am ET. were weak, but gaining a bit of traction. The FTSE 100 is down -0.96% to 5477; the French CAC down -1.38% to 4280 and the German DAX off just -0.20% to 6374.

Crude Oil futures are up +0.62/bbl to 136.67, while the $USD is up a bit (+0.31%) to 73.095, and the Euro down to 1.5652.

Spot prices at 7:45am ET for gold, palladium, platinum and silver are quiet (like for all week), at: 928.10, 443, 1982, and 18.12, respectively.

The DJIA futures are at 11206, up +57, but down about -25 in the past hour (at about 8:00am ET). At 9:15am ET, the DJIA is down -18 to 11131, and the $USD has softened, although still up since midnight.

Comments & Outlook

Then watch for the earnings reports of these banks, comparing the results (and expected increase in write-downs) to their stock action in the market. Two things could happen to tell you this Bear market is going to end soon: (i) the Bank and Broker-Dealer write-downs are minimal, and (ii) their share prices rally—not for one or two banks, but across the board--for several days after the corporate results for the biggest banks are released.

I think there is more downside—perhaps -10% in the major market indexes from here—before a positive bias returns to the market. But, after a summer rally of sorts, there could be a rapid hammering of prices that flushes out the weak hands, and then the Bull (admittedly not in the healthiest condition) can return to the ring.

This is a time when you scan your list of candidates (like my Cara 100) to focus in on the ones you think will have a good run of profits, dividend increases, increased operating and profit margins, no capital raise-ups, no management issues, and so forth. I would only buy a small percentage of your allocated funds for each selection, and I’d wait for market weakness before doing it.

The name of the game is to manage risk before thinking gains. At the end of the day, if you position your portfolio appropriately, the stocks of high quality companies will perform well.