After a weak open, losing about -50 points, the DJIA then rallied about +125 points as spin doctors were effusive in their praise that earnings were beating the Street expectations. Then came the oil and gas inventory data, which served to knock the bull out of the rally. At the end of the session, the US equity market was up a bit, partly because of falling oil prices, but bonds were down a second straight day.

Yesterday, the DJIA (+29.88 +0.26% to 11632.38), S&P 500 (+5.19 +0.41% to 1282.19) and NASDAQ Composite (+21.92 +0.95% to 2325.88) did manage a small gain, which may be given back at the open this morning.

Crude Oil ($WTIC dropped -$3.98/bbl to 124.44 after the day earlier loss of -$3.40/bbl. Along with the continuing squeeze on commodity prices, as the $USD is regaining strength, $GOLD dropped -$25.70/oz to 922.80, which followed the prior day’s loss of -$15.20/oz.

With the lower commodity prices, the Toronto Composite index lost -131 -0.96% to 13512.66 and the Toronto Venture board dropped -1.79% to 2223.13.

In NY, Consumer Discretionary (XLY +1.9%) and Tech (XLK +1.8%) were the leading sectors while Energy (XLE -3.6%), Utilities (XLU -2.4%) and Basic Materials (XLB -1.3%) were the losers.

The big industry mover was Airlines again ($XAL +8.5%), following the day earlier gain of +22.2%. Insurance ($INSR) gained +5.2%. Goldminers ($XAU -5.3%), Oil Services ($OSX -4.8%) and NatGas ($XNG -4.4%) were the losing groups.

Cara 100 stocks were definitely on the move, both up and down, in heavier volume and more extreme price action. AET +12.7%, WHR +12.5%, GOL +9.5%, IBN +8.6%, and WFMI +8.4% were way up and CHRW -15.6%, COST -11.9%, ABX -7.8% and GG -6.5% just the opposite. The COST traded 5.2 times average daily volume as traders did not like the company report.

Today and tomorrow, traders will be reviewing the US housing data.

The 30-year US Bond ($USB) lost -0.48% to 113.61, following the loss of -0.34% the previous day. Yields were up across the board, but moderately so.

Earlier today, the Asia-Pacific markets were mixed. Tokyo (+2.18% to 13603.3, which was a 1-month high), Shanghai (+2.55% to 2910.3) and Australia (+0.52% to 5188.4) were up, but Hong Kong (-0.20% to 23087.7) and India (-1.11% to 14777) were down.

In Europe this morning at 8:35am ET (1335 GMT), there are losses. The UK FTSE is down -0.66% to 5408, the French CAC -0.72% to 4378, and the German DAX -0.88% to 6478.

Crude Oil futures are up +$0.31/bbl to 124.75, after being down about that much a half hour ago. The $USD is at $0.73085 while the Euro is at 1.5630. DJIA futures are down -28 to 11585 at 8:27am ET vs -35 a half hour ago.

Comments & Outlook

There is a strengthening USD here as commodity prices sink. To what extent this action is regulator and HB&B induced is unknown by the great unwashed. But we have our thoughts on the matter.

In any case, I believe the market is cueing in on the lower commodity prices still, which is serving to support the broad equity market. So far, the bond market is not being helped, but that situation is dynamic. Bond traders are still cautious because this Treasury Secretary and Fed head are likely to print, print, print money as their solution to what ails America, which when you think of it is the reason America is in economic trouble in the first place.

I am curious about the extreme trading of certain stocks. They are up +10% in a day and down the same the next. This gives rise to my concern there is massive front-running of orders by institutional block traders at HB&B. In a pinch (and these banks and broker-dealers are being squeezed, possibly to death, not just being pinched), the Street is likely to pull any stunt in an effort to survive. I think the regulators ought to be on the look-out, if they care at all.

I’ve been there, so listen up Mr. Regulator.