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[Excerpted from Bill Cara's Daily Report]

With no economic news, no new broker-dealer research, most tax-loss selling finished, and no corporate news of note other than Walmart’s (NYSE:WMT) announcement they would start selling the Apple (NASDAQ:AAPL) iPhone on Sunday, it’s not surprising to see extremely low volume and tight markets.

After opening slightly higher, the US equity market weakened through the first half of the session today, then closed on a slightly positive note with nine of ten sectors up on the day. Only Tech (XLK -0.1%) was down.

The closes for the week were: DJIA (+47.07 +0.56% to 8515.55), S&P 500 +4.65 +0.54% to 872.80) and NASDAQ Composite (+5.34 +0.35% to 1530.24).

The Canadian, UK, European, Australian, and Hong Kong markets were closed for Boxing Day.

Earlier Friday, the international markets that were open were mixed: Japan (+1.63% to 8739.5), Shanghai (-0.05% to 1851.52) and India (-2.51% to 9328.92).

Thursday in NY, the Energy sector (XLE +1.4%) and Basic Materials (XLB +1.2%) were the leaders.

There was extremely low volume in all Cara 100 company stocks. When I speak of a high volume day, I expect to see at least 25 of the Cara 100 stocks with daily volume that exceeds +100% increase of the three-month average daily trading volume. On weak volume days, there is possibly 1 in 100 and only maybe 4 or 5 that exceed a +25% increase.

When I look at the volume table, my eye draws a line across the +25% line and I look above that to see (i) how many stocks also have higher closing prices than lower closing prices that day, and (ii) which ones, in that GE is a more important “General” than GM. What I am studying (it only takes 5 seconds) is money flow. Capital is flowing into markets when there is higher price and higher volume, and that’s bullish.

But Thursday, when so many important markets of the world were closed and many traders are on holiday, I didn’t expect to see any remarkable money flow.

The stocks of the Cara 100 that lifted were led by the Canadian’s (even though the Toronto Exchange was closed): Silver Wheaton (SLW +87%), Goldcorp (GG +5.8%), Barrick (ABX +4.5%) and Teck (TCK +4.4%). That’s because $GOLD futures popped +$23.20/oz during the day to close at 871.70.

Sometimes I get exercised over the crapola that non-expert self-promoters funnel into the media. At the very bottom of the cycle in late October, I asked why the highly negative economists Roubini and Feldstein were being paraded around all the Financial Entertainment TV networks acting like they understand trading. Then there was that piece in Seeking Alpha by some jerk who claimed that Silver Wheaton was done like dinner, and many here in the blog got all upset.

As you know, I scolded those authors for throwing matches on the fire we were fully cognizant of. In particular, I was miffed at the slamming that SLW had taken on Monday, October 26, so I wrote it up.

Now you see why I refer to “Proof of concept”. SLW hit a record low of US$2.56 that day, closing $2.59. Within a few weeks it zoomed to $6.98, closing yesterday at $6.13.

The DJIA index btw was 8200 that week in late October when I wrote that Roubini and Feldstein had gone over the top. Six or seven trading sessions later, the DJIA index rallied to 9650. Then after the DJIA weakened in November to the low 8000’s, again Roubini was there on daily TV telling everybody the US equity indexes were going to crash a further -20%. A week or so later, the index rallied to 9000.

Thursday’s losers in the Cara 100 were the four Indian companies: Tata Motors (TTM -4.9%), ICICI Bank (IBN -4.4%), Infosys Technologies (INFY -3.9%) and HDFC Bank (HDB -3.3%). Not surprisingly, earlier in the day, the most important equity market in India, the Bombay Exchange B30 Sensex index had dropped -2.51% as the political dialog between India and Pakistan flared.

On the corporate front, MasterCard (MA -0.91%) reported that year-over-year retail sales were down -8% for December through Christmas Eve. Ex-gasoline, the decrease is not that bad. In fact, most consumers are happier. Amazon (NASDAQ:AMZN), too, reported that the holiday shopping season has been the "best ever", although many retailers would disagree.

I noted that the losers among the bigger retailers on Friday were: Macy’s (M -2.8%), Saks (SKS -1.8%), and Walgreen (WAG) and Nordstrom (JWN -1.2%). This wasn’t much, but traders of the US Retailers will need to keep a close eye on the industry for the first ten or 12 days of 2009.

To help you, I insert the following character string into the Portfolio section of Google Finance:

I sort them by % gain and loss, and by market cap to see what’s happening. Recall that it was in June-July of 2007 that I saw these stocks hitting the wall and collapsing when I concluded the Bear was taking control of the US equity market. With this terrible economy, traders are looking to separate the stocks of companies headed for bankruptcy versus those that are priced at or near Bear market lows and will likely recover.

Do you recall Circuit City, the old CC that traded at $15-$17.50 that summer when the credit bubble burst? As (OTC:CCTYQ), Circuit City now trades at about 15 cents. Traders who are going to be successful cannot ride these stocks all the way to zero unless you are short. As most individual traders do not practice short selling or buying put options, they must learn to watch the technical indicators, and use stop orders.

The US bond market is still trading at ridiculous premiums to long-term norms even given the bad economic data that is being reported weekly. On Friday, in the absence of any economic data, the US long bond ($USB) gained +0.50% to 141.17. The yields cannot be justified: 2.6% for the 30-year; 2.1% for the 10-year; and 1.5% for the 5-year. The T-Bill yield stayed at 0.005%.

Gold and silver precious metal prices were much stronger yesterday, whether this buying was coming from India due to concerns of major conflict with Pakistan or not.

There was a modestly stronger Euro (+0.28% to 140.31). The $USD dropped (-0.32% to 80.39). The Yen, Pound and Loonie also closed lower (-0.24% to 110.10; -0.84% to 145.82; and 0.21% to 81.83, respectively).

Precious metal futures prices closed Friday (compared to the Tuesday morning 6:00am ET spot price in brackets): gold at 871.70 (836.3); palladium at 176 (170); platinum at 894.50 (850); and silver at 10.53 (10.36). Spot Silver was 10.81 Tuesday at 6:00am ET. The obvious winners are gold and platinum, which makes it more likely that the India conflict was the issue. Of course, with all the aggressive central bank quantitative easing and government economic stimuli programs, ie, reflation, traders are waiting for precious metals to pop.

Crude Oil ($WTIC) gained +$2.36/bbl to close at 37.71.

Source: Low Volume on Little News