Late Rally Couldn't Save the Day

[Excerpted from Bill Cara's Daily Report]

Despite the late session rally, at the closing bell the S&P 500 (1,020.62 -8.31 -0.81%), DJIA (9,496.28 -47.92 -0.50%) and NASDAQ Composite (2,009.06 -19.71 -0.97%) were down almost a full percentage point.

There was even less enthusiasm in Canada, which disliked the lower $Gold (951.20 -3.70 -0.39%) and $WTIC Crude Oil (69.96 -2.78 -3.82%) prices. The Toronto Exchange Composite (10,868.21 -109.76 -1.00%) and the Toronto Venture Board (1,175.24 -13.47 -1.13%) both had losses of one percent or more, and the Canadian Loonie was down a bit too (91.39 -0.29 -0.32%) against the USD.

The US Dollar ($USD 78.15 -0.15 -0.19%) also gave up ground to the other major currencies as the Euro (143.35 +0.36 +0.25%), Yen (107.45 +0.62 +0.58%), and British Pound (162.84 +0.22 +0.14%) made gains.

In NY, in the equity sectors, there was only one winner in ten and that was the usually defensive Consumer Staples (XLP +0.2%), while Energy (XLE -1.9%) did not hold up under the selling pressure of Crude Oil prices.

Among industry groups, the Pulp& Paper and Broker-Dealer groups were strongest ($DJUSPP +1.9% $XBD +1.1%), while the Semi-conductors and Goldminers ($SOX +2.4% $XAU +1.8%) were leaders, while were strongest, while the natural gas and goldminer stocks ($XNG -2.4% %XAU -2.3%) were weakest on the day.

Earlier Tuesday, the Austral-Asian markets were all higher except for India (15,551.2 -0.74%), which needed a rest but was also under pressure of media reports that economic growth estimates are now being reduced. As for the others, they were all winners today: China (2,683.7 +0.60%) and China-inspired (ie, large cap listings] Hong Kong (19,872.3 +0.75%) made a partial recovery of Monday’s losses. Japan’s Nikkei 225 (10,530.1 +0.36%), and Australia (4,511.3 +0.61%) also made gains.

But, the European stocks have been falling sharply Tuesday morning. France (3,619.5 7:16AM ET -0.93%), Germany (5,377.1 7:16AM ET -1.60%) and the UK (4,847.1 7:16AM ET -1.26%) were all pulling back, led by banks as fears of slower economic recovery were settling in.

The leaders of the ten (only) winning Cara 100 company stocks Monday were Teekay LNG, Procter & Gamble and Garmin (TGP +2.0% PG +1.7% GRMN +1.7%), while the 90 losers were led south by commodity plays Cameco, Teck Corp and PetroBrasil (CCJ -4.5% TCK -4.5% PBR -4.4%).

The US Treasury long bond ($USB 120.94 +0.62 +0.52%) made some gains as capital fled the equity market. Treasury yields dropped for the 30-year (4.181 -0.27 -0.64%), 10-year (3.401 -0.50 -1.45%) and 5-year (2.390 -0.67 -2.73%) instruments. The Treasury bill yield remained unchanged at 0.130, which is a dangerously low level.

Precious metal prices were weak Monday and again Tuesday morning: the spot (cash) market was as follows for gold (949.55 -2.83 -0.30% 07:32am ET); palladium (286.0 -2.0 -0.69% 07:28am ET); platinum (1234 -9 -0.72% 07:29am ET); and silver (14.73 -0.12 -0.81% 07:32am ET), respectively. However, except for a brief sell-off from 4am to 7am ET, prices are not collapsing.

At the start of the day, futures prices were as follows for the Euro [1.4292 -0.0038 -0.27% 07:18am ET], and DJIA [69.60 -0.36 -0.51% 07:18am ET], and for Crude Oil [69.60 -0.36 -0.51% 07:18am ET].

Prices are reflecting a deleveraging in the credit markets.

Comments

[FrankTrades:]

Late rally? What late rally? You mean that dead rhino bounce at 3:45 PM? Look for a retest of the March lows as the most likely scenario going forward.

Sep 01 08:43 PM