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[Excerpted from Bill Cara's Daily Report]

Nervous traders sold off oil and precious metals from the outset on Monday, and gapped the equity market lower at the open.

At the close, however, the markets ended mixed. The S&P 500 (1,064.66 -3.64 -0.34%) and DJIA (9,778.86 -41.34 -0.42%) closed lower with the defensive Healthcare sector (XLV +1.0%) trying to pull the market up. The NASDAQ Composite (2,138.04 +5.18 +0.24%) closed a tad higher, with leadership coming from Computer Networks and Biotech ($NWX +1.1% $BTK +0.8%).

Among other extreme groups, the Airlines were flying ($XAL +4.4%) because of the morning plunge in Crude Oil prices ($WTIC 69.93 -2.56 -3.53%), but REITs ($DJR -1.8%) were not.

With the $USD up for the third day in a row (76.79 +0.31 +0.40%), $GOLD (1,003.80 -3.80 -0.38%) sold off at the open, falling to $995.90 before recovering much of the loss by day’s end. It still closed down on the day. The hit to Crude Oil and Gold knocked down the Toronto Exchange Composite (11,445.95 -82.28 -0.71%), and particularly the Venture market (1,265.00 -16.80 -1.31%).

The third day corrective move in the US Dollar, which followed a string of eight straight losses, took back more of the recent gains made in other major currencies such as the Euro (146.79 -0.32 -0.22%), Yen (108.69 -0.90 -0.82%), Pound (162.15 -0.32 -0.20%), and Canadian Dollar (92.74 -0.58 -0.62%).

The safe-haven play of early in the session, the US bonds, moved higher as capital flowed out of equities. The US long treasury ($USB) made a small gain (120.97 +0.28 +0.23%). But later in the day, those gains turned to losses as yields lifted on the 30-year (4.245 +0.14 +0.33%), and on the 10 year (3.487 +0.13 +0.37%), under the weight of massive treasury auctions that begin today. The yield on the 5 year paper (2.461 0.00 0.00%) remained unchanged. The T-bill yield bumped up a tad from Friday’s cycle low (0.090 +0.10 +12.50%), but continues to show that traders will park cash without return, a sign of perceived capital market risk.

For the Cara 100 company stocks on Monday, Brazil Foods and optionsXpress were winners (PDA +2.8% OXPS +2.4%), while some news dominated the losers, particularly DELL which is entering an acquisition (Perot Systems) that will not likely be earnings accretive for three years (VIP -5% POT -4.2% DELL -4.1%).

Tuesday, however, there is a positive spin to the commodity and equity markets as the Fed begins to contemplate a policy decision slated for release tomorrow at 2:15pm ET. Traders are figuring the wording will be positive about economic recovery, which may be a bit of posturing ahead of the following day start to the important G-20 meetings in Pittsburgh.

Earlier Tuesday, there is a weaker USD and higher oil and precious metals prices and stronger US equity futures. The earlier closed overseas equity markets, Shanghai (2,897.6 -2.34%) and Australia (4,671.1 -0.28%) drifted down a bit, but Hong Kong (21,701.1 +1.06%) and India (16,886.4 +0.87%) made headway. The Nikkei 225 of Japan was closed. Then by 6:42AM ET, France (3,846.2 +0.89%), Germany (5,741.1 +1.28%) and the FTSE 100 of London (5,180.1 +0.89%) were also moving higher on the weakening Dollar.

The precious metals market has been bouncing back since the Monday morning sell-off. Earlier Tuesday morning, affected by the weaker USD, the spot (cash) trades were as follows: for gold (1015.85 +9.31 +0.92% 06:58am ET), silver (17.20 +0.23 +1.36% 06:59am ET), platinum (1322 1326 +7 +0.53% 06:52am ET) and palladium (298.0 +5.0 +1.71% 06:40am ET).

Tuesday’s futures market is also stronger, with the Euro (1.4794 +0.0117 +0.80% 06:45am ET), the DJIA December futures (9782 +64 +0.66% 06:45am ET), and the Crude Oil futures (71.03 +1.10 +1.58% 06:44am ET) trading higher. The dance continues as the Fed and then the G-20 orchestra play on this week.

Source: Markets End Mixed as Dollar Rises Again