[Excerpted from Bill Cara's Daily Report]

Pre-holiday Friday equity prices were higher, but volume was anemic. However, trading in the US Treasury bond market was clearly under the microscope as the 30-year bond (119.97 -1.75 -1.44%) was hammered for the second day in a row, reflecting terrible interest by foreigners.

[Excerpted from Bill Cara's Daily Report]

Thursday trading was remarkable in all markets: the 30-year US Treasury bonds collapsed (-1.16 -0.94% to 121.72), the US Dollar plunged ($USD -0.49 -0.64% to 75.97), Crude Oil soared ($WTIC +$2.12/bbl or +3.1% to 71.69), Gold soared ($GOLD +$11.30/oz or +1.1%) and equities soared (S&P 500 +7.90 +0.75% to 1,065.48).

An unremarkable day saw weakness in the morning and strength for the final 90 minutes, leaving markets almost flat at the close. The S&P 500 (1,057.58 +2.86 +0.27%), DJIA (9,725.58 -5.67 -0.06%), and NASDAQ Composite (2,110.33 +6.76 +0.32%) were unsettled, awaiting the onset of Earnings Season Thursday.

Although the commodity prices were mostly unchanged, traders were focused in that direction, and so the Toronto Exchange Composite (11,349.88 +101.91 +0.91%) and Venture market (1,289.82 +8.42 +0.66%) made solid gains for the third day in three this week.

Another day, another drop in the US Dollar and another boost to equities and precious metal prices. In NY, all the sectors traded higher, but Energy and Basic Materials (XLE +2.4% XLB +2.1%) were clearly favored. At the close, the S&P 500 (1,054.72 +14.26 +1.37%), DJIA (9,731.25 +131.50 +1.37%), and NASDAQ Composite (2,103.57 +35.42 +1.71%) lifted about +1.4%. Due to the commodity price sensitive drivers, the Toronto Exchange Composite (11,247.97 +145.35 +1.31%) and Venture market (1,281.40 +27.15 +2.16%) had a similar result.

Since this is a speculative US Dollar based market, let’s start there. Tuesday, the US Dollar pulled back ($USD 76.31 -0.39 -0.51%) almost to the 75 cent level. Accordingly, traders were buying risk. For the second day this week, the Euro (147.15 +0.64 +0.44%), Yen (112.63 +1.00 +0.90%) and particularly the Canadian Loonie (94.33 +0.94 +1.01%) soared, while the Pound was a laggard (159.14 -0.25 -0.16%), in fact falling a tad.

It was just last Thursday when the Financial sector was hammered (XLF -4.4%), and credit dependent speculation in the Basic Materials and Energy was also dampened (XLB -3.9% XLE -3.1%) as the equity market took a hit when traders feared that banking and credit issues are not behind us. What a difference a couple days make.

On Monday, however, after Goldman Sachs upgraded the large US banks, and futures prices in Crude Oil and Precious Metals were sent soaring at noon by fresh money sent in by the Fed, the S&P 500 (1,040.46 +15.25 +1.49%), DJIA (9,599.75 +112.08 +1.18%), and NASDAQ Composite (2,068.15 +20.04 +0.98%) all climbed a percentage point or more higher.

With a focus on a weak national employment situation, tightening credit and economic recovery concerns, traders gapped the US equity market lower at the open on Friday, spent the day recovering and then sold off to a loss on the day, a fitting close to a week that took the market back to August prices.

Despite a loss in the US Dollar during the day ($USD 77.05 -0.19 -0.25%), share prices were soft at the close. The S&P 500 (1,025.21 -4.64 -0.45%), DJIA (9,487.67 -21.61 -0.23%), and NASDAQ Composite (2,048.11 -9.37 -0.46%) all closed lower. The Industrial and Consumer Discretionary sectors were weakest (XLI -1.3% XLY -1.3%), while Consumer Staples (XLP +0.3%) was the only sector to show strength, and only to a modest extent.

The US equity market gave back some more of Monday’s gains with a second day of small losses. At the close in New York, the S&P 500 (1,057.08 -3.53 -0.33%), DJIA (9,712.28 -29.92 -0.31%), and NASDAQ Composite (2,122.42 -1.62 -0.08%) were down.

The Toronto Exchange Composite (11,394.96 -0.03 -0.00%) was unchanged, but the Venture market (1,277.21 +4.90 +0.39%) followed up with another gain.

Despite modest improvement in the consumer sectors (Consumer Staples and Consumer Discretionary XLP, XLY +0.5%), the US equity market gave back some of Monday’s gains. At the close in New York, the S&P 500 (1,060.61 -2.37 -0.22%), DJIA (9,742.20 -47.16 -0.48%), and NASDAQ Composite (2,124.04 -6.70 -0.31%) all closed lower. The Technology and Financial sectors (XLK, XLF) both pulled back -0.5%.

Traders now will see if the last Wednesday afternoon (2:39pm ET) post-FOMC report benchmarks can be exceeded this week: S&P 500 (1,079.12), DJIA (9,906.73), and NASDAQ Composite (2,166.02).

Stocks sprinted out of the gate Monday morning euphorically embracing a spate of takeovers, undeterred by strength in the US dollar, or weakness in the Tokyo, Taiwan, and Shanghai stock markets. After closing near the best level of the session (S&P + 1.78%), US equities’ resiliency has finally convinced many unrepentant Bears to throw in the towel, no longer willing to stand in front of the bull market express train.

Xerox (XRX - 14.45%) announced it would pay 6.4 billion to acquire Affiliated Computer Systems (ACS + 14%), Abbott to use cash to buy Solvay’s drug business, and American Securities paid a huge premium to acquire GenTek (GETI + 39.87%). Companies willing to part with large sums of cash to buy businesses in face of lackluster economic prospects and continued high unemployment among consumers, was taken by traders as a very bullish omen for equities.

Traders are catching an odorous wind that suggests the widely touted US economic renewal is not happening. On Friday, August’s Durable Goods Orders came in with a decline of -2.4%, while an increase of +0.3% had been expected. August New Home Sales were reported as increasing +0.7%, while a gain of +1.6% was expected. Drunk on hope, the market is starting to sober up.

At the 4pm ET end of the week close in New York, the S&P 500 (1,044.38 -6.40 -0.61%), DJIA (9,665.19 -42.25 -0.44%), and NASDAQ Composite (2,090.92 -16.69 -0.79%) all closed lower for the third consecutive session. Tuesday was the only bright light of the week.

With the very important G-20 meetings in Pittsburgh Thursday and Friday, politics is front and center in capital markets. This intervention, leading to uncertainty, aided to the sell-off on Thursday. But what set it off, immediately after a strong open, was the shocking Existing Home Sales report that was issued at 10:00am ET.

Highlights The momentum in housing data has hit a bump as existing home sales ended four months of gains, down 2.7 percent in August to a 5.10 million annual rate that falls well short of expectations for 5.35 million. The dip wasn't lopsided to any of the two categories, split between single family homes, down 2.8 percent, and condos, down 1.6%. Regional data were also balanced showing low to mid-single digit percentage declines in the Northeast, Midwest and South and a low single digit gain in the West… Friday’s New Home Sales report was expected to show a fifth straight gain as was this report, though Thursday's results may subdue expectations a bit. Markets are definitely reacting to the report with the S&P down several points and the dollar index up … Commodities are moving lower as the play between safety and risk turns back to safety. A final note is that pending home sales, which are on a climb, sent a bad signal for this report which the NAR suspects reflects more stringent or even faulty appraisals that are scuttling sales…

With the FOMC policy decision reported at 2:15pm ET Wednesday and traders focusing on the very important G-20 meetings getting underway in Pittsburgh Thursday, politics is front and center in capital markets, and some of those became what traders call fast markets. Crude Oil ($WTIC 68.97 -2.79 -3.89%), for example, plunged in a 30-minute selling spree in the morning, and the US Dollar ($USD 76.33 +0.25 +0.32%) briefly soared and Gold bullion contracts ($GOLD 1,008.20 -6.30 -0.62%) plummeted momentarily. Equity prices snapped shortly after the Fed reported. The issue apparently has to do with Permanent Open Market Operations (POMO) and whether the US Treasury is any longer capable or interested in sustaining a low interest rate debt market supporting, bank supporting, equity market supporting interventionist policy that is whacking the Dollar.

At the 4pm ET close in New York, the markets ended on a bearish note. The S&P 500 (1,060.87 -10.79 -1.01%), DJIA (9,748.55 -81.32 -0.83%), and NASDAQ Composite (2,131.42 -14.88 -0.69%) all closed sharply lower than at 2:39pm ET with the S&P 500 (9,906.73 +76.86 +0.78%), DJIA (9,906.73 +76.86 +0.78%), and NASDAQ Composite (2,166.02 +19.72 +0.92%) showing the usual green.

[Excerpted from Bill Cara's Daily Report]

This story is getting old. Just when it looks like the equitymarket needs a boost, the US Dollar plunges almost -1% ($USD 76.08-0.70 -0.92%) and Financials (XLF +2.3%) and Energy (XLE +1.6%) fall inline. How low can the Dollar go?

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%).

From a session low in the mid-day Thursday, the major indexes began to rally, but ended the session near the middle of the day’s trading range.

In the continuous to and fro of the market dance, prices in New York attempted to advance as usual, but failed and ended down. At the close, the S&P 500 (1,065.49 -3.27 -0.31%), DJIA (9,783.92 -7.79 -0.08%) and NASDAQ Composite (2,126.75 -6.40 -0.30%) were all a tad lower.

Another late day rally pushed equity prices to their highest levels this year. Traders are now chasing index performance while understanding that they are also speculating in the continued collapse in the US Dollar. Who would have ever thought that shorting the greenback would be a lottery ticket to riches?

At the close in New York Wednesday, the S&P 500 (1,068.76 +16.13 +1.53%), DJIA (9,791.71 +108.30 +1.12%) and NASDAQ Composite (2,133.15 +30.51 +1.45%) were all higher by +1.1 and +1.5 percent. Like Monday and Tuesday, following a brief sell-off, traders lifted their bids through to the closing bell. This is a typical fast and furious Bull move – except this one is being led by international markets that are getting their power from the price being sucked out of the US Dollar.

Déjà vu; Wednesday seems like the second half of 1999 when investors ignored the risks and chased market prices higher. Except for Shanghai equities, the world is awash in green arrows Wednesday morning.

At the close in New York Tuesday, the S&P 500 (1,052.63 +3.29 +0.31%), DJIA (9,683.41 +56.61 +0.59%) and NASDAQ Composite (2,102.64 +10.86 +0.52%) all had a positive session. Like Monday, following a brief sell-off, traders lifted their bids through to the closing bell.

While the threat of a potential trade war with China momentarily pushed equities lower Monday morning, a wave of bargain hunting propelled stocks off their lows, causing nervous shorts to cover, and under-invested money managers to lift offers into the close.

After last week’s sharply higher performance, many traders concluded the broad market was due for a rest, while clearly extended and lacking momentum; however, erstwhile Bears were sadly mistaken as the little engine that could kept chugging along on Monday.

Stronger global economic data, except in Japan, spurred international equity prices, but the key story continues to be the collapse of the US Dollar, which is serving to make it easier for global traders to buy stocks and commodities listed or denominated in $USD.

At the close in New York on Thursday, the S&P 500 (1,042.73 -1.41 -0.14%), DJIA (9,605.41 -22.07 -0.23%) and NASDAQ Composite (2,080.90 -3.12 -0.15%) all had a positive session, and the strength was apparent from the opening bell.

[Excerpted from Bill Cara's Daily Report]

Stronger global economic data, except in Japan, spurred international equity prices, but the key story continues to be the collapse of the US Dollar, which is serving to make it easier for global traders to buy stocks and commodities listed or denominated in $USD.