As we opened our platforms premarket and saw “UK bank problems“..Injection by UK treasury into RBS, disappointing UBS report lead to a 2% decline in European indexes..We couldn’t help but think here we go again.  These are the kinds of headlines that bring up bad memories and you’d expect it to spread here to US markets.  Importantly,  US financials held in.  SP futs held the noted support in Journal to look for (1027) by open with the market shrugging off these problematic negatives even with a strong US dollar. ( as per early morning alert at SPX 1038). 

Oh yeah,  we had a big cyclical acquisition by Mr. Buffett, but this failed to give the market a bid (only a badly needed one to TRAN index, now only if we can get on for SOX).   The Bears had a another positive as a huge deal, besides all positive eco’ data lately, could not spark the market.    However for the Bulls,  things started to improve dramatically as the day wore on.    Most of the plays, particularly smaller caps were nicely in the green.   A seemingly flattish close, but the underlying market was pretty good in our eyes.   Just as we pointed out our ‘lagging list‘ over a week ago as a concern that turned out as a prelude to a broad market decline,  today‘s strength in the list led by initially by riskier asset group Casinos (WYNN, LVS ) .   When you see higher beta names moving, you are probably seeing an underlying bid developing. 


So far, so good as we closed at 1045!  A constructive day in our view, financials finished in positive territory and higher beta & smaller cap names performed well, even speculative biotech got a bid.  Go back and see what we said yesterday may happen if Mondays highs taken.  Still, tomorrow's FOMC may change the behaviour of this market depending on Fed's tweaking or not the statement.   Clearly, even if any market guru had the statement in hand as of tonight, they would not be able to predict what the market will do.  Watch the USD$ guru here!.

As far as more action,  we have had a strong day from the commodity land despite the strength from USD.   Oil related names enjoyed a nice day as well as coal plays having to do with BNI/ Buffett.    We lost another DJIM favorite play...STAR recently.   DDRX  agreed to be bought out by PEET and we think it's a very good price for PEET.   We ‘d replace DDRX with PEET  on our watchlist as the action suggests some more bullish momentum in the coming days/weeks.   On the other hand,  STEC ,  also one of our former darlings, has released a report that's very disappointing and it pretty much spelled the end of its story.  Only reason to bring this massacre up is to serve as a reminder why we don’t hold mid-small caps into earning reports.