The Dow Jones Industrial Average edged up 4.23 points to 10,325.26.  The S&P 500 tacked on a small 1.51 point gain (+0.13%, 1,104.49) and the Nasdaq 100 was up 5.77 points (+0.31%, 1,818.68).  On the month the DJIA added 257 points (+2.55%), the S&P 500 climbed 30.71 points (+2.86%) and the Nasdaq 100 showed that the place to be in February was in technology, gaining 77.75 points (+4.47%).

Across all markets, bonds and commodities did the best with interest rates dropping in 14 of 17 major economies worldwide.  EVEN the Greek 10-year was lower by 30 basis points as bond prices rose on news the German Government might buy Greek debt through a state owned bank.  This strengthened the euro against the dollar causing commodities to rise.

Yesterday, I mentioned the CurrencyShares Euro Trust (NYSE: FXE) was something to keep your eye on thinking that the news in Greece has got to get better sometime.  The timing was spot-on (better to be lucky than good sometimes, but being right gets paid) as the FXE closed higher today than all but one day in the last two weeks of trading.  If the bad news has washed itself out, any further positive developments about the Greek Tragedy of 2010 will be bullish for the euro, commodities and stocks.

On the flip side of this, the PowerShares DB US Dollar Index (NYSE: UUP) closed lower than all days but one in the past two trading weeks.  Looks like the dollar is a bit high here, and with the possibility of Washington D.C. passing the $1 trillion health care bill next week via ‘reconciliation’, the path of least resistance for the greenback is down.  If the carry trade cowboys get involved here, shorting the dollar and buying stocks, March may indeed come in like a lion.

New York spot gold rose $10.00 an ounce to $1,116.60 (+0.90%, 4:22 p.m.).  A break out here would be at about the $1,130 level with support at $1,060.  The SPDR Gold Shares (NYSE: GLD) chart is starting to look very interesting with resistance at $111.  The only thing I do not like about the chart is the stochastics are too high, but a close (2 closes even better) through $111 and I am a buyer.  The GLD closed up $1.12 (+1.03%, $109.43).

Nymex crude is pushing $80 again up $1.51 today to $79.68 a barrel (+1.93%, 4:26 p.m.).  Analysts think that crude will trade more off of supply and demand fundamentals and less as a reaction to the dollar in the future.  This sounds like it means that oil will trade on the premise of a better functioning economy and not on gloom and doom and fiscal nightmares.

Existing Home Sales were reported this morning at down 7.2% (January) to a seven month low (5.05M vs. 5.5M expected).  Last month sales dropped off a cliff (-16.7%) and analysts did not have to think too hard as to why.  NO JOBS.  An economy can turn up or down on simple expectations.  You have a job and things are good, but then a friend gets the axe and your brother calls to tell you his company just shut down.  You may still have a good job, but you are not dying to go buy a new house at this point.

The federal tax credit for new home buyers seems to not have helped as much lately and I have a theory – all the new home buyers that were going to buy a home already did.  I do not think they are going to squeeze a lot more out of that program.  Also, in December you go Christmas shopping not house shopping and it is cold in January.  Hopefully, sales pick up in the coming months but with all this snow in February I would not bet on a strong number.

I saved this for last to go out on a good note: The USA Men’s Hockey Team beat Finland 6 -1 in the semifinals today and will play the winner of tonight’s Canada-Slovakia game for the Gold.  Team USA vs. Canada will be a great game to watch.  Win or lose that one, Team USA is cranking out the medals faster than Freeport-McMoran (NYSE: FCX) and this has been a great Winter Olympics for our athletes and for us.

Have a great weekend.

The Dow Jones Industrial Average regained some of yesterday’s lost ground closing higher by 91.75 points (+0.89%, 10,374.16).  The S&P 500 added 10.64 points (+0.97%, 1,812.51) and the tech heavy Nasdaq 100 led the three indexes, up 18.69 points (+1.04%, 1,812.51)

The finance sector responded strongly as Bernanke spoke and on news that key senators are opposed to limits on commercial banks making bets with their own capital.  More trading news was made today as an SEC panel voted 3-2 to limit short selling on a down-tick on stocks that are down more than 10% on a day.  The new rule would make short positions only able to be entered on an uptick if a stock is down over 10% from its previous daily close in one day, and for all of the next trading day.  Quite frankly, this rule change is more for political cover for the SEC as they try to look like they are doing something.  The markets dropped drastically last year and all of a sudden, people looking for someone to blame pointed fingers at short sellers and the SEC.

The Effects of Short Selling

Fact is, short-selling adds liquidity to the market and just like with any trade, if the short-seller is wrong they can lose money.  An all to common public perception that short sellers cause stocks to go down too much is unfounded as there has to be a reason to bet that stock is going lower in the first place.  Short sellers will put a short position on if they think the stock is too expensive.  Some reasons for this might be that the company’s fundamentals are bad, the economy is headed lower or the stock has risen too far, too fast.

A way to think about short selling is; 1) Stocks are competing with each other for invest-able funds, and those that have better reason to be invested in get those funds and go higher, 2) Current investors in short-seller favored stocks may sell them to buy the more attractive stock, 3) The company that loses this invest-able funds ‘popularity contest’ are judged to be weaker and with no buying interest to counter-act regular selling, the stock goes lower, 4) On their own, short sellers would not be able to push a stock lower, as they have to ‘buy-in’ these shorts sooner or later, creating a ‘built-in’ demand for the stock.  Only the sellers of ‘long stock’ can sell the stock and walk away.  The short sellers have to be there to buy the stock back in and are nothing but future demand potential for that stock.

So if short selling cannot, by itself, make a stock go down, what is the SEC actually accomplishing here?  As long as their is sufficient liquidity in a stock, short selling is not the reason a stock is going down.  The SEC dropped the ball on policing ‘naked short selling.’  Naked short sales increase the supply of an issuer’s (company’s) effective outstanding stock, and is also illegal.  A lot of people should either be in jail right now, or should have paid large fines made money on naked short selling over the past few years.  If the SEC had done their job properly with the naked short sellers they would not be trying to save face right now by tinkering with legitimate short selling.  Period.

New York spot gold dropped $6.80 an ounce to $1,096.70 (-0.62%, 4:30 p.m.) and Nymex crude regained the $80 a barrel plateau, up $1.31 to $80.17 a barrel (+1.66%, 4:23 p.m.).  The PowerShares DB US Dollar Index (NYSE: UUP) dropped 0.20% (-$0.05, $23.76) and this throws a red flag.  Gold dropped and is acting weak while the dollar is dropping, which says to me gold has internal weakness.

Looking at the chart of the SPDR Gold Shares ETF (NYSE: GLD) we see that it failed to take out the resistance level at $111 and has rolled over and traded down to $107.36.  The stochastic oscillator looks to be topping out and rolling lower too.  The GLD did break the downtrend line from it’s all time high and this is a positive.  The next technical test for the GLD will be to see if it closes below $104 (twice in a row).  If this happens we have a lower low and strong trading stocks do not do that.  I suspect the ETF is going to trade sideways for awhile and consolidate.  The GLD will head down to $104 and flirt with breaking it – if it breaks for two consecutive sub $104 closes that is a sell signal.  If it holds and starts to head back up – buy more.

The S&P 500 finished down 12.97 points (-1.16%, 1,084.53) and the tech heavy Nasdaq 100 really took it on the chin losing 47.80 points (-2.62%, 1,771.10) as Apple Inc. (NSDQ: AAPL) sank $8.59 (-4.13%, $199.29) and Qualcomm, Inc. (NSDQ: QCOM) lost $6.72 (-14.23%, $40.48)

CNBC carried the cloture vote for Bernanke’s Fed reappointment and earlier on it may have seemed that the needed votes for confirmation would not reach 60.  As the day wore on and the yes votes ticked higher, so did the market.  The final vote came to 77 Yes and 23 No, which reconfirms Ben as the Chairman of the Federal Reserve for another four years.

The market was under early pressure from yet another bad weekly Jobless Claims number and a poor showing by the Durable Goods release.  While the four week moving averages, which smooth out the weekly readings, are still headed in the right direction, we have seen the jobs number come in 30,000 higher than expected for more than a few weeks now.  The question is: Is this a result of bad forecasting by the economists or is the jobs picture getting uglier?  No matter how you answer, the ‘recovery’ is going very slowly at best.

At the end of yesterday’s Wall Street Wrap, I mentioned that today would see more than a few transportation companies reporting earnings.  Other than the techs, the Dow Jones Transportation Average (.TRAN) fared the worst today, dropping 2.33%.  The Dow Transports are of special importance as those following Dow Theory look for the Industrial Average and the Transportation Average to tell them where the market is headed.  The Theory says that when both averages are making new highs a Bull market is confirmed.  On the other hand, when both are making new lows, a Bear market is confirmed.  If you are only looking at 2010, both averages made new lows today as the DJIA closed at its lowest point since November 9, 2008 and the DJTA posted its lowest closed since November 27, 2009.

Apple’s drop today could be seen as a sign that yesterday’s iPad unveiling was less than impressive.  After the close today, tech giants Amazon.com Inc. (NSDQ: AMZN) and Microsoft Corp. (NSDQ: MSFT) reported earnings.  Amazon beat expectations ($0.85 vs. $0.72) on a per share basis and beat on revenues as well ($9.52 billion vs. $9.04).  Amazon stock was trading lower in the after-market at $121.70 (4:23 p.m.) after closing the regular trading session at $126.03 (+$3.28, +2.67%).  Microsoft reported strong earnings on the heels of a new product cycle as they introduced Windows 7 last last year.  Mr. Softy reported earnings of 74 cents a share vs. the expected 59 cents on revenues of $6.7 billion.  Microsoft closed at $29.16 in the regular trading session and was up to $29.32 in after-market trading (4:27 p.m.)

New York spot gold traded as low as $1,072.40 an ounce before rising $14 to close at $1,086, losing only $1.20 (-0.11%, 4:43 p.m.)  As the stock market sags gold seems to be hanging in there and this could be a flight to safety.  The PowerShares DB US Dollar ETF (NYSE: UUP) rose 0.17% today and closed within 4 cents of its 200 day exponential moving average.  The stochastic oscillator for the UUP has just crossed above 80 and has not rolled over to point lower yet, but once above 80 a reversal is much more likely.  With support for gold in the $1,060 to $1,070 level, an area it visited today, and the UUP approaching resistance and a high stochastic reading, a reversal looks in the cards for a higher gold price soon.  Nymex crude gained 25 cents to $73.92 a barrel (4:49 p.m.)

Tomorrow has the GDP report (4.5% expected) and the Employment Cost Index (0.4%) being released at 8:30 a.m.  The Chicago PMI (57.0) is out at 9:45 a.m. and Consumer Sentiment (73.0) is at 9:55 a.m.

Selected earnings releases for Friday:

ACI 0.17 before market open, AVY 0.68 bmo, CVX 1.70, FO 0.52, HON 0.90 bmo, MAT 0.68 bmo, NWL 0.27 bmo, PCAR 0.07 bmo, WL 0.04 bmo.

After buying some Intel in the after-market yesterday you would be all ready for what could happen today – an Intel rally.  Well, what did happen is that the semiconductor space got sold off across the board with Micron Technology Inc. (NYSE: MU) dropping 5.59% (-$0.60, $10.13), Analog Devices Inc. (NYSE: ADI) down 3.37% (-$1.01, $28.96), Maxim Integrated Products Inc. (NSDQ: MXIM) losing 3.21% (-$0.62, $18.65), ST Microelectronics (NYSE: STM) falling 2.74% (-$0.25, $8.87) and Texas Instruments (NYSE: TXN) hanging in there but still off 0.84% (-$0.21, $24.50).  Buying into an earnings announcement but not waiting around for the numbers seems to be working as the news is getting sold.

The Dow Jones Industrial Average had 27 of 30 stocks finishing lower and lost 100.90 points (-0.94%, 10,609.65) for the day.  The DJIA sold off hard right out of the open, trading down until finally finding a bottom at 1 p.m. at 10,561.  The afternoon session brought the index back by 48 points as bargain hunting and short covering started.  The S&P 500 dropped 12.43 points (-1.08%, 1,136.03) and the Nasdaq 100 lost 22.00 points (-1.16%, 1,864.52).

The good news for JP Morgan Chase & Co. (NYSE: JPM) was that they beat earnings solidly (72c vs. 61c) and had their revenues come in up 32% year-over-year.  The bad news was that they reported large losses on mortgage and credit card loans and that they increased their loan loss reserves.  Bad news also came out today from Bank of America Corp. (NYSE: BAC) as they stated that their credit card charge-offs rose and Capital One Financial Corp. (NYSE: COF) had their credit card charge-offs top 10%.  Did everyone make their November payment, buy Christmas gifts on plastic as a last hurrah and lock up the checkbook?  All the market saw was three strikes and the bank stocks are out!  Bank of America lost $3.32% (-$0.56, $16.26), JP Morgan dropped 2.26% (-$1.01, $43.68) and Capital One fell 1.29% (-$0.54, $41.13).  Dick Bove, a well known bank analyst, was on CNBC after the close and stated that the banks would have $40 to $45 billion of write offs by the end of 2010.  So now you tell us?

E-Trade Financial Corp. (NSDQ: ETFC) ripped from $1.71 to $1.82 within the last 20 minutes of trading today as more rumors of someone buying them hit the market.  These rumors hit every few weeks but this time the rumor says these talks are so far along that E-Trade is not longer accepting new accounts.  Well E-Trade could be no longer accepting new accounts for another reason too – bankruptcy.

Baidu.com Inc. (NSDQ: BIDU) is up $81.19 since Google Inc. (NSDQ: GOOG) announced that they were hacked and pulling out of the Chinese market.  The interesting second story on this is that Google hacked the hackers back and found some evidence the Chinese Government may be involved.  Nonetheless, the clear winner from this digital espionage is Baidu, as the 21% jump has put the stock back above the uptrend line it held since July of 2009.  Whether or not it stays above the trendline is not known, but I doubt the Chinese Government is backing down and now, after making such a big stink, Google would lose face (and the respect of a lot of people who think they are the good guys for taking a stand) if they go back into China.  Baidu is a buy.

The PowerShares DB US Dollar ETF (NYSE: UUP) gapped higher and commodities sold off.  In recent columns I have written about this ETF dropping below its 50 day exponential moving average ($22.745) and looking weak.  Today the UUP closed above its 50 day EMA, gaining 13 cents (+0.57%, $22.27).  If the carry trade cowboys started getting short the dollar the last few days they are in losing positions now, but they may be shorting more and averaging their price higher.  This is because the UUP has a nicely defined downtrend line off the peak of December 22nd.  Until the UUP closes above this downtrend line the short trade is still looking good.  As usual the dollar and the DJIA went in opposite directions today.

Oil dropped on warmer weather and a strong dollar.  Nymex crude dropped $1.44 a barrel to $77.95 (-1.81%, 4:14 p.m.).  New York spot gold also got hit on the strong dollar losing $11.50 an ounce (-1.01%, 1,130.00, 4:19 p.m.)

Have a great weekend.

The market dropped off the open on a bad employment number and spent most the day trending sideways with little action.  Someone turned the lights on late as the Dow Jones Industrial Average ran up 38 points in the last 25 minutes of trading to gain 11.33 points (+0.10%, 10,618.19) on the day, which sets yet another new 52 week high.  The S&P 500 rose 3.48 points (+0.28%, 1,144.95) and the Nasdaq 100 was up 15.87 points (+0.84%, 1,892.59).  Both the S&P 500 and the Nasdaq 100 set new 52 week highs.

Steel was strong again today as Schnitzer Steel Industries Inc. (NSDQ: SCHN) beat their earnings estimates and was upgraded from hold to buy at Cannacord Adams.  U.S. Steel Corp. (NYSE: X) had their price estimates raised by J.P. Morgan Chase & Co. from $55 to $70.  J.P. Morgan did not stop there as they also raised their price estimates on AK Steel Holding Corp. (NYSE: AKS) to $34 from $29.  Steel is having a strong week as Goldman Sachs Group Inc. (NYSE: GS) stated Wednesday the industry should be up 8% in 2010.  Today the Market Vectors Steel ETF (NYSE: SLX) was up 2.58% (+$1.70, $67.55) putting it up 9.8% for the year.  I guess that makes Goldman right, so does that mean they are selling it now?  AK Steel was up 9.33% today (+$2.20, $25.77), U.S. Steel was up 7.27% (+$4.43, $65.34) and Schnitzer Steel was up 6.18% (+$3.26, $55.95).

Gold was down about $8 prior to the announcement of the Employment Situation by the Labor Department.  At 8:30 this morning we found out that non-farm payroll employment dropped by 85,000 with the headline unemployment number staying at 10%.  While the November jobs number was revised to show that we actually created 4,000 jobs two months ago, most the gains have recently come from temporary jobs.  The January number will most likely go higher as temp workers for the holiday shopping season are let go.  The market reaction was stock futures down, dollar down and gold up.  By the open gold had risen from down $8 to up $8.  The dollar opened lower and rallied early, which means that gold opened up and sold off early.  Gold bottomed at 11 a.m. and climbed for the rest of the day and closed the week out at $1,137.30 an ounce (+0.64%, +7.20, 5:10 p.m.)

Nymex crude rose 19 cents to $82.85 a barrel (5:01 p.m.)

Harry Truman once said he wanted a ‘one armed economist’ as they always say ‘on the other hand…’

In the last 24 hours four regional Fed President’s spoke and here are four headlines from articles that my Tracked.com personal tracker picked up;

The Fed: Fed’s Hoenig urges quick action on sharp rate hike – This story is about comments from Thomas Hoenig, President of the Kansas City Fed and is bullish on the economy.

Eric Rosengren: No end in sight for high unemployment – This story is about comments from Eric Rosengren of the Boston Fed and is bearish.

Fed’s Lacker says U.S. growth prospects improving – This story is about comments from Jeffrey Lacker of the Richmond Fed and is bullish.

U.S. Consumption, Spending to Spur Job Recovery, Bullard Says – This story is about comments by James Bullard of the St. Louis and is bullish.

Ok – so that’s 3 to 1 on bullish.  Great.  But what I want to know is which guy has one arm?

Have a great weekend.

The Dow lost 203.00 points (-2.09%, 9508.28) while the S&P got hit for 27.23 points (-2.57%, 1029.85) and the Nasdaq 100 was the biggest percentage loser on the day dropping 52.58 points (-3.05%, 1666.41).  Ugly across the board.

The dollar strengthened contributing to the stock market’s woes as this stronger dollar caused commodity based stocks to drop.  Dow Jones Industrial Average component Exxon Mobil Corp. (NYSE: XOM) lost $1.34 (-1.95%, $67.27) and looking at its daily chart, Exxon has just started the break down from the large symmetrical triangle it has formed over the past four months (as mentioned in my previous Wall Street Wrap dated 9/24).

All 30 Dow components were down today, with the biggest loser in percentage terms being JP Morgan Chase & Co. (NYSE: JPM) losing 5.59% (-$2.45, $41.37).  The race to the bottom was won by the finance sector today dropping 4.13%, with energy in second at -3.45%.  The ’strongest’ performing sector today was consumer non-cyclicals losing only 1.76%.

Surprisingly, even with a stronger dollar and weaker economic indicators, Nymex crude was up 21 cents today to $70.38 a barrel.  New York Spot Gold lost the $1,000 plateau last seen trading at $998.90 an ounce down $8.80 (-0.87%, 4:14 p.m.)

Now for the really bad news; The S&P 500 today broke down through the uptrend line the market has had since the very bottom back in March.  The wonderful uptrend we have been experiencing all spring and summer is now in jeopardy.  The Nasdaq 100 broke down through its major uptrend line on the 25th and broke down through its secondary trend line today.  The Dow broke down through its secondary trend line on the 25th and closed right on its major uptrend line today.  To sum this all up, technically speaking, things are starting to look pretty grim for the Bulls.  We get a bad employment number tomorrow and sell-off into the weekend and LOOK OUT BELOW!

Traders are most likely looking forward to the headline number of the week, the Employment Situation number expected out at 8:30 a.m. tomorrow.  This is the big number as we get that percentage that sticks in every one’s head.  Right now it is at 9.7%, but the estimate range for tomorrow is 9.6% to 9.9%.  With all the other job numbers missing this week, I suspect we go up the 1 or 2 tenths.

I have an idea to keep this market from dropping – this week we have had the ADP employment number, the Jobless Claims number and now we get the Employment Situation number tomorrow – so how about we cancel a few of these and just see one number a week?

Leaving you on that cheery note – the numbers for tomorrow are a loss of 170,000 jobs and 9.8%.