Markets began the week on a soft note for the second consecutive Monday, but they finished well off session lows. The Nasdaq was the hardest hit lower by .8% and the S&P 500 down .7% (in early afternoon trade the Nazz was lower by more than 1.3%). The Russell 2000 was a clear laggard off 1.5% today. Many know the credit markets are savvier than the equity markets and last week for example the TLT rose 3.5% and the S&P 500 by 3.2%. Something will have to give soon and perhaps its bonds as the TLT rose Monday by 1.3% and the S&P 500 slipped. The benchmarks are trying to sever the correlation between themselves and equities, and perhaps today was a start as crude plunged nearly 5% and stocks took their cue to move higher after the oil markets closed. Sectors that outperformed Monday were the normal culprits being the utilities are staples both in the green today. Just missing the positive mark was healthcare which seems to be finding a footing as the XLV lost marginally. Capital seems to still be flowing toward safe, yielding names. Looking at the all time highs list today the vast majority were defensive in nature and included SCG, CPB, CLX, DPS, K, PM and POST. Below is the chart of RAI we highlighted in our Monday 6/20 Game Plan. Today it did record a bearish shooting star pattern from all time highs so we will have to watch to see if the candle is confirmed this week. Groups that lagged Monday were the energy and materials and the financials. One just has to look at the ten year yield now hovering below 1.4 which underscores how investors feel the economy is really doing. Of course this weighs on banks and some names really took it on the chin today, most notably the European finnies. Stocks like DB is on a current 5 week losing streak down 25% in the timeframe. CS and RBS, like DB, are more than 60% off recent 52 week highs and CS and DB looked headed for single digits in the near term. Sure our domestic names look much better off with names like JPM “just” 16% off highs, but names like C and GS remain 33% off theirs. Your best bet in the overall group are the exchange plays which seem to be benefitting from all the volatility. The more erratic the action the more transactions being placed which pads the bottom line. CBOE, ICE, CME and MKTX all demonstrated solid relative strength to begin the week.

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