Small Change Day Yields Interesting Outlook

Stocks saw both sides of the ledger on Wednesday, with the Dow Jones Industrials leading a morning rally and then an afternoon sell-off which left stocks near where they started.

The big differences were in the two composites, with the NASDAQ up nicely and the NYSE markedly lower bringing into play the new-old economy paradigm.

Techs on the NASDAQ fared far better than old-line companies held within the NYSE, suggesting that there's neither clarity of direction or quality when it comes to US equities.

Dow 12,390.48 -12.37; NASDAQ 2,503.14 +22.66; S&P 500 1,377.20 -0.45; NYSE Composite 9,212.76 -49.24

While economic reports were somewhat benign, significant trading patterns emerged from within the indices.

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Advancing and declining issues were nearly even, with winners edging losers, 3149-3039, though most of the winners were on the NASDAQ and the bulk of the losers came from the NYSE. New lows slammed new highs, 224-109, and that's a repeating theme. Since October 31 of 2007, there have been less than 10 days in which more new highs were reported than new lows. It's an inherent factor of the calamitous underpinning of the US economy and hasn't changed one whit over the last 7 months.

Volume was at about the same level as yesterday - a little bit perkier, though still what one would expect from mid-summer. It seems as though the summer doldrums have hit stocks a bit early this year, no doubt having much to do with tight credit and a general consensus to not throw money around willy-nilly.

Commodities continue to sing an unfamiliar tune, heading South, as it were. Oil was down again by $2.01, settling at $122.30, a relief many hope to see continued. Gold dropped $1.70, to $883.80, while silver strengthened by 11 cents, finishing at $16.94. A few more days like this, for oil, in particular, and you're looking at a sharp correction in commodities on a lack of demand basis, spurred by overpricing.

The simultaneous slippage in stocks and commodities does not bode well for economies overall. What once looked like an inflationary spiral might end up - in a few month's time - looking more like a deflationary end-game.

It's not something for which economists nor governments are well-prepared. While the benefits to consumers is obvious - lower prices - it also stalls job creation, an article that has not, until now, rear it's unusually ugly head.

NYSE Volume 1,326,811,000
NASDAQ Volume 2,206,862,000