Good morning. The grief continued yesterday with equities continuing their descent. The Dow lost 28 points to 17,043, the S&P 500 fell 6 to 1,973 (now well below 2,000) and the Nasdaq dropped 12 to 4,493. Other than the fact the length (time) of this bull market is in record territory and “tired” and in need of a correction, there was some economic data released yesterday that was not encouraging. The Conference Board reported its index of consumer confidence fell to 86.0 in September from 93.4 in August and more importantly, was far, far below Wall Street’s estimate of 92-93. Per the Board’s chief economist, the decline was entirely attributable to consumers being less optimistic about the job market. Other ill news came in the form of the Standard & Poor’s/Case Schiller index of home prices in 20 cities showing home prices rising 6.7% in July y-o-y which was not only below the forecast of 7.4% but also the slowest rate of gain since November 2012. As I’ve mentioned previously, there’s a long term support line on the S&P chart dating back to the beginning of Q4 2013 coming in around 1,925-1,935 that sure looks like it will be put to the test. This trend line has been tested and has held 4 times in the last 12 months. Sure hope it’s like your shampoo. Wash, rinse, repeat.

This morning the Dow is down 129 points. Ugh, boy, I’m getting tired of this. Asian markets once again closed mixed but Hong Kong’s Hang Seng continues to get obliterated being down 9.4% since September 3rd. It was closed today for a holiday which lasts today and tomorrow. The holiday is sure to bring out more protestors.

One of the factors weighing on stocks is the strength of the U.S. dollar which once again hit a new 4 year high against a basket of 6 developed country currencies. In the quarter that ended yesterday it gained nearly 8% which is the strongest performance since 2008. So what’s the big deal? Well it makes exports from the U.S. more expensive to foreign buyers and will hit companies’, especially the really big global companies, bottom lines. Additionally the strong dollar will weigh on inflation here in the U.S. which is contrary to what the Fed has been trying to accomplish over the last 5 years which was to get it up to 2%. The dollar has gotten so strong as of late that no less than three Fed presidents, including Mr. William Dudley, the President of the New York Fed and the only permanent voting seat (the others rotate) have stated they are going to take the strength of the dollar into account when discussing the raising of interest rates.

Speaking of the strength of the U.S. dollar, it is hammering commodities priced in U.S. dollars and this just exacerbates the global decline in commodities. Over the past 24 hours the average of two major commodity market indexes has fallen 1.09% which may not be unprecedented but is hasn’t occurred in a decade. This is not the “good” deflation of rising productivity and better usage of goods. This is the “bad” deflation of lesser demand in conjunction with rising production. And this includes the commodity crude oil. Saying it was not a good day for the bulls is a massive understatement. Brent got bludgeoned falling a huge $2.53 closing at $94.67. And if you owned WTI you got it worse with WTI getting the St. Valentine’s Day massacre losing $3.41 to $91.16. WTI had been gaining on Brent but obviously that didn’t happen yesterday. So what the heck happened?! To refresh your memory, a week or so ago word came out that OPEC was looking at cutting production next year which gave crude prices an immediate boost. Well yesterday Reuters reported that the OPEC countries were producing the most in nearly two years. And remember that is in addition to U.S. production that keeps increasing. El fini. This morning WTI is correcting being up 95¢ remaining above strong support of $90.

Natural gas, which has been steadily climbing as of late, retreated 3.3¢ yesterday closing at $4.121. Natty rallied after the release of the noon forecast update showing a shift to cooler temperatures but good resistance was found $4.175 and we fell back to unhanged but mildly eroded at the end of the day. Both the bulls and bears are trying to push it around on weather forecasts and the action in the cash market. Speaking of the forecast, it is little changed from yesterday with the cold air mass sitting over the upper Midwest plains. My bet, and I guarantee you traders are playing it this way, is that it moves east increasing heating load which is of course is supportive of natural gas prices. This morning natty is basically unchanged as I write. And don’t forget tomorrow is EIA storage report day. Have a good day.