Good morning. During the last hour of trading yesterday I felt like I was hanging onto the edge of a 50 ft. ledge just hoping selling wouldn’t come pouring in at the close. And it didn’t. Whew! Although the Dow did close down 24, at 16,117, it could have been a lot worse for about 45 minutes into the session it was getting whacked being down 207 points. The S&P 500 crawled back to close flat to Wednesday at 1,862 and the Nasdaq even ended up 2 at 4,217 although I must admit I’d call that gain “immaterial.” This is the 6th straight day the Dow has closed lower and its longest losing streak since August 2013 and the lowest close since April 11th. I did find a positive sign though. The Russell 2000 gained 1.5% to 1,088, its 3rd straight day of gains. I note this because it was the Russell that led the other major indexes down. The other indexes were continuing to rise while the Russell was going lower. The term is “divergence.” History has shown that often the Russell leads the market down and up. That being said, we did not get the “reversal” (a technical term where we make a new low on the day but close higher than yesterday’s close and even better, higher than yesterday’s high). If we had gotten a reversal I guarantee you buying would have come into the market on the close.

Definitely helping the market yesterday (and unlike Wednesday) was a spate of good economic news including the Labor Department’s initial jobless claims report showing that seasonally adjusted claims fell to 264,000 last week. So what’s the significance of the number? It just happens to be the lowest number of new unemployment claims in 14 years! Separately, the Fed said September industrial output rose 1% which is the largest jump since May 2010. And finally we had St. Louis Fed President James Bullard telling Bloomberg TV that maybe the Fed should continue its bond buying program beyond this month. That’s QE folks and we know how the equity market loves QE. It’s interesting that it was Mr. Bullard who said this because he is known to be a monetary hawk. Personally, I don’t put much stock in his comments because he is not a FOMC voting member this year nor next and we also had Philadelphia Fed President Plosser, another hawk, saying the market selloff was not yet significant enough to hurt the U.S. economy. By the way, do you own Chesapeake Energy? If you did your holdings just increased in value 17%! They sold some assets in the Marcellus and Utica for $5.372 billion.

This morning equities are trading very nicely higher with Dow futures up a material 181 points. Goosing the market this morning were earnings reports ahead of the opening bell from GE, Honeywell and Morgan Stanley beating expectations. I also believe the traders who sold the market short and are in the money are taking some profits based on 1) yesterday lack of follow through to the down side and 2) we’ve a weekend ahead and the sidelines are a better place to be this second.

All ears will be tuned into hear what Fed Chair Jane Yellen will say today when she speaks at the Boston Fed’s 58th Economic Conference today. She may say nothing of importance but with the hawkish Fed President Bullard’s comments yesterday folks will be real interested to see if she hints about another QE (4?)

The 1,820-1,825 level basis the S&P has held twice and that is very good and we’re due for a bounce with short covering taking us to possibly the 1,900-1,910 level. However, so much damage has been to done investor psychology and the “technicals” that selling is very likely to show up there. As Sergeant Esterhaus used to say “Let’s be careful out there.”

After trading below $80/bbl and trading at a 2 year low WTI finally managed to find a bid closing up 92¢ at $82.70. Brent gained 69¢ settling at $94.47. WTI’s one day gain was the highest in 3 weeks. Both oils snapped a 3 session losing streak. Brent has lost a stunning $30/bbl over the past 4 months. The EIA released its weekly crude and products report (a day late due to the holiday on Monday) yesterday and on an aggregated basis (crude + gasoline + distillates) inventories increased a huge 4.3 million barrels on the week with the market expecting a decrease of 1.8. So why did crude close higher? Because, and I didn’t report this because the chaos in the equity market got more “space”) the API report on Tuesday afternoon set the stage for the large increase. WTI should find good support in the $70 – $80 range. You bulls better hope so because if it breaks $70 it gets real ugly.

This morning WTI is 15¢ but that is really lame considering equities are so much higher this morning.

The EIA also released its weekly natural gas report stating 94 Bcf was injected last week which was marginally bearish (greater than expectations). The market sold off 6¢ immediately after the report’s release but hit support and 30 minutes after the report volume dried up and we traded in a 3¢ range. By day’s end we closed basically flat to Wednesday at $3.796, down $0.004. Inventories are now 9% below last year and 10% below the 5 year average. It’s going to be tough to push natty much lower from here. We have strong support down at $3.72, winter is just around the corner and we’re going to go into the winter with less gas in storage than last year and the 5 year average

This morning natty is leaking 5.1¢ lower as I write.

Have a great weekend.