Good morning. After 3 days of a nightmare on Wall Street U.S. equities stabilized yesterday with the Dow ending down 6 to 16,315, the S&P 500 up 3 to 1,878 and the Nasdaq up 14 to 4,227. That being said, if you have energy stocks in your portfolio you’re still feeling pain (Chevron down 2% yesterday) with oil losing the most in one day in 2 years (more on that below). Stocks started the day higher on better than expected earnings from Citi Group, Johnson & Johnson and Domino’s Pizza pushing the Dow up over 100 points but I was paying close attention at 2 PM eastern for that has been the witching hour when we’ve seen the selling come in. And it did. But for the first time in since last Thursday buying actually appeared bringing the major indexes to mostly unchanged by the end of the day. I’m especially happy with yesterday’s close considering the ZEW Index report from Germany was released yesterday which came in horribly showing investment sentiment has turned negative for the first time in over a year. For those of you counting (and who’s not!), the Dow is down 5.6 % from its high last month and 1.6% for the year. The S&P is off 6.7% from its high September 18th and get this, it’s still up 1.6% for the year. Bet you never would have guessed that! Sure doesn’t feel like it!

Statistically, since 1949 past corrections (defined by a market decline of 10% to 19.9%) that did not manifest into full-blown bear markets lasted an average of 135 days with the S&P shedding 14.1%. You can do the math if the bull market ended on September 18th. European equities are down for the 7th consecutive session to a near 8 month low and the contagion is being felt here. It’s the same sucky story with concerns over the health of the world economy bringing mass liquidation in and it’s horrible this morning with the Dow down 200 points. Remember folks, you can do all the fundamental analysis you want but markets reflect behavior and there’s nothing but fear out there right now.

There’s a ton of economic and earnings data today so let’s see if any of it can bring this market back. The problem is it took months for entities to get their long position in place and it takes weeks or months to liquidate. With major numbers like 200 day moving averages being violated, the market is technically broken and needs to build a base again which means we’re in for a lot of volatility.

Oil continues to get absolutely and unadulteratedly massacred with WTI falling $3.90 to $81.84 yesterday and Brent down $3.85 to $85.04. Brent traded at a 4 year low and WTI is trading at a 2 year low. Both oils have fallen 25% over the past 4 months. The bears feasted on the IEA (again, not our EIA) report yesterday cutting its global demand forecast for 2014 and 2015 by 200,000 and 300,000 bpd, respectively. The bull’s hemlock was the agency citing a combination of increasing production at a time of decelerating global growth. With respect to prices, the IEA stated that most of the world’s production remains profitable at $80 Brent implying a further price drop would be required for supply to take a hit. And that is happening this morning with WTI down 15¢, which is much better than earlier this morning when it was down over a dollar.

Natural gas fell an even 10 cents yesterday closing at $3.816 and is down 10% in the past couple of weeks near a 3 week low. It’s my belief that part of natty’s decline of late is that it’s getting swept along in the tsunami of the general asset and commodity liquidation currently in the market (I’ve seen this before). I must say though that over the last few days the weather forecast each day has come in modestly milder pressuring prices. Looking at today’s 6-10 day forecast the mid-Atlantic states and Virginia will see an increase in HHD’s but before and after that time frame it looks quite mild. You folks in New England are having some great weather right now and the upper Midwest will have some awesome weather the week before Halloween. With a lack of any material cold and the continued liquidation of assets generally traders are pushing natty down 4.3¢ this morning not and not far off the recent low of $3.72 hit both in July and August.

So what’s been the impact at the pump of the falling oil prices? Answer: Over the past 3 months gasoline prices have fallen more than 40¢ a gallon per GasBuddy.com. According to Deutsche Bank, every 1¢ annual change in gasoline prices is worth approximately $1 billion in annual U.S. household energy consumption. If the current 40¢ decline in energy costs is maintained, consumer cash flow would improve by roughly $40 billion which is equivalent to almost three-tenths on annualized GDP growth. Not an immaterial sum. Have a nice day.