The session isn’t as bad as it looked moments before the open, but by the same token it’s a lot worse than it looked two hours before the start of trading.

There are some very interesting things happening beneath the surface. Home builders, semiconductors and broker dealers are higher. Utility stocks are lower as are drug and tires. I think the most compelling stocks are the dry bulk shippers. The group had been under a fair amount of pressure after a meteoric rally that saw rates come on with a Tiger Woods-like rebound after swooning at the start of the year. I consider the dry bulk index the best barometer of the health of the global economy. There is no doubt at some point higher crude becomes the headwind everyone says it is but I’m still not sure that level has been reached yet. 
 

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On the global stage many nations are paying substantially more than the U.S. and yet their economies continue to improve. Obviously, on one hand, we would like oil to response to a demand tipping point by way of Americans saying “no mas,” but by the same token, it would also be encouraging to know/see the economy getting better even in the face of this would-be headwind.

I have to say that recent slide in dry bulk rates could be more technical than some sort of reaction to higher crude. The long term trend is intact and today’s action is compelling, however. My favorites in the group include Genco Shipping (GNK), which looks great today, Teekay Shipping (TK) and Diana Shipping (DSX). All of these stocks are oversold and have tremendous room on the upside.

The agriculture stocks are also impressive today as the group continues to prove it’s more than a flash in the pan. A major brokerage firm finally got on board (never too late, I guess) and upgraded a couple of names, including Potash (POT) and Monsanto (MON).

Equipment maker Deere (DE) is putting in a strong session: Apparently the flooding in the Midwest will not hurt its manufacturing facilities. (On that note, my condolences and prayers are with the folks suffering from the extensive flood damage in the Midwest.)

The market has exhibited signs it wants to move higher, although for the Dow, General Electric (GE) will hang like a cement block around the ankles.


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