U.S. Banking Health

The Wall Street Journal reports U.S. bank stocks have seen an impressive rally of 45% from their July 15 low, but it may be too soon to give an all-clear signal. Foreclosures continue to mount which will lead to more writedowns, and some believe the problems that began in the subprime business are now starting to spill over into the prime mortgage market.

Further, for the past several quarters, borrowing costs continue hit the banks. Interest rates continue to rise for overnight loans between banks as well as the price of borrowing three-month money relative to the price of overnight money. See Professor Mike Mish Shedlock’s column, You Know The Banking System's Unsound When...

From the Bull Pen: Bulls can consider NYSE Euronext (NYX) for an upside play; sell-stops can be set below $45.

From the Bear Cave: Banking bears can continue to play the downside in the financial ETF (XLF); buy-stops can be set above the 50 DMA ($22.30).


Oil Steady at $124

Reuters reports crude oil remained steady above $124 a barrel after the main militant group in Nigeria said it had attacked two major crude oil pipelines belonging to Royal Dutch Shell (RDS.A). Its latest gains were limited, however, as reports have shown demand from the U.S. and other industrialized nations has been sliding. Oil has fallen over $23 from a record high above $147 on July 11 marking a 16% drop in price. Read Professor Charle’s Payne’s column Can Lower Crude Spark Markets?

From the Bull Pen: Is the oil ETF (USO) a buy off of its 100 DMA ($98.90)? Bulls can play that stock; near-term sell-stops can be set below that level.

From the Bear Cave: Will airlines stocks retreat should crude oil resume its long-term uptrend? Bears can play the downside in Continental (CAL); buy-stops above $15.

For more ideas in real time throughout the trading day, check out Minyanville’s Buzz & Banter.


Quick Check Around the World

Asian trading closed with the Hang Seng -0.24%, Nikkei +0.14%, Sensex +0.52%, Taiwan unchanged and Shanghai +1.32%.

A quick check across the pond finds the CAC -0.92%, DAX -1.04%, FTSE -0.14%,

As of 8:40 AM EST, S&P futures are unchanged at 1253, and Nasdaq futures are up +5 points to 1845.


A Look At Commodities

Commodities are lower. Crude oil is higher +0.60 to 124.63. Gold is up +0.70 to 927.40. Silver is higher  +0.079 to 17.325, and copper is off -0.40 to 370.00.

The dollar index is down -0.134 to 72.720.


No events on the radar but click here for the rest of the week's events.

Good luck!