Bulls appeared to still be suffering from a New Year’s hangover. The Dow Industrials fell -219 points, or -1.65% to 13045, the S&P 500 fell -20 points, or -1.42% to 1447, and the Nasdaq Composite fell -42 points, or -1.61% to 2609.

The markets were rocked this morning by disappointing economic data. Although construction spending was at 0.1%, slightly above expectations of -0.4%, the Institute For Supply Management’s manufacturing index dropped to 47.7 in December vs. expectations of 50.5, the lowest level in over four years. Readings below 50 indicate a contraction. Minutes after the readings were released, the S&P 500 dropped nearly 20 points.

But the selling wasn’t done for the day as was evident after the release of the December FOMC minutes. Although investors seemed to be pleased initially with the FOMC release, the markets broke down about an hour later, sending markets to the lowest levels of the day. Among the losers today were Caterpillar (CAT) falling -2.6%, AK Steel (AKS) falling -3.48%, and Terex (TEX) closing -4.4%. Get Professor Bennet Sedacca’s economic perspective in What Possibilities Lie Ahead?

“The head fakes will continue,” said Professor Jeffrey Cooper, “January is infamous for them: either pulling the rubberband back prior to sizable rallies or a bottle rocket of a rally that fizzes.”

Bright spots in today’s trading were in the commodities sector. Crude oil hit a new all-time high briefly touching above the $100 mark. Crude oil settled +3.30 to 99.28. The oil service sector (OSX) rallied as well gaining +2.22%. Schlumberger (SLB) added +2.25%, Transocean (RIG) added +1.96%, and Cameron (CAM) closed +3.7%.

Gold futures rallied to a new all-time high bringing along with it gold stocks. Gold specialist Professor Lance Lewis noted that not only was spot gold trading to new all-time highs, but the Dow/Gold ratio was making a new multiyear low as well signaling a good start for gold bulls. Gold finished up +23.60 to 861.60. The gold ETF (GLD) closed +2.86% and Gold miners ETF (GDX) closed +7.40%. Individual stocks included Golden Star (GSS) +7.28%, GoldCorp (GG) +7.99%, and Barrick Gold (ABX) +9.44%. For more, read Professor Prieur du Plessis’ article today Gold Shines Brightly To Start 2008.

Silver added +0.370 to $15.167, and copper gained +1.65 to 304.70. The dollar index fell -0.655 to 75.992.

For more summaries, click on Minyanville’s Buzz Bits.


Idea Flow

Below is a recap of some of the idea flow on today’s Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: DJIA, VAR, CMED, VRGY, BTU, MHS, SLV, TRMB, AKAM, WM, CFT, GBF, LQD, TLH, TIP, AMZN, ABX, KGC, MA, Japanese Yen, gold

Some bearish trade or investment ideas: SPY, CBRL, ADI, BKX, RUT, NYX, WYNN, LBY, IN, GWR, HAS, WSM, MCO, MAN, GBP/JPY, crude oil

Another two big days of trading before we can finally rest again. Have a great night, Minyans!