Iran's nuclear agency is trying to combat a complex computer worm that has affected industrial sites throughout the country and is capable of taking over the control systems of power plants, Iranian media reports have said.

Regulators announced Friday a rescue and revamping of the nation's wholesale credit union system, underpinned by a federal guarantee valued at $30 billion or more. Wholesale credit unions don't deal with the general public but provide essential back-office services to thousands of other credit unions across the U.S. The majority of retail credit unions are sound, but they will have to shoulder the losses through special assessments over the next decade.

Sept. 24 (Bloomberg) -- Crude oil in New York may drop as low as $71.50 a barrel in a short-term consolidation period, according to technical indicators used by traders to predict price movements.

Oil for November delivery will fall toward intra-day lows of $74.25 a barrel reached on Sept. 7 and $73.10 on Aug. 31, said Stephanie Aymes, a London-based cross-commodity technical analyst at Societe Generale SA. The top range of crude’s consolidation is $76.25, which is close to the 38.2 percent Fibonacci retracement of the contract’s drop from its $83.91 high on Aug. 4 to $71.49 on Aug. 25.

Sept. 24 (Bloomberg) -- The dollar may weaken further against the currencies of six major trading partners as a gauge of greenback strength formed a so-called head-and-shoulders trading pattern, according to Royal Bank of Canada

The resolution of a head and shoulders pattern for the Dollar Index paints a very ominous bearish profile for the U.S. dollar over the next 10 to 12 months,” George Davis, chief technical analyst at the Royal Bank of Canada’s RBC Capital Markets unit, wrote in a note to clients yesterday

Investors should expect more than three years of Wall Street ups and downs, Bank of America's top watcher of stock market trends, charts and history said in Birmingham Thursday night.

"People need to pull in expectations for the next couple of years," Bartels said.

"This feels like there's been a big psychological switch in just the past few weeks to the point where it's scary how fast things have shifted," said Rick Bensignor, chief market strategist at Execution Noble in New York.

Buyers (real, program, HFT or short covering) are in firm control today. If you came in long, who cares who the buyers are? The SPX has come within 1 point of the early week high but the Nasdaq Comp has gone 8 points above its recent high. Are there divergences? Yes there are, from the VIX holding above its recent low, the BKX still struggling below its 200 day moving average, and the lagging new high list. However, the market can move higher even with those nagging negative divergences but if they persist for too long, they become the market’s Achilles’ heel. If the S&P 500 Cash Index closes above 1150 today or by Monday, celebrate they will on your favorite financial show. Be on the lookout for a possible false breakout. We’ll be monitoring the volatility indexes, put/call ratio and a/d decline data for insight.  - Elliot Spar of Stifel Nicolaus

Renewal of asset purchases unlikely, but it's a close call. We believe that the incoming growth data will be sufficiently positive to prevent the reintroduction of asset purchases in coming months.  Indeed, since September 1, our tracking estimate for 3Q GDP has risen from +1.7% to +2.6%.  But it's a close call, and the FOMC could act at any time if the data disappoint.

In August, the entire gain in the LEI was due to the shape of the yield curve and nothing more. The other nine components aggregated to ZERO in terms of the growth.

And the growth bulls also have something else to answer for: the coincident-to-lagging indicator, which is almost like a book-to-bill ratio for the overall economy and actually has this nasty tendency to lead the leading indicator, actually fell 0.2% in August and is down now three months in a row. When that happened from November 2006 to January 2007 it really led … and as such, there was no excuse for not being prepared (unless, of course, you were not following it). This index peaked in May — pack that in your back pocket for future reference.

Sales of new single-family houses in August 2010 were at a seasonally adjusted annual rate of 288,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is unchanged from the revised July rate of 288,000 and is 28.9 percent below the August 2009 estimate of 405,000.

New orders for manufactured durable goods in August decreased $2.5 billion or 1.3 percent to $191.2 billion, the U.S. Census Bureau announced today. Down three of the last four months, this decrease followed a 0.7 percent July increase. Excluding transportation, new orders increased 2.0 percent. Excluding defense, new orders decreased 1.2 percent.

So the relief did not last long. The news that Irish GDP fell by 1.2% in the second quarter caused another selloff in the Irish bond market, and an increase in Irish CDS rates to a new record , and yet the Irish government is still committed to its insane projection of a small growth rate this year. The delusion of V is one of the reasons why the situation is potentially dangerous.  Portuguese 10-year spreads also went back to above 4%. El Pais reports on this story with a sense of trepidation, though pointing that Spain is not in danger,

 Irish-German 10y Spread

"It is worth noting that at current levels, gold is overbought and this raises the chances of a correction over the near term," said Taso Anastasiou, a technical strategist at UBS.

Today I just want to focus on one thing and one thing only, making sure I pin the top on the S&P 500 rally started in late August as I strongly believe the next wave will take us sub 1,000 in the S&P future.

First of all our VIX reversal warning is still in effect, we still recommend to be long VIX November and December calls. I personally favor 35 and 37.5 strikes. At a cost of 1 for the November 37.5s, should we indeed go dip below 1,000 you stand to multiply your investment somewhere between 5 and 10 times.

That said, I turn to the fractal structure of the move in S&P and Eurostoxx. Both are completing an A-B-C flat correction from the lows in early July. Standard targets both indicate that we could possibly go a touch higher with a 1,160 being the C=A in S&P and 2,873 in Eurostoxx. However the price action in both is bearish here. In S&P as long as we remain below 1,138 I expect to go fill the gap at 1,105 before testing the key resistance which will be around 1,075. We have a H&S short term with neckline at 1,117 and we broke and retested as resistance the support of the latest move from 1,082 to 1,142.

NEW YORK (Reuters) - The outlook for New Jersey's debt rating has turned negative, Moody's Investors Service said, citing the state's "long history" of failing to put enough money into its state pension fund

Sept. 23 (Bloomberg) -- Crude oil is poised for a drop to $61 a barrel after prices fell below a “bearish pennant” formation, according to a technical analysis by Kase and Company.

The bearish pennant that “recently broke lower indicates that major support should be tested at $71.49 and then $70.50 in the near-term,” said Dean Rogers, an analyst at the Albuquerque, New Mexico-based consulting company. “Upon a close below $70.50 a barrel, oil prices will likely drop into the mid- to low-$60 range with $61.20 as the major lower support target.”

AAII Sentiment Survey 44.97% Bulls, 25.40% Bears.

Bull-Bear Spread 19.57

We closed the 1930s with a 2% long bond yield, which makes perfect sense to us since the typical spread between the 30-year and the overnight rate is around 200 basis points. It won’t be a straight line, and based on past long interest rate cycles, which can last up to 32 years, we could be looking at a bottom roughly two years from now. So we wouldn’t quibble with the view that the secular bull market in bonds is in the mature stage. But it ain’t over yet.

As BBC reports: "The Irish economy shrank in the second quarter from the previous three months, surprising analysts who had been expecting growth. Gross domestic product (GDP) fell 1.2%, the Central Statistics Office said. It also revised down its measure of growth in the first quarter to 2.2% from 2.7%."

The government has been seeking to reassure investors about the economy.

Most economists had predicted a 0.5% rise in GDP.

"It's well below [the consensus forecast] and a disappointing figure clearly," said Dan McLaughlin, Bank of Ireland's chief economist.

"One could take some comfort from the fact that domestic demand is beginning to show some signs of life," he added.

"Probably people will now have to reassess their outlook for this year overall."

The Central Statistics Office said the economy had been hit by a fall in consumer spending - down 1.7% compared with the same period last year.

It now costs a whopping $500,000 a year to insure $10 million of Irish bonds for five years, according to data provider Markit, compared with around $460,000 on Wednesday evening. That’s a fresh all-time record and a 9% jump. And Ireland’s bond market isn’t faring better: Ireland now has to pay an interest rate that is nearly 4.2 percentage points higher than Germany, the euro-zone benchmark, to borrow cash from investors for 10 years. (That’s also a fresh record.) Two other fiscally-challenged European countries – Portugal and Greece – are also watching their risk spreads weaken, but not nearly as much.

So, what gives? Traders and economists have been saying for days that there is actually very little “liquidity” in the market for Irish bonds or credit-default swaps. Translation: Few investors are actually buying and selling insurance on Irish bonds, which means that when anyone does indeed buy, the price of insurance shoots higher. Brian Devine, an economist at NCB Stockbrokers in Dublin, put out a good note Wednesday explaining why Ireland’s credit spreads don’t reflect the country’s economic reality.

Jobless claims weren’t so great, knocking U.S. stock futures down a bit. Economists thought we’d get a rise of 3,000 up to 453,000. Instead we got a jump of 15,000 up to 465,000. Some quick takes from market watchers:

Ward McCarthy, Jefferies — Today’s claims level is above market expectations, but within the range of forecasts. Claims have been unusually difficult to forecast in recent weeks as the residual effects of inappropriate seasonal adjustments and calendar distortions due to the Labor Day holiday weekend have created distortions. Going forward in the near-term, claims should resume their recent downtrend, though week-to-week reversals will be common.

Peter Boockvar, Miller Tabak — Just as the S&P’s couldn’t sustain any momentum after breaking above the upper end of the trading range of 1130ish, the economic data is unable to generate any positive momentum to the upside. Every breakout has been false and blah remains the unfortunate theme.

David Ader, CRT Capital – Not a huge increase but after several weeks of falling is in the ‘wrong’ direction. We note too that the lower [continuing] claims merely means people falling off the ranks vs. getting jobs (our take).

WASHINGTON (September 23, 2010) – Existing-home sales rose in August following a big correction in July, according to the National Association of Realtors®.

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.3 percent in August to 110.2 (2004 = 100), following a 0.1 percent increase in July, and a 0.2 percent decline in June.

In the week ending Sept. 18, the advance figure for seasonally adjusted initial claims was 465,000, an increase of 12,000 from the previous week's revised figure of 453,000. The 4-week moving average was 463,250, a decrease of 3,250 from the previous week's revised average of 466,500.

Sept. 22 (Bloomberg) -- U.S. 10-year Treasury note futures are set to climb to 126 28/32 should they sustain a break through a key Fibonacci level, Societe Generale SA said, citing technical indicators.

The bottom line is that the "obvious" breakout of the S&P 500 is not confirmed by many other indexes and contrarian sentiment indicators. This does not signal the definitive end to the rally, but it should at least give cautious thinkers a seat at the table.

      Bullish                 Bearish

... as much as we did at the August top.

 - Schaeffersresearch.com

For 17 consecutive weeks, U.S. stock funds have experienced combined withdrawals of nearly $50 billion, according to the Investment Company Institute.

Sept. 22 (Bloomberg) -- Portugal sold 750 million euros ($1 billion) of bonds as yields driven higher by concern that the government will struggle to trim its deficit fueled demand.

The debt agency sold 450 million euros of securities due October 2014 to yield 4.695 percent, a jump from the 3.621 percent at the July 28 auction. Investors bid for 3.5 times the amount offered, more than the 3.1 times in July. Portugal also sold 300 million euros of 10-year bonds, leaving the total for the auction at the low end of the 750 million-euro to 1 billion- euro range set for the sale. Demand also rose for that debt.

FT Deutschland leads its financial section this morning with the Germany’s that the head of Germany’s largest asset managers, DWS, believes that China is about to drown in its bubbles, and likely to suffer a very significant asset prices collapse, that could have a negative impact on growth.

Sept. 22 (Bloomberg) -- U.S. home prices dropped 3.3 percent in July from a year earlier, the eighth consecutive decline, as foreclosed properties flooded the market.

The index for mortgage purchase applications fell 3.3 percent following a 0.4 percent slip in the prior week. The index had been on a climb in earlier weeks. The refinance index fell 0.9 for a third straight dip. Refinancing made up 81 percent of total applications

The number of U.S. companies at significant risk of default (rated B3 or below) recently fell to a two-year low, according to Moody's. "What's interesting is the snap back," Moody's David Keisman said. Government liquidity initiatives are helping to improve credit quality and lessen default risk.

In the week after September triple witching, the US market was down in seven of the last eight years, and given the current overbought setup, we see the risk that later this week we could in fact see a bigger reversal in the market. -UBS

U.S. Census Bureau News

September store sales are swinging back and forth according to ICSC-Goldman's tally which fell 1.4 percent in the September 18 week following a 0.8 percent rise in the prior week. The year-on-year rate is also swinging back and forth, up a very strong seven tenths in the week to plus 3.3 percent

Sept. 21 (Bloomberg) -- Individuals are more bullish on U.S. stocks than any time this year even as hedge funds boost bets that equities will drop. That signals the Standard & Poor's 500 Index may hold near its current level, according to Bank of America Corp.'s Mary Ann Bartels.

"The equity market this year has frustrated both the bulls and the bears, and this is likely to continue into year-end," Bartels, ranked second among analysts who study price charts in Institutional Investor magazine's most recent survey, wrote in a note to clients yesterday.

Bartels said the biggest risk to her call for a "deeper correction" is the position by hedge funds and traders. Leveraged short exchange-traded funds have issued 2.8 percent of assets over the last week and 5.7 percent over the last two weeks, the note said, citing data from TrimTabs Investment Research.

"This indicates a bias to the short-side which is a contrarian bullish sign," Bartels wrote. "Fast money or hedge funds are positioned defensively, and if the market breaks key resistance levels, short covering as well as outright buying is likely to occur."

The S&P 500 needs to exceed 1,150 to invalidate a potential head and shoulders top that would indicate a reversal of a bullish trend, Bartels said. A break above that level would send the benchmark to revisit its 2010 intraday high of 1,119.80 reached in April, she said.

Flows into High Yield Bond and Emerging Markets Equity Funds hit a six week high during the second week of September while outflows from Money Market Funds climbed to their highest level since mid-June as the latest spike in risk appetite sustained a broad rally by global equity markets. Overall, EPFR Global-tracked equity funds took in a net $9.42 billion during the week ending Sept. 15 – a 13 week high -- while bond funds posted collective inflows of $4.21 billion and Money Market Funds surrendered a net $26.5 billion.

While generally willing to back the rally, investors showed little appetite for picking winners at the sector level with seven of the nine major sector fund groups tracked by EPFR Global recording outflows for the week. They also showed some caution when it came to Europe’s story: despite recent upgrades for the Eurozone’s full-year GDP growth Europe and Emerging Europe Equity Funds both posted outflows and Global Bond Funds, which on average allocate a third of the portfolios to European markets, saw inflows slip to a 13-week low.

REAL GROSS domestic product (GDP) increased at an annual rate of 1.6 percent in the second quarter of 2010, according to the "second" estimates of the national income and product accounts (NIPAs) ^{The "second" estimate of real GDP growth was revised down 0.8 percentage point from the "advance" estimate .}

Sept. 20 (Bloomberg) -- Investors should sell the euro against the dollar as the 16-nation currency heads toward a one- month low against the greenback, Citigroup Inc. said, citing technical indicators.

The euro has held near the 76.4 percent Fibonacci retracement level of $1.3158, which marks the drop from Aug. 6, when the euro reached a three-month high, to Aug. 24, its lowest level since July. The currency has also traded below its 200-day moving average of $1.3228. Citigroup recommends establishing a short position, or an order to sell, at $1.3095 with a target level of $1.2588, the Aug. 24 low.

“We believe it is best to wait and see what happens around these levels,” technical analysts led by Tom Fitzpatrick at Citigroup in New York, wrote in a note to clients.

Sept. 17 (Bloomberg) -- Crude oil is unlikely to advance much more in London as prices fail at a four-month trend-line at $79.25 to $80.26 a barrel, according to technical analysis by Commerzbank AG.

Sept. 16 (Bloomberg) -- Treasury 10-year note yields are settling into an upward channel that may signal a reversal in the bullish sentiment that has borrowing rates hovering near record low levels, according to Jefferies Group Inc.

“At minimum we are seeing a correction and possibly an early sign of a change in trend in the Treasury market to higher yields,” said John Spinello, chief technical strategist in New York at Jefferies, one of the 18 primary dealers that trades government debt with the Federal Reserve. “Recent rallies have been rejected, and we are headed to higher yields.”

The pattern of 10-year notes setting higher daily highs and lows in yields means investors should sell as prices of the securities rise, Spinello said in an interview. A close in yield below 2.655 percent will delay the move high in yields, he said. If the 10-year note breaches 3.02 percent, it will represent the first retracement of the bullish move in Treasuries, he said.

In September 2004, it had been 18 months since stocks had hit a major bottom in the market (see Chart 1). They ended a strong rally in January of that year and spent the next few months in a large trading range. And somewhere in the latter half of that range the 50-day moving average moved below the 200-day average to trigger the now famous death cross signal.

In today's market, it has also been 18 months since a major bottom, and there's also been a trading range — albeit a sloppy one — in effect since January (see Chart 2). Volume is anemic and a moving average death cross is in place.

But we can use a loose framework, taking into account such factors as a four-year presidential-term cycle in the stock market pointing to a bottom in October.

It is quite possible that we'll see an important buying opportunity at that time.

The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.3 percent in August on a seasonally adjusted basis, the U.S. Bureau
of Labor Statistics reported today. (Before seasonal adjustment, the
all items index increased 0.1 percent for the month.)  Over the last
12 months, the all items index increased 1.1 percent before seasonal
adjustment.