Some Thoughts:

Last Friday, three of the heads of major exchanges appeared as if they were ready to have a cage match to the death. With the Flash Crash having the potential to ruin their new “business” that they have been cultivating for seven years, they quickly turned on each other.  But after a weekend sit-down negotiated by a few consigliore’s, the heads of the six Exchanges met today at the tutti di capo’s house in Washington DC.  They arranged to enter through side doors to avoid the paparazzi.  And when they exited, a truce had been called.  After all, a war is no good for any of the families.  It was decided that there would be a “strengthening of circuit breakers and handling of erroneous trades”.  This, they agreed, would satisfy the Feds and then they would once again be able to go about their business.

Question: How can a serious issue/problem be fixed if the problem is not understood yet? Let’s quote Carl Quintanilla, this morning: “How do you propose new regulations for a problem in which you don’t yet understand the cause?”

Question: Why was not something so mundane and obvious (circuit breakers) already employed by the exchanges             who are supposed to be insuring fair and orderly markets for all?

Question: Are circuit breakers really the band-aid solution, and actually do nothing about the root of the problem, which is the horrible foundation and conflict-of-interest issues inherent in our market structure?

Question: Do you remember Fredo’s receiving the Kiss of Death? In our current market structure drama, are long term investors “Fredo”?

Yesterday’s market action was, to quote Simon Cowell, “actually quite boring.” After a morning ramp-up it grinded sideways most of the day. Volume was 25% lighter in this rally compared to the drop on Friday, and advancers outnumbered decliners 19 -1. That’s like a NY Yankees score. And by the way, shame on us, given our love of America’s Game, to not mention Oakland’s Special Sunday: Congratulations to Dallas Braden and the Oakland A’s on their perfect game, only the sport’s nineteenth.

Where we left off 4:00pm EST:

INDU                      10785.14                               +404.71

SPX                        1159.73                                 +48.45

CCMP                    2374.67                                 +109.03

Futures now at 7:00 EST:

DJA                                                                         -114

SPA                                                                        -14.10

NDA                                                                        -20.75

Key Data out today:

07:30:                                                                     NFIB Small Business Optimism (87 expected)

10:00:                                                                     Wholesale Inventories (0.5% expected)

10:00:                                                                     IBD/TIPP Economic Optimism (48.4 expected)

Since yesterday’s close, some key stories:

–          Euro erases gains/ US Futures weak as optimism cools concerning EU bailout.

–          Brown offers to resign in UK. Hung Parliament.

–          SEC and six exchanges agree to strengthen circuit breakers.

–          Geithner to probe the Flash Crash today.

–          Icahn’s LGF offer extended.

–          Barton Biggs says US Equities can rally 20% as the global crisis eases.

–

Significant Movers After The Close:

CUZ +16.8% (earnings), NEXM +12.2% (study results), EMKR +12%, (earnings), WAVX +11.1% (earnings, acquires patents), SNHY +9.4% (earnings), MPG +8.2% (earnings), HQS +8.2% (earnings), ABAT +6.2% (earnings), GY +4.7% (BA contract), LDK +4.1% (earnings), NFP +4.1% (earnings), SCVL +3.8% (comps, guidance), SLXP +3.7% (earnings), LM +2.6% (earnings), ZLC +2% (Chairman and other board members to leave), NIV +1.2% (earnings), IVN +1.1% (to release project development plan), ARD +0.8% (earnings), MDR +0.7% (earnings); ADY -12.2% (earnings), PCLN -11.7% (earnings), BEE -11.1% (secondary), ZAGG -10.7% (earnings), VISN -7.8% (earnings), MBI -7.2% (earnings), TIXC -6.7% (earnings), ARIA -6.4% (earnings),  NUAN -5% (earnings), JAZZ -5% (secondary), FLR -4.5% (earnings), CIGX -4.4% (earnings), GTY -2.8% (secondary), SGU -2.7% (earnings), POWI -1.9% (CFO terminated), AGO -1.9% (earnings), WRC -1.6% (earnings).

Significant Movers This Morning:

	US – Upside
Symbol	Name	Last	%	Mrkt Cap	Headlines
FRE	Freddie Mac	$1.48	10.45%	4,322	Posts loss; seeks $8b in aid.
SYKE	Syke Enterprise	$20.00	4.66%	906
	US – Downside
Symbol	Name	Last	%	Mrkt Cap	Headlines
PCLN	Priceline	$216.60	-13.27%	11,849	Earnings
MBI	MBIA	$8.68	-6.97%	1,912	Earnings
HBAN	Huntington Bancshares	$6.25	-3.70%	4,650	Regionals Get Swept Up In Greek Drama
SNDK	SanDisk	$40.06	-3.60%	9,500
RCL	Royal Carribean	$31.35	-3.70%	7,005	Ship returns sans cruise member

Earnings Today:

Ticker               Estimate                 Actual

AGM                       0595                       0.54

ALLT                      -.01                         0.01

BPZ                        1.00                        -.02

CECE                     -.02                         0.01

CHD                       1.08                        1.11

CPHI                      0.11                        0.10

DUSA                     0.01                        1.00

EGY                        0.12                        0.11

FOSL                      0.32                        0.53

HEAT                     0.03                        0.05

IVR                          0.79                        0.77

JASO                      0.18                        0.24

NICE                      0.37                        0.38

NURO                    -.17                         -.20

PAAS                     0.24                        0.18

SDTH                     0.10                        0.12

SEED                     -.22                         -.18

SPPI                       -.15                         -.80

SUSS                     -.19                         -.29

Expected Earnings Later:

AAIR, ARCL, ASEI, ASYS, BNVI, CBEH, CIE, CPL, CSKI, STRP, SCLT, CWCO, CXPO, DFZ, DIS, DOVR, DPTR, EAR, ERTS, ESIO, EXEL, FNGN, GBE, GEOI, GILT, GIVN, HCKT, HIT, HMIN, IDSY, LTRE, MEMS, MFB, MGPI, NGSX, NXG, OPNT, OXGN, PAL, PDM, PIP, PLUG, RICK, SGA, SMI, SOMX, SPMD, SPWRA, SSRI, SSW, STRI, STV, SYX, TAST, TEAR, TIER, TM, TMH, TRGL, TRIB, TWER, VIMC, WX, XSEL.