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OI Technical Staff : 11/11/2005 9:59:59 PM

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Jeff Bailey : 11/11/2005 8:02:53 PM

Veteran's Day .... It was a rather quiet day of trade and as you can see from today's internal measures, volume was light. NYSE volume was the lightest since September 2 (1.63 billion shares), which was the Friday before Labor Day.

Slow days of trade give us time to honor and remember all veterans who have sacrificed, in many different ways, to serve our country.

Veterans. You have defended my freedoms, and for that I am very thankful. At times, you have also been called upon to defend the rights, or freedoms of those that cannot defend themselves. For this, I am also very appreciative.

Perhaps the Russell 2000 Index ($RUT.X) 666.66 +0.26% tipped their caps to the 666th Transportation Company in today's trade.

My tour of Duty with the 666th Transportation Company - by Phillip C. Brown, Sergeant E5 Link

Again... to all veterans. I thank you for your sacrifice and defending my freedom.

Jeff Bailey : 11/11/2005 7:17:01 PM

Pivot Matrix for next week at this Link ... There was a conversation today regarding pivot level calculation. I use the conventional (Prior High + Prior Low + Prior Close) / 3 method of pivot level calculations.

The "Woody's" model was discussed, but from research and industry contacts, this model is rarely used. It is thought that the opening tick (which the Woody's model uses for pivot calculation (PrevHigh + PrevLow + 2 * Open) of a security may not truly reflect, or depict the market's full perception of trade. Unlike the closing tick, which after several hours, days, or weeks of trade, reflects the final resting point of all votes (buyers and sellers) agreeing on price as information is learned.

As always, it is encouraged that traders backtest any trading tool or methodology.

Jeff Bailey : 11/11/2005 6:02:38 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 11/11/2005 5:28:57 PM

Closing Internals found at this Link

Jane Fox : 11/11/2005 3:45:32 PM

The AD line has climbed to +425 and AD volume continues to make new daily highs. And there go the TICKS again +800

Jonathan Levinson : 11/11/2005 3:43:17 PM

I need to leave in the next few minutes. Have a good and safe weekend, all.

Jonathan Levinson : 11/11/2005 3:36:47 PM

The good news for bears is that the 60 min cycle has finally rolled over on QQQQ/NQ Link , but the bad news is that the 30 min cycle downphase has run almost the entire length of its range with just a 20 cent decline to show for it. That's very corrective action from the key 30 min cycle, and while the daily and weekly cycles are also overbought and due for some downside, it could also portend a bullish blast for Monday morning. The short cycle indicators are also oversold after their long sideways run today, more potential fuel for bulls on Monday. Link

Jonathan Levinson : 11/11/2005 3:28:25 PM

Session low for GOOG here at 388.85, down 2.25. That's the equivalent of 22.5 cents on a 39.11 cent stock, for what it's worth. The market remains quiet, volume light and the range narrow.

Jonathan Levinson : 11/11/2005 3:18:49 PM

YM holds 4 points off its high, QQQQ 22 cents of its high at 40.70 currently, a tale of two markets. Yet volume breadth remains stronger on the Nasdaq, +2.15:1, while only +1.88:1 on the NYSE.

Jeff Bailey : 11/11/2005 3:15:23 PM

03:00 Internals found at this Link

Jeff Bailey : 11/11/2005 3:03:29 PM

03:00 Market Watch found at this Link

Jonathan Levinson : 11/11/2005 3:00:31 PM

Headlines:

DEC NATURAL GAS ENDS THE WEEK WITH A GAIN OF 2.6%

DEC NATURAL GAS CLOSES AT $11.712/MLN BTU, UP 33.2C, OR 2.9%

Jeff Bailey : 11/11/2005 2:49:25 PM

Fannie Mae (FNM) $47.64 +2.69% Link ... presses best levels of the month.

Jonathan Levinson : 11/11/2005 2:41:53 PM

Volume breadth is up to +2:1 on the NYSE, +2.2:1 on the Nasdaq.

Jeff Bailey : 11/11/2005 2:41:17 PM

Here come the toops and a Veteran's Day bid! SPX 1,233.93 +0.24% presses best levels of the session.

Jane Fox : 11/11/2005 2:40:28 PM

Those new daily highs in the AD volume were your heads up to this little rally we have going on.

Jane Fox : 11/11/2005 2:39:55 PM

Bulls would love to see the TICKS get to +1000 and they just may.

Jonathan Levinson : 11/11/2005 2:38:51 PM

New highs for ES and YM, while QQQQ drifts higher still within the opening gap, just below narrow range resistance. A single buy program could easily catapult price to the top of the range, but so far the Qs are lagging. Link

Jeff Bailey : 11/11/2005 2:38:48 PM

Beetle's Balanced Benchmark alert ... iShares Russell 2000 (IWM) $66.40 +0.52% ... gets green for the first time since Q3 rebalance.

Jane Fox : 11/11/2005 2:38:43 PM

See what I said about taking each and every trade.

Jane Fox : 11/11/2005 2:35:34 PM

TICKS are chiming in again +800 and the bulls are getting stronger.

Jane Fox : 11/11/2005 2:17:14 PM

OK the AD line is now above 0 (oh whoppee!) and the AD line is still making new daily highs. The TICKS to +800 gives another clue that the bulls are getting stronger.

Jeff Bailey : 11/11/2005 2:13:56 PM

02:00 Internals found at this Link

Jane Fox : 11/11/2005 2:10:34 PM

Just out of the blue TICK +800

Jonathan Levinson : 11/11/2005 2:09:52 PM

QQQQ continues to hold within its opening gap: Link Link

Jeff Bailey : 11/11/2005 2:02:41 PM

02:00 Market Watch found at this Link

Jeff Bailey : 11/11/2005 1:54:16 PM

December Natural Gas (ng05z) $11.69 +2.72% ... Recoups this weeks losses as a cold front sweeps down from the Northwest bringing near-freezing temperatures to parts of Idaho Link

Jonathan Levinson : 11/11/2005 1:51:03 PM

On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.

Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).

Link

Hopefully this won't herald a new, less transparent posture for the Fed, contrary to what most are expecting from Bernanke's tenure. And, hopefully, they won't stop publishing the daily open market ops with respect to those repurchase agreements.

Jeff Bailey : 11/11/2005 1:44:00 PM

Boeing (BA) $65.43 -1.01% Link ... Shares off their recent highs after rival Airbus said it expects to win at least another 57 orders for its new A350 passenger plane by the end of this year, bringing the total number of orders to 200.

The A350 is billed as a rival to Boeing's 787 Dreamliner, due to start flying in 2008.

Jeff Bailey : 11/11/2005 1:39:39 PM

General Motors (GM) $24.53 +4.38% Link ... rebounds from a recent string of 52-week lows after the world's biggest maker of automobiles said hourly workers have agreed to a proposal that would increase the amount retirees and active workers must pay for their healthcare.

General Motors had asked the United Auto Workers (UAW) for the conessions this spring. GM said it lost more than $3 billion in the first 9 months of 2005 as its labor costs rose and competitors ate away at its U.S. market share.

Jonathan Levinson : 11/11/2005 1:31:58 PM

Despite the break below 72 SMA support, there's nothing to this decline, sideways, weak and slow. The short cycle downphase is not yet oversold, but it's close. There's no indication that confluence at 40.60-.65 will break on this attempt, and a new upphase from here following the pathetic downphase currently in progress would have a good chance at being impulsive, for an aggressive test of the high. Link

Jane Fox : 11/11/2005 1:26:52 PM

... of course within the context of an AD line below 0 the bears are not quaking in their boots.

Jane Fox : 11/11/2005 1:25:49 PM

That AD volume should be getting the bears pretty worried. Link

Jonathan Levinson : 11/11/2005 1:21:47 PM

Session low for QQQQ at 40.69, testing gap support: Link

Jeff Bailey : 11/11/2005 1:21:15 PM

01:00 Internals found at this Link

Jonathan Levinson : 11/11/2005 1:17:06 PM

Volume breadth slightly weaker, down to +1.6:1 on the NYSE, +1.7:1 on the Nasdaq.

Jane Fox : 11/11/2005 1:11:04 PM

Problem with days like this is that you have to take each and every trade that sets up because you never know when/if the big moves are starting. Take a look at yesterday and Wednesday and if you had not been in position you would have missed the really nice moves we had.

Jonathan Levinson : 11/11/2005 1:08:29 PM

30 min channel support hasn't begun to tick down, as the narrow range compresses the keltner bands. Still, the cycle is coming off a top, as is the 60 min cycle, and at this point a failure to bounce will result in those channels beginning to decline. 72 SMA holds at 40.79, below which these intraday cycles are bearish: Link

Jeff Bailey : 11/11/2005 1:03:55 PM

01:00 Market Watch found at this Link

Jonathan Levinson : 11/11/2005 12:59:31 PM

Session high for gold here at 469.40, tsting the 138% fib line off the May low: Link

Jeff Bailey : 11/11/2005 12:56:26 PM

Yellow Roadway (YELL) $48.59 +1.90% ... ticking session highs here. Challenges upper-end of $47.02-$48.61 resistance.

Jonathan Levinson : 11/11/2005 12:43:59 PM

Volume breadth holds at +1.6:1 on the NYSE, +2:1 on the Nasdaq. This short cycle downphase forgot to eat its Wheaties, getting very little traction as price adheres to the 72 SMA. Above 40.69, the bulls get the benefit of the doubt. Link

Jane Fox : 11/11/2005 12:39:29 PM

The AD volume making new daily highs is telling you the bulls are gaining momentum but the AD line below 0 is telling you the bears have a firm grip on the reins and what do the markets do with these two forces rubbing against one another? They go nowhere.

Marc Eckelberry : 11/11/2005 12:32:28 PM

Excellent, thank you Jonathan.

Marc Eckelberry : 11/11/2005 12:31:26 PM

May I venture to say at this point that QQQQ 41.90 could have been an important swing top?

Jonathan Levinson : 11/11/2005 12:30:53 PM

Here are the indicators used in generating that chart: Link

Marc Eckelberry : 11/11/2005 12:29:53 PM

Good stuff, thanks Jonathan. At $150 bucks, Q charts sometimes drives me up the wall.

Jonathan Levinson : 11/11/2005 12:28:41 PM

Free and registered, both. The registered version gives you the multiple (more than 3?) days' accumulated intraday data, as well as eliminating that advert above the quote screen.

Marc Eckelberry : 11/11/2005 12:26:49 PM

Really? The free version??

Jonathan Levinson : 11/11/2005 12:26:17 PM

Quotetracker.

Marc Eckelberry : 11/11/2005 12:25:25 PM

Thanks, Jonathan. I never use the open, seems to have no relevance in YM pivots, but is that e-signal?

Jane Fox : 11/11/2005 12:24:58 PM

Oh Oh watch out bears AD volume to new daily highs.

Jonathan Levinson : 11/11/2005 12:25:48 PM

Here, Marc: Link . They're listed as "Woodie's Pivots," and are computed with the previous day's H-L-C as well as the current day's open. They're one of the standard indicators on Quotetracker.

Jeff Bailey : 11/11/2005 12:20:43 PM

12:00 Internals found at this Link

Jane Fox : 11/11/2005 12:20:28 PM

I miss Linda's commentary on the AD line for sure.

Marc Eckelberry : 11/11/2005 12:20:42 PM

Jonathan, what charting service are you using? Those pivots are pretty accurate, compared to Qcharts for futures. Do me a favor when you have a chance and run the YM pivots, it should be P: 10625, R1 10712 and S1 10574. Qcharts is always off on those and I have to use a spreadsheet. I'm curious to see what you come up with.

Jeff Bailey : 11/11/2005 12:11:05 PM

12:00 Market Watch found at this Link

Jonathan Levinson : 11/11/2005 12:10:56 PM

Crude oil is trying to put in a double bottom at S1, currently down .475 at 57.325, the earlier low at 56.90. Link

Jonathan Levinson : 11/11/2005 12:03:27 PM

The bottom of the 30 min channel is at 40.69, also gap support. There's a good likelihood of a bounce there, but it needs to be strong. A weak/sideways bounce will see this cycle begin to roll, and with all intraday (and daily and weekly) cycles overbought, there's plenty of room for that floor to fall lower. Link

Jonathan Levinson : 11/11/2005 12:01:14 PM

Session low for INTC and QQQQ here. Volume breadth falls to +1.8:1 on the Nasdaq, the TICK.NQ down to 0249 and TRINQ neutral-bullish at .54.

Jonathan Levinson : 11/11/2005 11:58:05 AM

QQQQ tests 72 SMA support here for the first time since 1PM yesterday: Link

Marc Eckelberry : 11/11/2005 11:56:20 AM

Have to go, looks like a clean entry on the January QQQQ 41 puts at 1.05. Now at 1.10 with NQ losing weekly R1 and SOX going red.

Jeff Bailey : 11/11/2005 11:56:19 AM

GSTI Software Index (GSO.X) 170.78 +0.43% Link ... has now retraced 80.9% of its December-April decline and after threatening a MACD "sell signal," MACD begins to kick higher.

Dorsey Wright's Software Bullish % (BPSOFT) at 49.58% and "bear correction" Link

It would currently take a higher 62% reading for this sector to achieve "bull confirmed" status.

Jonathan Levinson : 11/11/2005 11:48:29 AM

QQQQ holding its narrow range above gap support, the 30 min cycle channel stalling after peaking at 41: Link

Jeff Bailey : 11/11/2005 11:31:47 AM

Bullish swing trade call establish stop alert ... for the Matrix Service Link Feb. $7.50 Call (QXW-BU) ... Would close out the remaining 1/3 position should the stock trade $7.40.

MTRX $7.80 -9.72% ...

Jeff Bailey : 11/11/2005 11:28:17 AM

11:15 Internals found at this Link

Jane Fox : 11/11/2005 11:19:01 AM

When the VIX does not support new highs in the S&P futures that new high has a very good chance of been a headfake.

Jeff Bailey : 11/11/2005 11:18:47 AM

11:15 Market Watch found at this Link

Jane Fox : 11/11/2005 11:17:55 AM

Unfortunately though the new highs in ES are not being met with new lows in the VIX so we remain in a chop.

Jonathan Levinson : 11/11/2005 11:16:55 AM

Need to step away for 15 minutes.

Jane Fox : 11/11/2005 11:16:20 AM

WE are now getting some direction. Link

Jeff Bailey : 11/11/2005 11:15:09 AM

Matrix Service (MTRX) alert $8.04 -6.94% ... Late yesterday, Valero Energy (VLO) $96.02 +0.54% said "significant safety issues" were involved in the deaths of two contract workers at its Delaware City, Deleware, refinery last week.

Matrix Service, which oversees the Deleware refinery overhaul and employed the two workers, did not have an immediate comment.

Marc Eckelberry : 11/11/2005 11:07:25 AM

The play is directional, but feel free to play around with it next week by throwing in some November calls as we near put support at 40.

Marc Eckelberry : 11/11/2005 11:06:03 AM

Our January 41 strike has a pc ratio of 0.34, in case you were wondering. There is absolutely no wall of worry, like last year. Yes, we have some puts next week, but those are all old news, Katrina positions that will unwind soon enough. They should support us between 39.50 and 40.30, so be aware that any short plays will not find great traction quite yet. You can scalp in and out of the January puts.

Jonathan Levinson : 11/11/2005 11:02:32 AM

Session high for QQQQ at 40.918: Link

Marc Eckelberry : 11/11/2005 11:02:17 AM

As an illustration of the wide spread belief that we will have a year end rally, the December QQQQ 40 strike has a whopping 0.30 pc ratio, with calls favoring puts 3 to 1. The 41 strike is even more optimistic with a 0.28 read, Now you know why I am a buyer of January 41 puts.

Jonathan Levinson : 11/11/2005 10:55:06 AM

Volume breadth +1.4:1 on the NYSE, +1.8:1 on the Nasdaq.

Jeff Bailey : 11/11/2005 10:49:33 AM

Net2Phone (NTOP) $1.90 +28.37% Link ... Late yesterday, telecom provider IDT Corp. (IDT) $11.59 -1.19% Link said it began its offer to buy all outstanding shares of the voice over internet provider for $2.00 per share.

Jonathan Levinson : 11/11/2005 10:47:04 AM

Gap support holds, QQQQ back above 40.80 as 30 min channel resistance rises to 40.95 and the so far weak, corrective short cycle downphase results in a sideways move only: Link

Jonathan Levinson : 11/11/2005 10:32:43 AM

I wish, Keene. I do it vicariously through reader John...

Jonathan Levinson : 11/11/2005 10:32:15 AM

Mark, it's one that J.M. Hurst used via nested moving average channels. By selling at multiple channel (pipe) tops and buying at bottoms, he could confidently set tight stops beyond which he'd be certain that his analysis was wrong. My adaptation uses Keltner channels instead, and by nesting multiple timeframes on the same chart, channel touches and breaches provide those entries and suggest the stops. The trouble comes in trending moves that violate and redraw the channels at steep rates on sharp bounces (yesterday) or declines. Link

Jane Fox : 11/11/2005 10:28:40 AM

As you can see these two have not broken their respective "lines in the sand." I am using the S&P futures for this comparison because it has a the best correlation to the VIX. Link

Jane Fox : 11/11/2005 10:23:51 AM

Until these two resolve you will see no direction in the market. Link

Jonathan Levinson : 11/11/2005 10:22:28 AM

This is a pattern we've often seen at 30 and 60 min cycle tops and bottoms. The cycles are like pipes: the 30 min cycle is a narrower pipe that contains the price and oscillates within a wider pipe, the 60 min cycle. As that wider 60 min channel turns, the 30 min cycle bumps around within it, tracing a flat range for a few hours before hitting the declining top of that wide 60 min channel as it begins its descent. During those sideways few hours, the price is "weightless" within the broader cresting channel. The tell occurs as the range begins to make lower highs and eventually breaks the lower range bottom. It's still early for that, but if the bulls stop breaking their earlier highs, we'll know that the turn is coming. Link

Jeff Bailey : 11/11/2005 10:20:49 AM

10:00 Market Watch found at this Link

Jane Fox : 11/11/2005 10:17:21 AM

AD volume is now making new daily highs as the AD line is making new daily lows. This is such a recipe for chop.

Jonathan Levinson : 11/11/2005 10:17:20 AM

Session high for crude oil here agt 58.10, +.30.

Jonathan Levinson : 11/11/2005 10:16:09 AM

Volume breadth softens to +1.8:1 on the Nasdaq, but has strengthened to 1.35:1 on the NYSE. QQQQ has parked itself at 40.80 as the wavelet downphase runs, setting up the potential for a bounce when the wavelet bottoms in the next 2-3 minutes (middle oscillator pane). Link

Marc Eckelberry : 11/11/2005 10:10:39 AM

I have complete faith in my read on VXN. The hit at 14 marked a swing low.

Marc Eckelberry : 11/11/2005 10:08:33 AM

QQQQ Max pain is 39, but 40 will probably hold through opex. In any case, the December and January strikes show massive optimism at 40, so once we are done with opex, the put play could gather some steam.

Jonathan Levinson : 11/11/2005 10:06:30 AM

QQQQ breaks back to 40.80 in a quick drop off a 40.89 high. Blink and you missed it. The short cycle oscillators are still at lower highs relative to price, still a potential bearish-D. Gap support is at 40.77, below which is next support at 40.68. Link

Jeff Bailey : 11/11/2005 10:06:20 AM

10:00 Market Watch found at this Link

Jane Fox : 11/11/2005 10:01:07 AM

AD volume is positive but the AD line is negative and both are gyrating all over the place.

Marc Eckelberry : 11/11/2005 10:00:14 AM

That VXN chart uses 10% envelope from 10 day ema and has not failed me all year.

Jonathan Levinson : 11/11/2005 9:58:34 AM

Volume breadth edges lower to +1.16:1 on the NYSE, +2.5:1 on the Nasdaq as NQ and QQQQ make a new high at 40.88.

Marc Eckelberry : 11/11/2005 9:58:24 AM

VXN chart with envelope for those who don't believe me: Link

Marc Eckelberry : 11/11/2005 9:56:39 AM

VXN is right at reversal point, a hair above 10% away from 10 day ema. Gotta play it. Lots of calls at 41 strike, big resistance.

Jane Fox : 11/11/2005 9:54:04 AM

Internals are hard to read this morning however, they are certainly not bullish but I can't put a bearish label on them yet. Albeit I do think the push will be the downside.

Marc Eckelberry : 11/11/2005 9:54:36 AM

ALERT: Long QQQQ January 41 put at 1.05. Stop .55.

Jeff Bailey : 11/11/2005 9:53:25 AM

QQQQ Link ... How about a Veteran's Day trade at $41.00 today?

Jonathan Levinson : 11/11/2005 9:51:54 AM

QQQQ holds steady at 40.85, still above the 30 min, 60 min and short cycle channels. The longer it holds without pullback, the stronger it becomes as these cycles pull up to join the price. The short cycles have reversed their downphase from yesterday's close, though at a current lower high, there's a potential bearish divergence against the higher price high if the price drops straight from here. So far, it shows no sign of doing so. Link

Jeff Bailey : 11/11/2005 9:48:56 AM

Pretty good seller of the DIA Nov. $107 Puts (DIA-WC) early.

DIA $106.64

Jane Fox : 11/11/2005 9:46:30 AM

VIX is probing previous day lows as ES is probing previous day highs so the VIX is confirming the bullishness but the AD volume/line are not and that is a huge red flag for the bulls.

Jane Fox : 11/11/2005 9:41:53 AM

AD volume is positive but barely and the AD line is also positive but barely at +128.

Jonathan Levinson : 11/11/2005 9:38:00 AM

Volume breadth is now positive across the exchanges, +1.22:1 on the NYSE, +2.35:1 on the Nasdaq.

Marc Eckelberry : 11/11/2005 9:37:50 AM

VIX and VXN are right at reversal points.

Jonathan Levinson : 11/11/2005 9:36:29 AM

QQQQ holds right at the top of its 30 min channel. The keltner breach suggests downside from here, but ignoring those signals was the correct decision for all of yesterday's trending rise (see red paintbars above the 100 tick candles yesterday). Direction is still up for grabs. Link

Jonathan Levinson : 11/11/2005 9:31:37 AM

Volume breadth is -1.07:1 on the NYSE, +2.44:1 on the Nasdaq at the open.

Jeff Bailey : 11/11/2005 9:29:25 AM

MBNA Corp. (KRB) $26.29 ... 1.85 million share block crosses the wire at $26.29.

Jonathan Levinson : 11/11/2005 9:25:43 AM

The Fed's open market desk is closed with the bond market today. No expirations or deliveries scheduled for today.

Jeff Bailey : 11/11/2005 9:24:56 AM

Program Trading Levels for Friday ... HL Camp & Company has their computers set for program buying at $+3.67 and set for selling at $+1.57.

Jonathan Levinson : 11/11/2005 9:02:47 AM

Second that, Tab.

Tab Gilles : 11/11/2005 9:00:58 AM

To all the Veterans'....Thank You Link

Jonathan Levinson : 11/11/2005 8:56:54 AM

Cycle-wise, we have the weekly cycle that has aborted its downphase in the very early going and is back in an upphase in overbought terrirory. Within that, the daily cycle is also pointed north within overbought territory. On an intraday basis, the 60 min cycle is rising in a strong upphase just above its midpoint, plenty of room to run, while the 30 min cycle is pointed north but buried in overbought territory, at the very top of its range. The short cycle is also in an upphase, not yet overbought.

This picture suggests that the bullish cycles are firing on literally all cylinders. The toppy 30 min cycle suggests limited upside intraday without a correction first, but will all cycles in gear, there's a much better than average chance of an upside trending move. My guess is that any weakness today will be of the sideways variety- only a strong break of 40.30 QQQQ would suggest otherwise.

Tab Gilles : 11/11/2005 9:03:37 AM

Nasdaq100 ($NDX) Very bullish move on the $NDX yesterday, as I pointed out in my 11/10 11:41 AM post. Where I was looking for a break over the 1636 resistance level. Link Link Link

As the chart on 11/7 9:34 AM....the Bollinger Bands expansion indicated then that there was more upside. Link

The $NASI, $NAHL & $VXN are pointing to more upside. Link Link Link

Continue to hold Profund UOPIX positions 10/26 @ $22.66 (1/2 position) & 11/2 @ $23.66 (1/2 position). Closing NAV 11/10 $24.82. Link

Jonathan Levinson : 11/11/2005 8:20:08 AM

The bond markets are closed for Veteran's Day. The TNX posted a big reversal following the 1PM 10-year note auction results, reversing nearly all of the previous day's gains: Link . A new daily cycle downphase is kicking off for the ten year yield, though the rising trendline hasn't yet been broken on the daily chart.

In case you missed it, the ten year note auction was a success, at least insofar as the Indirect Bidder participation was concerned. Foreign central banks bought a record percentage of the notes auctioned, more than 55%, though overall demand was tepid at best, with a 2.24 bid to cover ratio that was the weakest since the February auction. This shows that had the Foreign Central Banks not stepped up to the plate and bought a record percentage of the total, demand would have been very weak. Equities and bonds rallied following that 1PM announcement.

In recent weeks, I've been noticing that the market action has been ignoring the liquidity picture depicted by the Treasury and Fed actions. If foreign central banks are protecting their already huge positions in US markets, then it's worth noting that the Fed is but one central bank. In other words, believe the tape. If foreign central banks want to bid up US bonds and stocks, then that's what they will do, and our technical indicators will follow that action. If, on the other hand, this ten year note bonanza was a one-time affair, then the current rallies in stocks and bonds could turn out to be mere flashes in the pan. In the meantime, prices have been clearly moving higher, and that's the direction until the charts show different.

Linda Piazza : 11/11/2005 7:30:41 AM

Good morning. I will be off today, but wanted to give a quick update on Asia and Europe before I take off.

The Nikkei closed at a new four-year high. Most other Asian markets gained, as do European markets, with those European markets posting strong gains. Japan's third-quarter real GDP rose in line with expectations according to one source and faster than expected according to another, by 0.4% quarter over quarter. Annual growth was 1.7%. Domestic demand contributed to growth while foreign demand detracted from growth. The GDP deflator was -1.1% quarter over quarter. Imports had its biggest negative impact on growth in 11 years.

In Europe, carmakers and technology-related issues gain, while home-improvement related issues declined in the U.K. after building merchant Travis Perkins warned about market conditions and leading indicators.

Jonathan Levinson : 11/11/2005 7:14:25 AM

Equities are up, ES trading 1233.5, NQ 1660.5, YM 10666 and QQQQ +.175 at 40.775. Gold is down 1.7 at 466.10, silver up .012 at 7.719, ten year notes down 3/64 at 108 25/64, crude oil -.625 at 57.175 and natgas is up .265 at 11.645.

There are no major economic reports scheduled for today.

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