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OI Technical Staff : 10/6/2006 9:59:59 PM

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Tab Gilles : 10/6/2006 9:57:33 PM

Open Positions & Stock watch Link

$NDX/ $NAA daily Link

$NAHGH/$NALOW 10-ema weekly Link

$NDXA50 & $NDXA200 daily Link Link

Profund Ultra OTC (UOPIX Link

Profund Ultra SmallCap (UAPIX) Link

Marc Eckelberry : 10/6/2006 6:26:04 PM

Today, enough puts were added to increase the ratio to .60, still heavy on the call side, but watch that next week and make sure it doesn't flip. For now, it's still resistance (SPY 135/SPX 1350).

Marc Eckelberry : 10/6/2006 6:19:21 PM

Yesterday, I posted this:
Marc Eckelberry : 10/5/2006 9:47:51 AM
I know it's 2 weeks away, but too many traders leaning on SPX 1350. As I pointed out last night, SPY pc ratio is .38. That doesn't mean we can't rally now, just that 1350 will be tough next week.

Marc Eckelberry : 10/6/2006 6:16:57 PM

Thanks Tab, just saw your post.

Marc Eckelberry : 10/6/2006 6:07:29 PM

Greenspan propped the markets up mid-morning, if you are wondering what happened:
Oct. 6 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the "worst may well be over" for the U.S. housing industry that's suffering its worst downturn in more than a decade. Greenspan, speaking at a conference in Calgary today, pointed to a "flattening out" of weekly mortgage applications after they went down "very dramatically."

Keene Little : 10/6/2006 5:15:05 PM

One last comment--the daily chart of the DOW shows a hanging man doji. The bulls will need to negate that pending bearish candlestick with a green candle on Monday. A red candle would confirm the reversal candlestick pattern.

Keene Little : 10/6/2006 4:40:06 PM

With that I'm outahere. Monday will hopefully provide some clues about the direction for the week and maybe beyond. Have a great weekend.

Keene Little : 10/6/2006 4:38:38 PM

An update to the DOW chart I showed earlier this morning shows how it held on top of its ascending wedge that it broke above this week. That's a bullish looking move here so it bears watching by those who are short the market. But the short term pattern suggests only a minor new high before it succumbs to greater selling pressure. I now have very good correlation between some Fib projections based on the wave pattern and DOW 11900 is looking very good for a market high. Link

Marc Eckelberry : 10/6/2006 4:40:25 PM

Hi Marc, Hope you are having a great day. Quick question - where are you getting your P/C ratio. I use the CBOE site but it updates every half hour. Thanks for any help.

I only know of Qcharts that provides real time PC ratio. The delayed feed (for other readers) link: Link

Jim Brown : 10/6/2006 4:37:24 PM

Jeff, you can place your guess in next week's reader challenge but you can't actually win the prize. Just like Keene, you will get an honorable mention if you win but no prize.

Keene Little : 10/6/2006 4:21:47 PM

Jeff, you've been bullish this market? Hadn't noticed ;-)

Jeff Bailey : 10/6/2006 4:20:13 PM

Now I'm upset Jim! I thought the competition was only open to readers. :(

Keene and Bob would have won anyway. My guess would have been MONTHLY R1. Once again, I'm too bullish.

Jeff Bailey : 10/6/2006 4:16:46 PM

Biotech HOLDRs (BBH) $186.61 -0.46% ... this would be my "sector of the week" to monitor next week. Actually, this sector was a reason I was leaning bearish for a near-term QQQQ trade.

Now hold on.... yes, this sector is looking like it is ready to make a turn, and could offer up a NEW bullish surprise.

BBH chart with some comments at this Link

I use the BBH so I can get a volume read. Note the steeper downward trend of the 200-day SMA, that may take some time to round out.

Light volume advance above the 200-day suggests there isn't a lot of disagreement.

Think of the process you've witnessed the past couple of months. Boom! The SMH/SOX makes a move. Then they stall out a bit. Then Boom! the GSO.X makes the move and adds fuel to the fire.

Aha! What's next say the trader?

Boom! How about some biotech? Maybe take some profits in the chips, roll to the biotech?

Why no volume? Hey... it has been a VERY TOUGH market to try and SHORT anything the last couple of months.

See the building importance going forward?

You and I could probably KNOW of some type of bearish event, or lack of bullishness for the biotechs that is coming, but after the past couple of months, let alone this past two weeks, how interested is anyone in trying to short anything?

Yep... a short will usually look for the 200-day SMA as a good place to short, with a plan that longs will liquidate given the chance.

But take the long side of the trade. Biotech has built a very nice 5-month base. That base can become the "powder keg" for the eventual explosion. Actually, did you know the Point and Figure charting system also has a bullish/bearish count based on the WIDTH of a base? Yes! It is the EXPLOSION up/down from a base where the herd turns on the break that drives price.

Back to volume ... So, you can see the impressive PRICE action as the BHH moves UP from the BASE. But the volume... well, that's looking more like a fuse has been lit, not a keg of gun powder igniting.

So... I get the feel, based on observation, that the GROUP as a whole may not be primed for an explosing anytime soon. If I'm WRONG, then the BELLWETHER stocks are the place to be hunting right now, and they should be the ones that kick off a bullish cycle.

Jim Brown : 10/6/2006 4:15:27 PM

I am holding my ER short over the weekend just in case North Korea does soemthing stupid.

Jane Fox : 10/6/2006 4:10:57 PM

Have a great weekend everyone.

Keene Little : 10/6/2006 4:08:46 PM

I'm not eligible for the prize? Just another example of the injustice of it all ;-)

Jim Brown : 10/6/2006 4:08:26 PM

Keene, great job on picking the S&P to close at 1350. Evidently those waves really do work! I was far too bearish in expecting traders to take profits this week while others were far too bullish in expecting an unrelenting rally. You and Bob were right on in letting the charts tell you where the S&P would go rather than letting your bias get in the way. Congratulations!

Next week I am going to give away a much better prize in the reader challenge but everyone will have to tune into the monitor on Tuesday to find out what it is.

Jane Fox : 10/6/2006 4:07:18 PM

Only report out on Monday is the 8:30a.m. NY Fed Manufacturing Index. Previous: 13.84.

Keene Little : 10/6/2006 4:07:11 PM

If you missed it in yesterday's Wrap, here's the ascending wedge for SPX on the weekly chart: Link

On the shorter term charts SPX is pressing back up to the top of the wedge for price action since July and is where it closed today. Bearish kiss goodbye setting up for Monday? But as I show here, we could get the "one more high" to 1356 to finish off the short term wave count. That's only a point away from the top of the wedge on the weekly chart. Monday could get interesting. Link

Jim Brown : 10/6/2006 4:04:08 PM

Reader Challenge Winner - The winner of my reader challenge was Keene with his pick of 1350 for the S&P close today. He was dead on. Unfortunately he is not eligible for the prize.

The reader who came the closest was Bob Demyanovich who guessed 1352.37. Good job Bob! We need to add you as a commentator to the monitor!

Keene Little : 10/6/2006 3:51:10 PM

Here are some levels I've marked on my chart and set alarms for:
SPX 1356-1357--potential high if we get a rally on Monday.
SPX 1338 (Tuesday's high)--warning shot across the bow of the USS Bullship.
SPX 1327 (Tuesday's low)--the shot that takes out the rudder of the USS Bullship.
SPX 1311--the shot below the waterline of the USS Bullship.

In between 1356-57 and 1338 could see a lot of chop and it's the DMZ--whatever side you're on you could be shot if found in there.

Marc Eckelberry : 10/6/2006 3:50:04 PM

Here is the chart again, smaller: Link

Marc Eckelberry : 10/6/2006 3:48:53 PM

5 year monthly chart for RLX (retail). Kiss goodbye? All time high and a solid bearish divergence: Link

Jeff Bailey : 10/6/2006 3:38:02 PM

GSO.X 181.13 -0.11% ... DAILY S1 180.38, DAILY Pivot 180.95, but session high juuuuust shy of DAILY R1 181.83.

Yep... chips are weaker, but BTK.X and GSO.X add a bit of strength still to the QQQQ.

Jeff Bailey : 10/6/2006 3:36:24 PM

BTK.X ... 706.65 -0.15% ... did juuuust undercut its DAILY Pivot (704.29), but nothing close to its DAILY R1 712.12.

Jeff Bailey : 10/6/2006 3:35:11 PM

SMH $33.96 -0.67% ... its session low this morning (same tye of double-bottom as QQQQ) was its DAILY S2 of $33.75.

Jeff Bailey : 10/6/2006 3:31:48 PM

QQQQ $41.40 now ... surprised the QQQQ didn't get a flinch trade up to M R1.

This morning I couldn't figure out why the QQQQ didn't just fall to $41.21 based on my early morning hand-tabulated DAILY Pivot Levels. Turned on my QCharts' DAILY Pivot levels and there's S1 at $41.26 on snapping up each 5-minute close.

I liked the entry point, but my downside target becomes WAY off.

Marc Eckelberry : 10/6/2006 3:28:10 PM

1699.25 is 50%

Marc Eckelberry : 10/6/2006 3:27:03 PM

Ok, NQ below pivot.

Marc Eckelberry : 10/6/2006 3:26:52 PM

YM 11900 is a kicker.

Marc Eckelberry : 10/6/2006 3:26:27 PM

I just wonder who is holding this up.

Marc Eckelberry : 10/6/2006 3:26:10 PM

Some big contracts just got dumped.

Jeff Bailey : 10/6/2006 3:22:56 PM

See today's dollar/Treasury YIELD action?

That represents a LOT of cash freeing up. I touched on this last week.

Where is it going to go? Equities on a pullback, or just more push higher? Will it stay here in the U.S., or will dollar ease and cash that has been coming into equities and ESPECIALLY Treasuries go back where it came from?

Keene Little : 10/6/2006 3:21:32 PM

One thing I will say is that if we do get a new high on Monday, which I will count as the 5th wave up to end this, it should be an excellent short play setup. The risk to shorts right here is a run up of about 65 DOW points and 8 SPX points as I look at the Fib projections.

Marc Eckelberry : 10/6/2006 3:20:38 PM

Typical pre-holdiay bounce, but this is a little wild. With the Korea business, I expect some post close selling.

Keene Little : 10/6/2006 3:18:08 PM

Today's pattern unfortunately leaves me guessing as to what it means in the larger pattern. I could adequately support a reason for another leg up on Monday as well as a reason why we've seen the top. Scalp 'em for now is about all I can say. We'll have to wait for additional clues from price next week.

Jeff Bailey : 10/6/2006 3:18:42 PM

03:00 Internals found at this Link

SPX did add 5 new highs at 16:0, but NYSE/NASDAQ flat from 01:00.

With bond market closed on Monday, we may well see a replay of today on Monday for the major indices.

Marc Eckelberry : 10/6/2006 3:17:29 PM

Book partial profit now at pivot, justin case, let rest ride.

Marc Eckelberry : 10/6/2006 3:16:13 PM

Monday morning blues coming if bulls close below 1700.

Marc Eckelberry : 10/6/2006 3:15:46 PM

I added to my short at 1703.75.

Marc Eckelberry : 10/6/2006 3:15:23 PM

NQ is 100 points away from its 50 dma, 50 points from 20 dma and 30 from 10 dma. I would not be a very confident bull now.

Marc Eckelberry : 10/6/2006 3:13:49 PM

NQ daily and trendline R: Link

Jim Brown : 10/6/2006 3:13:08 PM

VIX is showing no signs of put buying heading into the close. Bulls definitely think this rally is going to last.

Marc Eckelberry : 10/6/2006 3:11:15 PM

The double top is a poweful short term reversal tool. I say short term, because it often doesn't last. But it might be good enough for today.

Jim Brown : 10/6/2006 3:10:54 PM

I could not pass up takeing an ER short at 748. Just too many signs of resistance holding.

Marc Eckelberry : 10/6/2006 3:10:02 PM

Jane, I get the same at the top...

Jane Fox : 10/6/2006 3:05:39 PM

Watching the internals too close and forgot about MACD.

Marc Eckelberry : 10/6/2006 3:04:52 PM

3Pm turn. Watch NQ 1701.75.

Jeff Bailey : 10/6/2006 3:04:45 PM

03:00 Market Watch found at this Link

Jane Fox : 10/6/2006 3:04:31 PM

OH Man 20 lashes with a wet noodle. Look at those boooutifuulll MACD divergences I missed. Link

Marc Eckelberry : 10/6/2006 3:03:58 PM

QM is holding on above 59.50, that old low and it sets up trading above 60 next week if we get a close above. NOt sure about that, but some traders on edge with a potentila oil breakout to the upside becauce of Korea and unstable geo-political situations.

Jane Fox : 10/6/2006 3:02:49 PM

Marc ECBOT seems to be OK here.

Marc Eckelberry : 10/6/2006 3:02:52 PM

North Korea could launch a missile this weekend, which got everyone short at the open and with low volume, the scammeers in the pits can nail all the stops, but I doubt it can hold up in the close. QQQQ only at 1/2 normal volume. No one is interested in buying this, it's all manipulation.

Jim Brown : 10/6/2006 3:00:27 PM

Of course the reverse is also true. The legions of shorts in serious pain may be thinking about covering as well as hope for a Friday roll over begins to fade. It should be an interesting last hour.

Marc Eckelberry : 10/6/2006 2:59:45 PM

NQ hugging that trendline resistance.

Marc Eckelberry : 10/6/2006 2:58:57 PM

Anyone else, or is this IB only?

Jim Brown : 10/6/2006 2:58:51 PM

Marc, I agree, lots of resistance here on the Nasdaq, Russell, etc. The SPX appears stuck to 1350 and a dead stop. This would be a good opportunity for traders to take profits from the week's gains ahead of a long holiday weekend.

Marc Eckelberry : 10/6/2006 2:58:15 PM

They can pull a fast one much easier when we can't get bonds, lots o cmputers hooked to bond ticks.

Marc Eckelberry : 10/6/2006 2:57:33 PM

ECBOT is off IB for some reason.

Marc Eckelberry : 10/6/2006 2:56:21 PM

NQ double top from yesterday with a bearish divergence, not that it has meant much these days.

Keene Little : 10/6/2006 2:51:23 PM

The 1-min charts of NQ, ES and YM look almost identical so it's clear that big buy programs are hitting across the board. That's big money coming in and I have a pretty good idea where that money is coming from.

Jeff Bailey : 10/6/2006 2:44:53 PM

Shutting down for a few minutes, see if I can't fix things.

Jane Fox : 10/6/2006 2:44:53 PM

Vix breaks to new daily lows as ES makes new daily highs so these highs should stick and have followthrough. Have you noticed were ES found support today? Right at the May highs. Funny how that works isn;t it?

Keene Little : 10/6/2006 2:44:34 PM

Looks like the buy programs are hitting. Now the question is whether this is all part of a larger sideways consolidation or if instead it will just head for new highs. It's looking more and more like the 5th wave up scenario that I showed this morning (9:41 and 11:41)) is in play.

Jeff Bailey : 10/6/2006 2:43:23 PM

I can't get charts, but the alerts and data feeds are sure working.

Jeff Bailey : 10/6/2006 2:41:48 PM

Bearish swing trade stop alert for the QQQQ $41.53.

Jeff Bailey : 10/6/2006 2:40:53 PM

This is where NQ bulls will pressure a bear

Jeff Bailey : 10/6/2006 2:40:26 PM

QQQQ $41.51

Jeff Bailey : 10/6/2006 2:38:47 PM

DDX.X Link

Jeff Bailey : 10/6/2006 2:36:26 PM

QQQQ $41.47 -0.07% ... ditto?

Jeff Bailey : 10/6/2006 2:35:57 PM

DiskDrives (DDX.X) 156.17 +1.04% ... might be some shorts about to get some squeeze here.

Jeff Bailey : 10/6/2006 2:34:35 PM

Oh that reminds me ...

Bond Market Closed On Monday for Columbus Day

Keene Little : 10/6/2006 2:33:37 PM

With a couple of buy programs, especially if they hit right after lunch, it can scoot this market to the upside. We've seen it happen too many times to discount the possibility. But for now keep an eye on that YM 11907 level for resistance and then ES 1358.50 if it presses a little higher. If ES gets above 1358.50 there's a good chance we'll see ES close its gap at 1360.75. YM already closed its gap on the 8:30 reports.

Jeff Bailey : 10/6/2006 2:26:56 PM

Sector Bullish Pct for AERO space Airline is currently "bear correction" status at 57.43% and reversed up from 40% to 46% in late August. It would currently take a 72% measure to achieve "bull confirmed" status, and a 50% measure to reverse back lower to "bear confirmed" status.

Here's StockCharts.com's Pnf Chart of UPS Link , which has been adjusted for payment of stock dividends.

Here's Dorsey's PnF chart of UPS, which does NOT adjust a stock's historical price for payment of dividend Link

For those not familliar with the PnF charting sytem, it is widely used by option traders and valuable for assessing risk reward.

The bullish/bearish vertical counts give the trader/investor a longer-term REWARD profile, while RISK can be assessed to a sell/buy signal that would negate the bullish/berish vertical count.

For UPS, when it gave its first "buy signal" in late August at $71, then built the column of X to $72, that is the bullish vertical count column. When the stock's price reversed back lower to $69, RISK/Reward for a bullish trade was $4 to $16.

When I profiled a bullish trade in UPS, it was trading $74. Risk/reward at that time was $6:$11. Risk to a sell signal is $68.

The OPTION price at the time of profile was $3.00, and risk/reward for the OPTION is $3:$7 (reward= Strike + Premium)

Do you begin to see how the MARKET, or trading/investing becomes a methematical assessment of RISK/REWARD?

There is no better mechanism than the MARKET to assess risk/reward. The MARKET is never wrong.

Keene Little : 10/6/2006 1:56:25 PM

Two equal legs up in the bounce from this morning's low is at ES 1358.50 which is the bottom of this morning's gap so watch that for resistance, or not. Two equal legs up for YM is closer at 11907.

Jeff Bailey : 10/6/2006 1:55:42 PM

Aerospace/Airlines NH/NL for yesterday were 8:1

Tab Gilles : 10/6/2006 1:50:06 PM

Marc, More Vista news. Link

Keene Little : 10/6/2006 1:47:44 PM

Jeff and I had looked at UPS on Wednesday and I mentioned it looked bearish to me. The ascending wedge is bearish but doesn't have the associated negative divergences so it's not a "classic" bear wedge. But after getting an over-throw yesterday it has now dropped back inside the wedge. That's a sell signal. Now we'll have to see if the bottom of the wedge is tested/broken (currently near the 20-dma at 72.50). Link

Jeff Bailey : 10/6/2006 1:38:24 PM

I'm having one heck of a time with my QCharts intra-day chart today.

Jeff Bailey : 10/6/2006 1:32:29 PM

UPS $74.18 -1.65% is back below the rising wedge trend though.

Jeff Bailey : 10/6/2006 1:30:31 PM

Laughing (really, first time today) ... Keene, you do have a good sense of humor. I was hoping you would say it was "bullish." (grin ... jab, jab).

Jeff Bailey : 10/6/2006 1:26:06 PM

01:00 Internals found at this Link

Keene Little : 10/6/2006 1:15:06 PM

As for copper (HG06Z) it too looks to be struggling with both its 20 and 50-dma's for the past month. It's currently testing its 20-dma at 3.39 (current 30-min delayed price is 3.40) and the 50-dma is just above at 3.46. However, the daily oscillators look bullish on this one. I agree that price action over the next week will be important. Copper of course is a good indicator for economic strength so this could be a good commodity to keep an eye on.

Keene Little : 10/6/2006 1:10:44 PM

So I've got the right stock then. It looks bearish to me (surprised?). It's been hanging below its 200-dma, not quite back up to it again, and the daily oscillators are threatening to roll back over. Link

Jeff Bailey : 10/6/2006 1:06:44 PM

It is a Brazilian miner of non ferrous and precious metals Keene.

Jeff Bailey : 10/6/2006 1:03:54 PM

01:00 Market Watch found at this Link

Keene Little : 10/6/2006 1:05:52 PM

I'll bite--what's RIO (other than "Comp Vale do Rio Doce ADS")?

Jeff Bailey : 10/6/2006 1:01:01 PM

Check out December Copper (hg06z) too. It is up strong today $+0.10 after sharp decline and break of some intermediate-term support of $3.25.

Jeff Bailey : 10/6/2006 12:58:22 PM

Pivot level and "wave-wedge" traders ... have you been working on your RIO chart? I think early next week is going to be important.

Jane Fox : 10/6/2006 12:53:56 PM

* FEDERAL DEFICIT DOWN $68 BILLION FROM $318 BILLION IN 2005
* FEDERAL DEFICIT ABOUT $10B LOWER THAN PREVIOUS CBO FORECAST
* 2006 FEDERAL BUDGET DEFICIT $250 BILLION, CBO ESTIMATES

Jane Fox : 10/6/2006 12:52:39 PM

Funny but I find daytrading so much less scary than swing trading. My time in the market is short and therefore I have less exposure to "external" events. I so often have people look at me like I am from Mars when I tell them I am a futures trader and I will usually get a "That is so risky." I have quit trying to explain. I just nod my head and go to something else.

Jane Fox : 10/6/2006 12:48:06 PM

TICKS back to +800. The bulls ain't gonna give up easily.

Jane Fox : 10/6/2006 12:47:39 PM

Keene, the problem with the commodities as well is that you really need to know your leverage. Trading the commodities can lose you a lot in a short time but of course the opposite is true as well.

Jeff Bailey : 10/6/2006 12:46:02 PM

OIH and BHI both juuuuuust about back filled there gaps (from Wednesday close) too Marc.

Keene Little : 10/6/2006 12:44:44 PM

Jane, I haven't traded NG but based on your comments I may give it a closer look. It's just lately I've been so focused on equities and trying to determine where that elusive top is. But as I was studying the oil chart again last night for the Market Wrap I thought to myself how well it's trading technically (unlike the equities), at least the technicals I like to use (Jeff uses different ones).

I just might have to think more seriously about day trading those commodities instead. But the bottom line for me is that day trading is not my style. I don't like horror movies (I find no pleasure in them whatsoever) and I don't like being scared by the market either. Give me a swing trade setup that I can observe at a more leisurely pace and I'm happy.

Jeff Bailey : 10/6/2006 12:43:03 PM

QQQQ 60-minute interval chart with my interpretation of "revelations" and why QQQQ has traded as it has at this Link .

Use the Pivot Levels to figure out/confirm why computers do what they are doing.

IF you can figure out the scenario, then provide the tests, then we can trade like a computer.

FIRST sign of any near-term softening is below WEEKLY R1. IF demand too strong and inventory still exhausted, that level will hold support. If not, then gravitate back toward MONTHLY retracement of $40.59, maybe find correlation in WEEKLY Pivot retracement. Keep monitoring your heavyweights.

Marc Eckelberry : 10/6/2006 12:42:52 PM

Today's game is simple: the trend is down, but shorts are covering everytime QM drops. It is a difficult day to trade unless your entry was unemotional and you waited for that bounce up to gap close to enter. If you didn't do that, you are sweating every tick.


Keene Little : 10/6/2006 12:40:17 PM

The 2nd leg down today is impulsive so it's either wave-c and up we'll go after this leg down, or it's wave-3 which will be followed by a sideways consolidation. I'll try to put these moves together that will hopefully tell us whether or not yesterday's high could have been a significant one. In the meantime beware that after a 3-wave decline today we could be set up for a rally.

Jane Fox : 10/6/2006 12:39:24 PM

ES is hitting 1353 resistance turned support and it may take a while to break it.

Jane Fox : 10/6/2006 12:38:30 PM

Keene have you ever used your expert analysis to daytrade Natural GAs? It is a mover and I think one of the better markets to day trade. Of course I can't trade it well because I use internals that are based on equities and have nothing really to help me. I mostly just use PDR and overnight ranges.

Keene Little : 10/6/2006 12:36:34 PM

Marc, I agree with your assessment. For me personally I've found it has become more difficult to play the intraday trading game. Either that or it's just not my style of trading and I find it too frustrating. Therefore I've backed away from intraday scalping and look more for swing trade setups. By its very nature that requires wider stops.

So smaller initial positions with wider stops keeps my stop losses at the same amount. And then as the trade moves into the win column I can add and subtract from it. But the intraday game is more difficult because I think it's become too easy for big money to run the stops.

Marc Eckelberry : 10/6/2006 12:35:51 PM

If you are losing money and always complaining about being stopped out even though you took the trend, there are just 2 simple reason: one, your stop is too tight, 2 your entry is not good enough, it was emotional and not calculated. Rules for a down day: only short a bounce and watch out because shorts cover, especially after a long run up: they are nervous.

Marc Eckelberry : 10/6/2006 12:31:11 PM

The game has become too crowded and your only protection is wider stops.

Marc Eckelberry : 10/6/2006 12:25:44 PM

As the years go by, I become more and more convinced that traders loose money beacuse their stops are too tight. If it is a trending day and your entry was correct, your stop should have plenty of breathing room. If a trending reverses, yes, you lose, but that is a rare event. What is more likely is that you get stopped out if you put stops where everyone else has them (so called resistance and support). It is all intuitive at some point, but a game that requires capital, or you can't win.

Keene Little : 10/6/2006 12:20:57 PM

Interesting observation by a reader (thanks Lynne). Lots of eye balls out there looking at different things. Please keep sending in your comments, bullish and bearish, since we can't watch everything. It's the input from readers that has been so helpful to me and my own analysis. Truly a two-way street and we learn from each other.

I was just reviewing the Rydex funds, in response to your comment about the bonds. I noticed that the Rydex equal weight S&P fund (RSP) appears to have made a double top with it's 5/10/06 high; not surpassing it as the SPX has done. That would support that the SPX gains are by the big players, not the entire index? Another divergence, eh?

Jane Fox : 10/6/2006 12:17:43 PM

Keene the AD volume certainly agrees with your 12:14 post. I just wish the VIX did as well.

Jane Fox : 10/6/2006 12:15:20 PM

Dateline WSJ - Jerome York, an ally of influential investor Kirk Kerkorian, abruptly resigned as a director of General Motors Corp., in an attack against the Detroit auto maker's management.

The resignation, disclosed in a regulatory filing, follows Wednesday's decision by GM to break off talks about an alliance with Nissan Motor Co. and Renault SA, which had been suggested by Messrs. Kerkorian and York to boost GM's performance and stock value.

Keene Little : 10/6/2006 12:14:47 PM

If you look at this morning's bounce in NQ it is clearly a 3-wave bounce. That suggests lower prices are coming.

Keene Little : 10/6/2006 12:13:52 PM

In order for the bullish possibility that I showed for the DOW to hold, all indices must hold this morning's low. That's the first test. The 2nd test, and the more important one for the bulls is the Tuesday high can not be violated.

Marc Eckelberry : 10/6/2006 12:10:57 PM

QM above 59.25 is bullish again. That pretty much wiped out any chances of a positive outcome for NQ today. Resistance is 1698, 1699.50 and 1701.75.

Jane Fox : 10/6/2006 11:54:22 AM

... today's lows so far are 1353.25.

Jane Fox : 10/6/2006 11:54:02 AM

ES's may highs were 1353 so I would expect some support at this level.

Keene Little : 10/6/2006 11:52:58 AM

I should add that SPX is not giving me the same bullish impression as the DOW. That non-confirmation between even those two has me watching this rather than trading it. Once the signals are in synch then I'll recommend some trades. Until then, chop chop.

Marc Eckelberry : 10/6/2006 11:58:27 AM

I don't think we will get above yesterday, in fact we should correct all the way down to 1685 for NQ.

Jane Fox : 10/6/2006 11:50:33 AM

TICKs now -800.

Jane Fox : 10/6/2006 11:46:34 AM

Dateline WSJ - Google Inc. is in talks to acquire online video site YouTube Inc. for roughly $1.6 billion, according to a person familiar with the matter.

The discussions are still at a sensitive stage and could well break off, this person says. Rumors of such talks was reported earlier on the TechCrunch blog.

A spokeswoman for YouTube could not be reached for comment. A Google spokesman said, "We don't comment on rumors and speculation."

YouTube is a poster child for a new generation of startups, which is surging thanks to the growth in usage of the Internet and online advertising. Founded in February 2005 in a garage by three twentysomething alums of eBay Inc.'s PayPal electronic-payment unit, YouTube quickly built a huge consumer following for videos online. Now users watch more that 100 million videos daily, and the site's market share tops that of similar services from the likes of Google, according to some research firms.

Keene Little : 10/6/2006 11:41:01 AM

We're getting a small impulsive bounce off this morning's low for the DOW. That could mean the spike down this morning was just finishing up the consolidation from Wednesday's high and now we're starting the 5th wave up as I showed for ES earlier (9:41). Using Fib projections off the internal wave pattern for the rally from Sept 22nd, I'm getting some good correlation around DOW 11900 for end to at least this rally leg. Link

The DOW needs to drop below 11755 in order to negate this bullish possibility. In the meantime this is the way I'm leaning--one more high to tag the 11900 area and then start a bigger decline. We should get a pullback now from this morning's bounce and then another push higher into positive territory this afternoon if this bullish depiction is to play out.

Jeff Bailey : 10/6/2006 11:32:51 AM

11:15 Internals found at this Link

Jeff Bailey : 10/6/2006 11:17:20 AM

11:15 Market Watch at this Link

Keene Little : 10/6/2006 11:15:33 AM

After dropping down to its uptrend line from May 2005, the 30-year yield (TYX) is getting a bounce and by the looks of the weekly oscillators it looks like we could get a sustained rally. On the daily chart it's testing its 20-dma today at 4.81% but I suspect that will give way after consolidating near today's high. With higher interest rates the stock market may begin to realize the latest rally was built on false expectations. Link

Marc Eckelberry : 10/6/2006 11:12:25 AM

Dropping oil made for some short covering, but resistance is still 1701.75. Watch QM 59. PC ratio is climbing.

Jane Fox : 10/6/2006 11:11:39 AM

Profits from going long are not easily made with these two this bearish. Link

Jane Fox : 10/6/2006 11:08:47 AM

Notice how price has stopped in its tracks. AD volume making new daily lows again!

Jeff Bailey : 10/6/2006 10:59:28 AM

QQQQ $41.45 -0.12% ....

Jeff Bailey : 10/6/2006 10:59:01 AM

I have no idea how I got those numbers. The correlation I was looking for at 05:28:57 post was something around $40.43 in the DAILY Pivot Levels and be the gravitation point.

Now DAILY R1/MONTHLY R1 and even WEEKLY R2 have the gravitation look.

Jeff Bailey : 10/6/2006 10:53:28 AM

That was a rather BIG mistake on my part at 05:36:53 AM regarding the QQQQ Daily Pivot Levels.

Jeff Bailey : 10/6/2006 10:51:41 AM

Correction QQQQ Daily Pivot Levels ... QQQQ Daily Pivot Levels are $41.03, $41.27, Pivot= $41.41 $41.65, $41.79

Keene Little : 10/6/2006 10:50:50 AM

Watch ES 1358.50, the bottom of this morning's gap. That would be the first level of resistance to the current bounce.

Marc Eckelberry : 10/6/2006 10:48:39 AM

NQ gap is closed.

Jane Fox : 10/6/2006 10:47:14 AM

Opps TICKS now +1000 and that is a danger sign.

Jane Fox : 10/6/2006 10:46:30 AM

TICKS +800 and the buyers are getting stronger now.

Jane Fox : 10/6/2006 10:46:05 AM

I have been in and out of a trade 3 times already today. This is why I love trading the futures, so easy to get in and so easy to get out. You don't have to fool around with MMs.

Marc Eckelberry : 10/6/2006 10:45:54 AM

Oct. 6 (Bloomberg) -- U.S. stocks fell for the first time in four days as a government report showed the unemployment rate dropped last month, suggesting the Federal Reserve may be less inclined to cut interest rates. "Accommodation by the Fed and a slowing economy have been part of the booming stock market story -- both are being called into question," said Kevin Ferry, chief market strategist at Cronus Futures Management in Chicago. "What is the stock market supposed to grasp onto now?"

Jane Fox : 10/6/2006 10:43:53 AM

If AD volume were just lolly gagging sideways and VIX hugging daily lows I would have stayed long but the volume making new daily lows is just too clear that the bears are exerting pressure.

Marc Eckelberry : 10/6/2006 10:43:16 AM

QQQQ 41 has put support and 10 dma is not far belwo at 40.80. That would all correspond to 1680 area for NQ.

Jane Fox : 10/6/2006 10:40:15 AM

I will not be long when AD volume is making new daily lows!

Jane Fox : 10/6/2006 10:39:50 AM

I am out of my ES long.

Jane Fox : 10/6/2006 10:39:20 AM

Adn there goes AD volume to new daily lows again and sure enough the climb stops in its tracks.

Jane Fox : 10/6/2006 10:31:07 AM

TRIN is cooperating at 0.90 new daily lows.

Jane Fox : 10/6/2006 10:30:22 AM

Now we have the VIX hugging daily lows and the AD volume climbing, only a tad but it is not making new daily lows anymore. You may want to try an ES long here with a stop 2 ticks below daily lows.

Marc Eckelberry : 10/6/2006 10:27:59 AM

Very orderly, no panic, but clear some inventory ahead of the big earnings next week.

Jeff Bailey : 10/6/2006 10:27:47 AM

Swing trade short alert for the QQQQ $41.32 here, stop $41.53, target $40.55

Marc Eckelberry : 10/6/2006 10:28:25 AM

Quiet day to start offloading some stocks.

Marc Eckelberry : 10/6/2006 10:25:43 AM

Gold held 565 and oil held 59.50.

Jane Fox : 10/6/2006 10:20:27 AM

You need the VIX and AD volume in sync for a the best probabality in a trade. VIX is saying long but AD volume is saying short so the markets just move sideways and I remain on the sidelines.

Jeff Bailey : 10/6/2006 10:20:09 AM

Current OPEN MM Profiles that I've made and Watch List at this Link

Marc Eckelberry : 10/6/2006 10:19:38 AM

I am still targeting 1684 on the NQ short I have at 1704.25. But they will not make it that easy. It might wait until Monday.

Marc Eckelberry : 10/6/2006 10:17:51 AM

Just can't get above the pivot. Too many stocks in the red. Watch QM 59.525 support.

Jane Fox : 10/6/2006 10:16:50 AM

If only the dang AD volume would get going I would go long but it continues to drop albeit at a lesser pace than earlier.

Jane Fox : 10/6/2006 10:15:33 AM

TRIN to new daily lows.

Marc Eckelberry : 10/6/2006 10:14:34 AM

Watch NQ gap close at 1701.75.

Marc Eckelberry : 10/6/2006 10:12:42 AM

The ratio is dropping to .63 and that shows support for the markets.

Marc Eckelberry : 10/6/2006 10:12:08 AM

That real time PC ratio is the reason I still keep Qcharts.

Jane Fox : 10/6/2006 10:11:21 AM

Geesh! VIX testing daily lows but AD volume is still making new daily lows so I remain on the sidelines. IF the volume were climbing even a tad I would try a long.

Marc Eckelberry : 10/6/2006 10:09:13 AM

That should provide a measure of support, but it is a shift going forward. This rally was made possible by all the bears getting clobbered. I wonder how many are left.

Marc Eckelberry : 10/6/2006 10:08:00 AM

PC ratio down at .65. This is the first time we have a down day with a low pc ratio. That tells me the tide has shifted from a degree of pessimism to outright optimism in the face of danger.

Jane Fox : 10/6/2006 10:07:49 AM

TRIN reached a high of 1.72 but has fallen to 1.28. Still bearish but certainly less so than earlier.

Jane Fox : 10/6/2006 10:06:59 AM

AD volume continues to make new daily lows so I will not try a long but VIX is not even testing daily highs so I will not try a short.

Jane Fox : 10/6/2006 10:05:39 AM

ES tags daily lows again but the VIX is falling so little chance of followthrough to the downside.

Keene Little : 10/6/2006 10:02:51 AM

We've had a steep drop and now we're consolidating so we should expect lower. But then look for a bigger bounce to correct this morning's decline (or more bullishly start a 1 to 2-day consolidation before heading higher again).

Jane Fox : 10/6/2006 9:50:30 AM

I love it when these two talk to me. Link

Jane Fox : 10/6/2006 9:47:38 AM

ES tags its daily lows and the VIX is telling me they will hold for now.

Jane Fox : 10/6/2006 9:44:21 AM

The VIX is above its PDH and the trin is 1.61. No lack of clarity here either.

Keene Little : 10/6/2006 9:41:35 AM

The steepness of this morning's drop already suggests that the high is probably in. But to keep bears on their toes, until ES breaks down below Tuesday's high of 1347.25 this could be just a 4th wave pullback within the rally from Tuesday's low. That interpretation would say one more high is needed to finish the rally. Bears shouldn't get complacent just because the sell off starts like this. This chart depicts that short term bullish possibility. Link

Marc Eckelberry : 10/6/2006 9:40:51 AM

Gap close is 1701.75 if they run some stops.

Marc Eckelberry : 10/6/2006 9:39:44 AM

Sub pivot day for NQ (1699.50).

Jane Fox : 10/6/2006 9:37:52 AM

AD line is a very bearish -1393 and AD volume well below 0 and falling. No lack of clarity this morning.

Marc Eckelberry : 10/6/2006 9:39:04 AM

Risk for gold on a break below 565 is to 540/550, where it could find solid support, right at year open gap. But for now, we see if 565 holds.

Marc Eckelberry : 10/6/2006 9:29:19 AM

I think Jane is right for the near future. However, Russell did come out 2 days ago stating he was accumulating gold juts like in the 70's. He's an old analyst who has seen it all.

Jane Fox : 10/6/2006 9:25:43 AM

I have shown this Gold chart many many times but here is an update. It looks like a bullish wedge may be forming or it could be just a continuation of the downward channel. For an idea one way or the other I use MACD which is telling me downward channel because there is no bullish divergence. RSI is less clear but still does not have a divergence so I remain bearish on the Gold market. Link

Marc Eckelberry : 10/6/2006 9:25:49 AM

Oil is dropping and giving a floor at yesterday lows. The dollar is staying strong and undercutting gold as rates rise. A stronger dollar and a slowing economy: another divergence. The Feds have not been clear enough and the markets are all over the place.

Marc Eckelberry : 10/6/2006 9:20:28 AM

Right now, there are clear signs the economy is really slowing down and to have RLX (Retail) at all time highs is absurd under these conditions. All the market collapses have had exactly all these parameters: record numbers with no substance behind them, or not a care to have by giddy investors. Furthermore, they all had a warning salvo prior to the run-up. We had a strong warning salvo this year, let's hope it was just a fluke.

Marc Eckelberry : 10/6/2006 9:15:05 AM

I don;t say they can't keep rallying, anything is possible, I just don't see any sensible investor throwing any money at this market right here until we see clear signs that there is no trouble whatsoever.

Jane Fox : 10/6/2006 9:14:06 AM

NEW YORK (MarketWatch) - Crude-oil futures dipped early Friday to trade back below $60 a barrel as the head of the Organization of the Petroleum Exporting Countries said there is still no agreement to hold an emergency meeting to discuss a production cut.,P> Crude for November delivery was last down 5 cents at $59.98 a barrel. The contract rallied Thursday amid reports that OPEC had informally agreed to cut production by 1 million barrels and day and may hold an emergency meeting later this month.

But early Friday, some of the speculation came out of the market after Nigerian Oil Minister Edmund Daukoru said the group is still in consultations on the need for an emergency meeting but that no decision had yet been made.

Daukoru said consensus was growing for a production cut of 1 million barrels, Dow Jones Newswires reported from London.

An official from U.S. Energy Secretary Sam Bodman's department said OPEC would be wrong to cut production, arguing that the world needs all the oil it can get.

Marc Eckelberry : 10/6/2006 9:16:15 AM

And as far as technical analysis, NQ did not breakout and hold out of the channel/wedge, a discrepancy with ES and YM. Link
The semi weakness wil take its toll on the markets, to ignore it is perilous. I slao noted yesterday that all the Vista players were down. Core stocks hat propelled the August rally. These are all divergences and strong forward looking indicators.

Jane Fox : 10/6/2006 9:12:41 AM

TBonds had the same reaction to the employment data as the equity markets; first a rally to new overnight highs then a decline to new overnight lows. New lows are been made as I type.

Even Gold and Oil seemed to react to the 8:30 news but it is a stretch to think why Oil would react although not a stretch to see why Gold would react since it is used as a hedge against inflation.

Notice how similar the patterns are for all three commodities. Link

Keene Little : 10/6/2006 9:08:33 AM

As of yesterday's close I was expecting a small pop up to finish the short term wave count and then a sell off the rest of the day. With the relatively steep pullback in YM this morning its pattern now looks done. It's possible a pullback today will just be part of the consolidation since Wednesday but for the time being if you're short this market you can now use yesterday's high as your stop level.

Marc Eckelberry : 10/6/2006 9:06:25 AM

The semis are going to take it on the chin. Watch MU, TXN and INTC.

Marc Eckelberry : 10/6/2006 9:04:33 AM

WE should retest all the breakout points. NQ 1684, ES 1350, NDX 1665.

Marc Eckelberry : 10/6/2006 9:01:35 AM

It's going to be about the economy and the true health of the consumer, not pipe dreams.

Marc Eckelberry : 10/6/2006 9:00:49 AM

Oct. 6 (Bloomberg) -- U.S. stock-index futures fell as a government report showed fewer jobs were created in September than forecast, renewing concern economic growth is slowing. Semiconductor shares fell after Micron Technology Inc., the largest U.S. maker of computer-memory chips, reported profit and sales that missed analysts' estimates. EBay Inc. declined as Cantor Fitzgerald recommended selling shares of the world's biggest online auctioneer.

Jane Fox : 10/6/2006 8:52:14 AM

The equity markets really didn't like the employment data out at 8:30. Funny thing was how the markets seemed to rally first then fall. Link

Here is a 1 minute chart of the action. Link

Tab Gilles : 10/6/2006 8:47:58 AM

US Dept of Labor's Bureau of Labor Statistics (www.bls.gov) released the much-awaited September Non-Farm Payroll data. Morgan Stanley Global Economic Team was calling for 146K, Briefing.com for 115K while consensus opinion stands at 120K (Aug NFP came in at 128K).

The Data;

Employers added just 51,000 jobs in September, the fewest in almost a year, while the unemployment rate dropped down to 4.6 percent -- offering a mixed picture of the nation's jobs climate.

Jane Fox : 10/6/2006 8:41:33 AM

Dateline WSJ - WASHINGTON -- U.S. payrolls growth slowed last month much more than expected, while the prior month was revised up and the unemployment rate fell.

Nonfarm payrolls increased 51,000 in September after growing a revised 188,000 in August and 123,000 in July, the Labor Department said Friday. Previous reports had shown job growth of 128,000 in August and 121,000 in July.

The unemployment rate dipped to 4.6% in September from 4.7% in August. The September unemployment rate was the lowest since June and within the narrow 4.6%-4.8% monthly range seen so far this year. The labor force participation rate was unchanged last month.

Average hourly earnings increased $0.04, or 0.2%, to $16.84. That was up 4.0% from a year earlier.

The payrolls growth was well below Wall Street expectations, but the unemployment rate was also lower than expected. The median estimate of 23 economists polled by Dow Jones Newswires had projected a 125,000 payroll increase and a 4.7% unemployment rate. Wage growth was slightly less than expected, as surveyed economists had projected a 0.3% monthly increase in average hourly earnings.

Jeff Bailey : 10/6/2006 5:36:53 AM

QQQQ Daily Pivots Levels $39.30, $40.40, Pivot= $40.98, $42.08, $42.66.

Anyone still want to throw technical analysis out the window? See the trend and even the rising 21-day SMA and the 200-day SMA and WEEKLY S1? Throw in a little short interest and you have some bears on the wrong side of the market. Not government manipulation.

Jeff Bailey : 10/6/2006 5:28:57 AM

Exactly as I thought .... what about you?

With the "bad news" out of Micron (MU), which isn't an NQ/NDX/QQQQ component, but is a "chip" stock, and IF the jobs data is view NEGATIVE, where the downside risk levels?

Jeff Bailey : 10/6/2006 5:26:53 AM

$NASI and a very small 5-point box Link ... associate QQQQ $40.04, or this week's WEEKLY S1 with that column of "O" to -5.00, then the X's back up to 15.00 (Wednesday's/Thursday's action).

Any "overlap" in tomorrow's DAILY Pivot Levels?

Jeff Bailey : 10/6/2006 5:22:08 AM

QQQQ was looking at short interest Link

Sep. 15 short interest was highest in 8 months.

What you want to be it was the "semiconductor's are lagging" camp that had shorts building further? Maybe forgot, or didn't know who some of the largest weighted stocks were?

Sept. 15 QQQQ close was $40.11.

Check it out Link

A "manipulated trade?" Yeh... shorts have been manipulating it higher, or so it looks to me.

Jeff Bailey : 10/6/2006 5:09:50 AM

BHI's high of $70.23 makes one think too.

I'm not the type that goes back for seconds so soon.

You look at SPX 5-minute interval chart just today, then BHI, they look just about identical.

Jeff Bailey : 10/6/2006 5:05:10 AM

Humph ... SPX session high Thursday was 1,353.79. MONTHLY R1 1,353.78.

Jobs report coming up.

Jeff Bailey : 10/6/2006 4:38:11 AM

Euopean Markets Link

DAX up 2.20 at 6077.48

FTSE up 2.90 at 6007.40

Jeff Bailey : 10/6/2006 4:35:22 AM

YM -4 at 11,922

Jeff Bailey : 10/6/2006 4:34:50 AM

UK Aug. Mfg Output +0.4% on Month; +1.5% on Year

UK Aug Mfg Output Was Forecast At +0.2% MM, +1.5% YY

UK Aug Industrial Production +0.1% On Mo; +0.7% On Yr

UK Aug Indus Production Forecast +0.2% MM, +0.9% YY

UK 3Mo Mfg Output +0.7%; 3Mo Industrial Production 0.0%

Jeff Bailey : 10/6/2006 3:41:38 AM

Keene/Marc ... I don't think it is that investors never learn, or that they've forgotten. I've been reading "have bulls forgotten" since June 2003.

I've been bullish, as I should be based on the technicals in play and the way I know how to manage an account. I can assure everyone that I haven't forgotten the decline from 2000-2002 and how well put options and shorts played out.

I think it may be the bear bloggers right now (bull bloggers are just as bad during a decline) that seem to think traders/investors and even some technical analysts are idots. That they don't know how to manage risk. That traders plow their ENTIRE account into ONE TRADE at one instant.

Some think they have to get "the bottom" or "the top," otherwise there is no sense in trading as the move was missed.

Some also believe that when you do close a bullish trade for a profit and the same security continue to move higher, that the MARKET, or those that continue to buy the security, sometimes adding/building a position as it moves higher were WRONG in doing so, because they (the trader that sold at a lower level) sold it at a lower price.

Some that never even traded the security believe the MARKET, or others are WRONG and they just don't understand how wrong they are as the security moves in the direction that hasn't yet confirmed their scenario(s).

Tell you what. If the SPX is going down 30% anytime soon, it has to go down a paultry 7% to even get to correction status. That leaves another 23% for us to plow our entire account into one trade, all at one time.

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