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Keene Little : 11/21/2006 1:23:32 AM

I'll probably be about 30-60 minutes late tomorrow morning so go ahead and get started without me. I'll be back at my desk as soon as I can.

Keene Little : 11/20/2006 10:05:22 PM

Tuesday's pivot tables: Link and Link

OI Technical Staff : 11/20/2006 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 11/20/2006 5:00:06 PM

Closing Internals found at this Link

Note: NYSE's 5-day NH/NL ratio gets the 3-box reversal back higher at 96.00%.

NYSE and NASDAQ 5-day/10-day NH/NL ratios once again in unison, all in column of X.

Jeff Bailey : 11/20/2006 4:30:04 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 11/20/2006 4:10:04 PM

1 million shares of QQQQ blocked out at $44.39

Keene Little : 11/20/2006 4:06:18 PM

The 6-day winning streak for the DOW has come to end. A moment of silence please...

Jeff Bailey : 11/20/2006 3:53:39 PM

MATTEL CLAIMS BRATZ DOLLS BELONGS TO IT

DJ- Barbie maker argues that Bratz dolls, which have eaten away at Mattel's empire since 2001, rightfully belong to Mattel because they were originally created by Carter Bryant while he was employed by Mattel. Bryant later went to work for MGA prior to MGA's launch of the Bratz.

MAT $23.35 -1.31% Link

Jeff Bailey : 11/20/2006 3:13:59 PM

03:00 Internals found at this Link

Keene Little : 11/20/2006 3:09:57 PM

The move higher from November 3rd has not changed my expectation for a new high once the current pullback/consolidation is complete. Today's price action may be just part of the consolidation since Thursday's high. As shown in this ES 60-min chart we could see it pull back to a Fib target at 1398 which intersects its uptrend line at mid day tomorrow. Another alternative to a drop to 1398 would be more of a sideways move over to the uptrend line. Link

From there we should proceed higher, likely in a very choppy fashion. Depending on how long that choppy rise takes, assuming of course we get it, we could see ES top out around 1420 +/-. If price plays out this way and we get that new high then the EW count will look very good for calling a major high.

Jane Fox : 11/20/2006 3:03:55 PM

I wish I could show some of the charts from John Maudlin's weekly newsletter showing how far the housing market has to fall to revert back to its mean, which as you know all markets do. If you are long the housing market you probably will not want to see these charts.

Jeff Bailey : 11/20/2006 3:02:25 PM

03:00 Market Watch found at this Link

Jane Fox : 11/20/2006 2:56:47 PM

Oh Keene I did as well. What the heck. From what I have been reading the housing market "ain't seen nutting yet."

Keene Little : 11/20/2006 2:55:42 PM

Jane, I have to smile at that report you just posted. I think those are probably the same economists who in the summer of 2001 were unanimously predicting that we would not have a recession. This was about 3-4 months After we had officially started our recession (which they apparently can't figure out until in hindsight). These people probably get paid good money for sticking their finger in the air and still can't figure out the direction of the wind. Maybe someone forgot to tell them to lick their finger first.

Jane Fox : 11/20/2006 2:44:21 PM

SAN FRANCISCO (MarketWatch) -- Nearly two-thirds of the economists polled in the Wall Street Journal's latest forecasting survey believe the worst of the housing bust is over, according to a report posted Monday at WSJ.com. However, the 49 economists responding to the survey expect home prices to rise 2.8% this year and to fall by 0.5% next year. In addition, the average economists' estimate predicted gross domestic product growth at a 2.3% in the fourth quarter. According to the survey, the economists expect GDP growth to remain at that rate through the first half of 2007 and to accelerate later in the year. The economists also predicted 107,000 new jobs a months over the next year.

Keene Little : 11/20/2006 2:42:59 PM

I find it more than a little interesting that the Q's stopped dead the last 3 days at the broken uptrend line from April 2005 through the October 2005 low. It tapped it practically to the penny today (the line is at 44.46 and today's high so far is 44.48. I continue to believe this one will only pull back and then give us another minor high but draw that trend line on your charts and see if it continues to act as resistance if it gets tagged again. I bought a few QQQQ puts when it hit that line again today and I'll add to my position if it gets tagged again. Link

For QCharts users, in case you weren't aware of this, you can get a continuous chart of QQQ and QQQQ by using the symbol QQQ.Q. You can use similar symbols that QCharts has provided to get continuous futures prices as well.

Jeff Bailey : 11/20/2006 2:31:44 PM

ICSG: World Refined Copper Suprlus Of 88,000 Tons In August

Jane Fox : 11/20/2006 2:26:49 PM

Opps there goes YM to a new daily low.

Jane Fox : 11/20/2006 2:25:39 PM

YM's daily low from this morning was 12340 and YM has just retested that low. Seems to have held for now.

Jeff Bailey : 11/20/2006 2:25:06 PM

Fed's Fisher: Germany Has Made Progress On Econ Reforms

DJ- Federal Reserve Bank of Dallas President Richard Fisher on Monday praised Germany's efforts to reform its economy, and said more needs to be done.

"I would say that much progress has been made," Fisher said in comments prepared for delivery before the American Academy in Berlin.

"Were I asked what needs to be done next, my reply would echo any concerned friend of Germany: that everyone in this country ... must seize the opportunities presented by recent reforms and by the improving business cycle to help Germany prosper anew," Fisher said.

"Germany has embarked upon what is certain to be a long and difficult journey to secure its future in a tough, competitive, globalized world," Fisher said.

"Persistence in pursuing economic reform will solve the problems that threaten Germany's future," Fisher said, adding the nation "must 'press on' with needed reforms to its laws and to its attitudes toward competition and the pursuit of excellence."

The central banker didn't address the U.S. economy or monetary policy outlook in his prepared speech.

Keene Little : 11/20/2006 2:24:41 PM

Nice little flush to the downside. ES and YM are hitting potential support at the bottom of their parallel up-channels from the November 14 low. I'm not sure about support there but watch for ES 1403 to hold, or not. Next support is the uptrend line from November 3rd, closer to 1396.

Jeff Bailey : 11/20/2006 2:22:51 PM

Microsoft (MSFT) $29.88 +1.63% ... that's a new 52-weeker. WEEKLY R2 $29.90 with session high so far $30.00.

Jane Fox : 11/20/2006 2:22:18 PM

Take note though the VIX is only at its PDL and that is not what you would call bearish.

Jane Fox : 11/20/2006 2:21:22 PM

AD volume is now under 0 and falling. Looks like the rescue team was not able to rescue the market this time.

Marc Eckelberry : 11/20/2006 2:22:41 PM

Say good bye. This is why I wanted to start shorting early. QQQQ 44.50 was the signal and they are going to hurt some suckers who bought this pitiful rally today.

Keene Little : 11/20/2006 2:17:43 PM

Marc, that's exactly why I use futures for shorter term trades. The slippage with options makes it much more difficult to make the same kind of money you can with futures. It also teaches great discipline about proper risk management.

Jeff Bailey : 11/20/2006 2:18:30 PM

Treasury's Paulson:

Deficits Need US, International Solutions

Trade Deficit Will Be Worked Out Over Time

Optimistic Vietnam Trade Deal Will Be Okayed

Tax Cuts Have Helped Americans

Entitlement Reform Needs Bipartisan Approach

Entitelment Reform "Major" Problem For US

DJ- The challenge of reforming entitlement programs like Social Security remains a major problem in the U.S., Treasury Secretary Hank Paulson said Monday.

Paulson made the comments in a question-and-answer session following a speech to the Economic Club of New York.

Asked about his plans to push reform of Social Security and the Medicare/Medicaid health insurance system for the elderly and the poor, Paulson said: "You've pointed to two of the really major problems facing our nation."

Paulson said this would be a good time to start making changes to the entitlement programs. However, he said he would not be "prescriptive" on how this should be done.

"Only by taking a bi-partisan approach" and listening to everybody's ideas can the U.S. move forward on these issues, he said.

He didn't comment when asked whether private accounts should be part of the reform.

Paulson's comments followed a speech on U.S. capital markets in which he said U.S. regulators should shift from a rules-based to a principles-based approach in guarding against financial misconduct.

In the question and answer period, Paulson elaborated a little, saying "I don't think there is a single principle embedded in Sarbanes-Oxley that I think is ill-founded."

"A lot of it just has to do with implementation."

He said that while the Securities and Exchange Commission will tackle issues related to the Sarbanes-Oxley regulation, his main focus over the next couple of years will be on problems in the accounting system, the legal system "and on the overall regulatory structure" that raise the costs of U.S. capital markets.

Paulson also reiterated that the U.S. has a "strong" economy at present and that tax cuts had played a positive role in this.

"Thank goodness we've had them," he said.

He recognized however that policymakers need to be "very sensitive" to ensure that the benefits of growth are felt by the population at large.

Paulson said he would also be focused on trade issues over the final two years of the Bush administration.

He recognized that "there's a current that's running against" free trade both within the U.S. and overseas.

"I'm going to work head in that area," he added.

He also said he would continue to work with China to tackle both short- and long-term challenges in the bilateral trade relationship in the hope of building confidence on both sides.

Paulson said he was "optimistic" that Congress would eventually approve the U.S.-Vietnam trade deal. Lawmakers recently failed to okay the deal, falling short of the two-thirds majority needed to approve the accord.

Marc Eckelberry : 11/20/2006 2:13:39 PM

I prefer using futures rather than buying puts, as they don't suffer from as much time erosion and in fact are a cheaper way to do it, you just have to get used to the wider stops. If you think about it, it is a far more precise and cost efficient way to do it. Many risk thousands on options but worry about a few hundred on a future's trade. That's just the way I look at it.

Jane Fox : 11/20/2006 2:12:39 PM

Here is my list of brokers and charts.

I use Tradestation for my charts. They are expensive but have the most reliable data stream in the industry and to me that is everything. I don't have lost data when we have fast moving markets and I can be rest assured my data points (daily highs, lows, swing highs, lows, etc.) are as accurate as they can be. Their user interface is certainly not the best in the industry but I forgo the usability for the data integrity. I also run TS strategies that are coded for TS only so I am pretty well tied to TS for now.

I use Interactive Brokers with a Ninja Traders addon. IB is very fast and cheap. They don't have great support so is geared more for the user who does not need a lot of hand holding.

The Ninja trader addon is a piece of software that I have got to have. I enter a trade with NT and it will execute the trade to IB. It will then place my stop loss and limit according to how I set it up. Once I place a trade I can go brain dead but Ninja just takes over. The other day I was in a trade and my daughter-in-law asked me a question. I got so involved with her I "forgot" about my trade. When I turned around I saw that Ninja had not only put my stop and limit in but had moved my stop up as my trade moved into profitability.

I also have a TS brokerage account for my strategies. Now that is a sweet way to trade, just turn on the strategy and leave it alone. Well not really but close.

Marc Eckelberry : 11/20/2006 2:11:10 PM

No suprise as they had to tag QQQQ 44.50 (actually 44.48) with a bearish divergence and that could be it for today, maybe even the week. A typical psot opex round up. Watch NQ 1813 resistance now.

Keene Little : 11/20/2006 2:11:05 PM

My intention on the put plays is to buy puts as we near what I believe will be a significant high and then wait for support and an expected bounce to sell lower strike and next month out. I like to get the puts paid for before they pay off.

Keene Little : 11/20/2006 2:07:09 PM

Marc, that's a pretty good strategy for an attempt to catch the top here. I"m being cheap and stingy and will wait for the market to come to me or else not trade. I'm thinking we'll only be due a pullback before a final assault on the highs as we head into the end of November. But we might not get those new highs so for my longer term put plays I added to my position today. Each leg higher and I'll add a few more. If this doesn't tip over by the 1st week of December I'll exit everything and reevaluate.

Jeff Bailey : 11/20/2006 2:04:38 PM

Last 3 WEEKLY Pivot Matrix found at this Link

Jane Fox : 11/20/2006 2:03:16 PM

Almost like clock work the rescue team arrives. The bears were getting a tad too srong so the bulls had to put them in their place.

Keene Little : 11/20/2006 2:01:21 PM

The VXN chart shows that it has been hammering at the bottom of its descending wedge and could potentially launch out of here at any time. Compare this chart to the ones I showed for the COMP and NDX (1:19) and you can understand why the bulls are pressing their luck here: Link

Similarly for the VXO: Link Don't forget that a common finish to these wedges is a throw-over or throw-under so a brief spike lower that reverses back up into the wedges would be a "buy" signal for the volatility indices and a sell signal for stocks.

Marc Eckelberry : 11/20/2006 1:59:46 PM

Keene, I agree with the 12420 stop. I think 12415 is a wall (38.2% projection and channel R). My strategy would be to short here (12374), add another order 12389, another at 12405 all with stops at 12420 and cost average. It's easier if you don't have the time to stare at the screen all day long and you never know when they pull it. Since I consider this a swing trade as opposed to a daytrade, I think the wider stop is worth it. Lots of danger ahead, but that's trading. Currently, the short at 12374 is in the money. (I also know they like those round numbers and DOW 12350 could be all they wrote today).

Jeff Bailey : 11/20/2006 1:47:03 PM

WEEKLY/MONTHLY Index Pivot Matrix found at this Link

Keene Little : 11/20/2006 1:44:54 PM

I've still got my order in to short YM at 12400 if tagged, stop at 12420. I like the opportunity for a short from that level whereas I don't like either a long or a short from the current level. I'm in the gimmee mode--give me what I want or I keep my marbles to myself and this market can go play with its own marbles.

I'm thinking another minor new high should complete the small ascending wedge pattern from Friday's low (it might have completed at the last high today but I'm not sure enough about that to want to short it here). Upside risk is to daily R2 at 12417. Or daily R1 at 12393 could cap any further rally. Link

Jeff Bailey : 11/20/2006 1:39:57 PM

NYSE Group (NYX) $96.15 +2.5% Link ... Trade here has PnF chart getting a 3-box reversal higher. Sets up a potential triple top buy signal.

Marc Eckelberry : 11/20/2006 1:27:35 PM

Back for a sec. They are trying to nail those ES and NQ stops at triple top and they could very well succeed, which is why I prefer YM short today. ES resistance is 1410, and it is pretty stiff if we get there.
Jane, you are right, a low VIX does not mean a bear market per say, but so far, a VIX reading below 10 (we just hit 9.99) has meant a 5 to 10% correction within a month or so, and if you add an equity pc ratio below .50, it moves up the time frame to possibly days(which is why when had a VIX below 11 in September, equity pc ratio was higher, so it did not correlate). But there is no statistical evidence to suggest a VIX below 10 will not result in a steep correction, since the only times we have had that were Dec 1993/Jan 1994 and July 2005. 10% correction in early 1994 and I believe 6% in 2005. I am not a believer in "new" paradigms when it comes to the stock market. I might also add that prior VIX readings below 10 where in a growing economy, this one is in a decelerating economy so it carries far worse implications for the health of the markets.
I have spent a lot of time studying this issue from all angles and posted alsewhere, but I think the end result could be SPX at 1350 by year end (tying into 8.5% current earnings growth, so 12% SPX is not likely and far overpriced, this is not 2004/2005) and a further correction in January.
It's a little rushed, but that is my take. Short term concern for bears is the opposite cycles from last year (something I pointed out in June), meaning they could still rally into Thanksgiving, as opposed to last year.

Jeff Bailey : 11/20/2006 1:19:26 PM

01:00 Internals found at this Link

Keene Little : 11/20/2006 1:19:15 PM

YM held its uptrend line from Friday but with this chop it's hard to say where this is going next. As boring as it might be to sit on your hands that's what I recommend with this kind of price action.

From a little longer perspective, especially with the techs up a little stronger today (and the short term pattern looks like it could head a little higher today), both the NDX and COMP show themselves to be at potentially tough resistance. The daily chart of the COMP shows price at the top of its parallel up-channel from 2004 and still pressing its Fib target near 2453. Link

NDX has a very similar daily chart but I also saw over the weekend how it's testing an old broken uptrend line from April 2005 right here. Bulls could be pressing their luck to expect much more. Link

Jane Fox : 11/20/2006 1:12:29 PM

All the major indexes are making new yearly highs but their respective daily MACDs are not. HMMM!!!

Jeff Bailey : 11/20/2006 1:08:43 PM

VIX 9.96 ... WEEKLY Pivots are ... 9.20, 9.62, Piv= 10.47, 10.89, 11.74.

Still has the look of more call buyers/puts sellers than call sellers/put buyers.

Jane Fox : 11/20/2006 1:06:35 PM

The VIX is very low but as you can see that does not mean we are ready for a bear market. Here is a monthly chart of the VIX with a the SPX below. Link

Jeff Bailey : 11/20/2006 1:05:50 PM

01:00 Market Watch found at this Link

Jeff Bailey : 11/20/2006 12:55:18 PM

CME $543.67 +1.62% ... probes its MONTHLY 19.1% retracement.

Jeff Bailey : 11/20/2006 12:50:41 PM

SOFTware Bullish % at this Link ... there are six (6) different stages a MARKET/SECTOR can experience. Here I not four (4) of them.

Others are Bull Confirmed and Bull Correction.

It would currently take a 60% reading for this sector to achieve "bull confirmed" status.

Marc Eckelberry : 11/20/2006 12:46:50 PM

QM dropping again and that is holding things up, but you must realize that oil is dropping for the very reasons stocks should drop: a dangerously slowing economy. There has never been such a thing as a real-estate soft landing.
Gotta go, be safe, but sometimes safe is not staying on the sidelines.

Marc Eckelberry : 11/20/2006 12:34:16 PM

And down goes YM. I had a feeling they were not going to give R1. It could change, but this is why sometimes you have to trade your conviction as to where the next swing set up is and just leg in, or you end up missing the boat.

Keene Little : 11/20/2006 12:32:40 PM

Two equal legs down from today's high is at YM 12363 and ES 1405.50. If this is just a pullback before heading higher again, those levels should be support. Uptrend lines from Friday are a little lower for YM (12358) and even lower for ES (1403.75).

Jeff Bailey : 11/20/2006 12:31:26 PM

Red Hat (RHAT) $16.41 -1.55% Link ... Here's a "test."

At what PRICE would RHAT currently have to trade in order to see a "low pole warning?"

Hint: Count the long column of O's, divide by 2.

Jeff Bailey : 11/20/2006 12:24:23 PM

XBD.X PnF chart from Dorsey/Wright with "High Pole" and "Low Pole" warnings at this Link ... (IMPORTANT: See 12:07:19 BPWALL chart)

Keene Little : 11/20/2006 12:22:57 PM

I've changed my order to short the YM at 12400 instead of 12388. I see that as an upside possibility now and would rather wait for a higher target or else not trade.

Marc Eckelberry : 11/20/2006 12:24:22 PM

A YM short below 12415 looks like the best set up today, enter according to your risk tolerance, but nickel and diming it might not get you into a 150 point trade coming to the downside, target 12287. Has not touched its 5 dma and 4 days, and that will not last. They are trying to hit 12393, so some of you might consider cost averaging into a short set up. YM contracts are cheap. Usual caveats, etc... but frankly, the odds do not favor much more upside now. VXO at 9.58, equity pc ratio on Friday was .47. Distribution has been going on every day at the open for the past week.
Upside risk is to 12415. Watch QM and 58.30 now.

Keene Little : 11/20/2006 12:18:34 PM

I see the VIX finally dropped below 10 (9.93 as I type). We finally made it. If we continue to rally (with a pullback/correction first) through this week and possibly into the end of the month, we should see the VIX firmly close below 10. Those long term puts are starting to look pretty inviting.

Jeff Bailey : 11/20/2006 12:07:49 PM

Hey! The XBD.X 244.34 +1.01% ... get the all-time high!

Jeff Bailey : 11/20/2006 12:07:18 PM

WALL Street Bullish % (BPWALL) found at this Link

Keene Little : 11/20/2006 11:57:36 AM

Jeff, good point on the candlestick correlation. A low pole reversal might look like a hammer candlestick--a long shadow under the head of the candle which signfifies a strong rejection of the lows. While it's not necessarily a buy signal it does warn of a potential trend reversal. A shooting star (long shadow above the head of the candle) is also a potential topping candlestick.

Jeff Bailey : 11/20/2006 11:56:01 AM

CME ... Dorsey/Wright classifies the stock as belonging to WALLStreet sector bullish % (BPWALL).

As you know, this sector is still "bull confirmed."

The BPWALL rose to 82% in early November, is currently in a column of "O" at 76%. A reading of 68% would have the sector "bear alert" status (bear alert= when bullish % drops below 70% without penetrating a previous bottom).

Jeff Bailey : 11/20/2006 11:47:45 AM

Sector Status Changes .... According to Dorsey/Wright & Associates ... the BIOMed sector bullish % (BPBPIOM) achieved "bull confirmed" status on Friday.

The PROTection/Safety sector bullish % (BPPROT) reversed back up to "bull alert" from "bear confirmed."

Wow! That was quick. Might be on the alert/lookout for some "shake out" patterns.

Keene Little : 11/20/2006 11:47:32 AM

I've had an order in to short YM at 12388, stop 12408. It'll be a small trade with a tight stop. It's worth a try but not worth a lot of risk. Now we'll see if it gets hit--just missed it on the last stab higher.

Jeff Bailey : 11/20/2006 11:43:39 AM

I would think a "candlesticker" might tie in a low pole warning, perhaps having seen some type of reversal pattern in a Japanese Candlestick pattern(s).

Jeff Bailey : 11/20/2006 11:41:03 AM

CME ... Daily interval bar chart with October and November's MONTHLY Pivot Levels at this Link

Late last week, Keene had forwarded a question to me, which was addressed to him regarding the "low pole warning" from the PnF chart.

CME had a "low pole warning" back in mid-September.

Traders/investors will look for such a "pattern," but the PnF purist associates this pattern as a reversal pattern. It SHOULD BE TIED with MARKET and SECTOR analysis. The BULL that looks to play the pattern looks for a 3-box reversal back lower, if not more, in order for the trade to REDUCE RISK, where a STOP can then be placed closer to the bottom. The BULL then looks for the stock to stabilize on the pull back, MARKET and SECTOR bullish % to stay firm, then have the stock's PnF chart REVERSE BACK HIGHER, follow with the "buy signal" and demand to take firm control. Once the reversing higher PnF "buy signal" is established, the trader/investor begins assessing longer-term RISK (risk to a sell signal) and REWARD (longer-ter bullish vertical count). ALWAYS monitoring the MARKET and SECTOR bullish %.

Jane Fox : 11/20/2006 11:36:56 AM

ES now breaks through to a new daily high and me thinks ER will be next.

Jane Fox : 11/20/2006 11:27:41 AM

Neither ES nor ER were able to make new daily highs. You could feel the selling coming in when they tested those highs. However, I think another test will break through.

Jane Fox : 11/20/2006 11:26:44 AM

YM to new daily highs and ES and ER are trying to make new daily highs. The laggert today is NQ.

Jane Fox : 11/20/2006 11:25:22 AM

TICKs +800

Jeff Bailey : 11/20/2006 11:23:18 AM

CME (reminder) ... in mid-October (10/17/09), the CMD said it was buying BOT $159.53 +0.96% Link ...

Jane Fox : 11/20/2006 11:23:16 AM

... not giving the bears much of a chance.

Jane Fox : 11/20/2006 11:22:46 AM

VIX continues to fall and AD volume continues to climb...

Jeff Bailey : 11/20/2006 11:16:00 AM

11:00 Internals found at this Link

Keene Little : 11/20/2006 11:15:51 AM

ES made it into its resistance zone (1407-1408) where I thought we might an intraday high that leads to another pullback/consolidation. YM came up shy of its 12390-12400 zone. I still see the possibility for YM to hit the 12390 level (top of its parallel up-channel for price action since November 3rd) and would consider a short play there.

Jane Fox : 11/20/2006 11:10:58 AM

I'm not sure if you have ever listened to NPR's Car talk with Tom and Ray but I bet they had a wonderful time with that Datsun owner.

Jane Fox : 11/20/2006 11:09:41 AM

Here is a comment from John Hussman in the most recent newsletter from John Maudlin. "In a recent segment of National Public Radio's "Car Talk," a guy called in with a Datsun that had over 200,000 miles on it. The base of the floorboard had long rusted away, and the accelerator pedal had detached from the vehicle. Not wanting to pay for a new floor plate to be welded in, the caller fitted a round pad of rubber to push down the accelerator mechanism, and glued it under the ball of his right shoe, which he wore at all times. The problem was that he was developing a limp...

There are times when you stop trying to get the last mile out of a car, squeeze the final bit of toothpaste out of the tube, or speculate for an extra few percent in an overvalued, overbought, overbullish market that has every likelihood of surrendering those gains over the full cycle, even if they materialize.

I don't hesitate to recognize that the quality of market action remains favorable here, which has historically been an indication that investors have no particular aversion to risk, and are in a speculative mood. More often than not, that has been associated with positive stock market returns, even when valuations have been elevated. The difficulty at present is that despite generally favorable market action, stocks are strenuously overbought, and advisory sentiment shows very little bearishness (just 26% bears, according to the latest Investors Intelligence figures). Historically, this has defined what I call a "sub-climate" where stocks have typically underperformed Treasury bills, on average, until the overbought or overbullish condition (generally both) has cleared.

Jane Fox : 11/20/2006 11:05:12 AM

BOSTON (MarketWatch) -- Equity Office Properties Trust, the nation's largest public owner and manager of office properties, has agreed to be acquired by Blackstone Group in the largest deal ever for real estate investment trusts.

Private-equity firm Blackstone late Sunday said its real-estate affiliate agreed to buy Equity Office (EOP) for $36 billion including debt.

Equity Office is the latest REIT in a deal to be taken private by Blackstone in a year that's seen several high-profile M&A transactions.

In June, Trizec Properties Inc. agreed to an $8.9 billion buyout by a group led by Blackstone and Brookfield Properties Corp.

CarrAmerica Realty Corp. (CRE) reached a deal in March to be acquired by Blackstone's real-estate unit for about $5.6 billion.

So far in 2006 there has been $294.6 billion in real-estate deals including the latest involving Equity Office, up 64% from the same time the previous year, according to Thomson Financial.

Jeff Bailey : 11/20/2006 11:02:19 AM

11:00 Market Watch found at this Link

Jeff Bailey : 11/20/2006 10:57:01 AM

CME $541.28 +1.17% ... has some MONTHLY 19.1% retracement marking the recent highs right in here at $543.69. MONTHLY R1 at $535.77 with WEEKLY Pivot $524.25.

Jane Fox : 11/20/2006 10:54:44 AM

TY Keene. I would like to know as well as the readers.

Keene Little : 11/20/2006 10:54:07 AM

Jane, I'll put together my list of tools with a brief explanaion for why I use them.

Jeff Bailey : 11/20/2006 10:50:46 AM

I'll tabulate CME's MONTHLY Pivot Levels in just a second.

Jane Fox : 11/20/2006 10:49:30 AM

I'm not sure if you read my earlier comment but I had a request from a reader last week for these and I thought it was an excellent idea.

Jane Fox : 11/20/2006 10:58:07 AM

Keene and Jeff - Do you think you could put together a list of tools you use to trade such as which broker you use and which charts and why.

Jane Fox : 11/20/2006 10:46:43 AM

See how fickle this market is today.

Jeff Bailey : 11/20/2006 10:48:09 AM

Question regarding CME: Jeff, What do you see as resistance for CME? What do you feel is an upside target short term? Does point and figure analysis give us an upside target?

Thanks Danny

Reply: Here's a PnF chart of CME Link where other than Friday morning's highs ($546.96) I see very little overhead supply resistance. On a near-term basis, my target would be WEEKLY R1 of $557.50. My longer-term objective would come from the PnF chart's bullish vertical count of $655.

Current longer-term RISK/REWARD for bull entries is $51/$116, or just about $1/$2

Jane Fox : 11/20/2006 10:36:15 AM

Unfortunately MACD is not helping at all here. Link

Jeff Bailey : 11/20/2006 10:36:02 AM

TORONTO DOMINION TO BUY REST OF TD BANKNORTH

DJ- Toronto-Dominion agrees to buy the rest of the shares in TD Banknorth which it doesn't already own for 32.33 a share, or about $3.2 billion. Offer represents a 6.5% premium over TD Banknorth's closing price on Friday.

TD $58.97 -0.28% Link

BNK $32.41 +6.78% Link

Jane Fox : 11/20/2006 10:34:41 AM

I keep changing my bias because I am getting mixed signals. Bottom line is the VIX and AD volume are moving in opposite directions (VIX making new daily lows and AD volume making new daily highs) so I have to say the bulls have the ball. If long though be careful because the TRIN is saying it may not last long.

Jane Fox : 11/20/2006 10:31:38 AM

TRIN making new daily highs. Be careful out there folks.

Jeff Bailey : 11/20/2006 10:30:55 AM

BLACKSTONE TO BUY REIT IN $20B DEAL

DJ- The real-estate arm of private-equity firm Blackstone Group reaches a $20 billion deal to acquire Equity Office Properties Trust, the U.S.'s largest office-building owner and manager, in possibly the largest real-estate deal ever.

EOP $47.88 +7.06% Link ...

Keene Little : 11/20/2006 10:30:24 AM

What does a low pole warning reversal mean on the PNF charts? Regan

Hi Regan, sorry for the delay in getting back to you on this. I had asked Jeff to respond to your question but he hasn't so here's what I found in stockcharts.com:

"Low Pole (LP): A situation on a Point and Figure Chart that occurs when a down column that falls 3 boxes or more reverses to an up column. The reversal retraces more than 50% of a down move that has an odd number of "O's", or retraces more than 62.5% of a down move that has an even number of "O's". Because it is not an actual P&F buy signal but offers a good probability of leading to one, this formation is considered a 'buy al_rt'."

Jeff Bailey : 11/20/2006 10:27:17 AM

BANK OF AMERICA TO BUY US TRUST

DJ- Giant consumer bank plans to pay $3.3 billion for private-banking arm of Charles Schwab. Deal would vault Bank of America into the top tier of private banks serving the ultrarich and give Schwab cash influx to bolster operations.

BAC $54.90 +0.09% Link ...

SCHW $18.88 +1.72% Link ...

Jane Fox : 11/20/2006 10:30:14 AM

Now we have the TRIN rising against a falling VIX as the AD volume climbs, the exact opposite to this morning. Is the TRIN telling us the bears are getting stronger like it told us the bulls were getting stronger this morning.

Jeff Bailey : 11/20/2006 10:24:28 AM

NASDAQ OFFERS $5.1B FOR LONDON STOCK EXCHANGE

DJ- LSE shares rise 6% after NASDAQ makes a surprise $5.1 billion offer for the bourse. Nasdaq's move represents a much awaited decision by the No. 2. U.S. stock exchange after buying a 25% stake in the LSE. LSE rejects offer, saying it undervalues the exchange.

NDAQ $36.80 +0.62% Link

Jane Fox : 11/20/2006 10:22:56 AM

WASHINGTON (MarketWatch) -- Leading indicators of U.S. economic activity increased 0.2% in October, suggesting slow growth will continue through the winter and into the spring, the Conference Board said Monday.

Economists had been expecting a 0.3% increase, according to a survey conducted by MarketWatch.

The leading indicators increased a revised 0.4% in September, up from 0.1% reported last month. The leading indicators fell 0.3% in August. This was the first back-to-back increase in the leading indicators since last December and January.

But the gains were not a harbinger of faster growth ahead, according to Ken Goldstein, labor economist at the Conference Board.

"The impact of a slower housing market on consumers and slower profit growth on business isn't completely offset by lower gas prices and a rising stock market," Goldstein said.

Jane Fox : 11/20/2006 10:18:51 AM

Denise, a MM reader, allowed me to stay with her in Las Vegas and I would like say thank you so much Denise, you are a very generous person.

Jane Fox : 11/20/2006 10:15:40 AM

I met a very nice gentleman at the Futures Summit who is a MM reader. Hi Bill. Hopefully you are reading this.

He said he was hoping the writers could all list what kind of charting and trading platforms we use. I think this is very good idea and later today I will certainly list what I use and why.

Keene Little : 11/20/2006 10:14:09 AM

I guess the pullback is not over, maybe. Ugh, stay away from this mess.

Jane Fox : 11/20/2006 10:13:09 AM

AD volume making new daily lows so don't even think about being long.

Jeff Bailey : 11/20/2006 10:08:45 AM

10:05 Market Watch found at this Link

Keene Little : 11/20/2006 10:06:41 AM

I guess the pullback is over, maybe. NQ and ER came the closest to testing their overnight lows. I'd watch for ES 1407-1408 and YM 12390-12400 to act as resistance and then another choppy pullback. That would keep them in their small ascending wedge patterns that appear to be forming since Friday's low.

Jane Fox : 11/20/2006 10:06:07 AM

The internals are not confirming each other so that to me is a very clear signal to not trade.

Jane Fox : 11/20/2006 10:05:02 AM

ES makes new daily highs but the AD line and volume are both under 0 so the highs don't stick. See how valuable the internals are when trading.

Jane Fox : 11/20/2006 10:02:22 AM

ES makes new daily highs confirmed by the VIX. The TRIN was the canary in the mine this morning and was warning us of this bullishness.

Jane Fox : 11/20/2006 10:00:59 AM

LONDON (MarketWatch) -- Nasdaq Stock Market Inc. on Monday launched a fresh approach for the London Stock Exchange with a cash bid that values the exchange at about 2.7 billion pounds ($5.1 billion), in an offer the board of the LSE once again rejected.

Nasdaq (NDAQ) , which withdrew a previous bid of 950 pence a share in March, said it would pay 1,243 pence a share for the U.K. stock exchange operator (UK:LSE).

A deal, which could be completed as early as the first quarter of 2007, would create the world's biggest exchange group by number of listings, comprising 6,400 listed companies with a total market capitalization of $11.8 trillion.

However, LSE Chairman Chris Gibson-Smith rejected a meeting with the U.S. exchange.

"Given the board's unanimous view of the final offer from Nasdaq, I have rejected Nasdaq's request for a meeting," he said in a statement.

Jeff Bailey : 11/20/2006 10:00:19 AM

Phelps Dodge (PD) $122.70 +29.13% Link ... shares surge after Freeport McMoran (FCX) $57.87 +0.81% Link offers to buy the copper producer for $25.9 billion in cash and stock.

FCX has offered $88 in cash and 0.67 share for each PD share, roughly $126.48.

Jane Fox : 11/20/2006 9:59:16 AM

VIX continues to make new daily lows so not a time for shorts.

Jane Fox : 11/20/2006 9:50:48 AM

Oh man I really don't like it when we have the internals all going in opposite directions. VIX to new daily highs so please do not try a long but the TRIN is making new daily lows so please don't try a short. :(

Keene Little : 11/20/2006 9:50:21 AM

Welcome to the chop zone.

Jane Fox : 11/20/2006 9:48:03 AM

Ok we have the VIX and AD volume moving in opposite directions which is good for the bears but the TRIN is falling to new daily lows so please take care out there.

Keene Little : 11/20/2006 9:47:15 AM

I'm waiting to see if overnight lows hold--ES 1399, YM 12332, NQ 1795 and ER 787.40. Those levels would a good place to attempt a long but be ready to bail if it slices right through.

Jane Fox : 11/20/2006 9:45:13 AM

Well so much for the bullish bias, both AD volume and AD line are making new daily lows.

Keene Little : 11/20/2006 9:40:04 AM

Particularly for YM this morning, the quick push down at the open was followed by a jam to the upside. Same pattern, same result. The hard part of course if figuring out where the drop will stop and it's good for only a very fast scalp trade if you so desire. It's already pulling back again. I'm tempted to try a long on NQ based on its sideways run over the past 3 days to its uptrend line from November 3rd. That line is currently near 1799.50. The risk for such a trade is at least down to 1795, its overnight low.

Jane Fox : 11/20/2006 9:37:27 AM

... however the tajectory of the AD line and volume is up so that does give us a bullish bias.

Jane Fox : 11/20/2006 9:36:52 AM

AD line is an anemic -127 and AD Volume below 0 so we have no winners this morning and a good time to just sit on your hands.

Keene Little : 11/20/2006 9:15:51 AM

Overnight action in equity futures looks like a precursor for what we can expect this week--chop. If the overnight low holds on a retest I would expect to see the market chop its way higher before we see another pullback. As Linda had warned in her weekend Wrap, be careful of low volume this week which subjects us to price spikes from buy and sell programs. There are some big profits on the board and as we get closer to Thanksgiving there could be just as many sell programs as buy programs kicking in as people decide to take some money off the table for the weekend.

Jane Fox : 11/20/2006 9:07:41 AM

I manage my daughter's 401(k) and I have her long bonds so this chart is starting to worry me. Notice the high on November 14th was not met with an equal MACD high, which is a classic MACD bearish divergence and is confirmed by the RSI. This is something I have learned to not ignore. Link

Jane Fox : 11/20/2006 9:03:59 AM

The daily chart of Crude has me baffled because the downward price channel has a rising MACD. If price were consolidating at yearly lows (moving sideways) with the MACD rising then I would be bearish and expect prices to continue their decline but price and MACD moving in opposite directions like this is not something you see very often. I'm sure some would call it a bullish MACD divergence but I have been watching MACD too long to call it bullish yet I can't call it bearish either. Notice RSI is also following the same path as MACD.

At least two of the presenters at the CME Futures Summit I attended last week were bullish on Oil and one was a partner at the Energy Management Institute so I guess I will have to go with them because I cannot read this chart other than to say I don't see anything bullish about it. Link

Jane Fox : 11/20/2006 8:53:37 AM

This daily chart of gold is starting to get way too cluttered for me so I will be taking some things off of it today. As you can see the reverse H&S did confirm and the neckline is now support. That neckline is also the 100EMA and as long as this support holds I will remain bullish on Gold.

The thing that bothers me is the rally from the October 4th bottom has only reached a 38.20% retracement so remains a weak retracement. Link

Jane Fox : 11/20/2006 8:44:04 AM

Good morning all. Well I am back for a few days at least. I will have to leave again on Wednesday to attend to some personal business but I will deal with that later.

Markets remain bullish and the only swing type position is long. I don't see anything telling me we are topping and this bullishness could go on until the new year.

Overnight the markets stayed with their PDRs, which pretty much tells us nothing. I will be keeping a close eye on the internals today to see if they are starting to deteriorate. Link

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