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Keene Little : 12/6/2006 12:41:25 AM

Wednesday's pivot tables: Link and Link

OI Technical Staff : 12/5/2006 9:59:59 PM

The Market Monitor has been archived.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

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Jeff Bailey : 12/5/2006 7:35:50 PM

SPY and an unconventional $0.50 box with volume turned on Link

Jeff Bailey : 12/5/2006 7:32:51 PM

DIA and updated unconventional $0.20 box with volume turned on. Link

Friday's action was Os down to 121.00 with a close back up at $122.05.

Volume on the up moves looks to build more than it does on the down moves still.

Jeff Bailey : 12/5/2006 7:24:04 PM

NASDAQ Summation ($NASI) Link ... 10-point box is still in a column of "O" at 250.00.

NASDAQ Comp. Bull % ($BPCOMPQ) still in X and "bear correction" at 58.00%.

And the NASDAQ Comp Link ... Nasty "bear traps" at 2,050 and 2,320.

Jeff Bailey : 12/5/2006 7:12:42 PM

Interesting observation in mid-September with DIA/SPY and then the QQQQ.

Institutionally followed bullish % all turn "bull" in mid-September.

Yep, retail shorts been giving the Q's heck all the way up.

Jeff Bailey : 12/5/2006 7:10:54 PM

And the SPY Link

Jeff Bailey : 12/5/2006 7:10:07 PM

I might actually be the "contrarian" in the DIA Link

Jeff Bailey : 12/5/2006 7:06:21 PM

Could be a dinger of a quarterly Op-Ex. QQQQ reclaims its 11/17 expiration close of $44.30.

QQQQ short interest as of 11/15/06 Link

Jeff Bailey : 12/5/2006 7:06:15 PM

Good article from earlier this spring regarding various "homebuilder" ETFs. Link

Jeff Bailey : 12/5/2006 6:21:20 PM

StreetTracks SPDR Homebuilders (AMEX:XHB) $38.02 +2.14% Link ... closes juuuust above its 50% 04/05/06 high close and 07/18/06 low close retracement.

Jeff Bailey : 12/5/2006 6:18:08 PM

iShare Dow Jones Home Construction (ITB) $43.35 +2.79% Link ... Closes juuuust below its 61.8% retracement taken from the "bring it out at the top" high of $50.01 and summer low of $32.50.

It's a "buyer's market" and somebody's doing some buying!

Jeff Bailey : 12/5/2006 5:34:07 PM

Closing Internals found at this Link

Note: NASDAQ's 5-day NH/NL ratio reverses back higher. Would currently take matching 70% readings for 5 and 10-day to mark a 3-box reversal.

Still matching 90% for the NYSE 5 and 10-day NH/NL ratios.

Jeff Bailey : 12/5/2006 5:22:47 PM

Good Gravy! ... 540 new highs on the big board.

61 among the S&P 500 getting close to the 64:1 found on 10/25/06.

Jeff Bailey : 12/5/2006 5:09:16 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 12/5/2006 5:04:26 PM

Mexico's Calderon Proposes Balanced Budget For 2007

2007 Budget Sees 3.6% GDP Growth

2007 Budget Sees 3.0% Inflation

2007 Budget Sees $42.50 Bbl Oil Price

DJ- Mexican President Felipe Calderon sent his 2007 budget proposal to Congress Tuesday, pledging to increase social spending while balancing the budget through government efficiencies.

The 2.23 trillion peso ($205 billion) budget is based on assumptions of 3.6% growth in gross domestic product, inflation of 3.0%, an oil export price of $42.50 a barrel, and an average exchange rate of 11.20 pesos to the dollar.

Calderon said the three main aims of the budget are to improve public security, reduce poverty and create employment.

The proposal calls for crude oil exports of 1.63 million barrels a day, compared with 1.81 million b/d in 2006.

Calderon, who took office last Friday, said economic conditions won't be as favorable as they were in 2006. Global economic growth, and particularly that of the U.S., will be slower than this year, "and there will also be less oil income, both because of a lower projected price as well as a decline in our oil production, which has already begun in 2006," Calderon said.

State oil monopoly Petroleos Mexicanos, or Pemex, is currently producing 3.2 million barrels a day of crude oil, and exporting 1.7 million b/d. Production has fallen from 3.3 million b/d in 2005, and nearly 3.4 million b/d in 2004.

The 2007 economic growth projection of 3.6% is below the 4.7% that the government expects at the end of 2006. Calderon said the 2007 budget is aimed at bolstering the domestic economy, promoting housing, tourism, agriculture and infrastructure.

He said the government will lower the income tax rate to 28%, while simplifying the tax system to encourage compliance and taking measures to combat tax evasion.

Total social spending will increase 6.9% from 2006, he said, with spending on health up 9.3% from 2006 and spending on education up 4.2%.

Jeff Bailey : 12/5/2006 4:39:40 PM

Red Hat (RHAT) $17.04 -0.52% ... did close juuuuust below its trying to round higher 21-day SMA.

WEEKLY Pivot $17.13.

MONTHLY Pivot $16.95 marks today's and month's low.

Jeff Bailey : 12/5/2006 4:31:47 PM

Sirius Satellite Radio (SIRI) went out at $3.85 -7.67% ... rather narrow trade today of $3.85-$3.92.

Jeff Bailey : 12/5/2006 4:17:50 PM

And we're closed.

Dow Diamonds (DIA) $123.36 +0.45% ... matches its all-time closing high of 11/16/06.

Keene Little : 12/5/2006 4:16:50 PM

Along the lines of my idea that we'll see an ascending wedge play out over the next week or so, here's how it might look on the daily SPX chart. The upside projection is around 1425 cash. Link

There are a couple of reasons I like this scenario, one of which is the EW count and the expectation for a 5-wave move up from November 28th and right now we only have a 3-wave move. We need a pullback and then another push higher. At least that's how it would look good from an EW perspective.

Another reason I like this is because of opex. For the past many months we've seen a pattern (which of course is now subject to change since it's been identified) where we get a sell off on the Thursday prior to opex (the head fake day) and then a move higher into opex. It seems the banks' trading teams use the sell off to load up on cheap front-month call options and then rake in their billions on their "risk-free" trading by jamming it to the upside.

So a pullback on Thursday followed by a rally into opex week could finish this whole thing off. That's obviously just speculation at the moment but I like the way it fits.

Keene Little : 12/5/2006 3:53:33 PM

Here's an update to the NYSE chart I showed earlier. I've got some Fib projections pointing to 9079 for a potential high which coincides nicely with the top of the parallel up-channel from 2004 and a little over-throw for its ascending wedge. Today's high is 9068. Link

I of course have no idea if the rally will stop here but this chart is enticing me to add to my longer term short position. The bearish divergence at the new high is glaring. Volume also peaked on November 30th and the new highs the past 2 days have been on lower volume. It all fits for a top and now it's just a matter of watching to see if a top is found near here.

Marc Eckelberry : 12/5/2006 3:41:20 PM

It would really suprise me not to get a pullback on or before Thursday. It happens just about every week before triple witching. Maybe this time is different. But that would mean the selling will occur next week. At some point, they want to get in cheaper for the March contract.

Jeff Bailey : 12/5/2006 3:28:54 PM

03:00 Internals found at this Link

Keene Little : 12/5/2006 3:22:01 PM

When I look at MACD on the 30-min chart and see it slowly dropping back towards the zero line while price basically consolidates, I think that this will set up for another run higher. It could pull back a little further but I don't think a sell off is coming.

Keene Little : 12/5/2006 3:20:11 PM

It's getting whippy again in the last hour. Gun fight in the OK Corral.

Marc Eckelberry : 12/5/2006 3:20:17 PM

And right now, I can assure many went short the March contract at 1429 after exiting long December at 1417. That's a 17 point premium to cash (SPX) at expiration that a hedge fund with thousands of contracts can cash in on. That is if the believe Q1 will be down, which will most likely be the case. And even if the want to stay long, they still sell December at highs and buy March lower. We should see lower prices before the end of the week. Then they can ramp up March next week, they don;t care, they are in. If that's the plan, But either way, December should be under some pressure soon.
Makes you feel like a pawn, doesn't it? You're right. Many funds hold future's contracts for the entire duration of volume trading. It's leverage fo them,just like us, but in millions. They add to positions, etc..But they key move is right now and how to avoid getting hit with too much premium on the switch.

Keene Little : 12/5/2006 3:11:17 PM

This fast little sell off is the reason I don't like the long side. I don't know if the current sell off has any meaning other than just being part of the overall chop, but it obviously isn't exactly bullish.

Jeff Bailey : 12/5/2006 3:06:39 PM

YM long stop alert ... 12,335

Jeff Bailey : 12/5/2006 3:02:33 PM

03:00 Market Watch found at this Link

Marc Eckelberry : 12/5/2006 3:08:26 PM

I have been expecting the market to pull back but I am not so convinced it will, at least not substantially. There is just too much money available. Most of the IRA, 401(k) and pension money is going into the stock market. Many home owners and investors sold their real estate to cash in at the height of the real estate market to retire. They have nowhere to put their money because the interest rates are so low. They are putting their money into the stock market to try to get a higher return on their money. The buyers of the real estate are using borrowed money for their purchases. Financing is still easily available. So, we have the financial institutions giving out money to buyers to give to the sellers to invest in the stock market. The pull back in the real estate market actually helps the stock market. It will end eventually but not until the cash dries up. I am watching my stocks and I will protect the gains but I am not quite ready to go short yet. Peter

Peter, you are right on many counts. But there are other forces at work now.
The action this week is dictated by contract rotation from December into March and how to avoid too much premium in the switch (which is why I expect a pullback now that they are getting out on every uptick of December. Then they buy March at a lower price, unless of course, many switched Friday) You will note that Friday's low was 1399.25 for the march ES contract. Everything else is just noise, including economic data. No one cares, they are either already in, or booking profits. The new highs were made on lower volume, and many tech leaders are not participating. Funds are not buying today (lighter volume yesterday and today), it's just hedgies working the triple witch. As a rule, new highs on lower volume are not a good entry for investors. Traders is a different story.

As for year-end, I believe SPX will close the year at 1400, give or take a point or two. Not here and not higher than here. We are up 13% already for the year. I agree with Tobias Lefkovitch at Citi on this, his conference last week triggered the selling on Monday.

Jeff Bailey : 12/5/2006 2:59:06 PM

YM long raise stop alert ... to 12,335

YM 12,344

Keene Little : 12/5/2006 2:51:57 PM

Price action has been so slow today I can't even tell whether or not we've got bearish divergences at the retest of this morning's early high. It's just a choppy mess. Daily R1 continues to hold both ES and YM back.

Jeff Bailey : 12/5/2006 2:45:53 PM

YM 12,352 ... comes to its highs and 80.9% Daily Pivot retracement.

Keene Little : 12/5/2006 2:39:53 PM

This market is battling for every single point. It doesn't exactly look bullish but like yesterday it just keeps sneaking a little higher. I don't see enough upside to warrant the risk of a long trade but I also don't see a reason to short it here, hence my being flat. But if ES manages to work its way up near 1420, the top of its wedge, I could get interested in the short side for at least a scalp trade.

Jeff Bailey : 12/5/2006 2:21:44 PM

TRIN 0.89

Jeff Bailey : 12/5/2006 2:21:35 PM

YM 12,345

Jeff Bailey : 12/5/2006 2:19:31 PM

YM 12,339

Jeff Bailey : 12/5/2006 2:17:18 PM

TRIN 0.93

Jeff Bailey : 12/5/2006 2:17:05 PM

BIX.X 398.55

Jeff Bailey : 12/5/2006 2:16:30 PM

YM 12,337

Jeff Bailey : 12/5/2006 2:16:18 PM

XBD.X comes to WEEKLY R1

Jeff Bailey : 12/5/2006 1:56:21 PM

Observing, feeling some pressure building here.

Jeff Bailey : 12/5/2006 1:55:46 PM

YM 12,328

TRIN 1.00

Jeff Bailey : 12/5/2006 1:46:03 PM

Intl. Business Machines (IBM) $94.33 +0.87% ... pressed against its WEEKLY R2 ($94.45)

Jeff Bailey : 12/5/2006 1:45:19 PM

YM 12,335

Jeff Bailey : 12/5/2006 1:45:01 PM

Boeing (BA) $90.77 +1.32% ... sticks its head above WEEKLY R1 ($90.72)

Jeff Bailey : 12/5/2006 1:42:37 PM

House Postpones Vote On Offshore Oil, Gas Drilling

DJ- U.S. House leaders, in a surprising last-minute decision, have decided against holding a vote Tuesday on a bill to open more than 8 million acres in the Gulf of Mexico to oil and natural gas drilling.

"The OCS (offshore drilling) bill that was scheduled for consideration this afternoon has been pulled from the schedule for today," said a spokesman for House Majority Leader John Boehner, R-Ohio, in a notice to reporters.

The spokesman, Kevin Madden, said the House will consider the bill before the legislative session comes to a close this week.

"Details on the mechanics of how the measure will be considered have yet to be decided," he said. "Stay tuned."

Jeff Bailey : 12/5/2006 1:37:40 PM

YM's DAILY R1 at 12,347 with R2 at 12,397.

Jeff Bailey : 12/5/2006 1:36:58 PM

YM 12,334 ... day trader's 5-minute interval chart at this Link

Keene Little : 12/5/2006 1:36:13 PM

I don't see anything particularly bearish here and yet the upside is very labored. Flat is still a good, if not boring, position.

Jane Fox : 12/5/2006 1:27:40 PM

NEW YORK (MarketWatch) -- The market for initial public offerings gets in stride this week with two closely watched deals from footwear maker Heelys (HLYS) and regional airline Allegiant (ALGT) Travel, both expected to debut Friday.

The deals come after a relatively slow couple of weeks in the IPO market surrounding the Thanksgiving holiday.

Although Heelys and Allegiant Travel seem to be grabbing the most attention, other IPOs are also on the calendar this week, including a $163 million deal from shipping firm Aegian Marine Petroleum and Tuesday's debut of Penn Virginia GP Holdings.

The calendar gets even more crowded next week, with potential IPOs from Genesis Lease Ltd., NewStar Financial, IPG Photonics and US BioEnergy.

The IPO market is picking up steam for a year-end push ahead of the holidays after turning in a strong November.

Jeff Bailey : 12/5/2006 1:23:37 PM

Can't believe bears didn't flinsh above 12,340.

Jeff Bailey : 12/5/2006 1:22:32 PM

YM 12,333

Jeff Bailey : 12/5/2006 1:21:59 PM

YM long adjust stop alert ... to 12,322

Jeff Bailey : 12/5/2006 1:19:02 PM

YM long alert ... go long the YM here at 12,339, stop 12,228, target 12,370.

Jeff Bailey : 12/5/2006 1:17:03 PM

01:00 Internals found at this Link

Jeff Bailey : 12/5/2006 1:02:33 PM

01:00 Market Watch found at this Link

Jane Fox : 12/5/2006 12:58:57 PM

And here they come TICK +1000

Keene Little : 12/5/2006 12:37:33 PM

I've been trying to figure out what could be playing out here since the move up has been a choppy pattern. Based on the corrective wave pattern in both directions the EW count suggests we could be in the middle of an ascending wedge to end this rally. This ES 30-min chart shows an idea of what could be happening. Link

This is obviously speculation at this time but it would fit in the larger wave pattern and it would fit as a topping pattern. The time frame may be off, and even the price projections but the formation of an ascending wedge fits. It says we should expect a choppy pullback and then another choppy rise to new highs, potentially getting ES up near 1430. Perhaps we'll see ES 1420 before getting the next larger pullback. Anyway, some rambling thoughts as I watch this.

Jeff Bailey : 12/5/2006 12:11:33 PM

NASDAQ Stock Market (NDAQ) $38.63 +1.65% Link ...

Jeff Bailey : 12/5/2006 12:10:38 PM

EUROPEAN REGULATORS OK NYSE-EURONEXT MERGER

DJ- European regulators have given an initial go-ahead to the proposed $13.8 billion merger of Euronext and NYSE Group, moving the process to create a transatlantic stock exchange closer to completion.

NYX $98.06 +2.09% Link ...

Jeff Bailey : 12/5/2006 12:09:08 PM

TACO BELL STORES HIT BY E COLI OUTBREAK REOPEN

DJ- Yum Brands says several of its New York-area Taco Bell restaurants closed because of an outbreak of suspected E.coli will reopen today. Taco Bell says it is sanitizing the stores and replacing all their food ingredients before reopening.

YUM $62.99 +2.20% Link ...

Jeff Bailey : 12/5/2006 12:04:50 PM

MICROSOFT SEES REVENUE GROWTH IN FISCAL 2007

DJ- Microsoft is on track to achieve revenue growth of 13% to 15% in fiscal 2007, its chief financial officer, Chris Liddell, tells investors. Liddell says the launch of its new Vista product will be a key contributor to this growth.

MSFT $29.06 -0.92% Link ...

Jeff Bailey : 12/5/2006 12:03:01 PM

EIA SEES LOWER US OIL-IMPORT PRICES

DJ- Energy Information Administration forecasters see the average price of light, low-sulfur crude oil to U.S. refiners falling gradually from the 2006 average level through 2015. Agency sees moderate import growth for next quarter-century.

Jeff Bailey : 12/5/2006 12:02:03 PM

US SEES IRAQ UNDER IRAQI CONTROL BY FALL 2007

DJ- U.S. expects all of Iraq to be in the control of Iraqi forces by early autumn next year, with complete transfer of command and control of all Iraqi army divisions by late spring or early summer, says U.S. military spokesman, Maj. Gen. William Caldwell.

Keene Little : 12/5/2006 12:01:24 PM

So far it's looking like a small sideways consolidation this morning which suggests higher prices coming. The alternative is a fast break down coming but I'll believe that one when I see it. A break below YM 12300 would be a heads up that something more bearish may be starting.

Jeff Bailey : 12/5/2006 12:01:08 PM

BRIDGESTONE TO BUY BANDAG FOR $1.05B

DJ- Bridgestone's Bridgestone Americas Holding unit has agreed to acquire U.S. tire maker Bandag for $1.05 billion. The cash offer from the world's largest tire maker is for $50.75 a share.

BDG $50.27 +11.61% Link ...

Keene Little : 12/5/2006 11:57:23 AM

Former presidential candidate and editor in chief of Forbes magazine Steve Forbes tells NewsMax that Bush's tax cuts saved the U.S. economy during the past four years. But he warns that Fed "has too much money out there."

Thanks Dave. It seems more and more people are sounding the alarm about the flood of money coming from the Fed. In the end I certainly fear it will have done more harm than good.

Jeff Bailey : 12/5/2006 11:49:22 AM

AUTOZONE FISCAL 1Q NET RISES 8.3%

DJ- Auto-parts retailer posts net income of $123.9 million, or $1.73 a share, amid inventory improvements and merchandise pricing. Sales rise 4.1% to $1.39 billion as same-store sales edge up 0.3%.

AZO $117.64 +2.77% Link ...

Jeff Bailey : 12/5/2006 11:47:46 AM

FORD FALLS AFTER DEBT OFFERING

DJ- Shares of Ford Motor drop 2.5%, hitting their lowest level since late August, a day after the auto maker said it would offer $3 billion in senior convertible unsecured notes.

F $7.70 -2.40% Link ...

Jane Fox : 12/5/2006 11:46:59 AM

SAN FRANCISCO (MarketWatch) -- New York City's Board of Health has voted to ban artificial trans fats at restaurants, according to a media report on Tuesday. Restaurants will be banned from using most frying oils containing artificial trans fats by July, and will have to eliminate them from all foods by July 2008, the Associated Press reported. The board passed the ban by a unanimous vote, making New York the first city in the nation to bar the artery-clogging fats, the AP reported.

Tab Gilles : 12/5/2006 11:46:23 AM

Jane, in reference to your 12/5/2006 11:16:25 AM post.

I see gold topping here... Link

Jane Fox : 12/5/2006 11:44:50 AM

NYC health board votes to ban trans fats in restaurants

Jeff Bailey : 12/5/2006 11:44:33 AM

TOLL SEES SIGNS OF BOTTOM; 4Q NET FALLS

DJ- Luxury-home builder reports net income of $173.8 million, or $1.07 a share, which includes 42c in writedowns. Analysts expected EPS of $1.06. Revenue falls 10% to $1.81 billion. Firm says it may be seeing a floor in some markets.

TOL $33.05 +3.57% Link ...

Jeff Bailey : 12/5/2006 11:43:04 AM

US FACTORY ORDERS SLUMP IN OCTOBER

DJ- Orders drop 4.7% in October, the sharpest fall in six years, roughly in line with economists' average forecast. Demand for transportation-related goods plummets 22% and non-defense aircraft and parts sinks 45%.

Jeff Bailey : 12/5/2006 11:42:30 AM

US ISM SERVICES INDEX UNEXPECTEDLY RISES

DJ- Institute for Supply Management's non-manufacturing index moves to a reading of 58.9 in November from 57.1 in October, expanding at its strongest pace in six months. Economists had expected a reading of 55.5.

Jeff Bailey : 12/5/2006 11:41:59 AM

US PRODUCTIVITY REVISED UP LESS THAN EXPECTED

DJ- Non-farm business sector productivity increases 0.2% during July through September, while unit labor costs are revised sharply lower for two quarters in a favorable sign for inflation. Unit labor costs rise by 2.3% in 3Q, down form original estimate of 3.8%. Unit labor costs in 2Q are revised down to a 2.4% decrease, compared to the originally reported 5.4% advance.

Jane Fox : 12/5/2006 11:33:57 AM

The VIX and AD volume are at odds with one another and when this happens you know we have a choppy market. AD volume making new daily highs tells me not be short but the VIX is not anywhere near making new daily lows to support a long position.

Keene Little : 12/5/2006 11:21:02 AM

Considering the choppy price action we're currently seeing, this ascending wedge is a potential pattern and suggests a minor new high before a larger pullback. YM needs to hold above 12309 for now in order to keep this wedge in play. An upside target might be near 12360. The gap from November 24th was almost closed at 12354 but it was missed by 3 points this morning. Link

Jeff Bailey : 12/5/2006 11:16:47 AM

11:00 Internals found at this Link

Note: Current NASDAQ 5-day NH/NL ratio would be good enough for a 3-box reversal back higher to 72.00%.

Jane Fox : 12/5/2006 11:16:25 AM

The daily chart of Gold is starting to worry me and I may have to exit my long position until I see something more bullish.

A bear flag looks to be forming. MACD and RSI did not confirm the higher highs although they did not make a lower high. I am also testing the Price Osc, an indicator I was introduced to at the Futures summit and it seems to be confirming both the MACD and RSI.

My problem is that I don't see an overly bearish chart but the bullishness has certainly gone. The crystal ball is cloudy whereas before the gold chart was one of the easiest charts to read. Link

Keene Little : 12/5/2006 11:16:25 AM

The current consolidation could easily go either way, or stay flat. I don't see anything here to recommend. Flat and watching for now...

Jeff Bailey : 12/5/2006 11:02:03 AM

11:00 Market Watch found at this Link

Keene Little : 12/5/2006 10:55:20 AM

It takes a break below ES 1412 to suggest we might be in a larger pullback. Until then the current up-channel is still in play. Link

Jane Fox : 12/5/2006 10:46:58 AM

* Nasdaq most active stocks: SIRI QQQQ SUNW MSFT CSCO
* NYSE most active stocks: F PFE LSI MOT GE

Jane Fox : 12/5/2006 10:46:29 AM

Opps These have now turned bearish. Link

Jane Fox : 12/5/2006 10:38:45 AM

SAN FRANCISCO (MarketWatch) -- Crude-oil futures climbed Tuesday, with the front-month contract climbing back above $63 a barrel, as a weaker U.S. dollar, which reduces exporter profits, increased the likelihood that the Organization of the Petroleum Exporting Countries would cut production.

"OPEC is worried by a fall in the dollar that is eroding member states' purchasing power, and [OPEC] ministers are expected to take up the issue when they meet next week to discuss output curbs," said UBS analyst John Rigby in a note to clients. The cartel will meet in Nigeria on Dec. 14.

Crude oil for January delivery was last up 56 cents to $63 a barrel on the New York Mercantile Exchange after reaching a high of $63.20.

Keene Little : 12/5/2006 10:33:27 AM

We're short term overbought (never mind long term) so the next bounce on the 1-min chart to overbought, to a lower price high, could be a good spot to try a short play.

NYSE has rallied up to the top of its long term parallel channel that I showed in the chart last night (11:48 PM below) with a small push above its ascending wedge. It could be the throw-over to finish its rally. I'm obviously leery about calling tops but that one looks like a real possibility.

Jane Fox : 12/5/2006 10:22:45 AM

WASHINGTON (MarketWatch) -- Nonmanufacturing sectors of the U.S. economy expanded at a faster pace during November, the Institute for Supply Management reported Tuesday. The ISM nonmanufacturing index rose to 58.9% from 57.1% in October. This is the highest level since May. The increase surprised forecasts. Economists were looking the index to dip to 55.8%. The headline index is not a weighted average of the survey's other key components. New orders rose to 57.1% from 56.5%. The employment index rose to 51.6% from 51.0%.

Jane Fox : 12/5/2006 10:22:15 AM

WASHINGTON (MarketWatch) -- Orders for U.S. factory goods fell by 4.7% in October, the latest evidence of contraction in the manufacturing sector, the Commerce Department said Tuesday.

Excluding transportation, however, orders for U.S.-made factory goods fell by 0.8%. Taking out orders for defense goods, orders fell by 3.6% in October.

It was the biggest overall drop in factory orders since July 2000. Falling orders for transportation equipment and defense and non-defense capital goods dragged down the overall number, the report shows.

Orders for defense capital goods fell by 41.5%, while orders for non-defense capital goods dropped by 15.5%. Orders for transportation equipment fell by 21.6%.

Wall Street economists surveyed by MarketWatch were expecting factory orders to decline by 4% in October.

Jeff Bailey : 12/5/2006 10:19:47 AM

Fannie Mae (FNM) $58.60 +1.22% ... back to my 11/17/06 long stop.

Jane Fox : 12/5/2006 10:16:47 AM

Internals are all now agreeing that the bulls have the ball and the AD line at +1082 is telling you that the bulls have field position as well.

Marc Eckelberry : 12/5/2006 10:09:57 AM

I have to step away, but keep the macro picture in mind, before panicking or getting all huffed up. SPX is up almost 13% for the year. That's a high target for many if not most funds. Expect distribution.

Keene Little : 12/5/2006 10:09:37 AM

This kind of price action right here looks like topping action. It may be good for only a pullback but the fight going on here looks typical of at least a short term top.

Marc Eckelberry : 12/5/2006 10:07:30 AM

The Feds will not lower rates. The market is realizing this and the rally could end right here. The markets wanted goldilocks. This was too high.

Keene Little : 12/5/2006 10:06:19 AM

And now a sharp pullback. Price action is getting a tad whippy here.

Keene Little : 12/5/2006 10:03:51 AM

Well that didn't take long to tag ES 1416.25 and it's not stopping. Does this seem like normal buying to you? Me neither. Don't fight the Fed has a whole new meaning now--when they're stuffing the money channels with billions of dollars you just can't fight them.

Jeff Bailey : 12/5/2006 10:02:53 AM

10:00 Market Watch found at this Link

Jane Fox : 12/5/2006 9:59:12 AM

Heck I can't be wrong about the TRIN two days in a row can I? HMMMMM yes.

Jane Fox : 12/5/2006 9:58:36 AM

Yesterday the TRIN was very bearish early in the morning and I thought it could be the canary in the mine warning us of an impending decline. That never happened. Well the TRIN today is bullish making new daily lows and I think today it is warning us of further bullishness.

Keene Little : 12/5/2006 9:58:20 AM

Nice bounce off ES gap close and the YM test of its overnight low. Now let's see if ES can get up and tag its 1416.25 target which is where I'd watch for a potential short play to set up. If this rolls back over to a new daily low now then I'd say we're probably into the pullback that we're due.

Jane Fox : 12/5/2006 9:56:04 AM

I think this is when the internals are the most valuable, telling you there is no clear direction and it is a good time to be flat.

Jane Fox : 12/5/2006 9:55:07 AM

VIX to new daily highs so don't be thinking long here.

Jane Fox : 12/5/2006 9:54:51 AM

AD volume to new daily highs so don't be thinking short here.

Jane Fox : 12/5/2006 9:50:26 AM

NQ and ER have both broken their respective overnight lows.

Jane Fox : 12/5/2006 9:49:28 AM

VIx is making new daily highs so the bears are gaining but the AD volume is still strong.

Marc Eckelberry : 12/5/2006 9:47:46 AM

NQ gap and crap.

Jane Fox : 12/5/2006 9:45:56 AM

VIx opens about where it closed and TRIN is 0.96 and falling. If I had to pick I would pick the bulls.

Jane Fox : 12/5/2006 9:44:36 AM

AD line is a mostly neutral +3.28 and AD volume is above 0 and climbing.

Keene Little : 12/5/2006 9:42:32 AM

Overnight lows for ES and YM, at 1409.50 and 12290 resp., could get tested early. YM just closed this morning's gap but ES clsoes its gap a little lower at 1410.25.

Keene Little : 12/5/2006 9:39:39 AM

Marc, that's a good point on the possible tax change. Just worrying about it may get enough traders to do some selling this year at the lower rate. Many have some very good profits this year and if they think they're going to sell in January anyway why not take some money off the table now at the lower rates.

Jeff Bailey : 12/5/2006 9:37:17 AM

NYSE Group (NYX) $100.62 +4.75% ... sticks its head above WEEKLY Pivot ($100.24)

Keene Little : 12/5/2006 9:31:59 AM

Initial move down out of the gates. Watch for a reversal back up.

Jeff Bailey : 12/5/2006 9:31:01 AM

Bullish swing trade stop alert ... for SIRI $3.90 -6.71% ...

Marc Eckelberry : 12/5/2006 9:30:57 AM

Keene, another scenario is the democrats raising capital gains or dividend tax next year. Many investors might want to take a tax hit this year, even on stocks that have done very well. That thinking could increase as the year draws to an end. Smart investors sell high and why take a chance with next year and higher taxes (and a pullback in stocks).

Keene Little : 12/5/2006 9:23:00 AM

In addition to the wedge resistance at ES 1416 that Marc mentioned, a measured move from the November 28th low gives us 1416.25 as an upside target. We may be only due a pullback before another choppy push higher but we are due a pullback.

I read an interesting opinion last night about tax loss selling. Since we've seen a strong rally into December there are not many who will have losses to take and therefore we may not have the usual selling. This actually fits some shorter term patterns I see here where we could see a choppy rise higher (think ascending wedges and lots of whipsaws) that takes another 2 weeks or so. But once we get into January then profit taking could really take hold.

Jeff Bailey : 12/5/2006 9:17:17 AM

Sirius Satellite Radio (SIRI) $3.85 pre-market and would be below my profiled stop of $3.90.

Will sell the entire position, just less than 1/4 at the opening ticks.

Marc Eckelberry : 12/5/2006 9:14:35 AM

This report is bearish to me. Either the consumer cannot keep up the expected spending on lower wages (my read on this, add the housing downturn and you have to wonder where growth will come from) or, if the economy is not that slow, it could increase overall labor cost as firms need to hire more. The market is obsessed with inflation, but right now, it should worry about a recession or lower profits from a potential larger work force, not labor cost associated with lower productivity. Either way, you do not get equity rallies to last long on lower worker productivity. All bull markets are built on higher productivity, which means maximizing your work force without excessive hiring, but still large revenue growth.
ES has wedge resistance at 1416.

Jane Fox : 12/5/2006 9:06:42 AM

Equity markets liked the data out at 8:30 this morning. ES and ER both broke their respective PDHs and YM and NQ tested theirs. Those are strange bedfellows aren't they? It is usually ER and NQ that trade in tandem and ES and YM. Link

Jane Fox : 12/5/2006 8:53:30 AM

Toll Brothers (TOL) the luxury home builder, said next fiscal year's profit may fall 62% but also said it may be seeing a floor in some markets. Fourth-quarter net income fell to $174 million, or $1.07 a share, from $310 million, or $1.84 a share, with revenue falling to $1.81 billion from $2.02 billion. Excluding one-off items it would've earned $1.49 a share. The next fiscal year's net is forecast to fall to between $260 million and $340 million, or $1.58 to $2.08 a share, hurt by a land-related writedown and a change in accounting treatment. Analysts expected fourth-quarter earnings of $1.06 a share and fiscal 2007 earnings of $2.30 a share.

Jane Fox : 12/5/2006 8:50:59 AM

WASHINGTON (MarketWatch) - Inflationary pressures stemming from higher wages are not building as fast as previously thought, Labor Department data released Tuesday show.

Unit labor costs - a key measure of inflationary pressures stemming from a tight labor market - were revised much lower in both the second and third quarters, the government said. Instead of rising at a 5.3% pace in the past year, unit labor costs in the nonfarm business sector were revised to a much-tamer 2.9% annual pace.

The Federal Reserve's chief worry about inflation was largely revised away. The Fed had been expressing concern that wage pressures were building that would inevitably feed into higher prices. The revised data show no trend toward higher wages.

The Fed is expected to keep its overnight interest rate target at 5.25% at its meeting next week. Investors and analysts are looking for the Fed to cut rates in March or May, but Fed officials have expressed very little concern that economic growth is fading too much. They continue to maintain a party line that inflation - not weak growth - is the Fed's biggest worry.

Productivity in the nonfarm business sector rose at a 0.2% annual pace in the third quarter, revised from no gain previously reported. Economists had expected productivity to be revised to 0.4%.

Unit labor costs, meanwhile, were revised to a 2.3% annualized from 3.8% previously.

The revision to unit labor costs in the second quarter was much more dramatic. Instead of a 5.4% increase, unit labor costs fell 2.4%. The revision was largely due to a downward revision in wages and salaries in the second quarter, as reported in last week's report on gross domestic product. In the second quarter, real hourly compensation (that is, inflation-adjusted) fell at a 5.9% annual pace, rather than the 1.6% increase reported a month ago. In the third quarter, real hourly compensation fell 0.4%, revised from a 0.7% gain.

Jane Fox : 12/5/2006 8:47:24 AM

WASHINGTON (MarketWatch) -- Planned job reductions rose by 11% in November to 76,773 as more than 20,000 jobs were eliminated in the automotive sector, according to a monthly tally released on Tuesday.

So far in 2006, planned layoffs total 785,179, outplacement firm Challenger Gray & Christmas said. That's down 19% from the 964,232 announced last year at this time.

This year is on pace to be the first since 2000 that Challenger counts fewer than 1 million job reductions.

November's job reductions were down 23% from November 2005. It's the eighth month this year with smaller layoffs than the same month last year.

"Right now the job market appears to be relatively stable, with low unemployment, moderate job cutting and steady, if not spectacular, job creation," said John Challenger, head of the outplacement firm, in a written statement.

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