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Jeff Bailey : 12/6/2006 11:08:51 PM

China Oil Majors Seen Dominant Despite New Rules

DJ- China on Wednesday issued new regulations that will open up the strategically important domestic energy sector to foreign companies, but the country's oil giants are likely to continue to enjoy the backing of the state.

As the government continues to slowly ease its grip on the sector as part of obligations to the World Trade Organization, China's four major oil and gas firms should remain dominant given economic and strategic considerations, some analysts and traders say.

"Beijing may be moving gradually in this direction but there's no sign it'll fling its doors open any time soon," said Kurt Barrow, a Singapore-based analyst at U.S. energy consultancy Purvin & Gertz Inc. "I don't think this threatens the (Chinese) companies at all."

The Ministry of Commerce unveiled regulations governing crude oil wholesale and storage in the country, as well as the wholesale distribution, storage and retail sales of petroleum products.

The new rules, which go into effect Jan. 1, allow foreign companies to invest in those sectors - markets long dominated by the so-called "Big Four": China National Petroleum Corp., China National Offshore Oil Corp., China Petroleum & Chemical Corp. (SNP) - known as Sinopec - and Sinochem Corp.

Under the new regulations, for example, a company that wants to sell crude oil should have a minimum registered capital of CNY100 million, or about $12.8 million, and be incorporated in China.

Among other requirements, it should also have "long-term, stable" supply and sales channels, according to the ministry's Web site.

China's pace of reform is likely to remain slow because energy remains a key sector that the government will want to control for the long term.

"Beijing has conflicting interests here: from a consumers' point of view, opening up is always a good thing," Barrow said of free-market prices.

"But from a regulatory point of view, opening up reduces their ability to control the market," he said.

Beijing has sometimes roped in state-owned companies to implement its strategic energy decisions, from calling on them to absorb losses in order to keep fuel prices under control to shipping home crude pumped from joint-venture projects overseas.

Most recently, Sinopec has been tasked to take the lead in filling China's first-ever strategic oil reserves.

China wants a strategic stockpile to provide a cushion against sudden supply disruptions. Han Yongwen, general secretary at the National Development and Reform Commission, said Wednesday that China has filled its strategic oil reserve with both imported and locally-produced oil, confirming analysts' views that a surge in China's crude oil imports earlier this year was partly driven by demand for filling the strategic reserve.

The position of major global oil companies operating in China also appears sound.

Companies such as BP PLC (BP), which has been pushing in recent years to broaden its foothold in China, aren't expected to be hampered by the new regulations - particularly when it comes to capital requirements - and could in fact boost their market share.

"Some small private traders failing to meet the new rules will have to stop operations," said one Guangzhou-based oil trader.

He estimated that 30% of the roughly 230 private oil-product wholesalers in the southern province of Guangdong alone may be put out of business.

"The smaller firms, perhaps some of the Hong Kong-based companies, may (also) find it harder," Barrow said.

Keene Little : 12/6/2006 11:00:28 PM

Wednesday's pivot tables (still using December contracts): Link and Link

Jeff Bailey : 12/6/2006 10:22:50 PM

Japan's November Foreign Reserves $896.95B; Up $11.39B On Month

DJ- Japan's foreign exchange reserves posted their largest one-month gain in November since March 2004 due mainly to the euro's recent strength against the dollar, the Finance Ministry said Thursday.

The nation's reserves, which include convertible foreign currencies, gold and International Monetary Fund special drawing rights, gained $11.39 billion on month to $896.95 billion, Ministry of Finance data showed. The rise follows a $4.28 billion increase to $885.55 billion in October and September's rise of $2.53 billion to $881.27 billion.

November's gain marked the ninth consecutive month of rise with the government attributing the growth to the European common currency's jump versus the greenback, which was $1.3242 at the end of November from $1.2761 at the end of October.

Credit Suisse economist Satoru Ogasawara said Japan's foreign reserves may continue to increase for a while, as the euro is likely to keep rising versus the U.S. unit.

The European Central Bank has been implying that it will keep its tightening campaign next year, whereas some economists expect the Federal Reserve may start cutting rates soon. As a result, the euro has been rising against the dollar. Japan holds euros in its reserves, though it doesn't disclose how much.

The yield on 10-year Treasurys was 4.466% at the end of November, higher than 4.602% at the end of October, a government official said. The bulk of Japan's foreign exchange reserves are thought to be held in U.S. Treasurys.

Separate data from the International Monetary Fund showed that China stood as the world's largest holder of the foreign exchange reserves at $975.59 billion in August, while Tokyo holds $864.69 billion of foreign exchange reserves. August is the earliest month comparative data are available for countries that hold much of the world's foreign reserves.

Analysts say the possibility of Japan winning back the position of the world's top foreign exchange reserves holder from China in the near term is quite low because Japan has stopped intervening in currency markets for more than two years and will likely continue to refrain from intervention.

When the Japanese Finance Ministry aggressively intervened to buy dollars for yen in the market until early 2004, the reserves constantly increased by about $20 billion monthly.

IMF data differ slightly from those issued by the MOF due to differences in calculation methods.

Japan's foreign exchange reserves have shown only minor changes in line with fluctuations in asset prices, namely U.S. Treasurys, and exchange rates since Tokyo stopped its currency-market intervention campaign in March 2004.

OI Technical Staff : 12/6/2006 9:59:59 PM

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Jeff Bailey : 12/6/2006 6:53:10 PM

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

May sell covered calls on KGC (see today's MM)

Jeff Bailey : 12/6/2006 6:38:43 PM

Closing Internals found at this Link

Jeff Bailey : 12/6/2006 6:25:26 PM

Closing U.S. Market Watch found at this Link

Keene Little : 12/6/2006 5:02:30 PM

There are thousands of ways to play this market and I thought this was a creative way:

I bought 50 May VIX 13 calls today at 2.90. I'm short vol from my January SPX IC and wanted to get some of that back here. If I average it out of the 5 mo. time frame, I'm paying 58 cents per month for a partial hedge against a serious sell-off. Just my thinking here..

Very interesting idea for using the VIX options. Thanks for sharing the idea Dan.

Keene Little : 12/6/2006 4:55:30 PM

I think the bulls moved the sun.

Jeff Bailey : 12/6/2006 4:53:15 PM

Well ... as they say ... "even a broken sun dial is right twice a day."

Keene Little : 12/6/2006 4:38:11 PM

That's a good question Jeff. I don't follow him very closely anymore but I know he was banking on the Bradley Model since its turn dates are derived from the alignment of the celestial bodies.

Jeff Bailey : 12/6/2006 4:36:18 PM

Keene, what's good'ol Arch Crawford up to these days?

Jeff Bailey : 12/6/2006 4:33:30 PM

Yes, the Bradley Model.

My apologies to Bradly followers.

Jeff Bailey : 12/6/2006 4:29:50 PM

Bullish swing trade call stop/target adjustment alert ... for the NYSE Group NYX Dec. $100 Calls (NYX-LT) ... to $97.00/$106 in the underlying.

Jeff Bailey : 12/6/2006 4:11:32 PM

Swing trade short stop/target adjustment ... for the 1/2 Biovail (BFV) $20.72 +9.62% position. Raise stop to $21.11 and lower target to $20.00.

Keene Little : 12/6/2006 4:10:00 PM

There's not a whole lot of room for new longs here. As difficult as it might be you'll need to open up your stop in order to avoid potential overnight probes. Either that or go flat for the night and we'll pick it up tomorrow. If the consolidation is done we should head up out of the gate tomorrow but that's obviously not a given.

Keene Little : 12/6/2006 4:08:07 PM

Brady count? Would that be the Brady Bunch or are you referring to the Bradley Model? Yesterday was the expiration of the Bradley Model turn date if that's what you meant. One more turn window come and gone. Cycle studies haven't been working very well since the summer and I know just a few cycle gurus who have been scratching their collective heads over this.

Jeff Bailey : 12/6/2006 4:03:39 PM

Isn't tomorrow "Day 3" of the Brady count?

Jane Fox : 12/6/2006 4:01:50 PM

Economic reports for tomorrow include.

8:30a.m. Initial Jobless Claims. For Dec 2 Wk. Expected: -37K. Previous: -34K.

3:00p.m. Oct Consumer Credit. Expected: +$4B. Previous: -$1.2B.

Jeff Bailey : 12/6/2006 3:59:18 PM

Day trade short cover 1/2 position alert ... in Biovail (BVF) at the offer of $20.68

Jeff Bailey : 12/6/2006 3:55:19 PM

Biovail DAY trade update alert ... let's cover 1/2 of today's short, but hold the other 1/2 position overnight with possible downside target of $20.00.

BVF $20.69 +9.47% ...

Jane Fox : 12/6/2006 3:53:45 PM

AD volume to new daily lows so if long I would do an exit stage left here.

Keene Little : 12/6/2006 3:45:12 PM

I'd think about raising your stop on a long to a couple of ticks to a new low from here. We're getting close to the end of the day and the overnight risk is for stops to get hit on both sides. Rather than carry a long overnight without much of a cushion I think I'd rather be flat and perhaps try a long tomorrow morning. If the bounce continues into the close you'll at least have a slight cushion.

Keene Little : 12/6/2006 3:41:23 PM

Two equal legs down for YM from its 12346 high at 1:00 PM was at 12311 which also made for a good place to try a long play. If you bought this dip I'd keep a stop no lower than about ES 1411 and YM 12295 for now to see if this starts the rally leg.

Marc Eckelberry : 12/6/2006 3:42:13 PM

Don't put money on it (although I am adding to ES March shorts), it's not a smart to csll tops, but at least lighten up on some of your winners. This rally the past 2 days stinks. I just have a wider time horizon when I enter extremes and don't care about 5 ES points. I'm going for SPX 1350 in January. I will daytrade oil in the meantime and cost average the whole thing.

Marc Eckelberry : 12/6/2006 3:38:31 PM

The VIX is flashing extreme warning signs in this uptrend holding above 10 ema. The calendar means nothing this year and I have seen many December suprises in 20 years.

Marc Eckelberry : 12/6/2006 3:36:14 PM

I think the notion is catching on that the Feds won;t cut rates in Q1. That will cause a sell-off. Just my guess. Then we rally back up to SPX 1400 last week of December. In any case, SPX will close 2006 around 1400, not much higher. Lefkovich at CITI is usually pretty right on.

Keene Little : 12/6/2006 3:32:00 PM

Thanks Marc. It's a play I plan to be out of by this Friday regardless of where it is.

Marc Eckelberry : 12/6/2006 3:29:29 PM

That's a heavy call resistance strike, Keene. Put support is at 139.

Marc Eckelberry : 12/6/2006 3:28:40 PM

It goes against everything we are hearing, but that's my call. Risky, I know, but I'm not waiting for any bells to ring.

Keene Little : 12/6/2006 3:27:31 PM

I just bought a few December SPY 142 calls for 70 cents and hope to get a bounce to 143 to sell them. If it just keeps diving instead then I know what my risk is.

Marc Eckelberry : 12/6/2006 3:27:42 PM

My sense is we put in a top due to non-confirmation by NDX and the massive bearish divergence on the SPX daily chart and rising VIX.

Keene Little : 12/6/2006 3:26:02 PM

You might want to try a few December call options here--make it a lottery play where it either works well or you'll lose it all.

Keene Little : 12/6/2006 3:25:06 PM

ES 1413 is two equal legs down from the last high of 1417.75 at 1:00 PM and of course the bottom of the recent consolidation is at 1412. We're now in the area that I'd look to nibble on a long and see if we get the next rally leg going.

Keene Little : 12/6/2006 3:18:25 PM

NQ has been weaker during the past two days but I have a bullish sense about this one too, at least for another leg up. The current pullback looks like a bull flag and a Fib projection and retracement, along with the bottom of the flag, line up near 1787 tomorrow morning. There's also potential support closer to Fib alignment near 1795. Link

Jeff Bailey : 12/6/2006 3:08:22 PM

Day trade short alert ... for shares of Biovail (BVF) at the bid of $20.81 +10.10%, stop $21.00, target $20.40.

Keene Little : 12/6/2006 3:03:02 PM

Seattle has been somewhat immune to the housing slowdown but I'm starting to see both more For Sale signs popping up and signs staying up longer. I've also recently seen a few sold signs come down but the For Sale sign still up. I regularly walk through some very nice (and pricey) neighborhoods in the Capitol Hill district and I'm also seeing For Sale signs being taken down as the house is taken off the market.

I assume many will put their houses up for sale after the holidays. If the housing market is still slow as we head into the spring (which is what I believe will happen) that's when many sellers will recognize the problem is more severe and get more serious about price reductions. Most are still holding on in hopes it will get better by the spring.

Jeff Bailey : 12/6/2006 3:02:37 PM

03:00 Market Watch found at this Link

Jeff Bailey : 12/6/2006 2:53:12 PM

Hmmm... 2nd showing on the house for sale across the street today. Nobody's looked at it the past couple of weeks that I've seen.

Tab Gilles : 12/6/2006 2:51:00 PM

Weekly EIA Report Link

Keene Little : 12/6/2006 2:27:47 PM

In the consolidation pattern that we've been in for the past two days I'd like to see a pullback to the lows of the congestion to finish the pattern. The last leg of these patterns, wave-e on the chart, can be short, long, or anything in between so it's risky trying to figure out where to get long. But a drop back to ES 1412 area or a break out above would be the two opportunities to get long for the ride up and out of here. Link

Keene Little : 12/6/2006 2:21:31 PM

Some good charts there Marc, thanks. It shows we can still get more "overbought" in sentiment but it clearly shows the bulls are now skating on thin ice.

Marc Eckelberry : 12/6/2006 2:15:50 PM

Speaking of sentiment, check the downward trendline R: Link

Marc Eckelberry : 12/6/2006 2:14:18 PM

NDX 20 DMA is the line in the sand.

Jeff Bailey : 12/6/2006 2:14:49 PM

Kinross Gold (KGC) $12.43 -2.04% ... probes morning low.

KGC-LV now $0.25 x $0.35. 168 contracts with L/H of $0.30/$0.40

Keene Little : 12/6/2006 2:13:48 PM

From an astute market observer (thanks Dave):

It always precedes a fall--I agree with Marc "now they are buying homebuilders." Human nature is always the same. We now think the market will never go down again. The Democrats are in charge. We have a not so graceful plan for defeat in Iraq. Bullish sentiment is at a new high of 59%. I believe the last time that happened was late '03 and that was followed by a 50% retracement over the next 7 months. Will it happen again? Most likely IMHO.

Marc Eckelberry : 12/6/2006 2:11:40 PM

This market is breaking all the rules (making new highs without NDX making new highs), which is why I would recommend booking profits in SPX sectors on rallies. Maybe we go gangbusters, but maybe nothing more happens until the last week of December, so don't get too greedy.

Keene Little : 12/6/2006 2:09:55 PM

I agree with your assessment Marc and I'm always reluctant to believe in the "blow-off top" theory to end a rally. Usually it's more of a wimper than a bang. In fact rolling tops are very common ending patterns. But if we were to get the blow-off move that's why I'd be looking to short it. First with long term puts and then start shorting the futures once I was more confident of a turn back down.

Marc Eckelberry : 12/6/2006 2:09:42 PM

NDX pinned right where it was almost a month ago. Anyone who bought the Q's mid-November has gone nowhere.

Marc Eckelberry : 12/6/2006 2:04:54 PM

Of course, they see you coming with that same chart we all look at and hit the stops. Butthey could have already done that game earlier at 1417.75.

Marc Eckelberry : 12/6/2006 2:03:44 PM

In fact, the VIX has been acting in ways that remind of previous imminent corrections. Trending up while ES trends up. It's the same set up as late July 2005.

Marc Eckelberry : 12/6/2006 2:01:07 PM

I was thinking ES 1421, Keene, but I think the rejection and double top at wedge R with a negative div. is enough for now.

Keene Little : 12/6/2006 1:57:19 PM

Since my ascending wedge idea for ES calls for what looks like could be a blow-off top with a move to 1430 or so, I'm obviously reluctant to recommend aggressively shorting anything here. If we do get that kind of move in ES, especially if it happens quickly into the end of this week, then I'll get more aggressive in recommending both short term as well as long term short positions.

This market still requires a lot of caution on the short side. In fact if ES can pull back towards 1412 now I'm going to be looking to buy it.

Marc Eckelberry : 12/6/2006 1:56:57 PM

This dollar bounce is temporary. I'm waiting for Feb gold to hit 620 area and re-load, although 630 200 dma is support.

Marc Eckelberry : 12/6/2006 1:49:32 PM

Bounce in anything is a short except gold.

Keene Little : 12/6/2006 1:42:38 PM

Marc, it's why I continue to pound the table that this bounce in the home builders is an excellent opportunity to short them.

Marc Eckelberry : 12/6/2006 1:38:48 PM

Some Wall Street analysts expressed skepticism over Robert Toll's more optimistic tone earlier this week, noting that in early November the CEO said he didn't see a bottom in sight for the housing market. "I'm wondering which Kool-Aid you're drinking because I want some, because it's not what we're hearing from a lot of the other [builders]," said Credit Suisse analyst Ivy Zelman during Toll's earnings call Tuesday. Link

Marc Eckelberry : 12/6/2006 1:35:21 PM

Now they are even buying home builders, based on the positive word of the Toll Bros CEO who not only three weeks ago said there was no bottom in sight. I don't know what market he is talking about, but it's not LA. It's such baloney, but price is what counts if you are short or long.

Jeff Bailey : 12/6/2006 1:32:13 PM

NYSE Group (NYX) $98.70 +1.12% ... get's its first 60-minute interval close above the 50-pd SMA since closing below late afternoon on 11/28/06 at $100.95.

Jeff Bailey : 12/6/2006 1:25:23 PM

01:05 Internals found at this Link

Jeff Bailey : 12/6/2006 1:12:21 PM

Berkshire Hathaway (BRK.a) $110,000 +1.85% Link ... Good gravy!

Jeff Bailey : 12/6/2006 1:07:54 PM

01:05 Market Watch found at this Link

Keene Little : 12/6/2006 1:04:09 PM

ES daily R1 is at 1419.75 so watch for potential resistance at that level if this manages to poke above recent resistance at 1417.50, which it just tried to do as I type.

Marc Eckelberry : 12/6/2006 12:58:36 PM

Keene is right, you should take your cues from NQ. ES is the most manipulated future's index in the world, since it has enough liquidity for hedge funds and gives many false signals, including, I think, this new high business.

Keene Little : 12/6/2006 12:55:14 PM

One caution about the upside is that I don't like the pattern in NQ for an immediate move higher. That one looks more like a bounce will lead to another pullback. It may not of course but if the techs don't join in a new high (watch gap close at 1807.75 and then a Fib projection for this leg up at 1809.25) then I would have trouble trusting a move higher in ES and/or YM.

Jane Fox : 12/6/2006 12:52:56 PM

See the bears don't have a chance in this market. TICKS +1000

Marc Eckelberry : 12/6/2006 12:48:33 PM

A report that Gates (MSFT) and Schmidt (GOOG) have done the biggest insider selling of any major company since 1987 is chilling things a little: Link

Jane Fox : 12/6/2006 12:39:21 PM

Please keep in mind that the AD line is still below 0 and this should worry the bulls - ya right - bulls worry? NAH!

Marc Eckelberry : 12/6/2006 12:37:56 PM

NQ lags again, but SOX still green. We are doing the usual per-triple witch. Be careful when switching contracts since you will get nailed with a .50 premium loss by Friday on ES (if swing trading), so only go March today if short. Otherwise, wait for tomorrow. Swing long traders might consider waiting for March to lose more premium by next week. This is of no consequence to day traders.
Watch ES 1415.25 level.

Keene Little : 12/6/2006 12:30:34 PM

There's always the risk of a head fake break to the upside and therefore buying a break out above this congestion could subject you to whipsaw but at this point I'd say a break above this consolidation would be the start of the next rally leg. A conservative way to try to grab it is to wait for a break out and then pullback to retest the top of the range. It may not pull back but very often it's the 2nd mouse that gets the cheese.

Jeff Bailey : 12/6/2006 12:30:47 PM

German DAX ($DAX) 6,369.51 Link ... possible "shake out" on that trade at 6,200.

Jane Fox : 12/6/2006 12:29:50 PM

Do all you futures traders realize tomorrow is rollover Thursday? I will be trading the March Link contract right off the bat but I know some traders will wait for the volume to come into the new contract before they switch. Personal preference.

Jeff Bailey : 12/6/2006 12:30:40 PM

SAP Ag (SAP) $51.70 -1.01% Link ... hasn't done a whole lot since bullish exit on 10/11/06 @ $50.75. With the dollar's weakness, it has held up rather well though. That is, if dollar weakness would negatively impact U.S.-consumer's taste for German software applications.

Jeff Bailey : 12/6/2006 12:24:14 PM

GSO.X ... yesterday's trade found resistance at WEEKLY R1 (188.03) and Lehmans comments on ORCL brings some weakness with GSO.X gapping below WEEKLY Pivot (185.61)

Those NQ/QQQQ traders that followed my observations regarding importance of software in September, while some were overly focused on Semiconductors, want to be following this group.

Jeff Bailey : 12/6/2006 12:19:56 PM

Kinross Option Montage at this Link ... OI is about as squared as square can be at the $12.50 strike. I'm showing 148 contracts have traded for the KGC-LV and 0 for the KGC-XV.

Now, go back and review the 60-minute interval chart of the dxy. I'm NOT a candlesticker, but the 60-minute chart (perhaps suitable for swing trade analysis) shows what might be a "hammer" from early Tuesday morning.

Keene Little : 12/6/2006 12:14:01 PM

I'm updating my ascending wedge idea a little here. After a sharper pullback from the high on November 30th, wave-(ii) on the chart, it would be common for the 4th wave, as I have it labeled on the chart, to be a flat correction. This is common in an EW pattern--the 4th wave often "alternates" in form to what the 2nd wave does. Link

The 4th wave often takes more time than the 2nd wave and that's already true for this correction. Another pullback near the lows of the recent consolidation could finish the correction and then get ready to rally. I've used a common Fib projection based on the wave pattern thus far and assuming the end of the correction is near 1412 then I get an upside projection to 1430.50 for the end of the run.

Again, this is speculation at the moment but it would fit nicely in both the short term and longer term wave pattern. Until I see a change to this expectation I'd be looking at the next pullback as an opportunity to get long.

Jeff Bailey : 12/6/2006 12:11:49 PM

Remember how CDE and BGO traded into November's expiration? Thinking about that too.

Jeff Bailey : 12/6/2006 12:10:52 PM

Kinross Gold (KGC) $12.63 -0.47% ... you get the feeling that somewhere out there, there's a computer or two monitoring the dxy.

KGC-LV $0.35 x $0.45 (monitoring). Thinking ... if I sell @ $0.40, I'm selling $12.50 + $0.40 = $12.90 and getting 7.5 days protection to $12.10. Do I need it, or want it though?

Jeff Bailey : 12/6/2006 11:58:56 AM

BIX.X 398.97 +0.06% Link ... still sitting on top of WEEKLY R2

YM 12,332 ... session low came pretty much at its WEEKLY R1.

BIX.X has been finding some resistance at the 400.00 level since early October. Did "pop" above for about a week in early November.

Bullish implication from MACD if BIX.X price action gets much above 400.00.

Jeff Bailey : 12/6/2006 11:41:54 AM

U.S. Dollar Index (dxy) ... now a 60-minute interval chart at this Link

Now, FOMC meets next week. Last meeting was October 24/25, and first "Observation"

Jeff Bailey : 12/6/2006 11:31:17 AM

U.S. Dollar Index (dxy) ... here's my daily interval chart with conventional (blue) retracement, which marks the range from 12/30/04 to 11/16/05 relative high Link

PINK is December's Pivot retracement. Note how MONTHLY Pivot marks the 05/12/06 relative low close, which was broken on 11/24/06.

Will follow with a 60-minute interval chart and QCharts' WEEKLY Pivot levels turned on.

Jeff Bailey : 12/6/2006 11:13:11 AM

11:00 Internals found at this Link

Keene Little : 12/6/2006 11:07:27 AM

The Iraq Study Group findings are being presented to the public so things may slow down a bit if market participants are watching.

Jeff Bailey : 12/6/2006 11:02:11 AM

11:00 Market Watch found at this Link

Keene Little : 12/6/2006 10:57:31 AM

The sideways consolidation since yesterday makes it look like we'll get an upside resolution out of this. The top of the potential wedge pattern for ES is now near 1422 and that would be the target if we get a rally started. Otherwise a slow drift lower in a prolonged sideways/down correction is equally possible. Just keep repeating to yourself flat is a position, flat is a position...

Jeff Bailey : 12/6/2006 10:49:50 AM

dxy has overlap at my conventional 80.9% 82.84 and WEEKLY Pivot.

Jeff Bailey : 12/6/2006 10:49:02 AM

Barrick Gold (ABX) $30.97 +0.06% ... near test of MONTHLY Pivot $30.39 this morning.

Dollar backfilling overnight gap at 82.64.

Jane Fox : 12/6/2006 10:44:19 AM

ER and NQ have been able to climb back into their PDRs but no market has been able to break its PDH yet.

Jane Fox : 12/6/2006 10:43:33 AM

SAN FRANCISCO (MarketWatch) -- The American Petroleum Institute reported a drop of 4.1 million barrels in crude supplies for the week ended Dec. 1. The Energy Department had reported a fall of 1.1 million. Motor gasoline supplies were up 674,000 barrels, the API said, contrary to the government's reported fall of 1.1 million. Distillate supplies were down 1.5 million barrels, the API said, vs. the 400,000-barrel fall reported by the government.

Jane Fox : 12/6/2006 10:35:23 AM

NEW YORK (MarketWatch) -- The dollar rose slightly against other major currencies Wednesday, after a stronger-than-expected private-sector employment survey raised speculation that a much-awaited U.S. nonfarm payrolls report due later in the week may surprise on the upside.

Private employers created 158,000 net new jobs in November, a report from Automatic Data Processing showed Wednesday. It's the largest gain since June's 368,000. Together with an estimated 15,000 government jobs that aren't included in the ADP index, the report suggests payrolls likely grew by about 170,000 in November. Economists surveyed by MarketWatch currently expect an increase of 110,000.

"The dollar is higher across the board on a combination of weak U.K. and euro zone manufacturing data, combined with stronger than expected ADP survey," said Ashraf Laidi, chief foreign-exchange analyst at CMC Markets in New York. The ADP survey came in "well above expectations" and "markets may lift their [payrolls] forecasts above the current consensus forecast of 100, 000," he said.

Jane Fox : 12/6/2006 10:34:38 AM

* Crude supply down 1.1 mln brls last week: Energy Dept.
* Distillate supply down 400,000 brls: Energy Dept.
* gasoline supply down 1.1 mln brls: Energy Dept.
* Jan. crude climbs 32 cents to $62.75/brl after $62.20 low

Jeff Bailey : 12/6/2006 10:32:37 AM

Baker Hughes (BHI) $73.00 -0.12% Link ...

Jane Fox : 12/6/2006 10:29:02 AM

AD volume back below 0.

Jeff Bailey : 12/6/2006 10:28:50 AM

Broker/Dealer (XBD.X) 243.96 +0.51% ... probes WEEKLY R1 first time this week.

Jane Fox : 12/6/2006 10:28:44 AM

That was nice try by the rescue team but no cigar - yet.

Jane Fox : 12/6/2006 10:27:58 AM

Please keep in mind that although the bulls may have intercepted the ball they still do not have field advnatage. AD line is -192.

Keene Little : 12/6/2006 10:27:10 AM

YM 12350 has been recent resistance and looks like it's continuing to be. This price action is just shaking the trees on both sides.

Jeff Bailey : 12/6/2006 10:25:51 AM

Red Hat (RHAT) $16.91 -0.76% Link ... Earnings conference call scheduled to start Thursday, 12/21/06 @ 05:00 PM EST.

Consensus currently $0.12/share on revenue of $104.21.

Jane Fox : 12/6/2006 10:23:19 AM

TICKs +1000

Jane Fox : 12/6/2006 10:23:04 AM

The rescue team doesn't let this market get too bearish does it? TICK +800

Keene Little : 12/6/2006 10:22:18 AM

ES got a nice bounce off the 1412 level so we know that's being looked at as support. If it should drop below that now then it will probably be good for a decent move down. But the potential for continued chop is very high since the pullback correction, if we're getting one, is expected to be a choppy one, as will the following rally. This is a tough time to trade and it's boring to sit on your hands but better trading times are ahead. Protect your capital above all else. Now getting a stronger bounce as I type.

Jeff Bailey : 12/6/2006 10:18:36 AM

Oracle (ORCL) $18.13 -3.87% Link ... Lehman cautious on stock, urging investors to "take profits."

Jeff Bailey : 12/6/2006 10:16:31 AM

DJUSHB 761.84 ... works its way above WEEKLY R1 (757.67)

Keene Little : 12/6/2006 10:14:59 AM

The home builders have seen a nice bounce the past week and it's now approaching potential Fib resistance at 765 (currently printing 762 as I type). A 38% retracement of the decline from July 2005 is at 765. Two equal legs up in its rally from the November low is also at 765. If price is able to get through this level then next resistance is not until the October 2005 low near 805. But 765 could cap this one off. Link

Jeff Bailey : 12/6/2006 10:13:44 AM

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

Jane Fox : 12/6/2006 10:08:55 AM

Both ER and NQ are below their respective PDLs but ES and YM have yet even test their PDLs.

Jeff Bailey : 12/6/2006 10:08:39 AM

Monitoring the Kinross Gold KGC Dec $12.50 Calls (KGC-LV) $0.30 x $0.35 with KGC $12.49 -1.57%.

Possible covered call into next Friday's expiration.

Keene Little : 12/6/2006 10:07:42 AM

So far ES is only testing the bottom of its recent trading range, at 1412. Whether this move down continues or now bounces back up is the big question here.

Jeff Bailey : 12/6/2006 10:06:43 AM

NYSE a/d 1075/1674

NASDAQ 936/1560

Jeff Bailey : 12/6/2006 10:05:37 AM

10:00 Market Watch found at this Link

I show DJUSHB +11 points, or +1.5% (not +3.93%)

Jeff Bailey : 12/6/2006 9:55:09 AM

Norsk Hydro Cuts 2010 Oil, Gas Output Target 6.7%

DJ- Norsk Hydro ASA (NHY) Wednesday cut its oil and output target for 2010 by 6.7% to 700,000 barrels of oil equivalent a day from 750,000 boe/d but was upbeat about the company's prospects beyond 2010.

"We have not been so successful in meeting the (oil and gas production) targets we have set. It is an industry (wide) challenge, not just a Hydro challenge," Chief Executive Eivind Reiten said at the company's capital markets day.

"The production downgrade is the negative side of the message. On the positive side, growth beyond 2010 is coming from a broader portfolio than we saw a year ago. We see solid and good growth beyond 2010," he added.

Reiten added that he expects oil prices through 2010 to remain high, which he considered to be $40-$60 a barrel.

He added the revised oil and gas target for 2010 will be 90% accounted for by production which is already on line and new projects which have been sanctioned. This compares with the earlier target of which 85% was accounted for by existing and sanctioned new projects.

"We're all stretching for some resources, and 700,000 (boe/d) represents the best estimate. There is uncertainty when we are talking about three years ahead, but we have made a very, very thorough review of it," Reiten said.

"All projects (included in that figure) are well defined and transparent," he added.

NHY $24.09 -3.91% Link ...

Keene Little : 12/6/2006 9:46:47 AM

I had mentioned yesterday that it's possible we'll see a move down on Thursday that sets up a bullish opex week. But the potential ascending wedge idea that I showed yesterday actually suggests exactly the opposite. If we were to get a pullback today and then a rally on Thursday into Friday I could see this rally finishing this week. That would set up the start of the decline as we head into opex. Just an idea that I'm watching. Link

Jane Fox : 12/6/2006 9:46:40 AM

The TRIN may have started out below its PDL but has climbed back into its PDR and making new daily highs supporting the bearishness.

Jeff Bailey : 12/6/2006 9:46:38 AM

Kinross Gold (KGC) $12.50 -1.49% Link

Jane Fox : 12/6/2006 9:44:11 AM

* NYSE decliners outnumber advancers 16 to 11
* Nasdaq decliners outnumber advancers 15 to 8

Jeff Bailey : 12/6/2006 9:43:51 AM

Dollar Index (dxy) kissed its weekly pivot, while StreetTracks Gold (GLD) kissed its WEEKLY S1 $63.10 and fills the 11/29 to 11/20 gap. GLD $63.19 -0.97% Link

Jane Fox : 12/6/2006 9:43:32 AM

All I need is the VIX making new daily highs and the AD volume making new daily lows to tell me the bears have the ball and an AD line at -733 and falling tells me the bears are gaining field advantage. Not a time to be long.

Keene Little : 12/6/2006 9:40:26 AM

Anywhere between ES 1412 and 1418 is just a chop zone and trying to figure out direction from inside this range is very difficult. Trading inide this range may just feed your broker. I'm waiting to see if it will rally up to the trend line along its highs since November 29th, currently near 1421, or drop back down in a larger correction, potentially back to about 1406. I wish I had a better feel for which way it will go so that I could trade it but unfortunately it's a coin toss from here.

Jane Fox : 12/6/2006 9:38:14 AM

TRIN opens below its PDL which is quite bullish actually. VIX open within its PDR.

Jane Fox : 12/6/2006 9:32:49 AM

AD line is -411 and falling. Ad volume is a tad below 0 and mostly sideways. The bears have a slight advantage but not much.

Jane Fox : 12/6/2006 9:19:28 AM

Dateline WSJ - WASHINGTON -- The long-awaited Iraq Study Group report, which was delivered to President Bush Wednesday morning, concludes that the situation in Iraq is "grave and deteriorating" but could still be improved if the U.S. focuses mainly on strengthening the Iraqi army and launches an immediate "diplomatic offensive" to win cooperation from countries such as Syria and Iran.

Both steps would mark a sharp departure from the current Bush administration approach, and could receive a chilly reception from the White House as well as U.S. military commanders in Iraq.

After meeting with members of the bipartisan panel at the White House, Mr. Bush said, "The report will be taken very seriously by the administration. It takes a tough assessment on the way forward in Iraq," he said. "We will take every proposal seriously and we will take act in a timely fashion."

Jane Fox : 12/6/2006 9:16:44 AM

Oil broke its downward trendline and has retested it but did not fall back into the downward channel. Oil still looks like a bottom has formed but it is no where near what I would call bullish, just not as bearish anymore. Link

Keene Little : 12/6/2006 9:13:38 AM

Yesterday's price pattern was strange in that it appeared the market was consolidating and yet it kept inching higher (except for NQ and ER which were both flat). It looks like we're due a pullback but it could continue to correct in more or less a sideways chop (to correct the rally in time instead of price). I didn't see any good setups for a trade yesterday and I don't see one yet this morning so it'll be watch and wait to see what happens this morning.

Jane Fox : 12/6/2006 9:12:53 AM

Gold has confirmed its bear wedge but has not violated its support at the 50 and 100 EMA. I have taken my long gold position off the table and will wait to see what this market does. BTW I would like to thank Tab for his input yesterday; I did read the post but didn't have the time to respond. I always take Tab's comments quite seriously. Link

Jane Fox : 12/6/2006 9:08:56 AM

Both ES and YM tested their respective PDHs overnight and both ER and NQ tested their PDLs overnight. Link

Jane Fox : 12/6/2006 8:50:40 AM

WASHINGTON (MarketWatch) - With mortgage rates falling to the lowest level in more than a year, the number of applications for mortgages at major U.S. banks rose 8.1% on a seasonally adjusted basis last week compared to the prior week, the Mortgage Bankers Association reported Wednesday.

Applications, including both loans for purchases and those for refinancing, were up 1.9% compared with the same week a year ago. Application volumes had been down by double digit percentages for most of the year.

Applications for loans to buy a home increased 4.9% in the past week.

Applications for loans to refinance an existing loan increased 13.7% in the past week. The share of loan applications that were for refinancings increased to 50.1%, the largest share since April 2004.

The average rate for a 30-year fixed-rate mortgage dropped to 5.98%, the lowest since October 2005, from 6.13%. Since early July, rates have fallen by 83 basis points, or 0.83 of a percentage point.

The rate for a 15-year fixed-rate loan, a popular vehicle for refinancing mortgages, averaged 5.66%, dropping from 5.86% a week earlier. It's the lowest rate since January

Jane Fox : 12/6/2006 8:47:43 AM

WASHINGTON (MarketWatch) - Private employers in the United States created 158,000 net new jobs in November, according to the ADP employment index released Wednesday.

It's the largest gain in the ADP index since June's 368,000.

Together with an estimated 15,000 government jobs that aren't included in the ADP index, the report suggests nonfarm payrolls likely grew by about 170,000 in November. The government nonfarm payroll report will be released Friday morning.

Analysts currently expect job growth of about 110,000 in November, according to a survey of economists conducted by MarketWatch.

In October, the ADP report showed 128,000 private-sector jobs, while the Labor Department's report found 58,000 in the private-sector and 92,000 total.

"These findings suggest a modest acceleration of employment in November, following three months during which, according to the ADP National Employment Report, gains in private nonfarm employment averaged a slower 104,000 per month," said Joel Prakken, chairman of Macroeconomic Advisers LLC, the economic firm that computes the ADP index from anonymous payroll data provided by Automatic Data Processing Inc

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