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OI Technical Staff : 1/5/2007 9:59:59 PM

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Jeff Bailey : 1/5/2007 7:52:22 PM

Closing Internals found at this Link

Jeff Bailey : 1/5/2007 7:32:39 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 1/5/2007 7:23:19 PM

Fed's Moskow: US Potential Growth Is Likely Lower Now

DJ- Changing demographic patterns mean the economy's potential growth rate is likely lower and that on a monthly basis, fewer new jobs will need to be added monthly to achieve full employment, Federal Reserve Bank of Chicago President Michael Moskow said Friday.

While Moskow did not address current economic conditions and the monetary policy outlook in his speech, nor did he address the monetary policy outlook, his comments nonetheless merit attention. That's because accurately measuring how fast the economy can grow and add jobs without fueling inflation are key inputs to the Fed's monetary policy deliberations. Moskow will be a voting member of interest rate setting Federal Open Market Committee at this year's gatherings, and he spoke in comments prepared for delivery before the Labor and Employment Relations Association in Chicago.

"Monetary policy could go off track if we don't recognize the impact of such structural changes on the economy and the benchmarks we use to evaluate the incoming data," Moskow said. "An important observation is that labor markets are constantly evolving, which can cause these benchmarks to change," he said.

The official noted that the decline of labor force participation seen over recent years appears to be demographically and culturally driven. "Our view is that most of the decline in labor force participation that happened after 2000 was not due to a weak economy" and "it seems very likely that it will continue to fall over the coming years."

"The recent changes in population growth and labor force participation imply that we need to change our benchmark for employment growth to something more like 100,000 per month," Moskow said.

"This change in the benchmark has only recently begun to be fully recognized by those who follow the economy on a day-to-day basis," Moskow said. He noted that embracing this means that the labor market has actually proved to be a good bit stronger than many current believe.

"Job growth has averaged roughly 160,000 over the past six months," Moskow said. "By the old standard, that would be just average, but given the current trends in the labor force, we view such growth as quite solid."

Unfortunately, Moskow said, his new labor market benchmark might prove ephemeral: "there is a lot of uncertainty about this mark in the long run."

As for the economy's growth rate potential, "the slower growth of available workers and the rate at which trends in educational attainment and labor market experience add to those workers' productivity both imply slower growth in potential output."

He said labor's contribution to the economy's potential growth rate "may have declined by a bit more than half a percentage point since the late 1990s," although he did not offer a number that would fix his understanding of the economy's growth potential. Many private sector forecasters reckon the rate stands between 3% and 3.5%.

Jeff Bailey : 1/5/2007 4:59:59 PM

S&P Price/Earnings Ratio at 18.01, Down From 18.12

DJ- The price/earnings ratio of the Standard & Poor's 500 Index at the close of trading Friday was 18.01.

On Thursday, the ratio ended at 18.12.

The price/earnings ratio for the S&P 500 measures the index's closing level divided by the index's total earnings, as reported under generally accepted accounting principles, or GAAP, for the most recent year.

In 2005, the most recently reported year, S&P 500 companies reported earnings of $78.28 a share.

Jeff Bailey : 1/5/2007 4:57:08 PM

Please remember the week ended 12/27/06 wouldn't be considered a "busy" week for commercial loan activity.

Jeff Bailey : 1/5/2007 4:55:01 PM

US Bank Business Loans Down $10.8 Billion In Latest Week

DJ- Large U.S. banks' commercial and industrial loans fell $10.8 billion to $1.188 trillion in the week ended Dec. 27, the latest week for which data are available, after rising $16.5 billion the previous week, the Federal Reserve said Friday.

Jumbo certificates of deposit at the large banks in the survey fell $15.0 billion to $1.709 trillion in the latest week after falling $13.5 billion the previous week. Revolving home equity loans rose $1.4 billion to $472.6 billion after rising $3.2 billion the previous week.

Federal Reserve Statistics Link

Keene Little : 1/5/2007 4:42:42 PM

Could be right Marc. That's why I say a rally has to start Monday. Any bounce followed by new lows could be lights out for the bulls. I'm just waiting for more proof before I add to my short position.

Marc Eckelberry : 1/5/2007 4:36:16 PM

Keene, I think the small cap debacle has just begun.

Jeff Bailey : 1/5/2007 4:34:56 PM

5 and 10year Treasury bond yields trade weekly ranges today.

Jane Fox : 1/5/2007 4:06:06 PM

* S&P 500 prelim closing: 1,410 down 9 points
* S&P 500 closes down 0.6% on the week
* Nasdaq Composite prelim closing: 2,434, down 19 points
* Nasdaq composite closes up 0.8% on the week
* Dow Industrials prelim closing: 12,402, down 79 points
* Dow industrials close down 0.5% on the week
* Russell 2000 prelim closing: 776, down 14 points

Keene Little : 1/5/2007 4:04:27 PM

If the Fed was pumping money into the market today it looks like it went to the bond market. After the initial spike down this morning bonds have seen a steady lift all day, just like we've typically seen in the stock market when the buying starts. The Fed may be concerned about rates rising too fast over there which would dash the hopes for any kind of housing recovery. Stocks got very little loving today.

Jeff Bailey : 1/5/2007 4:02:55 PM

Sell Program Premium ... YM 12,457 : SPY $140.72

Jane Fox : 1/5/2007 3:56:34 PM

The bears surely won this round. Link

Keene Little : 1/5/2007 3:55:46 PM

Sorry, I meant to update that RUT chart with a slightly different wave count (for where the 1st and 2nd waves are) and show an upside projection for the 5th wave--804 and then 822, based on the size of the 1st wave. Disregard my previous chart as this is my preferred count at the moment: Link

Marc Eckelberry : 1/5/2007 3:51:56 PM

They are going to work on those gaps Monday.

Keene Little : 1/5/2007 3:50:32 PM

The RUT continues to look the most bearish today, down -1.7%. But the daily chart shows an interesting bullish setup. If the consolidation since mid-November is a 4th wave triangle then we're due another leg up after the current pullback is complete. Today price has dropped to the uptrend line from July. This will have to start rallying on Monday so as not to negate this bullish setup. Looking at nothing else I'd be a buyer here. Link

Marc Eckelberry : 1/5/2007 3:49:51 PM

Bulls hold on, or should I see bears lose their nerve and cover. ES suffers more damage than NQ, which actually fared pretty well. Needs a close above 1798. Small caps are the real losers and that is bearish overall.

Keene Little : 1/5/2007 3:24:11 PM

With the increase in volatility this week I thought we would not have a boring Friday. Other than the two legs down this morning it's been pretty boring. And lots of whipsaws if you tried trading since noon.

Jeff Bailey : 1/5/2007 3:15:14 PM

03:00 Internals found at this Link

Marc Eckelberry : 1/5/2007 3:13:40 PM

I have learned not to chase the closing hour when AD lines are just as bad as mid day. Lots of money is leaving the stock market. They might bounce it, but the scare is on.

Keene Little : 1/5/2007 3:09:59 PM

And then the Boyz step back in with a buy program as if to say "not so fast bears, we still rule this house." But can they hold it up under the weight of more selling? That's when we'll get to see if a continuing influx of Fed money is enough (I don't think so). The pullback in the techs though still looks very corrective and makes me think it will head higher again.

Marc Eckelberry : 1/5/2007 3:05:26 PM

Bears keep the ball. If NQ 1795 breaks, we will test lows.

Jeff Bailey : 1/5/2007 3:02:05 PM

03:00 Market Watch found at this Link

Jeff Bailey : 1/5/2007 2:53:15 PM

Dollar Tree Stores (DLTR) $32.06 +4.60% Link ... Higher after company warned late Thursday that Q4 sales are trending toward the upper end of its previous forecast of $1.28 billion to $1.31 billion.

Marc Eckelberry : 1/5/2007 2:49:38 PM

Watch VIX 12.

Marc Eckelberry : 1/5/2007 2:47:33 PM

Lots of money struggling to hold us up, but if the VIX stays above 12 and the AD lines stay this bad, we could have a final hour sell-off. Watch NQ 1795, 50 DMA and 1798 20 DMA. The battle right now. I can't imagine they will close ES below it s50 DMA at 1414.50, but there's a lot of believers out here and not many bears and that spells danger.

Keene Little : 1/5/2007 2:46:05 PM

I've been trying not to make a comment on Jane's posting (2:01) about Bernanke's speech today (as reported by MarketWatch) but I can't help myself. Having Bernanke (the Fed) supervise the banks is like having the fox guard the hen house. Maybe by the 100th anniversary of the Federal Reserve, in 2013, we will have identified them as the primary cause of the banking crisis we could be headed for and the Federal Reserve system will be drastically changed as we know it. Unfortunately we have Congress to fix the problem, should it occur, and that doesn't give me the warm and fuzzies.

BTW, have you heard the latest rumor about the U.S. Treasury? Under Goldman Sach's ex-Chairman Henry Paulson, now Treasury Secretary, the U.S. Treasury department will be privatized so that they're better able to coordinate activities with their banking partners. It's an outlandish rumor of course and has no basis in truth. But imagine what if...

Jeff Bailey : 1/5/2007 2:39:09 PM

That's what I thought on Friday 12/22/06 Keene. But not the "Boyz," just some Christmas cheer. Today's trade action very similar to 12/22/06.

Keene Little : 1/5/2007 2:30:45 PM

The slow tipping over after this morning's bounce is either bullish for a run higher into the close or it's getting ready to waterfall lower. Only because I don't think the Boyz will want an ugly Friday I'm leaning towards an upside resolution. But sell a break down since it could accelerate lower.

Jeff Bailey : 1/5/2007 2:18:42 PM

PTR was trading $130.65 at 02:03 PM EST.

January "Max Pain" is/was $115 ($5 increments) at this morning's check and February's is/was $135.00

Jeff Bailey : 1/5/2007 2:15:25 PM

There's one of those interesting $4.62 decimal trades from the CBOE on the PTR-NF at 02:03 PM EST.

All market makers h/l has been $5.10/$4.40

Jeff Bailey : 1/5/2007 2:06:09 PM

QQQQ $43.83 -0.52% ...

Jane Fox : 1/5/2007 2:01:30 PM

WASHINGTON (MarketWatch) -- The Federal Reserve should maintain its key role as a supervisor of the banking system in addition to its duties as the U.S. central bank, Fed Chairman Ben Bernanke said Friday.

Bernanke made no comments about the economy or current policy in his prepared remarks to a joint gathering of the American Economic Association and the American Finance Association in Chicago. A copy of his remarks was made available in Washington.

Bernanke defended the Fed's role as a banking supervisor, arguing that its close interactions with the financial system make for better monetary policy.

There are no serious policy proposals now under consideration that would strip the Fed of its supervisory role over banking.

Bernanke noted that the Fed's history has naturally led to it having a major role in oversight of the financial system. Indeed, the Fed was created in 1913 in an attempt to moderate the periodic financial panics that had disrupted the economy, he said.

Jeff Bailey : 1/5/2007 2:02:19 PM

These VIX options are crazy. VIX 11.98 and lower than yesterday's benchmark, but the VIX-BV are $1.80 x $1.90 and higher than yesterday, even when VIX.X was at highs of session.

Trading some volume today at 1,208 contracts from $1.55-$1.90

Jeff Bailey : 1/5/2007 1:55:59 PM

CDE $4.42 -4.53% ... looks "oversold" short-term on relative basis. Dead cat bounce back to $4.70?

Jeff Bailey : 1/5/2007 1:54:41 PM

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

Jeff Bailey : 1/5/2007 1:48:07 PM

Google (GOOG) $485.64 +0.49% Link ...

Jeff Bailey : 1/5/2007 1:46:23 PM

What are we? 3 trading days into the new year?

Jeff Bailey : 1/5/2007 1:45:11 PM

Gut feel, based on observation is QQQQ doesn't see the light of day above $44.40 until this summer.

Jeff Bailey : 1/5/2007 1:41:18 PM

AZZ Inc. (AZZ) $52.75 +3.67% Link ... new all-time high after company said Q3 earnings more than doubled, boosted by demand at its electrical and industrial products segments.

Jeff Bailey : 1/5/2007 1:23:00 PM

01:00 Internals found at this Link

Jane Fox : 1/5/2007 1:13:19 PM

DST this year is from March 11 to November 4.

Jane Fox : 1/5/2007 1:13:02 PM

The Energy Policy Act of 2005 was passed by Congress and then signed into law by President George W. Bush on August 8, 2005. Under the new law, Daylight Saving Time begins three weeks earlier than previously, on the second Sunday in March. DST is extended by one week to the first Sunday in November. The new start and stop period begins March 2007.

The original House bill would have added two full months, one in the spring and another in the fall. According to some U.S. senators, farmers complained that a two-month extension could adversely affect livestock, and airline officials said it would have complicated scheduling of international flights. So, a compromise was worked out to start DST on the second Sunday in March and end the first Sunday in November.

Enactment of the Energy Policy Act of 2005 will not alter the rights of the states and territories to choose not to observe Daylight Saving Time.

Keene Little : 1/5/2007 1:11:38 PM

Of all the indices right now I think NDX looks downright bullish here. We had a sharp rally yesterday and so far a corrective pullback. The pullback may not be over but when I look at its chart I want to buy it. That makes me a nervous bear.

Jeff Bailey : 1/5/2007 1:09:35 PM

PetroChina (PTR) gets the trade at $130.00 Link

Jeff Bailey : 1/5/2007 1:03:32 PM

01:00 Market Watch found at this Link

Jeff Bailey : 1/5/2007 1:00:50 PM

Dell Computer (DELL) $26.15 -0.34% Link ... Holding tough despite downgrade at JP Morgan to "underweight" from "neutral," saying the company will have a difficult 2007. The firm also cut its earnings estimate for Dell's fiscal fourth quarter ending in January.

Keene Little : 1/5/2007 1:00:09 PM

Here's the same NYSE daily chart I posted below, now with the other uptrend line that Marc mentioned. I want to point out one other thing for bears to be aware of--I highlighted two price patterns to show a potential fractal playing out here. The pattern in late August to early September and the one from mid-December until now look very similar. Link

The sharp move down in early September was actually the end of the correction instead of the start of a decline. It's possible (although becoming less probable as we see many sell signals setting up) that we'll see a similar outcome from this.

Jeff Bailey : 1/5/2007 12:57:37 PM

Motorola (MOT) $19.22 -6.47% Link ... traded as low as $18.00 at the open after the company warned late yesterday that it will miss fourth-quarter profit targets on a sales shortfall in its mobile phone division.

Jeff Bailey : 1/5/2007 12:52:27 PM

HERBALIFE (HLF) $30.25 -23.02% Link ... sharply lower after company cut its 2007 revenue estimate because of a slowdown in the Mexican market.

Keene Little : 1/5/2007 12:49:44 PM

Good point on the NYSE trend line Marc. I have it from the July low through the September 11th low. If it's drawn through the September 25th low then NYSE is holding its uptrend by staying above 9000. It's also hitting the bottom of its daily Bollinger Band so it would be natural to see a bounce. If it breaks below 9000 and presses its BB down then we'll have a good idea that we have a trend change.

Looking at the 60-min chart of NYSE you can see a very clear 3-wave move down from Wednesday's high. Even though it's a sharp move down, and looks impulsive (meaning it could be a trend change), it's still only a 3-wave move. The bulls want to see a rally back above yesterday afternoon's 9128 high so as to leave the pullback as a 3-wave pullback.

Keene Little : 1/5/2007 12:39:50 PM

The DOW is currently stalled at the lows of the past two days. A push back above 12410 could see a reversal of today's decline. The uptrend line from July through the spike low on December 1st is currently near 12410 so that's another reason for resistance right here. A failure to get back above 12410, and hold above, will increase the likelihood we'll see new lows.

Marc Eckelberry : 1/5/2007 12:37:55 PM

Keene, I see you have your NYSE trend line alittle higher than I do, I have it right at 9000, so we are still in the channel according to my chart. That makes good support with ES 50 DMA for now. I emphasize for now as I think the trend has changed, especially if the daily confirms the bear flag on ES.

Jeff Bailey : 1/5/2007 12:12:57 PM

US Oil Fund (USO) $47.40 +0.10% ...

Jeff Bailey : 1/5/2007 12:12:09 PM

Swing trade put close out partial alert ... with PetroChina $130.40 -1.53% lets close out one (1) of the PTR Feb $130 Puts (PTR-NF) at the bid of $4.70.

Keene Little : 1/5/2007 12:06:22 PM

The break down in NYSE looks like it could be significant. It takes a rally back up to 9060 by the close to keep it hanging on to its uptrend line from July. Link

Jane Fox : 1/5/2007 11:52:02 AM

The AD line that comes with TS is a cumulative line but I use the absolute value, ie what the actual AD value is at any point in time, and had to code it myself. When you watch the AD line on your charts make sure you know the difference.

Jane Fox : 1/5/2007 11:49:27 AM

Then of course for the volume just change the word line to volume.

Jane Fox : 1/5/2007 11:48:48 AM

I have had a request to explain the AD line and volume. Here is how TS explains it "The Advance-Decl Line indicator calculates the difference between advancing issues and declining issues and plots the cumulative total of this value for the chart. The difference between advancing issues and declining issues is known as market breadth. For example, if a stock market index is rallying but there are more issues declining than advancing, then the rally is narrow and much of the stock market is not participating. To plot the Advance-Decline Line accurately, the chart must contain both the Advancing Issues and the Declining Issues and the inputs must specify the correct data number for each. Because the Advance-Decline Line begins accumulating values from the left of the chart, the numeric value of the Advance-Decline Line will depend on the data available in the chart. Therefore, the relative value, or trend direction, of the Advance-Decline Line is more important than its numeric value."

Marc Eckelberry : 1/5/2007 11:53:08 AM

Targeting QM 54.50 if 55.30 does not hold (February contract). At that point, it will put the March contract at 55.50 and where they should hold up. Always check the forward contract. So watch QM 55.30 (Feb contract). If we hold 55.30, the worst could be over. But be careful, commodities are the sharpest knives.

Jane Fox : 1/5/2007 11:48:11 AM

EGAds the AD line is -2028. Yes Virginia that is 2.

Marc Eckelberry : 1/5/2007 11:40:15 AM

Next time the market rallies on an analyst upgrade (INTC yesterday and GOOG in November at 500), sell it. Just joking, but you know what I mean.

Marc Eckelberry : 1/5/2007 11:44:56 AM

ES 1414.50, 50 DMA held, but we might have witnessed a trend reversal. The failure at 1429/1430 was unequivocal. Interest rates are climbing and small caps are dying a slow death. This rally is pretty much over, especially given the warnings cooper keeps sending off. We are in short the rallies mode until ES can regain its 10 DMA.

Jeff Bailey : 1/5/2007 11:32:42 AM

11:00 Internals found at this Link

Keene Little : 1/5/2007 11:27:08 AM

I take that back--I see ES 1415.50 was tagged. Hmm, it needs a retest with bullish divergences before I'd think about a long.

Keene Little : 1/5/2007 11:22:46 AM

After that sharp sell off it doesn't look like we've seen the bottom yet. It's looking bearish with this drop but ES 1415.50 hasn't been tagged yet so we'll see what happens there (think about trying a long if it looks like it will hold, bullish divergences, etc.). The move down from Wednesday's high can still be classified as just a 3-wave pullback so the bulls are not dead yet.

Jane Fox : 1/5/2007 11:13:40 AM

TICKS almost to -1000. Low so far -939

Jane Fox : 1/5/2007 11:11:51 AM

TICKs -800 again. The bears are gaining once again. Have you noticed how the bears have been able to grab that ball right out of the bull's hands of late?

Jeff Bailey : 1/5/2007 11:07:46 AM

Sell Program Premium ... YM 12,461 : SPY $140.75

Jane Fox : 1/5/2007 11:07:03 AM

Feb. gold drops $21.40, or 3.4%, to $605/oz in NY

Jeff Bailey : 1/5/2007 11:04:45 AM

11:00 Market Watch found at this Link

Jane Fox : 1/5/2007 10:58:36 AM

If you want to tell the WSJ want you think of Bush sending more troops to Iraq here is a place to vote. Link

Jeff Bailey : 1/5/2007 10:58:16 AM

PrimeWest Energy Trust (PWI) $17.26 +0.05% ... Upgraded to "Market Perform" from "Underperform" at Tristone. Target cut to $21.50 from $24.

With stated dividend of $2.61/share, current SEC yield based on $17.26 price is 15.12%.

Trust profile at this Link

Keene Little : 1/5/2007 10:50:16 AM

The small caps (RUT) are weak today but near support. The current price is 780.82 as I type. A trend line along the lows since November (the bottom of a potential sideways triangle consolidation pattern) is about to be tested near 780.50 (cash) and it's testing its 50-dma here at 780.81. Slightly lower is its uptrend line from August, currently near 777. If small caps hold up here we could see an upside resolution out of this. Much of a break below 777 and it could be lights out for the bulls.

Jeff Bailey : 1/5/2007 10:42:51 AM

EIA: Weekly Nat. Gas Storage Table at this Link ... draw of 47 Bcf.

Jane Fox : 1/5/2007 10:42:59 AM

The TRIN was a heads up this morning and should have put the bears on full alert. Then when the VIX started making new daily lows it was a red flag waving in front of the bulls and sure enough they came in for the kill. BTW VIX is making new daily lows as I type.

Jeff Bailey : 1/5/2007 10:40:04 AM

Correction: alert I deleted my 10:32:22 AM Post (Nat. Gas Storage) as that was last week's table. I have not seen the data/report at this time.

Jeff Bailey : 1/5/2007 10:30:59 AM

Partial fill alert ... with LAB $9.80, partial fill on the LAB-AB at $0.35. (I show 40 contracts traded at the offer)

Keene Little : 1/5/2007 10:29:19 AM

Ready for another buy program to get things moving here.

Keene Little : 1/5/2007 10:07:58 AM

Time to spit the bears out I guess. Nice little 5-point ES run out of nowhere.

Jane Fox : 1/5/2007 10:05:19 AM

VIX making new daily lows here so if short I would be thinking about covering.

Jeff Bailey : 1/5/2007 10:05:50 AM

NASDAQ Comp. 2,439.65 -0.56% Link ...

Jeff Bailey : 1/5/2007 10:05:19 AM

NYSE 9041.21 -0.78% Link ...

Jeff Bailey : 1/5/2007 10:03:45 AM

NASDAQ a/d 696/1,931

Jeff Bailey : 1/5/2007 10:03:31 AM

NYSE a/d 628/2,280

Jeff Bailey : 1/5/2007 10:03:15 AM

10:00 Market Watch found at this Link

Jane Fox : 1/5/2007 10:02:01 AM

So far PDLs are intact. Link

Keene Little : 1/5/2007 9:59:27 AM

There is one possibility that I noticed on ES this morning that calls for a pullback to a slightly new low before the pullback from mid December is complete. It involves a bit more complex wave count (double zig zag for those who follow EW) and the end of the pattern could be a Fib projection at ES 1415.50. An uptrend line from early November and the bottom of a parallel down-channel from mid-December cross near this level so watch for possible support there if tagged. Link

Jane Fox : 1/5/2007 9:57:18 AM

TICKS -800

Jeff Bailey : 1/5/2007 9:45:01 AM

Swing trade call place order to close out alert ... not seeing much sign for a tax-loss bounce in Labranche. Place an order to close out the three (3) LAB Jan $10 Calls (LAB-AB) at the current offer of $0.35.

LAB $9.78 -1.51%.

Keene Little : 1/5/2007 9:41:47 AM

Except for NQ--it's making new lows but it has a lot more it can give up before its chart turns bearish.

Keene Little : 1/5/2007 9:40:45 AM

We haven't quite tested the pre-market low yet so that's still a possibility.

Jane Fox : 1/5/2007 9:40:20 AM

McMillan's weekly update came early today. - Technically, the Santa Claus rally was positive this year, but it stumbled to the finish line. The last two days, which are the first two trading days of this year, have seen some negative developments taking place. Most of our technical indicators are now negative, but prices have remained in an uptrend. Since price is the most important indicator of all, we must respect it, but we can be prepared should it break down as well. What we mean by 'price' is the chart of the S&P 500 Index ($SPX). It nearly broke down on Wednesday (the first trading day of this year), but managed to rally by the close of trading and remained inside its bullish channel -- a channel that extends all the way back to June. That low was probed again on Thursday, but again another rally brought $SPX back into the range. So as long as it keeps closing within this range, the bullish case is intact -- despite other negative indicators.

The equity-only put-call ratios have been on sell signals for a couple of weeks, and they remain there. The standard ratio appears to be bouncing back and forth but that is due to some extremely heavy dividend arbitrage in MO, BMY, JPM, and PBR in the last couple of weeks. Dividend arbitrage consists of very heavy call volume (and no put volume); it is merely noise, and doesn't constitute any valid data for a contrarian put-call ratio buy or sell signal. The weighted ratio clearly remains on a strong sell signal.

Market breadth has been fairly negative too, as sell signals were issued at the end of last week (trading just before year-end was quite bearish).. Even though breadth closed about unchanged the last two days, that was a disappointment after Wednesday's very strong opening which saw advances race out to a strong lead over declines as the Dow rose more than 100 points -- all before the whole situation reversed dramatically at mid-day.

Finally, the volatility indices ($VIX and $VXO) rose for three straight days (the last 2 days of 2006 and the first of 2007). Both of these volatility measures dropped back some today, keeping them somewhat neutral.

In summary, it would be bearish if $SPX broke down below its bullish channel. Most important: if such a breakdown by $SPX does NOT occur, then maintain a bullish stance.

Jane Fox : 1/5/2007 9:37:39 AM

Totally does not make sense but we have seen this before have we not?

Jane Fox : 1/5/2007 9:37:05 AM

The AD line and volume are bearish but the TRIN is quite bullish.

Jane Fox : 1/5/2007 9:36:43 AM

OK now the bears have to take note, the TRIN is below its PDR at 0.70. Go figure!

Jane Fox : 1/5/2007 9:35:42 AM

AD line is a very bearish -1361 and of course AD volume is below 0 and falling. The bears have firm grip of the ball and have field position.

Jane Fox : 1/5/2007 9:21:08 AM

NEW YORK (MarketWatch) - Treasury prices gave up gains and took heavy losses early Friday, pushing yields higher, after the Labor Department reported unexpectedly robust job growth for last month, alongside higher-than-expected wage inflation.

Jane Fox : 1/5/2007 9:20:35 AM

WASHINGTON (MarketWatch) -- The U.S. housing market is improving, and demand will go up over time, Freddie Mac (FRE) CEO Richard Syron said Friday. "We are pretty comfortable in the long-term view," Syron said on a conference call with investors. Freddie Mac, which is the second-largest buyer of home mortgages, reported a third-quarter 2006 loss of $550 million on Friday, compared to a gain of $880 million a year earlier.

Keene Little : 1/5/2007 9:18:47 AM

Jobs data is a lagging indicator for our economy so it's hard to determine what the strong job growth will mean for the future. But with wage inflation (wages were up 0.5% vs. 0.3% expected) and the strong jobs number the bond market looks like it's finally starting to get the picture. The Fed has been saying for months that the market is not hearing their message--they're more concerned about inflation than the economy slowing. We'll probably hear more people talking about stagflation soon.

So now the stock market is deciding whether strong job growth is good or a Fed on hold is bad. The overnight low in the futures held above yesterday's low and that's the line in the sand for me--below that and we should be looking for bearish plays. As long as price stays above it I think we've got another push higher coming (but not much higher). Disregard the news as a factor in all this.

Jane Fox : 1/5/2007 9:09:47 AM

(MarketWatch) - U.S. housing market 'improving': Freddie Mac CEO

Jane Fox : 1/5/2007 9:09:04 AM

NEW YORK (MarketWatch) -- The dollar rallied to a six-week high against the euro and pared most of its losses versus the yen early Friday after a government showed job growth in the U.S. unexpectedly accelerated last month, dashing hopes the Federal Reserve would lower interest rates soon.

Jane Fox : 1/5/2007 9:07:17 AM

The job growth story out at 8:30 was really good news for the economy but the equity markets just did a great big yawn. YM sort of made a new overnight high but the other three didn't even test their respective overnight highs. Link

However the big story is the bond market. Take a look at how the bond traders reacted to the news. HMMMM do they know something we don't? Are they that upset that this gives the FED more reason to NOT cut rates soon? Link Did you notice the reaction in the $ and Gold?

Jane Fox : 1/5/2007 8:49:21 AM

WASHINGTON (MarketWatch) - Job growth in the United States unexpectedly accelerated in December, with nonfarm payrolls rising by 167,000 and the jobless rate remaining at a very low 4.5%, the Labor Department reported Friday.

Job growth was much stronger than the 100,000 expected, dashing fleeting hopes held by some that the Federal Reserve would cut interest rates soon.

Job growth in the previous two months was revised higher by a total of 29,000. Economists had expected job growth to slow from November, especially following release of the ADP employment report on Wednesday, which showed a 40,000 decline in private-sector payrolls.

The government said Friday that payrolls grew by 1.84 million in 2006, an average of 153,000 per month. The jobless rate fell from 4.9% at the beginning of the year to 4.5%.

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