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Keene Little : 2/28/2007 2:03:15 AM

Here's a really long term view for the coming decline as laid out in the other charts: Link

Keene Little : 2/28/2007 1:54:40 AM

Futures are climbing big in the overnight session. Seems there's a relief rally going on overseas and that's making some think we'll see the same thing on Wednesday. While we're due for a bounce/consolidation I'm not so sure I'd be anxious to buy it quite yet. I've put together some charts on the SPX to present my best guess where I think price is going from here. Today's break down has moved the bearish EW count to preferred status and that's where I'm starting from.

The sharp drop today is not easy to count the waves because there aren't many. But near as I can tell it looks like we'll need to stair step lower over the next week or so in order to finish the wave count for the 1st leg down from the high. Link

Because of the huge drop it takes a rally back above 1440 to say something is wrong with the bearish wave count but in reality the count is not negated until it gets back to 1450. From here that now looks like a moon shot. Stepping out a bit, this 120-min chart shows how that first leg down will be just part of a much larger 5-wave move down into May: Link

This is obviously conjecture on my part but I'm using Fibs (time and price), trend lines and previous price levels to judge how a downside pattern could unfold and this seems reasonable. A decline into early March should be followed by a big bounce into mid-March (opex?) and then a big 3rd wave down that will convince the bulls the bull market is finished. After a large 5-wave move down into May we'll then be due a large 2nd wave bounce into the end of May/early June.

Now a daily chart to show how it looks relative to the price action since early 2005. The decline will happen a lot faster than it took to rally. This is because we're entering wave-C down in the very large A-B-C move down from the 2000 high. It should drop faster than the 2000-2002 decline and drop below the October 2002 low. Link

Again, this is my best guess as to how the decline could unfold and is intended only to give you an idea of where we could be headed this year. In the meantime we'll see how tomorrow unfolds but so far I'd have to say I'd be real careful about the long side. There are a lot of trapped bulls right now who will be using "thank you God" bounces to get out of positions.

Also, if there were margin calls this afternoon (especially considering the record amount of margin investors are currently using), we could see a bunch of sell orders hit early as those people sell to meet their margin requirements. Be careful tomorrow.

Jeff Bailey : 2/28/2007 12:24:12 AM

WALLstreet fell 14.6%, still "bear confirmed" at 48%. (was 82% end of January)

Jeff Bailey : 2/28/2007 12:22:03 AM

Sector Bullish % Status Changes

AEROspace Airline reverses lower to "bear alert" from "bull confirmed" (falls from 72% to 62%)

BANKs reverse from "bear correction" to "bear confirmed" (falls from 66% to 60%)

BUILding falls further from "bull correction" to "bear confirmed" at 58%.

Jeff Bailey : 2/27/2007 11:42:12 PM

I'm showing a near exact 15,889 options (all exchanges) traded for that SFB-OG.

Jeff Bailey : 2/27/2007 11:39:48 PM

When we get these BIG volatility days, get some screen captures of where the volume was at, the bias (Up/Dn Ticks) and prior day's OI.

OI will INCREASE on "sell to open" or "buy to open" interest. OI will DECREASE on "sell to close" or "buy to close" interest.

Jeff Bailey : 2/27/2007 11:40:19 PM

SPY March Options Montage (Sorted by strike) at this Link

Trader's focus/attention may want to be at the $137 Strike and the 1:4 Up/DnTick. A SELLER of those PUTS bullish. Not big CBOE volume, but that's the skewed trade.

Jeff Bailey : 2/27/2007 11:15:04 PM

Real quick "Max Pain" Theory Levels for March (As of Tuesday's close) ...

SPY $142 ($1 Increments)

SPX 1,435 (5-point Increments)

OEX 665 (5-point Increments)

DIA $125 ($1 Increments)

QQQQ $44 ($1 Increments)

NDX 1,800 (5, 15 and 25 pt increments)

Jeff Bailey : 2/27/2007 11:04:02 PM

SPY Options Chain (sorted by CBOE Volume) at this Link

Keene Little : 2/27/2007 10:52:36 PM

Tuesday's plunge certainly opened up the ranges for Wednesday's pivot tables--they're now wider than the weekly and monthly ranges: Link and Link

Jeff Bailey : 2/27/2007 10:49:50 PM

Daily/Weekly/Monthly Pivot Matrix for tomorrow at this Link

OI Technical Staff : 2/27/2007 9:59:59 PM

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

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

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

Jeff Bailey : 2/27/2007 8:16:52 PM

NYSE Summation ($NYSI) alert! Link ... reverses 3 boxes (20-point box chart). Falls 52.18 to +839.39.

NYSE Bullish % ($BPNYA) down 4.15% (loss of roughly 125 stocks to reversing lower PnF sell signals) to 71.05%.

Note: It is, and has always been my FIRM belief that the NYSE is a better "pulse" of INSTITUTIONAL activity. They were dumping today. Defensive posture warranted.

Jeff Bailey : 2/27/2007 8:16:48 PM

NASDAQ Summation ($NASI) Link ... down 42.61 to +236.13.

NASDAQ Comp. Bullish % ($BPCOMPQ) Link down 2.30% (loss of roughly 69 stocks to reversing lower PnF sell signals) to 59.74%.

Jeff Bailey : 2/27/2007 6:52:46 PM

China's Shanghia Stock Exchange ($SSEC) Link ... was the index that took it on the chin Tuesday.

Down 268.81 points, or -8.84% to 2,771.79.

Jeff Bailey : 2/27/2007 6:43:43 PM

NYSE Assessing Trading Glitches

DJ- The New York Stock Exchange experienced trading glitches near the end of the session Tuesday, a day that saw the seventh-worst point decline for the Dow Jones Industrial Average.

"Toward end of trading today, there were intermittent technical issues, and the problem is being assessed right now," an NYSE spokeswoman said.

U.S. stocks plunged Tuesday, after concerns about risk set off by an overnight selloff in Chinese stocks produced a rout that escalated through the afternoon.

A plunge of around 200 points in just 15 minutes of midafternoon trading left the Dow Jones Industrial Average down 546 points at its Tuesday low, the worst decline for the average in more than five years. The drop wiped out all of the index's gains on the year. The Standard & Poor's 500 Index also plunged into negative territory on the year.

The DJIA ended at 12216, down 415 points, the average's seventh-worst drop in points.

Jeff Bailey : 2/27/2007 6:37:37 PM

Watch List at this Link

Jeff Bailey : 2/27/2007 6:23:30 PM

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

Left today's activity of CLOSED trades (PTR,RKH and 1 SFB-PN), but will be removed tomorrow.

Jeff Bailey : 2/27/2007 6:13:55 PM

Good gravy! ... RKH $159.00 -3.28% ... fell as low as its 38.2% retracement of $158.05.

Jeff Bailey : 2/27/2007 6:07:07 PM

Swing trade covered call establish stop alert ... Should the TLT itself trade stop of $87.50, would close out the TLT Mar $89 Call (TLT-CK)

Jeff Bailey : 2/27/2007 6:03:01 PM

Swing trade put establish stop alert on the remaining SPY Apr $144 Put (SFB-PN) at $2.40/contract.

Jeff Bailey : 2/27/2007 5:55:09 PM

Bank of America (BAC): 'Very Modest' Exposure To Subprime Mortgages

DJ- Bank of America Corp. (BAC) has very limited exposure to subprime loans, the bank's chief risk officer, Amy Brinkley, said Tuesday.

Speaking at the bank's investor conference, Brinkley said that about 1% of Bank of America's consumer loan portfolio is subprime loans to people with weak credit histories. "We're not seeing the cracks in our own consumer portfolios," she said.

The Charlotte-based company's corporate and investment bank, however, also operates in the subprime space. It holds a "very modest" amount - a "couple hundred million dollars" - of "residual" subprime mortgage loans that it didn't sell to other entities, Brinkley said.

"There is a hedge on it," she said, but "I don't know if I would describe it as a perfect hedge."

Brinkley also said Bank of America has financed about $500 million or $600 million of residual loans at other institutions. The bank is a warehouse lender to what she described as "very top-tier clients." She said those warehouse loans are "well-collateralized and margined."

"I would not consider it a major concentration," she said of the investment bank's subprime position.

BAC $50.80 -3.76% Link ...

Jeff Bailey : 2/27/2007 5:43:00 PM

High-Grade Derivative Index Widens To 36.5 Basis Points

DJ- A host of benchmark credit derivative indexes swooned Tuesday as a wave of risk aversion swept across credit markets.

The widening was fueled by a plunge in global equities with the Dow Jones Industrial Average posting its steepest drop in more than five years.

Increased jitters around subprime mortgages and concerns about economic growth triggered by a steeper-than-expected drop in January durable goods orders also drove the indexes wider.

Risk premiums on the current version of the CDX index, the benchmark investment-grade derivatives index, moved as far as a midpoint of 36.5 basis points, more than six basis points wider than late Monday, said one market participant. Just last Thursday, the index was trading at a record tight of 28.50 basis points.

As of 3:41 p.m. EST, the index stood at 35.0 basis points.

This means that a buyer of credit protection would have to pay $35,000 a year to protect a notional amount of $10 million of bonds against a possible default for five years - up from $28,500 on Thursday.

The widening in derivative indexes began on Friday but gathered steam Tuesday after a sharp drop in Chinese stocks triggered weakness in equities around the world.

One credit strategist at a large bank in New York said the weakness across asset classes created a perfect storm.

"Everyone was looking at each other's markets and this fueled the fire," the source said.

While actual trading volumes of the derivatives indexes weren't available, the strategist said Tuesday saw hectic trading activity.

As for stocks, NYSE composite volume surpassed its record volume of 3.58 billion shares, having traded about 3.9 billion shares in late trade.

Nasdaq composite volume traded about 2.75 billion shares before the close.

Leading the widening Tuesday in the credit derivatives market, was the cross-over derivatives index, which is comprised of the credit default swaps of bonds straddling the investment-grade and high-yield divide.

The current version of the cross-over index was trading most recently at bid/offer levels of 136.25/137.50 basis points, 24.25 basis points wider on the day, according to data provider TradeWeb.

This is the index's biggest one-day move to date. The cross-over index "has been trading with higher volatility for the last few weeks but in the last few days, as spreads have started to unwind, it has seemingly become the best indicator of fear in the credit markets," said Tim Backshall, chief credit derivatives strategist at New York-based independent research firm Credit Derivatives Research, in an email to Dow Jones Newswires.

Credit default swaps are insurance-like derivative instruments that allow investors to protect debt against a potential default. They are also increasingly used to bet on the credit worthiness of a company.

Jeff Bailey : 2/27/2007 5:26:18 PM

Closing Internals found at this Link

Jeff Bailey : 2/27/2007 5:13:23 PM

CNBC mentioning a "glitch" with NYSE's hybrid system. I can't find details at NYSE's site.

Check your accounts tonight, make sure you know what you're short/long or otherwise.

Jeff Bailey : 2/27/2007 4:41:41 PM

April Crude Oil (cl07j) settled up $0.07, or +0.11% at $61.46.

getting hit here.

Jeff Bailey : 2/27/2007 4:37:43 PM

Closing U.S. Market Watch found at this Link

Keene Little : 2/27/2007 4:33:34 PM

CME is within a stone's throw from closing its gap at 509 on January 3rd. It got as low as 510 and closed at 510.58. A small drop tomorrow could see that stock turn around and get some kind of bounce from here. In its 3-wave decline from the January 24th high, the 2nd leg down would be 162% of the 1st leg down at 508.64 (slight correction on this 120-min chart vs. the one I posted earlier). I've seen stranger things in this market than a steep sell off like this turn right around and knock the bears back on their fannies. Take nothing for granted with this market. Link

But if there are more bearish things afoot here, this CME daily chart shows how a decline could unfold into the summer. This is just an example, using Fibs and prior levels, but a move from 600 down to the 300 area in that time frame is not unreasonable if we're starting Bear Market, Phase II. Link

Jeff Bailey : 2/27/2007 4:22:37 PM

fast market "bounce" took it to MONTHLY S2 and I don't want to risk that again. Sometimes a market gives you a second chance.

Jeff Bailey : 2/27/2007 4:21:12 PM

Closing out a YM short here at 12,176 ...

Jeff Bailey : 2/27/2007 3:59:38 PM

Baker Hughes (BHI) $64.50 -1.66% ... has not violated post-earnings low of $63.34.

Keene Little : 2/27/2007 3:56:16 PM

When the market makes a huge move like this, in a nearly straight line, it's really tough to tell what the intraday wave count could be. That's leaves me guessing a little for tomorrow but the bounce off this afternoon's low could be the start of a 4th wave correction. That suggests consolidation tomorrow which is common after a big move anyway. Gives everyone a chance to catch up and take a breath. A 38% retracement of today's decline would be typical for a 4th wave although in this case that might be a bit much to expect.

Jeff Bailey : 2/27/2007 3:51:13 PM

Buy Program Premium ... SPY $140.58

Jeff Bailey : 2/27/2007 3:44:37 PM

Buy Program Premium ... SPY $140.60

Keene Little : 2/27/2007 3:41:32 PM

GOOG is down 3% today but it has managed to hold above its gap at 450 (slight break below it). The bulls are hanging on by their finger nails on that stock.

Keene Little : 2/27/2007 3:38:05 PM

That high TRIN reading is another example of a no-bid market. While the total volume is a little higher than normal it's not extraordinary but the down volume has swamped the up volume by about 8:1 on the NYSE. Even the TICKs don't register much in the way of bearishness. There were simply very few buyers to be found today and most of them got their head handed to them for even thinking of buying.

Jeff Bailey : 2/27/2007 3:37:28 PM

SPY $140.71 -3.07% ...

Jeff Bailey : 2/27/2007 3:37:14 PM

Swamped with buy/sell program premiums ... alternating.

Jane Fox : 2/27/2007 3:32:18 PM

You may want to print these charts for I'm not sure you will ever see these three this bearish again. Take a look at the TRIN 15.53??? get real. Link

Keene Little : 2/27/2007 3:26:10 PM

Today's stock market decline certainly took care of the low VIX--still up 56% after pulling back from its high of 19, currently 17.46.

Jane Fox : 2/27/2007 3:24:34 PM

I truly did expect the SPX to take more than just a few days to make a 5% correction (1378) but at this rate it will do just that this week.

Jeff Bailey : 2/27/2007 3:22:43 PM

In just about ONE day the SPX declines a full year's interest on 30-year Treasury paper.

Jeff Bailey : 2/27/2007 3:22:08 PM

TLT $90.73 +1.45% ... spiked to $91.26 "easing back" as RISK/REWARD is measured.

Jane Fox : 2/27/2007 3:21:23 PM

Well so much for my blather about the 50EMA, the SPX is just about to test its 100EMA, which is sitting at 1404.00

Jeff Bailey : 2/27/2007 3:20:12 PM

SFB-PN traded $6.00, $4.70 x $4.90 now.

Jeff Bailey : 2/27/2007 3:19:47 PM

SPY $140.88 -2.96% ... fast market

Jeff Bailey : 2/27/2007 3:19:27 PM

What a day to be a trader!

Jeff Bailey : 2/27/2007 3:18:33 PM

Refinance your mortgage alert! ... For those with an adjustable rate mortgage, I'd be on the phone looking to lock in a fixed rate the next couple of days.

Jeff Bailey : 2/27/2007 3:15:30 PM

June Fed Funds futures (ff07m) alert! 94.825 .... 30% chance of Fed rate cut by expiration.

Jeff Bailey : 2/27/2007 3:13:42 PM

03:00 Internals found at this Link

Keene Little : 2/27/2007 3:11:36 PM

This spike off the bottom now looks like it could carry some. If the shorts start covering now we could see quite a rally into the close.

Keene Little : 2/27/2007 3:09:25 PM

I had thought it would take a couple of weeks to dismantle the DOW's climb from the end of November. From last week's high it's been exactly one week and we're only a handful of points away from the 12072.60 low on November 28th. It's clear the bulls can "cover" just as fast as the bears.

Jeff Bailey : 2/27/2007 3:02:29 PM

03:00 Market Watch found at this Link

Jane Fox : 2/27/2007 3:01:45 PM

NEW YORK (MarketWatch) - The big sell-off in China stocks Tuesday may not derail the upcoming initial public offering from Chinese financial news firm Xinhua Finance, but the red ink managed to create a bit of uncertainty around the deal, IPO watchers said.

Jeff Bailey : 2/27/2007 2:59:54 PM

Swing trade put close alert ... sell one (1) of the SPY Apr. $144 Puts (SFB-PN) at the bid of $5.30.

SPY $140.00 -3.63% ...

Jeff Bailey : 2/27/2007 2:58:06 PM

Buy Program Premium SPY $140.00

Jane Fox : 2/27/2007 2:57:09 PM

NEW YORK (MarketWatch) -- A sharp rally in the yen and the Swiss franc on Tuesday serves as a reminder of the risk of a massive unwinding of carry trade positions.

Carry trade refers to the practice of speculators borrowing or selling lower-yielding currencies such as the yen or the Swiss franc at low costs and reinvesting in higher-return currencies and assets, such as the New Zealand dollar, the British pound and the South African rand.

The yen climbed almost 1.8% against the dollar, the euro and the British pound on Tuesday. Against the Australian dollar and the New Zealand dollar, the Japanese currency surged 2% and 3%. Interest rates in Australia and New Zealand are among the highest among major economies.

Meanwhile, emerging-market currencies slumped with the Turkish lira off almost 2%, the South African rand down 1.6% and the Brazilian real 1.4% lower versus the U.S. dollar. The Icelandic krona fell 1.1%.

Keene Little : 2/27/2007 2:56:59 PM

If ever there was a time for the PPT to step in, this is it. We're in a no-bid market here.

Keene Little : 2/27/2007 2:51:45 PM

The daily chart of the DOW shows how impressive the drop out of its ascending wedge is. The drop below 12536 moved the bearish count to preferred status and it now takes a rally back over 12600 to give the ball back to the bears. It's time to short the rallies as it looks very good, at least with the DOW and SPX, that we've seen the highs for a very long time. I have not updated the old bullish wave count on the chart because frankly I don't believe there is one. Once a bounce gets started I'll then have a better idea for where a bounce could get to. Link

Keene Little : 2/27/2007 2:40:11 PM

I've been warning bulls, especially if you can't watch the market intraday, that months of gains could be given back in just a few days but today's sell off even surprises me. Two months of gains in 2007 wiped out in a day. Pretty impressive.

Jane Fox : 2/27/2007 2:33:21 PM

I know the day is not over but I do not see the volume as excessive. A high volume day is over 3 million and the S&P is now at 2.98 M

Keene Little : 2/27/2007 2:33:19 PM

GOOG is still holding above the top of its gap at 450 and if that breaks then its uptrend line from August 2004 could catch its fall, currently near 440. The bearish EW count is quite bearish and calls for a big drop from here and then stair step lower. Dropping 100 points over the next 2 months, if not faster, would be a reasonable assuption. But the bears don't control the ball until GOOG gets below 440 and any rally back above 485 would say the bulls are running with it again. Link

Jeff Bailey : 2/27/2007 2:30:33 PM

Dinger of a sell program underway ... SPY $141.11 -2.78% ...

Jane Fox : 2/27/2007 2:30:14 PM

One has to wonder if the yearly lows I posted at 1:58 will hold today. You'd think so.

Jane Fox : 2/27/2007 2:29:23 PM

DOW now down -240.

Jeff Bailey : 2/27/2007 2:26:29 PM

Frontier Oil (FTO) $29.28 -4.09% ... reversing gains.

Jane Fox : 2/27/2007 2:20:56 PM

These two are mouth dropping. Link

Jane Fox : 2/27/2007 2:19:15 PM

AD line is -2374.

Jane Fox : 2/27/2007 2:16:59 PM

DOW is down -213
SPX -33
NAZ -72
Russell a whopping -23

Jeff Bailey : 2/27/2007 2:12:28 PM

Dow Industrials (INDU) 12,421.81 -1.68% Link ... today's trade at 12,500 is first "sell signal" since giving a "buy signal" at 11,050.

Keene Little : 2/27/2007 2:11:33 PM

I'm looking to update GOOG's chart and first thing I see is that it's back down to the top of its gap at 450--the level that has supported pullbacks in December and February. It's currently printing 453 and obviously if it breaks below 450 it could see a rapid flush to the downside. But right now there's just as good a chance for a bounce.

Jeff Bailey : 2/27/2007 2:08:09 PM

Sell Program Premium ... SPY $141.89

Keene Little : 2/27/2007 2:07:39 PM

This is what you call a washout--all the new bulls who were utterly convinced that the bull market would continue forever are now finding the exit door has narrowed considerably. Bids have simply dried up. But the danger for bears who may be jumping in now is that a short covering rally could be quite spectacular.

Keene Little : 2/27/2007 2:04:28 PM

NYSE is now hitting its 50-dma at 9211.

Jane Fox : 2/27/2007 2:03:41 PM

I would use the DIA for those shorts if you are inclined.

Jeff Bailey : 2/27/2007 2:03:38 PM

XBD.X 238.40 -3.28% ... testing previously broken to the upside trend from 04/21/06 relative higher to the lower 10/10/06 high.

Jane Fox : 2/27/2007 2:02:58 PM

Needless to say the SPX will close under its 50EMA and upward channel. Time to be looking for longer term shorts.

Jeff Bailey : 2/27/2007 2:02:34 PM

BKX.X 117.12 -1.50% ...

Jeff Bailey : 2/27/2007 2:02:20 PM

BIX.X 401.63 -1.38% ...

Jane Fox : 2/27/2007 2:02:01 PM

A 5% correction would bring the DOW to 12155 and the SPX to 1378 and a 5% correction is a mild correction. A 10% correction may be in the books for us.

Jeff Bailey : 2/27/2007 2:02:00 PM

SPX 1,421.00 -1.95% ...

Jeff Bailey : 2/27/2007 2:01:39 PM

SPY $142.31 -1.97% ...

Jeff Bailey : 2/27/2007 2:01:16 PM

VIX alert! 14.00 +25.50% ... MONTHLY R2 here.

Keene Little : 2/27/2007 2:01:06 PM

By breaking below 535 CME the next downside target could be the Fib projection near 507. Price is currently just above the uptrend line from April 2005 (520) so getting a little bounce from there (or a big one) would be expected. But the wave count would look best with a small correction followed by another new low, again, similar to what I see for the other indices. Link

The bearish wave count calls for stair stepping lower into March before setting up a bigger bounce to perhaps retest its broken uptrend line from April 2005. The bullish wave count calls the pullback just an a-b-c correction to the longer term rally in which case next week's low (assuming we get it) could launch another rally leg. I put the key level for the bullish count at a break back above its uptrend line from August 2006.

Jane Fox : 2/27/2007 1:58:46 PM

SPX's yearly low is 1403
DOW's yearly low is 12337
NAZ;s yearly low is 2394 and
Russell 2000's yearly low is 768.

Jeff Bailey : 2/27/2007 1:52:08 PM

Or DEFENSE!

Jeff Bailey : 2/27/2007 1:51:58 PM

Anyone thinking "inflation" here?

Jeff Bailey : 2/27/2007 1:51:42 PM

TLT $90.23 +0.89% ... now approaching what could be a "right shoulder" of a h/s top formation.

Jeff Bailey : 2/27/2007 1:49:19 PM

DHF $4.36 -0.45% ...

Jeff Bailey : 2/27/2007 1:48:54 PM

PHF $10.05 -1.37% ...

Jeff Bailey : 2/27/2007 1:48:40 PM

TYX.X 4.664%

Jeff Bailey : 2/27/2007 1:48:29 PM

TNX.X 4.552%

Jeff Bailey : 2/27/2007 1:48:18 PM

FVX.X 4.523%

Jeff Bailey : 2/27/2007 1:47:32 PM

SPY $142.37 -1.92% ...

Jeff Bailey : 2/27/2007 1:47:12 PM

BIX.X 401.65 -1.38% ...

Jeff Bailey : 2/27/2007 1:46:40 PM

Swing trade short target alert ... for the Regional Bank HOLDRs (AMEX:RKH) at $162.05.

Jeff Bailey : 2/27/2007 1:42:44 PM

China's Hang Seng Index ($HSI.X) Link was down 360.08 points, or -1.76% at 20,147.87.

List of components at this Link ...

Keene Little : 2/27/2007 1:40:08 PM

NDX has a good start for an impulsive decline which would be the first clue that its corrective days are finished. The move down needs a small bounce, like that shown for SPX and the DOW, followed by a new low next week. It would then be ready for a larger bounce into mid-March to be followed by a big move down, again like that shown for SPX and DOW. But as the bullish count shows, the bulls are not dead yet, not until NDX drops below 1763. The path of the bullish wave count is pure conjecture at this time so don't go by that depiction. Link

Jeff Bailey : 2/27/2007 1:39:50 PM

PetroChina (PTR) $115.01 -5.55% Link ... while bullish stopped at the opening ticks, stock probes its 200-day SMA. It's 09/11/06 low close well below at $104.60.

Jeff Bailey : 2/27/2007 1:36:23 PM

CNOOC Ltd. (CEO) $79.62 -3.85% ... probes its 09/11/06 relative low close here.

Jane Fox : 2/27/2007 1:32:51 PM

Crude is ready to break its 200EMA. Link

Jeff Bailey : 2/27/2007 1:27:07 PM

RKH $162.48 -1.16% ...

Keene Little : 2/27/2007 1:22:41 PM

It looks like we're still probing for a bottom today. Keep an eye on DOW 12425 just in case that Fib level is the target. Here's an update on the SPX chart in keeping with the one I posted for the DOW. We should be due a 4th wave correction in the bearish count before proceeding lower next week. A downside target near 1420 looks like a reasonable target before we're set up for a much bigger bounce to correct this decline. Link

I put a Fib projection on the chart that shows how it would look, and where the target is (near SPX 1472), if we're in an A-B-C upward move from Feb 12. The new low today, which would be wave-B in the bullish count, can go below the start of wave-A (the Feb 12 low) and when that happens it's common for wave-C to go 162% of wave-A (in what's called an expanded flat correction).

Until we get a 5-wave move down, as labeled in red, any rally back above 1440 would increase the chances for the bullish wave count.

Jeff Bailey : 2/27/2007 1:17:15 PM

01:00 Internals found at this Link

Jeff Bailey : 2/27/2007 1:04:19 PM

Program Trading Collars In with NYSE Composite -180 points.

Jeff Bailey : 2/27/2007 1:03:44 PM

Should we finish in the red today, and likely will at session lows, this will NOT be a light volume decline like we've been seeing in recent months.

Jeff Bailey : 2/27/2007 1:02:11 PM

01:00 Market Watch found at this Link

Keene Little : 2/27/2007 1:00:43 PM

From a fellow reader (thanks John):
"Asian Contagion" deja vue. You had to know that when every person in Shanghai, who was old enough to ride a bicycle, was buying stock (and borrowing money to do it) that it was going to come to a bad end. A lot of yahoos in America are not much better. Margin borrowing has reached an all-time high. Well, guess what? They got a call from their broker today. There are probably a lot of Bulls out there today who have a sick feeling in the pit of their stomachs.

Keene Little : 2/27/2007 12:57:34 PM

Studying the pattern in the DOW, which has one of the cleaner patterns at the moment, I like the bearish wave count on this 60-min chart better: Link

Instead of a 3rd of a 3rd wave down this morning it's just a normal 3rd wave. It came close to achieving 162% of the 1st wave down which is a very common relationship. That's at 12425 and may still be achieved this afternoon before we see a slightly larger bounce start as the 4th wave correction. After that bounce we'l be due another leg down into next week with a downside target in the 12300 area, depending on how high the 4th wave correction gets to.

While becoming less likely, there is still the chance that today's move down is completing a sharp pullback as an a-b-c move for green wave-B in a larger A-B-C rally from Feb 12. The new low does not negate that possibility. It's a stretch but still possible. It takes a move back above 12600 to give it a higher probability.

Jane Fox : 2/27/2007 12:48:51 PM

TRIN has reached at high of 5.98. Kind of wondering about this internal of late. It has been really wierd.

Keene Little : 2/27/2007 12:44:57 PM

I don't anticipate a large bounce if we're into the bearish wave count--it'll only be a 4th wave correction that will chop sideways/up over the next day or so. Maybe the DOW will bounce back up to 12500-12525 or so and then it will be time to get shorty again. But if we see a more impulsive (sharp) rally then it brings up the question as to whether or not today's pullback was just that. At this point I would say the bears are not in trouble until the DOW rallies above 12600.

Jane Fox : 2/27/2007 12:37:14 PM

WASHINGTON (MarketWatch) -- U.S. home prices fell 0.7% in the fourth quarter, the fastest rate since 1992, and are up just 0.4% in the past year, Standard & Poor's reported Tuesday in the inaugural release of the national Case-Shiller price index.

A year ago, home prices were rising 14.6% year-over-year.

"Annual changes in home prices are either in decline, flat or yielding negative returns across all markets," said Robert J. Shiller, chief economist at MacroMarkets LLC, which produces the index for S&P. "All metro areas are showing smaller annual returns than those reported for November."

"Given the overhang of supply and clear signs of deceleration in home prices, we continue to expect a nationwide home price decline of about 3% in 2007," Goldman Sachs economists wrote in a research note. They called the Case-Shiller index "probably the highest-quality measure of home prices

Keene Little : 2/27/2007 12:36:00 PM

The bullish divergences on the shorter term charts are warning us that we could be finding a bottom soon, and from an EW count it's possible we've already made one.

Jeff Bailey : 2/27/2007 12:34:16 PM

Don't want to get too cute with BIX.X 400.00. MONTHLY 61.8% pivot retracement at 400.76.

Jeff Bailey : 2/27/2007 12:32:44 PM

BIX.X 402.07 -1.28% ...

Jeff Bailey : 2/27/2007 12:30:50 PM

Swing trade short lower stop alert ... on the Regional Bank HOLDRs (AMEX:RKH) $162.28 -1.28% ... to $162.50.

Approaching target of $162.05.

Jeff Bailey : 2/27/2007 12:27:11 PM

FREDDIE TO STOP BUYING HIGH-RISK LOANS

DJ- Mortgage giant will stop buying subprime mortgages in which borrowers have 'a high likelihood' of missing payments. It also is developing fixed-rate and hybrid ARM products that will provide more choices for subprime borrowers.

FRE $64.47 -0.70% Link ...

Jeff Bailey : 2/27/2007 12:25:05 PM

US DURABLES ORDERS PLUNGE; HOME SALES UP

DJ- Demand plunged in January for big-ticket manufactured goods, underscoring the sector's weakness, while home sales grew as the weather turned fair. Orders for durable goods dropped 7.8% last month, more than double the expected drop.

Keene Little : 2/27/2007 12:23:15 PM

I'll bet there are more than a few bulls hoping for the Hail Mary pass this afternoon--that would be the PPT coming in and injecting some badly needed buy programs to get the bears running for cover.

Jeff Bailey : 2/27/2007 12:21:05 PM

The CAT-HM are $4.80 x $4.95.

Jane Fox : 2/27/2007 12:20:41 PM

TRIN 4.71. :)

Jeff Bailey : 2/27/2007 12:19:50 PM

VXO.X 13.61 +22.94% ...

Jeff Bailey : 2/27/2007 12:19:30 PM

VIX.X 13.43 +13.43%

Jeff Bailey : 2/27/2007 12:19:18 PM

Swing trade sell covered call alert ... sell two (2) of the Caterpillar CAT April $70 Calls (CAT-DN) at the bid of $0.85 ($0.85 x $0.89) with CAT $65.48 -2.64%.

Keene Little : 2/27/2007 12:11:12 PM

I see the potential for the Cavalry to come riding to the rescue after lunch. They're mounting up now so whether they're getting ready to run away (after all, the generals retreated a while ago), or come fight the bears, we'll see.

Jeff Bailey : 2/27/2007 12:06:30 PM

Citigroup (C) $51.93 -1.42% ...

Jeff Bailey : 2/27/2007 12:06:08 PM

HSBC Holdings (HBC) $87.85 -1.22% ...

Jeff Bailey : 2/27/2007 12:05:39 PM

New Century Financial (NEW) $15.21 -0.19% ...

Jeff Bailey : 2/27/2007 12:05:16 PM

Novastar Financial (NFI) $8.07 +1.38% ...

Jeff Bailey : 2/27/2007 12:04:55 PM

US Oil Fund (USO) $51.28 +0.74% ... has reversed losses. Session low has been $50.09.

Keene Little : 2/27/2007 12:04:51 PM

NDX is now testing its uptrend line from Jan 3, near 1791.

Jeff Bailey : 2/27/2007 12:04:16 PM

Frontier Oil (FTO) $30.55 +0.06% ... inches green.

Jeff Bailey : 2/27/2007 12:00:31 PM

SPX 1,429.33 -1.38% ...

Keene Little : 2/27/2007 12:00:17 PM

It's possible that the current move down will finish the move down for today so think about protecting profits if you're short.

Jeff Bailey : 2/27/2007 11:58:27 AM

June Fed Fund futures (ff07m) alert! 94.80 +0.04% ... 20% probability of a 25 bp rate cut by contract expiration.

Keene Little : 2/27/2007 11:54:13 AM

After finding resistance near some very important Fib levels in the 9455 area the big drop in the NYSE certainly looks bearish. Now it's very close to its uptrend line from July, currently near 9265, and I'm sure we'll get a bounce off that line. Just below it is its 50-dma at 9212. If you're short the market think about taking some profits soon and dare I say even think about playing a bounce. This is still a market that could surprise both sides. Link

Jeff Bailey : 2/27/2007 11:52:26 AM

NYSE Quarterly Circuit-Breaker and Trading Collar Levels at this Link

Jeff Bailey : 2/27/2007 11:41:51 AM

TLT Mar $89 Calls (TLT-CK) which we rolled to yesterday are $1.10 x $1.20.

Do NOTHING here, if it gets called away, it gets called away.

Jane Fox : 2/27/2007 11:41:04 AM

WASHINGTON (MarketWatch) -- Sales of existing U.S. homes rose 3% to a seasonally adjusted annual rate of 6.46 million in January, the highest in seven months, the National Association of Realtors reported Tuesday.

It was the largest percentage gain in two years.

Sales were down 4.3% year-on-year.

Economists surveyed by MarketWatch were expecting sales to rise to about 6.30 million

Jeff Bailey : 2/27/2007 11:40:49 AM

iShares Lehman 20-year (AMEX:TLT) $89.92 +0.54% ...

Jeff Bailey : 2/27/2007 11:40:11 AM

30-year YIELD ($TYX.X) down 4.7 bp at 4.686%. 19.1% retracement of 05/12/06 relative high yield close to recent 12/01/06 relative low yield close.

Keene Little : 2/27/2007 11:38:02 AM

BTW, I depict the RUT rallying back up to the top of its channel for the bullish case, up near 850. If the RUT has found a bottom today and starts its next leg up, wave-(v) = wave-(i) (green count) just under 836 and would be near the mid line of its channel by mid March. That's a much more likely upside target (for the bullish case).

Keene Little : 2/27/2007 11:34:13 AM

I cleaned up the RUT 120-min chart that I posted below (12:29 PM) and show the two wave count possibilities after this morning's drop. Interestingly the pullback stopped exactly at the bottom of the parallel up-channel created off the bullish wave count (draw a trend line between the 1st and 3rd waves and then attach a parallel to the 2nd wave and very often that's where the 4th wave correction will stop). Link

The bullish wave count isn't negated until the RUT drops below 799, the wave-(i) (green) high. That happens to be also the uptrend line from July so that level becomes doubly important. As long as the RUT stay above 799 there is still the potential for this index to rally to a new high. Below 799 and the bears are in control.

Jeff Bailey : 2/27/2007 11:32:08 AM

Swing trade short lower stop alert on the Regional Bank HOLDRs (AMEX:RKH) $162.60 -1.09% ... to $164.10.

Jeff Bailey : 2/27/2007 11:18:03 AM

11:00 Internals found at this Link

Jeff Bailey : 2/27/2007 11:12:21 AM

SPY $143.44 -1.19% ... for those that may have "rounded up to 3/4 bullish" back on 02/09/07, just above current levels of trade, the jacked up volatility most likely has those at, or in-the-money calls close to where you bought them. Can cut back to 1/4 bullish, or back to 1/2 bullish.

Jane Fox : 2/27/2007 11:09:24 AM

It has been a while since we have seen these two this bearish. Link

Jeff Bailey : 2/27/2007 11:02:22 AM

11:00 Market Watch found at this Link

Jane Fox : 2/27/2007 11:01:11 AM

TRIN 4.30!!!

Jane Fox : 2/27/2007 11:00:23 AM

You know with all this bearishness I just realized there has been no TICKS reading at -800. As a matter of fact the lowest reading so far today has been -726.00.

Jane Fox : 2/27/2007 10:57:34 AM

Here is an analysis using the 50MA. Link

Jane Fox : 2/27/2007 10:54:24 AM

Crude is recovering and back up to 61.225/bl.

Jeff Bailey : 2/27/2007 10:50:11 AM

SPX 1,434.98 -0.99% ... if we were to close here tomorrow MONTHLY Pivot Levels would be ... 1,412.50 (close to "drag it up 19.1%"), 1,423.75, Piv= 1,442.66, 1,453.91 , 1,472.82

Keene Little : 2/27/2007 10:47:35 AM

This SPX 60-min chart shows how the rest of the decline should continue to finish the larger degree 1st wave down and then the 2nd wave bounce into mid March. Any recovery back above the uptrend line from November would be a heads up that the bears may not be in control after all. Link

Jeff Bailey : 2/27/2007 10:44:28 AM

SPY $143.72 -1.00% ... Should we close here tomorrow ... MONTHLY Pivot levels would be ... $141.21, $142.47, Piv= $144.44, $145.70, $147.67.

Jeff Bailey : 2/27/2007 10:41:33 AM

Swing trade put alert for two (2) of the S&P Depository Receipt SPY April $144 Puts (SFB-PN) at the offer of $2.60. ($2.50 x $2.60)

SPY $143.64 -1.05% ...

Keene Little : 2/27/2007 10:32:28 AM

After breaking its uptrend line from November near 1437 look for SPX to find resistance there.

Jane Fox : 2/27/2007 10:32:13 AM

The SPX's 50EMA is sitting at 1431 so we need a close below 1431.00 for me to say the charts have now given me a sign to get short.

Jane Fox : 2/27/2007 10:28:28 AM

Here is a chart of the AD line going back to last August. As you can see this internal has hit a multimonth low today. Link

Keene Little : 2/27/2007 10:27:57 AM

SPX needed to break below 1431.44, the low on Feb 12, in order to confirm its bearish wave count. This morning's low is 1431.41. Woohoo, confirmation by 3 cents! Obviously that low is acting as support but if it breaks, as it should, then look for another flush.

Keene Little : 2/27/2007 10:24:18 AM

To just give an idea what a decline might look like on the DOW if we've started the big one down, this morning's very sharp drop tells me it's likely a 3rd of a 3rd wave down. That means we should stair step lower as we "unwind" the wave count and get some 4th and 5th waves to complete the 1st larger degree wave down over the next week or so. Link

The other interesting development today is that it's looking like we could have the potential to see both turn dates have a say in this market. The turn date around Feb 23 looks at this point like it will have marked a top in the market. The Mar 9 turn date could mark the top of the larger degree 2nd wave bounce as shown on the DOW chart.

Any rally back above 12628 from here would negate the bearish wave count as I've got in on the chart now. Once the move down finishes the wave count then it can bounce back up to 12700 and not be a problem for the larger bearish picture.

Jeff Bailey : 2/27/2007 10:14:57 AM

As soon as I try pulling up an SPY options chain, QCharts shuts down. Moving over to the CBOE. Looking for some protective puts.

Jeff Bailey : 2/27/2007 10:12:48 AM

VIX 12.99 +16.50 ... has jumped above its MONTHLY 19.1% retracement.

Jeff Bailey : 2/27/2007 10:10:35 AM

very, very defensive.

Jeff Bailey : 2/27/2007 10:10:27 AM

NASDAQ a/d 281/2466

Jeff Bailey : 2/27/2007 10:10:15 AM

NYSE a/d 393/2614

Jane Fox : 2/27/2007 10:08:02 AM

VIX spikes to new daily highs as AD volume continues to make new daily lows. This may be a very good spot to get short with a stop just above daily highs. Pick you market carefully though.

Jeff Bailey : 2/27/2007 10:04:11 AM

10:00 Market Watch found at this Link

Jeff Bailey : 2/27/2007 9:47:10 AM

Chavez to seize foreign oil assets ... Chicago Tribune Story Link

Jeff Bailey : 2/27/2007 9:44:07 AM

CRB Index (CEC:CRY) 312.26 -0.90% ...

Jeff Bailey : 2/27/2007 9:43:27 AM

Treasuries may be the only security trading to the upside.

Jeff Bailey : 2/27/2007 9:42:30 AM

It is VERY red this morning. Swarmed with downside al_rts I've had set.

Jane Fox : 2/27/2007 10:00:50 AM

This is of course your "sell the rallies" kind of day but be careful of where you get in. YOu have a few things you need to worry about. 1. the Rescue team and 2. a reactionary bounce off just plain Jane oversold conditions.

Keene Little : 2/27/2007 9:40:49 AM

You can bet we'll get some very strong bear market rallies so always stay prepared for a big in-your-face rally if you're short. But this now has all the makings of a top put in last week.

Jeff Bailey : 2/27/2007 9:39:49 AM

Bullish swing trade stopped alert ... for PetroChina (PTR) at the bid of $117.50.

Keene Little : 2/27/2007 9:37:41 AM

The DOW has broken below 12536. The fat lady is singing.

Jane Fox : 2/27/2007 9:35:27 AM

TRIN 3.25!

Jane Fox : 2/27/2007 9:35:16 AM

VIX above its PDR - way above.

Jane Fox : 2/27/2007 9:34:54 AM

Oh EEE TRIN +2.65!!

Keene Little : 2/27/2007 9:34:43 AM

For SPX the uptrend line from November is near 1437. Could get interesting if that breaks. While we're waiting for confirmation that a top has been put in, and therefore a little early to get super bearish, the setup has been there for the top. This market has been one bad story away from a big drop and today might be it.

Jane Fox : 2/27/2007 9:33:59 AM

Needless to say the AD line is very very bearish at -1294 and AD volume below 0 and falling. Like I needed to tell you that!

Jane Fox : 2/27/2007 9:23:25 AM

The daily chart of the NAZ futures is a tad harder to analyze. I have drawn a H&S before that did not pan out so this one has a very good chance of not either but a close below the red neckline and the 100EMA would be a very good sign that we are headed lower. Link

Keene Little : 2/27/2007 9:18:19 AM

Wow is all I can say. It's been a very long time since we've seen the DOW futures down 100 points before the open. This drop, if it holds, will change the picture substantially and obviously much more bearish. We'll watch how SPX does around its uptrend line near 1440. The big numbers for the DOW and SPX are 12536 and 1431. A break of those levels and it's pretty much lights out for the stock market. What happened in China is just a taste of what's to come over there. That bubble has been waiting to get popped.

Jane Fox : 2/27/2007 9:14:40 AM

Here is a chart of the DOW futures. It is looking worse than the S&P. Link

Jane Fox : 2/27/2007 9:13:28 AM

I usually like to show the SPX.X when doing a daily analysis but with the selloff overnight I decided to use the futures. Gee whiz it looks like we need to give Hansel a call to see if he can save the dike like he did back in late January. I still maintain my position that a close under the 50EMA will be a sign that we are into a correction and could be time to get short. Will that happen today? Link

Jane Fox : 2/27/2007 9:07:29 AM

BOSTON (MarketWatch) -- Two home builders with operations in Florida said they're seeing quarterly losses driven in part by the Sunshine State's ailing housing market.

Hovnanian Enterprises Inc. (HOV) , one of the nation's largest builders of homes, said Tuesday it expects to post a loss after charges for its fiscal first quarter ended Jan. 31.

Before charges, the Red Bank, N.J., company said it expects quarterly earnings of 20 cents a share, above its earlier December estimate between 5 cents and 10 cents a share.

Hovnanian said it expects to book about $90 million in charges related to operations in Fort-Myers-Cape Coral, Fla., "due to a continued decline in sales pace and general market conditions, as well as increasing cancellation rates, during the quarter."

A tough Florida housing market also hit WCI Communities Inc. (WCI), which has been the focus of recent takeover speculation. The tower and home builder said Tuesday it swung to a loss in the fourth quarter of $64.6 million, or $1.52 a share, as it booked real estate inventory impairment losses of $91.4 million.

The Bonita Springs, Fla.-based company said margins were hit by greater use of incentives and discounts due to rising inventories of unsold new and existing homes in its markets.

"Our Florida markets, which account for approximately 85% of our business, experienced the greatest slowdown during 2006," said Chief Executive Jerry Starkey in a statement.

Jane Fox : 2/27/2007 9:04:06 AM

It wasn't just equities that sold off, so did the US $, Gold and Oil. The only safe haven overnight was Bonds.

Now you know Gold and the $ have an indirect correlation and when both sell off one of them has to "give." It is usually the $ that ends up trading opposite to Gold but today Oil is down as well so I'm not so sure that it will be the $ that continues down and Gold retraces. In any case the $ is now breaking it overnight low so that may be telling us something. Link

Jane Fox : 2/27/2007 8:58:02 AM

LONDON (MarketWatch) -- London's top index lost more than 100 points on Tuesday after a sell-off in the mining sector, Investors were also eyeing earnings from companies such as Standard Chartered and GKN on Tuesday,

Jane Fox : 2/27/2007 8:55:35 AM

Dateline WSJ - SHANGHAI - The biggest drop in China's benchmark stock index in a decade wiped out more than $100 billion of market capitalization and sent ripples through other Asian markets, in the latest sign of the emerging global importance of the country's economy and financial system.

A day after the Shanghai Composite Index hit a new record high, it plunged 8.8% on Tuesday to 2771.79, on what analysts said were widespread efforts by investors to cash in on big gains and avoid any government attempts to cool the markets. Tuesday's drop was the biggest in percentage terms since an 8.9% fall on Feb. 18, 1997, triggered by rumors that then-paramount leader Deng Xiaoping had died, a day before he actually did.

There were no new policies announced Tuesday, and few analysts said they saw the one-day fall as a turning point for China's stock market. In fact, most signs suggest investors have returned from last week's Chinese New Year holidays keen to hold more stock. Monday, for instance, a mutual fund from a joint venture called CCB-Principal Fund Management reached the maximum subscription amount, 10 billion yuan ($1.29 billion), just hours after it began accepting applications. "Investors are choosing to cut their positions to avoid the fluctuations in the market, but it's still too early to say the market has reached its peak," said Chen Huiqin, an analyst at Huatai Securities.

Jane Fox : 2/27/2007 8:53:26 AM

If you are long this market I wouldn't look at these charts. Not nice! Link

Jane Fox : 2/27/2007 8:47:31 AM

WASHINGTON (MarketWatch) -- New orders for U.S.-made durable goods plunged 7.8% in January as nearly every category of manufactured goods declined, the Commerce Department reported Tuesday.

The drop was the largest since October and exceeded the 5.5% drop expected by economists surveyed by MarketWatch. See Economic Calendar. Orders in December rose a revised 2.8%, down from 2.9% previously reported.

Analysts expected the headline number would be knocked down in January because Boeing Co. (BA) had a large drop in orders compared with December. Aircraft orders are very volatile.

Transportation orders fell 18% in January after rising 3.1% in December. Aircraft orders fell 60.3% in January

Jane Fox : 2/27/2007 8:45:49 AM

LONDON (MarketWatch) -- Stock futures tumbled Tuesday, driven by a plunge in the Chinese equity market, which helped drive wider declines in Europe and Asia, and weaker-than-expected durable goods data in the U.S.

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