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Jeff Bailey : 5/30/2007 2:24:34 AM

Hang Seng ($HSI) down 209 points, or -1.02% at 20,261.

Components Link

Jeff Bailey : 5/30/2007 2:22:24 AM

Shanghai Stock Exchange ($SSEC) Link ... Down 258 points, or -5.96% at 4,077.

Jeff Bailey : 5/30/2007 2:21:11 AM

China Stocks Plunge On Tax Hike

Reuters Story Link

Jeff Bailey : 5/30/2007 12:30:12 AM

YM 13,515 ... has broken below overlapping DAILY Pivot (13,545) and WEEKLY Pivot (13,545) support.

Vulnerable to overlapping DAILY S2 (13,438) and WEEKLY S1 (13,436).

Jeff Bailey : 5/30/2007 12:22:57 AM

Japan Industrial Production m/m was down 0.1% Vs. forecast of +0.5% and previous -0.3%.

Jeff Bailey : 5/30/2007 12:18:14 AM

YM down 40 points, or -0.29% at 13,518.

Jeff Bailey : 5/30/2007 12:15:02 AM

Hang Seng ($HSI.X) ... down 178, or -0.87% at 20,291.

Jeff Bailey : 5/30/2007 12:14:16 AM

Nikkei-225 ($NIKK) ... now down 142 points, or -0.81% at 17,531.

Keene Little : 5/29/2007 11:58:23 PM

Wednesday's pivot tables: Link and Link

The 4 indices are currently in synch and showing the same pattern so I expect all will stay in synch on Wednesday. As I had mentioned late Tuesday we should have our answer very early on Wednesday morning as to whether or not the bearish wave count that I have on each of the charts is correct or not. 30-min updates:
DOW: Link
SPX: Link
NDX: Link
RUT: Link

Note that the RUT is the closest to exceeding Tuesday morning's high which is the level that would negate the bearish wave counts so keep your eye on that one in the morning (the rest would likely follow if this happens). If the bearish wave count is correct, with a 1-2, 1-2 wave count setup into the close then it would be typical to see a gap down and continued sell off right from the open in the 3rd of a 3rd wave down. So we should get our answer either way very quickly.

The bearish wave counts say we'll take out last week's lows fairly quickly and then we'll take it from there as to what the next move might be. An early morning rally that negates the bearish wave count says we'll either form a larger sideways consolidation or immediately head higher. Of the two bullish possibilities I believe the larger sideways consolidation is the greater likelihood (which will be choppy and full of whipsaws so guess which one would be more fun to trade?).

Marc Eckelberry : 5/29/2007 11:47:12 PM

China sell-off. This is bad news, watch NQ key support area between 1899.50 and 1902.

Jeff Bailey : 5/29/2007 10:27:13 PM

CDW Agrees To Be Acquired in $7.3 Billion Deal ($87.75 cash)

AP Story Link

CDWC $83.11 +9.99% Link ... $87.02 was last tick in tonight's extended.

Jeff Bailey : 5/29/2007 10:19:06 PM

Hang Seng ($HSI.X) Link ... finished Tuesday's trade at 20,469.59.

Jeff Bailey : 5/29/2007 10:16:59 PM

Nikkei-225 ($NIKK) Link ... currently down 67 points, or -0.38% at 17,606.

Session high/low has been 17,727/17,557.

No changes to PnF chart at this point.

Jeff Bailey : 5/29/2007 10:03:40 PM

China Yuan Official Central Parity Rates For Wednesday at this Link

OI Technical Staff : 5/29/2007 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 : 5/29/2007 5:31:46 PM

Simon Property Group (SPG) $105.40 +3.45% ...

Jeff Bailey : 5/29/2007 5:31:13 PM

Equity One Provides 1Q Investment Property Valuation Update ... Press Release (from Saturday) at this Link

Jeff Bailey : 5/29/2007 5:29:07 PM

Equity One (EQY) $28.33 +2.79% ... $29.20 extended.

Jeff Bailey : 5/29/2007 5:28:17 PM

S&P To Add Equity One To Midcap 500, Remove Bandag

DJ- Standard & Poor's will add Equity One Inc. (EQY) to the S&P MidCap 400 Index, replacing Bandag Inc. (BDG) on a date to be announced.

Bandag is being acquired by Bridgestone Corp.'s (BRDCY) Bridgestone Americas Holdings Inc. in a deal that still requires final approvals, the unit of McGraw-Hill Cos. (MHP) said.

Jeff Bailey : 5/29/2007 5:19:52 PM

July Unleaded (rb07n) settled down $0.1171, or -5.07% at $2.1934.

Jeff Bailey : 5/29/2007 5:16:37 PM

July Crude Oil (cl07n) settled down $2.05, or -3.14% at $63.15.

Jeff Bailey : 5/29/2007 5:03:48 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 5/29/2007 4:52:28 PM

Closing Internals found at this Link

Jeff Bailey : 5/29/2007 4:43:14 PM

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

Marc Eckelberry : 5/29/2007 4:38:48 PM

This market is risky for both shorts and longs. But the trend is still clear and you must not lose track of that, no matter how scary it gets. Should you short? Of course, but only rallies and only for a quick trade. Today saw 2 big long set ups, overnight and at the close and one short set up in the middle, but you better not step away for coffee.

Marc Eckelberry : 5/29/2007 4:22:17 PM

There is no such thing as a safe day. When a bear tells me it's safe to buy, that is when I will sell. When a bull tells me it is safe to sell, I will buy. The entire world was telling you to sell this weekend. Guess what was the right trade.

Marc Eckelberry : 5/29/2007 4:16:48 PM

The only way to trade a bull market and make consistent money is to buy pullbacks. I don't know how much simpler I can put it to traders. Yes, it will change. Of course it will. but until then, how much money havebears left on the table? Trading is not rocket science.

Keene Little : 5/29/2007 4:13:44 PM

Certainly the market is set up for immediate selling or an immediate cancellation of the bearish wave count setup, especially on the RUT. So we'll know very quickly which way we'll want to trade.

Marc Eckelberry : 5/29/2007 4:12:22 PM

Maybe I am an idiot, but I don't see anything bearish in today's action. Buying the 30 dma for NQ and a close above 10 and 20 dma with room to spare is what I call bullish. The COMP is even more sanguine. It might change this week, but once again shorts are not seeing the obvious. The market is not done going up.

Jane Fox : 5/29/2007 4:10:48 PM

The only item of significance tomorrow is the FOMC minutes at 2:00EDT.

Keene Little : 5/29/2007 3:55:35 PM

Kiss goodbye for the DOW against the bottom of its earlier bear flag? Link

I don't know what would prompt immediate selling tomorrow morning but that's the setup here.

Jeff Bailey : 5/29/2007 3:48:15 PM

BP Says It Agreed To Major Gas Exploration Deal With Libya

DJ- BP PLC (BP.U.T) said Tuesday that it signed a major exploration and production agreement with Libya's National Oil Co.

In a statement, Group Chief Executive Tony Hayward said the deal was worth at least $900 million, adding it was "BPs single biggest exploration commitment."

BP $67.28 -0.72% ...

Jeff Bailey : 5/29/2007 3:43:43 PM

Ford Motor: Not In Any Talks To Sell Volvo Unit

Keene Little : 5/29/2007 3:42:16 PM

The RUT maintains the most bullish potential only because it's so close to today's high. But it's set up the same as the others where the next leg down could find some strong selling: Link

If the RUT is able to rally a little higher here it will create a 5-wave advance and that would turn this back into a potentially bullish wave pattern so a new high would be potentially important.

Keene Little : 5/29/2007 3:38:03 PM

And NDX: Link These bearish setups would be negated with rally above today's high.

Jeff Bailey : 5/29/2007 3:35:41 PM

5-year Treasury Note Yield ($FVX.X) finished up 3.1 bp at 4.827%.

Keene Little : 5/29/2007 3:35:23 PM

Same setup for SPX: Link

Jeff Bailey : 5/29/2007 3:35:06 PM

Mexico's 5-year Bond Yield Down 0.09 Pct Pts To 7.59%

Keene Little : 5/29/2007 3:33:31 PM

The updated DOW 30-min chart shows a potentially bearish wave count with a sequence of 1st and 2nd waves down from last week's high. This morning's high would have finished the 2nd wave correction and the decline from there started the 3rd wave down. Link

Within that 3rd wave down we've had the 1st wave down and now another smaller 2nd wave bounce is currently in progress. If this wave count is correct then the next move will be a strong decline so be aware of this possibility. It may not kick into gear until tomorrow morning if we don't get some selling into the close.

Keene Little : 5/29/2007 3:23:07 PM

After dropping back below the uptrend line from March NDX is now bouncing back up to it near 1897.50 (cash) so watch for a kiss goodbye here. Link

Jeff Bailey : 5/29/2007 3:10:56 PM

03:00 Internals found at this Link

Jane Fox : 5/29/2007 3:08:21 PM

Needless to say that short did not trigger and just as well because we are into a total mess right now and neither side as control.

Jeff Bailey : 5/29/2007 3:01:55 PM

03:00 Market Watch found at this Link

Keene Little : 5/29/2007 3:01:43 PM

Still bear flagging. I don't like the upside even though we've seen enough rallies come out of a corrective bounce like this. The odds say look for lower prices soon. Just remember those are odds and not guarantees.

Jeff Bailey : 5/29/2007 2:54:03 PM

Swing trade put option alert ... for one (1) of the Imergent (AMEX:IIG) $23.37 -4.88% IIG July $22.50 Puts (IIG-SX) at the offer of $2.45. ($2.30 x $2.45).

No stop for now, target $18.00 in the underlying.

Jane Fox : 5/29/2007 2:40:42 PM

I will be taking ER short at 833.80.

Keene Little : 5/29/2007 2:17:07 PM

The pattern today is that sellers are hitting before resistance levels are being hit so they're getting a little bit of a jump on selling by selling into the buying. So it remains bearish for now.

Jeff Bailey : 5/29/2007 2:15:23 PM

GM $30.16 -1.08% ... Stock dividend is $1.00/share/year.

SEC Yield at current price is 3.315%.

Keene Little : 5/29/2007 2:15:02 PM

It looks like we're bear flagging here. Watch ES 1518/YM 13516 (downtrend lines from this morning's highs) for resistance.

Jeff Bailey : 5/29/2007 2:13:41 PM

GM Convertible Bond Offering (from Friday) ... Reuters Story Link

Interest rate of 1.5%. Convertible at ~$36.57/share.

Keene Little : 5/29/2007 1:28:04 PM

If you want to try again at another short entry, watch for a bounce to correct the leg down that we just got and place your stop above the high just before 1:15.

Jane Fox : 5/29/2007 1:24:15 PM

Internals have turned around and are downright bearish now. The TRIN was telling us something this morning wasn't it? Link

Keene Little : 5/29/2007 1:22:25 PM

Hmm, the bounce didn't make it up to the level I just gave for ES before the sellers whacked it again. Bummer, it would have been a sweet entry.

Jane Fox : 5/29/2007 1:22:17 PM

ER long from 836.60 was stopped at 835.40.

Jane Fox : 5/29/2007 1:20:03 PM

US $ rallies hitting Gold pretty hard. Then Crude falls making it even worse for Gold. Link

Jeff Bailey : 5/29/2007 1:19:23 PM

01:00 Internals found at this Link

Keene Little : 5/29/2007 1:16:13 PM

In the bounce off the mid-day low watch ES 1521.50 (SPX 1519) for a potential high. That's where the bounce has two equal legs up and a 62% retracement of the decline off this morning's high.

Jane Fox : 5/29/2007 1:15:19 PM

Raising my stop to 835.40

Keene Little : 5/29/2007 1:13:43 PM

Everyone's trying to figure out what the funds are going to do this week. We've got the "sell in May, go away" crowd wondering if this run is over and therefore take profits vs. those who firmly believe we'll continue rallying through the summer and are making calls for DOW 14000 and 15000. In fact the increase in calls for the DOW to rally to those levels should start worrying bulls. The higher and faster we go the more people who are jumping on the DOW 14K/15K bandwagon.

Shorter term we've got this week to worry about--the last week of May. I've given you the crucial support levels for the DOW and SPX and if those are broken by Thursday there's a good chance many fund managers will cut and run which would likely cause a bit of hard selling. The flip side says if DOW 13200/SPX 1490 hold then we'll likely see many piling in long for the expected run higher. In between those lows and last week's highs we should remain cautious and short term trading oriented.

Jeff Bailey : 5/29/2007 1:02:20 PM

01:00 Market Watch found at this Link

Jane Fox : 5/29/2007 1:01:10 PM

My long from 836.60 has a target at 838.00 and a stop at 834.90.

Keene Little : 5/29/2007 12:55:25 PM

Assuming this morning's high finished the correction to last week's decline, a larger 3-wave move down from last week's high, with equal legs down, gives us a Fib target of 1494.55. At this point watch the current bounce to short with a stop at a new daily high. Link

The daily chart shows a parallel up-channel for price action since March (using the EW technique to draw the channel). The bottom of this channel is currently near 1501. The key downside level for bears is the May 10th low of 1491.42. Link

Jane Fox : 5/29/2007 12:51:37 PM

Ditto here. Link

Jane Fox : 5/29/2007 12:50:51 PM

Could the S&P be building a Head and shoulders here? MACD says very likely. Link

Jeff Bailey : 5/29/2007 12:51:41 PM

Chicago Fed Midwest Mfg. Index Up 0.6% In April Vs. March

DJ- Manufacturing activity in the Midwestern U.S. expanded in April, registering its third straight monthly increase in the heavy industrialized region, the Federal Reserve Bank of Chicago reported Tuesday.

The Chicago Fed Midwest Manufacturing Index rose 0.6% in April to a seasonally adjusted level of 104.9. In March, the index gained 0.8% to 104.3. The last monthly decrease occurred in January.

The April index was generally in line with the national Federal Reserve Board's industrial production index, which was up 0.5% in April.

Still, the latest data reflected only a 0.1% increase compared to April 2006, far below the 2.0% year-over-year increase in national output, according to the Chicago Fed.

The index of manufacturing activity in Illinois, Indiana, Michigan, Iowa and Wisconsin is derived from the number of hours worked to measure changes in the factory sector.

All told, the data show that the U.S. economy is growing at a modest pace, providing no major reason for Federal Reserve monetary policy-makers to either raise or reduce the benchmark short-term interest rate anytime soon. The key lending rate has stood at 5.25% since June of last year.

Of the four major manufacturing categories, only resource output posted a decline, the Chicago Fed said.

The biggest boost came from regional automotive sector output, up 2.0% in April, after a 0.8% increase in March. The April figure matched the 2.0% auto sector increase on a national basis. Over a 12-month period, however, Midwest auto output dropped 0.7%, while nationwide auto output rose 2.2% during the same time frame.

The Chicago Fed also reported regional machinery output rose 0.4% in April after a 1.l% increase in March. Midwest machinery output lagged behind the national increase of 1.4% in April.

Compared with year-ago levels, Midwest machinery output in April was 0.8% higher, far below the 8.5% increase on a national basis.

Chicago Fed data revealed steel sector output in the Midwest region was up 0.3% in April, in line with the national steel sector increase, after rising 1.2% in March.

Regional steel output was 1.2% higher, compared with April 2006, outpacing the 0.6% year-over-year decline in national steel output.

Resource output in the Midwest was 0.5% lower in April, from a 0.4% gain the previous month.

Of the five components in the resource sector, food and nonmetallic minerals were down, while production of wood and chemicals were higher. The Chicago Fed said paper production was unchanged in April.

The nation's April resource sector output also declined, down 0.2%. Compared with the same time a year ago, regional resource output was unchanged in April, while national resource output fell 0.1%.

The Chicago Fed is scheduled to release its May Midwest manufacturing index on June 27.

Jane Fox : 5/29/2007 12:48:31 PM

ER is now testing the upper trendline of its trading range. I suspect it will not break that trendline. Link

Jane Fox : 5/29/2007 12:47:22 PM

I will be taking ER long at 836.60.

Keene Little : 5/29/2007 12:39:32 PM

I don't understand how the market will ever come down if the big money is so leveraged with naked call sales to protect themselves instead of taking profits. This could cause non stop short covering pushing the market higher and higher. We've never been in this situation before. What will make it end?

Good question Marie. I suppose one could look at it the other way and suggest that selling will get out of hand when the institutions have to start covering/hedging their naked put positions if the market starts to sell off (they've been BIG put sellers during the past few years).

Because of the amount of hedging that's going on in this market today, unlike what we've ever seen before, it's anybody's guess as to what it means. It also means the usual sentiment indicators based on this data is highly suspect today. For example, I don't think we can assume the market will react the same today just because there's a high short interest ratio.

I guess the only thing I can say is follow the charts. Sentiment data, commercial vs. large speculator positions (COT data), my Uncle Harry, the shoeshine boy--they're all useful pieces of information but you can't trade off it (at least not us whereas large institutions try to use this information to get ahead of the crowd).

It's another reason I like to use EW patterns as they (for me) are at least a little more predictive. But even EW is obvioulsy subject to interpretation. But you show me one technical indicator that's not subject to interpretation and I'll show you why it won't work over time.

Keene Little : 5/29/2007 12:27:07 PM

Just noticed an error on my DOW daily chart--the key downside level for the bears got mistyped and should read 13211 and not 12511. The pullback low on May 10th is the important level for the bulls to hold. But I think if the DOW breaks below 13325 we'll have a heads up that something more bearish is happening.

Jane Fox : 5/29/2007 12:25:03 PM

TRIN is getting downright bearish. Can I say that word?

Jane Fox : 5/29/2007 12:24:39 PM

Looks like the TRIN was telling us something today. Link

Jeff Bailey : 5/29/2007 12:22:28 PM

US, IRAN RETURN TO DIPLOMACY OVER IRAQ

DJ- Iran's ambassador to Iraq says that Iran and the U.S. would meet again in less than a month following talks in Baghdad on Iraq's future that the U.S. ambassador described as 'businesslike.'

Jeff Bailey : 5/29/2007 12:20:55 PM

PetroChina (PTR) $128.81 -0.10% ...

Jeff Bailey : 5/29/2007 12:20:08 PM

US Oil Fund (USO) $48.31 -2.40% Link ...

Jeff Bailey : 5/29/2007 12:19:12 PM

NIGERIAN MILITANTS MULL PEACE OFFER

DJ- Nigeria's President Umaru Yar'Adua used his inaugural address to call for an immediate cessation of hostilities in Nigeria's restive southern oil region, and the main militant group appeared to welcome his overture.

Keene Little : 5/29/2007 12:16:36 PM

I've updated the DOW daily chart with a slightly different parallel up-channel for price action since March. It's based on the trend line drawn from the 1st to the 3rd wave and then a parallel attached to the bottom of the 2nd wave. This is the EW way of identifying channels. The bottom of this channel intersects the top of the larger up-channel from July near 13345 on Thursday. Link

A conventional uptrend line off the March low through the low on April 12th will be near 13325 on Friday and I know there are several market technicians looking at DOW 13325/SPX 1490 as support that will be followed by another rally leg. So we could be at decision time if and when the DOW gets down to the 13325-13445 area by the end of the week.

At this point I'd have to say we'll need to see the DOW below 13325 in order to reinforce the idea that the market has already topped out. I'm a cautious bear until then.

Jane Fox : 5/29/2007 12:15:44 PM

YM is the only market below ON lows. Link

Jane Fox : 5/29/2007 12:13:25 PM

WASHINGTON (MarketWatch) -- You asked for a positive yield curve, you got it. Now be sure you understand what it means for the economy. The bane of bankers for the past year, the negatively sloped yield curve, where short-term interest rates are greater than long yields, is now in the process of reversing.

The first clue that the term structure of interest rates was going to revert to its normal shape occurred in early March. That's when rates on the 30-year Treasury bond rose above rates on the two-year note.

As I observed in my column of March 12, in the past, this has been a good predictor of where the rest of the curve was going.

Sure enough, a few weeks later, the spread between the two- and the 10-year note turned positive as well.

Jeff Bailey : 5/29/2007 12:12:50 PM

BANK OF CANADA READY TO RAISE RATES

DJ- Canadian central bank, while holding interest rates steady for the eighth straight meeting, notes 'an increased risk' that inflation will persist above 2% 'and that some increase' in rates may be necessary to cut inflation.

Jeff Bailey : 5/29/2007 12:12:03 PM

US LAWMAKERS PUSH FOR BIG COAL SUBSIDIES

DJ- Democrat and Republican lawmakers from coal states are proposing taxpayers guarantee billions of dollars in construction loans for coal-to-liquid production plants and set minimum prices for the new fuel, The New York Times reports.

Jane Fox : 5/29/2007 12:09:32 PM

WASHINGTON (MarketWatch) -- U.S. home prices fell 1.4% in the first quarter compared with a year earlier, the first year-over-year decline in national home prices since 1991, according to the S&P/Case-Shiller index released Tuesday. A year ago, home prices were rising at an 11.5% pace. Prices have been falling for the past three quarters.

The Case-Shiller indexes cover three geographical areas. The national index is released quarterly, while the 10-city and 20-city indexes are released each month.

The 10-city Case-Shiller price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. The 10-city index has fallen nine months in a row, while the 20-city index has fallen for eight straight months.

All three Case-Shiller indexes show continued deterioration in home prices. Prices were falling or rising slower in most U.S. cities.

Jeff Bailey : 5/29/2007 12:09:19 PM

FORD SEES SURGE IN RUSSIAN REVENUE

DJ- Auto maker is planning to increase its revenue in Russia by 50% this year to about $3 billion, the head of Ford's Russian operations tells news agency Interfax at a conference in St. Petersburg.

F $8.48 +0.35% ...

Jeff Bailey : 5/29/2007 12:08:13 PM

CBOT SEES CME DEAL SUPERIOR FOR TECHNOLOGY

DJ- Board of directors for CBOT Holdings cites technological advantages as key reason for endorsing a revised merger proposal from Chicago Mercantile Exchange instead of competing bid from IntercontinentalExchange.

BOT $194.64 +1.20% ...

CME $524.57 +2.15% ...

ICE $147.38 +1.64% ...

Jeff Bailey : 5/29/2007 12:00:55 PM

WINDSTREAM TO BUY CT COMM

DJ- CT Communications agrees to be acquired for $585 million, or $31.50 a share, a 46% premium compared to Friday's closing price. Deal expected to close in 2H.

WIN $15.03 +0.73% ...

CTCI $31.25 +44.81% ...

Jeff Bailey : 5/29/2007 11:49:46 AM

NWX.X 277.47 +3.04% Link ...

Keene Little : 5/29/2007 11:49:37 AM

I should add to my comment about the DOW daily chart, relating to the bullish possibility from here, that it's possible we'll get a larger sideways triangle to form instead of a 3-wave pullback to a low below last week's. There's no way to know that yet but keep it in mind in case you've got some put options that might wither and die if we see a sideways consolidation followed by another rally leg into June. I'll continue to watch for evidence as to whether or not that possibility is playing out.

Jeff Bailey : 5/29/2007 11:47:23 AM

AVAYA MAY BE NEXT TELECOM TAKEOVER CALL

DJ- Shares jump 14% as Wall Street Journal reports the telecommunications-equipment maker is in talks with private-equity and strategic bidders about selling part or all of the company.

AV $15.68 +14.7% ...

Jeff Bailey : 5/29/2007 11:46:24 AM

NORSK HYDRO WORKING ON $30B-PLUS ALCAN BID

DJ- Norway's Norsk Hydro is working on a $30 billion-plus bid for Canada's Alcan, rivaling a rejected bid from Alcoa, reports Canada's Globe and Mail newspaper. Report also says other miners, including BHP, are contemplating offers.

AL $86.92 +2.25% ...

AA $40.56 -0.83% ...

NHY $35.28 -0.36% ...

Jeff Bailey : 5/29/2007 11:44:21 AM

US CONSUMER CONFIDENCE INDEX RISES (earlier this morning)

DJ- Conference Board's index of consumer confidence for May rises to 108.0 from an upwardly revised 106.3 in April and from 108.2 in March, with consumers more optimistic about present conditions in particular. Economists expected a May reading of 105.

Jeff Bailey : 5/29/2007 11:43:04 AM

RBS GROUP MOVES AHEAD WITH ABN AMRO BID

DJ- A consortium of banks led by Royal Bank of Scotland says it will go forward with a $95.61 billion takeover bid for ABN Amro, topping a bid from Barclays and continuing a struggle with Bank of America for control of the Dutch bank's U.S. arm.

ABN $48.21 -0.12% ...

Keene Little : 5/29/2007 11:39:48 AM

To keep things in perspective, and as a reminder what could happen next, the daily DOW chart here shows the potential for what could happen over the next few weeks or longer. I'm going to assume for now that we're going to get another leg down to at least match last week's decline. That move would then take us to potential support and it will be decision time for the market. Link

Two equal legs down (assuming we first make another minor new high today before starting back down) will be around 13380. That is also the area of the top of its parallel up-channel from last July and at the trend line along the highs since November 2005. That resistance line may turn into support. Because the decline at that point (again, assuming we'll get down there as the next move) will be a 3-wave pullback against the longer term rally, it's possible it will only be a 4th wave pullback in the rally from March, as labeled in green for the bullish wave count.

We'll have plenty of time to review this possibility if and when price gets there but it's worth keeping in mind so that you're aware of this possibility. I'm bearish the stock market but I also recognize that it could get another rally leg before we're ready for a larger decline.

Jeff Bailey : 5/29/2007 11:34:38 AM

TISHMAN TO BUY ARCHSTONE-SMITH FOR $60.75 A SHARE

DJ- One of the nation's leading apartment REITs agrees to be acquired by a partnership sponsored by Tishman Speyer and Lehman Brothers in a $22.2 billion deal, including debt, a 22.7% premium to Thursday's closing price, just before reports surfaced about a potential deal. Transaction is seen closing in the 3Q.

ASN $60.40 +9.35% ...

Jane Fox : 5/29/2007 11:30:31 AM

The only thing that has my attention is the TRIN at 1.26. That is not bullish but yet it was bullish on Friday and the markets did nothing then either so go figure.

Jane Fox : 5/29/2007 11:28:35 AM

These are very bullish but just like Friday price is not reflecting bullishness we see in the internals. Totally weird! Link

Jeff Bailey : 5/29/2007 11:18:37 AM

11:00 Internals found at this Link

Keene Little : 5/29/2007 11:16:39 AM

It looks like it's consolidating for another run higher so no change to the picture yet. I want to see some short term bearish divergences at new highs.

Jeff Bailey : 5/29/2007 11:02:29 AM

11:00 Market Watch found at this Link

Jeff Bailey : 5/29/2007 10:55:59 AM

CME's Nov'07, Feb'08, May'08 Housing Futures Table found at this Link

Jeff Bailey : 5/29/2007 10:51:20 AM

CME's Aug'07 Regional Housing Futures Table at this Link ... Not a alot going on here.

Keene Little : 5/29/2007 10:43:32 AM

Stepping away for about 15 minutes. Watch for a minor new high with bearish divergences on the 5 and 15-min charts to add confidence in trying to short it. NDX just tagged its 62% retracement at 1904.

Jeff Bailey : 5/29/2007 10:34:17 AM

Dallas Fed May Mfg. Production Index 25.0 Vs. April's 24.3

Dallas Fed May Business Activity 20.9 Vs. April's 15.9

Keene Little : 5/29/2007 10:24:02 AM

While it's looking like we could still press slightly higher, especially if price consolidates for a bit, if at any time prices now drop back below the lows put in late Friday afternoon that will be a signal that the bounce is over and you'll want to be short. For the DOW and SPX those levels are at 13483 and 1512, resp. The heads up that that's coming would be a break of the uptrend lines from Thursday's lows.

Keene Little : 5/29/2007 10:11:28 AM

We didn't get a little consolidation before making a new high so it's still possible we'll see that (so the current drop might only be part of a slightly larger consolidation that we might get). Shorting SPX (ES) as it reached its 1522 target was a good move but understand that this could push slightly higher still.

The DOW stopped exactly at the top of it up-channel for the bounce off Thursday's low so watch for another test of it with bearish divergences to try shorting it. Link

Jeff Bailey : 5/29/2007 10:08:18 AM

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

Jeff Bailey : 5/29/2007 10:03:12 AM

10:00 Market Watch found at this Link

Keene Little : 5/29/2007 9:55:30 AM

If we get a small consolidation now followed by another high then we could see SPX tag its 1522 Fib target. It would be a good short play setup if it plays out this way. Link

Keene Little : 5/29/2007 9:50:02 AM

The wave pattern for the move up from mid day Friday supports the idea that we're going to see a little stair-stepping higher this morning. The DOW will probably push above its Fib target zone in that case and SPX may get closer to its target at 1522.

Keene Little : 5/29/2007 9:46:00 AM

Interesting data on the short interest ratio that Marc pointed out. I was reading more about the short interest over the weekend and the bottom line is that the amount of short interest may not have nearly the implication that it once did. The trouble in using it as a sentiment indicator is that so many funds are using shorting as a hedge and not necessarily speculating about a market drop.

From what I've read we have to take that data with the view that "it's different this time". This time it actually might be. Same thing with the put/call ratio--many more players are using option strategies for hedging instead of directional plays.

Keene Little : 5/29/2007 9:39:15 AM

The DOW, not surprisingly, is the first to push up into its Fib target zone so the risk is that this early morning push up will fail right away. It may be difficult to short it but I certainly wouldn't want to chase it higher.

Jeff Bailey : 5/29/2007 9:31:11 AM

Weekly/Monthly Index Pivot Matrix found at this Link

Jane Fox : 5/29/2007 9:30:27 AM

And last but certainly not least is a chart of Crude. Very clear trading range but MACD is suggesting support will break before resistance. However you have to remember this market is subject to political pressures that have nothing to do with TA. Link

Marc Eckelberry : 5/29/2007 9:30:05 AM

If you are short, you are not alone.

May 29 (Bloomberg) -- Short sellers are betting against U.S. stocks like never before as the Standard & Poor's 500 Index approaches an all-time high...The amount of shorting -- where traders sell borrowed stocks expecting to buy them back after prices fall -- jumped to 3.1 percent of the total shares listed on the New York Stock Exchange this month. That's the highest since at least 1931...Mergers and acquisitions increase the likelihood that short sellers will get burned, according to Robert Froehlich of DWS Scudder, which oversees $321 billion. "Anyone that did the theory, `sell in May and go away,' they're going to wish they never read that," Chicago-based Froehlich said. He expects the Dow average to climb 11 percent and reach 15,000 by Christmas Link

Jane Fox : 5/29/2007 9:25:26 AM

Gold has certainly revealed a very clear level of support and is now getting a lift from the falling $. I am still on the sidelines here because this market is now right between resistance and support. Link

Keene Little : 5/29/2007 9:20:58 AM

Equity futures have had a lift for most of the overnight session and YM is not far from its Fib projection at 13562 for two equal legs up in its bounce off Thursday's low. A 62% retracement of last week's decline is at 13575 so keep an eye on that price area for resistance. The techs have been the weakest in overnight trading and resistance for NQ will be 1900-1902 (NDX 1894-1896). I think a shorting oportunity will present itself early and then we'll see if the bulls have other ideas.

Jane Fox : 5/29/2007 9:19:17 AM

And of course that MACD divergence is showing up on the NAZ chart as well. Link

Jane Fox : 5/29/2007 9:17:30 AM

The DOW is not yet testing its 20EMA but its MACD divergence is just as clear as the one you are seeing on the S&P charts. When you get this kind of divergence in both the S&P and the DOW you should be taking notice. Link

Jane Fox : 5/29/2007 9:13:44 AM

S&P has not closed below its 20EMA since March 19th but the MACD is telling us it will soon. The MACD divergence you are seeing here is about as clear as it will ever be. Link

Jane Fox : 5/29/2007 9:09:03 AM

The Russell 2000 Cash Index has fallen back into its trading range and the MACD is suggesting it will not break out again soon unless of course that breakout is to the bottom. I think we are in for a long hot summer. Link

Jane Fox : 5/29/2007 9:06:40 AM

Here are the charts of Friday's intraday trading. They certainly do not reflect the bullishness we were seeing in the internals. Link

Jane Fox : 5/29/2007 9:03:42 AM

As I have always said there are no guarantees in this market and although this setup is about as close to a guarantee as you can get, Friday was the exception. Link

Jane Fox : 5/29/2007 9:01:02 AM

Friday was a totally weird day because the internals were very bullish yet price went nowhere. Of course you could use the argument that it was a Friday before the long weekend but that does not explain why under the hood was so bullish but buying and selling were in balance. Link

Jane Fox : 5/29/2007 8:56:40 AM

The $ is falling and Gold is climbing so those two are in sync but Gold and Crude are not.

The DAX broke its PDH overnight and we are now seeing a disconnect between the DOW and the DAX. I have not been watching the DAX long enough to know what (if any) significance this has but you can be rest assured I will continue to watch it to see if I can glean anything from this disconnect. Link

Jane Fox : 5/29/2007 8:47:49 AM

Good morning all. I hope you are all refreshed from your official summer kickoff weekend. Its funny how used to sleeping in one can get though isn't it?

Even though we had the weekend off the Globex markets traded for a while yesterday so I have added that range to the "overnight" range.

ER has made a series of higher highs and lows and has even broken its PDR from Friday.

NQ has tagged its PDH giving us a good idea of resistance.

ES has peeked a little above its PDH but was not able to sustain that break so I am using its PDH as resistance for now.

YM (was not open yesterday) is not anywhere near its PDH. Link

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