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Marc Eckelberry : 6/1/2007 2:00:04 AM

NASDAQ targets: Link

Jeff Bailey : 5/31/2007 11:41:28 PM

NYSE, NASDAQ Comp., SPX and RUT New High/New Lows Table that I keep at this Link

Jeff Bailey : 5/31/2007 11:31:42 PM

Russell 2000 ... NH/NL for Thursday was 135:13. That's +7 NH from the 4/25/07 benchmark of 128:16.

SPX ... NH/NL for Thursday was 85:1. Here too a bit stronger from 4/25/07 benchmark of 81:0.

Keene Little : 5/31/2007 11:01:06 PM

End of day re-posts:

Friday's pivot tables (new monthly values): Link and Link

I've been fooling around with a couple of ideas for what could be playing out in the market. I'm going to use the RUT here as an example and the NDX would look very similar. First of all, the ascending wedge idea for the final 5th wave up in the rally from March: Link

This is a little different from the one I showed Thursday afternoon but is basically the same and shows a choppy pullback (perhaps after a small pop higher Friday morning) and then rally to a final high in opex week. The final high could be just above 860 which is a little higher than what I had shown Thursday afternoon. If at any time a previous low is violated, such as 821.28 on May 24th, then it would signify that we've seen the high. As long as higher lows continue to hold then higher potential exists.

I've been wondering what would be playing out if we see a rally through much of the summer. This daily chart shows a parallel up-channel for the rally from March that might be only about half way through: Link

It looks small on the daily chart but the ascending wedge idea on the 60-min chart above is the dark green price depiction, with a down-up sequence into mid June and the wedge is outlined with the red trend lines. The more bullish idea is in light green and follows the parallel up-channel higher into the end of July/beginning of August and would take the RUT up above 900. There's a Fib projection from the July 2006 low where two equal legs up would be at 921.49.

My first reaction to this possibility was "no way". There are just way too many negative divergences and lack of internal breadth in this market to support this. But price is the final arbiter and I thought I'd better show this possibility so that you're aware of it. We're in an irrational market right now and I must admit it's been baffling trying to figure out where the top could be.

The RUT will set up a good short if it plays out like the pattern on the 60-min chart (or if it breaks down sooner). But if the price pattern looks more impulsive, then long will clearly be the place you'll want to be. The tough part for spread traders right now is that we have this kind of blow-off top possibility, making it a challenge to find bear call spreads that will work.

But bull put spreads could be just as risky--a break down from an ascending wedge finish to this rally could drop very fast, faster and harder than the February decline and not recover. I think it's a time to trade very lightly and cautiously for the next month or two until this pattern clears up, which could be in just a couple of weeks but better to be careful until it does.

Jeff Bailey : 5/31/2007 11:26:43 PM

May Trade Blotter of CLOSED trades at this Link

Quick Review: ... Wow! What a BULLISH month it was for the broader market as the S&P 500 Index (SPX.X) added another 3.3%. A $10,000 investment in the SPX would be up $330.00. That's not bad, not bad at all.

Caterpillar (CAT) $78.58 +0.12% Link ... Oh my! Yeah! Why did I pull the trigger on the CAT-HM on 4/23/07 and there on 5/01/07. A loooong time still until option August expiration. I guess it was even MORE BULLISH than I had analyzed. Never regret taking a profit, but the CAT is purrrring.

PetroChina (PTR) $129.24 +1.03% Link ... As discussed, the PnF chart link is incorrect from StockCharts, but we're just reviewing here. Stock hanging around the 5/4/07 exit of $128. Still keeping a watchful eye for another bull entry. It's traded $126 twice (5/24 and 5/30).

USO $48.96 +1.55% Link ... After some "hum-dinger" bullish trades in March from $48.50 to $52.50 and $53.45, the "buy the pullback" at $51.08 on 4/12 didn't work out. USO about unchanged since that exit on 5/4/07, thus I'm not overly bullish in here.

CAL $40.17 +1.23% Link ... (as covered call CAL-EH)) ... No regrets for a 5.6% gain in 7 calendar days. CAL just recently traded by initial bull target of $40.50. Dow Transports (TRAN) had a MAJOR break-out today.

BOOM $36.25 +2.14% Link ... "Boom, boom, booom..." Yes, what can I say, I like the stock long near $35.00. It's "thin," and moves up and down quickly.

ICE $144.94 -2.53% Link ... Traded the calls (IHH-FJ) long, but the turmoil around bidding war with CME over BOT had me using a tight stop. Too tight as stock ends up exceeding bull target of $150.

OLN $20.24 -0.78% Link ... No, it isn't the Outdoor Life Network. Actually, subscriber question regarding it and James Cramer's bullishness had me looking for a long. Still long in the OPEN positions with a covered call, but we've legged out and taken some profits along the way. The market can't take away profits booked.

SPY $153.32 -0.10% ... Those SYH-ST are $1.55 tonight. Still waiting for 1929.

Valero Energy (VLO) $74.62 -0.75% Link ... While 5/22/07 was a day trade short, couldn't resist a put option today (5/31/07) that extends well past the summer driving season. WEATHER is probably the biggest threat to a bear now, as it appears some refining log-jam issues are being resolved and supply of unleaded starting to flow.

IWM $84.27 +0.56% Link or RUT.X Link ... That partial exit (5/30/07) goes back to two different observations of selling at $83.52 late afternoon 5/23 and early 5/24. Fool me once, shame on the market. Fool me twice, shame on me. You know my take on things here with current OPEN MM profiles.

CYPB $15.14 -7.17% Link ... Good trade? Way too much "fundamental" stuff to even mention here, but it ties to some of the "struggles" FRX is having with the FDA of late and getting new drugs to market. I don't "know" anything the market doesn't know, or isn't in the press. Let's leave it at that.

EWJ $14.60 +0.96% ... After reviewing the $NIKK Link on Wednesday evening and seeing IWM "crater" right to our bear entry Tuesday morning after the Shanghia Link decline from 4,300, I thought it best to challenge the IWM with a tighter stop at $14.62 today. Short interest has actually been FALLING on the IWM. Maybe not susceptible to a short squeeze as other ETF's, but you'd of thought IWM would have at least fallen back below the 5/24 entry on 5/30. That is... unless somebody doesn't share my bearishness.

Huh? Have you ever critiqued your own trades? Check to see if you're on the RIGHT SIDE of a market?

Go back and look at some GREAT trades and TERRIBLE trades. What was the thought process (technical, fundamental) at that time. Where are the stocks now? You may have LOST on a trade, but was it too tight of a stop that now finds the security confirming prior analysis? Or is the stock well ABOVE/BELOW the stopping point, where that old analysis is in need of serious adjustment?

OI Technical Staff : 5/31/2007 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 : 5/31/2007 9:02:14 PM

It's Russell Index Reconstitution Time (Source: Morningstar) ... Link

Jeff Bailey : 5/31/2007 9:00:22 PM

U.S. Reconstitution Central (Source: Russell) Link

Jeff Bailey : 5/31/2007 8:54:01 PM

email response ... "Yes!" and "Probably Not" and "Don't Really Know"

Yes! Here's a great resource for option strategy terminology and the "Bear Call Spread" Link

Probably Not ... With so many mergers having taken place this past year, several Russell Index components have been acquired, or are still pending final closing of the deal within next several months. Unless the pending deals fall through, those components aren't going anywhere, except towards the agreed upon deal price. An example would be aQuantive (AQNT) $63.79 -0.26%, which is set to be acquired by Microsoft (MSFT) which isn't a small cap, so AQNT won't be one either.

"Really don't know" ... While I'm pulled in several directions each day (news, profiling trades, following those trade, market internals, Market Watch's, energy inventories), I'm not sure how many current Russell Index components have been acquired, or deals announced. However, I'm left with the general impression of what I have been able to post/cover here and in the Market Wraps that there have been several.

Mutual funds/ETF's that have to track the various Russell components will likely have some cash that needs to be put to work by, and perhaps after the yearly reconstitution.

Jeff Bailey : 5/31/2007 8:25:30 PM

Will see later this evening if that helps the Russell 2000's NH/NL, where NH have been lagging.

Jeff Bailey : 5/31/2007 8:24:23 PM

Closing Internals found at this Link

Note(s): NASDAQ's 10-day NH/NL ratio reversed up at needed 68.00% measure. Today's 220 new highs surpasses 4/25/07 benchmark of 202.

Keene Little : 5/31/2007 8:13:26 PM

I've been fooling around with a couple of ideas for what could be playing out in the market. I'm going to use the RUT here as an example and the NDX would look very similar. First of all, the ascending wedge idea for the final 5th wave up in the rally from March: Link

This is a little different from the one I showed this afternoon but is basically the same and shows a choppy pullback (perhaps after a small pop higher Friday morning) pullback and rally to a final high in opex week. The final high could be just above 860 which is a little higher than what I had shown this afternoon. If at any time a previous low is violated, such as 821.28 on May 24th, then it would signify that we've seen the high. As long as higher lows continue to hold then higher potential exists.

I've been wondering what would be playing out if we see a rally through much of the summer. This daily chart shows a parallel up-channel for the rally from March that might be only about half way through: Link

It looks small on the daily chart but the ascending wedge idea on the 60-min chart above is the dark green price depiction, with a down-up sequence into mid June and the wedge is outlined with the red trend lines. The more bullish idea is in light green and follows the parallel up-channel into the end of July/beginning of August and would take the RUT up above 900. There's a Fib projection from the July 2006 low where two equal legs up would be at 921.49.

My first reaction to this possibility was "no way". There are just way too many negative divergences and lack of internal breadth in this market to support this. But price is the final arbiter and I thought I'd better show this possibility so that you're aware of it. We're in an irrational market right now and I must admit it's been baffling trying to figure out where the top could be.

The RUT will set up a good short if it plays out like the pattern on the 60-min chart (or if it breaks down sooner). But if the price pattern looks more impulsive to the upside than what would be expected in the ascending wedge, then long will clearly be the place you'll want to be.

Jeff Bailey : 5/31/2007 8:07:14 PM

Yes, you can feel it. See Thursday's market wrap as the transports "cratered"! Link

Excellent technical analysis as the TRAN did get the quick 3-box reversal higher and TRAN easily took out tight bear stops at 10-or 30 sma.

Jeff Bailey : 5/31/2007 7:55:43 PM

Keene! (01:12:34) Did you notice the "shake out" (see my 12:56:33) pattern? Actually, that trade at 5,280 is a major cautioun sign to shorts!

You can see it can't you? BIG resistance for TRAN at 5,240, then the "shake out" (perhaps a "suck'm shorts in") to 5,140 and the whip back higher.

Jeff Bailey : 5/31/2007 7:25:19 PM

Bancroft Family To Discuss Dow Jones Bid With News Corp

DJ- Dow Jones & Co.'s (DJ) 125-year history as an independent media company could be nearing an end.

The Bancroft family, which controls 64% of the company's voting power, said in a preliminary statement that it would meet with Rupert Murdoch's News Corp. (NWS, NWSA) to discuss its $5 billion bid for Dow Jones, which includes The Wall Street Journal. The family also said it would consider other bidders and options for the company. The statement - which will be finalized after a special meeting of the company's board now under way - said the Bancroft family is planning to meet News Corp. "to determine whether, in the context of the current or any modified News Corporation proposal, it will be possible to ensure the level of commitment to editorial independence, integrity and journalistic freedom that is the hallmark of Dow Jones," according to a preliminary draft of the family's statement.

The family also said it was receptive "to other options that might achieve the same overarching objectives."

"After a detailed review of the business of Dow Jones and the evolving competitive environment in which it operates, the Family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corp.," the statement said.

The move opens up the door for Murdoch, but also could give him potential competition in his quest to own the company. Though the Bancrofts maintain the option not to sell, Thursday's step makes that outcome less likely.

The family has so far rejected Murdoch's offer, which represented a 67% premium to Dow Jones' stock price before his offer became public. But over the past several weeks, family members have been in frequent contact with one another to determine a possible alternative to doing a deal with Murdoch. Some family members have become convinced that "the status quo" is no longer an option for Dow Jones, according to people familiar with their thinking.

By publicly declaring their willingness to do a deal, the family hopes to convey to potentially interested parties that they are willing to consider offers besides Murdoch's.

The decision puts the board in a delicate position. Under existing standards, a company's board is generally obligated to at least listen to an incoming offer. So far, the board's position has been that it would take "no action" on News Corp.'s offer given the family's objection to it. After the News Corp. bid became public early this month, Dow Jones issued a statement saying it had been informed that votes representing 52% of the total voting shares of the company had rejected the bid.

The family emphasized in its statement that it wanted to protect the editorial independence of The Wall Street Journal and the strength of Dow Jones' other divisions. The family also said it isn't committing to a negotiation with Murdoch. "There can be no assurance that the dialogue with News Corporation or any other party will result in the negotiation, or the desire of family members to purse the negotiation, and execution of any agreement." The Bancrofts also stressed that its family members control the strings.

Dow Jones publishes The Wall Street Journal and its international and online editions, Barron's, the Far Eastern Economic Review, MarketWatch, Dow Jones Indexes and the Ottaway group of community newspapers. Dow Jones owns Factiva and co-owns SmartMoney with Hearst Corp. It also provides news content to CNBC television operations worldwide and to radio stations in the U.S.

Jeff Bailey : 5/31/2007 7:15:22 PM

Dow Jones (DJ) alert! $53.31 +0.87% ... CNBC reporting Bancroft family plans to discuss bid with New Corp.

DJ called higher at $58.25 extended.

NWS $23.63 -1.41% ... flat

Jeff Bailey : 5/31/2007 7:05:49 PM

December Unleaded (rb07z) settled $1.8557.

Jeff Bailey : 5/31/2007 7:01:33 PM

June Unleaded (rb07m) official settlement for delivery was $2.2512.

July Unleaded (rb07n) settled up $0.0042, or +0.19% at $2.2032.

Jeff Bailey : 5/31/2007 6:52:59 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 5/31/2007 6:34:18 PM

Cramer's Candidate #3 ... GLDD $9.06 +1.00% Link ... For Russell addition

Jeff Bailey : 5/31/2007 6:34:06 PM

Cramer's Candidate #2 ... FCSX $42.29 +1.36% Link ... For Russell addition

Jeff Bailey : 5/31/2007 6:33:54 PM

Cramer's Candidate #1 CCIX $26.56 -0.44% Link ... for Russell addition.

Jeff Bailey : 5/31/2007 6:17:18 PM

Weekly/Monthly Index Pivot Matrix with updated MONTHLY Pivot Levels at this Link

Jeff Bailey : 5/31/2007 6:02:46 PM

James Cramer discussing the yearly Russell reconstitution for those interested.

Keene Little : 5/31/2007 5:36:14 PM

Friday's pivot tables (new monthly values): Link and Link

Jeff Bailey : 5/31/2007 5:34:56 PM

Greenspan: Odds of a U.S. recession 1 out of 3 (May 11, 2007) Link

Jeff Bailey : 5/31/2007 5:33:03 PM

March, April and May MONTHLY Pivot Matrix at this Link

Note: Qtr figures are from last three months. At March 30 close, the SPX was up 0.2% for the quarter, or 0.2% YTD at that time. Think about that regarding today's 03:12:56 posting.

One "twist" not disclosed was that Mr. Greenspan stated he thought the probability of the U.S. slipping into a recession was 33.33% chance.

Jeff Bailey : 5/31/2007 4:13:02 PM

Dell Computer (DELL) ... earnings press release Link

Consensus was for EPS of $0.26 on Revenue of $13.96 B

Jeff Bailey : 5/31/2007 4:07:15 PM

Dell Computer (DELL) $26.91 +2.63% ... surging on headline numbers.

Jeff Bailey : 5/31/2007 4:03:23 PM

Reminder: June option expiration is June 15

Jeff Bailey : 5/31/2007 4:02:18 PM

2007 Russell Reconstitution Date Schedule

June 11 Preliminary lists of additions and deletions to Russell 3000.

June 15 & 22 Updates to the list

June 22 Reconstitution final after the close.

June 25 Final membership lists posted for Russell 3000, Russell 1000, Russell 2000, Russell Midcap and Russell Microcap indexes.

Keene Little : 5/31/2007 4:00:59 PM

A little fear of the dark (tomorrow morning's economic reports)? ES and YM sold off some right at cash close.

Keene Little : 5/31/2007 3:59:20 PM

BTW the NDX pattern and setup looks very similar to the RUT so it could play out the same way (down-up sequence into a minor new high by opex).

Keene Little : 5/31/2007 3:55:59 PM

No I haven't Jeff. Sorry, no idea on that one.

Jeff Bailey : 5/31/2007 3:55:23 PM

Keene ... have you done any work regarding the annual Russell reconstitution?

Keene Little : 5/31/2007 3:55:21 PM

Thanks for that correction Jane. That's right, he rolled out and up from his May spread. He's had a tough go of with bear call spreads. As I've said before, it's hard to plan for or trade a blow off top. Unfortunately for spread traders they'll struggle next with bull put spreads since blow off tops are usually reversed hard.

Jane Fox : 5/31/2007 3:52:45 PM

Actually Keene I think Mike cashed in his JUNE SPX spreads.

Keene Little : 5/31/2007 3:52:38 PM

It would appear we've got not only good traders amongst our readers but history buffs as well. Thanks Scott for sharing:

This is not a free market and it can't be with one central bank having cart blanche control over any part of it. Raising and lowering of interest rates and expanding and contracting money supply is inflationary and deflationary.

I believe it was Thomas Jefferson that warned of a central bank in a letter to the Secretary of the Treasury Albert Gallatin, "If the American people ever allow private banks to conrol the issue of the currency first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered."

I believe the beloved FED have proven Jefferson right. Property tax is confiscation anyway you look at it. Stop paying it and you will see who the actual owner of what you think is your property.

I plan on following the Fed's market down when it comes.

Jane Fox : 5/31/2007 3:49:39 PM

When I first moved to the US from Canada back in 1990 I had an ugly experience with cashiers not wanting Canadian money. I had gone into a Coffee World for a latte and decided to pay with cash (you remember back then when we used cash to buy our lattes). I counted out the money to the penny. Unfortunately though there were three Canadian pennies in the lot. The lady behind the counter took a pencil and pushed each one back to me and said, "We don't take Canadian money here." I almost reached across the counter and took her by the neck and throttled her but cooler heads prevailed and I just walked out never to return.

Jane Fox : 5/31/2007 3:44:26 PM

Economic Reports for tomorrow.

8:30a.m. May Nonfarm Payrolls. Expected: +145K. Previous: +88K.

8:30a.m. May Unemployment Rate. Expected: Unch. Previous: 4.5%.

8:30a.m. April Personal Income. Expected: +0.3%. Previous: +0.7%.

8:30a.m. April Personal Spending. Expected: +0.4%. Previous: +0.3%.

10:00a.m. End-May Reuters/U Of Mich Sentiment Index. Expected: 88.0. Previous: 88.7.

10:00a.m. April Pending Home Sales. Previous: -4.9%.

10:00a.m. May ISM Manufacturing Business Index. Expected: 54.0. Previous: 54.7.

Keene Little : 5/31/2007 3:44:03 PM

Knowing that a number of you are using the RUT for your bear call spreads, and considering Parnos has cashed in his May SPX bear call spreads (at a loss but he's controlling his risk), I thought I'd give you my best guess as to how the RUT will play out over the next two weeks. I showed the daily chart before and the resistance by its trend line along the highs from May 2006. I also think it's finishing its rally in an ascending wedge (ending diagonal 5th wave). Using the 60-min chart, this is how it might play out:

Note that this pattern takes the RUT into its high during opex week which fits my projections for SPX as well. I think the RUT will top out near 850 which means any short 850 calls could be at risk, especially if it does a throw-over above the trend line. If we get the pullback as projected, and especially knowing the shenanigans played with opex settlement prices, I'd strongly consider closing any spreads if your short position is less than 860. Link

Jane Fox : 5/31/2007 3:37:06 PM

Here is how the markets are trading in relation to their PDRs. Both ER and NQ have found some support at their PDHs. Link

Keene Little : 5/31/2007 3:36:50 PM

Jeff, the way the looney has been rallying lately it won't matter if we use Canadian money for our purchases--getting closer to parity with the strength in their dollar.

Jeff Bailey : 5/31/2007 3:36:16 PM

Why the Fed Is Right and the Market Wrong ... A "contrarian view?" Link

Jeff Bailey : 5/31/2007 3:27:33 PM

Answer (to 3:19:21) ... June 29, 2006. Roughly 11 months ago.

Jeff Bailey : 5/31/2007 3:21:31 PM

Keene ... Sometimes I can trick a cashier into taking a Canadian nickel, but shavings off the gold bar sure get a strange look.

Keene Little : 5/31/2007 3:20:07 PM

Oil (GSO) got a big bounce off this morning's low and looks downright bullish. But if I step back just a tad and look at in relation to the bounce off Tuesday's low, it looks like the leg up today could be completing an A-B-C bounce off Tuesday's low (based on the internal wave pattern of each leg). Link

The Fib projection for this leg up could see GSO rally to 49.24, or just under the downtrend line from July which is part of the down-channel that GSO currently finds itself: Link

Jeff Bailey : 5/31/2007 3:19:21 PM

Keene and Denise ... when was the last time the Fed took any action on interest rates?

Jeff Bailey : 5/31/2007 3:15:11 PM

03:00 Internals found at this Link

Keene Little : 5/31/2007 3:12:56 PM

From a Brit trader (thanks for sharing Denise):

Housing seems to suffer when the markets do well. Problem with Fed policy is that the effects are slow and built up over time - so whatever it did 6 months ago has still not affected people's behaviour. The Fed [and in fact any central bank] needs to be particularly careful and skillful [skill they dont have] when adjusting the disocunt rate.

Alot of well known economists argue that history shows it's the Fed who actually cause the majority of the economic fluctuations [i.e problems] because they try to fine tune the economy too much. They are too active.

BASIC CONCLUSION - they can be trusted to cock this up and which ever way they are supposed to move it they will either act too late or do the opposite. Let's see it play out over the next few weeks and months this summer. You'll be surprised how often central banks get it "wrong". Over here we are on the way up for interest rates - at least 1 more - but possibly 2 more by the end of the year. If the Fed cuts then your $ will be hammered and that will cause more problems which will need to be addressed later.

Good old Greenie with his doomsday recession prediction seems to have got it right.

Keene Little : 5/31/2007 3:03:21 PM

LOL, good one Jeff. I think they might take gold coins but the cashier would probably pocket it and run.

Jeff Bailey : 5/31/2007 3:02:35 PM

03:00 Market Watch found at this Link

Jeff Bailey : 5/31/2007 2:59:40 PM

Keene ... are you using a 1929 benchmark for euro/gold and SPX? :0)

Jeff Bailey : 5/31/2007 2:56:48 PM

Went to King Soopers last night. They ain't taking gold or euros in exchange for milk.

Keene Little : 5/31/2007 2:53:58 PM

Jeff, in euros and gold SPX has not rallied above its 2000 high (wink). Nor has the DOW. Only in Fed-induced inflated US dollars.

Keene Little : 5/31/2007 2:52:46 PM

Here's an update to the RUT's daily chart that shows price stalled today at the trend line along the highs since May 2006. Today's candle might be left as a shooting star at resistance (bearish reversal signal) if it closes near here or a little lower: Link

The trouble I'm having with the short term pattern is that today's pullback from the high looks very corrective with overlapping highs and lows, and looks like a bull flag. This corrective pullback suggests a resolution higher. That might be good for only a minor new high if it happens but that's the risk if you're thinking about the short side here. The risk for those who are long is that a drop from this kind of choppy pullback is often a fast sell off. Maybe because of tomorrow's numbers? Link

Jeff Bailey : 5/31/2007 2:46:47 PM

Well Keene, like Fed bashers have said for years, the S&P 500 is the reflection of an economy, and it would never trade above the 2000 highs as Greenspan created "this whole mess."

Jeff Bailey : 5/31/2007 2:41:01 PM

And trying to anticipate them equally as dangerous right now Marc!

EWJ $15.62 +1.10% ...

Keene Little : 5/31/2007 2:38:05 PM

Perhaps you're thinking of my criticism of the Fed for always being late to the party--they follow the market down and they follow it back up. All they do is aggravate the swings instead of dampening them.

Marc Eckelberry : 5/31/2007 2:37:29 PM

Only short rallies and extremes at that. Use yor pivots. In any case, buying pullbacks is much better, like today's NQ gap close. Gotta go for the week, I just wanted to throw in a couple of posts the past few days to drum up your courage to buy gold and equities the past few days. It's easy to be a skeptic, but beginning traders need help to go long, the hardest thing to do emotionally and why so many "smart" traders fail.

Keene Little : 5/31/2007 2:36:28 PM

I don't ever remembering criticizing Greenspan for cutting interest rates. I do remember criticizing him for being a buffoon but not for cutting rates.

Jeff Bailey : 5/31/2007 2:33:24 PM

Greenspan was harshly criticized by Keene and others for cutting rates during the last recession.

Marc Eckelberry : 5/31/2007 2:33:10 PM

Shorting breakdowns is like buying rallies in 2001. It's stupid.

Jeff Bailey : 5/31/2007 2:30:30 PM

And don't forget these two very, very smart men that have studied and learned from history, as to not repeat past errors. Link and Link

Keene Little : 5/31/2007 2:29:17 PM

You're right Jeff--the global market is much more in synch today and that's what makes the coming correction likey to be a global event. As for the liquidity, it's a result of massive speculative leveraging and borrowing. The whole thing today is built on credit, especially all the LBOs and M&As that we're getting now. It's even prompted Bernanke to say he thinks it's "time to look into it." As usual it'll be like closing the barn door long after the horses escaped. That Bloomberg article said it all--the shear numbers we're taling about today means the coming correction will be like nothing we've seen before.

Jeff Bailey : 5/31/2007 2:27:52 PM

Any progress in farming practices? Oh yeah.

Jeff Bailey : 5/31/2007 2:26:46 PM

12.9 million shares ... financial markets are MUCH different today folks.

Jeff Bailey : 5/31/2007 2:26:05 PM

SPY $153.43 +0.03% ... modest volume today at 76.5 million shares.

The Great Depression of 1929 - Could It Happen Again? Link

Some have been thinking this for the last 5 years and are still on the sidelines.

Jeff Bailey : 5/31/2007 2:20:50 PM

1929 Hudson Motor Car was a gem with its Super 6.

Jeff Bailey : 5/31/2007 2:18:13 PM

Keene ... did you read yesterday's FOMC release?

By the way ... market liquidity and global trade today is NOTHING like it was in 1929.

Heck, if people think thinks are the same today as they were in 1929, they'd better get a new set of encyclopedias. ;)

Jeff Bailey : 5/31/2007 2:15:08 PM

Will get new MONTHLY Pivot levels at today's close.

Jeff Bailey : 5/31/2007 2:13:17 PM

EVEN though MACD on 30-minute time interval looks similar. Hmmm... looks like RUT/IWM more like 4/21/07 intra-day action.

Jeff Bailey : 5/31/2007 2:12:11 PM

A different response from the RUT.X in last hour than found on 4/23/07.

Tab Gilles : 5/31/2007 2:04:17 PM

EIA Weekly Report Link

Keene Little : 5/31/2007 2:04:00 PM

They don't call the Boyz in the big banks smart money for nothing.

Keene Little : 5/31/2007 2:03:05 PM

Right you are Jeff. Merger mania is causing the market to rally on an almost daily basis, even while the economy slows. The last time we saw the exact same thing going on was in 1929. Even the big banks themselves are getting ready for what they think will be a big correction--Bloomberg article out yesterday on what the big banks are doing to prepare themselves: Link

Jeff Bailey : 5/31/2007 2:01:33 PM

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

EWJ and QGY-SD are now closed.

Jane Fox : 5/31/2007 1:57:58 PM

That chart is interesting Keene because if your trendline breaks it suggests the next stop will be around 13450 which is the low from yesterday and where I will be bail on my DIA puts.

Keene Little : 5/31/2007 1:55:39 PM

Like I said yesterday, who needs anything other than trend lines. Believe it or not, the uptrend line from last Thursday for the DOW is still in play: Link

Jane Fox : 5/31/2007 1:53:54 PM

Based on this chart I am going to go long DIA puts (July 136, DAZSF). I think this market has a very good chance of at least retesting the lower trendline and you have a very good place for a stop. Link

Jeff Bailey : 5/31/2007 1:53:01 PM

email response ... Yes! AG Edwards (AGE) $87.70 +13.67% is why the XBD.X is so strong today.

Wachovia buying AGE for $6.8 Billion.

AP Story Link

Keene Little : 5/31/2007 1:49:45 PM

The brokers (XBD) are having a good day, up +2.6% after pulling back a little today, but interestingly MER gave up its early morning gain and is dancing around zero for the day. That's another warning. But in the meantime the daily pattern for XBD looks like it could use a pullback and then final assault on a new high to finish the 5th of its 5th wave up from March (by mid June, opex week). Link

Jeff Bailey : 5/31/2007 1:40:51 PM

EBAY $32.50, OLN $20.00, GM $30.00, BOOM $36.00, CYPB $15.00

Jeff Bailey : 5/31/2007 1:32:22 PM

Forest Labs (FRX) $50.75 -0.60% ...

Jeff Bailey : 5/31/2007 1:41:38 PM

Email response (from last week) ... Don't let an "thin" option discourage you from purchase as even a thin option can provide handsome profits.

Jeff Bailey : 5/31/2007 1:29:45 PM

Cypress Bioscience (CYPB) target alert! $15.00

Keene Little : 5/31/2007 1:29:29 PM

Silver (YI, July contract) has had a nice bounce over the past few days after finding support at its uptrend line along the lows since January. It has now run into resistance from a couple of different things. It's retesting its broken uptrend line from June 2006 and its 50-dma. And the 2nd leg up in the bounce from the May low achieved 162% of the 1st leg up by tagging 13.53 this morning. It might make it back up to its downtrend line from February, currently near 13.72, but at this point I'd say there's limited, if any, additional upside remaining for its bounce. Link

Jeff Bailey : 5/31/2007 1:28:01 PM

01:10 Internals found at this Link

Linda Piazza : 5/31/2007 1:14:56 PM

The TRAN is dropping from its high of the day now. It hasn't even undone its breakout status on a 15-minute Keltner chart, but it did approach its 30-minute target closely enough that it's possible that was it for the day. We just don't know yet. I can't give any definitive suggestion for what happens next because signals aren't giving me anything definitive. A scrambled-up consolidation day wouldn't surprise anyone today anyway, because that's what we see so often on a Thursday and also because yesterday's big gains are being consolidated. Just make sure that scrambled-up consolidation day doesn't give way to steeper-than-expected declines. The TRAN, because it moves so quickly, can be one guide.

Jeff Bailey : 5/31/2007 1:14:03 PM

01:10 Market Watch found at this Link

Keene Little : 5/31/2007 1:12:34 PM

Time to throw out two more cautions--one on TRAN and the other due to the banks (BIX). This is the updated daily chart for TRAN that I showed in last night's Wrap where I said we could get a quick move higher today followed by a collapse back down inside its little ascending wedge pattern (if that's what's playing out): Link

Obviously we don't have the collapse back inside the pattern yet but if it happens (with a drop back below about 5270) then it would be a head fake break followed by a sell signal. The second caution is due to the underperformance of the banks. This is the chart I had used last night: Link

I mentioned the banks look bearish after breaking the uptrend line from April. It might get a bounce back up for a retest of its high but I had said this one looks bearish. A rally in the broader market without the banks is always suspect and oftentimes the banks will lead the way. Therefore if the Trannies drop back down and banks continue lower then it just adds to the "wall of worry" for the bulls. But this wall could be insurmountable.

Jane Fox : 5/31/2007 1:12:23 PM

The trade I took earlier is an excellent example of knowing when to get in but also knowing how to STAY in. This is where the art of trading comes in. The science will tell you where to enter but the art is staying in.

I got a very good entry and made 13 ticks and then was stopped at b/e. Was that a bad trade, nope. It was a good trade and I would do it again in a heartbeat. Once you get 13 ticks profit you would be a fool to let that turn into a loss yet 13 ticks is not quite enough to lock in any kind of profit. It was just my bad luck that I was stopped but if I had the exact same setup tomorrow I would play it the same way.

Jeff Bailey : 5/31/2007 1:07:17 PM

QGY-SD $4.80 x $5.10 ... CYPB $15.14.

WEEKLY Pivot is $14.69.

Jeff Bailey : 5/31/2007 1:05:45 PM

Swing trade put exit alert for the Cypress Bioscience CYPB July $20 Puts (QGY-SD) at the bid of $4.90.

CYPB $15.10 -7.41% ...

Jeff Bailey : 5/31/2007 12:56:55 PM

That's another 52-week high and a triple top buy!

Jeff Bailey : 5/31/2007 12:56:33 PM

Dow Transports (TRAN) 40-point box chart Link

Jeff Bailey : 5/31/2007 12:52:53 PM

Oh my! Great alert Linda!

Linda Piazza : 5/31/2007 12:41:21 PM

I'm just dropping in for a moment. Many of you will know that I often watch the TRAN, the Dow Jones Transportation Index, as a sort of sentiment indicator. Although there are exceptions, I've found that the SPX, OEX and Dow don't tend to go too far one direction unless the TRAN is headed that direction, too. Today, the TRAN has headed to a new high, and is now above the nice round number of 5300. I show a potential upside target for the TRAN of 5318.50 (Keltner, 30-minute), with the TRAN having already reached a high just under 5308 today. So, you want-to-be bears should be aware that the TRAN isn't currently supporting a bearish OEX, SPX or Dow play, remembering that there's not always a one-on-one correlation. You bulls should watch, too, though, as the TRAN can turn on a dime and it's approaching a possible upside target. Don't trade the SPX, OEX or Dow based on what the TRAN is doing, but do use it as you would a favorite breadth indicator or other such thing.

Keene Little : 5/31/2007 12:40:09 PM

Another reason for caution as the this little rocket ship, otherwise known as the stock market, makes it into the stratosphere (which makes breathing difficult and causes hypoxia-induced euphoria) is that the DOW is nearing a long term Fib projection based on the move up from the October 2002 low. Two equal legs up from there is at 13706. Link

Measured moves like this (symmetry in the market) are often turning points. It could easily over-throw this by a 100 points though so it's not a market timing tool but instead just another heads up, especially with the bearish divergences and lack of market breadth we're seeing.

Jeff Bailey : 5/31/2007 12:40:03 PM

Now slap a retracement on the rb07n from recent high bar chart close of $2.33 to that 1/18/07 low close of $1.60.

Jeff Bailey : 5/31/2007 12:37:04 PM

July Unleaded (rb07n) $0.02-box chart Link

Jeff Bailey : 5/31/2007 12:32:50 PM

This should be a near-term support area.

Jeff Bailey : 5/31/2007 12:32:32 PM

O gets another square at $2.14

Jeff Bailey : 5/31/2007 12:25:53 PM

O gets the square for July Unleaded at $2.16. Gavie its first "sell signal" at $2.18 yesterday. First since "buy signal" at $1.82 in February. Chart coming.

Keene Little : 5/31/2007 12:17:51 PM

One of the DOW charts I posted last night ( Link ) shows the same ascending wedge idea that I showed this morning for SPX. A slightly different version of that would be a "normal" 5-wave move up from last week's low in a parallel up-channel, as shown in this 60-min chart: Link

I'm assuming for now that we're going to press higher today to finish the 3rd wave which will be followed by a 4th wave pullback into Monday to perhaps the current trading level. That would then set up the final 5th of the 5th wave for a high early next week. At least if it played out this way it would set up another shorting opportunity to correct the 5-wave move.

Whether that kind of 5-wave move marks THE top or just one of a few more to go can't be known yet. It would take a break below 13400 to say we've seen a market high (after the 5-wave move completes, not from here). The Fib projections on the chart are based on the size of the 1st wave off the March low. So 13777 is where wave-5 = 62% of wave-1 and 13995 (let's call it 14K) is where wave-5 = wave-1.

Jane Fox : 5/31/2007 12:13:43 PM

Too funny, I get stopped and then it turns around and hits my target. Like I said my stop was too close but once I got 13 ticks profit there was no sense in taking a loss on that trade. So I will wait for the next one.

Jeff Bailey : 5/31/2007 12:13:01 PM

June Unleaded (rb07m) $2.23 -1.76% ... getting hit into today's expiration.

Jane Fox : 5/31/2007 12:09:05 PM

Had my stop too close and was stopped out at b/e.

Marc Eckelberry : 5/31/2007 12:07:16 PM

663.70 is key. I don't think oil matters that much, we all know there is inflation out there. It's really about the dollar for gold these days. GDP tomorrow will be critical for everyone.

Jeff Bailey : 5/31/2007 12:04:14 PM

Swing trade put option alert ... for one (1) of the Valero Energy VLO Dec $70 Puts (ZPY-XN) at the offer of $4.30.

VLO $74.22 -1.29%

Keene Little : 5/31/2007 11:55:37 AM

I showed the ascending wedge idea for SPX and here's an update to the pullback/consolidation idea using the DOW's 60-min chart. Assuming this morning's high is the end of the bounce (not sure about that yet), if we get a deeper pullback now, as per the light green depiction, I get a downside Fib projection at 13350: Link

That projection is based on the 2nd leg down being 162% of the 1st leg down (which was last week's decline) and would be typical for what's called an expanded or irregular flat correction (EW terminology). A move down to that level by next Tuesday morning would have it finding support at the uptrend line from March. That would obviously be a healthy drop from where we are currently trading.

The other possibility is the sideways triangle consolidation which I've updated off this morning's high. It's only a guess at this point how this could play out but some kind of sideways move over to the uptrend line would be a typical move. From there we'd get the final rally leg higher, perhaps into opex week as I discussed in last night's Wrap.

Jane Fox : 5/31/2007 11:55:20 AM

Heck $130 here, $130 there. I can take it.

Marc Eckelberry : 5/31/2007 11:55:13 AM

OIl is testing 62.90 support and that is hurting gold a little, but watch the 10 dma at the close, that is what will count (664). The dollar is weaker, so support stays for now.

Jane Fox : 5/31/2007 11:54:46 AM

I got to 13 ticks profit. Someday I will realize that when scalping ER you don't try for more than that. Lowering my target to 848.50 and will be happy with the 13ticks.

Jeff Bailey : 5/31/2007 11:54:42 AM

EIA's Crude Oil # Days Supply should be about 22.10 days. Link

Down from last week's 22.4.

Marc Eckelberry : 5/31/2007 11:52:58 AM

I also believe that Asians will be hording gold, limiting supply.

Jane Fox : 5/31/2007 11:51:54 AM

Ok enough I am raising my stop to b/e.

Marc Eckelberry : 5/31/2007 11:50:41 AM

I hasten to add that there was nothing to make gold a buy yesterday other than trendline holding and my expectations that Feds will not raise rates and oil will eventually head higher. So there is a bit of gambling, which is why we have stops. YG August stops should be at 657, no lower.

Jane Fox : 5/31/2007 11:49:39 AM

Raising the stop a tad to 846.4 and I have 6ticks at risk now.

Jeff Bailey : 5/31/2007 11:47:37 AM

StreetTracks Gold (GLD) $1 box chart (allows for three-years of observation) Link

Jane Fox : 5/31/2007 11:45:41 AM

I use weekly charts and a 12MA on the Crude, 7MA on the $ and 5MA on the Swiss Franc.

Marc Eckelberry : 5/31/2007 11:45:07 AM

Jeff, I used to trade gold on momentum when we had oil up, usd down and swiss up. The Swiss is no longer part of that trio. In fact, a lower swiss is like a lower yen, it means carry trade is alive. I stick to oil and USD, although right now it's all about USD, oil is a little irrelevant. But that is all for momentum. There are many other factors that come in play such as supply etc...

Jane Fox : 5/31/2007 11:44:07 AM

I don't use these charts for Gold entries just to check to see if I should go long or not. Of course the daily charts confirm that I should be on the sidelines.

Jane Fox : 5/31/2007 11:42:38 AM

Raising my stop to 846.2

Jane Fox : 5/31/2007 11:40:59 AM

Funny you should mention those Gold relationships Marc because they are why I am on the sidelines with Gold. I post these charts ever so often. Link

Jeff Bailey : 5/31/2007 11:38:50 AM

Marc! I'd love to see how a trader trades that relationship. Could you show us here in the market monitor?

Maybe post some historical charts, the paradigm shift, etc.

Would be VERY educational and it sounds profitable.

Jane Fox : 5/31/2007 11:36:21 AM

I will be moving that stop up once we move into profit.

Jane Fox : 5/31/2007 11:36:06 AM

Long ER at 847.20 stop at 845.1 and target is 849.00

Jeff Bailey : 5/31/2007 11:35:48 AM

EIA: Weekly Gross Inputs, Crude Oil Inputs, Refinery Operable Capacity and Percent Utilization Table at this Link

Marc Eckelberry : 5/31/2007 11:38:55 AM

A few years ago, I told you to trade gold using swiss francs (and taught others this trick, using three confirmation: oil up, swiss up and usd down). Gold traders now know that the old paradigm has changed as the Swiss franc is now a carry trade, thus borrowed cheap like the Yen, so a pullback in the swiss means nothing for gold. Gold is a recipient of the carry trade which is why it rallies when equities rally. The dollar is more of a concern for gold. We have GDP tomorrow.

Jane Fox : 5/31/2007 11:29:21 AM

If I get triggered long at 847.20 my stop will be just under daily lows.

Jane Fox : 5/31/2007 11:26:41 AM

My long is now sitting at 847.20.

Jane Fox : 5/31/2007 11:25:36 AM

I did mention this morning that Gold's front month is now August. Tks for the reminder Marc.

Marc Eckelberry : 5/31/2007 11:24:53 AM

Jane, gold was a buy when it held multi-month trednline for a second time yesterday, but then again, I am a bit of a cowboy. I will just be adding contracts to my position (659 August) if we close above 664. You should be trading August now.

Jane Fox : 5/31/2007 11:24:42 AM

I will now go long ER at 847.8

Jane Fox : 5/31/2007 11:24:05 AM

US $ could not even muster a close above its 50EMA.

Jane Fox : 5/31/2007 11:23:33 AM

This is one sick little puppy. Link

Marc Eckelberry : 5/31/2007 11:22:57 AM

There are great shorts, but you have to hit extreme highs and not get greedy. FOr the average trader, it's best to buy pullbacks that stay above SPX 20 dma and momentum above 5/10 dma.

Jane Fox : 5/31/2007 11:21:57 AM

Gold is not a buy yet but I think it will be soon because I think the $ will retest its yearly lows. That is my story and I am sticking to it. Link

Marc Eckelberry : 5/31/2007 11:20:56 AM

There always has to be some bad news in order to get pullbacks in a bull market. You have to shut it out and buy support, wchich in this case is crystal clear at SPX 20 dma. There is no sense in calling for market collapses until we close below that. Anyone who traded the last big bull knows this.

Jeff Bailey : 5/31/2007 11:20:50 AM

11:00 Internals found at this Link

Jane Fox : 5/31/2007 11:20:34 AM

I will go long ER at 848.20

Keene Little : 5/31/2007 11:18:58 AM

The US dollar is still holding its uptrend. I'd be a little cautious about jumping on today's bounce in gold. So far it's just a bounce off its 200-dma (August contract), nothing more. The euro is also still in its downtrend and below its 50-dma and the euro and gold have been tracking fairly well.

Jeff Bailey : 5/31/2007 11:14:45 AM

Swing trade short stopped alert ... on the iShares Japan (EWJ) $14.62 +1.05% ...

Marc Eckelberry : 5/31/2007 11:18:20 AM

All that nonsense about gold breaking down on Asia. What baloney. Asians buy gold when they are scared. Don't read the press if you want to make money. In any case, the trendline held twice, it was a buy yesterday and is now screaming if it closes above 664.80. As for buying pullbacks in stocks, no comment. Price speaks for itself. There will be some profit taking very soon, it will not mean the end of the world.

Keene Little : 5/31/2007 11:13:10 AM

The wave count for the move up from yesterday afternoon's low would look best with a minor new high and the Fib projection for the move up from last Thursday points to just shy of SPX 1537 which is where I'm hoping it will get before a larger pullback (and the place I'd like to try a short play). But it's struggling with the broken uptrend line from March so it might not make it any higher.

The ascending wedge idea that I showed in last night's Wrap and one of the SPX charts posted last night looks like a good possibility from here. This 30-min chart shows an updated view of it and how it could play out into next week, topping out around the 1552 Fib level that I had discussed previously (which of course is the March 2000 intraday high). Link

Jeff Bailey : 5/31/2007 11:02:30 AM

11:00 Market Watch found at this Link

Jeff Bailey : 5/31/2007 10:59:27 AM

Semiconductor HOLDRs (SMH) $36.54 +1.02% ... tentative still under WEEKLY Pivot ($36.59).

Jeff Bailey : 5/31/2007 10:58:29 AM

GSO.X 200.51 +0.81% ... gapped above WEEKLY R1 (199.12) at the open and hasn't looked back.

Jane Fox : 5/31/2007 10:58:19 AM

We had a little correction but the bulls are back in full force now. Link

Jeff Bailey : 5/31/2007 10:57:33 AM

QQQQ $47.50 +0.63% ... new intra-day high!

Jane Fox : 5/31/2007 10:56:39 AM

Here is the Smith Open number charts. All markets are trading at +10 Link

Jeff Bailey : 5/31/2007 10:57:06 AM

I knew there's be another one coming soon.

Did you ever come up with a China ETF to short?

Might find investors there looking for the door and opting for U.S. assets again.

Jeff Bailey : 5/31/2007 10:53:31 AM

EIA: Weekly Crude Oil, Total Gasoline, Reform. Gasoline and Total Distillate Stockpiles Table at this Link

Keene Little : 5/31/2007 10:40:23 AM

Jeff, another minor high would actually set up a better shorting opportunity so I'll be at it again soon ;-)

Jeff Bailey : 5/31/2007 10:37:08 AM

At least he isn't trying to short it again ... ;)

Jeff Bailey : 5/31/2007 10:28:32 AM

Swing trade covered call(s) alert ... Let's sell two (2) of the ishares Russell 2000 IWM June $85 Calls (IOW-FG) at the bid of $0.75.

IWM $84.14 +0.40% ...

Keene Little : 5/31/2007 10:21:29 AM

My 9:45 post did in fact mark the top of the market so aren't you glad you didn't jump in and buy it? But we may only get a small pullback here and another minor high before seeing a larger pullback. Continue to be cautious about whipsaws.

Jeff Bailey : 5/31/2007 10:02:57 AM

10:00 Market Watch found at this Link

Jeff Bailey : 5/31/2007 9:53:31 AM

IWM $84.30 +0.59% ... probing WEEKLY 19.1% retracement.

Jeff Bailey : 5/31/2007 9:52:32 AM

It happens to everyone Keene, at least once. Still, you can buy a high and control your risk, and more than likely, SELL HIGHER as overhead supply is limited!

Jeff Bailey : 5/31/2007 9:46:37 AM

Russell 2000 (RUT.X) 848 +0.56% Link ... X gets 2 squares. All-time high!

Keene Little : 5/31/2007 9:44:48 AM

NDX and RUT have rallied above last week's highs so it's unanimous. Parabolic rallies rule! Momentum is clearly to the upside so don't fight it. Joining it this late though is always a difficult choice and usually about the time you decide you can't stand it any longer and jump in is when it reverses. Maybe that's only happened to me (wink).

Jeff Bailey : 5/31/2007 9:44:02 AM

NYSE Composite ($NYA.X) Link 10,000 !!!!

Jeff Bailey : 5/31/2007 9:42:19 AM

Cybress Bioscience (CYBP) 15.43 -5.39% ... weak early. Approaching bearish target of $15.00.

QGY-SD $4.50 x $4.80

Linda Piazza : 5/31/2007 9:41:46 AM

I don't have a strong sense of what will happen today, but I wanted to mention that we're about to see 10:00 economic releases. With the sometimes tendency for Thursdays to be choppy consolidation days, consolidating Wednesday gains, the 10:00 release period would be a perfect time from which a pullback might begin for technical reasons, beginning the consolidation process. This is not a suggestion to enter a bearish trade but rather a warning to bulls to be careful today not to give back gains in case the markets pull back, producing a consolidation day.

Jeff Bailey : 5/31/2007 9:40:40 AM

Broker/Dealer Index (XBD.X) 268.25 +3.44% ... surging.

Jeff Bailey : 5/31/2007 9:39:22 AM

S&P Banks (BIX.X) 405.26 +0.28% ... probes WEEKLY Pivot.

Jeff Bailey : 5/31/2007 9:35:07 AM

NYSE Composite ($NYA.X) 9983.61 +0.20% ... All-time high.

Keene Little : 5/31/2007 9:34:13 AM

SPX just peaked its head above last week's high which negates the bearish wave count (from last week) on that chart, following the DOW. No surprise here. But it's now tagging its broken uptrend line from March through the May 10th low so watch for a pullback to start (may only be a relatively small one).

Jeff Bailey : 5/31/2007 9:33:13 AM

Swing trade short lower stop alert on the iShares Japan (EWJ) $14.56 +0.69% ... to $14.62. (from $14.80).

Keene Little : 5/31/2007 9:19:59 AM

There's been a slight bullish bias for the overnight equity futures so we'll see if that follows through after the open. Short term I see the possibility for a quick pullback and a push to a minor new high (get SPX above last week's high) and then a larger pullback/decline. It could get a bit whippy early this morning before setting up a pullback. Then it will be a matter of trying to figure out how much of a pullback we can expect.

Linda Piazza : 5/31/2007 9:19:12 AM

Jane asked yesterday what I thought about the price/RSI bearish divergences we're seeing on some indices. They're certainly present on the SPX, for example. I don't know that I can add anything enlightening. My thought about such divergences is that they're like a heads-up, in this case for bulls, to prepare an exit plan and attend to stops, but that price has to be the arbiter. They just signal that it's time to have such a plan, just in case. Such divergences can be resolved by sideways trading, a steep decline, or even, illogically, by a choppy sideways-up movement, although that last one is rarer. We of course saw a similar setup with price/RSI bearish divergences resolve with February's steep decline. In that case, a price break of the rising trendline was the determinant. It was of course difficult to get into a bearish play on that drop, if subscribers remember the day of the steepest drop. Therein lies the problem for bears who want to enter, hoping for such a drop. It's a quandary that some will resolve one way--waiting for a price break and understanding that it may come swiftly enough that they can't participate or trying to find a top and understanding that they might be chopped to pieces even if they're diligent about setting stops because we really have no evidence yet that supports such plays. Just that warning. It's a tough decision and one that will be different for each trader. I don't know what will happen today, but I warned subscribers last Thursday that no technical damage had been done yet, and that the SPX might bounce up through its latest channel again. I profess that I don't understand the unrelenting momentum, the "any news is good news" reactions, and I don't like at all the distance that indices have pulled away from 200-ema and -sma's, but . . .

So, bulls, keep ratcheting up those stops. That I know for certain is good advice. The rest: this market has rendered me clueless.

Jane Fox : 5/31/2007 9:11:21 AM

Silver is making a move upward. Link

Jane Fox : 5/31/2007 9:10:15 AM

Quick look at crude and as you can see it is still in its trading range. MACD and RSI are not talking either. Link

Jane Fox : 5/31/2007 9:07:09 AM

The daily gold chart is certainly not telling me it is time to go long but patience grasshopper your time is coming. Link

Jane Fox : 5/31/2007 9:06:18 AM

The US$ has had plenty of opportunity to break above its 50EMA but so far has not been able to and I think gravity will take over and it will retest its yearly lows. This is why I think Gold will be the market for me to get long. Link

Jane Fox : 5/31/2007 9:01:26 AM

Same analysis for the NAZ. Link

Jane Fox : 5/31/2007 9:00:32 AM

MACD and RSI on the Russell chart is not quite as clear but since this market has a tendency to be more volatile and take deeper dips the MACD does as well and although it looks like it is moving upward it is still not testing new yearly highs like price. Link

Jane Fox : 5/31/2007 8:57:00 AM

Ditto for the DOW. Link

Jane Fox : 5/31/2007 8:56:10 AM

Yesterday SPX made a new yearly high intraday and closed at an all time record, the previous record close was 1527 made in March, 2000. However and I think this is a very big however, the MACD and RSI are both not confirming these highs and I think are telling me we are headed for this correction I have been talking about ad nauseam. Link

Jane Fox : 5/31/2007 8:48:54 AM

WASHINGTON (MarketWatch) - The U.S. economy slowed to a crawl in the first quarter, held back by falling investments in homes, shrinking inventories and a large trade gap, the Commerce Department reported Thursday.

The economy grew at a 0.6% annualized pace in the quarter, revised down from the initial estimate of 1.3%, the government said in its second estimate of quarterly gross domestic product. It was the slowest growth since late 2002.

Economists surveyed by MarketWatch were expecting GDP to be revised to 0.7%.

The economy has grown just 1.9% in the past four quarters, well below the 3% growth most economists say is the long-run potential. It's the weakest year-over-year growth in four years.

Consumers continued to lead the way in the first quarter with strong gains in spending and income. The business sector, however, invested little and saw year-over-year before-tax profit growth fall to the lowest level of the five-year-old expansion.

Economy-wide inflation surged at the fastest pace in 16 years, and core consumer inflation accelerated a bit above the Federal Reserve's comfort zone.

Jane Fox : 5/31/2007 8:47:27 AM

WASHINGTON (MarketWatch) -- First-time applications for state unemployment benefits stayed elevated above 300,000 in the latest week, but fell back a bit from last week's levels, the Labor Department reported Thursday.

Initial claims fell by 4,000 to a seasonally adjusted 310,000 in the week ending May 26, the government reported. Last week, claims rose for the first time in six weeks, to a revised 314,000.

Jane Fox : 5/31/2007 8:47:08 AM

The gold's front month is now August and why you see that gap at the open of the overnight session but higher highs and lows were due to the $ making lower lows and highs. Looking at the daily chart of the $ I think it is ready to turn around and challenge its yearly lows so gold may be setting up as a very good buy.

I heard a comment yesterday that you can no longer just look at the American markets but you need to watch the global markets as well. This of course has been the case for a while but gets even more important each and every year. When I started trading I never heard about the Chinese, German markets but now I watch them closely. Case in point the DAX is even more bullish than the DOW and when the DOW corrects you can be rest assured the DAX will as well. Link

Jane Fox : 5/31/2007 8:38:36 AM

Even though we started yesterday with news that I though could bring the markets to their knees they were all able find the needed buyers and make new daily highs and in the case of ES new yearly highs and YM new all time highs. At some point this market has to make a correction, I am not talking transition into a cyclical bear market (heaven forbid) but take a normal market correction like markets have always done since we have had markets. I know I am sounding like a broken record but the longer this goes on the harder that correction will be and the more it will hurt. Link

Jane Fox : 5/31/2007 8:26:48 AM

Many economic reports today:

8:30a.m. Initial Jobless Claims.. 8:30a.m. 1Q Preliminary GDP.

8:30a.m. 1Q Corp Profits, prelim.

9:45a.m. May Chicago PMI. .

10:00a.m. April Help-Wanted Index.

10:00a.m. April Construction Spending.

11:00a.m. May Kansas City Fed Manufacturing Survey

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