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Keene Little : 6/26/2007 12:37:53 AM

After reviewing a few different EW opinions about what this market is doing, along with some statistics about what we should expect for this week (typically bullish in the 2nd half of the week), I thought I'd present a couple of ideas for what might be playing out here. I'll stick with the SPX for this analysis.

First is a daily chart showing two possibilities--one bearish and the other bullish (as usual). The bearish pattern says the market topped out on June 1st and we've now started a 3rd wave decline since the June 15 high. The projection is to finish one larger degree 1st wave down by mid July at the July uptrend line near 1440. Link

The bullish wave count calls for either a continuation of the rally from Monday's low, or a bounce and new low before the next rally leg. Two equal legs down from June 1st is at 1485.56 and that's why the bearish key level is identified at 1485--any lower and the odds increase that we're on the bearish price path. Upside potential is near 1560 for the bullish wave count--where the 5th wave would equal the 1st wave in the rally from March.

Using the 60-min chart, here's how the two potential bullish scenarios might look from here (and the dark red bearish path): Link Use the downtrend line from June 20th as your guide since a firm break of it should be the indication that the leg down is complete. Any bounce on Tuesday that finds resistance there could be followed by another new low before it's ready to rally.

Some Elliotticians are calling for a large sideways triangle to play out, that started from the June 1st high, for a 4th wave correction and then a final 5th wave rally leg into July/August. The triangle idea needs another up-down sequence and could take another 3 weeks or so to play out before setting up the next rally to new highs. I'm showing the triangle idea as well as the possibility that the rally could start from here (or after a minor new low) and finish earlier in July (if the 1560 area is to be the ultimate high): Link

I showed the above chart last week and referred to the extended 1st wave as the move up from July to February. I haven't seen this wave count from other Elliotticians but I think it has a good chance of being correct (assuming the bearish wave count is not the one in play). The Fibs for this pattern point to just above 1600 by mid August so keep this in mind as you consider your trading plan for the summer.

A move above 1540 would say we should be looking for at least 1560 if not 1600. But a move below 1485 would go a long way towards telling us the bulls are already done. And if that happens this week it could catch a lot of bulls leaning the wrong way (expecting this week to be bullish). Continue to scalp moves until the larger pattern clears up some.

Keene Little : 6/25/2007 10:04:56 PM

Tuesday's pivot tables: Link and Link

OI Technical Staff : 6/25/2007 10:00:00 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 : 6/25/2007 5:11:52 PM

August Unleaded (rb07q) settled up $0.0043, or +0.19% at $2.2519.

Up $0.0191, or +0.86% since last Monday's settlement.

Jeff Bailey : 6/25/2007 5:11:48 PM

August Crude Oil (cl07q) settled up $0.04, or +0.06% at $69.18.

Down $0.44, or -0.632% since last Monday's settlement.

Jeff Bailey : 6/25/2007 4:58:58 PM

Closing U.S. Market Watch found at this Link

Marc Eckelberry : 6/25/2007 4:35:32 PM

By the way, YM 13480 is 50 dma.

Marc Eckelberry : 6/25/2007 4:37:09 PM

For those who picked up those INTC Jan 22.50 calls, I plan on exiting the trade before July 4th. I am very weary of the summer, but I bought a lot of time in case we wake up with a crash. Break even is 25.05 by January 2008, I don't think this is a big risk. But if we hit 25/25.50, I'm cashing in for the summer. Stops should be at INTC 22.90.

Jeff Bailey : 6/25/2007 4:32:45 PM

Closing Internals found at this Link

Marc Eckelberry : 6/25/2007 4:09:58 PM

That would mess up a lot of bonuses, Jane. I think they want to go to the Hamptons with a fat check. They will dump it all after July 4th.

Jane Fox : 6/25/2007 4:08:54 PM

That is my story and I'm sticking to it. :)

Jane Fox : 6/25/2007 4:08:30 PM

I think $RUT has a chance of breaking this week.

Jane Fox : 6/25/2007 4:06:28 PM

Like I said couldn't be much clearer.

Jane Fox : 6/25/2007 4:06:13 PM

$Rut high on June 4th is 855. The neckline is at 826. 855 - 826 = 29. 826-29 = 797 just about where the 200EMA will be when/if it gets there.

Marc Eckelberry : 6/25/2007 4:04:44 PM

I doubt that breaks this summer, but you never know...In any case, ER has to go, way too rich.

Jane Fox : 6/25/2007 4:04:24 PM

If/when the H&S pattern confirms and the blue trendlien breaks the first level of support will be the green dotted 200EMA.

Jane Fox : 6/25/2007 4:03:01 PM

Marc that $RUT neckline orginated back on Nov 2nd 2006. Link

Marc Eckelberry : 6/25/2007 3:56:52 PM

I am going to note that ER neckline in case it breaks in July.

Marc Eckelberry : 6/25/2007 3:52:11 PM

Now that is a bearish chart, Jane. ER is the pone to short if this falls apart.

Jane Fox : 6/25/2007 3:50:35 PM

They don't get much clearer than that.

Jane Fox : 6/25/2007 3:49:54 PM

Ya gotta admit this is a pretty neat little formation setting up here. Link

Marc Eckelberry : 6/25/2007 3:45:44 PM

I am using YM when things get really rough. You cam catch plenty of volatility to make some back.

Marc Eckelberry : 6/25/2007 3:44:49 PM

Here comes a test of NQ weekly pivot (1932.50).

Marc Eckelberry : 6/25/2007 3:39:09 PM

And I will buy some more on dips. Just use January's.

Marc Eckelberry : 6/25/2007 3:37:58 PM

Glad I loaded up on INTC at lows.

Marc Eckelberry : 6/25/2007 3:37:25 PM

Don't worry if you feel cheated. Overnight should get some heat and another entry.

Marc Eckelberry : 6/25/2007 3:35:13 PM

Whenever I see the main press and CNBC talk about "end of days", I buy pullbacks.

Marc Eckelberry : 6/25/2007 3:32:12 PM

Yep, NQ 50 dma at 1927 was the target. If 1932 holds on close, bulls stay in control.

Keene Little : 6/25/2007 3:27:11 PM

Nice blast higher out of the little descending wedges. If you bought this dip then pull your stop up to just below the day's low. The larger descending wedge pattern on the 30-min chart that I showed earlier (2:44) calls for a substantial push back to the upside.

Jane Fox : 6/25/2007 3:26:06 PM

You all knew to put your limit at 832.20 + 1.30 = 833.50 didn't U.

Jane Fox : 6/25/2007 3:25:12 PM

That trade made up for the earlier one that took so long. :)

Jane Fox : 6/25/2007 3:24:20 PM

You should be out of that long now.

Jane Fox : 6/25/2007 3:23:39 PM

Thar she blows!

Jane Fox : 6/25/2007 3:22:49 PM

Stop is 830.10 for now.

Jane Fox : 6/25/2007 3:22:37 PM

Triggered long at 832.20

Marc Eckelberry : 6/25/2007 3:22:09 PM

They will come back, probably tomorrow. This week is far from over.

Jane Fox : 6/25/2007 3:21:05 PM

Once the buyers come back into the ER market they usually come back in large numbers.

Marc Eckelberry : 6/25/2007 3:20:43 PM

If you need to get some money back, use YM and scalp multiple contracts. That one is all over the place. Don't do momentum, buy support, sell the spike, etc...

Jeff Bailey : 6/25/2007 3:20:04 PM

03:00 Internals found at this Link

Jane Fox : 6/25/2007 3:19:20 PM

Long at 832.20 stop just below daily lows.

Jane Fox : 6/25/2007 3:16:51 PM

Take the long entry off the table.

Jane Fox : 6/25/2007 3:16:22 PM

The DOW will probably close below its blue trendline but right at the 50EMA. Link

Keene Little : 6/25/2007 3:12:30 PM

My 3:09 comment should have said a small descending (bullish) wedge, not an ascending wedge. Sorry about that.

Marc Eckelberry : 6/25/2007 3:11:57 PM

Just be disciplined here if trying to catch a falling knife. NQ should hold the lows now, but you never know. Conservative traders should wait for a move back above 1932.

Jeff Bailey : 6/25/2007 3:11:05 PM

VIX.X 16.99 +7.87% ...

Marc Eckelberry : 6/25/2007 3:10:29 PM

Some newsletter came out with an Armageddon prediction. Hogwash.

Jeff Bailey : 6/25/2007 3:10:17 PM

XLF Alert! $36.05 -1.31% ... (see 06/21/07 11:39:31)

Marc Eckelberry : 6/25/2007 3:09:47 PM

NQ 50 dma 1927.25.

Keene Little : 6/25/2007 3:09:35 PM

It looks like a small ascending wedge on teh 1-min chart so it's looking like the market could be hammering in a bottom here.

Jeff Bailey : 6/25/2007 3:02:42 PM

03:00 Market Watch found at this Link

Marc Eckelberry : 6/25/2007 3:00:09 PM

NQ back above weekly S1 and YM at 50 dma. That better hold.

Jane Fox : 6/25/2007 2:59:18 PM

Bears getting a lot stronger. Link

Jane Fox : 6/25/2007 2:57:39 PM

ER long at 833.60. Stop just below daily lows. alert

Jane Fox : 6/25/2007 2:51:58 PM

Take the long at 836.20 off the table now.

Marc Eckelberry : 6/25/2007 2:45:15 PM

Out. But still in INTC as I think that is one stock they want to show in their portfolio end of month. This is a very healthy shake up.

Keene Little : 6/25/2007 2:44:52 PM

It's looking like a descending wedge pattern for SPX, as shown on this 30-min chart. After a brief throw-over above the pattern this morning it would be very typical to get an equal throw-under from here (or maybe after a bounce). Watch for a continuing bullish divergence at a new low and an opportunity to try to buy it. Link

Jane Fox : 6/25/2007 2:44:12 PM

ER is very oversold now so I will try a long at 836.20 alert

Marc Eckelberry : 6/25/2007 2:43:18 PM

Rough waters.

Marc Eckelberry : 6/25/2007 2:42:45 PM

I bought 1933, stop is raise to 1932, risking ony 1 now. Bought some INTC January 22.50 calls (gap is closed, or close enough 23.23, lw is 23.34).

Jane Fox : 6/25/2007 2:41:03 PM

Oh my goodness gracious. Link

Jeff Bailey : 6/25/2007 2:40:54 PM

VIX.X 16.74 +6.28% ...

Marc Eckelberry : 6/25/2007 2:40:49 PM

Or clobbered...NQ 1936.50 is S1...

Jane Fox : 6/25/2007 2:40:23 PM

All markets break their PDLs. Link

Marc Eckelberry : 6/25/2007 2:39:58 PM

This is when traders with ice in their veins get rewarded on a swing trade.

Jane Fox : 6/25/2007 2:39:39 PM

Neat little selloff going on here. Link

Marc Eckelberry : 6/25/2007 2:39:20 PM

NQ weekly S1 is hit, making a lower low with a slight bullish divergence. Brave souls will buy it (1932.50) if you believe EOQ will ramp up. I do, but I must admit things are getting very, very dangerous.

Jeff Bailey : 6/25/2007 2:36:52 PM

Dow Jones Home Construction (DJUSHB) alert! 556.95 -1.73% ... probes its 7/18/06 relative low close.

Keene Little : 6/25/2007 2:35:57 PM

So much for not making new lows today. So now watch for SPX to head for 1491-1493.

Jeff Bailey : 6/25/2007 2:33:58 PM

Swing trade put option alert ... For two (2) of the Financial Select SPDRs XLF Aug $37 Puts (XLF-TK) at the ooffer of $1.30.

XLF $36.26 -0.73%.

No stop for now, target $34.50.

Keene Little : 6/25/2007 2:33:53 PM

RUT broke above its downtrend line this morning so watch for a retest near 830 (coming down to it now). If it holds we could see another rally leg get started. Link

Keene Little : 6/25/2007 2:27:36 PM

NDX continues to chop its way lower but that choppy price pattern is what makes it look more bullish than bearish. As long as 1909 (uptrend line from March) holds then this pattern remains bullish. Link

Jeff Bailey : 6/25/2007 2:27:07 PM

DORAL SLIDES AS FBOP ENDS BID

DJ- Doral Financial shares slump 30% as firm says FBOP won't proceed with its $610 million bid for 80% of the company and will instead support Doral's previous deal with a group led by Bear Stearns.

DRL $1.12 -30% ...

Jeff Bailey : 6/25/2007 2:24:15 PM

Bear Stearns (BSC) $138.61 -3.57% ... continues to provide a drag.

Marc Eckelberry : 6/25/2007 2:24:14 PM

It's becoming an environment where you only trade the open and then go flat.

Marc Eckelberry : 6/25/2007 2:23:23 PM

We will see if funds come in at the close.

Keene Little : 6/25/2007 2:22:57 PM

Near DOW 13390 is the trend line along the lows since June 8th (briefly broken this morning) so support might be found there (bouncing as I type). Link

Jeff Bailey : 6/25/2007 2:22:25 PM

American Intl. Group (AIG) $71.24 -0.01% ...

Jeff Bailey : 6/25/2007 2:21:37 PM

Berkshire Hathaway (BRK.A) $107,900 +0.46% ...

Marc Eckelberry : 6/25/2007 2:21:03 PM

SPX needs to get 1506 back at the close.

Jeff Bailey : 6/25/2007 2:20:51 PM

S&P Insurance (IUX.X) 407.17 +0.12% ...

Jeff Bailey : 6/25/2007 2:18:27 PM

WILDFIRE NEAR TAHOE FORCES EVACUATIONS

DJ- Firefighters are trying to corral a raging forest fire that had destroyed at least 220 homes, charred nearly 2,500 acres and forced about 1,000 people to evacuate near the popular Lake Tahoe resort area. No injuries reported.

Marc Eckelberry : 6/25/2007 2:16:00 PM

This could get really ugly if NQ can't get 1945 back quickly. YM 13500 is also an issue.

Marc Eckelberry : 6/25/2007 2:15:11 PM

NQ 1943.50 is 61.8%. Held so far.

Keene Little : 6/25/2007 2:10:47 PM

It's been just a slow bleed off since the noon high. It's looking like the selling could acclerate a little as we head into the final two hours. But I don't expect the selling to challenge this morning's lows. However, if it does then it will look like we're on the green price path on the charts I've been posting, in which case we could see SPX head for the 1490 area.

Marc Eckelberry : 6/25/2007 2:10:26 PM

Qm back above 69. Bulls are in trouble now.

Jane Fox : 6/25/2007 2:08:54 PM

Now our profit objective is hit. Too funny!

Jane Fox : 6/25/2007 2:08:34 PM

Tks Marc - no one likes trades like that but heh we made something on it though. A very good example as to why you need to give your trades some breathing room.

Marc Eckelberry : 6/25/2007 2:06:21 PM

That was well done Jane. ER is a not easy when it goes against you.

Marc Eckelberry : 6/25/2007 2:05:25 PM

If long from opening lows, stops should be moved up to NQ 1943/1944, just below overnight lows.

Jane Fox : 6/25/2007 2:03:32 PM

Well we got a little on that one. That was NOT fun!!

Jane Fox : 6/25/2007 2:03:06 PM

Take profits now don't force it to 841.10.

Marc Eckelberry : 6/25/2007 2:02:34 PM

NQ 1949 was 38.2% today. Slow bleed and some longs are panicking watching their gains evaporate. VXI and VXN are still saying buy, but AD lines weakening.

Jane Fox : 6/25/2007 2:01:23 PM

I would be thinking about taking profits as soon as possible. Got to within 1 ticks of profit so stop is at least at b/e - alert

Jane Fox : 6/25/2007 2:00:11 PM

We will probably have to give a sacrifice to the trading Gods if this trade makes it to profit.

Jane Fox : 6/25/2007 1:57:38 PM

This trade has felt more like a swing trade than a day trade :)

Jane Fox : 6/25/2007 1:57:12 PM

Lower your stop to 843.60. alert

Marc Eckelberry : 6/25/2007 1:55:43 PM

If QM loses 69 and NQ does not rally, it would be bearish. This is turning into a scalpers day after the initial morning great buy at NQ weekly S1. I like to ride those the whole week, but we can't lose 1945 overnight lows, whatever happens.

Marc Eckelberry : 6/25/2007 1:52:52 PM

See the upticks in NQ and ER on the QM drop? Watch QM 69. Not over yet, oil bulls could try a bid there.

Marc Eckelberry : 6/25/2007 1:51:25 PM

69 now.

Marc Eckelberry : 6/25/2007 1:51:03 PM

QM is dropping to 69.10.

Marc Eckelberry : 6/25/2007 1:50:44 PM

It's not a bad trade, Jane if oil stays up here. We could still see an end of day reversal. SOX is down and NQ at pivot. It just depends on where bulls hold the fort. Could be COMP 2600.

Jane Fox : 6/25/2007 1:47:34 PM

I would love to lower the stop but I don't dare. That swing high at 843.80 will keep the stop at 844.20.

Jane Fox : 6/25/2007 1:45:58 PM

But we had a plan and we are trading that plan. If we get stopped and we didn't waiver we have a successful trade.

Jane Fox : 6/25/2007 1:45:00 PM

Hard to stay in when you have the market going against you.

Jeff Bailey : 6/25/2007 1:44:38 PM

European Markets: at this Link

$FTSE Link ...

$DAX Link

$CAC Link

Jane Fox : 6/25/2007 1:44:31 PM

How many have been able to ride this one out?

Marc Eckelberry : 6/25/2007 1:44:13 PM

Oil refuses to drop, putting in some pre 2 pm pressure, but the VIX has hardly budged from lows.

Jane Fox : 6/25/2007 1:43:51 PM

Our short from 842.40 reached a high of 843.80 and we have our stop at 844.20 so still in this darn trade. It is certainly giving us heartache though.

Marc Eckelberry : 6/25/2007 1:40:14 PM

Traders have to also understand the dynamics of end of quarter window dressing after a big rally. Funds that missed those gains will have to buy in order not to look silly. This should normally put in a floor of support before Friday.

Marc Eckelberry : 6/25/2007 1:37:19 PM

VIX weekly pivot is at 15.

Marc Eckelberry : 6/25/2007 1:33:02 PM

With VIX at lows and NQ holding 10 dma, I'm not sure being short is very wise. Again, watching oil. A QM bid above 69.30 will definitely help bears.

Marc Eckelberry : 6/25/2007 1:31:43 PM

NQ 1952.50 is holding, now needs to see QM drop.

Jeff Bailey : 6/25/2007 1:29:16 PM

Buybacks Pump Market

DJ- Stock buybacks among S&P 500 companies accelerated in 1Q to a record $117.1 billion, up 18% from a year earlier. Steven D. Jones writes the trend continues to raise the possibility that buybacks are helping sustain the bull market.

Jeff Bailey : 6/25/2007 1:27:55 PM

July Crude (cl07q) $68.89 -0.36% ... comes to WEEKLY Pivot. Backfills morning gap lower (floor trade from Friday's)

Marc Eckelberry : 6/25/2007 1:26:20 PM

It's the battle of NQ 1952.50 and QM 69.

Jeff Bailey : 6/25/2007 1:25:32 PM

June 13, 2007 Beige Book (Dallas) Link

Marc Eckelberry : 6/25/2007 1:25:14 PM

If QM can lose 69, bulls could ge a push into the close. Otherwise, this rally could die. The entire premise for a consumer resiliency will have to be gas prices not getting too high.

Jeff Bailey : 6/25/2007 1:23:21 PM

US Regional Economic: Dallas' June Fed Mfg. Index Falls

DJ- Dallas Fed says its June production index falls to 14 from 25 in May, while the general activity index is halved to 10.8.

Keene Little : 6/25/2007 1:22:18 PM

Doing the same idea for SPX as I projected for the DOW (12:18 post), and assuming we've seen the high for the day, a pullback to about 1501-1502 could set up another rally leg into the end of the week (the dark red a-b-c bounce off this morning's low). Two equal legs up in that case would get SPX up to the 62% retracement and broken uptrend line from March around the 1518 level. Link

Jeff Bailey : 6/25/2007 1:21:02 PM

EUROPEAN STOCKS CLOSE MIXED

DJ- European shares end mostly lower, with continued worries about interest rates weighing on real-estate companies and mining shares also trading weak. Frankfurt sheds 0.2%, while London adds 0.3%.

Jane Fox : 6/25/2007 1:19:28 PM

Target is 842.40 - 1.30 = 841.10

Jane Fox : 6/25/2007 1:19:07 PM

Triggered short at 842.40 with a stop at 844.20.

Marc Eckelberry : 6/25/2007 1:16:27 PM

QM bid above 69 is stalling bulls, so watch that as well.

Marc Eckelberry : 6/25/2007 1:15:51 PM

Traders need to watch NQ and 10 dma at 1952.50, now support. You cannot trade ES, YM or ER without having an eye on NQ or you will get burned.

Jeff Bailey : 6/25/2007 1:15:01 PM

PetroChina (PTR) $147.35 -1.27% ... is off $1.91.

PTR-II (Sep $145 Calls) are $9.60 x $10.00.

PTR-GK (July $155 Calls) are $1.85 x $2.10.

VIX.X 15.51 -1.52% ...

Jeff Bailey : 6/25/2007 1:11:02 PM

01:00 Internals found at this Link

Jane Fox : 6/25/2007 1:06:52 PM

Lowering the stop before we are triggered - now that is an aggressive strategy :) alert

Jane Fox : 6/25/2007 1:06:19 PM

If triggered short at 842.4 you can lower the stop to 844.20 now.

Jane Fox : 6/25/2007 1:01:44 PM

Stop will be wide at 844.60 to begin with to give it breathing room, however, I will be agressive on lowering the stop when I can.

Jeff Bailey : 6/25/2007 1:01:12 PM

01:00 Market Watch found at this Link

Jane Fox : 6/25/2007 1:00:17 PM

ER short at 842.4 - alert

Jane Fox : 6/25/2007 12:51:37 PM

US $ is finding support at its December 2006 lows, which is not surprising. That level created a lot of resistance on the way up so it should be support on the way back down. MACD is telling me this support will hold. Link

Jane Fox : 6/25/2007 12:44:45 PM

jtHMA spreadsheet - remember I am no longer using the monthly charts for these swing trades. I have found them to be just too long. Link

Jane Fox : 6/25/2007 12:29:15 PM

That blue upward trendline will not break easily but once it does it could be a look out below as all the bulls head for the exits. Link

Jane Fox : 6/25/2007 12:24:38 PM

NEW YORK (MarketWatch) -- Taiwanese shares hit a seven-year high Monday, as Citigroup upgraded the market to overweight from underweight citing cheap valuations.

"Foreign investors have Taiwan as their single biggest underweight, sentiment is in the doldrums, and relative to the region, valuations are as cheap as they've ever been," said Markus Rosgen, strategist at Citigroup, in a research report dated Sunday.

Jane Fox : 6/25/2007 12:22:07 PM

ES and the VIX are in sync today and the VIX is supporting ES's new daily highs. Link

Jane Fox : 6/25/2007 12:19:54 PM

Internals remain bullish. Link

Keene Little : 6/25/2007 12:18:57 PM

Doing a little speculating and projecting here, using the DOW 60-min chart, and I come up with a nice setup if the DOW pushes to about 12500 today before starting a pullback which could take it back down to 12400 to set up another rally into Thursday, maybe Friday, topping out around 12560. That would give it two equal legs up (dark red a-b-c count up from this morning's low) and land it on top of the 62% retracement of the decline from June 15th and back to one of the broken uptrend lines from March: Link

Jeff Bailey : 6/25/2007 12:07:31 PM

Haven't seen a complete list of newly reconstituted RUT/IWM components.

Jeff Bailey : 6/25/2007 12:03:04 PM

iShares Russell 2000 (AMEX:IWM) $83.31 +0.44% ... battles WEEKLY Pivot.

Jeff Bailey : 6/25/2007 11:58:16 AM

US Regional Economic: CHICAGO FED INDEX NEGATIVE IN MAY

DJ- U.S. economic growth continues to trend below average amid weakness across all categories, but improves from April. Chicago Fed National Activity Index for May comes in at -0.22. Reading indicates little inflationary pressure over next year.

Jeff Bailey : 6/25/2007 11:56:58 AM

US DERIVATIVES INDEX HITS NEW LOW

DJ- Riskiest slice of the U.S. derivatives index based on subprime mortgages hits a new low, fueled by early readings of loan data that indicate home buyers continue to struggle to meet their mortgage payments.

Jeff Bailey : 6/25/2007 11:56:01 AM

BRISTOL UNVEILS POTENTIAL DIABETES DRUG

DJ- Bristol-Myers Squibb presents a first look at a potential drug being developed to treat Type 2 diabetes. Dapagliflozin is being developed with AstraZeneca. Firms expected to report Phase III data from another diabetes compound today.

BMY $31.68 +0.89% ... WEEKLY Pivot Levels are ... $29.52, $30.49, Piv= $31.27, $32.24, $33.02.

Jeff Bailey : 6/25/2007 11:53:18 AM

BANK OF AMERICA LOST $450M ON PARMALAT

DJ- Bank of America, whose technical consultants are in Milan court today to describe the relationship between the lender and the Italian dairy company, says it relied on 'fraudulent' statements from Parmalat.

BAC $49.33 +0.79% ...

Jeff Bailey : 6/25/2007 11:52:17 AM

S&P DOWNGRADES SUBPRIME RATINGS

DJ- Credit rater downgrades a large number of bonds backed by risky home loans made in 2005 and 2006 and placed many more on CreditWatch with negative implications.

Jeff Bailey : 6/25/2007 11:51:31 AM

WALGREEN 3Q NET CLIMBS 20%

DJ- Drugstore chain posts net income of $561.2 million, or 56c a share. Sales increase 13% to $13.7 billion as same-store sales rose 7.8%. Analysts expected EPS of 54c on revenue of $13.79 billion. Store openings remain on track.WAG $44.57 -0.88% ...

Jeff Bailey : 6/25/2007 11:50:21 AM

GM RISES ON UAW TALKS, UPGRADE

DJ- Auto maker's shares rise 3% as optimism surrounding the company's upcoming contract talks with the United Auto Workers union continues to grow. Goldman Sachs lifts its ratings to buy amid possibility of sizable concessions.

GM $36.16 +1.97% ...

Jeff Bailey : 6/25/2007 11:48:57 AM

DJ Survey: US June Consumer Confidence Seen At 105.0

DJ- Economists look for consumer confidence as measured by the Conference Board to have slipped a bit in June.

The median estimate of 21 economists surveyed Monday by Dow Jones Newswires is for a reading of 105.0 in June, down from the 108.0 reading in May.

The Conference Board is due to release the June consumer confidence report at 10:00 a.m. EDT (1400 GMT) on Tuesday.

"The Michigan sentiment survey and the ABC survey both fell considerably in the first half of June, hurt by high gasoline prices, rising mortgage rates and weak equity prices," noted Robert Mellman, an economist at JP Morgan Securities in New York. "However, since the middle of the month, domestic stock prices have partially recovered, while gas prices have fallen over the past few weeks. This suggests that any decline in the Conference Board's consumer confidence index could be more moderate."

Mellman and his colleagues look for the index to fall to a reading of 105.0.

Jeff Bailey : 6/25/2007 11:46:38 AM

DJ Survey: US May New Home Sales Seen 920,000; -6.2%

DJ- The new-home sales report for May will be closely scrutinized for signs of the current state of the housing slump, especially after the news Monday that existing home sales only dipped by 0.3%, but there is deep skepticism about the validity of the 16.2% increase in new home sales reported for April.

The median estimate of 25 economists surveyed Monday by Dow Jones Newswires was that new-home sales declined by 6.2% in May to an annual rate of 920,000 from 981,000.

The Commerce Department is due to release May's new-home sales report at 10:00 a.m. EDT (1400 GMT) Tuesday.

"We look for May new home sales to fall just over 6% to 920,000 after jumping 16.2% in April," wrote economists at Lehman Brothers in New York in their weekly research note for clients. "Looking past the monthly volatility, new home sales continue to trend lower, albeit at a slowing pace. Tighter lending standards and the recent rise in mortgage rates will likely continue to depress sales. However, builders are determined to clear excess inventories and are therefore willing to lower prices and offer non-price incentives. We expect the imbalance in the new home market to correct faster that the existing home market since builders are motivated sellers."

Jeff Bailey : 6/25/2007 11:29:12 AM

S&P Banks Index (BIX.X) 394.12 +1.02% ... Traded that 50% retracement (390.23) at Friday's close (see 6/11/07 Wrap) and this chart Link

BIG test will be the 38.2% and MONTHLY S1/WEEKLY Pivot.

Jeff Bailey : 6/25/2007 11:22:05 AM

Oak Ridge Micro-Energy (OKME) $0.20 +17.64% ... A Jim Jubak stock from early November. Sticks its head back above its 200-day SMA.

Jane Fox : 6/25/2007 11:18:23 AM

SAN FRANCISCO (MarketWatch) -- Crude-oil futures fell sharply Monday after trade unions in Nigeria ended a four-day general strike over the weekend.

"Nigerian oil exports were never disrupted and now that the government has agreed to freeze fuel prices and unions have agreed to go back to work, some of the geopolitical premium built into crude-oil prices is being extracted," said Michael Fitzpatrick, an analyst at Man Financial, in a note to clients.

Trade unions ended the strike over recent rises in fuel prices and value-added tax following talks with the government on Saturday, the BBC reported. Union leaders accepted the government's proposal to freeze petrol prices for at least a year at the compromise price of 55 cents per liter, the BBC reported.

Jeff Bailey : 6/25/2007 11:18:07 AM

11:00 Internals found at this Link

Keene Little : 6/25/2007 11:12:43 AM

It's the same setup for SPX as I showed earlier in the updated DOW 60-min chart--if price pulls back from here then it should set up either a 3-wave bounce into the end of the week or a little more serious decline to the 1490 area before a potential rally into July. Considering the end-of-month push I'm leaning towards the a-b-c bounce into the end of the week with a pullback to around 1504 first. Link

Jane Fox : 6/25/2007 11:09:43 AM

SAN FRANCISCO (MarketWatch) -- Gold futures fell as much as $5 an ounce Monday morning, as ongoing worries over higher global interest rates as well as retreating crude-oil prices weighed on demand for the precious metal.

Jane Fox : 6/25/2007 11:07:47 AM

Internals are certainly turning bullish. Link

Keene Little : 6/25/2007 11:03:39 AM

And for SPX that's right at its downtrend line from June 20th, which is the top of its parallel down-channel.

Jeff Bailey : 6/25/2007 11:03:14 AM

11:00 Market Watch found at this Link

Keene Little : 6/25/2007 11:02:57 AM

SPX 1513.58 is its 38% retracement.

Keene Little : 6/25/2007 11:02:20 AM

A 38% retracement of the decline from June 15th is at DOW 13478.

Jeff Bailey : 6/25/2007 11:00:41 AM

Boy did we get "juked" on the DIA Naked put this morning.

Keene Little : 6/25/2007 11:00:28 AM

The DOW is now pressing up against potential resistance. Look at this bounce as an opportunity to try the short side. Just don't let it get away from you to the upside.

Jeff Bailey : 6/25/2007 11:00:09 AM

June-Dec07 Fed Fund futures at this Link ... Last week I noted an "up-tick" in Dec07, which started to suggest a very slight ~10% probability of a rate cut by end of year.

Simply take a base of 100.00, then subtract a futures contract for a Fed fund target rate.

December ... 100 - 94.81 = 5.19%. Fed's target right now is 5.25%.

Jane Fox : 6/25/2007 10:58:58 AM

Do you think a close below the blue upward trendline would be significant? I do. Link

Jeff Bailey : 6/25/2007 10:47:40 AM

I'm really starting to think that for Housing futures to signal/confirm any type of turn higher, a longer-dated futures contract will have to revert a more near-term contract.

For instance, Feb08 price would have to be higher than Nov07.

Can still see the "bright spots," (Nov07 New York Metro/San Francisco) but week-to-week, the "bright spots" aren't really shining that bright and shedding light on other regions.

If there's any "good news" from the housing sectors, its that the inflation the Fed has/had been concerned about regarding housing, continues to abate.

Jeff Bailey : 6/25/2007 10:40:17 AM

CME's Regional Housing Futures Table ...

Aug07 at this Link

Nov07 at this Link

Feb08 and May08 at this Link

Jane Fox : 6/25/2007 10:38:23 AM

Stopped at 841.80.

Keene Little : 6/25/2007 10:36:01 AM

The DOW could be the first to hit potential resistance near 13465 but its trend lines. From there it could drop to a new low before setting up a stronger rally into the end of the month and even through July (green bullish path). Or it could just pullback as part of what will be a 3-wave bounce into the end of the week which could set up some strong selling next month. Regardless of which at this point, I'd look to short the DOW up at resistance since you can keep risk relatively tight. Link

Jane Fox : 6/25/2007 10:35:43 AM

Move stop to 841.80.

Jane Fox : 6/25/2007 10:33:07 AM

Stop to 841.40.

Jane Fox : 6/25/2007 10:31:55 AM

Triggered long at 843.20 with a limit order at the required 13ticks. 844.50.

Jane Fox : 6/25/2007 10:30:17 AM

I will take ER long at 843.20 with a wide stop at 840.80.

Jeff Bailey : 6/25/2007 10:21:27 AM

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

Keene Little : 6/25/2007 10:19:36 AM

Approximate futures premium over cash (September futures):

YM -- +108
ES -- +13.50
NQ -- +23.00
ER -- +6.40

Keene Little : 6/25/2007 10:14:48 AM

The bounce looks good so far. Look to buy the pullback. It may only be good for a scalp though so just trade it. SPX 1510-1511 is the first upside target.

Jeff Bailey : 6/25/2007 10:08:16 AM

US Existing Home Sales ...

DJ- Existing-home sales dipped during May to their lowest level in nearly four years, while inventories climbed and prices fell a 10th straight time.

Home resales fell to a 5.99 million annual rate, a 0.3% decrease from April's revised 6.01 million annual pace, the National Association of Realtors said Monday. April's rate was originally estimated at 5.99 million.

The median home price was $223,700 in May, down 2.1% from $228,500 in May 2006. The median price in April this year was $219,800. The 2.1% drop marked the 10th consecutive year-over-year price decline.

The May resales level of 5.99 million was in line with Wall Street expectations. It was the lowest pace of demand since 5.94 million in June 2003.

NAR economist Lawrence Yun said would-be buyers appear to be waiting for more signs of stability. "The market is underperforming when you consider positive fundamentals such as the strength of job creation, economic growth, favorable mortgage interest rates and flat home prices," Yun said.

Some private analysts think the housing slump will keep restraining the economy. Builders broke ground in May at a lower rate than the month before, confirming their loss of confidence in a market bloated with inventory. The government reported last week May housing starts fell 2.1%, the first drop in four months. The lifeless housing market has reduced economic growth for six consecutive quarters, and a bulging supply of unsold homes suggest further drag. Another thorn in the side of the industry is the subprime loan market mess. Lenders have tightened credit - and might do so further amid evidence that the outlook for securities backed by the riskiest subprime loans made last year has deteriorated.

The average 30-year mortgage rate was 6.26% in May, up from 6.18% in April, according to Freddie Mac (FRE).

Inventories of homes rose 5.0% at the end of May to 4.43 million available for sale, which represented an 8.9-month supply at the current sales pace. There was an 8.4-month supply at the end of April, which was unrevised from a previous estimate.

Regionally, existing-home sales were mixed. Sales rose 0.7% in the Midwest and 5.8% in the Northeast. Demand fell 0.8% in the West and 3.4% in the South.

Jeff Bailey : 6/25/2007 10:03:54 AM

US May Existing Home Sales Down 0.3% To 5.99 Million Rate

Jeff Bailey : 6/25/2007 10:03:09 AM

10:00 Market Watch found at this Link ... DIA's session low has been $133.31.

Jeff Bailey : 6/25/2007 9:58:53 AM

Dow component breadth surprisingly positive based on that dip. 21:9. "Big 10" 7:3

Keene Little : 6/25/2007 9:56:44 AM

We got some early selling but I suspect it was due to those who got nervous over the weekend and hit the market with their sell orders first thing this morning. I see some bullish divergences so I think it won't last long and we should get a bounce started. Maybe one more minor new low. But if it does continue lower then it will probably be SPX 1493 before firmer support.

Jeff Bailey : 6/25/2007 9:52:53 AM

Asian Markets: at this Link

$NIKK Link ... Looks like some normal profit taking.

$HSI Link ....

$SSEC Link ...

Jeff Bailey : 6/25/2007 9:49:05 AM

Treasuries finding some early morning buyers with the TNX.X down 5.8 bp at 5.080%.

Jeff Bailey : 6/25/2007 9:48:04 AM

VIX.X 17.00 +7.93% ...

Jeff Bailey : 6/25/2007 9:47:46 AM

VXO.X 16.93 -0.23% ...

Jeff Bailey : 6/25/2007 9:47:06 AM

Swing trade NAKED Put stop alert ... with the DIA $133.40 for the one (1) DIA July $133 Puts (DAW-SC) at the offer of $1.75.

Jeff Bailey : 6/25/2007 9:35:20 AM

General Motors (GM) $36.74 +3.60% ... "hot" early.

Keene Little : 6/25/2007 9:35:08 AM

BTW, one of the things about the daily gold chart that I see as bearish is the inability for MACD to get back above zero on its bounces.

Keene Little : 6/25/2007 9:32:59 AM

Jane, interesting you show the continuous gold contract coming down to its 200-ema for a potential retest. I show the non-continuous (August) contract held back by it. That bullish divergence has me watching this carefully but so far it continues to look bearish to me: Link

Jane Fox : 6/25/2007 9:17:15 AM

Crude is heading back down to test support at $67.00/bl. MACD suggests it will hold. Link

Jane Fox : 6/25/2007 9:15:36 AM

Looks like Gold is headed back down to test support at its 200EMA and I think it will hold. Link

Jane Fox : 6/25/2007 9:11:49 AM

The DAX has certainly been the stronger market but the huge MACD divergence is suggesting this market is headed lower as well. Link

Jane Fox : 6/25/2007 9:07:20 AM

Once this H&S formation confirms ( a break below the blue trendline) I will be buying IWM puts. Link

Jane Fox : 6/25/2007 9:05:19 AM

Here is that trading range for the DOW. Link

Jane Fox : 6/25/2007 9:01:02 AM

Here is the trading range Larry McMillan talked about in his Friday's weekly commentary. This chart also shows the SPX was stopped on Friday right at its 50EMA but the MACD suggests the 1490 will break.

A close below 1490 would be quite bearish for sure. Link

Keene Little : 6/25/2007 8:58:27 AM

Futures have held basically flat as we head for the open. We should start at least some kind of relief rally this morning and then watch what happens as the indices get up near resistance. That would be up near DOW 13450 and SPX 1510. Things could change quickly but I wouldn't be interested in the short side until at least those levels are reached. Look for the buying opportunities first.

Jane Fox : 6/25/2007 8:49:37 AM

The US $ and Gold were not connected at the hip overnight like they usually are but you can be rest assured they will be at some point today. Crude breaking its PDL suggests that it will be Gold down and the US $ up.

Interestingly the DAX broke its PDL overnight whereas no American market did. Link

Jane Fox : 6/25/2007 8:42:58 AM

Friday the bears were able to deliver a powerful blow to the bulls and around 1:30EDT all markets broke through their PDLS (Thursday's low) except for ER which tagged its Thursday lows.

The bulls were able to pull themselves off the mat and stage a weak recovery and the overnight session has basically moved sideways from where each market closed on Friday. Link

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