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Keene Little : 8/10/2007 10:12:47 PM

Monday's pivot tables: Link and Link

OI Technical Staff : 8/10/2007 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The Market Monitor has been archived.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 : 8/10/2007 5:33:43 PM

Trade Blotter of CLOSED trades and Stops/Targets on OPEN MM Profiles that I've made at this Link

Should I not return to the MM on Monday morning, please close out ALL remaining OPEN profiles that I've made.

Have a great weekend!

Jeff Bailey : 8/10/2007 5:23:13 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 8/10/2007 5:12:33 PM

Closing Internals found at this Link

Jeff Bailey : 8/10/2007 4:41:35 PM

NYSE High-Low Index Indicating A Market Bottom ... 08/07/2007 MarketWatch Story ...

Research conducted by Dorsey, Wright Money Management indicates that the NYSE high-low index is one of the very few highly reliable indications of a general market bottom. It is indicating a very favorable opportunity in the market right now. This contrasts markedly with the extreme negativity in the financial press, the credit markets, and in market sentiment as expressed by the ISEE put-call ratio, for example.

The NYSE high-low index is a ratio constructed by dividing the number of new 52-week highs (NH) on the New York Stock Exchange by the number of new 52-week highs + the number of new 52-week lows (NL). These numbers are widely reported in the financial press. The formula is NH / (NH + NL). This single-day number is then smoothed with a 10-day simple moving average. The 10-day readings are plotted. Through the close on 8/7/2007, the ratio stood at 8.8%.

When the NYSE high-low index is below 10% and declining, as it is now, the probability is for the market, as measured by the S&P 100, to be significantly higher over a 3-month time frame. This condition is quite rare, with the market having only been in this configuration 34 days since December 1996. Statistics show an average 3-month return of +10.89% with 97.06% of the instances showing a positive return. (The worst 3-month return was -0.18% and the best return was +22.57%.)

When the NYSE high-low index is between 10% and 20% and rising, which is where it will be if there is a reversal from the current level, probabilities are even more powerful for a 3-month rise. That condition is extremely rare, having occurred only on 15 days since December 1996. Statistics show an average 3-month return of +17.46% with a 100% of the instances netting a positive return. (The worst 3-month return was +5.19% and the best return was +34.80%.) Both of these returns are significantly above baseline market returns for a 3-month period.

Keene Little : 8/10/2007 3:53:19 PM

DOW has now broken its downtrend line so we could get a leg up from this afternoon's low to equal the leg up from this morning to the noon high. For the DOW that gives us an upside target of 13372. The other possibility is that we're going to finish consolidating in an ascending triangle for the 4th wave and then head lower on Monday: Link

Jane Fox : 8/10/2007 3:40:08 PM

WASHINGTON (MarketWatch) -- The federal budget fell into the red in July, the Treasury Department reported Thursday, with both outlays and receipts hitting a record high for the month. The monthly deficit was $36.3 billion, slightly less than the $37 billion estimated earlier this week by the nonpartisan Congressional Budget Office.

For the first 10 months of the fiscal year, the federal deficit has totaled $157 billion. In July, the government took in $170 billion in individual, corporate and other receipts. It spent $207 billion on programs run by federal agencies.

July is typically a deficit month, a Treasury spokeswoman said; in July 2006, the deficit was $33.2 billion.

Last year, the deficit totaled $248 billion.

Jane Fox : 8/10/2007 3:38:01 PM

Take note of the red arrow on the SPX chart. This arrow shows the SPX making a new daily low, albeit not by much but it was a new daily low. Now take a look at the blue arrow on the VIX, which is the same time bar. See how the VIX DID NOT make a new daily high, did not match the SPX's new daily low and it did not have follow through. As a matter of fact the SPX rallied from that point.

If you notice all other swing highs and lows on the SPX match the swing lows and highs on the VIX. Link

Jeff Bailey : 8/10/2007 3:38:01 PM

Hey! YM at WEEKLY Pivot. 10-year YIELD closed above its WEEKLY Pivot.

03:00 Market Watch Link

Jeff Bailey : 8/10/2007 3:37:04 PM

Fed just added ANOTHER round this afternoon. Saw it, couldn't resist it.

Jeff Bailey : 8/10/2007 3:30:05 PM

Boooo Yaaaahhhh skeee-daddy!

Jeff Bailey : 8/10/2007 3:29:45 PM

YM long target alert! 13,300

Jeff Bailey : 8/10/2007 3:28:36 PM

YM long alert ... here at 13,255. Stop 13,220. Target 13,300.

Keene Little : 8/10/2007 3:20:24 PM

The DOW has stayed below its downtrend line from Wednesday and the pattern does not yet look complete to the downside. Therefore, any break of the uptrend line from this morning's low, confirmed with a break below 13125, could usher in stronger selling. But a break of its downtrend line, currently near 13245, would be bullish for at least the short term. Link

Keene Little : 8/10/2007 2:46:19 PM

While the pullback from today's high looks corrective (meaning we could just bounce around inside today's trading range), the bearish interpretation of the pullback is that we're going to waterfall lower into the close. That's what happened last Friday so stay aware of that possibility if fear grips the market again this afternoon (of a Black Monday which I don't believe we're in danger of seeing).

Jane Fox : 8/10/2007 2:21:04 PM

Here is McMillan's weekly commentary. This market is moving so fast these days that any commentary must necessarily be written quickly, or when the markets are closed -- the latter in this case. Huge market swings and market rumors are the order of the day. This makes for very difficult short-term trading, since one can easily be stopped out, even if he is using wider stops.

$SPX rallied 76 points from Monday's morning lows to Wednesday's closing highs -- and then gave back 44 points today.

$VIX is above 26 and $VXO is nearly at 28, neither of which truly reflects the magnitude of the moves taking place. Eesistance and support levels have to be taken rather liberally, as $SPX has probed through levels, only to reverse. The most recent example of this is overhead resistance. $SPX had probed the 1490 level a few times and had not been able to get through there. But yesterday, in what we now find out was a massive short covering rally, $SPX not only probed through 1490, but closed above it. Yet, today, $SPX was down sharply. So, we can now say that resistance is 1490-1500. Similarly, support is at 1430-1440.

The equity-only put-call ratios remain strongly on sell signals. These are intermediate-term indicators, and they will be bearish as long as they continue to rise. Obviously, there is a rush to buy puts now, but the real market bottom will not come until the last guy has paid top dollar for the last put.

Market breadth had been abysmal, reaching extremely oversold levels. That was as much responsible for the rally we saw early this week as anything else. Oversold conditions, such as the ones we saw in breadth, often result in sharp, but short-lived rallies -- and that's what we had. Most of that oversold condition was relieved by the rally, although today's action will impart a new round of negative numbers to breadth.

The volatility indices continue to rise and are probing levels not seen since 2003 (when volatility was on its way down, at that time). As most of our readers know, a spike peak in $VIX is a buy signal, but -- in our opinion -- that has not yet occurred. We have been looking for $VIX to at least close below 21 to finalize the peak in $VIX. It hasn't happened. Even though $VIX closed at a new high today, we still think the 21 level is the demarcation line for a buy signal. As long as $VIX remains above there, the market will be on the defensive.

We feel that the true bottom will not be formed until there is a successful retest of the lows. A break below 1380 would mean a true, perhaps long-term, bear market is under way Just remember that oversold conditions can create sharp, but short-lived rallies at any time.

Jane Fox : 8/10/2007 2:13:40 PM

Rallies today need to taken in the context of a very bearish AD line so you should not expect the rallies to have follow through. Link

Keene Little : 8/10/2007 2:06:58 PM

Even the pullback looks corrective and this supports my thought from this morning that we're just going to consolidate sideways (even if it does have big swings) before getting another leg down. We might just consolidate between today's highs and lows for the rest of the day and then a final low on Monday before setting up a bigger rally (to a lower high). Be careful of the chop this afternoon with little follow through.

Keene Little : 8/10/2007 1:51:05 PM

The pullback from today's high now leaves a clear 3-wave bounce off this morning's low, which is corrective. While the correction could get larger to the upside, this tells me we haven't seen the lows yet. Long is not the place to be yet.

Jeff Bailey : 8/10/2007 1:49:20 PM

Oh baby will I and my MM traders will too! Good day today, good month going! Stay disciplined and don't let the bloggers distract you!

Keene Little : 8/10/2007 1:42:59 PM

Have a good weekend Jeff.

Keene Little : 8/10/2007 1:30:19 PM

SPX is cycling around its broken uptrend line from July 2006 at 1453 so whether it closes above it or below it today will probably answer our question as to whether we're headed higher or lower next.

Jeff Bailey : 8/10/2007 1:25:24 PM

See also ... 10:56:58

Jeff Bailey : 8/10/2007 1:24:43 PM

SPX 1,455.61

Jeff Bailey : 8/10/2007 1:24:17 PM

Sell Program Premium ... YM 13,300

Jeff Bailey : 8/10/2007 1:23:09 PM

YM alert! 13,290

Jeff Bailey : 8/10/2007 1:19:58 PM

Keene! No, but trying to help those that have (from years of MM commentary) protect themselves and trade the charts.

Jeff Bailey : 8/10/2007 1:19:21 PM

YM Long setup cancel alert .... from 01:08:07

Jeff Bailey : 8/10/2007 1:18:20 PM

01:00 Internals found at this Link

Tab Gilles : 8/10/2007 1:14:56 PM

Uptick rule change may be adding to volatility. Link Link Link

Jeff Bailey : 8/10/2007 1:12:00 PM

In the zone ...

Jeff Bailey : 8/10/2007 1:11:44 PM

Buy Program Premium ... YM 13,246

Jeff Bailey : 8/10/2007 1:11:20 PM

YM 13,259 ... has not traded DAILY S1 again. No setup trigger at this point.

Jeff Bailey : 8/10/2007 1:09:40 PM

IF EXACT setup is traded. Stop goes 13,205. Target 13,290

Jeff Bailey : 8/10/2007 1:08:07 PM

YM Long setup alert! ... with YM 13,236. GO LONG YM on a trade at 13,255 ... IF IT TRADES my DAILY S1 once again and sticks.

Keene Little : 8/10/2007 1:07:38 PM

Jeff, just caught your 12:48 comment. So you're really buying into the conspiracy theory, eh? I would have thought you disagreed with all that talk. You've been discussing it so much recently that I'm guessing you are now supporting the theory.

Jeff Bailey : 8/10/2007 1:02:18 PM

01:00 Market Watch found at this Link

Jeff Bailey : 8/10/2007 12:59:04 PM

SPX 1,447

Jeff Bailey : 8/10/2007 12:58:55 PM

Buy Program Premium ... YM 13,217

Jeff Bailey : 8/10/2007 12:58:14 PM

SPX 1,446

Jeff Bailey : 8/10/2007 12:58:06 PM

Sell Program Premium ... YM 13,212

Jeff Bailey : 8/10/2007 12:52:43 PM

YM 13,258

Jeff Bailey : 8/10/2007 12:52:34 PM

Buy Program Premium ... SPX 1,449

Jeff Bailey : 8/10/2007 12:51:14 PM

RUT 787.34 +0.31% ... what a wild day. Great day to be a disciplined trader!

Jeff Bailey : 8/10/2007 12:50:01 PM

YM 13,237 ...

Jeff Bailey : 8/10/2007 12:49:50 PM

Sell Program Premium ... SPX 1,447

Jeff Bailey : 8/10/2007 12:49:32 PM

SPT alert! ... YM 13,233

Jeff Bailey : 8/10/2007 12:48:13 PM

Still no word from PHF on recent NAV. Could be part of the conspiracy among banks? Usually PHF updates every Thursday.

Jeff Bailey : 8/10/2007 12:35:53 PM

IWM $78.73 +1.31% ... session high has been $79.77.

Jeff Bailey : 8/10/2007 12:35:11 PM

Know where your OI is at!

Jeff Bailey : 8/10/2007 12:35:02 PM

RUT.X 791.60 +0.85% ... just tagged 800 strike.

Jeff Bailey : 8/10/2007 12:34:02 PM

20-day Net% .... about 1% from "squared up"

Jeff Bailey : 8/10/2007 12:24:03 PM

INDU ... potential "shakeout alert!" ... quick 3-box reversal after "sell signal"

Jeff Bailey : 8/10/2007 12:22:52 PM

BIX.X alert! 365

Jeff Bailey : 8/10/2007 12:22:22 PM

Don't fight the Fed!

Jeff Bailey : 8/10/2007 12:20:22 PM

PPT Alert! ... be disciplined!

Jeff Bailey : 8/10/2007 12:19:57 PM

YM alert! 13,290

Jeff Bailey : 8/10/2007 12:16:09 PM

YM coiling like a rattle snake that's been stepped on.

Keene Little : 8/10/2007 12:15:55 PM

The pink wave count is still possible on SPX as it is on the RUT but it will need to keep rallying from here. If it turns back down and makes a new low then the dark red wave count becomes the preferred count (bounce into opex week to a lower high and then a strong decline to follow). Link

Jeff Bailey : 8/10/2007 12:15:00 PM

Tuesday went to 15.69 though.

Jeff Bailey : 8/10/2007 12:14:31 PM

Last buy program almost "dinger" status to 11.29

Keene Little : 8/10/2007 12:10:46 PM

At SPX 1453 is the broken uptrend line from July 2006 (shown on my 60-min chart) so that's another reason for resistance right here.

Jeff Bailey : 8/10/2007 12:10:06 PM

Rack'm up!

Jeff Bailey : 8/10/2007 12:09:48 PM

Swing trade put close out alert! ... the CNOOC CEO Dec $110 Put (CEO-XB) at the bid of $9.50.

CEO $109.70 -2.64% ...

Keene Little : 8/10/2007 12:09:23 PM

Two equal legs up for SPX is at 1453.72 and gap closure is at 1457.71 (although that number changed on the quote sheet right after the close--it was closer to 1453).

Jeff Bailey : 8/10/2007 12:08:15 PM

(wink)

Jeff Bailey : 8/10/2007 12:08:06 PM

PPT alert!

Keene Little : 8/10/2007 12:07:46 PM

The downtrend line for SPX from Wednesday, which held down each bounce yesterday, is currently near 1452.30 so be careful if chasing this bounce higher.

Jane Fox : 8/10/2007 12:07:44 PM

LONDON (MarketWatch) - British stocks suffered through their worst one-day performance of the year on Friday, dragged lower by financial services companies as investors continued to sell down the sector amid fears about exposure to the unfolding U.S. subprime mortgage market crisis.

Jane Fox : 8/10/2007 12:07:12 PM

Crude tags its $70.00/bl support. Link

Keene Little : 8/10/2007 12:06:22 PM

Two equal legs up for ES today is at 1460 but watch for potential resistance at gap closure at 1458. This should be just a consolidation bounce before heading lower again. Two equal legs up for YM is at 13281 but gap closure is higher at 13329.

Jane Fox : 8/10/2007 12:04:58 PM

The large caps are have not even broken their PDLs whereas ER (the russell 2000 futures) is almost to its PDHs. Crazy!!!

Jeff Bailey : 8/10/2007 12:03:44 PM

SPX 1,447

Jeff Bailey : 8/10/2007 12:03:31 PM

Sell Program Premium ... YM 13,230

Jane Fox : 8/10/2007 12:03:20 PM

Here are your overnight futures charts. ER is the only market to break its ON highs and is blasting higher. This just exemplifies the craziness we are seeing in the markets lately. Link

Jeff Bailey : 8/10/2007 12:02:52 PM

YM long stop alert 13,230

Jeff Bailey : 8/10/2007 12:00:43 PM

Slammed with upside alerts I've had set !!!!

Jeff Bailey : 8/10/2007 11:58:47 AM

YM long raise stop alert ... to 13,230.

Jeff Bailey : 8/10/2007 11:58:14 AM

IWM Alert! $78.37

Jeff Bailey : 8/10/2007 11:57:41 AM

Buy Program Premium ... YM 13,220

Jeff Bailey : 8/10/2007 11:47:39 AM

YM long alert! here at 13,177. Stop 13,145. Target 13,290

Jeff Bailey : 8/10/2007 11:41:03 AM

YM 13,155

Jeff Bailey : 8/10/2007 11:40:55 AM

SPX 1,437

Keene Little : 8/10/2007 11:40:49 AM

Interestingly the RUT is still maintaining the more bullish possibility here that the pullback from Wednesday is simply a correction of the rally off Monday's low. That maintains the possibility that we'll see a rally from here into next week as per the pink wave count. Link

More bearishly the count to the downside from Wednesday is a 1-2, 1-2 wave count and get ready for some strong selling in that index next. A break back below 770 would likely be accompanied with some strong volume behind it.

Jeff Bailey : 8/10/2007 11:40:17 AM

Sell Program Premium

Jeff Bailey : 8/10/2007 11:32:13 AM

11:05 Internals found at this Link

Thursday's Internals at this Link

Keene Little : 8/10/2007 11:31:36 AM

One of the things that many market participants don't understand about the Fed dropping interest rates is, first, they tend to do it too late and they chase the market lower. Second, the Fed won't be able to stimulate demand with lower rates. They'll be pushing on a string in that regard. Demand comes from the market and not from Fed policy. This will just have to run its course over the next year or two (in a bear market) and the Fed, like everyone else, will be just along for the ride.

Jane Fox : 8/10/2007 11:16:46 AM

WASHINGTON (MarketWatch) -- Many financial market participants are clamoring for the Federal Reserve to cut interest rates to provide liquidity to markets, but some veteran Fed watchers question how effective a rate cut would be.

Earlier Friday, the Federal Reserve announced it was providing liquidity "to facilitate the orderly functioning of financial markets."

The Fed move was part of a major effort by the world's central bankers to inject liquidity into the banking system over the past two days after a French bank announced losses from investment in subprime mortgages.

Talk of an emergency Fed meeting was making the rounds in financial markets.

"No easing can fix a fright right now," said James Glassman, economist at JP Morgan Chase. Bill Sullivan, chief economist JVB Financial, said a rate cut might shore up investor confidence "but would probably do very little to address the losses that have transpired as a result of the imprudent risk strategies."

In the savings-and-loan crisis of the late 1980s, Fed rate cuts were effective because the liquidity directly benefited the troubled thrifts, Sullivan said.

In the present situation, the assets involved in the current turmoil "are difficult to price and lack transparency, suggesting that a lower funds rate would have minimal influence on how these positions are resolved between counterparties," Sullivan said.

Keene Little : 8/10/2007 11:12:18 AM

Approximate futures premium over cash (September futures):

YM -- +48
ES -- +5.00
NQ -- +11.00
ER -- +3.30

Jeff Bailey : 8/10/2007 11:08:33 AM

Sell program premium minute ago ... expect institutional activity!

Jeff Bailey : 8/10/2007 11:07:15 AM

11:05 Market Watch found at this Link

Jeff Bailey : 8/10/2007 11:04:22 AM

11:00 Watch/internals coming!

Jeff Bailey : 8/10/2007 11:04:12 AM

Keene! show chart of premium if you can. Show traders Tuesday and Wednesday afternoon.

Jeff Bailey : 8/10/2007 11:03:12 AM

PPT ????

Jeff Bailey : 8/10/2007 11:03:03 AM

9.33

Jeff Bailey : 8/10/2007 11:02:58 AM

Buy program premium still on ...

Jeff Bailey : 8/10/2007 11:02:16 AM

YM 13,155

Jeff Bailey : 8/10/2007 11:02:09 AM

Buy Program Premium ... SPX 1,436.46

Jeff Bailey : 8/10/2007 11:01:27 AM

YM 13,149

Jeff Bailey : 8/10/2007 11:01:19 AM

Sell Program Premium ... SPX 1,434.67

Jeff Bailey : 8/10/2007 11:00:36 AM

Dow Industrials (INDU) ... PnF chart the bulk of institutions will be viewing Link

NOTE: M S1 and Dorsey's bullish support trend.

Keene Little : 8/10/2007 10:59:15 AM

Jeff, I think you're losing it. I never had a 9:56 post.

Tab Gilles : 8/10/2007 10:56:58 AM

We've been hearing opinions from every economist, politician, market analysts and the "Donald" on the current market condition. But...there's one voice that has been absent in all of this that has been silent?

GREENSPAN!

If you recall....the former Fed Chairman in a March statement calling for a one-third chance of a recession. His comments contradict those of current Fed Chairman Ben Bernanke. Greenspan stated at a Merrill Lynch investor forum that, "My arithmetic says if there's a one-third probability of a recession, then there's a two-thirds probability there won't be a recession."

I would really like to hear his opinion now!

Jeff Bailey : 8/10/2007 10:55:09 AM

YM 13,134

Jeff Bailey : 8/10/2007 10:54:56 AM

Buy Program Premium ... SPX 1,434.16

Jane Fox : 8/10/2007 10:53:13 AM

DOW breaks its support. Link

Jeff Bailey : 8/10/2007 10:49:03 AM

CNBC ... Donald Trump saying Fed needs to cut rates.

Jeff Bailey : 8/10/2007 10:48:21 AM

I've deleted my 10:46:50 post as Keene's 09:56:50 was also deleted.

Jeff Bailey : 8/10/2007 10:44:27 AM

Program Trading Levels ... HL Camp & Company has their computers set for program buying at $7.52 and set for program selling at $3.88.

QCharts symbols for S&P 500 Premium is INDEX:PREM.X

Jeff Bailey : 8/10/2007 10:41:48 AM

YM 13,125

Jeff Bailey : 8/10/2007 10:39:19 AM

YM alert! 13,111

Keene Little : 8/10/2007 10:37:25 AM

The best wave count for the decline from Wednesday that I have right now is that a new low here should complete the 3rd wave. That would mean another consolidation (4th wave) that will likely take us into the afternoon and then a final low (5th wave) either late today or Monday. Then we should be set up for a rally that lasts a couple of days.

Jeff Bailey : 8/10/2007 10:32:18 AM

Dow Industrials (INDU) 13,101 -1.27% Link ... Today's trade at 13,150 is a double bottom sell signal. That NEGATES the previously discussed BULLISH vertical count.

Testing trend here this morning.

Jane Fox : 8/10/2007 10:30:58 AM

I find absolute resistance and support levels hard to find and much prefer resistance and support zones. Here are a couple of those zones on the SPX chart. Link

Tab Gilles : 8/10/2007 10:18:58 AM

Fed Statement Release Link

Jeff Bailey : 8/10/2007 10:19:06 AM

ECB Adds EUR61.06B In 3-Day Tender

DJ- Leading central banks worked for a second day in a row to shore up a liquidity shortage in their banking systems.

The European Central Bank and the U.S. Federal Reserve, injected liquidity into money markets where demand for funds is far exceeding supply. Their move came as continued subprime debt jitters in credit markets spilled into other financial markets, driving down equity prices worldwide.

The ECB added EUR61.05 billion to money markets at a weighted average allotment rate of 4.08%. Demand for the cash was strong, the ECB received 62 bids totaling EUR110.035 billion.

The Fed later came in and added $19 billion in a three-day repurchasing agreement amid total submitted bids of $31.2 billion, the largest single repo this year.

Friday's moves follows the Fed's addition of a combined $24 billion on Thursday in two separate $12 billion transactions. The ECB added EUR94.8 billion in liquidity Thursday. Both central banks said they funneled money into the markets to ensure orderly market conditions.

Market tension intensified Friday after HomeBanc Corp. (HMBN) filed for Chapter 11 bankruptcy in the U.S. Friday with $4.9 billion in debt versus listing assets of $5.1 billion. Creditors include BNP Paribas (BNPQY) and Commerzbank AG (CRZBY)in New York.

The allotments matures on Monday, which could well prompt a third round of liquidity boosts unless market conditions improve.

"It's highly probable that the ECB will add liquidity again on Monday and could keep doing so for a few days after that, though the amounts will likely fall gradually," Marcus Hettinger, a forex strategist for Credit Suisse in Zurich said.

Friday's ECB tender differs from Thursday's, when unlimited funds were offered at a guaranteed fixed 4% rate, as the money market overnight rates shot up to 4.7%.

"This liquidity-providing fine-tuning operation follows up on the operation conducted yesterday and aims to assure orderly conditions in the euro money market," the ECB said in a statement.

Traders had expected the move as money market overnight rates were around 4.30% to 4.35% in early trade, above the ECB refinancing minimum bid rate of 4.00%.

Failing to roll over Thursday tender that fell due on Friday risked tightening money markets further.

"Markets are currently facing a liquidity crisis, the beginning of a potential credit crunch scenario. Fundamentals do not matter in such a situation, and hence markets will ignore lonely voices shouting for a focus on healthy balance sheets and low default rates," said analysts at UniCredit in a note to clients early Friday morning.

European traders were hoping for a stronger liquidity injection by the Federal Reserve Friday. Brokers and analysts say it is still very difficult for European banks without U.S. operations that have direct access to the Fed to buy dollars.

Some dollar overnight lending rates jumped to 6.20%-6.30% early Friday from around 5.50% in U.S. dealings - well above the Fed's target of 5.25%.

The Fed is not signaling a policy change with this week's added liquidity, Merrill Lynch economist David Rosenberg said.

"The Fed will stand ready to inject liquidity into the banking system when needed, but again, it does not signal that it is on the precipice of easing monetary policy," he said in a note to clients.

In Asia, the central banks of Japan, Hong Kong and Australia all also pitched in with liquidity injections into their banking systems.

In Japan, stocks plunged Friday, with the Nikkei Stock Average of 225 issues shedding 2.37% to close at 16.764.09 points. The Bank of Japan funneled 1 trillion yen into money markets to curb a key overnight rate.

Stocks in European markets slid by midday.

The pan-European Dow Jones Stoxx 600 index dropped 2.6% to 364.41, with the U.K.'s FTSE 100 index losing 2.9% to 6,088.60, the German DAX 30 index falling 1.6% to 7,334.13 and the French CAC-40 index giving up 2.7% to stand at 5,472.89.

Jane Fox : 8/10/2007 10:13:11 AM

Yesterday I talked about the relationship between the VIX and the AD line. If the VIX and the AD line are not in sync the VIX will exert its influence on the markets to a point like it did yesterday but then eventually the AD line will take over and the VIX will succumb and follow.

That was the scenario yesterday and it looks like again today. Link

Jeff Bailey : 8/10/2007 10:10:42 AM

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

Jeff Bailey : 8/10/2007 10:05:59 AM

NASDAQ a/d 712/2,012

Jeff Bailey : 8/10/2007 10:05:44 AM

NYSE a/d 580/2,464

Jeff Bailey : 8/10/2007 10:04:58 AM

BIX 360.78 -0.09% ... Sits on WEEKLY R1 here. DAILY Pivot at 364.68. DAILY S1 356.88 provided opening support.

Jeff Bailey : 8/10/2007 10:02:29 AM

10:00 Market Watch found at this Link

Jeff Bailey : 8/10/2007 9:59:35 AM

S&P Banks (BIX.X) 361.16 +0.01% .... edges green.

Jeff Bailey : 8/10/2007 9:58:52 AM

Not sure Keene was aware (09:56:50) ... be disciplined!

Jeff Bailey : 8/10/2007 9:57:32 AM

Fed: Providing Liquidity For Smooth Mkt Functioning

DJ- In an effort to calm fears of a global credit crunch, the Federal Reserve on Friday said it is providing liquidity to facilitate the smooth functioning of financial markets.

"The Federal Reserve will provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5.25%," the statement, issued before the opening of U.S. equity markets, said.

"In current circumstances depository institutions may experience unusual funding needs because of dislocations in money and credit markets. As always the discount window is available as a source of funding," it said.

"It's a little bit of a confidence-building statement," said Zach Pandl, an economist at Lehman Brothers. "I don't think they're trying to take a view on rate cuts at this moment," he added.

The Fed on Tuesday opted to hold the federal funds rate at 5.25% for a ninth-straight meeting as expected. But in a move that disappointed investors hoping for a signal that the Fed stood prepared to lower rates, officials maintained their anti-inflation bias, though they also acknowledged the emergence of some downside risks to growth.

Amid signs that the U.S. subprime crisis is spilling into global credit markets, the Fed and the European Central Bank have pumped liquidity into financial markets the past two days, though the size of the ECB's operations has dwarfed those of the Fed.

The Fed conducted a $19 billion three-day repurchase agreement operation after doing two operations on Thursday.

"It is a good sign for now that the amount of the injection needed was smaller than feared and that it has brought the (overnight bank lending rates) rate down very quickly," said Tony Crescenzi, strategist at Miller Tabak.

Jane Fox : 8/10/2007 9:45:39 AM

Certainly don't need me to tell who has the ball this morning. Link

Jeff Bailey : 8/10/2007 9:44:35 AM

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

Keene Little : 8/10/2007 9:44:32 AM

It's way too early to even be thinking about picking a bottom. The price pattern would look best with some consolidations followed by more selling. If I can get a satisfactory 5-wave count to the downside from Wednesday's high and it looks like bullish divergences are appearing then maybe it'll be time to try a long into next week.

But no catching falling knives right now. Either short or flat is the place to be right now. The risk for new short entries is a short-covering squeeze that bounces 100 DOW points in the blink of an eye.

Jane Fox : 8/10/2007 9:41:15 AM

Dateline WSJ - WASHINGTON -- The Federal Reserve, in a statement that underscores the deepening severity of developments in credit markets, said in a statement that it is "providing liquidity to facilitate the orderly functioning of financial markets," and will pump enough money into credit markets to keep the Fed's target for the federal funds interest rate at 5.25%.

"The Federal Reserve will provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5-1/4 percent," it said. "In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets. As always, the discount window is available as a source of funding

Keene Little : 8/10/2007 9:40:30 AM

Yes, Jane, Cramer lost it last Friday. Poor man, getting beat up by all his billionaire buddies who are infuriated that they don't have Bernanke in their back pocket.

Jane Fox : 8/10/2007 9:39:35 AM

My goodness gracious TRIN is 2.24

Jeff Bailey : 8/10/2007 9:38:51 AM

13-week Note Yield ($IRX.X) plunges 26 bp to 4.460% ...

Jane Fox : 8/10/2007 9:38:28 AM

AD line is a very bearish -1559 - no surprise there.

Jane Fox : 8/10/2007 9:35:11 AM

QQQQ 120 minute jtHMA charts give a sell now. Link

Jeff Bailey : 8/10/2007 9:34:31 AM

VIX Alert! ... 28.71 +8.42% ... above MONTHLY R1.

Jane Fox : 8/10/2007 9:30:15 AM

Keene, did you see Jim Cramer's rant on CNBC about the FED. THe guy needs Valium.

Jane Fox : 8/10/2007 9:28:39 AM

NEW YORK (MarketWatch) -- Fed fund future prices suggest the U.S. Federal Reserve will be forced to do an emergency inter-meeting rate cut within the next week, Merrill Lynch analyst Joseph B. Shatz said in a note to clients late Thursday. Fed Funds futures appear to be pricing in a substantial risk that the Fed may make the move after a series of recent events, including a move by the European Central Bank to inject $130 billion into banks. On Friday, the European Central Bank injected 61 billion euros ($84 billion) in a tender auction.

Keene Little : 8/10/2007 9:26:27 AM

Jane, re: your 9:17 comment, are you sure you weren't reading Jim Cramer's headlines? (wink)

Jane Fox : 8/10/2007 9:16:17 AM

NEW YORK (MarketWatch) -- Shares of Countrywide Financial Corp., the largest U.S. home lender, fell more than 15% in pre-market trading on Friday after it said problems in the U.S. mortgage market poses a serious threat to its earnings and financial condition.

The company, which makes money providing mortgages and then reselling them to investors, said the markets' reluctance to buy mortgages right now is causing it to retain a greater proportion of mortgage loans than it sells.

In simple terms, the firm's traditional customers, investment banks, are not buying the company's product. That's not good for earnings or revenues.

Countrywide shares fell $5.11, or 17.8%, to $23.55 in pre-open trading Friday.

Jane Fox : 8/10/2007 9:15:17 AM

LONDON (MarketWatch) -- Central banks in Europe and Asia injected billions more dollars into the banking systems Friday as they again moved to boost liquidity in markets suffering from the subprime credit crisis.

The European Central Bank said it had provided 61 billion euros ($84 billion) to banks in a three-day tender offer.

The loans came on top of the roughly 95 billion euros it handed out in its biggest ever cash injection Thursday after overnight interest rates spiked. The ECB's Thursday move also coincided with attempts by the Federal Reserve and the Bank of Canada to ease liquidity problems

Jane Fox : 8/10/2007 9:17:56 AM

Headlines on MarketWatch.com this morning are screaming, "Futures Signal Major Selling" so I expected total Armageddon once I had my charts open but then when I took a look I see lower lows and highs but nothing too much out of the ordinary. Markets closed weak so the overnight session was weak. Geesh!!! Link

Jane Fox : 8/10/2007 9:10:37 AM

WASHINGTON (MarketWatch) -- Prices of goods imported into the U.S. climbed 1.5% in July, led by a big increase for petroleum, government data showed Friday.

This marked the sixth straight monthly increase in import prices.

The Labor Department's data follow a revised 0.9% gain in June. July's increase, the largest since March, suggests some inflationary pressure from abroad.

Petroleum prices rose 7.0 % last month, following a 4.4% gain in June and also the biggest increase since March

Keene Little : 8/10/2007 8:58:25 AM

It looks like we're getting the answer to the question as to whether or not we're going to start a rally today. It could of course still happen (big v-bottom reversal) but with futures down as hard as they are (even after rallying a bit off the bottom), it's looking more and more like we'll see at least a test of Monday's lows after the cash market opens. ES has already done that in the overnight session (down 24 at its low) and YM is below it. That price pattern says we'll stair-step lower before getting a bounce into opex week and then the bottom should fall out from there.

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