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Jeff Bailey : 8/16/2007 2:28:50 AM

Meetings I attended this evening had most of the "finger pointing" at either the mortgage lender, or the consumer that originated the loan.

The message I gave was that the lender that originated the loan may be partially to blame, but when they sold it to the banker, it was then his/her job to assess the risk.

Bottom line is the finger points to he/she that now owns the note. Deal with it.

Jeff Bailey : 8/16/2007 2:19:11 AM

Closing Internals found at this Link

Jeff Bailey : 8/16/2007 1:57:21 AM

Dorsey/Wright Supply and Demand recap at this Link

Jeff Bailey : 8/16/2007 1:14:10 AM

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

Jeff Bailey : 8/16/2007 12:55:53 AM

Wednesday's Top Story ... Mortgage lender Countrywide Financial (CFC) $21.29 -13% plunged after Merrill Lynch advised investors to sell the stock on liquidity concernes. Selling picked up mid-session on reports that dealers were quoting CFC's commercial papaer at 12.5%.

Jeff Bailey : 8/16/2007 12:48:30 AM

Closing U.S. Market Watch found at this Link ... HUGE bid into shorter-dated maturities. 13-week ($IRX.X) plunged 37 basis points to 4.130%.

Keene Little : 8/15/2007 10:58:06 PM

Thursday's pivot tables: Link and Link

As I had mentioned towards the end of the day on Wednesday, and in tonight's Market Wrap, the bearish wave count calls for a strong selloff on Thursday. The only way for that not to happen is for an immediate rally out of the gates so the bulls can't waste any time otherwise the bears will quickly take the market much lower.
DOW: Link
SPX: Link
NDX: Link
RUT: Link

OI Technical Staff : 8/15/2007 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The Market Monitor has been archived.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.

Tab Gilles : 8/15/2007 4:18:40 PM

$INDU closes below 13,000 and tests 200 ma & ema. Link

But what about the other indexes? SPX Link OEX Link $COMPQ Link $NDX Link $RUT Link

Jane Fox : 8/15/2007 4:08:28 PM

Economic Reports for tomorrow include:

8:30a.m. Initial Jobless Claims. Expected: -2K. Previous: +7K.

8:30a.m. July Housing Starts. Previous: +2.3%.

12:00p.m. Aug Philadelphia Fed Business Index. Expected: 8. Previous: 9.2.

Jeff Bailey : 8/15/2007 4:01:35 PM

I have several meetings that I need to attend. I will update things later this evening.

Jeff Bailey : 8/15/2007 4:00:38 PM

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

Keene Little : 8/15/2007 3:59:07 PM

No suspense. The bulls blinked and the renewed selling into the close is the start of the breakdown from the descending wedge. Prepare for a big down day tomorrow. But as always, the market is the great humbler so don't get crazy, keep your stops at appropriate levels, trade according to your account size, don't eat yellow snow, etc.

Jane Fox : 8/15/2007 3:58:27 PM

VIX turned around and made new daily highs and the markets all made new daily lows. Things are a lot different out there now. Remember back in March, the Shanghai surprise selloff, and how quickly the bulls were able to get back on their feet. That is not the case this time.

Keene Little : 8/15/2007 3:54:16 PM

One thing about these wedges to keep in mind. Bears will remember the bearish ascending wedges during the previous rallies very well--when they failed with a rally out the top of them the rally was usually very strong. We now have the opposite setup here. Many traders will be seeing this same bullish pattern and thinking it's a buying opportunity (and they could be right). But if the pattern fails and price drops out the bottom it's going to be a strong drop, helped by a lot of the bottom pickers bailing out of their positions, just as the bears did on the way up.

Keene Little : 8/15/2007 3:50:54 PM

Tomorrow could be very ugly. I wouldn't want to be long much of anything tomorrow if we don't see a bounce immediately tomorrow. There is still the possibility that the leg down here is completing the bullish descending wedge and if it is then the rall out of here will be strong. Otherwise the bearish wave count says we've started the 3rd of a 3rd of a 3rd wave down. These are the screamers so if there's follow through tomorrow morning then we're going to see some very strong selling.

SPX is peering over the edge of the cliff here and looks right now like it could leave a doji for its final candle. Ah the suspense...stay tuned. Link

Jeff Bailey : 8/15/2007 3:50:28 PM

Day trade short stop alert! for CFC $21.36.

Jane Fox : 8/15/2007 3:46:26 PM

VIX no longer making new daily highs so we may see the selling abating for now.

Jeff Bailey : 8/15/2007 3:44:36 PM

Day trade short alert ... for 1/2 postion in shares of CFC $20.90. Stop $21.36. Target $20.50.

Keene Little : 8/15/2007 3:43:17 PM

VIX over 30. It's been a while since we've seen that level before--not since it came down from that level in April 2003 (right after the bottom in March 2003).

Keene Little : 8/15/2007 3:40:59 PM

The 5-min chart of SPX shows a very orderly and consistent selling since the 2:00 high. Not much buying going on here.

Jeff Bailey : 8/15/2007 3:30:33 PM

MMS: No Oil Output Off Line In US Gulf Ahead Of Erin

Jane Fox : 8/15/2007 3:30:26 PM

ES to new daily lows - again.

Jeff Bailey : 8/15/2007 3:29:54 PM

MMS: 0.06%, or 5MMCF/day of US Gulf Natural Gas Output Shut In

Jane Fox : 8/15/2007 3:28:34 PM

VIX to new daily highs so I don't think the selling is over yet.

Jeff Bailey : 8/15/2007 3:28:22 PM

VIX.X alert! 30.30 +9.46% ... WKLY R2.

Jeff Bailey : 8/15/2007 3:18:06 PM

Swing trade long setup cancel order alert ... for PBT from 11:40:08 AM.

PBT $13.75 +0.36% ...

Jeff Bailey : 8/15/2007 3:15:20 PM

03:00 Internals found at this Link

Keene Little : 8/15/2007 3:14:25 PM

As per the descending wedge idea I showed on the SPX 60-min chart (1:37) stay aware of the possibility we're going to see a strong rally out this decline. Once it drops below 1412 then the chances of a significant and fast decline from there increase dramatically.

Jane Fox : 8/15/2007 3:13:52 PM

All markets are now making new daily lows.

Jeff Bailey : 8/15/2007 3:09:01 PM

Day trade short setup cancel order alert ... For CFC from 02:48:51

Jeff Bailey : 8/15/2007 3:02:46 PM

03:00 Market Watch found at this Link

Keene Little : 8/15/2007 3:01:38 PM

No bounce back up to retest the broken uptrend line on SPX but a bounce off this morning's low would be an opportunity to short it. That might give the DOW an opportunity to retest its broken uptrend line near 13030.

Jane Fox : 8/15/2007 3:01:17 PM

DOW has only made a 50% retracement of its rally off the March 14th lows. Link

Jane Fox : 8/15/2007 2:59:02 PM

Here is the SPX with a fib bracket from the March 14th lows to yearly highs. As you can see this market has retraced more than 61.80% of that rally. Link

Jane Fox : 8/15/2007 2:56:41 PM

I keep changing my support and resistance lines and I have to admit I just don't know where support will be. I thought I would go back to the support and resistance zones but they don't seem to be working either. However, the lows made on March 14th should hold up if/when the markets ever reach that level again.

Jane Fox : 8/15/2007 2:52:34 PM

AD line as been flashing a bull warning all day.

Jane Fox : 8/15/2007 2:51:57 PM

All markets are now under their respective PDLs but only NQ has broken its daily low as well. Link

Jeff Bailey : 8/15/2007 2:50:29 PM

At a new session low, it almost makes me sick. Good gravy I say, if it trades Red #6.

Jeff Bailey : 8/15/2007 2:49:11 PM

CFC $19.66 -19.74% ...

Jeff Bailey : 8/15/2007 2:48:51 PM

Day trade short setup alert! ... for 1/2 position in shares of CFC at $20.80. Stop $20.98. Target $19.00.

Jane Fox : 8/15/2007 2:47:13 PM

Notice where the S&P futures tagged its daily highs but the VIX did not tag its daily lows. This is a huge warning those daily highs are going to hold up as resistance and would have been a very nice short. Link

Jeff Bailey : 8/15/2007 2:39:15 PM

About 11,196 Put OI at $20 strike. Heaviest was/is $27.50.

Jeff Bailey : 8/15/2007 2:38:25 PM

CFC day traders ... drag that dynamic down to $20.00. 19.1% becomes $20.90.

Jeff Bailey : 8/15/2007 2:37:38 PM

Us bears can be ferocious can't we?

Jeff Bailey : 8/15/2007 2:36:55 PM

CFC $20.08 ... yet another dive, to red #5?

Keene Little : 8/15/2007 2:36:32 PM

SPX is in the green while the DOW is in the red and yet SPX has broken its uptrend line from this morning's low first. Any retest of the line now, currently near 1432.50, is another opportunity to get short.

Jeff Bailey : 8/15/2007 2:35:30 PM

Can buyer bar the door at RED #4?

Jeff Bailey : 8/15/2007 2:35:09 PM

Day trade short target alert! ... CFC $20.45

Jeff Bailey : 8/15/2007 2:33:47 PM

Day trade short lower stop alert on CFC to $21.02.

CFC 20.81.

Jeff Bailey : 8/15/2007 2:31:04 PM

CFC day traders ... drag that dynamic down to session low of $20.70.

Jeff Bailey : 8/15/2007 2:29:53 PM

Day trade short lower stop alert! ... for CFC to even.

CFC $20.93

Keene Little : 8/15/2007 2:22:32 PM

SPX is testing its uptrend line right here so a continuation lower now would be a sell signal.

Jeff Bailey : 8/15/2007 2:21:23 PM

Day trade short alert ... for 1/2 position in shares of CFC $21.53. Stop $21.90. Target $20.45.

Jane Fox : 8/15/2007 2:20:43 PM

... as is the NDX. Link

Jane Fox : 8/15/2007 2:20:03 PM

However, the DOW is still above its 200EMA. Link

Keene Little : 8/15/2007 2:19:53 PM

A break below DOW 13K would be my signal to get short. The danger is a head fake break and whipsaw back to the upside. This opex week remember.

Jane Fox : 8/15/2007 2:19:05 PM

Same with the SPX. Link

Jane Fox : 8/15/2007 2:17:45 PM

I have taken all trendlines off this chart so we can concentrate on where the markets are trading in relation to their green dotted 200EMA. As you can see this is the first time the RUT has been below its 200 EMA since August 2006. Link

Jeff Bailey : 8/15/2007 2:13:56 PM

CFC at Red #3

Keene Little : 8/15/2007 2:13:54 PM

The pullback is already a little deeper than it should be for the 2nd leg to complete a 5-wave move. So we're either at the start of the decline (waiting for a break of the uptrend line to confirm) or else we're going to get a more complex upward correction within a bear flag pattern.

Jane Fox : 8/15/2007 2:13:21 PM

The DOW is still trying to hold on to 13000 and if it does close below 13000, I bet you will see it on the front page of your local papers tomorrow. Link

Jeff Bailey : 8/15/2007 2:13:16 PM

CFC $21.05 ... plunging ... plunging now.

Jeff Bailey : 8/15/2007 2:11:52 PM

Anyone catch that CNBC report!

Jeff Bailey : 8/15/2007 2:11:37 PM

CFC $21.35 alert!

Jeff Bailey : 8/15/2007 2:11:24 PM

Day trade short cover alert! for CFC $21.50.

Tab Gilles : 8/15/2007 2:10:08 PM

EIA Weekly Report: Link

Jeff Bailey : 8/15/2007 2:04:17 PM

Day trade short lower stop alert ... on CFC to $22.07

Jeff Bailey : 8/15/2007 2:02:59 PM

CFC day traders ... "drag lower" you dynamic.

Jeff Bailey : 8/15/2007 2:01:44 PM

Day trade short lower stop alert! for the 1/2 position CFC to break even.

CFC $21.97. session low now $21.75.

Keene Little : 8/15/2007 1:58:41 PM

In case the top of the bounce is missed (by not reaching its upside projections), prices should not drop below the uptrend line from this morning's low until the 2nd leg up tops. So if the uptrend lines are broken then we've seen the high for the bounce and it will be time to get short.

Jeff Bailey : 8/15/2007 1:57:10 PM

CFC Alert! $22.20

Jeff Bailey : 8/15/2007 1:55:08 PM

10-year ($TNX.X) up 0.8 bp at 4.740% ...

Jeff Bailey : 8/15/2007 1:54:06 PM

Day trade short 1/2 position alert in CFC $22.36. Stop $22.85. Target $21.50.

Keene Little : 8/15/2007 1:48:28 PM

It's looking like we're on the bearish price path here. Now we watch for SPX 1447-1448 and DOW 13144-13147 to see if they act as resistance and a place to get short. If the bearish wave count is correct the next leg down is going to be a doozy. This daily chart shows what kind of downside potential we're looking at: Link

Jeff Bailey : 8/15/2007 1:45:43 PM

CFC $22.51 ...

Jeff Bailey : 8/15/2007 1:44:24 PM

10-year ($TNX.X) now up 1.4 bp at 4.746% ...

Jeff Bailey : 8/15/2007 1:43:56 PM

Day trade short stop alert $22.76 on CFC.

Jeff Bailey : 8/15/2007 1:43:13 PM

Day trade short lower stop alert on the CFC to $22.76.

CFC $22.64

Keene Little : 8/15/2007 1:37:40 PM

There is one bullish possibility if the market heads for a new low from here and leaves a bullish divergence at a new low. It would look like a bullish descending wedge for price action since last week's high. But it has to drop from here in order to keep that pattern in play. Otherwise a continuation higher for two equal legs up off this morning's low would more likely set up the bearish outcome with a very strong selloff to follow: Link

Jeff Bailey : 8/15/2007 1:34:28 PM

CFC Day trader's 5-minute interval chart Link

For those new to the MM, the Lower 5-MRT (5 Minute ReTracement) is a technique I developed years ago and have taught day traders. You can also make an Upper 5-mrt. What this gives the day trader is additional levels to trade against.

I will fill in "yellow zone" that utilize the powerful and institutionally trade Pivot Levels (Daily,Weekly,Monthly). Sometimes they uncover "targets" that a day trader can begin to assess RISK/Reward as the day's trade unfolds.

Jeff Bailey : 8/15/2007 1:21:25 PM

01:00 Internals found at this Link

Jeff Bailey : 8/15/2007 1:18:15 PM

CFC $22.62. Post profile low has been $22.51.

Jeff Bailey : 8/15/2007 1:16:25 PM

Day trade short lower stop alert ... on the remaining 1/2 CFC to $23.20.

Just above Dynamic 61.8% and 5-mrt Red #0.

Jeff Bailey : 8/15/2007 1:07:26 PM

CFC $22.62 -7.52% ... slips under DAILY S2. Lower 5-mrt's RED #1 at $22.21. Red #2 $21.42 and WEEKLY S2 $21.17 are day trader's target.

Jane Fox : 8/15/2007 1:06:59 PM

VIX and ES are in sync today so be looking for divergences. Link

Jane Fox : 8/15/2007 1:05:06 PM

AD line is heading down again and is currently at -933, not an environment for the bulls I'm afraid. AD volume is now making new daily lows so I think the bulls have fumbled the ball.

Jeff Bailey : 8/15/2007 1:04:13 PM

01:00 Market Watch found at this Link

Jeff Bailey : 8/15/2007 1:01:02 PM

Day trade short cover 1/2 alert ... CFC $22.75.

Jeff Bailey : 8/15/2007 12:58:58 PM

Day trade short cover 1/2 position alert! ... in the Countrywide (CFC) should it trade $22.70.

Thats 215 of the 430 shares ($10K=Full : $10,000 / $23.22 = 430 shares).

CFC $22.78 -6.86% ...

Keene Little : 8/15/2007 12:55:34 PM

Long is the place to be for the moment, against the mid-day low. Let's see if the DOW and SPX can make it up to their targets to set up the short play. But reverse short if the mid-day lows are taken out.

Jeff Bailey : 8/15/2007 12:29:54 PM

Fed Repurchase Details at this Link

Keene Little : 8/15/2007 12:28:05 PM

If the market manages to get another leg up in a larger 3-wave bounce off this morning's low, the same projection for the DOW as I had done for SPX gives us an upside target of 13144 which is on top of the 50% retracement of this week's decline. So SPX 1447-1448 and DOW 13144 will be the levels to watch for a short play if the market can rally from here. Otherwise a drop below the low just put in before 12:00 will be an immediate sell signal.

Jeff Bailey : 8/15/2007 12:23:59 PM

Disclosure: I currently hold bearish position in CFC.

Jeff Bailey : 8/15/2007 12:23:33 PM

Day trade short alert ... for shares of Countrywide (CFC) $23.22 -5.15% here. Stop $23.55, target $21.50.

Jeff Bailey : 8/15/2007 12:13:56 PM

Fed Repurchase (update/story)

DJ- In an unusual move, the Federal Reserve on Wednesday announced an overnight repurchase agreement, then canceled it, and announced again that it was implementing an overnight operation.

The New York Fed had said earlier in a statement that "preliminary estimates suggest that an overnight RP, which would be conducted at the Desk's normal operating time of 9:30 a.m., will be needed to accommodate heightened reserve needs typical on a Treasury mid-quarter refunding date," and added "the Desk stands ready to conduct further operations later in the day if needed."

The central bank's overnight target rate was trading on target at 5.25%. Open market operations are the Fed's tool to achieve its monetary policy objectives, and involve borrowing and buying a mix of Treasury and other fixed-income securities.

Jeff Bailey : 8/15/2007 11:53:07 AM

Fed Accepts $7 Billion In Overnight RPs (10:57 AM EDT)

Jeff Bailey : 8/15/2007 11:52:09 AM

NHC: Gulf Tropical Depression Upgraded To Tropical Storm Erin

Jeff Bailey : 8/15/2007 11:51:21 AM

NHC: Dean To Be "Major Hurricane" By Monday

Jeff Bailey : 8/15/2007 11:50:19 AM

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

Keene Little : 8/15/2007 11:47:42 AM

Looking at SPX here, if we get a pullback now that gives us two equal legs down, for potential support at 1426.75, we could then get another leg up for a larger correction of the decline from Monday. Then a projection from there, for two equal legs up off this morning's low, gives us 1448 for an upside target. This would also be a 62% retracement of this week's decline and would make an outstanding setup for the short side. Obviously a new daily low from here would be more immediately bearish. Link

Jeff Bailey : 8/15/2007 11:40:46 AM

Disclosure: I currently hold bullish position in PBT.

Jeff Bailey : 8/15/2007 11:40:08 AM

Swing trade long setup alert ... Let's look to go long the Permian Basin Royalty Trust (PBT) $13.84 +1.02% ... for a 1/3 position ($10K = Full), or 250 shares, should it trade $13.66.

Stop goes $13.20, Target $16.00.

Keene Little : 8/15/2007 11:35:14 AM

We could still be due a larger bounce but all bounces should be shorted at this point. This market is headed much much lower so it's worth testing the highs in case it continues lower from there. If stopped out then short the next high. Just keep your stops as tight as you can until you catch the next ride down.

Jeff Bailey : 8/15/2007 11:29:26 AM

Black Box Alert! ... Traders that may be using a "black box" system that utilizes New Highs and New Lows, may want to consider issues on the big board.

Jane Fox : 8/15/2007 11:29:21 AM

SAN FRANCISCO (MarketWatch) -- Shares of Applied Materials Inc. slipped more than 3% Wednesday morning - giving up gains made by the stock over the last month - after the semiconductor tool maker reported quarterly results that indicated continued pressure in the volatile chip market.

The company also forecasted a continued weakness in equipment orders for the current period, as makers of memory chips begin to trim back on expansion plans.

In early trading, Applied (AMAT) shares were off 3.6% at $20.46. The stock peaked at $23 last week - its highest level since January of 2004 - which represented a gain of nearly 45% over the last 12 months

Jeff Bailey : 8/15/2007 11:28:20 AM

11:08 Internals found at this Link

Tuesday's Internals at this Link

Jeff Bailey : 8/15/2007 11:17:52 AM

If not... MASSIVE sign of firming at the "bottom"

Jeff Bailey : 8/15/2007 11:16:20 AM

I've got to believe there's something wrong with networks, or computers in New York financial markets. 0 new highs, 45 new lows is what I'm getting.

Jeff Bailey : 8/15/2007 11:13:31 AM

Volume readings look VERY low.

Jeff Bailey : 8/15/2007 11:10:36 AM

11:08 Market Watch found at this Link

Jeff Bailey : 8/15/2007 11:07:04 AM

EIA: Weekly Gross Inputs, Crude Oil Inputs, Refinery Op. Capacity, Percent Utilization, # Days Crude Oil Supply Table found at this Link

Linda Piazza : 8/15/2007 11:01:29 AM

Although the Fed supposedly cancelled the earlier repo (see my 10:00:24 and 10:01:28 posts this morning) due to a technical error and was to reinstate it later, I can't find information that it has yet done so, which it usually does through the Federal Reserve Bank of New York. I'm signing off now. If you would like to watch for any add yourself (which I believe would be a total add for the day, since I can't find anything else that's expiring today, at least in the last 25 transactions), you can find it here: Link

Jeff Bailey : 8/15/2007 10:56:27 AM

EIA: Weekly Kerosene-Type Jet Fuel, Heating Oil and SPR Inventory Table at this Link

Keene Little : 8/15/2007 10:53:32 AM

Here's something to feel bullish about--the US dollar may have finally found its bottom. It may immediately break above $82 but right now it's about to bump its head on the downtrend line from March 2006. It may pull back first and get another running start to break that resistance and then head for $83 for its next test of resistance. Link

Jeff Bailey : 8/15/2007 10:49:51 AM

Heating Oil stockpiles rose by 897,000 barrels to 38.25 million barrels. Still down 33.16% from year-ago levels of 57.23 million barrels.

Jeff Bailey : 8/15/2007 10:46:19 AM

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

Keene Little : 8/15/2007 10:38:44 AM

SPX has broken its downtrend line from Monday so the next downtrend line for this index is the one from last Wednesday the 8th. At 1444 currently this line is just above the level for two equal legs up this morning at 1442. A 50% retracement of this week's decline is right in the middle 1442.70. Link

Jeff Bailey : 8/15/2007 10:33:00 AM

Now you know why "bears dislike the Fed" the so much.

;) (wink)

Jeff Bailey : 8/15/2007 10:31:46 AM

Jane's got it too.

Jeff Bailey : 8/15/2007 10:31:12 AM

That "explains" the sharp reversal back higher in equity markets.

Jeff Bailey : 8/15/2007 10:30:32 AM

NY Fed Cites Technical Problem In Canceled RP Operation

Jeff Bailey : 8/15/2007 10:28:26 AM

Countrywide (CFC) $24.54 +0.32% ... fills its gap.

Jane Fox : 8/15/2007 10:28:01 AM

NEW YORK (MarketWatch) -- U.S. stocks turned higher after the Federal Reserve cancelled overnight repurchase operations, a move which the market first took to mean it was comfortable with liquidity levels in the system.

But the Fed later said it would again try conduct the repurchase operation which it had to cancel earlier.

"If anything, it just goes to show how sensitive investors are to liquidity conditions," said Mike Malone.

Jeff Bailey : 8/15/2007 10:25:01 AM

CFC PnF chart Link

Keene Little : 8/15/2007 10:19:58 AM

Two equal legs up in this morning's bounce would take the DOW and SPX up to 13113 and 1442 so if those levels get tagged watch to see if price stalls there for a shorting opportunity. The risk for bears today is that we could be starting the bounce that corrects the decline from Monday which could give us a 200-point rally in the DOW.

The hard part in trading a bear market (which I believe we've started) is that the rallies tend to be very sharp, but short lived, which makes it difficult to stay short for the bigger ride down.

Jeff Bailey : 8/15/2007 10:18:39 AM

ACH PnF chart Link

Jeff Bailey : 8/15/2007 10:11:47 AM

Aluminum Corp. China (ACH) $40.35 -6.03% ... Today's trade at $41 triggers the "bear triangle" pattern.

Jane Fox : 8/15/2007 10:09:57 AM

Doesn't it feel like the SPX is standing right on the edge of a cliff? Link

Jane Fox : 8/15/2007 10:07:06 AM

Markets are hanging on to those PDLs for dear life. Link

Jeff Bailey : 8/15/2007 10:08:27 AM

KKR Fincl Holdings Sells $5.1B Of Residential Mortgages

DJ- KKR Financial Holdings LLC (KFN) said it sold about $5.1 billion of residential-mortgage loans as part of its restructuring and hinted at possible liquidity trouble amid the credit market turmoil.

In recent trading, KKR Financial shares fell 23%, or $3.51, to $11.76. Earlier Wednesday, the stock fell as low as $9.39.

KKR Financial said Wednesday it has an aggregate net equity investment of about $200 million.

Citing the "unprecedented disruption in the residential mortgage and global commercial paper markets," KKR Financial said it has started talking with investors in its asset-backed secured liquidity note facilities regarding "various alternatives to resolve potential funding disruptions resulting from the current market environment." If those strategies fail, KKR Financial warned it might need to record a charge of up to $200 million.

KKR Financial's sale of the mortgage loans to an unnamed buyer will prompt a loss of about $40 million.

In January, the San Francisco company, a publicly traded affiliate of buyout giant Kohlberg Kravis Roberts & Co., said it would divest itself of its residential mortgage portfolio as it converted from a real-estate investment trust to a limited liability company.

As a REIT, at least 75% of its gross income had to be generated by real estate assets; for the company, that consisted of its investments in residential mortgage assets, it said.

After the sale, KKR Financial owns about $5.8 billion of mortgage loans, mainly in the form of residential-mortgage-backed securities.

The company said it "no longer intends to invest in residential real estate assets."

Jane Fox : 8/15/2007 10:04:26 AM

NEW YORK (MarketWatch) - Financial stocks were volatile again Wednesday as analyst downgrades moved several individual shares lower, but broader indexes turned higher after a weak opening.

A report that some U.S. banks are no longer accepting certain hedge fund credit assets as collateral added a new twist to credit fears.. The Financial Times reported that various hedge funds said several banks in recent days had cut off lending to funds that use credit portfolios, including mortgages, collateralized debt obligations and subprime securities, as collateral.

That leaves the highly leveraged funds heavily reliant on their prime brokers for borrowing, the report added.

That could cause problems for all sorts of financial companies who trade with hedge funds, if the funds are unable to raise cash to meet margin and collateral obligations with them.

Wednesday is also redemption day for funds with a 45-day advance notice redemption window. That means hedge fund investors will have a chance to pull there money out of those funds, which could cause more market gyration. See full story.

Jeff Bailey : 8/15/2007 10:04:23 AM

NASDAQ a/d 1,431 / 1,184

Jeff Bailey : 8/15/2007 10:04:09 AM

NYSE a/d 1,449 / 1,586

Jeff Bailey : 8/15/2007 10:03:32 AM

10:00 Market Watch found at this Link

Linda Piazza : 8/15/2007 10:01:28 AM

CNBC is now announcing that the cancellation of the repo was due to a technical difficulty.

Linda Piazza : 8/15/2007 10:00:24 AM

Weird. Just as I was preparing a posting noting that the Fed, acting through the Federal Reserve Bank of New York, was injecting funds today with a same-day repo (repurchase agreement) with a settlement date tomorrow, CNBC announced that the Fed was cancelling overnight repos. Now, the Fed Reserve Bank of New York's site has updated and shows that this add was, in fact, cancelled.

Keene Little : 8/15/2007 9:59:50 AM

Getting a nice short-covering bounce now. If the DOW can get above 13100 then it will be a break of its downtrend line from Monday. Until that happens, try shorting at the downtrend line with a stop just above 13120, the high of yesterday's late-afternoon high.

Jane Fox : 8/15/2007 9:59:08 AM

Internals have improved a great deal. The AD line is now at +31 and both VIX is making new daily lows as the AD volume is making new daily highs.

Jeff Bailey : 8/15/2007 9:54:07 AM

Countrywide Financial (CFC) $23.60 3.45% ... today's trade at $24.00 triggers the "bearish triangle" pattern.

Purdue University study showed that in a bear market (depicted by bullish %) the bearish triangle was profitable 87.5% of the time, average gain of 33.3% in 2.5 months.

Jane Fox : 8/15/2007 9:48:28 AM

I would be using rallies to sell until you see a clear change of direction.

Jane Fox : 8/15/2007 9:44:31 AM

Nothing telling me we have found a bottom yet. Link

Keene Little : 8/15/2007 9:49:06 AM

The price pattern is taking on the appearance of a waterfall decline as the the downtrend lines gets steeper since the August 8th high, as shown on this DOW 30-min chart: Link Staying on the short side is the right place to be until the trend breaks.

Jane Fox : 8/15/2007 9:43:36 AM

All the internals are telling me the highest odds trade is short.

Jane Fox : 8/15/2007 9:40:07 AM

VIX is climbing and that means lower.

Jane Fox : 8/15/2007 9:39:31 AM

AD line is of course under -1000 at -1250.

Jane Fox : 8/15/2007 9:35:02 AM

Anyone remember that song, "Oh Little Hansel, Hold Back the Dyke;
You gotta save your mama;
You gotta save your papa;
You gotta save your little Dutch town" ? Link

Jane Fox : 8/15/2007 9:30:54 AM

Here is the US$ on it way back to test its infamous downware blue trendline. Link

Jane Fox : 8/15/2007 9:29:52 AM

Here is the daily chart of Oil showing the bounce off the $70.00 support. Link

Jane Fox : 8/15/2007 9:27:20 AM

US $ up and Gold is down so these two are in sync today.

Crude is getting a nice bounce off its $70.00/bl support. Link

Jane Fox : 8/15/2007 9:22:16 AM

WASHINGTON (MarketWatch) - U.S. industrial output rose 0.3% in July, boosted by business equipment and auto production, the Federal Reserve said Wednesday.

Capacity utilization rose to 81.9% in July, the highest level since last September, the Fed reported.

Manufacturing output rose 0.6% while utility output fell 2.1%.

Industrial production is up 1.4% in the past year. Industrial capacity has grown 2.0% in the past year.

The increase in industrial production was in line with economist's forecasts, according to a survey conducted by MarketWatch. Capacity utilization was expected to remain steady at 81.7%

Jane Fox : 8/15/2007 9:20:35 AM

The Economic Reports out this morning did nothing to help the bulls for all markets are under their PDLs which isn't saying too much since they all closed very close to their daily lows yesterday.

The overnight session was mostly sideways but the lower lows and highs show the trend from yesterday was carried through the session. Link

Jane Fox : 8/15/2007 9:14:57 AM

WASHINGTON (MarketWatch) -- Manufacturing activity in the New York area held steady at a healthy pace in August, data released by the Federal Reserve Bank of New York showed Wednesday.

The Empire State Manufacturing index fell to 25.1 points in August from a reading of 26.5 in July.

Among the businesses surveyed by the New York Fed, 40% reported that conditions had improved in August, while 15% said conditions had deteriorated.

The August reading was much stronger than expected: Economists had forecast that the index would fall back to 19.0.

The Empire State index is of interest to economists primarily because it gives early guidance on industrial activity. In particular, it's seen by some as an early forecast of what to expect in the upcoming Institute for Supply Management report on U.S. factory activity.

Jane Fox : 8/15/2007 9:13:44 AM

CHICAGO (MarketWatch) -- The volume of applications filed seeking mortgages increased at a seasonally adjusted 3.4% last week compared to the prior week, according to the Mortgage Bankers Association's weekly survey.

However, this uptick may be misleading: The industry group's chief economist said "recent upheavals" that have hit the mortgage industry may be contributing to that boost.

In particular, the industry's turmoil "may be temporarily increasing the level of retail application activity at the large lenders that participate in the MBA survey rather than representing a systemwide increase," said Doug Duncan, the MBA's chief economist and senior vice president of research and business development.

Jane Fox : 8/15/2007 9:12:10 AM

Dateline WSJ - WASHINGTON -- U.S. consumer prices softened last month on falling energy prices while clothing and medical care posted sharper gains, suggesting the recent disinflationary trend may have come to an end with underlying inflation near the high end of the Federal Reserve's comfort area.

Still, the data should give policymakers enough ammunition to drop their longstanding anti-inflation bias when they meet next month amid growing worries over credit conditions and the fallout from housing. But with core inflation apparently leveling off, officials may be wary of cutting rates barring a financial collapse that threatens economic growth.

The consumer price index rose 0.1% in July, the Labor Department said Wednesday, compared to June's 0.2% rise. The core CPI, which excludes volatile food and energy prices, advanced 0.2%, matching June's increase.

Unrounded, the CPI rose 0.117% last month. The core CPI advanced 0.236% unrounded. The data matched Wall Street forec

Keene Little : 8/15/2007 9:11:24 AM

I'm starting to get the feeling we're in a market that is exactly the opposite of how it was when it was rallying--it keeps dropping and is not letting bulls out or bears in. Everyone is now waiting for bounces to exit long plays or enter short plays and when it doesn't bounce both sides are forced to chase it lower. I don't want to short the market here but if it continues to sell off today then that may in fact be the best play.

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