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Jeff Bailey : 8/23/2007 12:31:40 AM

World Bullish % Bell Curve at this Link

Jeff Bailey : 8/22/2007 11:17:04 PM

Bear Correction ... Wednesday's action has Dorsey/Wright's NASDAQ-100 Bullish % (BPNDX) reversing up to "bear correction" status at 57.00% (56% on chart).

StockCharts.com's BPNDX Link

Jeff Bailey : 8/22/2007 11:16:08 PM

Bull Alert! ... Wednesday's action has Dorsey/Wright's NYSE Bullish % (BPNYSE) reversing up to "bull alert" status at 38.16%.

StockCharts.com's BPNYA Link

Jeff Bailey : 8/22/2007 10:56:26 PM

BOJ: To Buy Y400.0 Bln T-Bills Outright On Aug 28

Jeff Bailey : 8/22/2007 10:54:40 PM

YM ... 13,552

Overnight H/L has been 13,379 / 13,300.

Jeff Bailey : 8/22/2007 10:53:40 PM

NHC: Dean Now A Tropical Depression

Expected To Dissipate Thursday.

Keene Little : 8/22/2007 10:35:32 PM

Thursday's pivot tables: Link and Link

The corrective price pattern still needs to develop further before getting a better idea of what's next. Using just SPX I'm showing the setup for a pullback on Thursday (not that you'd know it with futures up strong this evening):
SPX daily: Link
60-min: Link
30-min: Link

As I mentioned at the end of the day on Wednesday, there was a good short play setup (for a put option play since I didn't like the risk for an overnight futures short). Now we'll see if the positive futures carry into the cash open. If the market gaps up and pulls back to find support at or above Wednesday's closing prices then we'll want to be long. Otherwise watch for the possibility of a gap n crap (if it gaps up). We'll see what it looks like in the morning.

OI Technical Staff : 8/22/2007 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The Market Monitor has been archived.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 : 8/22/2007 9:17:09 PM

If I were the Fed, I'd be taking some nice PPT profits (drain some liquidity), then sit back, get ready to defend further if need be.

Jeff Bailey : 8/22/2007 9:12:36 PM

OK ... no more trading YM for me tonight. I have a lot of chores needing my attention.

See you in the morning. Will see early if Fed drains any liquidity it has pumped into the system.

Bernanke looks like he's on track. (see 02:10:01, then 02:46:33, then 02:53:34)

Jeff Bailey : 8/22/2007 9:05:53 PM

See action at GREEN #1 after 5-minute close above.

Jeff Bailey : 8/22/2007 9:04:37 PM

YM 13,367 ... get covered.

Jeff Bailey : 8/22/2007 9:00:37 PM

YM overnight with UPPER 5-MRT, and tomorrow's DAILY Pivot retracement (to right) Link

Jeff Bailey : 8/22/2007 8:48:41 PM

YM's GREEN #1 13,332. #2 13,364. #3 13,384. #4 13,404. #5 13,436. #6 13,468.

Jeff Bailey : 8/22/2007 8:46:19 PM

YM Short stop alert! 13,367

Jeff Bailey : 8/22/2007 8:31:30 PM

Need the SPT (Surge Protection Team) here ...

Jeff Bailey : 8/22/2007 8:30:26 PM

YM alert! ... 13,364 ... GREEN #2.

Jeff Bailey : 8/22/2007 8:27:09 PM

NHC: Tropical Storm Dean Rapidly Weakening Over Mexico

Jeff Bailey : 8/22/2007 8:24:13 PM

YM short ... 13,358. Stop will be 13,367. Target is 13,338.

Jeff Bailey : 8/22/2007 8:22:30 PM

YM Short alert! here at 13,358. Stop goes just above GREEN #2 (13,365), target 13,338.

Jeff Bailey : 8/22/2007 8:19:40 PM

Overnight YM traders. Can slap an upper "5-mrt" on the YM for addition levels above DAILY R2 to WEEKLY R1. Green #6 juuuust below WEEKLY R1.

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

YM alert! 13,354

Jeff Bailey : 8/22/2007 7:59:01 PM

YM 13,344 ...

Jeff Bailey : 8/22/2007 7:58:38 PM

YM Pivot Matrix for Thursday at this Link

Jeff Bailey : 8/22/2007 7:22:04 PM

YM alert! 13,326 ... initial target from 09:55:32 AM.

Jeff Bailey : 8/22/2007 6:02:04 PM

Now expecting Fed to take some liquidity out of system tomorrow morning.

Jeff Bailey : 8/22/2007 5:58:15 PM

7.25% ... that's a "key number" for junk bond traders now.

Jeff Bailey : 8/22/2007 5:56:25 PM

Any guess which day that was put together?

Jeff Bailey : 8/22/2007 5:55:08 PM

Bank of America to Invest $2 Billion In Countrywide ... Link

Jeff Bailey : 8/22/2007 5:53:52 PM

Countrywide (CFC) Alert! $21.82 +0.13% ... surging to $26 extended.

Jeff Bailey : 8/22/2007 5:49:28 PM

Linda! I've been adding them up in my head. Wasn't double checking. Will likely be an ACTIVE Fed tomorrow.

Jeff Bailey : 8/22/2007 5:40:35 PM

Dow Diamonds (DIA) ... With longer-term, intermediate-term, and short-term retracement at this Link

Linda Piazza : 8/22/2007 5:11:00 PM

Thanks, Jeff, for double checking the repo amounts for me.

Jeff Bailey : 8/22/2007 5:10:39 PM

Russell 2000 Index ($RUT.X) gets the close above 796.24. Support should be firm at 759.

Jeff Bailey : 8/22/2007 5:06:19 PM

Closing Internals found at this Link

Jeff Bailey : 8/22/2007 4:52:46 PM

Oh my! Anyone slapped a conventional inflection high/low retracement on the NASDAQ COMP?

Should be firm buyers above 2,451.26.

Jeff Bailey : 8/22/2007 4:50:38 PM

NASDAQ's 5-day NH/NL Ratio needs 28.00% measure to give a "buy signal"

Jeff Bailey : 8/22/2007 4:49:44 PM

NYSE 5-day NH/NL Ratio Alert! ... today's closing measure of 17.6% does have the NYSE's 5-day NH/NL ratio giving a "buy signal"

Jeff Bailey : 8/22/2007 4:37:29 PM

That's about what I come up with Linda.

Jeff Bailey : 8/22/2007 4:36:56 PM

CBO MAY PUT '07 DEFICIT AT 5-YEAR LOW (earlier)

DJ- The Congressional Budget Office is expected to estimate that the U.S. federal budget deficit for fiscal year 2007 will be near the five-year low of $157 billion set in 2002. The deficit for fiscal year 2006 was $248 billion.

Jeff Bailey : 8/22/2007 4:33:23 PM

Closing U.S. Market Watch found at this Link

Linda Piazza : 8/22/2007 3:53:43 PM

As far as I can determine, the Fed has repos adding up to $14.00 billion maturing tomorrow, $2 billion of that from today's repo and $12.00 billion from two Thursdays ago, August 9. Any injection of less than $14.00 billion, if I'm right about the calculations, will be a draw on liquidity. Don't trust me: verify it for yourself at the website: Link

Jeff Bailey : 8/22/2007 3:48:17 PM

YM 13,271 ...

Jeff Bailey : 8/22/2007 3:48:06 PM

I think they can, I think they can.

Jeff Bailey : 8/22/2007 3:47:46 PM

BKX.X 109.03 (unch) ...

BIX.X 377.69 -0.07% ...

Keene Little : 8/22/2007 3:45:18 PM

The setups just don't get much sweeter than this one for a short play. I have no idea if it'll work and an overnight futures trade is too risky here. That's why I'm recommending an option play with a couple of puts. You know what your risk is and don't spend more than you can bear to lose. Link

Linda Piazza : 8/22/2007 3:36:28 PM

Remember the conclusion of the Bank of Japan's meeting tonight as you're making your end-of-day decisions. Will the BOJ forego its earlier intention to hike due to the impact of the credit crunch or perhaps some hints that consumer consumption in Japan might slow? Will it go ahead with a rate hike but flood the markets with yen to counter any adverse effect on the yen and keep it weak against other currencies? Someone on CNBC Asia several nights ago pointed out how mistaken it was for people to ignore the fact that central banks might have two separate reasons for involvement in the currency markets. One might be just to impact the currency markets while the other might be to impact liquidity. While some on television and in print argued that the BOJ couldn't be intending to raise rates when it was flooding markets with yen, this guy the other day was saying, effectively, "It ain't necessarily so." I obviously have no special insight into what the BOJ will do but just understand that it could impact your trades.

Keene Little : 8/22/2007 3:36:23 PM

We've got an interesting setup heading into the end of the day. The ascending wedge pattern I've been showing on the SPX 30-min chart shows both the pattern and an EW count that points to potential resistance around 1466. It might get parked there for the close. These ascending wedge patterns are usually bearish (unless of course it pops out the top and runs higher in which case it's very bullish).

Linda has been referring to the yen and Japan's central bank decision on rates that will be announced during our overnight hours. Based on the pattern that's developing here for SPX I'm guessing the market is not going to like Japan's decision and that we're going to see immediate selling. A gap down tomorrow morning and decline from there is what I'm calling for. So a few front-month index puts, no stop, and let the chips fall where they may.

If the market runs much higher than 1466 into the close I probably will stay flat for overnight.

Jeff Bailey : 8/22/2007 3:35:42 PM

YM Long exit alert! 13,270

Jeff Bailey : 8/22/2007 3:35:18 PM

SPX alert! 1,463.25 ... retraces 50% of recent decline.

Jeff Bailey : 8/22/2007 3:33:41 PM

YM Long raise stop alert .... to 13,255

Jeff Bailey : 8/22/2007 3:33:00 PM

YM 13,258 ... hold onto your hat!

Jeff Bailey : 8/22/2007 3:30:54 PM

YM Long finger on the button alert! ... Keep your finger on the button for current OPEN YM long into the close.

Stop still 13,236.

YM 13,252

Jeff Bailey : 8/22/2007 3:27:42 PM

Will follow YM long to close ... stop currently 13,236.

Jeff Bailey : 8/22/2007 3:27:02 PM

YM Long cancel target alert ...

Jeff Bailey : 8/22/2007 3:22:49 PM

Google (GOOG) 513.65 +1.38% ...

Jeff Bailey : 8/22/2007 3:22:17 PM

NDX.X alert! 6/04/07 close.

Jeff Bailey : 8/22/2007 3:22:10 PM

NDX.X alert! 6/04/07 close.

Jeff Bailey : 8/22/2007 3:21:47 PM

YM Long raise stop alert ... to 13,236.

YM 13,255

Jeff Bailey : 8/22/2007 3:20:47 PM

TRIN alert! ... 1.00

Jeff Bailey : 8/22/2007 3:20:23 PM

YM long raise stop alert ... on the 13,227 to break even.

YM should go out at high of day.

Jeff Bailey : 8/22/2007 3:18:58 PM

YM Long exit partial alert! ... Sell one (1) of the YM longs (from 13,214), here at 13,242.

Hold the other to target.

Jeff Bailey : 8/22/2007 3:16:39 PM

03:00 Internals found at this Link

Jeff Bailey : 8/22/2007 3:03:14 PM

03:00 Market Watch found at this Link

Jeff Bailey : 8/22/2007 3:00:16 PM

YM Long alert for an additional ... here at 13,227.

Jeff Bailey : 8/22/2007 2:53:34 PM

Moody's Upgrades Four Classes of Credit Suisse First Boston Commercial Mtg. Corp. Series 2002-CKP1

Jeff Bailey : 8/22/2007 2:52:29 PM

YM 13,231

Jeff Bailey : 8/22/2007 2:52:11 PM

Nice little buy program kicking in ...

Jeff Bailey : 8/22/2007 2:49:37 PM

YM 13,213

Jeff Bailey : 8/22/2007 2:47:44 PM

Wachovia (WB) $49.401 +0.34% ...

Jeff Bailey : 8/22/2007 2:46:33 PM

S&P Upgrades Wachovia's Comm Mtg 2004-C12 Class B To "AA+"

Tab Gilles : 8/22/2007 2:44:57 PM

Weekly EIA Report Link

Jeff Bailey : 8/22/2007 2:43:47 PM

YM Long alert ... 13,214. Stop 13,202. Target 13,260.

Linda Piazza : 8/22/2007 2:43:46 PM

After Jeff's excellent update on ECB action in his 2:13:07 post, I checked out the euro/yen action. Much to my surprise, after having checked it out early this morning and found it moving similarly to the USD/yen, the euro/yen's 15-minute chart shows the currency pair's value moving up more strongly than the USD/yen pair when seen on an intraday Keltner chart. It's challenging Keltner resistance the USD/yen chart hasn't even approached. This would be anticipated if the expectation, right or wrong, is the ECB would likely raise rates (therefore perhaps strengthening the euro) but that the U.S. might not. It's important to remember that the euro's strength against the yen is also important in the whole yen carry trade concerns. We're getting a bit of a mixed signal about how much we should worry about the yen carry trade and how likely it might be that equities still might be dumped, then, from these two currency pairs. However, the euro/yen's move higher hasn't yet broken the currency pair's value above Monday's high, just as the USD/yen wasn't able to break above Monday's high earlier today. Both sets of currency pairs are above a 23.6 percent retracement of the decline off June's highs, but still below a 38.2 percent retracement. My conclusion? Although the euro/yen pair is outperforming the USD/yen pair in intraday trading today, their daily charts don't look all that different, and the Bank of Japan action or inaction tonight might change both charts, in any given direction, depending on what the BOJ decides and the reaction to that decision. The rise in the euro/yen may provide some support, but I really don't see anything definite here yet.

Jeff Bailey : 8/22/2007 2:41:27 PM

Valero Energy (VLO) $65.07 +3.10% ...

Jeff Bailey : 8/22/2007 2:40:56 PM

Valero Energy: No Crude-Oil Supply Disruptions From Hurricane Dean Seen

Jeff Bailey : 8/22/2007 2:39:40 PM

Lehman Bros. (LEH) $57.35 -0.25% ...

Jeff Bailey : 8/22/2007 2:39:08 PM

Lehman Bros. to close BNC Mortgage LLC Unit

Jane Fox : 8/22/2007 2:35:11 PM

This has been another very tough day to trade and probably the trade you did not take was the best trade.

Jeff Bailey : 8/22/2007 2:32:57 PM

YM 13,212 ... 61.8% dynamic at 13,209.

Jeff Bailey : 8/22/2007 2:32:22 PM

5-year YIELD .... 43.26 ... 61.8% dynamic at 43.31.

Jeff Bailey : 8/22/2007 2:30:00 PM

BKX.X 107.81 -1.11% ... session low has been 107.67.

DAILY S1 here, WEEKLY Pivot at 107.23.

Jeff Bailey : 8/22/2007 2:28:35 PM

YM's regular session range remains 13,180-13,256. No real intra-day traction on either side that I've been able to observe.

Keene Little : 8/22/2007 2:25:05 PM

Ideally, to finish the pattern to the upside, the current pullback will lead to one more push higher. If it can push higher I like SPX 1464-1466 for a level to short. Here's the updated 30-min chart posted last night: Link A break below 1451 now would negate this setup and suggest short is the place to be.

Jeff Bailey : 8/22/2007 2:24:43 PM

YM Long stop alert 13,215

Jeff Bailey : 8/22/2007 2:13:07 PM

ECB SIGNALS IT'S STILL INCLINED TO RAISE RATES

DJ- European Central Bank looks set to raise interest rates to 4.25% on Sept. 6, if market turmoil doesn't deepen. With E.U. banks reluctant to lend over longer periods of time, ECB also says it will dole out 40 billion in three-month funds Friday.

Jeff Bailey : 8/22/2007 2:11:46 PM

Correction to my earlier comments (1:16:30) regarding "banks borrowing from discount window a negative."

I did not have full information.

Jeff Bailey : 8/22/2007 2:10:01 PM

MAJOR US BANKS BORROW FROM DISCOUNT WINDOW

DJ- Citi, JP Morgan Chase, Bank of America and Wachovia each say they borrowed $500 million from the Fed's discount window to take advantage of the central bank's latest attempt to add liquidity to the credit markets.

Jeff Bailey : 8/22/2007 2:09:03 PM

Well Fargo - Greater Bay Deal Gets Fed Reserve System OK

Jeff Bailey : 8/22/2007 1:58:31 PM

YM Long alert 13,231 here. Stop 13,215, target 13,260.

Jeff Bailey : 8/22/2007 1:57:03 PM

RUT.X 796.24 ...

Jeff Bailey : 8/22/2007 1:53:23 PM

Interbank Forex at 01:50 PM EDT ... Link

Jeff Bailey : 8/22/2007 1:45:16 PM

Russian Ctrl Bank Allots RUB127.52B In Two 1-Day Repos

DJ- The recent interventions of the Russian central bank into the local money market aim at supporting stability in the market, Central Bank Deputy Chairman Konstantin Korishchenko told Dow Jones Newswires Wednesday evening. He said that while there is tension on the market, there is no liquidity squeeze. "At least not right now," Korishchenko said. The central bank injected a total of 127.52 billion rubles ($4.93 billion) into the market through two one-day repo agreements Wednesday. This was the largest boost since the bank resumed the operations Aug. 15. The bank also announced that it bought back RUB984.5 million worth of OBR bonds Tuesday that were due Jan. 15, 2008, to ease liquidity shortages of some banks. On Tuesday, the bank sold some $4.5 billion to the market to buoy the weakening ruble. No such operation took place Wednesday as the ruble regained some ground against the dual currency basket. The Russian currency, however, remained some 1% below the dollar-euro basket price of 29.61 - the level of the central bank bid at which it buys excess supply of hard currency. Analysts said the ruble will continue to weaken in the coming days as they see more non-domestic investors cutting their ruble positions. "We are talking here mostly about locally registered financial institutions reducing ruble positions of their foreign clients," a foreign exchange trader said. Traders mentioned Citi, UBS, Barclays, RBS, HypoVereinsbank and Goldman Sachs as the main players leaving the ruble behind and seeking the relative safety of developed world currencies. Korishchenko said that according to his rough estimates, net capital outflows from Russia reached $10 billion in the first three weeks of the month. "Normally, we are buying $10 billion on average from the market each month," Korishchenko said. "This month the number is close to zero so far." Alexei Moisseev, head of fixed-income research at Renaissance Capital in Moscow, said he reckons there is still some $7 billion to $10 billion that will leave Russia soon. "Some market participants still see the ruble too cheap to sell," Moisseev said. But, he added, the next few days will bring more outflows as "the USD/EUR isn't looking too good at present, so the ruble carry trades are probably off for now." In addition, end-of-month tax payments have also put pressure on liquidity. Analysts estimate that more than RUB100 billion will be needed this week to meet the payments. The overnight money market rates were seen at between 6% and 7% Wednesday. The one-day repo liquidity injections, which have topped RUB350 billion in the last week, are the most effective tool for the central bank to keep money market rates from skyrocketing, analysts said. Korishchenko said that the current liquidity situation makes the Russian market healthy. "It might not be polite to say, but sometimes a certain money crisis is helpful for normalization of the foreign exchange market," Korishchenko said.

Keene Little : 8/22/2007 1:31:11 PM

A break below that last low in SPX at 1450.98 would likely have it pressing down to its uptrend line from last Friday, currently near 1444. A break of that level would be the signal that we're into a deeper retracement at a minimum.

Keene Little : 8/22/2007 1:29:15 PM

We're seeing the either the early stages of a waterfall decline developing today or else it's a corrective pullback that will lead to another push higher in the pattern I showed earlier on the SPX 30-min chart, updated here: Link

Jeff Bailey : 8/22/2007 1:29:13 PM

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

Linda Piazza : 8/22/2007 1:28:29 PM

Just as the USD/yen was not confirming early strength this morning, it wasn't confirming weakness a few minutes ago, either. It's been going sideways since 10:30 this morning, with tiny 15-minute candle bodies strung out along a line (15-minute 120-ema) now near 114.90. Remember how our indices tend to flatten ahead of an FOMC meeting? This currency pair may be flattening ahead of Japan's rate hike decision tonight. I'm not sure whether our equities will, too, since they tend to move somewhat in lockstep, or whether watching the currency pair just won't have much relevance today, sort of like the way we always question VIX movements during opex week.

Jeff Bailey : 8/22/2007 1:19:05 PM

Looking at BIX.X, news probably broke around 11:00 AM EDt.

Jeff Bailey : 8/22/2007 1:16:58 PM

Haven't been able to get my news wire feed running this morning.

Jeff Bailey : 8/22/2007 1:16:30 PM

CNBC reporting that some banks are borrowing at the discount window today. That will have sentiment negative.

Jeff Bailey : 8/22/2007 1:13:31 PM

01:00 Internals found at this Link

Linda Piazza : 8/22/2007 1:04:30 PM

Here's what I see on a 30-minute chart of the SPX now, with the realization that the SPX is already moving lower since I snapped the chart: Link

Jeff Bailey : 8/22/2007 1:02:32 PM

01:00 Market Watch found at this Link

Linda Piazza : 8/22/2007 12:59:35 PM

It looks as if the SPX's 30-minute chart was telling the truth, and the USD/yen's failure to confirm the early push higher was giving us a good warning not to trust the early push. (See my 10:34:03 and 10:30:09 posts.) Do I regret not jumping on a play, buying a put? Not a bit, and it's not just because I eschew most directional plays these days. Internals and various intraday charts provided a mixed view of what might happen, and, if you haven't noticed, options are very expensive these days, with the high volatility inflating those prices. You don't want to be wrong while volatility happens to decrease, because you're going to suffer more than usual. Make sure you have good setups. Futures and options are not equivalent, either in their liquidity (at times) or in the way that options prices can be inflated and then suddenly deflated again.

Jeff Bailey : 8/22/2007 12:58:02 PM

YM 13,213 ... "in the zone"

Jane Fox : 8/22/2007 12:58:34 PM

A series of lower lows and highs tell you the trend is down and I never like to buck the trend. Please keep in mind though the internals are still bullish albeit less bullish than earlier. Link

Jane Fox : 8/22/2007 12:51:23 PM

The S&P futures made a new daily low but the VIX did not make a new daily high so those lows did not have followthrough and we had another expansion of the range. Link

Jeff Bailey : 8/22/2007 12:49:47 PM

RUT.X 795.41 ...

Jeff Bailey : 8/22/2007 12:45:51 PM

YM 13,220

Jeff Bailey : 8/22/2007 12:44:27 PM

YM late-morning low has been 13,190.

Jeff Bailey : 8/22/2007 12:43:17 PM

YM 13,211

Jeff Bailey : 8/22/2007 12:42:45 PM

TRIN 1.41 ...

Jeff Bailey : 8/22/2007 12:41:10 PM

YM really "shouldn't have" come under 13,209 on a 5-minute close.

Jeff Bailey : 8/22/2007 12:40:12 PM

YM 13,214

Jeff Bailey : 8/22/2007 12:39:52 PM

YM 13,210

Keene Little : 8/22/2007 12:39:20 PM

SPX is just about to tag its uptrend line from Monday so be careful of a reversal back up. Again, if you're feeling bullish about the market here's where you want to try a long play.

Jeff Bailey : 8/22/2007 12:39:03 PM

DAILY R1 needs to hold, but not counting on it at this point. BIX/BKX both down 1.00%.

Keene Little : 8/22/2007 12:38:05 PM

That was a quick drop. ES tagged the 1455.50 level (50% of gap) so now we'll see if it holds or not.

Jeff Bailey : 8/22/2007 12:38:02 PM

YM Long stopped alert at 13,193

Jeff Bailey : 8/22/2007 12:33:59 PM

YM day trader's 5-minute interval (updated) Link

Keene Little : 8/22/2007 12:31:03 PM

Price is chopping around so direction from here is a bit of a coin toss. But after gapping up today and now consolidating it looks bullish. It could drop back down and give us a slightly larger 3-wave pullback in which case two equal legs down would be at SPX 1453.69 if it drops from here. That would coincide with a tag of the uptrend line from Monday's low: Link

From there we could get another leg up later this afternoon to finish a larger A-B-C bounce off last Thursday's low. A Fib projection for such a move would be just under 1471 (where wave-C = 62% of wave-A) which would be a slight overthrow above the downtrend line from July 19th and back up to the top of its parallel up-channel from last Friday. It still takes a break below 1440 to tell me we've topped out and are into at least a deeper retracement of the rally.

Jeff Bailey : 8/22/2007 12:29:58 PM

YM Long entry alert 13,211

Jeff Bailey : 8/22/2007 12:23:31 PM

YM Long setup alert ... with YM 13,239. Let's look to go long the YM at 13,211. Stop goes 13,193. Target 13,260.

Jeff Bailey : 8/22/2007 12:21:41 PM

YM Long exit alert 13,239.

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

Dow Indu. (INDU) ... Daily interval chart with conventional inflection high/low retracement Link

Relative to NDX/NQ, see today's upside potential for a YM trader?

Jeff Bailey : 8/22/2007 12:03:55 PM

NASDAQ-100 Index (NDX.X) Daily Interval chart with conventional inflection high/low retracement Link

Jeff Bailey : 8/22/2007 11:55:03 AM

Today's "key close" will likely be monitored for the NDX.X (chart to follow) and RUT.X.

NDX has also challenged its 6/04/07 close.

Jeff Bailey : 8/22/2007 11:50:56 AM

Some very good observations, thought from Keene this morning. Or at least I agree with them.

Note the subtle ES/SPX backfill of this morning's gap. Not so for YM/DIA/INDU

Financials have had BIG move recent week, most likely some profit taking.

5-year ($FVX.X) WEEKLY Pivot is 43.87, or 4.387%.

Jeff Bailey : 8/22/2007 11:46:04 AM

YM day trader's 5-minute interval chart Link

Jeff Bailey : 8/22/2007 11:41:56 AM

Might see YM 13,263 and SPX at its 50% retracement.

Jeff Bailey : 8/22/2007 11:36:22 AM

YM long lower target ... to just below DAILY R2 (13,263), or 13,260.

YM 13,229.

BIX and BKX have slipped fraction's red.

Keene Little : 8/22/2007 11:31:13 AM

A drop back down to a new daily low from here would look bearish from an EW perspective and I would expect at least a gap fill. If you're bullish then a long against this morning's low from here is the right play. If you're bearish then a short against the last high around 10:50 AM is the right play.

Jeff Bailey : 8/22/2007 11:25:34 AM

11:00 Internals found at this Link

Keene Little : 8/22/2007 11:16:42 AM

SPX has now dropped into this morning's gap. I like to watch the 50% retracement of gaps as a measure of what the market will do next--if it finds support at 50% or less of a retracement then expect the market to continue in the direction of the gap. If it retraces more than 50% then the odds of a gap close rise considerably. For ES the 50% retracement is at 1455.50 so about another 5 points lower.

Jane Fox : 8/22/2007 11:10:54 AM

What I see happening here is an expansion of the ranges and I would not be selling the ES's new daily lows. Link

Linda Piazza : 8/22/2007 11:07:51 AM

Denise reminded me to check on the Fed's activity today. (Thanks, Denise.) So far, acting through the Federal Reserve Bank of NY for its temporary open market operations, the Fed has added $2.0 billion, with yesterday's $3.75 billion maturing today. That's a drain of $1.75 billion, unless I'm missing something not included in the last 25 transactions.

Jeff Bailey : 8/22/2007 11:03:30 AM

11:00 Market Watch found at this Link

Jeff Bailey : 8/22/2007 11:00:54 AM

MBA's Weekly Mortgage Application Report Link

Keene Little : 8/22/2007 10:58:07 AM

Pushing higher again. The choppy rise in the DOW looks like an ending pattern so it's supporting the idea that we should be close to a top for this move. SPX has resistance near 1464.50 if it pushes up to there. As shown on the 5-min chart with the EW count for the move up from yesterday afternoon it's the next Fib projection. And I showed the parallel up-channel on the 15-min chart, the top of which is currently near the same 1464.50 level so look to short it there if it stalls and rolls back over. Link

Jeff Bailey : 8/22/2007 10:55:49 AM

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

Jane Fox : 8/22/2007 10:54:26 AM

Interestingly the DOW futures break to new daily highs first. The DOW has been a laggert of late.

Tab Gilles : 8/22/2007 10:48:32 AM

FDIC Quarterly Banking Profit is out... Link

Jane Fox : 8/22/2007 10:40:39 AM

We are consolidating at daily highs and the internals are bullish. This is telling me we are going to see higher highs well before lower lows.

Jeff Bailey : 8/22/2007 10:40:33 AM

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

Linda Piazza : 8/22/2007 10:34:03 AM

I don't see any clarity on my intraday charts. One, a thirty-minute chart, shows the SPX as being more likely to dip toward 1453.50 before it climbs, if it does. The other, a 15-minute chart, shows a likelihood of only a minimal dip, perhaps not even much more than it's dipped now or perhaps down toward 1456, before it climbs toward 1472.

Keene Little : 8/22/2007 10:33:07 AM

Because price might get a little whippy here I'm letting price take me out rather than try a long play on this pullback. I don't see enough upside potential (famous last words) to warrant a long play but by the same token I'm not willing to risk much on a short play. It has to work from here or I want to get out of the way and try again a little higher.

Jane Fox : 8/22/2007 10:31:58 AM

The S&P has to close above 1500 before I will feel safe to take a long position again. I suspect that will not happen during the summer months but the way the market has traded this summer so far I would not be betting on it. Link

Keene Little : 8/22/2007 10:30:16 AM

If short against this morning's high I'd now lower my stop to just above the high at 10:14 AM (so it stays the same for YM). The pullback this morning looks corrective and suggests more highs to come.

Linda Piazza : 8/22/2007 10:30:09 AM

I'll add to Jane's 10:05:00 observations. The USD/yen is not confirming the bullishness, unless you look only to the overnight rise. As I type, the currency pair is dipping to 114.94, down from the 9:30 115.44 level. It's not a serious dip as yet, but it confirms the 115-ish level as resistance that will require an effort to surmount.

Jane Fox : 8/22/2007 10:14:48 AM

Here is how the markets are trading in relation to their previous day ranges (PDR). Link

Keene Little : 8/22/2007 10:10:22 AM

If you shorted this morning's high you should have your stop a couple of ticks to a new high. Then if stopped out I'm going to watch for the next rollover to short. It might take two more tries but with tight stops the small losses should easily be recovered with a deeper pullback/decline. A rally over SPX 1469 would have me looking to buy the dips instead of shorting the rallies.

Jeff Bailey : 8/22/2007 10:06:24 AM

10:03 Market Watch found at this Link

Keene Little : 8/22/2007 10:04:37 AM

EW counts are often not very accurate on the very short term charts so I use them only for guidance. But this SPX 5-min chart shows how the rally from yesterday afternoon might need to stair-step higher to finish a 5-wave move. That's why I want to keep stops tight right now--I'm trying to catch the end of this move but recognize it might have a little more work to do to the upside. Link

Jane Fox : 8/22/2007 10:05:00 AM

AD volume heading straight up and although I have seen this turn around and head the other way most of the time it does not.

TRIN at 0.59 is very bullish but maybe a tad too bullish and the markets may need to digest this all for a while. (move sideways)

VIX is not confirming the bullishness but it is not discounting it either.

TICKS are bullish. Link

Jeff Bailey : 8/22/2007 9:55:32 AM

YM long alert 13,235. Top 13,193. Target 13,320.

Jeff Bailey : 8/22/2007 9:48:41 AM

S&P Retail Index (RLX.X) Alert! 476.53 +1.52% ... Back at 50% retracement of 7/18/06 low CLOSE to 2/20/07 High CLOSE. Recaptured long-term bar chart trend at yesterday's CLOSE. (see 8/14/07 MM 10:29:25 AM) Link

Jane Fox : 8/22/2007 9:46:22 AM

All markets are now well above their respective overnight ranges.

Jane Fox : 8/22/2007 9:45:30 AM

AD line is a very healthy +2100

Keene Little : 8/22/2007 9:42:55 AM

Because of the quick pop higher this morning, the downtrend line from August 19th is near 1469 at the moment and that's where it could be headed. But first it has to get through 1463 and if it does then I'd look for it to get up there.

Keene Little : 8/22/2007 9:40:56 AM

SPX is also tagging the top of parallel up-channel for price action since Friday. It may be trying to catching rising knives here to short it by watch for price to stall to make a quick attempt with a relatively tight stop. Link

Jeff Bailey : 8/22/2007 9:40:40 AM

OEX.X Alert! 680.41 +0.97% ... 50% retracement of 7/17/07 high to recent 640.50 high.

Jeff Bailey : 8/22/2007 9:39:17 AM

NDX Alert! 1,933.97 +1.18% ... 50% retracement of 7/19/07 high to recent 8/16/07 low.

Jeff Bailey : 8/22/2007 9:37:17 AM

RUT.X Alert! 796.88 +1.07% ... 50% retracement of 7/13/07 high to recent 8/16/07 low.

Jane Fox : 8/22/2007 9:33:35 AM

Crude fell to under $70.00/bl yesterday and cannot seem to break back above the support that seems to have turned to resistance now.

I put the US/YEN currency pair on these charts, a market that Linda has been talking about for a few days and as you can see it is in rally mode supporting the bullish picture you see on the indexes.

US$ chart I use is the US $ against a basket of currencies and the one I use to tell me where the US$ is in relation to some of the more important currencies around the world. It fell overnight and in turn Gold rallied. These two markets are joined at the hip. Link

Jane Fox : 8/22/2007 9:22:09 AM

All markets broke their respective previous day highs (PDH) overnight except the Dow futures, YM. A series of higher highs and lows means the trend is up and that the bulls have the ball, at least for now. I suspect the AD line will get to over +1000 today. Link

Tab Gilles : 8/22/2007 9:21:46 AM

The FDIC releases its Quarterly Banking Profile for the second quarter today, this release will show the status on non-mortgage related real estate lending. Link

Linda Piazza : 8/22/2007 9:11:41 AM

Tab, it's a twisted web, isn't it, this global economy? It's like a game where we all must pull out puzzle pieces and see which move is inconsequential and which tumbles the whole mess. I confess that my grounding in economics is minimal, so I'm not going to be the best at that puzzle. I do know this. The Nikkei news source is full of scary headlines about what the yen's sharp rise will do to Japan's economy--threaten expected growth, etc.--speculating that the whole subprime debacle may have changed the global environment that contributed to the weak yen. However, I'm not sure that's all there is to it. The Nikkei also this week released a study that concludes that the 20-something's in Japan are a saving and not a spending bunch, "with many not buying cars or drinking but spending weekends at home, with a strong motivation to save money." While that sounds admirable, a primary concern for the Bank of Japan before raising rates has been a beefing up of consumer spending. Doesn't sound as if it's happening.

Keene Little : 8/22/2007 9:11:28 AM

Equity futures rallied strong overnight until the European markets opened and they've been relatively flat since the high right after 4:00 AM. With a high of 1464.50 for ES (it has since pulled back 4 points), or nearly +15 points from its closing price, that would put SPX up around 1462. I had mentioned SPX 1460-1463 as an area that could be tough resistance if it gets there. That may happen sooner rather than later this morning and will be a good opportunity to watch for a short play to set up as per the wave count on this chart: Link

Tab Gilles : 8/22/2007 9:05:04 AM

Linda, the Japan news sounds to me like a coordinated action by global central banks in an effort for the U.S. to lower the fed funds rate....hmmmm?

Linda Piazza : 8/22/2007 8:59:04 AM

I've been noting for months that there's been a correlation in the action seen on the USD/yen's chart and on those of many equity indices, notably the RUT and the SPX, to some degree. This correlation has persisted for years. At times, the USD/yen action precedes or forewarns of equity action, and at other times it merely corroborates it. If the yen carry trade has truly unwound, as some speculate, watching the USD/yen and euro/yen charts for guidelines may become a less useful task, but so far, it still proves helpful. Here's a chart I posted yesterday, with today's updated prices. Note that the 115 area used to be rough support for a broad band, but may now be functioning as resistance. Link

Tab Gilles : 8/22/2007 8:58:30 AM

Bloomberg.com reported yesterday that $550 billion of commercial paper is coming due in the next 90 days; the total market size is $1.1 trillion. Link

Linda Piazza : 8/22/2007 8:54:52 AM

An article credited to the Nikkei news source today speculated that the Bank of Japan may decide not to raise rates, as it had been widely predicted that it would do at its two-day meeting concluding tomorrow (tonight for us). The change in predictions was credited to "subprime-induced market instability and credit crunch concerns," the article noted. Other article headlines noted, as others have been warning, that any such rate hike would accelerate the yen's rise against other currencies. This is of particular concern in Japan, but also across the globe because of the yen carry trade that allowed investors to borrow yen and then use yen to leverage into equities or other securities. I've been cautioning subscribers in my Wraps and posts to be watchful of any BOJ action this week and to plan trades accordingly. This is a time when "spooky action at a distance," a term borrowed from Einstein's concerns about the implications of quantum theory, could indeed impact our markets. As you're planning your trades today and deciding whether to hold overnight, be forewarned that what happens in Japan tonight could indeed impact our equities.

Linda Piazza : 8/22/2007 8:43:53 AM

Through the Federal Reserve Bank of New York, the Fed has a $3.750 billion repo from yesterday maturing today. Any add less than that amount today will be a net draw. Those of us who remember Jonathan's excellent updates miss them now. I haven't been following these figures long and so can't tell, as he would have been able to do, whether a $3.750 billion draw would have much impact or be a minimal amount. It should be about an hour until we'll know whether the Fed is making an early morning addition or not.

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