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Keene Little : 9/5/2007 11:27:42 PM

Thursday's pivot tables: Link and Link

Keene Little : 9/5/2007 11:27:31 PM

The DOW bounced off its broken downtrend line from July 19th after breaking its uptrend line from August 16th. A bounce tomorrow should test the broken uptrend line (and perhaps try a short there). A break below 13200 could be more bearish. Link

SPX is slightly more bullish in that it hasn't broken its uptrend line yet. A bounce back up on Thursday could retest its broken uptrend line from August 28th near 1490 (mabye close the gap). Otherwise a drop below 1455 is needed to break trend line support (including the downtrend line from July 19th). Link

NDX has a nice parallel up-channel from August 16th so use it as your guide. Right now NDX is testing the mid line so if it breaks then a trip down to 1963 should be quick. But right now NDX remains bullish. Link

The RUT looks similar to SPX right now--both its uptrend line from August 16th remains support and then if that breaks it still could find support at its broken downtrend line from July 19th. Another rally leg has the potential to head up towards 820. Link

OI Technical Staff : 9/5/2007 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The Market Monitor has been archived.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.

Linda Piazza : 9/5/2007 7:48:15 PM

Reader Question: Any comments on the current breakdown in the QQQQ, as it had led the market up and now breaking to new daily lows. Looks like AAPL may be the cause.

Response: AAPL indeed contributed, retracing Friday's and Tuesday's gains. However, it wasn't alone, with fellow top-ten-holdings Gilead Sciences (GILD) and Research in Motion Ltd. (RIMM) contributing to the QQQQ's weakness.

I don't typically follow the QQQQ's much, so my comments won't have the ring of experience but rather be drawn from an examination of charts. That may be good or bad. It provides me with an unbiased view, but I could be missing the cues that are important, some knowledge of "sticking points," prices around which the QQQQ's have tended to group.

First, because my answers must be for the benefit of all subscribers, you probably already know much of what I'm mentioning, so my intention isn't to insult your intelligence, but just to sort through how I go about studying charts I don't frequently study. I note a bullish price objective of $57.00 on the point-and-figure chart, giving me a sort of basis upon which to examine the QQQQ's. Do I believe this objective will be met?

The QQQQ's have been knocked back from yesterday's test of $50.00, a nice round level that approached the July high of $50.66. When I study daily charts with volume included, I note that the QQQQ's are moving back into a level at which there perhaps wasn't much institutional interest in accumulating the Q's back in June. Volume was falling from early June into mid-July as the QQQQ's were climbing toward $50.00. Volume didn't pick up again until the Q's began pulling back from that level, and then that volume exploded. The huge bounce off the 8/16 low was on huge volume. Back in late February, the Q's dip to 43.06 and bounce from that level was also accompanied by big volume. My conclusion? Only institutions or big money can produce volume that big. Recently, big money wasn't much interested in the QQQQ's as prices approached $50.00, but big money certainly has been interested in accumulating from $40-43.00, so that might provide a floor on any further tests.

Knowing about volume patterns on the last approach and push above $50.00 would have already made me wary of what would happen when the QQQQ's approached $50.00 again, even if I hadn't seen that pullback since yesterday's test. I'm not seeing anything in this week's volume patterns that give me sound clues, though, as to whether this is a natural and expected pullback in a nervous market or something more, at least on the daily chart. If I'd seen a big volume day that produced a small-bodied candle with big shadows, I'd have my answer (big money selling into the gain). I didn't see that, though, and just didn't find anything to sway me any particular direction other than the incontrovertible truth that the Q's were sold when they tested $50.00.

If I'm looking at patterns on that daily chart, I see that there's a nearly perfect inside-day setup on the Q's. Those who follow such setups would be buying on a new breakout above today's high and selling on a breakdown below it, but I've been burned once too many times on inside-day setups to believe in them too much.

I turned to 15-minute and 30-minute nested Keltner chart, two of my favorite charts for intraday studies. I've have to tell you: they're not telling me much, either. Link Here's what the 30-minute chart tells me, then. Although the 30-minute 9-ema provided support on tests most of Thursday, Friday and Tuesday, that -ema is now pressuring prices lower. Until and unless that changes, the current short-term downtrend won't have changed, and it will likely pressure the Q's into a gap test and a test of a sell signal generated through the inside-day type of signals. That $48.50-48.80 level looks like one that has produced many opens, closes, highs or lows, so bulls would want to see it hold as support, but as long as the daily 50-sma is held on daily closes, no real damage has been done. Do I think a test of the 50-sma is in the works? I certainly believe it's possible and perhaps even beginning to be more likely than not.

However, the charts give only a slight edge to that possibility over another: a push up toward $49.50-49.66 and perhaps even higher before any downturn.

I'll leave you with a weekly Keltner chart and some possibilities shown there, possibilities that currently don't give me a lot of confidence that we'll see that $57.00 P&F upside target just yet: Link

Jeff Bailey : 9/5/2007 4:59:10 PM

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

Jeff Bailey : 9/5/2007 4:45:23 PM

What a ride Boeing (BA) had today.

Keene Little : 9/5/2007 4:40:03 PM

A similar 60-min chart for SPX as I showed for the DOW, shows price consolidating on top of its uptrend line from August 16th. That in itself looks bearish and a break lower tomorrow would likely also break back below its broken downtrend line from July 19th. Link

But the pink wave count, which is the double zigzag corrective count pointing to another leg higher, has an interesting correlation of Fibs. The two a-b-c's (within the a-b-c-x-a-b-c) would be equal at 1533 and the 2nd a-b-c would have equality in the two legs up at 1531. That level would tag the trend line along the highs since August 17th this Friday or next Monday. Needless to say that would be a big rally and I think until we get the breakdown the bears need to respect that possibility here.

Jeff Bailey : 9/5/2007 4:38:35 PM

Closing Internals found at this Link

Jeff Bailey : 9/5/2007 4:33:39 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 9/5/2007 4:23:10 PM

I tell you what ... these New High and New Low readings after the dip last week and today will keep the shorts on their toes.

Keene Little : 9/5/2007 4:20:56 PM

I like the alternative wave count (in pink) on this DOW 60-min chart better than the one I just posted (4:07) because I don't like forcing a bullish wave count on it: Link The alternative wave count is a little more complex double zigzag (a-b-c-x-a-b-c) that needs another c-wave up to perhaps the 13700 area. Hopefully we'll get a few more clues from price action tomorrow.

Jeff Bailey : 9/5/2007 4:18:06 PM

Lightest volume on the Big Board since 8/20/07.

Jane Fox : 9/5/2007 4:10:39 PM

Economic reports for tomorrow include:

8:30a.m. Initial Jobless Claims. Expected: -5K. Previous: +9K.

8:30a.m. 2Q Revised Productivity. Expected: +2.4%. Previous: +1.8%.

8:30a.m. 2Q Revised Unit Labor Costs. Expected: +1.6%. Previous: +2.1%.

10:00a.m. August ISM Non-Manufacturing Business Index. Expected: 55. Previous: 55.8.

Keene Little : 9/5/2007 4:07:01 PM

The DOW danced between its broken uptrend line from August 16th and its broken downtrend line from July 19th. I suspect the July 19th trend line will be the one to break but we could see the DOW press a little higher before rolling back over. Link

Jeff Bailey : 9/5/2007 4:07:00 PM

Majors all very, very close to their 02:00 Beige Book release.

Jeff Bailey : 9/5/2007 4:00:40 PM

YM 13,321 ...

Jeff Bailey : 9/5/2007 3:59:04 PM

Anyone followed ACH last couple of weeks? Good gravy!

Closed those ACH-WF on 8/16 on the plunge back to $34. ACH $64.48 today.

Jeff Bailey : 9/5/2007 3:56:04 PM

VXN.X 27.32 +11.46% ...

Jeff Bailey : 9/5/2007 3:55:14 PM

Kind'a interesting ... earlier today, somebody took down 100 of the BDQ-UJ at the offer of $0.20 (it was NOT me). Bids $0.05 all day, but now ISEX up at $0.10 bid. Offer still $0.20.

BIDU $219.05 +0.96%.

Jane Fox : 9/5/2007 3:49:47 PM

The DOW could retrace back to 13000 and still not jeopardize the upward trend. Link

Keene Little : 9/5/2007 3:48:57 PM

Buyers to the rescue at the end of the day. Gee, I wonder where the money is coming from. This is good though--it should set us up for the short play tomorrow (looking for the Fib levels to get tagged--3:12 post).

Jeff Bailey : 9/5/2007 3:47:25 PM

Somewhat of a "reverse image" of yesterday's last hour of trade.

YM 13,335 ....

Jane Fox : 9/5/2007 3:46:09 PM

There is a very good chance that this week will see the Wilshire 5000 retreat back to the August 29th swing lows at ~144450 which is the 50% retracement of the August highs to August lows. Link

Linda Piazza : 9/5/2007 3:46:19 PM

What's happening tonight that might impact our markets? As Jeff has already mentioned, the ECB policy decision will come tomorrow morning before our markets open, at about 7:00 EST. The Bank of England also makes its policy decision about the same time. You should know that markets can also react to things that ECB head Trichet has to say in the press conference after the decision is made.

That's probably the biggest scheduled event. I don't see anything scheduled for Japan tonight, but there are a number of economic releases for July numbers in the UK and Germany.

Why should we care about the ECB and BOE's decisions? First, many market watchers here will be watching to see how these other central banks react and what they have to say about the credit crunch, inflation and other concerns. Also, the ECB's decision in particular might change the euro/yen relationship, which then might impact the yen carry trade.

Jeff Bailey : 9/5/2007 3:45:13 PM

Google (GOOG) 60-minute interval chart with a conventional near-term retracement. Volume at price study turnend on (simply shows void supply area). GOOG nor NDX/QQQQ have traded their MONTHLY R1's yet. Link

Keene Little : 9/5/2007 3:38:30 PM

The bounce is faltering here. It's either very bearish and we're going to sell off hard from here or else we're going to see more of a sideways consolidation before selling off. So neither is bullish.

Linda Piazza : 9/5/2007 3:38:11 PM

This morning's little inverse H&S on the SPX has been invalidated, of course, as I warned that it might be, since it was forming just ahead of the Beige Book announcement. In the course of forming and then invalidating that formation, however, the SPX was forming the right shoulder for a larger regular H&S, with the formation setting up from Friday through today. The neckline would be at about 1465-1467, depending on how you draw the neckline. While I don't count on these to confirm or to meet their downside targets if they do, this isn't a comfortable formation for the bulls to spot. SPX at 1469.33 as I type.

Jeff Bailey : 9/5/2007 3:23:20 PM

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

CLOSED out the GOP-IX @ $4.40 with GOOG $526.85.

Jeff Bailey : 9/5/2007 3:14:33 PM

03:00 Internals found at this Link

Keene Little : 9/5/2007 3:12:38 PM

Getting a bigger bounce now and unless we see a sideways consolidation between today's low and the mid-day high (for another down-up sequence before tumbling lower) then we should see the market rally higher than the mid-day high. The type of correction that appears to be playing out could have the 2nd leg reaching 162% of this morning's 1st leg up. That would give us SPX 1479 (which is also a 38% retracement) and DOW 13375 (which is where the 50% retracement is located).

Jeff Bailey : 9/5/2007 3:02:58 PM

03:00 Market Watch found at this Link

Linda Piazza : 9/5/2007 2:36:21 PM

USD/yen: 115.07 after dipping to a new day's low at 114.97. As Keene mentioned earlier with reference to something else, value/RSI bullish divergence can be seen at the low. Don't count on that meaning anything yet, but do use the divergence to help you think through various scenarios. What if the USD/yen bounces and equities bounce, too? Where is the USD/yen likely to find resistance and will equities be stopped if and when the USD/yen is? The 30-minute 9-ema has been providing resistance most of today, and that's now at 115.20 on 30-minute closes. Nothing has changed in today's downward trend until and unless that's breached on a 30-minute close.

Keene Little : 9/5/2007 2:25:00 PM

Any lower than about SPX 1466 would be bearish but watch for possible support at or above that level.

Jeff Bailey : 9/5/2007 2:25:00 PM

The "bullish side" of me certainly doesn't like the 5-year Yield ($FVX.X) breaking to new multi-month lows.

Jeff Bailey : 9/5/2007 2:24:15 PM

If we can get GOOG again back at $520, will take it again.

See how BIDU handles things.

Jane Fox : 9/5/2007 2:22:52 PM

VIX bumping up against daily highs means lower lows for the SPX. Link

Jeff Bailey : 9/5/2007 2:21:15 PM

VXN.X 27.34 +11.54% ...

Jeff Bailey : 9/5/2007 2:20:47 PM

Swing trade bullish call exit alert! ... for the one (1) Google Inc. GOOG Sep $540 Call (GOP-IX) at the bid of $4.40.

GOOG $526.85.

Linda Piazza : 9/5/2007 2:18:32 PM

The TRAN did break to a new day's low, but it's trying to maintain the 4830-ish level as support. I'm not sure it's going to be successful. There's always the chance that this bearish right triangle will be converted to a bull flag that's then broken to the upside. That would happen, for example, if the TRAN broke support, dipped quickly and then then broke higher. For now, nothing has been decided any way, with the TRAN at 4831.05 as I type.

Why am I watching the TRAN? The TRAN is sensitive to the economy as well as energy concerns. It tends to lead or confirm movements in some other indices such as the Dow, SPX or OEX. I don't bet on the sustainability of movements in those indices if the TRAN is moving opposite them, for example. So, I use the TRAN as I would an indicator such as RSI or CCI.

Keene Little : 9/5/2007 2:12:35 PM

Today's bounce still looks like it could get another leg up but obviously much of a break of this morning's low would be more immediately bearish (but watch for a head fake break if there are bullish divergences).

Jane Fox : 9/5/2007 2:11:51 PM

WASHINGTON (MarketWatch) - The credit crunch and resulting financial market turmoil has little impact on economic activity through the end of August, according to the latest report on current economic conditions released by the Federal Reserve on Wednesday.

The Fed's Beige Book found that economic activity has continued to expand across much of the nation. Four of the 12 districts - Philadelphia, Richmond, Dallas and San Francisco - reported that their economies continued to grow, but at a slower pace.

The Beige Book is a collection of anecdotal reports compiled by the Fed district banks to inform officials preparing to set monetary policy. The Federal Open Market Committee meets again on Sept. 18 and there is great pressure on the central bankers to lower the federal funds target rate in light of the market turmoil.

Linda Piazza : 9/5/2007 2:10:54 PM

Thanks, Jeff and Keene, for the notations on ARMs, too. You know, I knew a little something about LIBOR, but I honestly did not know until I did some research for myself how much is based on LIBOR rates.

Linda Piazza : 9/5/2007 2:05:43 PM

The TRAN is dipping toward its day's low at 4831.20, with the TRAN at 4832.63 as I type. A move below the day's low, if not quickly reverse, would be a confirmation of a bearish right triangle seen on the bottom of the TRAN's decline today.

Jeff Bailey : 9/5/2007 2:03:42 PM

Beige Book (Before August 27, 2007) Link

Keene Little : 9/5/2007 1:59:50 PM

The LIBOR index is used by many ARM mortgages so it's closely watched by many ARM holders (or should be).

Jeff Bailey : 9/5/2007 1:58:07 PM

Excellent education Linda!

Many Adjustable Rate Mortgages (ARMs) also use LIBOR!

Keene Little : 9/5/2007 1:57:53 PM

It's a tough call here as we approach 2:00 but my best guess based on the bounce pattern is that we're going to see an afernoon rally. That should set up a good short but I'll wait to see how it goes this afternoon.

Linda Piazza : 9/5/2007 1:50:47 PM

We're all having to learn a lot more about global economics than many of us ever anticipated. Recently, you may have heard an unfamiliar or perhaps vaguely familiar term bandied about: LIBOR. Today, someone on CNBC was talking about loans being pegged to LIBOR. So, what is LIBOR?

According to Investopedia.com, LIBOR is the London Interbank Offered Rate. Each day, the British Bankers' Association fixes a rate at which banks can borrow from other banks that are part of the London interbank market.

You might be surprised to learn that the U.S. as well as Canada, Switzerland and England use the LIBOR as a reference or benchmark for short-term interest rates. The world's best credit risks are able to borrow at LIBOR while other borrowers might be required to pay LIBOR plus several points. Some, of course, can't borrow at all.

For more information, you might go to the British Bankers' Association webpage detailing information about LIBOR: Link

Jeff Bailey : 9/5/2007 1:46:21 PM

Google (GOOG) alert! ... $529.03 +0.73% ... retraces 61.8% of recent decline. A decent gap to fill if buyers step up.

Jeff Bailey : 9/5/2007 1:45:16 PM

Dow Diamonds (DIA) ... now a daily interval bar chart, but just our MONTHLY Pivot retracement Link

Can probably see how institutional computers gobbled up M S2 last month, right back up to M S1.

BEARS certain want to see MONTHLY Pivot (this month) give way, and get back below trend.

Linda Piazza : 9/5/2007 1:35:35 PM

The VIX moves toward the day's high, with the VIX at 25.13 as I type and the day's high at 25.19. Don't read too much into this just yet: the VIX often moves up ahead of an important release. (Anecdotal evidence based on observations.) Still, this isn't what equity bulls want to see.

Jeff Bailey : 9/5/2007 1:34:23 PM

Still a little "too much" defensive buying in Treasuries ...

Jeff Bailey : 9/5/2007 1:33:53 PM

5-year Yield ($FVX.X) ... its WEEKLY S1 is 4.167%, and it has been finding buying since 10:00 AM EDT.

Linda Piazza : 9/5/2007 1:32:34 PM

The inverse H&S I mentioned in my 1:00:02 post was confirmed on the SPX and the price action has done just what I worried that it might ahead of the Beige Book: it fizzled. Prices are back below the neckline. That was the reason for that warning. You can't count on technical analysis ahead of important announcements or releases. It's all about positioning then. Sometimes the post-release movement will actually begin ahead of the release and you miss it, but oh, well. More times, you jump on a movement that fizzles like this and then you're stuck, forced to take a loss ahead of the release or else hold on through it.

Jeff Bailey : 9/5/2007 1:28:37 PM

See if it can begin "sticking" a bid at 13,319.

For a powerful bull reversal, I think we really look for test of MONTHLY Pivot, then quick turn up and slice WEEKLY Pivot as if it were not there.

Jeff Bailey : 9/5/2007 1:27:23 PM

YM 13,334 ...

Jeff Bailey : 9/5/2007 1:26:09 PM

Couldn't quite make the move above DAILY S1. Post profile high was 13,355.

That's about the 6-10 points observed from last few weeks.

Jeff Bailey : 9/5/2007 1:24:43 PM

YM long exit alert! ... 13,325

Jeff Bailey : 9/5/2007 1:22:46 PM

01:00 Internals found at this Link

Keene Little : 9/5/2007 1:21:50 PM

One reason to think the bounce could make it higher is because of the SPX trend lines. A move back up to retest its broken uptrend line from August 28th would take it back up to about 1485 and this is near a 62% retracement of the decline from yesterday. So maybe a pullback heading into the Beige Book report and then a big leg up following the report to finish a larger 3-wave correction of today's decline. We'll see how it looks as we approach 2:00.

Keene Little : 9/5/2007 1:18:39 PM

Two equal legs up in the bounce off the low is at DOW 13343. A 38% retracement of the decline off yesterday's high is at 13348. So we've got a Fib zone to watch for resistance to get short again. We'll be due another leg down, whether from here or after a larger 3-wave bounce. So itll be worth testing this bounce to see if it rolls back over.

Jeff Bailey : 9/5/2007 1:13:19 PM

YM 13,351 ...

Jeff Bailey : 9/5/2007 1:11:00 PM

YM's DAILY S1 is 13,349 (regular session high/low/close)

Jeff Bailey : 9/5/2007 1:05:43 PM

01:00 Market Watch found at this Link

Jeff Bailey : 9/5/2007 1:03:18 PM

YM Long raise stop alert ... to break even.

YM 13,344.

Jeff Bailey : 9/5/2007 1:02:07 PM

YM 15-minute interval chart with MONTHLY (pink), WEEKLY (blue) and DAILY (green) pivot levels at this Link

Linda Piazza : 9/5/2007 1:00:02 PM

We can all see the potential inverse H&S's building on 15-minute charts on the SPX, OEX and Dow. Those may confirm or may not, but my point here is to warn you to be careful about assumptions ahead of the Beige Book release. Sometimes before an important release, formations appear to set up and sometimes even are confirmed, but then price action just fizzles out.

The TRAN's short-term pattern certainly isn't confirming the potential bullishness of those formations, either. It dipped when they did and rose when they did, but the pattern resulted in a bearish right triangle (lower highs, flattish support) at the bottom of the descent rather than a potential inverse H&S. The USD/yen pattern looks a bit bear-flaggish, but the pattern could instead be considered an inverse H&S with an ascending neckline if one is particularly bullish. The value is at 115.25 as I type.

So, remember the upcoming report before you get too enthusiastic about a possibly untrustworthy formation that you might see developing. It's time for lotto money only on new short-term plays you might be considering.

Jeff Bailey : 9/5/2007 12:57:38 PM

YM Long alert! here at 13,325. Stop goes 13,305. Target 13,375.

Linda Piazza : 9/5/2007 12:29:49 PM

The SPX is approaching its 30-minute 9-ema, with that average at 1476.79 as I type, but likely to move a little higher if the SPX keeps rising. The SPX sometimes bounces from this average when rallying and is knocked down from it when descending.

Keene Little : 9/5/2007 12:26:50 PM

The DOW is getting a little bounce off its broken downtrend line from July 19th but now faces potential resistance at its broken uptrend line from August 16th, currently near 13310. SPX is a little stronger and hasn't tested its uptrend line yet, which is also where its 30-min 100-pma is located--at 1466.

Jane Fox : 9/5/2007 12:24:02 PM

Internals are retreating a bit now but the AD volume is still making new daily lows so this is just another rally to sell into.

Jeff Bailey : 9/5/2007 12:12:17 PM

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

OLN-AD are $2.40 x $2.65
JNJ-JL are $2.60 x $2.75
DAZ-LN are $1.20 x $1.35
BDQ-UJ are $0.05 x $0.20
GOP-IX are $3.90 x $4.10
CQR-UE are $0.60 x $0.70.

Jeff Bailey : 9/5/2007 12:03:16 PM

YM 13,296 ... WEEKLY Pivot here 13,297.

Keene Little : 9/5/2007 11:58:22 AM

The DOW has snuck its way lower to potential support now at its broken downtrend line from July 19th near 13257. We've got some bullish divergences building on the short term charts so we could get a bigger bounce from here. If the DOW drops much below 13250 from here then it becomes a lot more bearish. I'm stretching it a bit to come up with a bullish alternative to the wave count and I don't like it. That makes the bearish wave count that much stronger in my opinion. Link

Jeff Bailey : 9/5/2007 11:55:20 AM

ABB BOOSTS 5-YEAR TARGETS, EYES ACQUISITIONS

DJ- Swiss electrical engineering group significantly raises operational and financial targets, expecting sales to grow between 8% to 11% and operating profit margin moving within a range of 11% to 16%. It also sees acquisitions aiding growth.

Linda Piazza : 9/5/2007 11:39:07 AM

The USD/yen is now at 115.08, dipping toward a test of its day's low at 115.01. I show a potential downside target near 114.86, but that previous LOD should be considered potential support, too.

Jeff Bailey : 9/5/2007 11:31:42 AM

ECB MAY ACT IF EURO MONEY MARKET VOLATILITY PERSISTS

DJ- European Central Bank says that euro money market volatility has increased and it may take action tomorrow to "contribute to orderly conditions." The announcement comes a day ahead of the ECB's monthly rate-setting meeting.

Jeff Bailey : 9/5/2007 11:30:58 AM

REDBOOK US RETAIL SALES FALL 0.5%

DJ- National chain store sales fall 0.5% in August versus the previous month, according to Redbook Research. International Council of Shopping Centers-UBS Retail Chain Store Sales Index rises 0.2% in the week ended Sept. 1.

Linda Piazza : 9/5/2007 11:27:46 AM

I just checked to see if any further repos have been made today. I see none. That still leaves us with a $1.500 billion net draw for the day.

Jeff Bailey : 9/5/2007 11:25:56 AM

ADP SEES SLIGHT GAIN IN US PRIVATE SECTOR JOBS

DJ- Indicator from Automatic Data Processing and Macroeconomic Advisers sees an increase of 38,000 private-sector jobs in August. That compares with a Newswires survey that calls for a 115,000 increase in both private sector and government jobs.

Jeff Bailey : 9/5/2007 11:25:22 AM

MATTEL FALLS ON THIRD MAJOR TOY RECALL

DJ- Mattel's shares fall nearly 4% as problems deepen with the company announcing its third major recall this summer, this one for its signature Barbie brand, in a widening cascade of safety issues as consumer anxiety heightens and the holiday season draws near.

Jeff Bailey : 9/5/2007 11:24:56 AM

MGIC, RADIAN PULL PLUG ON $2.4B MERGER

DJ- The continuing turmoil in the U.S. home-loan market derails the merger of mortgage insurers MGIC Investment and Radian Group. Radian seeks to reassure investors rattled over its ability to survive a severe credit crunch.

Jeff Bailey : 9/5/2007 11:24:05 AM

DJ Survey: US Jobless Claims Seen Down 4,000 Sep 1 Week

Jeff Bailey : 9/5/2007 11:23:32 AM

DJ Survey: US 2Q Revised Productivity Seen +2.4%

Jane Fox : 9/5/2007 11:18:10 AM

The internals are still bearish but moving sideways except for the AD volume which is still making new daily lows. This is telling me the selling has stopped for now but it will resume later. The bears are just taking a little rest here.

Jeff Bailey : 9/5/2007 11:11:46 AM

11:00 Internals found at this Link

Jeff Bailey : 9/5/2007 11:02:33 AM

11:00 Market Watch found at this Link

Keene Little : 9/5/2007 10:50:42 AM

The DOW found support at its uptrend line from August 16th and its 30-min 100-pma. But price action since this morning's low looks like a very shallow choppy consolidation. Its bounce may not get far before heading lower again and breaking an important support line.

Jane Fox : 9/5/2007 10:43:46 AM

I see all the internals I now watch retreating except the AD volume which is still making new daily lows telling me this is a rally to sell.

Jane Fox : 9/5/2007 10:42:01 AM

The internals I now watch are, of course, the VIX and AD volume; replaced the TICKS with the DAX; and, although I keep an eye on the TRIN, I have replaced it with the USDJPY until Linda tells me to we should no longer use it.

Linda Piazza : 9/5/2007 10:37:38 AM

In my 3:23:24 post yesterday afternoon, I noted that we could be setting up for an important VIX test yesterday afternoon or this morning. That test, so far, has not turned out the way that equity bulls want it to turn out, at least in my opinion. I'm including yesterday's annotations as a benchmark against which you can check the concerns that we had yesterday, but those annotations confused at least one reader, so I want to clarify. I was saying that the VIX hadn't yet confirmed its H&S formation and that it, like equities, could bounce from the neckline level and invalidate the whole thing. Until and unless the VIX confirmed its H&S, I didn't think we should consider the inverse formations on some equities fully confirmed. I thought this was a danger point for bulls and bears alike, and that equity bulls needed to see the VIX confirm its H&S before they could feel much confidence. So here's the chart with yesterday's annotations and today's strong bounce pictured: Link

Jane Fox : 9/5/2007 10:35:37 AM

TRIN is also supporting the bearishness at 1.57

Jane Fox : 9/5/2007 10:34:39 AM

SAN FRANCISCO (MarketWatch) -- Treasury prices were broadly higher Wednesday, sending yields lower, as the stocks slumped in early trading after employment and home sales data raised concerns about the health of the overall economy.

Jane Fox : 9/5/2007 10:33:27 AM

CHICAGO (MarketWatch) -- The number of mortgage applications filed last week ticked up a seasonally adjusted 1.3% while mortgage interest rates barely moved, the Mortgage Bankers Association said Wednesday.

The volume of applications for all loans in the week ended Aug. 31 was up 10% on an unadjusted basis compared with the same week in 2006, the MBA's latest survey showed. The survey encompasses about half of all U.S. retail residential mortgage originations.

Applications filed to refinance existing mortgages rose a seasonally adjusted 2.3% on a week-to-week basis, while applications for loans to buy homes were up 0.4%.

The four-week moving average for all loans was down a seasonally adjusted 1.3%.

Jane Fox : 9/5/2007 10:32:50 AM

WE are now waiting for the 2:00 FED beige book. I will most definitely NOT be trading through that report.

Jeff Bailey : 9/5/2007 10:31:28 AM

MBA's Weekly Application Survey at this Link

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

WASHINGTON (MarketWatch) -- Contract signings on existing homes fell by 12.2% in July -- the largest drop since the pending homes sales index started in 2001, the National Association of Realtors reported Wednesday. The index hit its lowest level since September 2001. The index had gained 5% in June. Pending sales are 16.1% below July 2006. A decrease in pending home sales was seen in all four major regions of the United States, the group said. In July, pending sales fell 13.1% in the Midwest and 6.6% in the South. Pending sales fell 20.8% in the West and 12.2% in the Northeast.

Keene Little : 9/5/2007 10:27:01 AM

Yesterday's rally was wiped out in the first 30 minutes today (except NDX which is still above yesterday's low). Based on the sharpness of today's decline I believe it negates some of the more bullish possibilities I've been considering in the wave pattern. Therefore, until something changes, I think we've seen the high for the correction to the July-Aug decline and now we're starting the next big decline. As always I'll be testing this each leg at a time. Link

Jane Fox : 9/5/2007 10:23:37 AM

If the bulls are indeed back in the driver's seat on the daily chart, which is a totally different road trip than the intraday commentary you see in the monitor, then the bottom channel should hold up as the higher low I was talking about earlier. Link

Jeff Bailey : 9/5/2007 10:23:01 AM

BOE: Says It Could Inject Liquidity Next Week Via Open Market Operations

Linda Piazza : 9/5/2007 10:22:46 AM

USD/yen attempting a bounce now: 115.21.

Linda Piazza : 9/5/2007 10:22:03 AM

Currently, the SPX has slipped through Keltner and Fib support near 1471.60, but it's trying to steady. If it can't, it may have a date with 1464-1467, at least. Here's a 30-minute chart: Link

Jane Fox : 9/5/2007 10:19:36 AM

One of the most important internals, the VIX, is supporting the bullishness. Link

Jane Fox : 9/5/2007 10:18:45 AM

This is your "Get short and Stay Short" kind of day. Link

Linda Piazza : 9/5/2007 10:16:56 AM

I kept feeling foolish all yesterday afternoon commenting on the fact that the USD/yen just wasn't confirming the enthusiasm in equities. I kept prefacing my comments by telling how cautious a person I tend to be. How silly to be urging bulls to be planning what they were going to do as the SPX approached its upside intraday Keltner and inverse H&S targets, when one barrier after another was being breached. But, so far, the USD/yen remains a good tool for us, if only to provide warning that a profit-protecting plan needs to be in effect at all times.

Jane Fox : 9/5/2007 10:15:00 AM

Internals have turned very bearish and are getting more and more bearish by the minute.

Linda Piazza : 9/5/2007 10:12:56 AM

The USD/yen pair is dropping sharply. It's at 115.14 as I type.

Keene Little : 9/5/2007 10:12:50 AM

We could be nearing the completion of a quick 5-wave move down from yesterday's high so be prepared for the possibility of a larger bounce to correct this decline. If we do get the bounce then it should be followed by another leg down and that's already telling me that we'll likely break the uptrend lines from August 16th. In other words we might have seen an important high yesterday. That's a very early call but so far it's what I see.

Jeff Bailey : 9/5/2007 10:08:04 AM

10:05 Market Watch found at this Link

Linda Piazza : 9/5/2007 10:02:24 AM

The USD/yen is coming down to test its morning low, with the USD/yen now at 115.44 and that low at 115.40.

Linda Piazza : 9/5/2007 10:01:17 AM

No bounce attempt yet on the SPX. Next Keltner support near 1471.60 on 15-minute closes.

Linda Piazza : 9/5/2007 9:58:28 AM

Here's an intraday SPX chart: Link

Jane Fox : 9/5/2007 9:57:32 AM

A retracement from here is the most likely scenario but that retracement has to respect the support at 1427 or all bullish bets are off. In other words, the SPX needs to make a higher low to retain the upward trend. Link

Jane Fox : 9/5/2007 9:54:47 AM

DAX to new daily lows now. Will the DOW follow?

Jane Fox : 9/5/2007 9:53:22 AM

Here are the internals I am now using. Isn't it interesting how the DAX and the USDJPY trade so similar?

Notice the VIX is kind of bullish but the AD volume totally negates that bullishness and what you see is the markets moving sideways. Link

Linda Piazza : 9/5/2007 9:53:06 AM

The USD/yen is now at 115.68. Yesterday afternoon, I kept noting that this currency pair was not only not leading equities higher but it was also failing to confirm equity breakouts. Overnight, this pair dipped back below the next support zone and, this morning, it's below the 10-sma again.

For months in my Wraps, I've been urging subscribers to pay attention to this currency pair since it's either led or confirmed many important equity moves. Lately, I've also been urging that we begin to move away from a strict belief in a direct relationship. Instead, we should be aware that a time might come when this currency pair isn't so predictive, and be watchful for that to happen. Yesterday was one of those times when we had to watch for signs that the correspondence was weakening. If not, the currency pairs were showing some caution about being too enthusiastic about the equity gains. They did, in fact, appear to be giving a valid warning. So far, it's still valid to watch this currency pair and be aware of divergences.

Keene Little : 9/5/2007 9:52:34 AM

The DOW has clearly broken below its parallel uup-channel from August 28th and a retest of its broken uptrend line near 13410 would be an opportunity to test the short side. A continuation lower should find some support near 13300 or slightly lower. Link

Jane Fox : 9/5/2007 9:51:20 AM

When the AD volume is making new daily lows and the AD line is a bearish -1687 you do not want to chance a long, I don't care what the other internals are doing.

Jane Fox : 9/5/2007 9:50:20 AM

AD volume and AD line are telling me the breakouts though will not have follow through.

Jane Fox : 9/5/2007 9:49:38 AM

Russell 2000 to new daily highs as well.

Jane Fox : 9/5/2007 9:49:17 AM

NDX to new daily highs now so maybe the bulls are going to pull the rabbit out of the hat this morning.

Jane Fox : 9/5/2007 9:47:29 AM

The Russell futures is the only market to pierce its overnight low - so far. I think the DOW will be the next market to do so. Link

Jane Fox : 9/5/2007 9:44:47 AM

All internals (including the DAX and USDJPY) are in sync now and are bearish.

Linda Piazza : 9/5/2007 9:43:59 AM

The Fed has just announced a repo in the amount of $8.500 billion. As my earlier post noted this morning, $10.000 billion in repos are maturing today. So far, that leaves a net draw of $1.500 billion if I've noted all repos.

Jane Fox : 9/5/2007 9:38:53 AM

AD line is continuing to fall and is now at -1830. We have your classic bull/bear battle going on now and you do not want to be collateral damage.

Jane Fox : 9/5/2007 9:37:22 AM

I am seeing the DAX and the USDJPY currency pair making new daily highs telling me the bears have lost a firm hold on the ball and may fumble. This is not a good time to be trading.

Jane Fox : 9/5/2007 9:34:17 AM

AD line is telling me the bears have the ball this morning. -1393

Jane Fox : 9/5/2007 9:28:44 AM

The DAX supports the bearishness we are seeing in the American futures markets.

Crude bumped along its previous day highs during its entire overnight session suggesting it will move higher.

US$ and Gold has no real direction overnight. Link

Jane Fox : 9/5/2007 9:25:09 AM

Marketwatch.com headline this morning was "Sizeable Street Losses Loom" but as you can see the futures overnight session has not even tested yesterday's lows so I guess it is a little bit of a stretch to call the losses Sizeable. Oh well they need to sell content don't they? Link

Jane Fox : 9/5/2007 9:16:34 AM

LONDON (MarketWatch) -- Merrill Lynch on Wednesday upgraded long-term price forecasts for a range of industrial metals and related commodities, citing rising capital-spending and structural costs due primarily to China's continuing ravenous appetite for these materials.

The broker told clients that both the capital expenditures required to build and sustain new production and the cash operating costs necessary to produce from new operations have risen substantially over the past two years.

Indeed, commodity producers themselves have begun to highlight cost inflation more often to shareholders.

Jane Fox : 9/5/2007 9:15:07 AM

WASHINGTON (MarketWatch) -- Employment in the U.S. private sector grew by 38,000 in August, the weakest in four years, according to the ADP employment report released Wednesday. The ADP report suggests nonfarm payrolls may have grown much slower than the 120,000 anticipated by economists.

It was the second straight weak reading in the ADP index; July's reading was revised lower to 41,000 from 48,000 initially reported.

"A deceleration of employment may be under way," ADP said in a release.

Adding in some 27,000 government jobs not covered by the ADP report, it suggests nonfarm payrolls grew by about 65,000.

The Labor Department will report on the nonfarm payrolls number on Friday.

Keene Little : 9/5/2007 8:43:17 AM

I had mentioned last night that a drop below DOW 13400 (a drop of about 50 points from yesterday's close) would indicate we've seen the top for at least the leg up from Tuesday August 29th. With YM down more 80 points premarket that would have DOW breaking 13400. If it does then the next trend line support is the one from the August 16th low that's currently near 13300.

SPX below 1479-1480 would be the same signal and its uptrend line from August 16th is currently near 1464. A drop of 10 points would have it breaking below its up-channel from August 29th and with ES down 12 points it's looking like that could happen quickly.

Linda Piazza : 9/5/2007 8:23:17 AM

Today, $10.00 billion in Fed repos made through the Federal Reserve Bank of NY will be maturing: a $5.00 billion repo from Friday, Aug 31 and a $5.00 billion repo from Thursday, Aug 30. Unless I've missed something, any repo(s) of less than $10.00 billion will result in a net draw.

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