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Keene Little : 9/19/2007 2:04:58 AM

I just arrived back home in Seattle and it's late so just two charts of the NDX for tonight to show why I remain bearish this market and think Tuesday's rally is a gift to the bears, even if it takes another day or two to finish finding a top. The 60-min chart shows the Fib projection near 2038 is now very close to getting tagged (two equal legs up from the Sept 10th low) and right where it crosses the top of its parallel up-channel on Wednesday morning: Link

The DOW and SPX have already rallied above the tops of their channels but they've been stronger than the NDX anyway so I think it's worth watching the NDX here. The pattern of the rally from Monday's low would look better with a stair-stepping slightly higher before it finds a final top (shown in pink) but the risk here is that we may not get those final moves before it turns back down. Any sharp decline from here would be a strong statement that the top has been found (the stair-stepping higher requires relatively flat choppy corrections so a sharp decline would be a heads up that the rally is finished).

The daily chart shows price has now bounced back up to the mid line of its larger parallel up-channel from July 2006 so that's another reason to watch for resistance near the current level. But a slight push higher followed by a rollover could give us a double top. Link

Keene Little : 9/19/2007 1:38:02 AM

Wednesday's pivot tables: Link and Link

Jeff Bailey : 9/19/2007 1:02:48 AM

Shanghai ($SSEC) Link ... down 58 points, or -1.09% at 5,367.

Jeff Bailey : 9/19/2007 1:00:29 AM

Hang Seng ($HSI) Link ... up 928 points, or 3.78% at 25,505.

Low/high has been 25,287/25,515.

Would chart an "O" to 24,300 and stop, but note pending column of X.

Jeff Bailey : 9/19/2007 12:55:16 AM

Nikkei-225 ($NIKK) Link ... up 520 points, or +3.30% at 16,322.

Low/High has been 16,039/16,373.

Would chart demand (X) from 15,850 to 16,350 at this point.

Jeff Bailey : 9/19/2007 12:50:17 AM

BOJ Leaves Overnight Call Rate Unch At 0.5%

DJ- Bank of Japan board members voted 8-1 Wednesday to keep interest rates steady as fears rose that downside risks to the U.S. economy could derail Japan's economic recovery.

BOJ policy makers left the unsecured overnight call loan rate - the policy interest rate - unchanged at 0.50%, the lowest rate among the Group of Seven nations.

Wednesday's decision was in line with the market's expectations that the BOJ would stand pat on policy amid continued uncertainty over the U.S. economy and world financial markets, sparked by the subprime mortgage crisis.

It was the third consecutive meeting that the vote among BOJ policy makers was split, suggesting that a rate hike remains a possibility as early as October if markets settle down.

Atsushi Mizuno, regarded as the most hawkish member of the nine-person board, again opposed keeping rates steady and proposed lifting the key call rate as he did at the prior two meetings.

The board also left its monthly purchases of Japanese government bonds unchanged at Y1.2 trillion, and left the Lombard Rate - equivalent to the discount rate or the basis loan rate - unchanged at 0.75%. The BOJ has set no limit on how long commercial banks can borrow money through the standby lending facility.

"Risk factors for the Japanese economy that (BOJ) Gov. (Toshihiko) Fukui mentioned in August have increased. But the board members haven't obtained material that they need to revise down their view on the economy and prices," a person close to the BOJ said last week.

He added that the policy makers need to ascertain how much the subprime turmoil has negatively affected the corporate sector and personal spending in the U.S.

On Tuesday, the Federal Reserve cut the federal funds rate to 4.75% from 5.25%, the U.S. central bank's first rate cut in more than four years.

October Rate Hike Chance Still Uncertain

The BOJ's bias remains toward tightening, but with no sign that global financial markets are gaining stability, the chances of an October rate hike remain unclear.

Market players expect the result of the BOJ's September "tankan" corporate sentiment survey - due out Oct. 1 - and developments in global markets to hold the key to a rate hike decision at the Oct. 10-11 meeting.

But if concern over downside risks to the U.S. economy remains, BOJ policy makers could well put off a rate hike for another month.

Another person familiar with BOJ thinking said last week that "how strongly the U.S. economy has been negatively affected by the subprime issue remains unclear. The BOJ policy makers need to ascertain whether the U.S. economy has worsened significantly ahead of the (BOJ's) semiannual outlook report," due out Oct. 31. The BOJ board members will compile their semiannual outlook report, which includes their forecasts for real economic growth and consumer prices this fiscal year and next. A worsening of the U.S. economy could lead board members to revise down their expectations for the Japanese economy and prices, further postponing a rate hike. In April, the board forecast a 0.1% rise in the core consumer price index this year and a rise of 0.5% next fiscal year. Board members also forecast a rise of 2.1% in Japan's real gross domestic product this fiscal year, and similar growth next year.

Jeff Bailey : 9/19/2007 12:29:03 AM

RUT's NH/NL came in at 56:28 ... "Houston, we may have a problem."

Jeff Bailey : 9/19/2007 12:28:27 AM

SPX's NH/NL came in at 31:1 ...

Jeff Bailey : 9/19/2007 12:21:12 AM

S&P 500 Bullish % (BPSPX) sees a net gain of 4.43%, or 22 stocks to reversing higher PnF buy signals.

Currently 55.73% bullish, but needs 56% on chart to achieve "bull confirmed"

Jeff Bailey : 9/19/2007 12:18:29 AM

Sector Status Change ... STEEL&Iron reverses back up from "bull correction" to "bull confirmed."

Jeff Bailey : 9/19/2007 12:15:02 AM

Baker Hughes (BHI) ... an OEX component ... today's trade at $88 unleashes the "bullish catipult"

Jeff Bailey : 9/19/2007 12:10:36 AM

Bull Confirmed ... today's action did see a net gain of 4 stocks to reversing higher Pnf buy signals in the S&P 100 Bullish % (BPOEX) so 71% here (70% on chart).

TGT @ $67
COF @ $67
BDK @ $86
ATI @ $102

Jeff Bailey : 9/18/2007 11:46:38 PM

Japan's Yosano: Welcome Rate Action by U.S. Fed

Jeff Bailey : 9/18/2007 11:21:43 PM

About $3.20/call

Jeff Bailey : 9/18/2007 11:20:27 PM

Have I got what I think is a "honey" for you tomorrow.

Jeff Bailey : 9/18/2007 11:20:01 PM

Sector Status Change ... WALLStreet sector bullish % (BPWALL) achieves "bull confirmed" status at 53.66% (52.00% chart).

Jeff Bailey : 9/18/2007 10:07:16 PM

Index Pivot Matrix (Daily/Weekly/Monthly) for Wednesday at this Link

OI Technical Staff : 9/18/2007 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 : 9/18/2007 9:44:53 PM

Bears certainly look glassy-eyed and theirs knees are wobbling after today's action.

A strong NAKED CALL squeeze is well underway in the DIA/SPY/OEX and NDX, with RUT/IWM right on the edge.

Jeff Bailey : 9/18/2007 8:55:48 PM

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

Jeff Bailey : 9/18/2007 5:25:07 PM

Closing Internals found at this Link

Jeff Bailey : 9/18/2007 4:42:08 PM

Closing U.S. Market Watch found at this Link

52-week High and Low closes noted.

Linda Piazza : 9/18/2007 4:38:45 PM

If the calendar I'm reading is correct, the Bank of Japan's policy decision should be at about midnight tonight.

Jane Fox : 9/18/2007 4:35:36 PM

Economic Reports for tomorrow include

8:30a.m. August Consumer Price Index. Expected: 0%. Previous: +0.1%.

8:30a.m. August CPI, Ex-Food & Energy. Expected: +0.2%. Previous: +0.2%.

8:30a.m. August Housing Starts. Expected: -3.7%. Previous: -6.1%.

Jeff Bailey : 9/18/2007 4:31:26 PM

Brazil Steel: Iron Ore Prices Should Rise 30%

DJ- Iron ore prices could be headed much higher in 2008, with an adjustment close to 30% in order, the president of Brazilian integrated steelmaker Companhia Siderurgica Nacional (SID) told the local Estado news agency Tuesday.

"If it's 30% or not, it's still too early to say, but it certainly should be close to that," CSN chief Benjamin Steinbruch said.

In 2007 price contract talks, iron ore fines rose 9.5%. That followed increases of 19% in 2006 and 72% in 2005.

According to Steinbruch, Brasil is living amid a "spectacular moment."

"Chinese demand for commodities is a blessing for Brazil," Steinbruch said.

CSN is currently expanding output at its Casa de Pedra iron ore mine to 53 million metric tons a year, up from current production of about 16 million tons a year. The $1.5 billion project included expansion of export terminal facilities at the Sepetiba port near Rio de Janeiro to accommodate the increased output, which were completed earlier this year.

Linda Piazza : 9/18/2007 3:50:24 PM

The OEX has now nailed the top of its rising channel, established as markets began climbing off their August lows (and excluding the long lower shadows produced on 8/16 and 9/10). The SPX has nearly nailed the top of its channel. It looks as if it may today be at about 1522-1523 if I'm eyeballing it correctly. Time for a doji-type candle tomorrow or an actual pullback through the channel? There are no guarantees, but ordinarily that would be exactly what I'd expect for tomorrow. Since these aren't ordinary times, that's not a license to pile into bearish positions. It is a plea to decide, before the close, how you want to protect your bullish gains.

Jeff Bailey : 9/18/2007 3:50:10 PM

INDU Alert! 13,735 +2.47% ... retraces 80.9% of recent decline.

Keene Little : 9/18/2007 3:46:36 PM

NDX is also approaching its higher Fib target near 2038 so perhaps stair-stepping higher over the next day to get there. With two equal legs up from the 10th that should be a very good setup for a short play.

Keene Little : 9/18/2007 3:44:28 PM

As I suspected might happen they're going to keep buying this into the close. Tomorrow should give us some clues as to whether or not we're going to start back down in earnest or pull back correctively and stair-step higher.

Jane Fox : 9/18/2007 3:40:43 PM

Everything is back in sync now and all the internals are very very bullish. The FED gave the market what it wanted and then some. Link

Linda Piazza : 9/18/2007 3:32:35 PM

VIX at 20.81, approaching (and, in one case, exceeding) lows hit 8/08, 8/24, and 9/04 as the SPX was hitting its 8/08, 8/24 and 9/04 swing highs. Each of those VIX lows was a higher low, and if you draw a rising trendline off them, the VIX has now violated that rising trendline, but it's not below the perhaps psychologically important 20 or the 8/08 swing low of 19.33 or the 19.10 level my Keltner charts suggests might be important on a daily closing level.

What does all this mean? It means that the VIX is corroborating what we're seeing on the SPX. As the SPX approaches a key resistance level that has turned it back in the past (the rising channel resistance depicted in the chart linked to my 3:19:12 post), the VIX approaches the zone that has bounced it during those same periods.

It means be careful.

Jeff Bailey : 9/18/2007 3:31:21 PM

United Tech (UTX) $77.89 +2.71% ... that's a new 52-weeker. #5 weighted Dow Component.

Jeff Bailey : 9/18/2007 3:28:54 PM

NASDAQ NH Alert! 103 ...

Keene Little : 9/18/2007 3:27:35 PM

While trying to get short I recognize the possibility that we're going to see the market work its way a little higher tomorrow. It's why I'll trade on the light side and test the highs but I'm not willing to hang on if the market goes against me.

The way the rally started off yesterday's low, and now with the big spike up looking like a 3rd of a 3rd wave up, that could mean we're going to stair-step higher through tomorrow and maybe into Thursday as SPX heads for its higher Fib target near 1522. This is why I said it might take a couple of attempts to get short. I don't want to try a long for the higher level because it could finish at any time now. Link

Jeff Bailey : 9/18/2007 3:25:34 PM

03:00 Internals found at this Link

Linda Piazza : 9/18/2007 3:19:12 PM

Wow. Some decisions to be made if you're long the SPX: Link

Keene Little : 9/18/2007 3:17:55 PM

The DOW is now tagging the top of its parallel up-channel I showed on its 60-min chart and looks like it could leave a negative divergence on the 5-min chart. It's a good place to try a short on YM.

Jeff Bailey : 9/18/2007 3:15:35 PM

VIX.X alert! .. 20.85 ... WEEKLY S2.

Linda Piazza : 9/18/2007 3:14:53 PM

Big gains on the TRAN today, but no breakout above recent 200-ema resistance. The 200-ema is at 4929.89. The TRAN tested it on 8/23 and again on 9/04 and fell back both times. Right now, the TRAN is at 4893.50, so just keep this (no breakout) in the back of your mind if you're trading the SPX, OEX or Dow. I'm not saying the TRAN isn't gaining: it is. Big time.

Jeff Bailey : 9/18/2007 3:14:45 PM

YM Sep Futures squeeze alert! ...

Jane Fox : 9/18/2007 3:11:32 PM

I suspect the SPX jtHMA will turn back green by the end of this week and give me a intermediate buy signal. This is the signal I use to put my money back to work in my husband's and daughter's 401(k)s. Link

Linda Piazza : 9/18/2007 3:10:13 PM

Lots of Keltner support building underneath the SPX from 1498.80-1502.67, with all that still rising. Bulls wawnt to see that hold on pullbacks to maintain the breakout status.

Jane Fox : 9/18/2007 3:07:51 PM

We will probably see the DOW retrace for the rest of the week and it could easily return to the bottom of this channel. Link

Jeff Bailey : 9/18/2007 3:02:49 PM

03:00 Market Watch found at this Link

Keene Little : 9/18/2007 3:01:09 PM

It looks like a little sideways consolidation for the DOW near its high so another leg up looks likely. It missed its 13673 Fib target so maybe one more shot at it.

Linda Piazza : 9/18/2007 2:57:18 PM

It's the USDJPY that's showing some volatility post FOMC. It dropped all the way to the rising trendline that it began to establish more than a week ago then bounced again all the way up to 116.95, but is now right back about where it was before the decision. It's at 115.67.

Jane Fox : 9/18/2007 2:56:16 PM

TRIN ia a bullish 0.38.

Jeff Bailey : 9/18/2007 2:53:20 PM

NYSE NH alert! 102

Linda Piazza : 9/18/2007 2:50:59 PM

What SPX bulls absolutely do not want to see happen today is a close back below that triangle's top resistance trendline. That's at about 1491-1492, if I'm eyeballing it correctly. At this point, that seems an impossible thing to have happen, but we've all seen impossible things happen on an FOMC day.

Keene Little : 9/18/2007 2:49:47 PM

The pink wave count on the daily chart that I posted earlier is the winner. Now if price drops back it will leave a throw-over to finish its ascending wedge pattern. This is a pattern the bears have to love. The setup is excellent and now all we need is for the selling to begin. Link

Keene Little : 9/18/2007 2:47:14 PM

So is this it? From an EW perspective it has that potential and that's why I'm very interested in getting short. It may take a couple of stabs but the downside potential is very large and will easily take care of a few stop-outs. Link

Keene Little : 9/18/2007 2:41:34 PM

At ES 1525 it too is tagging the top of its parallel up-channel and these are normally very good places to play the reversal. There's no reversal yet but watch for evidence of topping to try the short side here. Use a little wider stop and smaller trade position.

Jeff Bailey : 9/18/2007 2:41:17 PM

NAKED Call Squeeze Alert! ... SPY $151.64/SPX 1,511.81

Linda Piazza : 9/18/2007 2:39:45 PM

Keltners show breakout status across all intraday charts I watch. Just keep following the SPX higher with your stops if you're in bullish plays. The breakout above the triangle on the daily chart, pointed out in earlier pre-FOMC posts, did indeed result in a trending move. Those who were cautious about jumping on the first post-FOMC move did miss something that could be traded without being whipsawed out of the move (at least so far) and you're probably full of regrets. This was a risk that I mentioned in my 11:34:08 post. I know the feeling when you've missed a move, the coulda/woulda/shoulda feeling, but don't chastise yourself if you decided that the conservative route and not trade the triangle breakout. It was a valid choice, and more times than not after an FOMC meeting, the best approach.

Keene Little : 9/18/2007 2:43:25 PM

Keep in mind the other upside number I had for the DOW at 13673. They're pressing this higher so that could easily get tagged at this rate. The top of the parallel up-channels for the DOW and SPX are currently near 13693 and 1511 (which just got tagged by SPX).

Jeff Bailey : 9/18/2007 2:38:03 PM

VIX.X Alert! ... 22.30 -15.78% ... undercuts MONTHLY 61.8% ...

Jane Fox : 9/18/2007 2:34:25 PM

OK this is really weird - I know Linda has been talking about this all day and I certainly see what she is concerned about. You know that I have been following the USDJPY as an intraday internal and that it has tracked the FDAX almost tick for tick. Well that relationship has certainly reversed today. Link

Jeff Bailey : 9/18/2007 2:34:13 PM

General Electric (GE) $31.37 +2.96% ... That's a new 52-weeker.

Keene Little : 9/18/2007 2:33:04 PM

Jeff's postings on NH/NL data continues to call the rally into question. It's too narrow based and we're not getting the full participation of the rest of the stocks. Smart money could be selling into this rally and that might be reflected in the weak breadth numbers.

Jeff Bailey : 9/18/2007 2:32:17 PM

Oh my! ... HUI.X 372.10 +1.83% ... an intra-day gapfest.

Tab Gilles : 9/18/2007 2:31:12 PM

FOMC Press Release Release Date: September 18, 2007

For immediate release

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 4-3/4 percent.

Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.

Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Developments in financial markets since the Committee's last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.

Keene Little : 9/18/2007 2:30:55 PM

DOW 13600 is key I think. If the bulls can't hold that level into the close then I think the rally could be all over. Watch for a minor new high with bearish divergences on the short term charts to try a short play. If it rolls back over then lower your stop quickly and keep risk tight until we've got some evidence that at least a short term top is in.

Jane Fox : 9/18/2007 2:30:14 PM

Russell 2000 still needs to break its resistance which I think it will do soon. Link

Linda Piazza : 9/18/2007 2:28:57 PM

If you bought the SPX breakout early this morning or the post-FOMC breakout, you're in a bullish position as the SPX tests Keltner resistance at 1499.58 on a 15-minute closing basis. Depending on when you entered your position and your own trading style, it's time to adjust your stops. Unless there's an immediate selloff, I'd say that surprised shorts will fuel further climbs, but keep in mind that it's not impossible to see such an immediate selloff, either. We often see sharp reversals immediately after an FOMC decision. I don't know how reliable a 15-minute chart will be in a volatile situation, but it now shows first potential support near 1493.06 on a 15-minute close, with stronger (9-ema) support down at 1488.84 but rising rapidly.

Jane Fox : 9/18/2007 2:26:54 PM

The SPX has now broken its September 4th swing high. Link

Jeff Bailey : 9/18/2007 2:26:32 PM

BB NH:NL 172:214

Jeff Bailey : 9/18/2007 2:26:20 PM

AMEX NH:NL 31:26

Jeff Bailey : 9/18/2007 2:26:06 PM

NASDAQ NH:NL 61:71

Jeff Bailey : 9/18/2007 2:25:52 PM

NYSE NH/NL 63:90

Keene Little : 9/18/2007 2:24:51 PM

Selling in bonds continues. A climb in yields I don't think is bullish for equities here. This spike up could easily be completing the wave count for the corrective bounce from Sept 10th. It's risky shorting this but this is the setup for it. When it feels wrong and scary that's usually the time. The risk is there could be pressure to hold the market up for the rest of the day but I sure wouldn't want to be long here and not especially overnight.

Jeff Bailey : 9/18/2007 2:22:27 PM

Bank of America Lowers Prime Lending Rate To 7.75%

Linda Piazza : 9/18/2007 2:22:32 PM

The RUT is running right up toward its 200-sma, the 50-sma, and also an average I consider especially important for the RUT (9/04 high nailed it, for example), the 72-ema. The 72-ema is at 799.58, and the others are all below that. There is no breakout yet, and those levels need to be watched for rollover potential.

A rollover doesn't seem likely, given the cuts that have just been announced, but we have to see how sentiment is impacted by the reasoning behind the cuts. We have to consider the possibility. The RUT is currently at 792.95, approaching the 795.83 50-sma.

Keene Little : 9/18/2007 2:21:12 PM

10-year has done a complete reversal again and is now rallying. Selling in the bonds. Definitely already priced in the market.

Keene Little : 9/18/2007 2:19:37 PM

10-year yield is climbing back up so perhaps already priced in? Same could be said for what will happen to the equity market.

Jeff Bailey : 9/18/2007 2:19:27 PM

S&P 100 Index (OEX.X) Alert! 700.00 ... see Monday's Market Wrap.

Jeff Bailey : 9/18/2007 2:18:46 PM

NAKED Call Squeeze alert! ... DIA $136.07 +1.49% ...

Jeff Bailey : 9/18/2007 2:18:24 PM

VIX.X Alert! 24.00 -9.36% ... see yesterday's MM.

Jeff Bailey : 9/18/2007 2:17:33 PM

Buy Program Premium

Keene Little : 9/18/2007 2:17:30 PM

TNX spiked up on the news and now just tanked big time. Buying in the bonds.

Keene Little : 9/18/2007 2:16:30 PM

Wow, nothing like a little 25-pt jump in ES.

Tab Gilles : 9/18/2007 2:25:06 PM

50 basis cut on both!!!

Two Important drivers of the market:

FED www.federalreserve.gov

Lehman Earnings: Link

Jeff Bailey : 9/18/2007 2:16:17 PM

Fed Cuts Target 50 bp; Cuts Discout 50 bp

Jeff Bailey : 9/18/2007 2:15:52 PM

Sell Program Premium ...

Jeff Bailey : 9/18/2007 2:15:27 PM

CBOE Most Active Call, Put Option Series at this Link

Keene Little : 9/18/2007 2:15:19 PM

Interesting Jeff, that heavy call strike coincides with the potential 13600 resistance line that I see.

Jeff Bailey : 9/18/2007 2:11:53 PM

DJX OI looks heaviest at the $136 Call Stike.

Keene Little : 9/18/2007 2:11:21 PM

For ES that might be a quick dip to about 1494 and then the first upside target would be near 1516.

Jeff Bailey : 9/18/2007 2:11:07 PM

DIA Options Chain found at this Link

Sorted by CBOE volume. Noting where the OI is at for Sep. expiration. #1 is Sep $125 Puts.

Keene Little : 9/18/2007 2:09:31 PM

Sticking with a plain vanilla a-b-c bounce off the Sept 10th low for SPX gives us the 1503 price projection as the first potential high for the bounce, which would coincide with a retest of its earlier broken uptrend line from the 10th. We might first see a quick dip down to near 1481 post-FOMC: Link

Keene Little : 9/18/2007 1:51:08 PM

The pullback from this morning's high looks corrective and suggests an upside resolution. But the usual spiky price action after the announcement should be expected. I changed the wave count slightly for the DOW's rally off the Sept 10th low (double zigzag a-b-c-x-a-b-c) and interestingly the Fib projection is to the same 13600 level where the mid line for the up-channel will be at the end of the day. One more leg up would finish the EW count. Link

Linda Piazza : 9/18/2007 1:19:42 PM

The SPX did come down to test the Keltner line I had referenced in my 12:34:11 post, but in the interim, that line had risen to just above 1485. However, the USDJPY did not make the same dip, so on a minor basis, it's not being as predictive of equity action as it has been at other times. It showed the first slacking of upward momentum, but that's all.

From this point on, I don't think it's about technicals so I'm going to refrain from making many posts. You can see the big triangle on the SPX's daily chart and the USDJPY is pressed up against a declining trendline that began forming on 8/23 (as well as its 30-sma), ready to corroborate or lead the SPX one direction or another if we can still believe its evidence. Although the Dow and OEX echo the action on the SPX, the action on many other indices does not, so be cautious about your conclusions. Someone out there is being cautious, spending money mostly on big caps that are highly liquid, it appears.

Jeff Bailey : 9/18/2007 1:17:15 PM

01:00 Internals found at this Link

Jeff Bailey : 9/18/2007 1:03:29 PM

01:00 Market Watch found at this Link

Jane Fox : 9/18/2007 1:02:23 PM

If the FED gives the market what it wants the September 4th swing high is within shooting distance today. Link

Linda Piazza : 9/18/2007 1:03:02 PM

This post is for spread or condor traders on the major indices. I know there are a number of you out there. As we head into the FOMC announcement, I wanted to suggest to you that you take a look at your positions. Are there any spreads (bear call or bull put) that you put on for at least 40 cents a side and can exit now for 15 cents or less? Think about whether you want to give up some of your profit and lessen some of your risk by paying that money to exit some or all of the positions priced at that level before the announcement. I've been listening to a lot of webinars by a lot of traders lately. Lessening risk whenever you've squeezed most of the juice out of a position is something that's common among successful spread traders. One, Dan Sheridan, asserts that he's often out of all front-month positions the week of opex, and I've been out of my 45 contracts of September condors since last week, I believe. Anyway, I'm out of all of them now. This week, I've even been able to close out 15 contracts of an October RUT condor I had (590/600 on the bottom closed today and 900/910 on the top closed yesterday, I believe). I gave up $0.35 altogether of my profit to do that, and perhaps you don't want to give up that much, but I could keep well over half my original profit and be out four weeks before October's opex, and that seemed a good deal to me. I'll put on another October position if I see a good opportunity, sometime this week after the decision. If not, oh, well, I'll have a less profitable but easier four weeks, won't I?

Anyway, it's just something to think about in this down time heading into the decision. I used to wait until I could get out for a nickel or a dime, and I still prefer to do that. However, in the current climate, my greatest preference is lessening risk in spreads, because they have such a rotten risk/reward parameter and can get into really hot water in a volatile climate.

Jane Fox : 9/18/2007 12:59:29 PM

SAN FRANCISCO (MarketWatch) -- Crude-oil futures climbed past $81 a barrel Tuesday into fresh, uncharted territory in New York as investors monitored expectations of an interest-rate cut by the Federal Reserve due later in the session, which may help boost demand for energy.

Crude oil for October delivery was last up 73 cents at $81.30 a barrel on the New York Mercantile Exchange. Oil prices had touched a fresh record of $81.50 a barrel during the regular session.

Jeff Bailey : 9/18/2007 12:56:35 PM

Kroger Co. (KR) $28.95 +7.32% ... Reported fiscal-second-quarter earnings rose 28% on 6.6% higher revenue, and 5.1% higher same-store sales excluding fuel. For the quarter ended Aug. 18, earnings reached $267.3 million, or 38 cents a share from $209 million, or 29 cents, in the year-earlier period. Sales reached $16.14 billion from $15.14 billion. Kroger increased its expectations for same-store-sales growth for the full year, pegging it at 4% to 5% excluding fuel sales. The company now expects to earn $1.64 to $1.67 a share in the year, up from the previous estimate of $1.60 to $1.65 a share.

Jeff Bailey : 9/18/2007 12:54:38 PM

AutoZone Inc. (AZO) $111.01 +2.20% ... Said today that its fourth-quarter net income rose 1.7% to $217.2 million, or $3.23 a share, from $213.5 million, or $2.92 a share in the year-ago period. The auto parts giant said revenue increased about 3% to $2 billion from $1.94 billion. Analysts surveyed by Thomson Financial forecast earnings of $3.25 a share and revenue of $2 billion, on average. Looking ahead, the Memphis, Tenn. company said it's "well positioned to generate increased sales growth for both its retail and commercial businesses."

Jeff Bailey : 9/18/2007 12:52:59 PM

Cummins Inc. (CMI $125.50 +3.08% ... Reaffirmed its 2007 earnings outlook of $7.15 to $7.65 a share. The Lakewood, N.Y., engine company said it maintained its outlook because of a strong first half and its projections for the rest of the year.

Linda Piazza : 9/18/2007 12:34:11 PM

The USDJPY produced a 15-minute close just below its 15-minute 9-ema. Prior to that, the 9-ema had begun flattening. This, in my opinion, signals a slowing of the upward momentum, but whether it means much more than that isn't decipherable since the violation was only a small one. The SPX has come down to test its 15-minute 9-ema, too, with that at about 1486.30 on 15-minute closes. There's nothing conclusive here yet on either chart, but do watch for the potential that the USDJPY could drop toward 115.60-115.65 as a sign that the SPX could drop toward 1484.60. A rise in the USDJPY toward 115.84-115.88 could prompt a SPX retest of the day's high. Beyond that, no predictions as price action clamps down ahead of the announcement.

Keene Little : 9/18/2007 12:30:07 PM

Did you take note of the NH/NL data that Jeff posted (thanks for those Jeff)? Even with a decent rally in the market today the new lows are beating out the new highs. This is a continuation of the pattern we've seen during the upward correction--weak internal market breadth and volume and it's indicative of a correction and Not the start of something more bullish to the upside.

Linda Piazza : 9/18/2007 12:28:20 PM

I'm still puzzling all this currency stuff out. Early this morning, the EURUSD (euro against the dollar) also attempted an upside breakout. Stay with me here, because this means the opposite of what it means when the USDJPY breaks higher. (In one case, we're measuring one currency against the dollar, and in the other, the dollar against another currency.) This means that the euro is rising against the dollar or, conversely, that the dollar is sinking against the euro. That might support the idea of a Fed easing, except that the movement is so inconclusive. Since the early morning breakout, the EURUSD has been sinking back into a retest of broken resistance. So far, it's holding, but the EURUSD is back in a trading range.

So, what does this mean? First, since both the Bank of Japan and our Fed are meeting today, the movements of the USDJPY are difficult to interpret. As I've mentioned, is the climb in the USDJPY attributed to a belief that our Fed won't ease and Japan won't raise? Is it attributed to a belief that our Fed is going to keep the inflation-watch language?

Maybe we should put more trust in what we see on the EURUSD, then, but what I see there, unfortunately, is far from conclusive.

So, stay with me a little longer. I'm learning right along with you, so I invite you to tag along as I try to puzzle this out, perhaps erroneously. If you're tagging along and I make a wrong turn, you can figure out that I'm making a wrong turn. I next took a look at the EURJPY and that's showing the same upside breakout and strong rise as we're seeing on the USDJPY. I think, then, we can deduce that the movement we're seeing on the USDJPY is not due to a belief by currency traders that the Fed is going to do one thing or another. It's more likely a yen-induced movement.

So? So, I don't think we have to discount too much what's happening with the USDJPY today, and can still use it as a sort of barometer, and I don't think the bet forex traders are making is that the Fed will raise rates or, maybe, not even that the Fed will keep rates the same. They're betting on a weakening yen, it seems. The action of the EURUSD tells me that forex traders aren't particularly sure what will happen with U.S. rates and the dollar.

Jeff Bailey : 9/18/2007 12:20:57 PM

Lehman's Least-Liquid Positions Were 8% Of Total In May

DJ- Lehman Brothers Holdings Inc. (LEH) did its best to calm investors' concerns about its exposure to troubled leveraged buyout loans, saying it has taken "full" markdowns of well over $1 billion on the loans.

"If spreads don't widen, we wouldn't expect to take any more marks," Chief Financial Officer Christopher O'Meara said during a conference call with investors Tuesday after Lehman said its fiscal third-quarter earnings fell by 3% to $887 million.

Lehman has trimmed its commitments to buyout loans from $44 billion to about $27 billion - including about $10 billion of additional commitments since its quarter ended on Aug. 31, he said. The loans are made primarily to private-equity firms that have fueled investment-banking profits for the last three years.

Lehman and other banks typically sell the high-yield loans and related bonds to investors seeking alternatives to lower-yielding investments, but fears about poor credit quality have dried up the market. That has left some of the loans stuck on banks' balance sheets, forcing them to mark down their values and forego the lending and underwriting fees that would have accompanied their sale.

Investors have been concerned that banks would underestimate the deterioration in their portfolios, but O'Meara said that, unless the credit situation worsens, Lehman's loan writedowns are over for the year. And, he added, "the worst of this credit correction is behind us."

Lehman took a revenue hit of about $700 million in total on its markdowns. "Economic hedges and other liabilities" related to its mortgage and corporate loan portfolios brought the total hit well below the absolute valuation markdowns in the loan portfolio, Lehman said.

Lehman also marked down much of its exposure to residential mortgages and mortgage-backed securities, but the loan portfolio appeared to take the bulk of the hits on Lehman's books.

He also sought to assuage concerns about Lehman's exposure to investment vehicles that haven't been able to fund their investments through sales of commercial paper. Lehman's commitments to provide backup funding to these asset-backed conduits, as they are known, added just about $4 billion to its total commitments, he said. Its mortgage positions, on the other hand, have grown a bit because it continues to originate loans but can't sell them to investors in the form of asset-backed securities because of market dislocations.

O'Meara conceded that valuing assets left on its books has become more difficult because so many markets have frozen, requiring firms to make judgment calls. Lehman's least liquid balance-sheet positions likely rose to as much as 11% of its trading positions from 8% - or $22 billion - at the end of the second quarter, he said.

Jeff Bailey : 9/18/2007 12:16:49 PM

OPEC: Likely To Add More Oil If $80 Oil Goes For Weeks

Jane Fox : 9/18/2007 12:13:29 PM

Oh my goodness look at Oil - over $81.00/bl Link

Jeff Bailey : 9/18/2007 12:09:24 PM

BB NH/NL 138:176

Jeff Bailey : 9/18/2007 12:09:12 PM

AMEX NH/NL 26:20

Jeff Bailey : 9/18/2007 12:09:00 PM

NASDAQ NH/NL 54:59

Jeff Bailey : 9/18/2007 12:08:46 PM

NYSE NH/NL 52:81

Keene Little : 9/18/2007 12:04:29 PM

And that's about all the guesses I have at the moment. Now we wait.

Keene Little : 9/18/2007 12:03:29 PM

Doing the same parallel up-channel for the DOW shows potential resistance by its mid line near 13600 by the end of the day so that's an area to watch if we get a post-FOMC rally into the end of the day that could then set up a sell-the-news reaction tomorrow (dark red price projection). Link

But a little higher there's a Fib projection for the 2nd leg up in the bounce off the Sept 10th low at 13673 (62% of the 1st leg up). This coincides with a 138% projection off the previous decline (Sept 4-10) which is often a good reversal level. That's shown by the pink price projection.

Linda Piazza : 9/18/2007 12:01:31 PM

So far, the action of the SPX and the USDJPY continue to mimic each other, with both hovering near day's highs, both maintaining the support of their 15-minute 9-ema's, but with the 9-ema now beginning to flatten on the USDJPY's chart. As per my earlier post, I'm a little cautious about drawing too many conclusions about likely equity action based on what the USDJPY does today because I'm not sure that the recent relationship still holds. (For newbies, movement in the USDJPY recently has either led or corroborated the same movement in U.S. equities.) Both central banks are meeting today--ours and the BOJ--and forex traders are making bets on the outcome. It seems to me that they're betting that the BOJ will not raise rates as the BOJ was predicted to do before the whole subprime/credit-crunch mess appeared, but also perhaps they're betting against the idea that our Fed will lower rates, and I don't know where the balance lies. At least they're betting that the dollar is going to be even stronger against the yen. These are scenarios I'm puzzling over and nothing concrete, and I could be way off base, but they do give me a bit of a pause about what to expect out of the Fed this afternoon. I'm hesitant to put too much credence in the belief that a rise in the USDJPY today is particularly bullish for equities. So far, the typical recent relationship has held, though, so perhaps I'm trying to read too much or the wrong thing into the rise.

Jane Fox : 9/18/2007 11:51:00 AM

The internals are giving you the go ahead to buy the dips. Don't expect too much follow through though as long as we are on a FED watch. Link

Keene Little : 9/18/2007 11:45:33 AM

The Trannies continue to struggle with the downtrend line from the July high. It's pressing up against it again so the test is on. Link

Keene Little : 9/18/2007 11:41:16 AM

With the push higher in SPX and playing with a parallel up-channel for price action since its Sept 10th low, Fib projections for a 3-wave bounce (similar to the NDX chart I just posted) gives us 1503 and 1522 as the two potential rally levels to watch for. A small pullback into or just after FOMC could then give us the final leg up to the 1503 projection. Link

Linda Piazza : 9/18/2007 11:34:08 AM

I said late yesterday that I expected the SPX to be parked pre-FOMC at either support or resistance on the triangle seen on its daily chart, but I didn't know which it would be. It's obviously going to be resistance, primed for a potential upside breakout if the market gets the news it wants. Obviously, if it doesn't, the SPX is primed to roll over at resistance. RSI is also at triangle resistance: Link

The post-FOMC volatility can chop whipsaw both bullish and bearish traders out of positions. Often, that post-FOMC volatility settles into a narrowing triangle that finally breaks either late on the FOMC day or early the next morning, and that direction is often the truer direction, although that's no guarantee, of course. The risk of waiting out that early post-FOMC reaction is that the first reaction is the true one and prices just run without ever looking back. The trade is missed. If you're planning on trading today, you decide what you want to do, but being whipsawed out of trades several times in the hope that this would be the one unusual time when the first reaction (sometimes even beginning just before the announcement) is the right direction never did appeal to me.

Jeff Bailey : 9/18/2007 11:26:22 AM

11:00 Internals found at this Link

Keene Little : 9/18/2007 11:17:39 AM

The two Fib projections for NDX, assuming it will finish another leg higher in its bounce off the Sept 10th low, are just under 2014 and then 2038. Watch for potential failure at the lower one first as the setup for a big decline to follow this. Link

Keene Little : 9/18/2007 11:09:38 AM

The bottom line when you look at a chart like the daily SPX chart I just posted and you see all that overlapping choppy price action since the August low, it's either extremely bullish with some strong 3rd waves to the upside about to unfold, or it's a corrective pattern. The higher odds scenario for these patterns is the correction. So a correction of the July-Aug decline means we've got another leg down coming. The only question in my mind is where the bounce will finish--either very near 1490-1500 or slightly higher later this week in the 1510-1520 area. The next leg down, a larger degree c-wave, will see some very strong selling.

Jeff Bailey : 9/18/2007 11:02:43 AM

11:00 Market Watch found at this Link

Keene Little : 9/18/2007 11:02:05 AM

The same pattern analysis on SPX as I showed for the DOW looks like this:
60-min: Link
daily: Link

The short term bullish pink count assumes we'll get another pullback, either before FOMC or a spike down post-FOMC, but then the rally leg from there. The dark red count assumes we'll continue to rally higher into FOMC, maybe a quick pullback and then another small push higher post FOMC, but then a collapse in price. Any rally above the Sept 4th high near 1496 would negate the dark red wave count but not necessarily be bullish for anything more than maybe a rally up to the 1510-1520 area before heading lower again.

For a while now I've assumed the rate cut is already priced in and if the Fed does as most expect (.25, or even .50, cut) then it's already baked into the cake. If they don't cut then major disappoint. If they cut more then it will scare the market. So where's the upside potential?

The upside potential comes from the shorts. The Boyz, possibly with a little help from the Fed, could jam the market higher and get the shorts to run for cover. It could then feed on itself for the rest of the week to finish wave-e of the larger daily wedge pattern (and these waves are usually associated with a big news event). But with the continued push higher today that intermediate bullish scenario is beginning to look more iffy. A rally into FOMC may not be the best thing for the bulls even if it does get them a little higher right after the announcement.

Linda Piazza : 9/18/2007 10:58:21 AM

I find the intermarket relationship between the USDJPY and currencies today somewhat interesting and wonder why there's not a shift in the typical correspondence of the movements of this currency pair and U.S. equities. Think about it. We saw a rise last week in the USDJPY that was somewhat supportive of equity gains, although perhaps not as much so as it would have been in the past. That occurred when the yen weakened due to both economic and political turmoil. The prime minister's resignation was thought to have definitely stayed the hand of the Bank of Japan, effectively preventing the BOJ from raising rates at the September meeting. So, as the value of the yen sank as a result, the value of the USD versus the yen (USDJPY) rose. While that eased the pressure on those in yen carry trades, I wondered at the time if it was doing much toward encouraging more yen carry trades to be put on.

But what is the rise in the USDJPY telling us today? Either something happened overnight--I don't find anything except that the BOJ has begun their two-day meeting at which they're expected to keep rates the same--that weakened the yen even more or else currency traders are betting on no Fed easing or only a small Fed easing. Since the breakout occurred shortly after the PPI was released, including a core PPI that wasn't as Fed friendly as some might like, I'm wondering, wondering . . . .

So, unless something happened overnight that weakened the yen or unless currency traders are just flat-out wrong on their bets today or unless the USDJPY rolls down, I'm wondering if today, this rise in the USDJPY might not be so supportive of equities.

I don't know the answers to these questions. I've confessed before that I don't have a background in economics, and I'm puzzling this stuff out for myself right along with you. I do encourage you to think about it, too, though.

Linda Piazza : 9/18/2007 10:45:53 AM

Early this morning, the USDJPY broke through the top of the triangle that had been forming over several days on intraday charts and ran straight up to outer Keltner resistance on the 15-minute chart. That resistance is now at 115.88 on 15-minute closes, although it was lower this morning when first hit. As long as the USDJPY finds support on 15-minute closes at the 9-ema on that chart, currently at 115.65, it's maintaining its current short-term uptrend, but there's some hint that it might soon be time for a retest of that support or perhaps even the support further down, near 115.45-115.50 on 15-minute closes. As I began this post, the current value was 115.76.

Jeff Bailey : 9/18/2007 10:42:04 AM

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

Stops/Targets for OPEN positions at this Link

Example: Target of the OLN-AD is $28.00 in the underlying shares of OLN.

Linda Piazza : 9/18/2007 10:38:15 AM

I've just returned and am noting that the Fed has announced a repo in the amount of $9.750 billion. Yesterday's $16.750 billion repo matures today. That leaves a net drain of $7.000 billion, unless I've missed something. Lately, these net adds and net drains do not seem as predictive of market action as they once seemed to be, so use these as background information without assuming that a day of net adds means a bullish day and a day of net drains means a bearish one. Perhaps market participants are reassured when the Fed allows a net drain that things can't be that bad out there, and are worried when there's a large net add such as yesterday's. You just can't count on all these inter-market relationships to stay static.

Keene Little : 9/18/2007 10:37:38 AM

Pushing higher again. If the rally from Friday morning's low turns into an overlapping choppy climb (needing another pullback and then new high) then all bullish bets would be off the table and I'd grow some serious bear claws in a hurry. We could be setting up for exactly the opposite scenario that I outlined for the DOW which requires a pullback to set up the next rally leg.

If we instead chop higher then it will be an ending pattern and it will say look out below post FOMC (could get a down-up sequence this afternoon/tomorrow morning before dropping). This is why I want to wait until we're near the FOMC announcement to see how it's set up. But this push higher is now turning me more bearish again.

Jeff Bailey : 9/18/2007 10:26:39 AM

IMF TO CUT US 2008 GDP FORECAST

DJ- The International Monetary Fund is cutting its forecast for U.S. gross domestic product growth in 2008 to 2.2% from 2.8%, Italian newswire Radiocor says. It also has lowered its euro-zone growth forecast to 2.3% from 2.5%.

Jeff Bailey : 9/18/2007 10:25:50 AM

REDBOOK SAYS CHAIN STORE SALES UP 0.8%

DJ- National chain store sales rise 0.8% in first two weeks of September versus the previous month, according to Redbook Research's latest indicator of national retail sales. The rise in the index is in line with target.

Jeff Bailey : 9/18/2007 10:24:56 AM

GENERAL MOTORS DOWNGRADED TO NEUTRAL

DJ- Auto maker is cut to neutral from buy by Goldman Sachs, which says expectations for a union- health-care deal are now largely priced into the shares but it still sees a challenging longer-term outlook for company.

GM $34.97 -0.70% ... #26 weighting in Dow Industrials.

Jeff Bailey : 9/18/2007 10:21:10 AM

NET FOREIGN OUTFLOWS OF US SECURITIES TUMBLE

DJ- Net foreign disposal of long-maturity U.S. securities is $3.0 billion in July, compared to acquisition of $81.8 billion in June. The "monthly net TIC flows" is $103.8 billion, up from $34.4 billion the previous month.

Jane Fox : 9/18/2007 10:14:17 AM

AD Volume is now making new daily highs and so is USDJPY but the VIX and DAX are not.

Jeff Bailey : 9/18/2007 10:12:25 AM

STANDARD CHARTERED BUYS AMERICAN EXPRESS BANK

DJ- U.K.-based international bank says it will acquire American Express Bank unit of American Express, for a final purchase price of about $1.1 billion. Standard Chartered intends to finance deal with cash resources, ongoing debt funding program.

AXP $58.50 +0.51% ... #11 weighted component in Dow Industrials.

Jeff Bailey : 9/18/2007 10:10:22 AM

STEEP AUGUST US PPI DROP SUPPORTS FED RATE CUT HOPES

DJ- Producer price index for finished goods slips 1.4% in August on the biggest drop in energy prices in over four years, but the inflationary relief may prove short-lived, as energy prices are again on the rise this month.

Jeff Bailey : 9/18/2007 10:09:25 AM

BEST BUY 2Q NET RISES 9% ON INCREASED SALES

DJ- Shares rise 4.5% after consumer-electronics retailer posts earnings of $250 million, or 55c a share. Wall Street expected 44c a share. Revenue jumps 15% to $8.75 billion, boosted by international results and new store openings.

BBY $46.57 +4.55% ...

Jeff Bailey : 9/18/2007 10:08:02 AM

LEHMAN BROTHERS 3Q NET SLIPS 3.2%, TOPS VIEWS

DJ- Lehman Brothers earns $887 million, or $1.54 a share, as more than half of the firm's revenue comes from overseas, kicking off an intensely anticipated earnings season for brokerage firms navigating turbulent mortgage and credit markets. Results calm some investors' nerves and send stock 1% higher.

LEH $59.25 +1.04% ...

Keene Little : 9/18/2007 10:06:47 AM

The wedge consolidation pattern that I had shown for SPX in last night's chart (below) has changed slightly with this morning's quick spike up but not appreciably. Looking at the DOW's 60-min chart shows an ascending triangle consolidation since Thursday's high and all these triangle consolidation patterns has switched me over into the bullish camp now for an expectation of a post-FOMC rally (in pink): Link

I've seen enough of these consolidation patterns break down and when they do they sell off hard so that's the risk in considering a long play. But the higher odds play out of this pattern is for a rally. It needs one more leg down as part of the triangle pattern, maybe down to 13400 or slightly lower which could be associated with the news spike post-FOMC, but then it should reverse and head higher from there. I want to see if this sets up as we head into FOMC and whether or not I still like the idea of buying a post-FOMC dip.

The daily chart shows a larger ascending wedge corrective pattern since the August low and that wedge needs one more leg up to finish it (also in pink). So the short term triangle pattern fits the larger wedge pattern and I like the Fibs up near 13650-13700 as a target for the rally and then the MOAP setup for the short side. Link

Jeff Bailey : 9/18/2007 10:03:01 AM

10:00 Market Watch found at this Link

Jane Fox : 9/18/2007 9:58:50 AM

Overnight ranges are still in tact so far. Link

Jane Fox : 9/18/2007 9:54:02 AM

The Russell 2000 futures are almost to their previous day lows (PDL). Link

Jane Fox : 9/18/2007 9:52:45 AM

AD line is still above 0 at +523 so I am not giving the ball to the bears quite yet.

Jane Fox : 9/18/2007 9:51:57 AM

VIX to new daily highs. DAX to new daily lows. USDJPY to new daily lows. All bearish.

Jane Fox : 9/18/2007 9:49:09 AM

Here are the VIX and S&P futures charts. The VIX hovering at daily highs is not bullish folks. Link

Jane Fox : 9/18/2007 9:46:24 AM

VIX is making new daily highs but so is the AD volume - these two need to be in sync before I will say one side or the other has control. The DAX is hovering at daily lows but the USDJPY is trading midrange (with a 9:30 open that is).

Jane Fox : 9/18/2007 9:44:28 AM

I was looking at my charts last night and I noticed this ominous head and shoulders on the SPX chart with a neckline the lower trendline of the upward channel. The September 10th swing low will have to break to confirm this formation or the other scenario the swing high at 1500 will have to break to negate the formation. Link

Keene Little : 9/18/2007 9:36:22 AM

Two equal legs up for the bounce off yesterday's low for NDX is at 1996.59 so watch to see if that is resistance to any further rally or not (good place to consider a scalp short play as we head into FOMC).

Jane Fox : 9/18/2007 9:35:19 AM

... but it is making new daily lows.

Jane Fox : 9/18/2007 9:35:05 AM

AD line has now climbed to +1205. It is too early to get a reading on the VIX.

Jane Fox : 9/18/2007 9:33:24 AM

Well I was close the AD line opens at +947.

Keene Little : 9/18/2007 9:32:32 AM

Yesterday's bounce pattern does not suggest a rally from here but it does support a continuation of the bounce. But then at least another pullback is likely so I'd be very careful chasing this morning's move higher.

Keene Little : 9/18/2007 9:30:54 AM

The market obviously thinks the inflation data is Fed friendly for them to be able to cut rates. I'm not so sure it is (core PPI is definitely not and is expected to climb over the next few months when looking at year over year comparisons). But we'll be in rally mode out of the gate and then we'll see if people reconsider.

Jane Fox : 9/18/2007 9:24:05 AM

I suspect the AD line to open over +1000 this morning.

Jane Fox : 9/18/2007 9:21:24 AM

The DAX broke its previous day high confirming the bullishness we are seeing in the American index markets.

Crude is certainly not retreating much off its $80.00/bl level and like I said yesterday from a technical point of view this means higher highs. Our in house Oil expert, Jim Brown, thinks otherwise based on seasonality and when Jim talks I listen so I am short oil (USO and XLE puts).

As long as Crude is strong Gold will remain strong as well and this in turn is affecting the US$/Gold relationship so it has not been as strong as it usually is of late This relationship is usually inverse to one another almost tick for tick and will straighten out over the next week. It always does. Link

Jane Fox : 9/18/2007 9:06:54 AM

Needless to say the markets liked the PPI data out at 8:30 this morning. The DOW futures have even broken their previous day highs. Link

Linda Piazza : 9/18/2007 9:02:01 AM

I have an appointment this morning that will keep me away from the open.

Jane Fox : 9/18/2007 9:01:07 AM

LONDON (MarketWatch) -- Gold futures rose as high as $730.50 an ounce, a new 16-month high, as Miguel Angel Fernandez Ordonez said the Bank of Spain won't be selling more gold this year. Under the central bank's gold agreement the Spanish central bank had been the largest seller of gold this year, according to reports. Shortly after 8 a.m. gold futures were up $4 to $727.80 an ounce.

Jane Fox : 9/18/2007 9:00:29 AM

There were almost a quarter-million foreclosures in the U.S. last month alone; a 36% jump since July. And since last year foreclosures have soared 115% - led by problems in Nevada, California and Florida. So finds RealtyTrac, a leading real estate data provider. And there's no end in sight. RealtyTrac's Rick Sharga tells John Wordock things may get worse before they get better as more subprime loans reset.

Jane Fox : 9/18/2007 8:59:35 AM

WASHINGTON (MarketWatch) -- Wholesale prices plunged 1.4% in August, led by falling food and energy prices, the Labor Department reported Tuesday.

Energy prices dropped 6.6% in August, while food prices dipped 0.2%, marking the fourth straight decline after the U.S. economy absorbed five months of hefty increases.

Excluding volatile food and energy, however, the core producer price index climbed a greater-than-expected 0.2% last month as prices for pharmaceuticals and cars increased by 1.3% and 0.5%, respectively.

Economists surveyed by MarketWatch had expected that the PPI would fall 0.4% overall and that the core rate would rise 0.1%.

The PPI and the core PPI for finished goods have each risen 2.2% in the past year.

The report on producer prices shows few inflationary pressures in the production pipeline as of August. But energy prices have soared since then, taking some of the luster off what was a generally favorable report.

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