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Keene Little : 9/24/2007 11:07:18 PM

Tuesday's pivot tables: Link and Link

Keene Little : 9/24/2007 10:59:39 PM

SPX is in a potential bull flag pullback with the intraday choppy price pattern that supports this: Link Two equal legs down would drop it to 1508.57 and then a lower Fib projection and its uptrend line from August 16th have potential support in the 1490-1495 area. Any lower than that and the bears will have the ball.

The DOW can't drop any lower without breaking its uptrend line from Sept 10th. If it can rally higher then the upside Fib projections remain just above 14K up to almost 14,200: Link It takes a break below 13400 before the DOW turns more bearish.

The RUT looks similar to SPX in that a minor pullback Tuesday morning could find support near 800 for two equal legs down from last week: Link A break below 788 would turn the pattern bearish.

The NDX was the stronger index on Monday but actually has the more immediately bearish looking setup where Monday's high could have been it for its rally: Link A failure to get back above 2065 (where it would retest broken trend lines) could spell trouble. A break below 2007 is needed to confirm the likelihood of a high for the bounce.

The NDX daily chart shows a slightly higher Fib projection at 2083 and the top of its parallel up-channel near 2100 so those are the upside targets if this can rally a little further. Otherwise this looks potentially bearish from here: Link

And lastly, keep an eye on the money--the banks are set up for a strong decline from here and if they do then I doubt the broader market will be able to do much on the upside (and if it does then it will be a better short setup). Link

OI Technical Staff : 9/24/2007 9:59:59 PM

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Jeff Bailey : 9/24/2007 6:48:36 PM

Global Indexes / Currencies Table at this Link

Jeff Bailey : 9/24/2007 5:23:50 PM

Closing Internals found at this Link

Jeff Bailey : 9/24/2007 4:43:00 PM

Closing U.S. Market Watch found at this Link

Keene Little : 9/24/2007 4:22:08 PM

The banks clearly have me wondering what could happen next to the broader market if they keep sinking from here. Keep in mind that the credit contraction problem has Not gone away and has barely gotten any better. There's a lot of commercial paper coming due and if the banks are forced to eat it (for which they've been hoarding the cash that the Fed is trying to liquidate the market with) then their stock prices may be reflecting exactly that scenario.

If the broader market participants get a whiff of this scenario with the banks they're going to exit stage right quickly. I'm trying a long play off this pullback but I'm trading it lightly and I'm not willing to give it much room. I'd rather get short and I'm certainly not carrying any long trades overnight. Way too risky for that. But there's just enough ambiguity in the chart patterns to keep me from getting short just yet.

Keene Little : 9/24/2007 4:17:01 PM

One concern I have about the bullish expectations for a new high is that we could see the market sneak in a high which won't become obvious until quite a few points have been lopped off. The DOW chart shows a Fib projection at 13892 for two equal legs up from the August 16th low. Did we get close enough today with a truncated finish to the rally? In other words, was today's high the 5th wave--wave-(v) on the chart? That's why I think a break of its uptrend line could be significant. We'll wait to see if it happens but heads up if it does and you're long the market.

Keene Little : 9/24/2007 4:22:30 PM

The DOW is holding on here--the uptrend line from Sept 10th, currently near 13740, could support another leg higher: Link The Fibs still point to the potential for a minor new all-time high before topping out. A break of its uptrend line could spell more bearish trouble ahead.

Keene Little : 9/24/2007 4:10:08 PM

I had mentioned earlier that GOOG may have given us its last move higher today by nearly tagging its trend line along the two highs of November 2005 and July 2007, currently just above 573 now. A drop back below 560 would be a heads up that it might have topped out: Link

But before getting all bearish on this one, I don't like the pullback today from a bearish perspective. It looks too much like a 3-wave correction which points to higher highs to come. It might consolidate a little longer here or could press higher right from here. Just keep an eye on that trend line to see if it becomes a brick wall. Or a throw-over above it and collapse back underneath would be another way to get a sell signal.

Keene Little : 9/24/2007 4:00:58 PM

We've seen this kind of intermarket divergence before between NDX and the DOW and it's rarely a bullish sign. NDX is up 7 (+0.34%) while the DOW is down 64 (-0.45%). Something smells funny about this.

Keene Little : 9/24/2007 3:54:50 PM

A chart only its momma could love (momma bear that is): Link If this EW count is correct on the banks (BIX) it's bombs away from here.

Jane Fox : 9/24/2007 3:53:12 PM

USDJPY is making new daily lows here and VIX is hovering at daily highs. This is bearish folks.

Keene Little : 9/24/2007 3:52:36 PM

With the banks looking as week as they are I'm not sure how or why SPX could bounce back up to 1540 or higher but until it breaks below 1508 I have to keep a bullish flag alive here: Link If it drops lower then the next support is at or above 1490. In fact the pink path has some merit from an EW and Fibonacci perspective but even that one has me scratching my head about how it could get a 50-pt rally out of a dip to 1490. Stranger things have happened and we'll just have to let price let us know where it's going next.

A break above last week's 1538.74 high is needed to tell us the pullback is over. That's a wide spread between 1540 and 1490 before we get a better idea on market direction, which means don't be betting big on either direction from here. Small scalps is the recommendation (or stay flat until we get a better setup).

Jeff Bailey : 9/24/2007 3:40:44 PM

INVESTOR PLEADS GUILTY TO BILKING BANKS

DJ- A retired Indiana real estate investor pleads guilty to criminal charges filed by federal prosecutors and settles related civil charges. Mark Ristow agrees to return $2.85 million in profits to savings banks and depositors.

Jeff Bailey : 9/24/2007 3:39:56 PM

AMR SHARES PLUNGE ON REVENUE FORECAST

DJ- Parent of American Airlines slides 15% after the world's biggest airline forecasts 3Q revenue will come in below analysts' forecasts.

AMR $20.56 -15.25% ...

Jeff Bailey : 9/24/2007 3:36:40 PM

Dow Jones US Home Construction (DJUSHB) 362.82 -5.20% ... That's a new 52-weeker.

Jane Fox : 9/24/2007 3:21:33 PM

If you follow the internals you may want to take a copy of the AD volume, ratio and VIX charts. This is the way they should look if you are short. Link

Jeff Bailey : 9/24/2007 3:21:24 PM

03:00 Internals found at this Link

Keene Little : 9/24/2007 3:10:24 PM

It looks like a nice impulsive decline from this morning's high so we should now get at least a correction of the decline. If we're into a larger sideways consolidation then we'd be due another up-down sequence between last week's high and today's low (looking at SPX here). The larger choppy pattern continues to make it difficult to get a bead on where this is headed next. Just need to trade this very short term if you're trading it.

Jeff Bailey : 9/24/2007 3:09:12 PM

UAW WILLING TO BARGAIN, BUT WANTS EQUITABLE DEAL

DJ- United Auto Workers union members walk off the job and begin picketing outside of several General Motors plants after contract negotiation deadline passes. Work stoppage represents first significant contract-related GM labor strike since 1984. UAW president says union is eager to wrap up strike, but it will not return to work until it wins a 'fair and equitable' deal.

GM $34.85 -0.31% ... #25 weighting in Dow Industrials.

F $8.48 +3.03% ...

Jeff Bailey : 9/24/2007 3:03:56 PM

03:00 Market Watch found at this Link

Keene Little : 9/24/2007 2:30:06 PM

As shown on the NDX 60-min chart, the key level is 2007. Pretty appropriate I'd say since a break of that would likely signal that we've seen the high for 2007.

Keene Little : 9/24/2007 2:28:00 PM

I've been maintaining a different wave count on NDX because I've been thinking it might give us a better clue as to what's next. It's also why I'm watching GOOG. GOOG did jump up this morning and nearly tagged the upper trend line near 572 that I had shown on last night's chart (below). It'll be interesting to see how it finishes the day.

I say that because of how NDX might finish today. Its daily chart shows a potential throw-over above an ascending wedge pattern and right now shows a very bearish looking shooting star (actually an even more bearish gravestone doji). If it finishes this way today then it can't be interpreted as anything but bearish: Link

The 60-min chart shows how the rally from Sept 10th would be counted--it's a 5-wave move that may have completed at today's high. The throw-over above the top of the wedge and the July 19th high and then quick collapse back under both is bearish. I think, based on this pattern, I'll be looking to sell the next bounce. Then I'll keep an eye on the others to see what may be confirming or negating this more bearish outlook. Link

Jeff Bailey : 9/24/2007 2:09:23 PM

Russell 2000 Index ($RUT.X) 806.77 -0.77% ... 60-minute interval chart with WEEKLY (blue) and MONTHLY (pink) pivot retracement at this Link ... First sign of any institutional selling would be below WEEKLY Pivot (803.60).

Keene Little : 9/24/2007 1:58:25 PM

Here's how a similar pattern in SPX, to the one I just showed for the RUT, would look: Link Two equal legs down from last Wednesday would be at 1508.57. A deeper retracement could have it dropping all the way down to its uptrend line from August 16th, currently near 1490. For the bullish outcome here it can't drop below the 1489.58 high on Sept 13th (wave-(i) on the chart) since that would be an overlap between the 4th and 1st waves and would be a strong signal that the rally finished last week. I have the key level at 1471 but a break below 1489 would be the heads up that something more bearish has begun.

Jane Fox : 9/24/2007 1:48:46 PM

Here are the charts of the overnight ranges. NQ has hardly even traded back into its ON range and obviously the stronger market today. Link

Keene Little : 9/24/2007 1:46:11 PM

For the RUT, a pullback with two equal legs down, which would be to the 800 area and potential support where there was resistance, could then set up another rally leg for the 5th wave in the move up from Sept 10th (the move up that I had expected to see today). This is how it would look: Link

Jane Fox : 9/24/2007 1:37:38 PM

By the way the AD line is now -723.

Jane Fox : 9/24/2007 1:36:48 PM

AD line has been telling you all day you should not be long. Now the internals are just about to give you the go ahead to get short. Let me rephrase that - Now the internals are telling you to sell the rallies. Link

Keene Little : 9/24/2007 1:36:43 PM

ES is two ticks from closing Friday's gap but YM has a little further to drop before it closes its gap. NQ is clearly the strongest and is not yet threatening to close its gap from either today or Friday. ER has been weaker looking all along but keep an eye on where it will have two equal legs down from last Wednesday's high (804.70, RUT 799.69). This pullback/consolidation might find support there.

Keene Little : 9/24/2007 1:33:02 PM

Off to the sidelines now. Something less bullish is obviously playing out here but I'm not willing to call it bearish yet. Could be a day of chop and whipsaw. Count me out.

Jane Fox : 9/24/2007 1:28:31 PM

The Russell 2000 has sliced through it previous day lows. The DOW has basically tested its PDLs. S&P is trying it's darnest to hold on with dear life. Link

Keene Little : 9/24/2007 1:25:14 PM

It's not looking so good for the bulls with the continuation lower. I don't like the short side because there's no finishing pattern to the upside. The only other thing that would be playing out here is a larger sideways consolidation, maybe another drop down as part of a larger pullback from last week's high, but I don't see a good setup either way if we take out this morning's low. It would have me on the sidelines waiting for clarity.

Keene Little : 9/24/2007 1:16:49 PM

We're there--it's time to buy with a stop at or just below today's low.

Jeff Bailey : 9/24/2007 1:15:05 PM

01:00 Internals found at this Link

Jeff Bailey : 9/24/2007 1:04:02 PM

01:00 Market Watch found at this Link

Keene Little : 9/24/2007 1:03:13 PM

SPX is working its way slowly down towards 1525. I still like the setup for a long play there. Keep your stop no more than about 3 points away which is very close to this morning's low.

Jane Fox : 9/24/2007 12:28:34 PM

I would be very hesistant taking a position in eiher direction today.

Keene Little : 9/24/2007 12:20:55 PM

Two equal legs down in this morning's pullback for SPX is at 1525 and close to a 62% retracement of this morning's rally. Watch for support near that level for a buying opportunity. Stops on new long trades need to be at a new daily low.

Keene Little : 9/24/2007 12:19:04 PM

I noticed today that Decliners were leading Advancers for the first hour on the Nasdaq and now just at break even, yet the market is sprinting higher. If you have time, could you comment? Is this an indication of a false breakout? Thanks.

This is what I was referring to when I said we should see a push higher accompanied by negative divergences--weaker internal market breadth which of course includes the a-d line. Sometimes you have to be careful though on the Monday following opex since there may be some activity that's related to establishing new options positions that are not necessarily reflective of the day's activities/news.

Keene Little : 9/24/2007 12:13:33 PM

The short term bullish pattern that we have since last Thursday's low calls for a strong rally out of the current consolidation so be looking to buy the current pullback. Just keep your stop relatively tight but be willing to try it a couple of times. Keep an eye on the 38%-62% retracement of this morning's rally for the potential support zone.

Jane Fox : 9/24/2007 11:47:41 AM

IF the AD line were stronger I would say this consolidation at daily highs is almost a guarantee we will see higher highs but I will not be putting money on the line until I see more strength in this internal.

Jane Fox : 9/24/2007 11:35:46 AM

BOSTON (MarketWatch) -- The housing market will again be in focus this week as investors brace for expected reports on August new- and existing-home sales, while two of the nation's largest home builders are slated to report financial results that will likely include quarterly losses and write-downs.

Keene Little : 9/24/2007 11:30:50 AM

This push higher could be the last one (watch for bearish divergence against the high around 10:30) and now we should get a little larger (in time and price) consolidation/pullback before proceeding higher again.

Jeff Bailey : 9/24/2007 11:15:54 AM

11:00 Internals found at this Link

Keene Little : 9/24/2007 11:14:47 AM

Small caps are clearly not getting the loving today. The RUT is having a hard time getting off the mat this morning.

Jeff Bailey : 9/24/2007 11:04:35 AM

11:00 Market Watch found at this Link

Jane Fox : 9/24/2007 11:00:41 AM

NDX is marching to its own drummer today. Link

Jane Fox : 9/24/2007 10:59:39 AM

The internals are bullish but certainly not overly so and you must always keep in mind the AD line is still sitting at -2.00, not a number that instills a great of bullishness in me. Link

Keene Little : 9/24/2007 10:58:17 AM

Small time frame stuff here but we should get another push higher before getting a slightly larger pullback. If we get another push higher after this pullback (which would give us a small 5-wave move up from this morning's low) it would be a good time to take some profits off the table and wait for a pullback to reenter.

The key level moves up from Thursday's low to this morning's low now. So if you're looking for this to be a slightly longer term trade on the long side then keep your stop at this morning's low.

Jane Fox : 9/24/2007 10:55:52 AM

Crude made a double top at 82.30 and I think it will retrace back to at least the 50% retracement level at 75.50 before it starts its next leg up. However, I think the better spot from which to springboard is $74.00. Link

Jane Fox : 9/24/2007 10:47:08 AM

The SPX jtHMA charts are giving the go - ahead to put your longer term money back to work because the weekly has now turned green. Link

Jeff Bailey : 9/24/2007 10:45:45 AM

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

I'm experiencing some problems with my graphics card.

Jane Fox : 9/24/2007 10:45:04 AM

WASHINGTON (MarketWatch) -- A recent downtrend in inflation gave the Federal Reserve "some wiggle room" to cut its overnight target interest rate by half a percentage point, the president of the Federal Reserve Bank of Dallas said Monday.

Dallas Fed chief Richard Fisher said that holding rates steady at the central bank's Sept. 18 policy meeting would have risked a slowdown for the nation's economy. Fisher currently doesn't have a vote on the Federal Open Market Committee but will next year.

"If we had maintained the anti-inflationary course we had been following for more than 14 months by holding the federal funds rate at 5.25%, I believe we would have risked oversteering our course and potentially run afoul of the shoals of unacceptably slow economic growth," he commented.

Jane Fox : 9/24/2007 10:44:15 AM

US$ falls to new yearly lows. Link

Jane Fox : 9/24/2007 10:42:17 AM

NDX breaks to new yearly highs. I didn't think the bulls had it in them today. Link

Keene Little : 9/24/2007 10:31:20 AM

In the wave counts that I have on the 60-min charts this should be the 5th wave in the move up from Sept 10th. As such it should also be weaker in market breadth so that's what I'll be watching for to help confirm it's a 5th wave. For now though there's some good upside potential for this trade.

Jeff Bailey : 9/24/2007 10:31:13 AM

NASDAQ Telecom Index (IXTCX) 283.48 +0.63% ... That's a new 52-weeker.

Jeff Bailey : 9/24/2007 10:29:48 AM

DELL TO SELL PCS THROUGH GOME STORES

DJ- Dell says that it will start selling its PCs and notebooks in China through the country's largest electronics retailer, GOME Group. GOME shares fall 9.5% following a share placement by chairman and controlling shareholder last week.

DELL $28.17 +1.47% ...

Jane Fox : 9/24/2007 10:29:01 AM

AD volume is making new daily highs but the AD ratio is not - yet. VIX is falling but not yet to new daily lows. DAX just tagged its daily high but was not able to break it. USDJPY is climbing but not yet to new daily highs (based on a 9:30 open). Bulls are getting stronger but until the AD line gets higher than its paltry +5 the bulls do not have control - yet.

Keene Little : 9/24/2007 10:29:00 AM

Nice little short-covering spike higher.

Jeff Bailey : 9/24/2007 10:27:21 AM

CHICAGO FED INDEX NEGATIVE IN AUGUST

DJ- U.S. economic growth trends below average in August and there is little inflationary pressure over the coming year, according to data released by the Federal Reserve Bank of Chicago.

Jeff Bailey : 9/24/2007 10:24:45 AM

Coca Cola (KO) $57.00 +0.79% ... That's a new 52-weeker. #13 heaviest weighted Dow Industrials component.

Jane Fox : 9/24/2007 10:24:17 AM

The AD line got to a low of -489 but has recovered a bit and is now at -272. WE will need the AD line a lot higher than this if the DOW and NDX are going to take a run at yearly highs. Looks like that may not happen today.

Keene Little : 9/24/2007 10:22:13 AM

Now that we're getting a bounce, if you bought the dip then I'd raise my stop to a new daily low. If it heads lower again it could start to accelerate lower. I wouldn't be anxious to jump on it with a short play yet because it might only give us a minor new before a bigger bounce. Price action is choppy which makes the short term pattern a bit of a mess.

Jeff Bailey : 9/24/2007 10:23:31 AM

YAMANA, MERIDIAN GOLD AGREE TO $3.6B MERGER

DJ- Yamana Gold suceeds in its effort to acquire Meridian Gold, with both sides agreeing to a $3.6 billion cash-and-stock deal that improves the boosted offer Yamana made Thursday. Cash portion of deal is now $7 per Meridian share, up from $6.50.

AUY $12.32 -2.29% ...

MDG $34.21 -0.17% ...

Jeff Bailey : 9/24/2007 10:19:32 AM

Sonus's Stock Tumbles On Failed Trial Of Cancer Drug ... Reuters Story Link

SNUS $0.74 -82.98% ...

SGP $32.03 -0.68% ...

BMY $29.00 (unch) ...

Jeff Bailey : 9/24/2007 10:15:14 AM

BROKERAGES MAKE HAY FROM CREDIT WOES

DJ- Thanks to a relatively new accounting rule, big brokerages last quarter booked hundreds of millions of dollars in gains based on worsening perceptions of their own creditworthiness. The liability benefit does, however, have a flip side, writes Jed Horowitz.

Jeff Bailey : 9/24/2007 10:13:49 AM

MERRILL CUTS WELLS FARGO, KEYCORP, REGIONS FINANCIAL

DJ- Merrill Lynch downgrades Wells Fargo to neutral from buy and KeyCorp and Regions Financial to sell from neutral, citing their recent stock performance and rising credit losses amid the housing downturn and credit crunch.

WFC $36.00 -0.66

KEY $33.25 -1.33%

RF $30.16 -1.14% ...

Jeff Bailey : 9/24/2007 10:10:37 AM

EUROPEAN M&A SETS RECORD DESPITE TURMOIL

DJ- European mergers and acquisitions activity hits $1.8 trillion in the first nine months of the year, surpassing last year's record, despite a 3Q slump in private equity-backed deals, the Financial News reports.

Jeff Bailey : 9/24/2007 10:10:01 AM

GSE PORTFOLIO CAPS MAY BE LIFTED IN FEBRUARY

DJ- James Lockhart, the top regulator for Fannie Mae and Freddie Mac, says that the portfolio limits on the mortgage giants could be lifted in February as the companies prepare to file timely and audited financial statements.

FNM $62.22 -0.79% ...

FRE $59.90 -0.74% ...

Jeff Bailey : 9/24/2007 10:08:38 AM

DEUTSCHE BANK SHARES FALL ON WRITEDOWN REPORT

DJ- Bank's shares fall on report from Reuters that the bank may have to write-down a $40.96 billion loan portfolio by $2.4 billion. Deutsche Bank declines to comment, but the write-down would amount to almost 6% of its total pipeline of leveraged loans promised to clients.

DB $125.98 -2.55% ...

Keene Little : 9/24/2007 10:06:57 AM

NQ has been a little whippy this morning. You're getting whacked around if you're trading that one this morning.

Jeff Bailey : 9/24/2007 10:02:54 AM

10:00 Market Watch found at this Link

Keene Little : 9/24/2007 9:59:21 AM

SPX is getting hurt this morning by the banks and brokers, each down a little more than 1%. Home builders are also down. It needs to turn around here otherwise last Thursday's low could be next.

Keene Little : 9/24/2007 9:54:03 AM

SPX is coming down into its potential support zone and is a good place to try a long play.

Jane Fox : 9/24/2007 9:47:40 AM

AD line is a very neutral +22. Neither the bulls nor the bears have ball at this point. It is just rolling around the field as the bulls and bears duke it out.

Jane Fox : 9/24/2007 9:45:44 AM

I was just talking to Linda and I would like to remind you all that she will not be posting today and tomorrow.

Keene Little : 9/24/2007 9:41:19 AM

If we do get a quick dip this morning (SPX giving us one) keep an eye on the SPX 1522-1523 area for support (two equal legs down from Friday's high and 62% retracement of the rally off Thursday's low).

Jane Fox : 9/24/2007 9:29:04 AM

NDX's yearly highs are at 2060 and Friday's high was 2054 so this market could easily break its yearly highs today as well. I'm not saying it will but it certainly could. The overnight futures suggest the bulls will have the ball at the open but it remains to be seen how far they can run with it. Link

Jeff Bailey : 9/24/2007 9:27:27 AM

Weekly/Monthly Index Pivot Matrix found at this Link

Jane Fox : 9/24/2007 9:26:18 AM

The DOW's daily chart is telling me it could very easily break its September 19th swing high today and that yearly highs are within reach this week. Heck yearly highs are within reach today if the bulls get the ball and start running with it. Link

Keene Little : 9/24/2007 9:25:54 AM

Equity futures made a nice steady climb higher during our overnight session so we've got a small gap up facing us this morning. Closing the gap is about as negative as it should get if we've got more rally ahead of us. There are still unfilled gaps from Friday but the bullish case needs those gaps to remain unfilled until we get the new highs that I showed on the charts.

Jane Fox : 9/24/2007 9:23:59 AM

I suspected SPX would retrace to at least 1500 before it took off on its next leg up to retest yearly highs. The question now is will it break the swing high at 1538 and just forget about that retracement. The price action on Friday didn't give us much to work with when trying to answer that question. Link

Jane Fox : 9/24/2007 9:09:00 AM

The overnight session was a series of higher highs and lows telling you the trend is up. Notice the Russell 2000 futures are a lot weaker than its large cap brethren but , of course, you have to consider the Russell sold off a lot heavier than the others late in the afternoon on Friday. Link

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