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Keene Little : 9/27/2007 1:13:45 AM

Thursday's pivot tables: Link and Link

It's possible we saw the high for the rally from Sept 10 today but it takes a break below the lows on Monday Sept 17th before the bears can claim a victory. In the meantime expect more chop, higher prices, lower prices or anything in between. I say that somewhat facetiously but in fact that's what the market has been giving us and trading short term (day trade) moves is about the only thing I can suggest at the moment. This too shall pass but for the moment stay flat or trade fast.
DOW: Link
SPX: Link
NDX: Link
RUT: Link

OI Technical Staff : 9/26/2007 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

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Jane Fox : 9/26/2007 4:13:05 PM

Economic Reports for tomorrow include.

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

8:30a.m. 2Q GDP, Final. Expected: +3.8%. Previous: +4.0%. .

10:00a.m. August New Home Sales. Expected: -5.2%. Previous: +2.8%. .

10:00a.m. August Help-Wanted Index. Previous: 25. .

11:00a.m. Sep Kansas City Fed Mfg Index . Previous: 15. .

Keene Little : 9/26/2007 3:45:15 PM

NDX came close to breaking the 2080 level before but launched off that level. It remains a key level for the bulls to hold.

Linda Piazza : 9/26/2007 3:25:32 PM

Knowing about the $49.000 billion in repos maturing tomorrow, I'm a little leery about what to believe might happen, so I'm also scanning other sources to see what could change the tenor overnight. I see some potentially important economic events in Europe tonight--the UK September Nationwide House Prices, the E-13 M3 Monday Supply and Germany's September Unemployment Rate, but I don't see anything scheduled in Japan that might give some warning of a big move in the USDJPY. The BBA LIBOR rate has dropped enough that I'm reading that banks likely shunned the Bank of England's auction today because they could probably find funds elsewhere for more beneficial terms, hinting that liquidity problems were easing in the U.K., at least. I don't find anything that points me one direction or another as to what might happen overnight and headed into tomorrow morning, so I'm left with that uneasiness about what the Fed will do tomorrow about those maturing repos. I just don't know.

Keene Little : 9/26/2007 3:21:40 PM

Nothing like a little bear fuel to shoot the market higher. It's a neat trick that I'll have to try some day when I get my bazillion bucks to move the market like that.

Linda Piazza : 9/26/2007 3:13:15 PM

Here goes the SPX and RUT, pushing higher toward their day's highs again. Bulls want to see the USDJPY continue to bounce back before they give an afternoon bounce too much credence. The USDJPY is at 115.46 as I type. Bulls want to see a 15-minute close at or near this level, but should then be aware of potential resistance near 115.57 and stronger at 115.66-115.75.

Tab Gilles : 9/26/2007 2:26:34 PM

Talk about parabolic! Link

What took Google 3 years to move, JRJC did in 30 days. Link

Keene Little : 9/26/2007 2:20:50 PM

I'm toying with a couple of ideas for what could be playing out here. Particularly if NDX drops back down below 2080, which would be a sell signal, as mentioned in my earlier post (9:52), I'm trying to figure out what bearish pattern the others could be on (vs. my expectation for a continuation higher).

Using the DOW's 60-min chart I show two bearish possibilities, one short term and the other longer term. Again, this is more of an effort to tie the broader market to a potential sell signal from NDX (which hasn't happened yet): Link

It's possible the DOW (and SPX) topped last week and we've been in a slow start to the next big leg down (dark red). If true then a quick drop to around 13500, the uptrend line from August 16th, should be next. But the corrective wave structure of the moves since last week has me thinking we might be seeing a larger consolidation pattern (pink) in an expanding triangle.

This more bullish interpretation says we'll get another leg down within that triangle pattern (that stays above 13600) but then a strong rally out of it. But any push above last week's high negates this and says we're on a more immediate bullish path (although I think it would be short-lived).

Tab Gilles : 9/26/2007 2:18:52 PM

Highly active Chinese stocks today...

GSOL,JRJC,CBAK,KUN,CDS,SHA-WT, XFML

Tab Gilles : 9/26/2007 2:14:59 PM

Weekly EIA Report Link

Linda Piazza : 9/26/2007 2:08:40 PM

Earlier today, I warned that bulls, particularly RUT bulls, would want to have profit-protecting plans as the USDJPY tested Keltner resistance. If equity performance was still tied to the performance of this currency pair, gains could be capped or pullbacks could ensue if the USDJPY fell back from that test. It did, and they did. The USDJPY has now broken out of the rising channel in which it had been moving since yesterday morning, ending that short-term rally tenor. Let's see what happens next, but I would now expect likely resistance on any USDJPY push up toward 115.60-115.70, if it even gets that far. Nearest resistance is at 115.44-115.49 with the USDJPY at 115.39 as I type.

Jane Fox : 9/26/2007 1:51:16 PM

VIX breaking to new daily highs and that should worry the bulls a great deal.

Keene Little : 9/26/2007 1:50:58 PM

SPX came down and tapped its uptrend line so now we'll see if it holds. Could this be a spike down to suck in some shorts and provide some needed fuel for another rally attempt? We'll soon find out but it's worth an attempt on the long side based on trend line support, tight stop (and even reverse on a break down).

Jane Fox : 9/26/2007 1:50:28 PM

And here is how they are trading in relation to overnight ranges. Link

Jane Fox : 9/26/2007 1:49:40 PM

Here is how the markets are trading in relation to their PDRs. Link

Jane Fox : 9/26/2007 1:43:31 PM

Internals have turned almost bearish but not quite. Don't forget the AD line is +550 and that is neutral so it is not yet supporting the bearishness. Very hard day to read, Link

Keene Little : 9/26/2007 1:42:11 PM

In fact it's the uptrend line from Sept 10th that is near SPX 1520 so that will need to hold for the bullish case.

Keene Little : 9/26/2007 1:38:57 PM

Nice little sell program hit there--took 'em all down. I'm watching the uptrend line on SPX from yesterday, currently near 1520, which the bulls don't want to see break.

Jane Fox : 9/26/2007 1:22:25 PM

I suspected today would be bullish but so far it has only been painful. Link

Jane Fox : 9/26/2007 1:21:37 PM

Here goes Crude through its support. I don't think it will be a straight line down to $74.00 but I do think it will get there. Link

Linda Piazza : 9/26/2007 12:49:13 PM

The SPX tests its 15-minute 9-ema now, with the SPX at 1525.17. Bulls would prefer to see the SPX close this 15-minute period above that level. Otherwise, it's vulnerable to a move down toward 1523.45 or perhaps even 1520.95.

Keene Little : 9/26/2007 12:46:46 PM

It still looks like we're bull flagging here so another leg up continues to be my expectation. After another leg up, assuming we get it, we could then get a slightly larger pullback to correct the rally off yesterday's low so if it presses higher again watch for negative divergences to then try a short play for just a pullback ino this afternoon. The only fly in the ointment for bulls (for another leg up from thi spullback) is the banks--they look more bearish so they could be a drag on the market today.

Linda Piazza : 9/26/2007 12:15:57 PM

Potential SPX Keltner support on the 15-minute chart lies at the current 1525.69 level down to the 9-ema at 1524.60. A failure to hold the 9-ema on 15-minute closes suggests that 1520.28-1521.70 might be tested. That wouldn't be particularly bearish, as long as it held and prompted a bounce.

Linda Piazza : 9/26/2007 11:47:49 AM

No significant pullback yet on the USDJPY as it challenges Keltner resistance at 115.70 on 15-minute closes, with rising channel resistance now nearing 116.00. The USDJPY is at 115.66 as I type. Equity bulls would prefer for it to break out above resistance, but as long as 9-ema support at 115.57 is maintained on 15-minute closes, the bullish tenor is maintained.

Keene Little : 9/26/2007 11:40:43 AM

After the blast higher it's looking like another corrective pullback so I'd look to buy this pullback.

Jane Fox : 9/26/2007 11:23:05 AM

VIX is making new daily lows and AD volume new daily highs and that is all I need to get me long. I see the AD ratio however is not making new daily highs so it is not a slam dunk. And the USDJPY and DAX are not in sync. Heh you can't have everything can you?

Jane Fox : 9/26/2007 11:21:58 AM

Please be advised that the AMEX is experiencing technical issues. Equities and ETFs are down floor wide. They are working to resolve this issue as quickly as possible.

Linda Piazza : 9/26/2007 11:15:39 AM

The USDJPY is again jammed up against Keltner resistance at about 115.70 with rising channel resistance above that, now at about 115.90. RUT bulls especially want to see the USDJPY break out above that Keltner resistance or at least maintain the 9-ema support on 15-minute closes, with that now at 115.54. The USDJPY is now at 115.68. Remember that earlier I cautioned that RUT bulls especially want to have profit-protecting plans in place for this USDJPY test of resistance . . . just in case those plans are needed.

Keene Little : 9/26/2007 11:14:47 AM

Bulls keep it alive by pushing back to new highs today so the long side remains the preferred side. The next goal is for SPX and the DOW to take out last Friday's highs. The DOW is very close now to doing that.

Linda Piazza : 9/26/2007 11:12:27 AM

The SPX is again challenging the Keltner resistance that pushed it back earlier today. That resistance is now at about 1525.25, so the SPX needs to close this 15-minute period above that. The SPX is at 1526.93 as I type.

Jane Fox : 9/26/2007 10:55:37 AM

If anyone wants to buy a house that will not fall in value just come to my neck of the woods. Houses here did not see the huge jump but just a steady 2-3% increase each year and thus are still very affordable and they are still increasing in value albeit at a slower rate. I mention this just to let you all know there are pockets around the country that have not been affected by the mortgage debacle.

Keene Little : 9/26/2007 10:49:07 AM

Another update from my realtor friend (thanks Denise):

Well #2 lender rejected my re-fi..due to verbage Fanny Mae required the appraiser to put in the appraisal..which "scared" the underwriter! The mulit-million dollar neighborhoods here are not experiencing devaluation..so I guess those guys are good to lend to..but not the lower (average) price point..and they say it is NOT discrimination.

Not all appraisers are putting this verbage in as required I am finding out now.....This is so stupid..they tell them they must put it in..and then they use it as the reason to deny my loan. The verbage is that the neighborhood has had a decline in values in the past 12 months--hellooooo? That is true in most of our Valley and the Nation too! And the second part is that there are too many houses on the mkt in the area too.. second hellooo???

Are lenders no longer in the lending business? Credit worthiness and loan to value thrown out the window?

Yes Denise, this is exactly what happens when fear replaces greed. Credit contraction (collapse) is what follows a credit bubble. Logic goes out the window on the downside just as logic was not part of the insanity when no-doc loans were being made.

Jane Fox : 9/26/2007 10:48:24 AM

So far it has been a very difficult day to read. First thing this morning the internals were nicely bullish but within a NY minute they had turned and now there is totally no clear direction. If you are daytrading the American indexes I think it is best to step aside.

Linda Piazza : 9/26/2007 10:43:08 AM

The SPX drops toward its 15-minute 9-ema, currently at 1520.09. Bulls would like to see this maintained as support on 15-minute closes. This would suggest that it would go on hammering at the resistance that it hasn't been able to break yet, now at 1525.09 on 15-minute closes.

Linda Piazza : 9/26/2007 10:41:14 AM

USDJPY fell back from its test of Keltner resistance and the RUT drops back, too. Neither pullback is serious yet, but the RUT is threatening to erase its move over nearest resistance on its 15-minute chart. Bulls would rather see it close this 15-minute period above about 808.82. It's at 808.26 as I type.

Keene Little : 9/26/2007 10:36:11 AM

As opposed to the short term bullish wave count that I showed on the SPX last night ( Link ), even with a quick dip first, it's possible we've already seen the high and that would have a wave count as shown here: Link

The move down from last week would be a setup for a stronger decline in a 3rd of a 3rd wave down so that's the risk for bulls if Friday's high stands. In fact at this point I'd say the bulls need to push SPX back above this morning's high to suggest this more bearish setup is not the correct wave count.

Jane Fox : 9/26/2007 10:34:51 AM

WASHINGTON (MarketWatch) -- Securities regulators are investigating whether credit-rating agencies such as Moody's Corp. and McGraw-Hill Cos. unit Standard & Poor's followed standard procedures for rating mortgage-backed securities, Securities and Exchange Commission Chairman Christopher Cox told the Senate Banking Committee Wednesday.

The agencies have been criticized for their ratings of the securities, but Cox said that the SEC has hasn't come to any conclusions about the agencies' explanations for unexpected losses on those assets.

"We have as yet formed no firm views on any of the reasons put forth by the credit-rating agencies, but we are carefully looking into each of them in the context of an examination the commission has begun" regarding credit-rating agencies active in residential mortgage-backed securities, he remarked

Linda Piazza : 9/26/2007 10:33:08 AM

The news about Northern Rock (either fourth largest or fifth largest bank in England, according to differing reports) was not all negative. The bank did away with its dividend last night, the negative news, but it also reported that it was in takeover talks. One bidder, however, was convicted in 2005 of some unspecified (in THE LONDON TIMES article, anyway) crime, and the bank appeared hopeful that another deal may work out. As some might remember, many of Northern Rock's customers lined up on September 14 to withdraw their life savings, alarmed by news that the bank had to be bailed out of trouble.

Linda Piazza : 9/26/2007 10:26:30 AM

Keene, in reference to your 10:06:57 post, writers on THE LONDON TIMES online agree with your supposition that banks are hoarding cash. CNBC Europe guests worry about that happening, too. Although we don't hear it talked about much in our press, there's lots of discussion about whether the Bank of England's head was right to cave in and inject funds last week or whether he should have held to a moral high ground. I caught another reference to trouble with Northern Rock this morning, but haven't yet had time to research what that trouble was.

Linda Piazza : 9/26/2007 10:23:27 AM

Although the SPX hasn't been able to break above next 15-minute Keltner resistance, the RUT has. That's at 808.875 for the RUT, on 15-minute closes, and the RUT just closed a 15-minute period at 810.16. It's dropped back to 809.78 as I type, so the breakout level is going to be retested rather soon, it appears, to see if it holds as support. The RUT most definitely has been following the trajectory of the USDJPY. At one time, it seemed the most sensitive to the movements in the USDJPY, and perhaps some of those yen carry trades were being put to work buying U.S. small caps. If the RUT is again showing sensitivity to the USDJPY, this is a particularly important point. The USDJPY is reaching toward that resistance zone I mentioned earlier. Both rising trendline resistance and the Keltner resistance have moved higher, and that zone is now at 155.69-115.81, with the USDJPY now at 115.65. What I'm saying is that, without a USDJPY breakout above resistance or at least sideways trend near the day's high, it's possible--not guaranteed--that RUT gains could soon be capped. A deep pullback in the USDJPY could warn us to prepare for a possible--not a guaranteed--pullback in the RUT.

Jane Fox : 9/26/2007 10:17:13 AM

The Russell 2000 is playing catch up today. Link

Keene Little : 9/26/2007 10:06:57 AM

Linda, your repo data shows what the Fed is up to on a daily basis. It's interesting to see the calculated M3 chart showing money supply has been shrinking rapidly right after the Fed did a quick injection last month (the rate of change is dropping). Whether the Fed is draining liquidity or the market is soaking it up faster than it's being created is hard to tell. I suspect the latter as banks hoard cash this time instead of lending it out (and thereby creating a credit contraction). M3 as of last Friday: Link

Linda Piazza : 9/26/2007 10:03:59 AM

Bulls want to see the SPX push above Keltner resistance at 1525.25 and maintain 15-minute closes above that level.

Linda Piazza : 9/26/2007 10:02:36 AM

So far, the USDJPY is still climbing within that rising channel that I pointed out earlier. Price action on the equities isn't so hot, but the SPX does maintain Keltner support at 1520.90 and then near 1517.14-1518.00, all on a 15-minute close. As long as it's doing that, it's at least remaining in the bullish upper half of the Keltner channels. If the USDJPY has any correlation at all with prices any longer, that gives a bullish cast to the day, but I'd certainly be careful with any bullish profits as the USDJPY approached 115.67-115.80, as Keltner charts and the rising channel show potential resistance in that zone. It's at 115.51 as I type. I'm not sure how much correlation it has any longer, or if it's perhaps just relegated to another indicator we watch now and then.

Jane Fox : 9/26/2007 9:58:00 AM

USDJPY to new daily highs (based on a 9:30 open).

Linda Piazza : 9/26/2007 9:57:27 AM

I hope the Fed is ready to pony up lots of money tomorrow. If I'm calculating correctly, $49.000 billion in repos mature tomorrow. Thursdays tend to have a lot of repos maturing anyway, but this is more than I've seen in the limited period I've been watching them.

Linda Piazza : 9/26/2007 9:53:38 AM

The Fed has announced a big repo in the amount of $15.250 billion. As far as I'm able to determine, that's all a net add.

Keene Little : 9/26/2007 9:52:10 AM

Now that NDX has pushed above the top of a potential ascending wedge pattern, for a possible completion of its wave count, tech bulls do Not want to see NDX drop back below 2080 now and stay there. That would be a throw-over finish to this pattern and it would be a sell signal. Link

Jane Fox : 9/26/2007 9:51:47 AM

OK all bullish bets are off the table now.

Jane Fox : 9/26/2007 9:50:39 AM

AD volume is climbing which is always bullish but the AD ratio is making new daily highs so that means the bullish is burning off. I see the USDJPY pair is now to new daily highs (bullish) and we are back to chop again. I really thought we had some clear direction this morning.

Keene Little : 9/26/2007 9:48:27 AM

As bullish as things look this morning, the reason I'm watching carefully where the bounce off yesterday's low has two equal legs up is because a 3-wave bounce that fails at a lower low against Friday's high could be setting up a very bearish 1-2, 1-2 wave count to the downside. If true then get ready for a red flushie. In other words what has looked like a bullish consolidation over the past week might in fact be a stealthy start to the next big decline. Continue to trade carefully and don't let this market move against you past your normal stops. Stay disciplined in money management.

Linda Piazza : 9/26/2007 9:48:54 AM

The SPX's first push this morning hit Keltner resistance at 1525.47 on 15-minute closes and dropped back from that level. It needs to maintain 15-minute closes above 1517.05-1517.75 to maintain its position in the bullish half of this Keltner channel. Here's where bulls need to hold on to keep that former SPX pattern in play. As I said earlier, just because bulls are attempting to reestablish that old pattern doesn't mean that they'll be successful. It's the same thing as watching an inverse H&S and seeing if it can confirm and reach its ultimate upside target. (This is an example of another type of bullish formation, not one that I'm seeing currently.) The formation of the inverse H&S would show bullish intent, but only the confirmation and reaching of the target would show that bulls really were in charge.

Jane Fox : 9/26/2007 9:44:46 AM

But remember the AD line is a bullish +1179 so don't get too bearish.

Jane Fox : 9/26/2007 9:43:45 AM

And just like that the internals turn around and are not bullish anymore.

Keene Little : 9/26/2007 9:42:37 AM

Two equal legs up for SPX off yesterday morning's low is at 1525.11 which matches its downtrend line from last week's high. Watch for price to potentially stall here.

Jane Fox : 9/26/2007 9:40:51 AM

All internals are giving you the go-ahead for long positions.

Linda Piazza : 9/26/2007 9:41:13 AM

Is the SPX attempting to reestablishing its old pattern? That pattern during the rally period was to gain strongly, trade sideways to sideways-up for a few days, dip suddenly down to the 10-sma, spring up from it and repeat the whole process. Yesterday, the 10-sma test occurred. Today the SPX gains. Just because it's attempting (or rather, investors are attempting) to reestablish that old pattern doesn't mean it will be successful in doing so, but bears, at least, should remain aware of what's happening, recognizing this potential pattern. Don't hang on, hoping, beyond your pre-established get-out point.

Jane Fox : 9/26/2007 9:35:14 AM

AD line now +1131

Jane Fox : 9/26/2007 9:35:03 AM

AD line is a bullish +896 but remember of late the AD line has needed to be over +1000 to be outright bullish.

Linda Piazza : 9/26/2007 9:33:58 AM

I've been warning of a time when the USDJPY might not be as useful a barometer as it has been in the past. We might get a look today at whether that's true. Since yesterday morning, this pair has been establishing a rising channel. Will equity prices? I've been afraid that the Fed's action would distort the helpfulness of this barometer. Here's a chart: Link

Jane Fox : 9/26/2007 9:29:31 AM

I expected Crude to retrace from its double top and thought the August 1st swing high would give it some support. However, I fully expect this support to break and that crude will retreat back to at least $74.00/bl. Link

Keene Little : 9/26/2007 9:27:44 AM

With the gap up in equities this morning it's looking like the consolidation the past week could be finished and now we'll get the next leg up. Techs are still very strong, with NQ up a higher percentage this morning, so getting just a minor new high and then rolling over does not look like it will happen. Looks like we could be in rally mode today. The only caution is that SPX will open up near its downtrend line from last week's high so be careful at the open for an immediate pullback.

Jane Fox : 9/26/2007 9:26:49 AM

This was one really sweet rally but I think it needs to take a rest and a retracement back to $700.00 is not out of the question. Link

Jane Fox : 9/26/2007 9:24:38 AM

US$ up crude up and poor 'ol Gold doesn't know what to do. Lately we have had the perfect environment for us Goldbugs, crude rallying the US$ down and Gold responded by reaching multiyear highs.

The DAX is supporting the bullishness in it American counterparts. Link

Jane Fox : 9/26/2007 9:18:44 AM

Welcome back Linda.

Linda Piazza : 9/26/2007 9:16:33 AM

I don't see any repos maturing today. That means that any repos announced today would result in a net add for the day.

Jane Fox : 9/26/2007 9:12:28 AM

LONDON (MarketWatch) -- U.S. stock futures were solidly higher Wednesday, with General Motors in focus after it reached a tentative agreement with the United Auto Workers to end a strike, while Chevron Corp. revealed plans for a $15 billion share buyback.

Jane Fox : 9/26/2007 9:11:54 AM

CHICAGO (MarketWatch) -- The volume of mortgage loan applications filed last week decreased a seasonally adjusted 2.8%, while interest rates on fixed-rate home loans increased, the Mortgage Bankers Association reported on Wednesday.

This week-to-week decrease stemmed entirely from a 7.3% drop in applications for mortgages to purchase homes, according to the Washington-based MBA. Applications to refinance an existing mortgage were up 3.3% in the week ended Sept. 21, compared with the previous week.

Also on a seasonally adjusted basis, the volume of overall application was up 15.4% from the same week in 2006, according to the MBA's weekly survey.

The four-week moving average of application filings for all loans was up 1.5%.

Jane Fox : 9/26/2007 9:10:58 AM

WASHINGTON (MarketWatch) -- Businesses reduced their orders for capital equipment from U.S. factories in August, another sign that capital spending and exports may not be strong enough to offset weakness in other areas of the economy.

Orders for durable goods plunged 4.9% last month after a 6.1% gain in July, the Commerce Department reported Wednesday, as bookings for new aircraft see-sawed lower. It was the biggest monthly decline in orders for big-ticket items since January.

Excluding an 11.2% drop in transportation goods, new orders fell 1.8% in August after chalking up a 3.4% gain in July

Jane Fox : 9/26/2007 9:09:13 AM

Late yesterday afternoon I posted that I thought today would be bullish based on the candles that were forming on the daily charts. So far that is true. Link

Jeff Bailey : 9/26/2007 8:53:59 AM

I will be away from the MM for the entire day.

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