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OI Technical Staff : 10/5/2007 9:59:59 PM

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Jeff Bailey : 10/5/2007 9:59:23 PM

S&P 500 recorded 36 new highs and 2 new lows today.

Russell 2000 recorded 108 new high (most since 131 on 8/08/07) and 11 new lows.

Jeff Bailey : 10/5/2007 9:54:51 PM

Warning! ... If you are not sleeping at night, because the trade is MOVING AGAINST YOU, or you begin to QUESTION that it is, it is most likely that you are OVERLEVERAGED!

Do NOT overleverage!

EVEN if you THINK you're on the RIGHT SIDE of the MARKET.

Are you getting up once, twice, or three times during the night to check and see how the YM,NQ,ES, or ER are trading?

If so, get things UNDER CONTROL!

Jeff Bailey : 10/5/2007 7:19:59 PM

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

TWM stop was $61.00, but got gapped at open. Remaining 1/4 closed at $60.90. When 2,000 stocks prove me wrong, that's enough. No longer an "oversold bounce."

Closed remaining 1/2 position in CDE at target of $3.83.

October's Trade Blotter of CLOSED Trades at this Link

Jeff Bailey : 10/5/2007 6:22:35 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/5/2007 5:52:51 PM

Closing Internals found at this Link

Jeff Bailey : 10/5/2007 5:25:40 PM

NASDAQ Summation Index ($NASI) Link ... -140 chart (-134.55 actual). Needs -60.00 to generate a buy signal.

Jeff Bailey : 10/5/2007 5:23:42 PM

NYSE Summation Index ($NYSI) alert! Link ... Using the same 20-point box scale as I have for years. Today's +260 print (278.13) gets this VERY BROAD measure of advancing/declining issues back on a "buy signal."

Keene Little : 10/5/2007 4:33:38 PM

Using the same wave count on the DOW as the SPX, in the 5th wave (the move up from Sept 28th), wave-c = 62% of wave-a at 14117 (vs. equality for SPX at 1563). Today's high was 14123 so the minimum Fib projection was tagged. Now it's a question whether price rolls over from here, which it's set up to do, or first presses a little higher: Link

The DOW lagged behind SPX today so it's a little tougher to equate these two right now. I had been thinking the DOW could make a Fib projection around 14217 while SPX rang the bell at 1563. Now we're left to wonder if the DOW will push the rest of the market a little higher or if SPX got close enough while the DOW tagged its lower Fib projection. We'll know Monday. Have a great weekend.

Jeff Bailey : 10/5/2007 4:27:53 PM

S&P Banks (BIX.X) 376.71 +0.70% ... "still conviction from computers to sell" above 378.43.

Some humans conceded 368.76 on Tuesday, but they too stand ground at 50% retracement (376.71) of 02/20/07 high close to recent 8/03/07 low close. Probably fewer than there were on Monday, but still a few.

Jeff Bailey : 10/5/2007 4:19:31 PM

Wilshire 5000 (DWC) 15,723.83 +1.10% ... "no conviction from buyers." There's always next week!

Keene Little : 10/5/2007 4:14:18 PM

SPX didn't quite ring the bell at 1563 today and the short term pattern does support the idea that we could see one more press higher on Monday so that's the risk if you're currently short. And if we do get one more high then it'll offer another opportunity to get short slightly higher. But we're there, either today or Monday. Link

Jeff Bailey : 10/5/2007 4:08:40 PM

Baby Berk's (BRB.B) $40,029 +1.48% ...

Jeff Bailey : 10/5/2007 4:07:40 PM

Oh my! ... Berkshire Hathaway (BRK.A) $121,100.00 +1.76% ... new high print at the close!

Jeff Bailey : 10/5/2007 4:05:14 PM

US PROSECUTORS PROBE BEAR HEDGE FUNDS

DJ- Federal prosecutors make a request to brokerage for information related to two mortgage-related hedge funds that collapsed during the summer, costing investors $1.6 billion. Probe is in the early stages and hasn't yet generated subpoenas.

BSC $131.58 +3.11% ...

Linda Piazza : 10/5/2007 4:06:14 PM

Here's how the SPX closed the day. Is this a breakout or not? It closed above the July intraday and closing high, but other channel touches like this have been met with sideways movement or a pullback within the channel: Link A sideways-up movement along the channel fits the "sideways" parameters, but I obviously don't consider this a channel breakout, so it's entirely possible that we'll see that pullback or sideways pattern continue after a day of big gains until we do.

Keene Little : 10/5/2007 4:03:51 PM

The other possibility is that we've seen a quick 1-2, 1-2 wave count to the downside and that would mean a potential gap down and run lower on Monday. NQ is getting a big bounce after the cash market closed and is retesting the highs. It's difficult to say whether that has any meaning for Monday.

Keene Little : 10/5/2007 3:59:39 PM

NDX has a bit of a different pattern but the others look like they might soon be completing a larger degree 5-wave move down from this afternoon's high. If so we should expect a bounce first thing on Monday morning but again it will be an opportunity to short it against today's high. Recognize though that the bounce could make it back up to near today's high and not negate the bearish setup we now have. It must take out the high to negate it. So that's our current risk.

Linda Piazza : 10/5/2007 3:59:35 PM

Do you want to hold over the weekend if you're in a long position? Are you in an October long position? How much is your option price going to suffer from time decay? What if the SPX does its several-day consolidation thing after a big gain? Ask yourself these questions before you hold into the close. (Note: front-month puts are going to decay, too.) You'll need a lot of price movement to counteract any decay of extrinsic value.

Linda Piazza : 10/5/2007 3:57:39 PM

Following a moving average such as the SPX's 10-minute 9-ema higher with your stops is a good technique when you're involved in a short-term momentum play and when you want to be taken out when the mood reverses. It's not rocket science, as they say. Just choose an average from which the prices are bouncing. If you were in a day trade or even longer trade that you intended to close out by the close today, that technique, as I suggested earlier, would have taken you out when the SPX either began closing 10-minute periods below that average or moved a certain distance below it. Decisions are made easier as you let price do the work for you. Right now, the SPX is threatening to break below its breakout level on that 10-minute chart, having some time ago first closed a 10-minute period below the 9-ema. SPX at 1556.19 as I type.

Keene Little : 10/5/2007 3:45:15 PM

Ooo, nice drop (if you're short). Lower stop now to just above that last little bounce and hopefully that will get you to breakeven. Let 'er ride now.

Jeff Bailey : 10/5/2007 3:39:46 PM

Good Gravy! ... BIX 377.73 +0.97% ... last time the BIX.X traded MONTHLY R1 was 8/17/07 and 8/22/07 (MR1 382.78). Buyers NEVER could show the conviction at those closes.

Linda Piazza : 10/5/2007 3:39:21 PM

Nothing big happening, but momentum bulls in short-term plays should note that the SPX's 10-minute 9-ema was resistance on the last 10-minute close. The SPX is retesting it from the underside now, with the current price and the 9-ema both at about 1559.40.

Here's what I think, though. Unless there's a bigger drop, shorts that held on way too long today (not talking about recently entered short positions here but someone going into today with October puts who held on after stops were hit and hoped for a downturn to save them) are going to have to start covering soon.

Keene Little : 10/5/2007 3:38:30 PM

We're getting a little correction of the initial drop but not much to it yet. But this is the bounce that should be shorted. If it can get a little higher so much the better (reduce risk to a new daily high).

Jeff Bailey : 10/5/2007 3:35:14 PM

Wells Fargo (WFC) $37.56 +0.77% ... threatens to close an all-time high ($37.37 from 8/21/07).

Jeff Bailey : 10/5/2007 3:32:56 PM

Citigroup (C) $48.59 +2.01% ... high for the month.

Jeff Bailey : 10/5/2007 3:32:21 PM

Bank of America (BAC) $52.78 +0.72% ... highs of the month.

Linda Piazza : 10/5/2007 3:29:01 PM

The TRAN is now at 5001.43. I was just a few points off where I thought it would temporarily top out, with Keene far closer. Of course, the day is far from over, and who knows how far it could climb into the close if a short-covering rally ensues. Bulls would like to see the TRAN stay above 4990 into the close and really need it to stay above the 200-sma now risen to 4974.

Jeff Bailey : 10/5/2007 3:27:53 PM

Looking for a bank that is down from its 01:50:24 stamp on 10/01/2007. Maybe leg into it further from the short side.

Keene Little : 10/5/2007 3:23:45 PM

Nice little impulsive decline on the 1-min chart. We should get a bounce back up now which will be an opportunity to short against today's high (which is where I've lowered my stop to and will watch carefully for another entry if stopped out).

Linda Piazza : 10/5/2007 3:22:55 PM

The SPX has dropped now to test its 10-minute 9-ema again, slipping just a bit below that average now. All day, it's produced 10-minute closes at or above that average, but it's probably about time for it to retrace all the way toward the next support, now at 1558.08, so if that happened, it wouldn't be a big change. Below that is 1556.47 support on 10-minute closes. A 10-minute close below that would look a bit more troubling for short-term upside momentum. If you've been in a bullish trade all day and it's a short-term trade that you don't intend to carry over the weekend, you might pick a rising moving average that you think has been prompting bounces and begin following it higher with your stops, letting a deeper retrace take you out . . . and then just close your eyes if prices continue higher afterwards. Smile.

Jeff Bailey : 10/5/2007 3:21:04 PM

03:00 Internals found at this Link

Keene Little : 10/5/2007 3:20:42 PM

Breaking down a little. A retest of the uptrend line, say around 1560, would be a good place to try a short. This is all very short term stuff as I try to confirm a top is in.

Keene Little : 10/5/2007 3:18:12 PM

SPX is tagging its uptrend line from this morning (the bottom of its little ascending wedge that I showed on the 10-min chart). It'll be a good test right here (1559.80).

Linda Piazza : 10/5/2007 3:18:24 PM

So, it's as if all the mortgage-backed security stuff never happened? As if financials didn't have to write down huge numbers? Everything is all hunky dory again as if none of that happened?

While I personally am glad the markets are doing well, I confess I'm puzzled. I've been seeing some signs that some problems were easing--the Fed allowing some net drain days when deciding on the repos, a reduction in the liquidity that the Fed has sloshing through the system, some other signs--but that doesn't mean that some companies haven't taken a hit.

This isn't personal. If I'd had to guess, I would have guessed that we needed to retest the summer lows, and I certainly didn't like seeing the low volume on some recent climbs, but in my Wraps over the last couple of weeks, I haven't been proposing anything other than oscillations within rising price channels. My positions aren't hurting, at least not yet. I made money, although not as much as I would have liked because I entered fewer contracts than usual, in September and October both, having already closed out all my October options plays a while ago. I might have to adjust some November bear call spreads if this continues unabated, but I'm not afraid of that. I know how to adjust. No, it's not that I took a heavily bearish stance in my positions and am suffering. I'm just confused, confused.

Jeff Bailey : 10/5/2007 3:17:17 PM

NASDAQ NH alert! Current 218 exceeding the recent 201 new highs from 9/19/07.

Keene Little : 10/5/2007 3:09:12 PM

One thing to keep in mind if trying to get short this afternoon is that these trends are rarely reversed in the afternoon. There might be some profit taking in the last 30 minutes but planning on a hard reversal is not likely. So consider your risk tolerance in carrying a short trade over the weekend--we could see a last gasp pop higher on Monday if the bullish newspapers get Mom and Pop to enter buy orders first thing Monday morning.

Keene Little : 10/5/2007 3:06:24 PM

Jeff, which one is IOW-VZ?

Jeff Bailey : 10/5/2007 3:04:44 PM

03:00 Market Watch found at this Link

Linda Piazza : 10/5/2007 3:00:15 PM

SPX 10-minute 9-ema is now at 1559.14.

Jeff Bailey : 10/5/2007 2:58:16 PM

Keene! Can I interest you in an IOW-VZ for $3.40?

Jeff Bailey : 10/5/2007 2:53:59 PM

Intercontinental Exchange (ICE) $158.00 +2.46% ... X's get the squares on the 3-box reversal back up. This will be BPWALL (will follow with CURRENT Sector Bell Curve) "bull confirmed" as of last night.

Keene Little : 10/5/2007 2:55:27 PM

The BIX rang the bell at 379 and TRAN rang its bell at 5022. Good little ducks lining up so nicely. That gave me the green light to start legging in with a very small short position (so I can accommodate a wider stop) in case this drops earlier than I thought. Once it starts working (assuming it will) I can then build to a full short position. Just stay aware that I'm attempting to catch a top here and that can be risky. But then again, so can every other technique. Mind your money management.

Tab Gilles : 10/5/2007 2:51:51 PM

My Lord...CNBC's Cramer, always the showman...just upped Bear Stearns Google upgrade by $1 to $701!

Jeff Bailey : 10/5/2007 2:50:40 PM

Wilshire 5000 (DWC) 15,746 +1.25% ... Weekly Interval bar chart with some past 52-week highs. Many look "seasonal". Link

SMA's represent 50-day, 150-day and 200-day.

MACD hook'n up above zero.

Tab Gilles : 10/5/2007 2:50:33 PM

Jeff...yes the catalyst was PhelpsDodge...as for SHLD...

Ego battle here with SHLD Eddie Lampert and Ackman, whose Pershing Square Capital Management holds an 11.6% stake in Sears Canada, opposes Lampert's attempt to take over its northern affiliate...believes its worth twice as much.

Just pointing out similarities in charts...SHLD has more upside...I've posted several charts last few days.

Keene Little : 10/5/2007 2:46:42 PM

Come to Poppa...

Keene Little : 10/5/2007 2:42:38 PM

Looking at what should be THE last leg of the rally, I would sell a breakdown from the ascending wedge pattern as shown on this SPX 10-min chart. It's inching its way higher towards ringing the bell at 1563 but a break of wedge could see a relatively quick retracement of it. Link

Jeff Bailey : 10/5/2007 2:34:25 PM

BGC ... recent convertible too Tab! ... To fund recent PhelpsDodge acquisition.

Linda Piazza : 10/5/2007 2:32:43 PM

The SPX's 10-minute 9-ema has now risen to 1558.32. So far, all day the SPX has closed 10-minute periods above or at that moving average. The SPX is now at 1560.21.

Linda Piazza : 10/5/2007 2:31:41 PM

So much for my fitted Fib bracket. The TRAN has moved up to an intraday high of 5023.32, rather than having gains capped somewhere near 5013-5014, as I had thought it might be. The TRAN is now at 5017.71.

Tab Gilles : 10/5/2007 2:36:37 PM

General Cable (BGC)is testing its GAP. But look at this chart... Link

Now look at Sears (SHLD) ...look familiar? Link

Keene Little : 10/5/2007 2:17:06 PM

The TRAN's last leg up within its triangle consolidation pattern would have two equal legs up from Sept 25th at 5022. Watch for a possible top there.

Jeff Bailey : 10/5/2007 1:59:02 PM

Sector Bell Curve Comparison ... From 10/06/2006 to January 2007's option expiration Link

Per long-time subscriber's recent "seasonal" observation.

Linda Piazza : 10/5/2007 1:59:02 PM

The TRAN has pushed back above 5000, at 5005.02 as I type. A fitted Fib bracket tells me that somewhere between here and about 5013.70, the TRAN should top out for the short term, but maybe someone should tell that to TRAN investors. As is obvious, the TRAN can really drive higher when it gets going.

Jeff Bailey : 10/5/2007 1:57:10 PM

Wilshire 5000 Comp. (DWC) alert! 15,731 +1.15% ... new 52-weeker!

Technical bear market ends.

Keene Little : 10/5/2007 1:52:02 PM

Over the past two days I've been showing the SPX 30-min chart with an EW count that I was going to track with you and watch to see if the oscillators would confirm or negate the count. While today's new high has not created a higher high for MACD or RSI, it has climbed sufficiently high enough to have me questioning the count. This is what I had on the chart, updated for today's prices: Link

For those who are trying to learn EW analysis I thought this would be a good exercise to follow and show how and why I'll change the wave count as a way of helping me determine the next move. The lack of bearish divergence against the high on October 1st has me questioning the count. So when I back out and view the rally from the August low as an ending diagonal (ascending wedge) needing a 5-wave move instead of an A-B-C move, then the internal wave count changes. The 5-wave count from Sept 25th does not look correct anymore.

So backing out and looking at the 120-min chart to see the rally from the August low, I've got an ascending wedge (as I've been showing on the daily charts) and as such each of the 5 waves needs to be a 3-wave move. That means the sideways move from Sept 19th to the 28th would have been the 4th wave (as a commonly found a-b-c-d-e pattern in 4th waves) and we've been in the 5th wave since: Link

Since the 5th wave will also be a 3-wave move, I'm looking to see where it would have two equal legs up. Is it just coincidence that it happens to be at 1563.37? This is the same 1563 that I showed on the weekly chart that would give us a 7-point throw-over above the July high as the 7-point throw-under in October 2002 below the July 2002 low (weekly chart: Link ). It continues to offer a great setup for a short play. Then we'll just have to see if it in fact plays out this way.

Linda Piazza : 10/5/2007 1:46:43 PM

The TRAN is now at 4992.62, accelerating its climb during this typical stop-running time of day. Now it needs to hold these higher levels, particularly above the 200-sma at 4973.95, into the close.

Linda Piazza : 10/5/2007 1:44:54 PM

No, momentum remains strong on the SPX and it pushed up rather than dipping to next Keltner support. The 10-minute 9-ema which has provided support on 10-minute closes all day long is now at 1555.78.

Linda Piazza : 10/5/2007 1:41:49 PM

The TRAN is at 4985.92 as I type, above the 200-sma but not yet above a 50% retracement of the summer's steep decline, with that just ahead at about 4990. So far, it's move today has been supportive of the SPX, OEX and Dow gains and it looks as if it's certainly attempting to play catch up.

Jane Fox : 10/5/2007 1:38:33 PM

My new motto.

Jane Fox : 10/5/2007 1:38:24 PM

If you follow the VIX and the AD volume, the money will follow you. Link

Linda Piazza : 10/5/2007 1:37:48 PM

So far, the SPX has maintained 10-minute closes at or above its 10-minute 9-sma, now at 1555.19, but that average is flattening. That might mean that another test of the channel line now at 1553.92 might be needed, but there's no guarantee. Momentum bulls don't want a 10-minute close much below that lower line, but I can only imagine that there will be a push to maintain breakout levels into the close.

Jane Fox : 10/5/2007 1:29:25 PM

I subscribe to Bob Brinker's Markettimer and one of the main reasons I am bullish (other than the charts are bullish as well). Link

Jeff Bailey : 10/5/2007 1:19:35 PM

01:00 Internals found at this Link

Keene Little : 10/5/2007 1:18:34 PM

We've been consolidating in what looks like a bullish setup for another leg up. So far so good.

Jeff Bailey : 10/5/2007 1:04:04 PM

01:00 Market Watch found at this Link

Linda Piazza : 10/5/2007 12:58:13 PM

SPX testing the 10-minute 9-ema. There's nothing magic about this number, but since the SPX bounced from it earlier today, it provides us with a measure of whether the momentum remains just as strong or is ebbing a bit, as it will eventually do. That 9-ema is now at 1554.63 on 10-minute closes. So far, the SPX maintains that support, but it wouldn't be unusual at this point for it to retrace to next support at 1553.81 on 10-minute closes. Momentum bulls would like to see that hold, though.

Jeff Bailey : 10/5/2007 12:52:29 PM

S&P Affirms Seven Home Loan Mortgage Ratings On Three Dealers

Jeff Bailey : 10/5/2007 12:51:42 PM

Monster Worldwide (MNST) $36.11 +0.83% ...

Linda Piazza : 10/5/2007 12:51:37 PM

The SPX's position with regard to an ascending channel on the daily chart: Link

Jeff Bailey : 10/5/2007 12:51:10 PM

Manpower (MAN) $69.11 +3.14% ...

Keene Little : 10/5/2007 12:49:26 PM

Another duck getting in line--the TRAN looks to be putting in the finishing touches to its triangle consolidation pattern: Link The last wave of these patterns, wave-e, will often do a throw-over above the top of the pattern (or a throw-under below the bottom in a bullish consolidation) before collapsing back down into the pattern. The index is bumping into its 200-dma also and any drop back down now will be a sell signal.

Keene Little : 10/5/2007 12:42:17 PM

The ducks are lining up nicely. The bounce in the banking index (BIX) is developing a rounded top appearance over the past few days (each new high is making less progress) and the daily chart shows it's approaching its downtrend line from May and its 100-dma at 379. The high for the BIX today is 377.53 so it's getting close to that potential resistance area. It could press a little higher to its broken uptrend line from October 2002 (near 386) but this too is beginning to look like it's setting up for a big decline (from an EW perspective--a 3rd of a 3rd wave down is next). Link

Linda Piazza : 10/5/2007 12:37:50 PM

In last night's Wrap, I noted that the daily charts looked set up for a 10-sma retest, but that 15-minute intraday charts looked different on many indices. In many cases (not, curiously, on the Dow), they looked as if support were stronger than resistance and as if up might be easier than down on the first trades this morning. Up, we got.

Linda Piazza : 10/5/2007 12:34:29 PM

At 4969.01, the TRAN is right underneath the 200-sma. Note the 50% retracement of the summer decline is just above that, too, at about 4990. The TRAN has come a long way, but now has it's hardest work to do.

Linda Piazza : 10/5/2007 12:22:45 PM

So far, the SPX is maintaining the support that momentum bulls would like to see it maintain, above the 10-minute 9-ema now at 1553.94. Momentum bulls would like to see this maintained on 10-minute closes. Next support on that chart is at 1551.70 and then at 1549.98, with both support lines still rising beneath the SPX. The SPX is at 1555.40 as I type.

I'm pointing out these short-term guides now because the SPX has charged up to and slightly above the July intraday high. In doing so, it's hit the rising channel resistance again off the summer low, so it's in a key spot. Bulls have an easy job: deciding where their stops should be, according to their entries and account-management styles, and then notching those stops higher as the SPX climbs, but do keep account-management in mind as this resistance is tested.

Jeff Bailey : 10/5/2007 12:19:19 PM

VXN.X 19.67 -8.34% ... more put sellers/call buyers than put buyers/call sellers I'd have to say.

Jeff Bailey : 10/5/2007 12:18:27 PM

QQQQ $52.66 +1.71% ...

Jeff Bailey : 10/5/2007 12:15:38 PM

Well Barry! Maybe selling those QQQQ puts was worth it?

Jeff Bailey : 10/5/2007 12:14:20 PM

US Dollar Index (DXY) 78.24 -0.30% (30-minute delayed) ... Tuesday evening (MM @ 10:05:33) this was a rather important level.

Keene Little : 10/5/2007 12:11:11 PM

VIX is also close to giving us the setup I was hoping to see--dropping closer to support between 15 and 16. This is starting to look lip-smacking good for the short play. Link

Linda Piazza : 10/5/2007 12:09:09 PM

SPX 10-minute 9-ema now at 1553.48. Momentum bulls would prefer to see that maintained on 10-minute closes, to preclude a deeper dip to next support at 1549.70-1550.82 on 10-minute closes. SPX at 1554.75 as I type.

Jeff Bailey : 10/5/2007 12:08:26 PM

Pay yourself you SILVER bulls for the hard work and discipline.

Jeff Bailey : 10/5/2007 12:07:43 PM

iShares Silver (SLV) $133.43 +0.43% ... battles with WEEKLY S1.

CDE $3.84 +2.40% ... penny either side of WEEKLY Pivot.

Jeff Bailey : 10/5/2007 12:06:12 PM

F5 Networks (FFIV) $42.14 +2.40% Link ... Today's trade at $42 generates a reversing higher double top buy signal. Bearish vertical count negated. Bullish vertical count under construction to ... $38 + ((5 * 3) * 1)= $53

Keene Little : 10/5/2007 12:05:23 PM

The pink wave count on the NDX daily chart has won out and price is now within the "zone". It's wide but I've identified an upside target for NDX between 2135 and 2170. Like I said for SPX it would now look better if we get a small consolidation (lasting about 4 hours) followed by one last high. If the last high is accompanied with negative divergences at or below 2170 then it will be the short play setup I've been waiting for. In the meantime I still like the long side. Link

Tab Gilles : 10/5/2007 12:02:58 PM

Sears Holdings (SHLD) Continues to climb. Link Link Link

Jeff Bailey : 10/5/2007 12:01:20 PM

CDE $3.84 ...

Jeff Bailey : 10/5/2007 12:01:06 PM

Coeur D' Alene (CDE) $3.83 bid ... should be exhausted at the offer.

Jane Fox : 10/5/2007 11:57:46 AM

Ok here is a good spot to take a breather and retrace a tad. Too far too fast is a recipe for disaster. Link

Jeff Bailey : 10/5/2007 11:49:46 AM

GoldCorp. (GG) $30.63 +0.78% ...

Jeff Bailey : 10/5/2007 11:46:25 AM

Day/Swing trade long target alert! ... For Coeur D' Alene Mines (CDE) $3.83 +2.13%

Linda Piazza : 10/5/2007 11:44:00 AM

Here's the TRAN's daily chart from last night, showing the congestion zone. I've been noting that the congestion has been forming what looks like a bullish right triangle (flat top, rising support) but that's been countered by the TRAN's inability to break out. We'll see what happens by the end of the day. Link The chart's annotations were from last night.

Keene Little : 10/5/2007 11:43:14 AM

It's still looking like a nice setup for a potential high for SPX in the 1560 area. The pattern in the climb up off Wednesday's low looks like it could use another small consolidation and then another high to finish off that leg up. Hopefully it'll set up nice for a good opportunity to try shorting it but not yet. Link

Linda Piazza : 10/5/2007 11:40:35 AM

Keltner breakouts everywhere. Because momentum is strong, I've rolled down to the 10-minute charts, as I mentioned earlier. Bulls would ideally want 10-minute 9-ema tests to prompt bounces to ensure that the momentum continues to be as strong. That 9-ema is now at 837.49 on the RUT, 1551.74 on the SPX, and 4931.54 on the TRAN, although the TRAN might need a 7- or 5-minute chart by this point since momentum is strongest on that chart. It's at 4964.75 as I type, charging all the way up toward the 200-sma, less than 10 points away now.

Linda Piazza : 10/5/2007 11:28:19 AM

As a reminder in case other writers haven't noted it, although CNBC certainly is noting it: the SPX's 7/19 closing high was 1553.08. The SPX's summer intraday high, produced on 7/16, was 1555.90. The SPX is at 1553.40 as I type, down slightly from its 1554.16 intraday high.

Jeff Bailey : 10/5/2007 11:21:55 AM

11:00 Internals found at this Link

NASDAQ's 5-day NH/NL measure of 72.1% would be another buy signal and confirm the new 52-week high.

Linda Piazza : 10/5/2007 11:18:16 AM

The TRAN did it: it broke above this week's resistance level anyway. It's at 4939.59 as I type. Needs to stay above 4931.52 on 10-minute closes to maintain its breakout status, but mostly, it needs to stay above 4922-4927. Remember, bulls, that it's going to slam into even more significant resistance at the 200-sma at 4973.69.

Keene Little : 10/5/2007 11:10:13 AM

Further information from Al on QCharts version 6:
Thanks for the post. My interest in switching to the esignal servers is because the intraday data on futures in 5.1 runs about 3 seconds behind the market numbers as shown on IB and Tradestation and I'm hopeful that the esignal servers are more current. It doesn't sound like much but in a fast market, it makes a real difference. I was unaware of the issue with only 120 days of intraday data. That is certainly an issue because I like to go back just like you when researching various methods, etc. And, I agree that they will force us to switch sooner than later.

Jeff Bailey : 10/5/2007 11:04:07 AM

11:00 Market Watch found at this Link

Linda Piazza : 10/5/2007 10:54:02 AM

TRAN at 4916.67. It has not broken above this week's resistance level from about 1422-1427, but investors are not giving up yet. It remains mired in a months-long congestion zone, too, and won't have broken out of that until it's closed above its 200-sma at 4973.57.

Linda Piazza : 10/5/2007 10:52:28 AM

USDJPY at 116.66. It's maintaining support above 116.60-ish S/R, so far, at least.

Linda Piazza : 10/5/2007 10:50:11 AM

Because momentum was strong on the SPX this morning (An understatement, right?), I rolled down to the 10-minute Keltner chart. The upper resistance on that chart is currently at 1553.54, but was a little lower when it was first tested this morning. New resistance just over 1553 is converging with it, strengthening it a bit. The SPX a few minutes ago dipped down to test the 9-ema on that chart, now at 1548.60, and is now attempting a bounce from that moving average. As long as that support, or the lower support at 1547.42 are maintained on 15-minute closes, I would expect a resistance challenge to be ongoing. So bulls want those levels maintained on 15-minute closes as a short-term guide to how bullish the move is. The SPX is at 1551.22 as I type.

Jeff Bailey : 10/5/2007 10:44:31 AM

RUL-JL $7.90 x $8.00.
RUL-VS $0.40 x $0.45.

Keene Little : 10/5/2007 10:43:18 AM

Has anyone out there had any experience with the new version 6 of qcharts? I would like to move to the esignal servers but I'm not interested in being a pioneer here either.

Alan, like you I've been tempted to switch over to the new version. Two things are holding me back. One, the reliability of QCharts has been very good so I haven't had that as a reason to switch just to get the eSignal servers. Two, and this is a big one for me, version 6 only gives you 120 days of intraday data and I like to go back a lot further than that to look for intraday price patterns. My fear is that I will soon be forced into version 6 but until that happens I'm sticking with the current version (5.1).

If anyone else has some feedback on the new version please let me know and I'll pass the information along.

Jeff Bailey : 10/5/2007 10:43:03 AM

Research in Motion (RIMM) $110.90 +10.31% ... sticks its head above GREEN #1.

Jeff Bailey : 10/5/2007 10:35:55 AM

BOC's Poll: Labor Shortage Puts Pressure On Capacity

DJ- Canadian firms reported only a marginal decline in capacity pressures with more firms facing labor shortages and fewer employers planning to cut back hiring, central bank survey results released Friday show.

Most companies still expect inflation to be in the upper half of the Bank of Canada's 1-3% target range. As well, they see sales growing at a slower pace over the next 12 months, while plans to invest in machinery and equipment are at the lowest level in three years.

Some 54% of firms in the Bank's autumn Business Outlook Survey said they would have some or significant difficulty meeting an unexpected increase in demand, down just one percentage point from a seven-year high of 55% in the summer poll.

The pressure is strongest in the West but has risen in the rest of the country over the last two surveys, the central bank said. Labor shortage was the constraint most often cited.

About 41% said they face labor shortages that restrict their ability to meet demand, up from 33% previously and matching the level in the spring, which was the highest since winter 2005/2006. The increase was widespread and was the most acute in British Columbia and the Prairie provinces.

Some 45% plan to increase hiring and only 8% will reduce, compared with 46% and 12% in the summer survey. The balance of opinion, which is the difference between those who will boost hiring and those planning reductions, was 37%, up from 34% previously.

Earlier, Statistics Canada said the nation's unemployment rate fell to a 33-year low of 5.9% in September from 6.0% in the previous month as the economy created a net 51,100 new jobs, three times more than anticipated.

The Bank of Canada surveyed about 100 firms across Canada between Aug. 16 and Sept. 14, a period encompassing the credit market turmoil. The Bank will consider the findings when it makes its interest rate decision Oct. 16, where it is widely expected to once again hold the benchmark overnight rate steady at 4.50%. "A number of firms reported tighter credit conditions as a result of recent financial market turbulence. But few firms indicated that this had affected their sales outlook or investment plans," the Bank said.

Keene Little : 10/5/2007 10:28:54 AM

The important level for the bulls to hold right now is SPX 1544, yesterday's high. In order for this consolidation to be bullish that high can't be taken out.

Keene Little : 10/5/2007 10:25:21 AM

If you play the cash market and didn't get to participate in the 3-min rally following the opening then you missed it. The market has been consolidating since. If the market was worried about the Fed going on hold with the strong jobs numbers it's looking like someone wanted to be sure the selling didn't kick into gear this morning and a couple of well timed strong buy programs took care of that problem. But once again there's been no follow through. The bears are afraid of trying to short this and there's a lack of bulls to give us some follow through. So we go flat.

Jane Fox : 10/5/2007 10:18:30 AM

The only two internals you really need are the AD volume and VIX and as you can see they are both in sync and bullish. This is a go-ahead to buy the dips or even breakouts. Since the AD ratio is hovering at daily lows and the DAX and USDJPY are not making new daily highs I don't expect a huge move up but certainly be looking for bullish trades. Link

Linda Piazza : 10/5/2007 10:18:18 AM

Recent highs on the TRAN have been 4921.84 on 10/01, 4927.50 on 10/02, and 4922.51 on 10/03. SPX, OEX and Dow bulls would like to see the TRAN burst past those levels and maintain higher prices than those throughout the rest of the day. The TRAN is at 4918.73 as I type, just off its day's high of 4921.37. Bulls do not want this resistance zone being tested to push the TRAN back again.

Jeff Bailey : 10/5/2007 10:13:35 AM

10:10 Market Watch found at this Link

Linda Piazza : 10/5/2007 10:07:57 AM

I showed you the RUT's daily Keltner chart in my 9:58:35 post. Here's the SPX's: Link What does this prove? Nothing yet other than that the RUT and SPX (and other indices) have run up to a key level this morning and that bulls need to keep their account-management skills in mind in case this resistance holds. I'm not guaranteeing that it will. Resistance is broken at times, looking as if it didn't exist at all, even when it's on my beloved Keltner channel charts. Smile.

Jane Fox : 10/5/2007 10:03:05 AM

No market has broken its overnight high yet so those highs have a very good chance of been resistance, if the bulls can get it together and do not let the bears stage a coup. Link

Linda Piazza : 10/5/2007 10:02:32 AM

The TRAN is at 4907.43 as I type. It still hasn't been able to break above its 200-ema. No breakout on the daily chart yet above its summer-and-early-fall congestion zone.

Linda Piazza : 10/5/2007 10:01:32 AM

So far, the USDJPY's 116.60-ish support zone has held as support. USDJPY at 116.67 as I type. It did drop down to 116.55 but bounced quickly. As a review, read this as you would any other indicator that you watch, not the end-all-and-be-all indicator, but if you're in bullish plays, you do want this to maintain its breakout above about 116.60 and eventually to climb again.

Tab Gilles : 10/5/2007 9:59:35 AM

They do Linda...I believe that many of these central bankers, along with economic and political leaders have no idea what's lurking out there. The "unknown" factor, the uncertainty of another financial surprise remains on the minds of most traders/investors...at least it does with me.

Linda Piazza : 10/5/2007 9:58:35 AM

A RUT daily nested-Keltner chart showing the resistance currently being tested: Link

Jane Fox : 10/5/2007 9:55:32 AM

All I'm asking for here is a pullback to 13700-13800 area not much but some. Notice the MACD and how over extended it is now but does not have a divergence. This is bullish but strongly suggests a pullback is necessary. Link

Keene Little : 10/5/2007 9:53:46 AM

BTW, if you shorted oil yesterday (such as QM, the e-mini future) it's working for you this morning but not much yet. Lower your stop to just above yesterday's high since it's still possible this is just a corrective pullback which will be followed by a final poke higher before dropping for good.

Jane Fox : 10/5/2007 9:53:15 AM

The SPX is on it way to tag its yearly highs and I am not getting the pullback I had hoped for. This means when it does pullback it has the chance of been deeper and more violent. Link

Linda Piazza : 10/5/2007 9:51:12 AM

No Fed repos were announced during the normal 9:40 announcement period. As mentioned earlier, none mature today, either.

Linda Piazza : 10/5/2007 9:49:49 AM

USDJPY is dropping rather heavily right now. It's at 116.61, down from its 117.26 pre-market high, which high I thought might be a bit suspect. Equity bulls would like to see it stay above 116.60, ideally.

Jeff Bailey : 10/5/2007 9:46:54 AM

Swing trade stopped alert! for the UltraShort Russell 2000 (TWM) $60.90 -1.15% ...

Keene Little : 10/5/2007 9:42:32 AM

After this strong shot higher this morning I'm hoping we'll get a consolidation of the gains (which could go the entire day) and then a final high probably Monday. At least a final high if the wave count is correct and SPX manages to ring the bell at 1563.

Jane Fox : 10/5/2007 9:41:59 AM

I see the USDJPY making new daily lows (based on a 9:30 open), the DAX making new daily lows and the AD volume ratio making new daily lows. The bulls are running out of steam but as long as the AD line is above +1000 and the AD volume (absolute) and VIX are in sync (and they are) I would not be trying a short.

Linda Piazza : 10/5/2007 9:41:14 AM

Tab, the comments about the unusual uncertainty you posted in your 9:29:30 post sound a lot like like what ECB and especially ECB head Jean-Claude Trichet had to say yesterday.

Linda Piazza : 10/5/2007 9:37:56 AM

Strong gains on the TRAN are driving it up right beneath its 200-ema again. A moving-average band that stretches from that 200-ema up to the 200-sma at 4973.53 has been turning the TRAN back since mid August. The TRAN is at 4911.45 as I type, so it hasn't broken out to the upside. Not yet.

Linda Piazza : 10/5/2007 9:36:25 AM

USDJPY at 116.99.

Tab Gilles : 10/5/2007 9:36:03 AM

Bear Stearns analyst raised his 2008 price target for Google Inc.(GOOG) to $700 Friday on predictions of continued advertising growth.

Calling Google "one of the best operating companies within our coverage universe," Bear Stearns analyst Robert S. Peck raised his price target for fiscal 2007 to $625, from a previous $550, and to $700 for fiscal 2008.

Jane Fox : 10/5/2007 9:35:56 AM

AD line is now +1394

Jane Fox : 10/5/2007 9:34:33 AM

VIX opens well below its previous day lows supporting the S&P futures open above is PDH.

Linda Piazza : 10/5/2007 9:34:29 AM

Switching to a 30-minute chart for the SPX now, and I see potential resistance at 1551 on 30-minute closes. What bulls don't want to have happen is for the SPX to hit that next resistance and then to pull back now within this first 15 minutes below 1546.60, as that would show that 15-minute resistance did hold. No pullbacks in sight right now, though. This is not an intention to scare anyone or to say that a pop-and-drop will occur, but rather just to point out things to watch. SPX now exceeding that next resistance and charging higher, toward the next at 1554.35.

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

Needless to say the AD line is a bullish +928 and climbing. I kind of expected to see it over +1000 this thing though.

Jane Fox : 10/5/2007 9:29:54 AM

Payroll data out at 8:30 lit a fire under the markets this morning unfortunately this kind of volatility overnight though usually means very slow intraday trading. Link

Tab Gilles : 10/5/2007 9:29:30 AM

The Fed finally gives us a reason for the rate cut.

Our policy easing was aimed at helping to offset the effects of those tighter credit conditions and thereby to encourage moderate economic growth over time. It was not intended to, nor should it, short circuit a more realistic pricing of risk and the gains and losses that the repricing will entail for market participants.

However, given the circumstances at the time of the September FOMC meeting, there were strong arguments in favor of the larger action of a 50 basis point decrease in the federal funds rate.

However they do seem leary on the outlook....

But you should view these forecasts even more skeptically than usual. The FOMC emphasized the considerable uncertainty in the outlook. As I noted earlier, we do not know how financial markets will evolve, and we do not know how households and businesses will respond to financial developments. Naturally, these types of uncertainties are greatest when markets are behaving abnormally. The recovery from the problems of the early 1990s was prolonged because banks had to rebuild capital; the rebound from the market crisis of 1998 was swifter, helped along by higher productivity growth and the rise in the stock market that accompanied the optimism about high-tech profits. We will need to be nimble in adjusting policy to promote growth and price stability.

Keene Little : 10/5/2007 9:24:31 AM

It was a nice steady climb all night in the equity futures and then a further pop on the jobs number so we've got a big gap up this morning. Where it is in the wave pattern makes for a good possibility that it will be an exhaustion gap. But I hope we get the follow through first and drive SPX up to 1563. That would be a sweet setup if it fails up there. In the meantime run with the bulls.

Linda Piazza : 10/5/2007 9:23:16 AM

In case you didn't read the Wrap last night, here's a short-term SPX Keltner chart from last night: Link As I warned in my Wrap, beware of any first-15-minute move that breaks above a channel line but then reverses to close back inside it or nearly inside it. Pop-and-drop days sometimes . . . just sometimes . . . set up that way.

Jane Fox : 10/5/2007 9:23:16 AM

Here is McMillan's weekly update - last week it came after the market closed on Friday.

The S&P 500 Index ($SPX) broke out over resistance at 1530 this week, and that was a significant bullish development. In the past couple of days, $SPX has temporized, but we feel it will soon challenge -- and likely exceed -- its all-time highs at 1555. That 1530 level now represents support, and below that, the 1490 area is strong support. The upside breakout took many traders by surprise, especially those who had been looking for a more traditional pullback to test the support at 1490.

The equity-only put-call ratios remain strongly on intermediate-term buy signals. As long as they continue to decline, as they have been, those buy signals will remain in place. Only an upward turn in those ratios would turn the picture bullish, and that seems unlikely for the near future.

Market breadth has improved tremendously this week. In the early stages of a new upside move, it is important to have broad participation.

Volatility indices ($VIX and $VXO) have stabilized this week. $VIX is bullish, as it is clearly in a downtrend (noticeable by the declining 20-day moving average). The volatility indices, however, didn't collapse even though the market broke out on the upside. That is not necessarily bearish (although a new uptrend in $VIX would be), but rather indicates that traders likely expect a relatively high level of volatility to persist, even in a rising market. That's the sort of environment that we saw in the late 1990's, and it may be present again.

In summary, the picture is intermediate-term bullish and will continue to be as long as the indicators retain their current positive states.

Jane Fox : 10/5/2007 9:20:23 AM

WASHINGTON (MarketWatch) -- The Federal Reserve's half-point rate cut on Sept. 18 may be enough to keep the economy from sinking from the financial market turmoil, said Donald Kohn, the vice-chairman of the Fed Board on Friday.

Many things remain uncertain, Kohn said, including how quickly markets will recover, the extent of credit tightening for consumers and businesses and how household spending will respond to recent financial developments.

"But pending further evidence, a 50-basis-point easing was not an unreasonable first approximation of what might be required to keep the economy on a sustainable growth path," Kohn said in a speech to the Greater Philadelphia Chamber of Commerce.

Linda Piazza : 10/5/2007 9:19:17 AM

No repos mature today . . . or Monday or Tuesday, unless the Fed announces repos today or tomorrow that mature Monday or Tuesday. As I've been noting the last week, the Fed has been allowing more net drain days of late, reducing liquidity. I've been wondering if this isn't both a vote of short-term confidence--that the Fed believes the financial system will not collapse without those repos--and also an attempt to buoy the U.S. dollar. As I've noted frequently, I don't have a strong enough background in economics to determine whether that's possible, but, if it is and if that's what the Fed has been attempting, then they've been moderately successful, at least in so far as the dollar's strength is measured against the yen. The dollar has been rising against the yen since 9/10, although it's been rising within a congestion zone for the most part. Yesterday began an attempt to break above that zone, with the USDJPY sustaining values above a 38.2% retracement of the summer's slide.

Just after the jobs announcement, the USDJPY jumped up to 117.26, hitting the 72-ema on the daily chart. Since neither the US nor the Japanese markets were open, this move is a bit suspect as it could have occurred on light volume. The USDJPY was at 116.87 when I began typing this report and it was still higher than yesterday's trading zone. Gains have been broadly supportive of gains in U.S. equities, although the relationship hasn't been as correlative lately as it sometimes was over the past two years. (Could it be that yen carry trades were not put to work as much buying U.S. equities as they were before, or even that traders avoided the risk of yen carry trades altogether, or more than in the past?)

Jane Fox : 10/5/2007 9:19:06 AM

It was twenty years ago on October 4, 1987 that the market began to become unglued, leading to Black Monday, October 19.

Jane Fox : 10/5/2007 9:17:27 AM

BOSTON (MarketWatch) -- The U.S. attorney in Brooklyn has started a criminal investigation into a pair of hedge funds run by Bear Stearns Cos. that had positions in mortgage-backed securities and subsequently collapsed last summer, The Wall Street Journal reported.

Federal prosecutors have made a request for information related to the hedge funds, but the probe is in the early stages and has not resulted in any subpoenas, according to a report on the Journal's Web site. The report cited people familiar with the matter.

The meltdown in the two hedge funds -- High-Grade Structured Credit Strategies Fund and High-Grade Structured Credit Strategies Enhanced Leverage Fund -- cost investors $1.6 billion, the Journal reported. The funds started losing money in the spring when bets on mortgages went sour

Jane Fox : 10/5/2007 9:16:07 AM

NEW YORK (MarketWatch) -- Washington Mutual Inc. expects third-quarter earnings to drop by about 75% because of factors related to weakening conditions in the nation's housing market, the lender said Friday.

The Seattle-based company (WM) said its quarterly loan-loss provision will be some $975 million, exceeding net charge-offs for the quarter by about $550 million.

It'll also book downward adjustments of approximately $150 million related to some $17 billion in held-for-sale mortgage loans that were transferred to the company's investment portfolio due to secondary-market conditions.

Tab Gilles : 10/5/2007 9:13:36 AM

Vice Chairman Donald L. Kohn At the Greater Philadelphia Chamber of Commerce 207th Annual Meeting, Philadelphia, Pennsylvania October 5, 2007 Link

Jane Fox : 10/5/2007 9:13:17 AM

WASHINGTON -- U.S. employment rebounded last month on robust public education and other service-sector hiring, and August payrolls were revised sharply higher, providing further evidence that while the U.S. economy may slow a bit due to the housing crunch, it is likely to skirt an outright recession.

The figures, which included an acceleration in wage growth, will likely force investors to rein in hopes for further aggressive easing by the Federal Reserve.

Nonfarm payrolls rose 110,000 in September, the Labor Department said Friday. Just as important, August was revised to an 89,000 rise from a previous estimate of a 4,000 decline. That drop had been seen by Fed watchers as a catalyst in the Fed's surprisingly aggressive half-point federal funds reduction last month, its first in over four years.

Still, many economists thought that report had overstated employment weakness since it included a big drop in state and local government education payrolls, which was widely expected to be reversed

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