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Jeff Bailey : 10/10/2007 1:04:31 AM

Dollar/Oil Dilemma: This one is getting a lot of questions the last several days.

Here's my take.

I think OIL is driving some of the DOLLAR action, and not dollar strength/weakness the cause of oil's weakness/strength.

The reason for this thinking is that if I were an "Oil Prince" in the Middle East and didn't see eye-to-eye with President Bush on some things, I'd still sell him my oil, but I'd be concerned that he might decide to "freeze my dollar-denominated assets" some day.

So, I sell the U.S. my oil, but convert the US$ received to another currency, or maybe a hard asset like gold/silver/copper/aluminum/moofers/pigs/wheat.

The U.S. "talks" a lot about getting away from its dependence on foreign oil.

Wanting a stronger dollar is just one more reason.

If it is dollar weakness/strength causing oil strength/weakness, then EVENTUALLY that comes undone.

Why?

That would be equivalent to hoarding. You know, stuffing something in the mattress out of FEAR.

Jeff Bailey : 10/10/2007 12:12:09 AM

Now, here's a DEMAND look and the Inputs/Capacity table I keep Link

What I like to do at the far right of the table is use a Friday close for the USO, which MATCHES the "Week Ending" figures. I feel this reflects a market that is "all knowing" before the figures are released the following Wednesday.

Now, the EIA's Crude Oil (# Days of Supply) is calculated from the Crude Oil Inputs (not the Gross Inputs) and the Crude Oil Stockpiles (see table below) using a 4-week moving average.

It makes sense to some supply/demand analysts (like myself) that when # Days of Supply falls, that means there is LESS supply. What is USUALLY an outcome of LESS supply of something?

Now, what "hasn't made sense" the last few weeks is this.

See the Aug 31 row? Crude oil INPUTS into refineries (that's demand) was 15.9 million barrels/day, and over at the far right, it "made sense" that USO's PRICE might rise to $55.78.

But look at 09/07 when Crude oil INPUTS fell by 337K/day.

Gulp! USO rose to $57.76 and # Days Supply fell to 20.6.

This is where an oil short started to feel the heat.

There are TWO reasons the U.S. would stockpile the SPR. ONE is obvious. We may sense some type of dissruption in crude oil supplies and for strategic reasons, stockpile the nation's reserves.

But the SECOND reason may partially explain the unexpected "spike" in oil prices from 09/07/07. Perhaps the government decided to build the SPR near-term, until some of the refining issues are worked out.

Remember when Crude oil prices were "plunging" yet gasoline prices were "surging" when refiners couldn't take on any more inventory of Crude as portions of their refineries were shut down for repair and switching to summer fuels?

Still though, the SPR has only stockpiled just over 2.5 million barrels the last 4 weeks, and Crude oil stockpiles are down just over 6.3 million barrels from a year ago.

Jeff Bailey : 10/9/2007 11:37:58 PM

From the looks of things, tomorrow's EIA figures aren't going to be just about "Crude Oil Stockpiles," but also some of the derivative distillates and blended components, specifically gasoline. Here's a "preliminary" look where the tabulations at the bottom of the table are calculated using last week's inventory figures. When I get the actual figures tomorrow morning, I'll punch them in and post them. Link

This is the SUPPLY side of things. What sticks out is we're about 14% below where things stood last year in gasoline. Earlier this summer I noted the major lag in heating oil figures due to the refinery outages and with winter approaching, >500 ppm Sulfer still down 28.4% from year-ago levels.

What refiners will do is really start cutting back on the more "refined" products, and try to start cranking out heating oil, which doesn't take as much processing.

If you're a farmer/rancher and transport a lot of cattle during the winter months, fill up those diesel tanks in the yard. That 30.65% year-ago build probably starts coming down as refiners concentrate on the heating oil situation.

The one additional SUPPLY figure not shown (due to horizontal limitation) is what has been taking place with the SPR (Strategic Petroleum Reserve). Over the last 4 weeks, we've seen a BUILD 2,534,000 barrels. I think I can "explain" this with the DEMAND side of things.

Keene Little : 10/9/2007 11:26:43 PM

Wednesday's pivot tables: Link and Link

I showed a wave count for SPX at the end of the day that currently fits very nicely when I consider the rally from the August low as an ending pattern in an ascending wedge, as shown in this daily chart: Link

This is the same kind of pattern we saw at the February and July highs and it was just as frustrating then trying to figure out where the high was going to be. I expect the same resolution out of this pattern as the ones before it. The bearish divergences at the new price highs tell me it's a matter of when, not if.

Inside the wedge each of the 5 waves will be a 3-wave move (as found in all triangle patterns) so the 5th wave from the Sept 25th low needs to be a 3-wave move, or another version of it. Another version would be two 3-wave moves with an x-wave in between (so an a-b-c-x-a-b-c) which becomes a 7-wave move and is another form of a corrective wave structure. This 60-min chart shows that count: Link

I've been talking about an upside Fib target of 1563 and the daily chart shows one at 1565. The trend line along recent highs is currently near 1570. And then as shown on the 60-min chart there's a Fib projection at 1574.57 for two equal legs up from the October 4th low (for equality in the 2nd a-b-c). So today's rally has unfortunately opened up the potential target zone. Just stay aware that the first upside target has been reached.

At the same time the VIX is now very close to its potential support level at its 200-dma just under 16 or its uptrend line closer to 15. When the VIX climbs back above 19 it will be on a "buy" signal (sell signal for stocks). I'm trying to identify a top in the market before we get that signal. Link

The DOW shows more upside potential--the first Fib target I've had on it is at 14217. The top of its parallel up-channel is closer to 14400: Link

NDX left a hanging man doji for Tuesday at the 2170 Fib target I've been showing on its chart. But its weekly chart shows a long term parallel up-channel from its 2002 low, the top of which is just above 2200: Link

A small consolidation and final high that plays out over the next week or two would be a good ending. This one could continue to drag the others higher into opex week. There's a little bit of discrepancy between the techs and the others so I'm not sure how this will resolve. Just stay on your toes for anything from here.

Jeff Bailey : 10/9/2007 11:12:56 PM

1 million shares blocked of USO at $61.40 this evening at 05:49:23 PM EDT.

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

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

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 10/9/2007 9:47:39 PM

What kind of a BUILD in crude stockpiles do you think the market needs to see tomorrow?

Hint: IF there is a US$/Oil trade on , and USO trades $58.00 and DXY is BELOW MONTHLY Pivot, PTR puts are gone. There gone if PTR trades $160 for sure! Should be about $8.00 in the option.

Jeff Bailey : 10/9/2007 9:47:33 PM

USO $61.40 +1.05% Link ... setting two al_rts for tomorrow. $63 and $60.

Why is the bearish vertical count "only" to $58.00?

I showed a December futures chart earlier today at 12:09:13.

Some discussion about the "head/shoulder top" on USO. I've got the head at $64, eyeball the neckline at $60.00 ($60.18 to be exact), gives objective of $58 too.

Jeff Bailey : 10/9/2007 6:59:45 PM

99c Only Stores (NDN) $12.23 +2.85% ... monitor this one tomorrow. It gave its first "buy signal" in over 11 months just recently at $12.50.

DJ- 99 Cents Only Stores (NDN) expects to report a fiscal second-quarter net loss even though net sales for the period rose 11% to $290.9 million from $261.1 million a year earlier. The City of Commerce, Calif., retail company's same-store sales for the period ended Sept. 30 increased 6.1%. 99 Cents expects to report a loss due to short-term operating margin and execution issues. The company said the summer's sales increases were mostly on products with lower margins. On average, analysts polled by Thomson Financial expect per-share earnings of 2 cents on revenue of $286 million.

Jeff Bailey : 10/9/2007 6:50:01 PM

Moody's Upgrades To Aa2 From Aa3 The Ratings On Las Vegas, Nevada's Limited Tax GO Debt

Jeff Bailey : 10/9/2007 6:46:54 PM

Dorsey/Wright Technical Leaders (PDP) $27.68 +1.28% ... mentioned this ETF today. ONLY holds technically STRONG stocks RELATIVE to the MARKET.

Bugger traded $22.05 on 08/16/07. Not bad ... not bad at all.

Since inception of 03/01/07, PDP up 15.33%.

SPX +11.54%.

Relative strength does matter.

Jeff Bailey : 10/9/2007 6:37:25 PM

Olin Corp. (OLN) ... also a "Metals Non Ferrous" Link ... See how LONG relative strength, or weakness can stick with a stock? Near-term, OLN's RS improving and suggests stock is gaining favor.

Jeff Bailey : 10/9/2007 6:19:00 PM

Alcoa (AA) ... PnF chart Link

January is a "1" on the PnF charting system.

In mid-February "2", AA gave a reversing higher double top buy signal at $35, and demand (X) further outstripped supply (O) to $36.

Eventually, a 3-box reversal was found to $33 and the bullish vertical count column (X's from $28 to $36) was established.

By early March "3" supply "O" continued to outstrip demand to $32.

But by early April "4," demand was once again back in control of the stock as a 3-box reversal back higher was observed to $35.

Demand continued to build and by early May "5," a powerful spread-triple top buy signal was observed when AA traded $37.

Shares of AA never did achieve their bullish vertical count of $55 as speculation that it may have been purchased by Alcan (AL) was put on the back burner. The bullish vertical count was negated at $37 in early August "8."

Now here we go again.

AA recently generated a reversing higher double top buy signal at $38 ... It is perhaps the "first look" at the horrific earnings season.

Jeff Bailey : 10/9/2007 5:46:46 PM

Dow Dogs ... Screen Capture from 01/03/07 with some various fundamentals at that time Link

Here they are tonight Link

What I did earlier this year was place ~$500 in each stock. Pfizer (PFE) has gone nowhere. Why is that? What does Pnf chart look like? Is the GROUP simply out of favor this year? PFE had a 14.431% EPS Growth Rate and was priced 15.6-times earnings on 12/29/06. Cash flow/share was 1.239, but now just $0.538.

AA was not one of this year's "Dow dogs," but ranks #3 among percentage gainers from 12/29/06 benchmark. Chart? Sector?

Jeff Bailey : 10/9/2007 5:10:48 PM

Alcoa (AA) $39.72 +3.70% ... Earnings Press Release Link

AA "flat" extended.

#24 weighting in INDU/DIA/YM.

1 down, 29 to go!

Jeff Bailey : 10/9/2007 5:07:06 PM

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

Jeff Bailey : 10/9/2007 4:50:28 PM

Closing Internals found at this Link

Jeff Bailey : 10/9/2007 4:41:52 PM

Buyers managed to get the 5-day NH/NL % change back in the green.

Jeff Bailey : 10/9/2007 4:34:33 PM

Closing U.S. Market Watch found at this Link

Keene Little : 10/9/2007 4:31:35 PM

Correction to my 3:38 post referencing the NDX stretch above its 200-week moving average. Thanks to Mark for the correction. The NDX was further stretched at the 2000 high than it is currently. So the NDX is further stretched from its 200-wma than at any time since the 2002 bottom.

Jeff Bailey : 10/9/2007 4:30:11 PM

Good gravy ... SPX goes out 1,565.15 +0.80% ... is it enough? (see last night's wrap)

TRAN 4,986.73 +1.04% ...

Keene Little : 10/9/2007 4:25:17 PM

I've got a wave count that I like better than the one I showed a little earlier on the SPX 60-min chart. First, on the daily chart, I've been showing an ascending wedge pattern and these can be very frustrating figuring out where the end of them will be. We saw the same development at the February and July highs. But when it breaks it usually breaks fast. This is one of the more common 5th wave patterns after a run has gone on too far too fast. Link

Inside the wedge each of the 5 waves will be a 3-wave move (as found in all triangle patterns) so the 5th wave from the Sept 25th low needs to be a 3-wave move, or another version of it. Another version would be two 3-wave moves with an x-wave in between (so an a-b-c-x-a-b-c) which becomes a 7-wave move and is another form of a corrective wave structure. This 60-min chart shows that count: Link

The 2nd a-b-c move up would have two equal legs at 1574.57 so that's the new upside target on the high side. The first Fib projection is at 1564.80 where wave-c = 62% of wave-a. This is also near the Fib projection I show on the daily chart at 1565.09. This was achieved at today's close. The trend line along the recent highs is near 1570 which places it in the middle of the two Fib projections on the 60-min chart.

This wave count fits very well for price action since the August low and the continuing bearish divergences against new price highs confirms the wave count. Now we just wait for the market to top out but I still like the setup for the short side. A break below 1555 would be a heads up (down) and a break below 1549 would confirm we've seen the high.

Jeff Bailey : 10/9/2007 4:15:54 PM

Dow Jones Home Construction (DJUSHB) 384.74 +1.37% ... (See 02:02:23)

Jane Fox : 10/9/2007 4:06:25 PM

Economic Reports for tomorrow include:

7:00a.m. MBA Mortgage Application Survey. Previous: -3.8%.

10:00a.m. August Wholesale Trade. Expected: +0.3%. Previous: +0.2%.

Jeff Bailey : 10/9/2007 4:00:47 PM

ICE alert! $163.52 +1.45% ... "out of the zone"

Keene Little : 10/9/2007 3:57:57 PM

SPX 1566 looks like a pretty decent possibility from here for a high first thing tomorrow morning. That would give us a cleaner 5-wave move up from this afternoon's low and tag the top of its potential ascending wedge pattern. A little gap n crap maybe?

Linda Piazza : 10/9/2007 3:52:45 PM

And here's the TRAN at 4977.39, right back to the 200-sma again after punching higher. It still can't maintain a breakout above that moving average that's so important a benchmark to some. Of course, I should also note that it is, however, maintaining daily closes above the 72-ema, with that at 4935.69. A mixed story, then, but on the whole, I don't consider the TRAN to have convincingly broken out of its months-long consolidation pattern. That would require daily closes above the 200-sma and the 50% retracement of the summer decline, and for those closes to either be significantly above those levels or to be maintained for more than the one day we say on 10/05.

Jeff Bailey : 10/9/2007 3:47:27 PM

Sector Preview: Semiconductors AP Story Link

Keene Little : 10/9/2007 3:46:45 PM

FYI, I never buy front month options except for lottery plays during opex week. I always go out at least 3 months. I'd rather buy the extra time and not need it than to have the market go flat and keep me wondering whether it's going to work or not and in the meantime my premium bleeds like a stuck pig.

Jeff Bailey : 10/9/2007 3:44:48 PM

Microchip Tech (MCHP) $31.93 -12.80% ... gett'n whacked.

Jeff Bailey : 10/9/2007 3:44:09 PM

NASDAQ-100 Heatmap Link

Keene Little : 10/9/2007 3:42:36 PM

I'm picking up a few SPY puts and QQQQ puts before the close today. Nothing big, just in case.

Jeff Bailey : 10/9/2007 3:41:19 PM

Expeditors Intl. (EXPD) $51.95 +4.06% ... goes into the SPX at today's close.

QQQQ bears can't get a break as EXPD a member of TRAN and QQQQ.

Jane Fox : 10/9/2007 3:41:05 PM

If you ever wonder what bullish internals look like print off these charts and paste them to your wall. Link

Keene Little : 10/9/2007 3:38:34 PM

The parabolic rally in NDX won't end well. As shown in this chart (courtesy EWI), it has now stretched further away from its 200-week moving average than ever before Link . The correction to this kind of move is rarely just back to the mean. Don't get complacent here if you're long. It's a great rally but I'd keep my stops trailing up close.

Jeff Bailey : 10/9/2007 3:39:17 PM

Frontier Airlines (FRNT) $6.87 -0.43% ... Denver-based regional. A play on a Rockies World Series run? Or something more. Stock's been on the move last couple of weeks.

Jeff Bailey : 10/9/2007 3:36:24 PM

Continental Airlines (CAL) $37.31 +2.07% ... econ sensitive, but also to energy prices. TRAN component.

Probes its 200-day SMA $37.65 again today.

Jeff Bailey : 10/9/2007 3:28:36 PM

I'm going "batty!"

Linda Piazza : 10/9/2007 3:28:12 PM

The TRAN is back above the 200-sma, but it hasn't topped the 10/05 level and is hesitating at the 50% retracement of its summer decline (7/18 high into 8/16 low). That sometimes important Fib level is at about 4990. The TRAN is at 4988.65 as I type. I show a 15-minute target and potential resistance at 5001.60. Although the TRAN has gained strongly, it's still trailing behind some other indices on the basis of how and when it meets or doesn't meet some of these benchmarks. Does it matter? Not lately, but unless "it's different this time," I'm still worried by its failure to do so.

Jeff Bailey : 10/9/2007 3:26:59 PM

Good gravy! ... Goldman Sachs (GS) $237.62 +4.71% ... that's an all-time high.

Jane Fox : 10/9/2007 3:26:09 PM

And then look at this craziness. Link

Jeff Bailey : 10/9/2007 3:25:20 PM

03:00 Internals found at this Link

Keene Little : 10/9/2007 3:24:28 PM

Just a little lower on the VIX and I'll get my other sell setup (with VIX hopefully finding support on its uptrend line/200-dma near 16. Link

Jane Fox : 10/9/2007 3:21:37 PM

The MACD on the daily DOW and S&P charts support the possible cup and handle pattern. Link

Linda Piazza : 10/9/2007 3:20:43 PM

When momentum is this strong, it may not matter, but the SPX is at the top of this channel on the daily chart again: Link

Keene Little : 10/9/2007 3:19:49 PM

SPX is now at the lower end of the potential Fib resistance zone of 1563-1566. Just be a little cautious if chasing this to the upside. Bulls will definitely want to see it drive up through 1566.

Linda Piazza : 10/9/2007 3:18:28 PM

The SPX may close this 15-minute period above its resistance on that chart, so I'm dialing up to the 30-minute chart now. Target and potential resistance there is 1563.20. As I've noted before, if you're in bullish plays and aren't sure you want to hold overnight, pick a moving average that's bouncing prices and put your stop an account-appropriate level below it. Follow that average higher. Price will take you out quickly if the tenor changes (even if it changes only temporarily--smile). That's not as easy today, when early action was choppy, as it is on strongly trending days, but it can still be done.

Jeff Bailey : 10/9/2007 3:16:41 PM

C'mon banks!

Jeff Bailey : 10/9/2007 3:16:28 PM

Select Sector SPDRs (XLF) $35.69 +0.81% ... challenges its 150-day SMA. 200-day SMA above at $35.99.

Jane Fox : 10/9/2007 3:15:59 PM

The longer the market goes up without a correction the more painful that correction will be. This nice little cup needs a handle and that handle means a retracement. Link

Jeff Bailey : 10/9/2007 3:15:25 PM

Broker/Dealer Index (XBD.X) alert! 243.99 +1.50% ... challenges its 200-day SMA. 150-day lower at 241.80.

Linda Piazza : 10/9/2007 3:11:12 PM

I don't see anything big (other than the fact that Japan's two-day central bank meeting should be beginning tonight, with the decision tomorrow night) happening tonight that might change the dollar against other currency pairs, and thereby hit or pump up our equity futures while we sleep. That doesn't mean it can't happen, but I just don't see anything listed. However, as most everyone listening to CNBC knows by now, Alcoa (AA) supposedly reports after the close today, and that certainly could change your trades, one direction or another.

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

IF the SPX can trade 1,600 by month's end, how does that % gain compare to 3.910% in the 13-week?

Is it worth the RISK?

That's all the MARKET ever does. Risk/reward.

Jeff Bailey : 10/9/2007 3:08:36 PM

There ... Rick Santelli mentioning the dynamic that selling in the short-end of Treasuries has had on equities today.

Linda Piazza : 10/9/2007 3:05:28 PM

SPX testing potential Keltner support on 15-minute closes at its current 1560.35 level, but stronger support is near 1557.99-1558.42 on 15-minute closes. That lower level is one that equity bulls want to see serve as support on 15-minute closes. Upside target and potential resistance has been hit (currently 1561.95), and bulls don't want to see a quick and hard reversal now. No upside breakout as yet on this chart. Keltner channel held as resistance.

Jeff Bailey : 10/9/2007 3:04:15 PM

03:00 Market Watch found at this Link

Jeff Bailey : 10/9/2007 3:00:56 PM

My "observation" is that equity bulls may want to see FURTHER defensive selling in Treasuries. That is, get that "save haven" cash out and into the equity market!

Have the dollar "firm" so it would suggest the cash is staying here, not moving overseas.

Linda Piazza : 10/9/2007 2:59:57 PM

I know that Keene and Jeff have been discussing ten-year yields today, and both have more experience watching them than I do. However, I have my own take on a benchmark to watch, and the yields are hitting it today: Link I know that few (maybe only one, me) watch the 72-ema, but how can I not watch it or believe it has no credence when I see a chart like that?

Jeff Bailey : 10/9/2007 2:59:24 PM

Take a "1-DRT" (fit a 0% to 19.1% retracement at 10/01/06 low and high) from last year's OCT 1 trade on the INDU. This year? Gosh, not sure 15,000 in the cards by Halloween.

Keene Little : 10/9/2007 2:56:21 PM

The wave count has obviously changed for the move up since the rally is making new highs. It's subject to interpretation at this point and I could argue a couple of different counts. This 60-min chart shows one of them and calls the ascending wedge, with bearish divergences, as an ending pattern. Where the top is is anyone's guess but I've got some Fib projections now coinciding in the 1563-1566 area. The trend line along recent highs is closer to the upper Fib level: Link

Keep it easy--a break of its uptrend line, confirmed with a break below 1549 would be a reliable sell signal out of this pattern. The first thing to watch for is resistance in the 1563-1566 area as an opportunity to once again test the short side. The ride down out of this pattern should be fun if you're short (back to 1510 relatively quickly).

Tab Gilles : 10/9/2007 2:54:33 PM

Good one Jeff...Dogs of the Dow...lol

Jeff Bailey : 10/9/2007 2:51:52 PM

Software HOLDRs (SWH) $44.34 +1.02% ... that's a new 52-weeker.

Linda Piazza : 10/9/2007 2:51:44 PM

The SPX approaches its 15-minute Keltner target, with that target now having risen to 1561.79 and still rising with the price action pushing it up. Remember that this sometimes serves as resistance on 15-minute closes, too. Keltner channels were developed to identify breakout plays when momentum was strong, so of course there are breakouts above Keltner channels, but just be aware that this signifies that over the very short term, the SPX's move is extended.

Jeff Bailey : 10/9/2007 2:50:41 PM

Last year's "stupid pet trick" Halloween forecast Link

Jane Fox : 10/9/2007 2:49:32 PM

Here is another notable quote by Alan Greenspan from Age of Turbulence, "There's a constitutional amendment I have been pushing for years without success. 'Anyone willing to do what it takes to become President of the United States is thereby barred from taking office.' I'm only half joking."

Jeff Bailey : 10/9/2007 2:45:34 PM

I've got one line up Tab! (stupid pet trick)

Jeff Bailey : 10/9/2007 2:43:49 PM

Gosh those look "expensive" X-KU $2.45 x $2.60.

Linda Piazza : 10/9/2007 2:43:09 PM

Based on what I'm seeing on the SPX's 30-minute chart, I'd suggest that if the SPX doesn't finish this 30-minute period above its current 1559.69 level (30-minute Keltner resistance), then there's increased doubt about whether it will reach its current 1561.76 upside target on the 15-minute chart.

Tab Gilles : 10/9/2007 2:40:55 PM

"TOP 10" reasons for a rate cut!!!

Jeff Bailey : 10/9/2007 2:40:39 PM

Dynamic Matrials (BOOM) $53.48 +1.63% ... "explosive" little bugger.

Jeff Bailey : 10/9/2007 2:40:10 PM

oh my!

Tab Gilles : 10/9/2007 2:39:24 PM

I wonder if Dave is going to do "Stupid Fed [Pet] Tricks" tonight?????

Jeff Bailey : 10/9/2007 2:39:05 PM

Olin Corp. (OLN) $22.63 +1.84% ...

Keene Little : 10/9/2007 2:38:43 PM

We're still within the Fibonacci turn window of Oct 5-9. I high today would be sweet.

Jeff Bailey : 10/9/2007 2:38:28 PM

US Steel (X) $107.40 +1.82% ... any "news" regarding steel prices today?

Jeff Bailey : 10/9/2007 2:37:24 PM

GoldCorp (GG) $30.75 +1.05% ...

Tab Gilles : 10/9/2007 2:36:46 PM

FYI: Alan Greenspan to appear on Late Night with David Letterman tonight.

From CBS website: Tuesday, October 9 Jennifer Lopez (CD, Brave) Alan Greenspan (Author, "The Age of Turbulence: Adventures in a New World")

Keene Little : 10/9/2007 2:36:30 PM

If SPX could sneak its way higher to tag 1563, with all kinds of negative divergences, and VIX drop down below 16, well, I could be forgiven for getting excited about the shorting opportunity.

Jeff Bailey : 10/9/2007 2:34:58 PM

Dorsey/Wright Technical Leaders (NYSE:PDP) $27.62 +1.06% ... that's a new 52-weeker.

Keene Little : 10/9/2007 2:34:14 PM

Yes Jeff, truly a momentous occasion. It's when you and I agree on where stocks are going that we'll be dangerous :-)

Jeff Bailey : 10/9/2007 2:34:00 PM

Just trade those futures contracts .... everyone "in" yesterday and everyone "out" today. Generate those commissions!

Linda Piazza : 10/9/2007 2:33:53 PM

SPX 15-minute Keltner chart shows next resistance and the target at 1561.67, as long as 1556.19 support is maintained on 15-minute closes. The action is still a little funky, so I'm not sure whether that upside target should be given much credence, but I'm just reporting what I see. Because of where the SPX is on the daily chart--in a period in which it's usually consolidating for a few days--I'd still be careful to protect my bullish profits.

Jeff Bailey : 10/9/2007 2:33:10 PM

ICE $161.94 +0.47% .... "in the zone" still. Tomorrow, tomorrow ...

Jeff Bailey : 10/9/2007 2:32:24 PM

PTR $185.12 +1.92% ...

Jeff Bailey : 10/9/2007 2:32:06 PM

Now I need PTR to go "plunk"

Keene Little : 10/9/2007 2:31:32 PM

"dunk" ES 1569.75--out and flat and watching carefully here.

Jeff Bailey : 10/9/2007 2:31:27 PM

Good gravy Keene! ... Fell out of my chair, but getting myself back together.

Jeff Bailey : 10/9/2007 2:30:28 PM

"dunk" YM 14,182 +70

Jeff Bailey : 10/9/2007 2:30:06 PM

Buy Program Premium ... SPX 1,557.22 +0.29%

Keene Little : 10/9/2007 2:25:13 PM

Jeff, mark this date down--we're in agreement (your 2:13 post) :-)
Since the September low I've been pointing to a rally in the 10-year yield that could take it back up near 5% by the end of October. Actually 4.9% looks like a better upside target for now (for two equal legs up off the Sept low). This is the daily chart I've been showing in my Market Wraps for those who don't subscribe to that: Link

Keene Little : 10/9/2007 2:16:36 PM

The reason I would not want to chase the move higher, if stopped out, is because a larger 3-wave bounce off Monday's low, with two equal legs up, could have SPX tagging 1560.51 (so a lower high) and then turning lower in a fast 3rd wave selloff. Something to watch for if it happens. So another short attempt against Friday's high would be a low-risk play but again you'd be trying to catch rising knives so trade light until it's working for you. Link

Jeff Bailey : 10/9/2007 2:15:56 PM

Take another/different retracement on the TRAN from the 08/11/06 low close to recent 7/19/07 high close. Resulting 38.2% right here at 4,948.83.

Jeff Bailey : 10/9/2007 2:14:35 PM

TRAN 4,950 +0.31% ... smack on WEEKLY Pivot.

Jeff Bailey : 10/9/2007 2:13:39 PM

Maybe a 5.0% handle by Halloween?

Keene Little : 10/9/2007 2:13:21 PM

Can I peek now? I didn't hear the "dunk" sound from IB stopping out my trade. Still alive but barely.

Jeff Bailey : 10/9/2007 2:13:11 PM

10-year ($TNX.X) up 0.8 bp at 4.869% ... best levels of session. Will need some cash if SPX 1,600 is to happen.

Linda Piazza : 10/9/2007 2:11:45 PM

I've mentioned it before and I'll remind you again, but I believe that Japan, Singapore and maybe Thailand all announce central bank decisions Thursday (Wednesday night for us). That could certainly impact currency pairs and therefore might impact how our equities perform, so keep that possibility on the radar screen the next couple of days.

Jeff Bailey : 10/9/2007 2:11:25 PM

ICE $161.43 +0.16% .... "in the zone"

Jeff Bailey : 10/9/2007 2:10:59 PM

XLF $35.44 +0.11% ...

Jeff Bailey : 10/9/2007 2:10:38 PM

PetroChina (PTR) $184.60 +1.64% ... smack on WEEKLY Pivot.

Linda Piazza : 10/9/2007 2:10:14 PM

The USDJPY is at 117.07, having jumped up in concert with equities. It's now well inside that 117.00-117.10-ish support/resistance zone, testing it. A descending trendline off yesterday's high now crosses at about 117.30.

Remember, though, that 50% retracement of the summer's decline that is just ahead of yesterday's 117.58 intraday high, at about 117.81. So far, the USDJPY's value remains within a formation that might or might not be a bull flag, pulling back off yesterday's high, but if it breaks out of the flag to the upside, it then faces yesterday's high and then that 50% retracement level.

Jane Fox : 10/9/2007 2:08:53 PM

WASHINGTON (MarketWatch) - With the economic outlook in the wake of the financial market turmoil highly uncertain, Federal Reserve officials agreed that a half a percentage point rate cut was "the most prudent course of action," but said only that future actions would depend on how the economy fared in coming weeks, according to a summary of the Sept. 18 meeting released Tuesday. There was no opposition to the rate cut. Fed officials were so uncertain about the outlook that they refused to provide the traditional balance of risk statement, language that indicates to the market whether the Fed believes it must focus its policy attention on higher inflation or slower growth. Such a statement in mid-September "could give the mistaken impression that the FOMC was more certain about the economic outlook that was in fact the case," the summary said. The FOMC cut rates by a half-point to 4.75% on Sept. 18, a decision that caught many analysts by surprise.

Jane Fox : 10/9/2007 2:07:02 PM

AD volume to new daily highsbut the AD line is not - yet. VIX is jusssstttt about to make new daily lows. Bulls have control now.

Jeff Bailey : 10/9/2007 2:06:05 PM

FOMC 09/18/2007 Minutes Link

Keene Little : 10/9/2007 2:06:04 PM

Taking out the mid-morning high will have me flat, so basically if SPX tags 1538 I will stop myself out.

Jane Fox : 10/9/2007 2:05:22 PM

Markets have quite bullish now.

Jane Fox : 10/9/2007 2:05:01 PM

It getting kinda crazy out there now.

Jeff Bailey : 10/9/2007 2:04:33 PM

YM 14,145 +33 ...

Linda Piazza : 10/9/2007 2:04:14 PM

My intraday Keltner channels are flattening with the 15-minute candles strung out along the converging 9- and 45-ema's on that chart, both near 1553-1554. Not much information to be gained from them or from price action as yet although the SPX is charging higher as I type. Next potential resistance at 1556.70-1557.62 on 15-minute closes, but look at the early action and potential resistance/support with some skepticism.

Jeff Bailey : 10/9/2007 2:02:23 PM

Dow Jones Home Construction (DJUSHB) ... Last week I mentioned here in the MM that I was studying a WEEKLY Pivot pattern, and I wanted to monitor it for SIMILARITY, or DIVERGENCE to the past. Here's a 60-minute interval chart Link

Note the BIG bounces that rose to, or above WEEKLY R2, the FOLLOWING WEEK were WEAK to at least WKLY S1.

Last week we saw a bounce to WKLY R2.

Very "subtle" hint of some stability as the 21-pd SMA just gets above the 200-pd SMA on this time interval.

Jane Fox : 10/9/2007 1:59:09 PM

WASHINGTON (MarketWatch) -- U.S. housing and credit markets remain fragile and won't recover for some time, a key Federal Reserve official said Tuesday, implying significant risks to the Fed's forecast for a modest improvement in the economy.

"Recent events suggest that housing will remain weak for several more quarters," said William Poole, president of the St. Louis Federal Reserve Bank, and a voting member of the Federal Open Market Committee this year. "Stabilization may not begin until well into 2008."

The financial markets, which were truck in August by a crisis of confidence in securities backed by mortgages and other unknown assets, "appear to be stabilizing, but they have not returned to normal and are still fragile." The Fed doesn't want to "bail out bad investments," and couldn't if it wanted to, Poole said. "We do have the responsibility to do what we can to maintain normal financial market processes."

"It is for the market to judge whether securities backed by subprime mortgages are worth 20 cents on the dollar, or 50 cents, or 100 cents," he said. "That process will take time, as it is expensive to conduct the analysis that good mortgage underwriting would have conducted in the first place."

Jane Fox : 10/9/2007 1:56:58 PM

WASHINGTON (MarketWatch) -- Financial markets are increasingly confident that the Federal Reserve won't cut its overnight interest rate target later this month. According to prices in the Chicago Board of Trade's federal funds futures market, the implied odds of an October rate cut fell from 48% to 38% on Tuesday. The market still expects the Fed to cut its target to 4.50% in December. Later Tuesday, the Federal Open Market Committee will release the summary of its Sept. 18 meeting, when the committee slashed the overnight rate from 5.25% to 4.75%, surprising markets. Two influential Fed bank presidents -- William Poole and Janet Yellen -- are speaking later Tuesday.

Jane Fox : 10/9/2007 1:56:25 PM

Market obviously liked what the FED minutes said. That was a nice little rally.

Linda Piazza : 10/9/2007 1:53:07 PM

If you haven't already, make up your mind whether you're going to hold options, especially October ones, over the release of the Minutes in a few moments. I don't know whether they will impact the trading day, but they certainly have that capability.

Jeff Bailey : 10/9/2007 1:50:46 PM

TRAN 4,933.86 -0.02% ...

Keene Little : 10/9/2007 1:50:10 PM

The DOW has been finding support at the mid line of its parallel up-channel from the August low since the Sept 25th low and that's where it currently is (and starting to bounce). It would be bullish to see a rally from here take out this morning's high and bearish to see it break much lower: Link

Jeff Bailey : 10/9/2007 1:49:55 PM

Wilshire 5000 (DWC) 15,700 +0.12% ...

Jeff Bailey : 10/9/2007 1:48:59 PM

YM 14,130 +18

Jeff Bailey : 10/9/2007 1:45:31 PM

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

Keene Little : 10/9/2007 1:35:14 PM

If SPX continues lower now, support should be found near 1550--previous lows and uptrend line from Sept 25th. A bounce to a lower high would set up another good shorting opportunity but I'm getting ahead of myself. In the meantime watch for support at 1550 and consider peeling some profits off the table if it looks like support will hold. If you're in a short position for a longer term trade and don't want to trade it (as I am) then just use the downtrend line from Friday to set your stop. Link

Jeff Bailey : 10/9/2007 1:27:43 PM

YM 14,130 +18

Keene Little : 10/9/2007 1:26:55 PM

Did word leak out? A quick sell program just hit across the board (not that I'm upset by that).

Jeff Bailey : 10/9/2007 1:17:10 PM

PetroChina (PTR) $185.00 +1.86% ... "easing" a bit.

Jeff Bailey : 10/9/2007 1:16:37 PM

01:00 Internals found at this Link

Linda Piazza : 10/9/2007 1:08:37 PM

It might be a long 52 minutes ahead of us.

Jeff Bailey : 10/9/2007 1:05:58 PM

BIX.X have traded WEEKLY Pivot ...

Jeff Bailey : 10/9/2007 1:03:26 PM

01:00 Market Watch found at this Link

Linda Piazza : 10/9/2007 12:50:04 PM

The TRAN is indeed drifting down toward that Keltner support that I mentioned in my 11:49:55 post, except that the support has now risen to 4947.60 from the 4946 level at the time of that original post. At 4949.19 as I type, the TRAN is now being squeezed between that support and the 9-ema on 4958.98 on 15-minute closes, without much way of telling which will hold. If support collapses, it looks possible for the TRAN to drop toward 4922, but take all targets with a grain of salt as the release of the minutes approaches in a little over an hour. If the TRAN bounces up through the 9-ema, the next target is 4973.50, but ditto on the "grain of salt" business for this potential target.

Keene Little : 10/9/2007 12:48:40 PM

Starting to breathe a little easier in my ES short. Stop stays at 1569.75 for now (SPX above 1558). Hopefully it'll survive any post-FOMC minutes release at 2:00. It's a little risky so assess it for yourself but sometimes I'll use a stop based on the cash index (SPX in this case) instead of the futures (ES). Futures can spike more in a reactionary move while cash tends to be a little smoother.

Jeff Bailey : 10/9/2007 12:39:20 PM

ICE's QCharts' WEEKLY R1 ... $160.62

Jeff Bailey : 10/9/2007 12:36:21 PM

ICE ... same daily interval chart with retracement Link

Jane Fox : 10/9/2007 12:34:33 PM

I am reading Alan Greenspan's Age of Turbulence, a really good book.

Here is a quote from the book, "In the face of the increasing integration of the global economy, the world's citizens face a profound choice: to embrace the worldwide benefits of open markets and open societies that pull people out of poverty and up the ladder of skills to better, more meaningful lives, while bearing in mind fundamental issues of justice; or to reject that opportunity and embrace nativism, tribalism, populism, indeed all the "isms" into which communities retreat when their identities are under siege and they cannot perceive better options."

Jeff Bailey : 10/9/2007 12:29:29 PM

CME ... same daily interval bar chart with retracement you and I traded BULLISH from $550. Blew out too soon at $580. Cursor box set at 09/28 bar on 2nd day "in the zone." Link

Jeff Bailey : 10/9/2007 12:21:28 PM

Tomorrow, tomorrow, there's always tomorrow ... I'll either love-ya, or dislike-ya ... tomorrow

Jeff Bailey : 10/9/2007 12:20:03 PM

Did you see where ICE closed yesterday? Bugger looks just like CME on 9/27 and 9/28 doesn't it?

Keene Little : 10/9/2007 12:19:57 PM

My take on oil, since the bounce into Friday's high, continues to be bearish. I had pointed out on Friday that the 3-wave bounce from the low on October 2nd reached the Fib target zone of 80.73-81.00. It then dropped to a new low below the October 2nd low, confirming the 3-wave move as a correction and confirming the trend is now down. Link

That means the current bounce should also be a correction and two equal legs up for it is at 80.03. The downtrend line from the high on Sept 28th is currently near 80.50 so I place resistance between 80.00-80.50. QM just printed a high of 80.07 so it's "in the zone" for a short play. If the wave count is correct (negated with a move above 81) then the next move will be hard down (3rd of a 3rd wave down).

Linda Piazza : 10/9/2007 12:19:23 PM

Prices are flat-lining ahead of this afternoon's FOMC minutes, which means that Keltner channels are, too, beginning to line up one within the other, arrayed smallest to widest. That will render support and resistance levels more difficult to determine.

Jeff Bailey : 10/9/2007 12:17:12 PM

Coeur D' Alene (CDE) $3.85 +2.66% ... right where I would have thought it would be.

Now, had I looked at it was above $4.00, then I'd have thought dollar headed back to the lows.

GG's session high has been $30.90.It's DAILY R2 $30.94.

Jane Fox : 10/9/2007 12:12:33 PM

The SPX is not giving an indication that it will retrace to even the 1540 support let alone the 1500 support level. As Linda suggests, it could just bounce along the top here before it starts its next bullish leg. Link

Jeff Bailey : 10/9/2007 12:09:13 PM

December Crude (cl07z) ... $0.50 box chart Link

Yesterday's trade at $78.00 did generate a double bottom sell signal.

However, today's rather "quick" 3-box reversal up presents the "shake out" and BEARS do NOT want to see a trade at $81.00.

For now, bearish vertical count is to $75.00.

Pink dots are possible channel.

Jane Fox : 10/9/2007 12:04:36 PM

I am long many Oil stocks so I will not be buying the crude ETF - USO since I have a lot of exposure to crude already.

Jane Fox : 10/9/2007 12:03:10 PM

Crude is also giving us a buy. Link

Keene Little : 10/9/2007 12:01:57 PM

The Trannies are holding on but the index is close to giving us a sell signal if it continues to drop. Conversely we could have a breakout in progress if it's able to rally back above Friday's high. The daily chart shows the pop above the top of its triangle consolidation pattern so a drop back below the top of it gave us a sell signal yesterday. Today's bounce has so far found resistance near the top of the pattern: Link

The bounce off the Sept 25th low (wave-d on the daily chart) needed to be a 3-wave move up to finish the last leg of the triangle. Two equal legs up was at 5022.03 and that's why I had mentioned on Friday that I was looking for a top there. It topped out at 5023.32: Link . That was then followed by the sharp drop into Monday's low and the subsequent bounce into this morning's high. The Trannie index is also a short against Friday's high as the next big move should be down.

That's the setup so now we wait to see what happens next.

Jane Fox : 10/9/2007 11:59:55 AM

Gold is now giving us a buy signal and I am long the Gold ETF - GLD. Link

Jeff Bailey : 10/9/2007 11:57:51 AM

Mmm, mmm, mmm ... tomorrow's EIA data, reaction could be a dinger.

Jeff Bailey : 10/9/2007 11:55:05 AM

USO $61.71 +1.56% ... its DAILY R1 yet to be tested at $62.13.

Jeff Bailey : 10/9/2007 11:53:23 AM

Should'a been on my horse with a 1/2 long in PTR this morning.

Jeff Bailey : 10/9/2007 11:52:56 AM

cl07x's DAILY R2 is $81.07.

DXY's DAILY S2 is 78.44.

PTR $185.86 +2.33% ... DAILY R2 right here at $185.91.

Linda Piazza : 10/9/2007 11:51:59 AM

USDJPY at 116.94. That 117.00-117.10 zone is still resistance so far. Equity bulls would rather not see the USDJPY sustain values below about 116.78 on 15-minute closes, as that sets up a breakdown situation and also makes the bull-flag interpretation less likely. A lot could change this afternoon with the release of the minutes, though.

Linda Piazza : 10/9/2007 11:49:55 AM

The TRAN still hovers just below its 200-sma. It's at 4961.64 as I type. Keltners are set up so that it looks possible that the TRAN could drift down toward 4946, so a little lower than it's current level at least. That looks slightly more probable than a climb toward 4984, potential next resistance, but only slightly.

Jeff Bailey : 10/9/2007 11:50:51 AM

I'm not done yet ... will show you a PnF chart of DEC Crude oil futures ... November's last day of trade is 10/22/07 and trade INTO settlement could be firm/strong. ESPECIALLY if it is as short as the USO and DXY doesn't get above MNTHLY Pivot.

Jeff Bailey : 10/9/2007 11:42:55 AM

Good gravy! ... Today's DAILY R1 for the DXY is 78.75. That has to be a "key level" ...

Jeff Bailey : 10/9/2007 11:37:38 AM

US Dollar Index (DXY) 78.54 -0.17% ... daily interval chart with previously shown Sep/Oct MONTHLY Pivot retracement Link

August's MONTHLY R1 was indeed 81.81.

Linda Piazza : 10/9/2007 11:30:20 AM

The USDJPY is now at 116.97. It is so far having difficulty with the 117.00-117.10 zone, a zone that was support through last night but that may be resistance now that it's been breached. Right now, the USDJPY is chopping around within a formation that may or may not be a bull flag pulling off yesterday's high. Until it breaks one way or the other, we just won't know.

Linda Piazza : 10/9/2007 11:28:10 AM

Of course I meant to type "SPX" and not "OEX" in my post originally uploaded at 11:14:53. I've corrected the post, but editing them always changes the time stamp. That time stamp is now 11:27:01.

Jeff Bailey : 10/9/2007 11:29:22 AM

PetroChina (PTR) $185.28 +2.01% ... now a daily interval bar chart with my MONTHLY Pivot retracement Link

Last night I was thinking ... "Oh boy! If the DXY continues to rally into today's session, we're going to be RICH as the DXY gaps its MONTHLY Pivot and PTR does the same!" (assuming DXY and Oil relationship in play)

Jeff Bailey : 10/9/2007 11:16:27 AM

11:00 Internals found at this Link

Linda Piazza : 10/9/2007 11:27:01 AM

The SPX did maintain 15-minute closes above Keltner support that is now at 1554.71 on closes but was lower when it was tested, below 1554. The SPX's target and resistance is now tentatively at 1558.88, but I've always been a bit skeptical of that target because it was set during the first 15-minute candle. So far, so good, but the SPX is now facing 15-minute resistance at about 1557.50 on closes, and it's going to have to push above that to get to the target. If you're in bullish plays, you need to be asking yourself how you'll treat the ongoing test of the previous high of the day. That will depend on whether you think there's going to be a breakout or whether you think we'll likely have another consolidation day.

It may depend, too, on whether you have a psychic connection to the person preparing the Fed minutes and to big money people who will be reacting to what they read in those minutes. I'm lacking that market tool myself.

Keene Little : 10/9/2007 11:10:18 AM

We're getting about as close as I care to see to a new daily high. Needless to say it needs to roll back over now otherwise we could have something more short term bullish in progress. So stepping aside will be the right play if stopped out and then reevaluate as the move progresses.

Jeff Bailey : 10/9/2007 11:04:01 AM

11:00 Market Watch found at this Link

Linda Piazza : 10/9/2007 11:02:47 AM

In my 10:36:16 post, I mentioned that if the USDJPY's decline off yesterday's was going to maintain a bull flag appearance, the USDJPY needed to bounce from near 116.70-116.80 support then being tested. It did bounce and is currently at 116.96, testing new resistance now. Equity bulls want to see it continue to bounce and not fall far below that 116.70-116.80 support zone.

Jeff Bailey : 10/9/2007 10:56:14 AM

Hmmm ... we've had trader reports that their is NO available USO to short at Ameritrade (no USO to lend to shorts).

Tab Gilles : 10/9/2007 10:45:59 AM

Followup to 9:14:29 AM post

Global Sources (GSOL) Is up on Yahoo news concerning rival Alibaba.com. Currently trading at $24 +$0.92 or +3.9%

Keene Little : 10/9/2007 10:44:41 AM

I'm not sure what caused the spike up in the DOW just now but shorting against this morning's high is still the right play.

Jeff Bailey : 10/9/2007 10:41:49 AM

Close enough ... a 2.75 Std Dev gets me +/- 1.956%.

Jeff Bailey : 10/9/2007 10:39:02 AM

3 Std Dev gets me +/- 2.193%

Keene Little : 10/9/2007 10:38:29 AM

When you look at the inflated prices of all of these stocks, do you look at them being up due to inflation and make adjustments in your mind as to what they would trade today compared with where they were trading say in March 2003?

This is a very good question because inflation (and the drop in the value of the US dollar) has in fact caused an inflated value of the stock market. If the DOW were priced in gold, Swiss Francs or Euros for example, instead of being at new all-time highs it would instead be around a two-thirds recovery of the 2000-2002 decline. If you are from Europe using euros to trade the US markets you've probably had a laugh or two (or a cry) about all the hype about the DOW making new all-time highs.

That speaks of the longer term value of your stock holdings if you've been long since pre-2000. The value of your account is in fact less than it was at 2000. But for traders it doesn't matter. We trade the charts and it could be priced in hogs ears and we wouldn't care. We trade short term and try to take money out of the market on a regular basis. We do care about money we sock away for longer term but it shouldn't affect how you treat prices you see being printed on a daily basis.

But just to give you an idea, here's a chart (courtesy Topline Investment) from a little earlier this year as the DOW was making new all-time highs (in US dollars). Priced in Swiss Francs the DOW was just passing a 62% retracement of the bear market decline. Now don't you feel better about our highs? Link

Jeff Bailey : 10/9/2007 10:37:16 AM

If I slap a Bollinger band on the DXY (20:2), I'm only getting Lower band that is -1.421% below its 20-pd SMA. Upper band is +1.421%

Linda Piazza : 10/9/2007 10:36:24 AM

USDJPY now at 116.86, approaching potential support in the 116.70-116.80 zone. If this pullback from the Monday high is going to maintain its bull-flag appearance, the USDJPY needs to bounce soon and certainly not drop much further.

Linda Piazza : 10/9/2007 10:33:28 AM

The Fed announced a repo in the amount of $12.500 billion, with that a net add. No wonder the dollar drifts lower today, at least against the yen. Hmmm. I wonder what the FOMC minutes are going to say this afternoon?

Jane Fox : 10/9/2007 10:31:40 AM

HONG KONG (MarketWatch) -- Crude oil futures fell in electronic trading Tuesday, extending weakness from the previous session, which saw prices touch a three-week low.

Traders worried that a stronger dollar would hurt energy demand and bet that data due later this week will show a third-weekly climb in U.S. crude inventories.

"The general strengthening of the dollar has helped to push oil prices back down, but the bigger driver is a current lack of fresh news and a fairly well-supplied market, at least for the moment," said Kevin Kerr, editor of Global Resources Trader, a newsletter of MarketWatch, the publisher of this report

Jeff Bailey : 10/9/2007 10:30:56 AM

AND the DXY tested a BIG level of resistance (see below at 10/08/2007 11:51:26) ... THEN ...

Jeff Bailey : 10/9/2007 10:29:53 AM

That has me thinking ... IF it is TRUE that OIL traders are keying off the dollar ....

Jeff Bailey : 10/9/2007 10:25:07 AM

QCharts' default setting for Bollinger Bands is ... Length: 20 ; Std Dev: 2.

Jeff Bailey : 10/9/2007 10:22:36 AM

Colombia's Central Bank Sold $179.5M In Put Options In September

DJ- The Colombian central bank sold $179.5 million in put options in September to slow down the peso's appreciation, the monetary authority said in a press statement late Monday.

The central bank sells put options any time the benchmark representative market rate, known as TRM, is lower than 2% below the 20-day moving average.

Separately, the central bank didn't buy dollars in the spot market in September.

The monetary authority also has the prerogative to sell or buy pesos or dollars on the spot market to influence the exchange rate.

In the first four months of the year, the central bank bought as much as $4.52 billion in the spot market to slow down the peso, which has gained 13% so far this year. The amount bought by the bank is high compared with the total dollars bought during the full-year 2006, when the bank purchased $1.78 billion.

Jane Fox : 10/9/2007 10:22:25 AM

S&P futures make a new daily low but the VIX did not make a new daily high so that new S&P low will not have follow through.

Linda Piazza : 10/9/2007 10:19:15 AM

The TRAN is sinking just below its 200-sma on its daily chart again, with that average now at about 4977.39 and with the TRAN currently at 4970.40, off its day's high of 4995.16. SPX, OEX and Dow bulls would prefer to see it remaining above that average.

Jeff Bailey : 10/9/2007 10:18:58 AM

Hot Topic (HOTT) $8.47 -0.47% ... Janney Montgomery starts at "buy."

Jeff Bailey : 10/9/2007 10:17:26 AM

Posco To Raise Vessel Thick Steel Plate Prices DJ- South Korea's Posco said Tuesday it will raise the prices of thick steel plates used to make vessels by 10% from Oct. 25 due to strong demand.

PKX $188.70 +0.72% ...

Jane Fox : 10/9/2007 10:15:42 AM

Although the price of crude has an affect on Gold, under normal market conditions the US$ has more but since crude as been so bullish lately I have noticed that relationship has switched and crude has had more of a pull on Gold than the US$.

Here are daily charts of Crude and Gold, which certainly does support that theory. Link

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

The 15-minute 9-ema on the SPX's chart is now at 1553.41. Bulls want to see that maintained on 15-minute closes to keep the 1558.80 target (and potential resistance) in place and to present the possibility of a higher target, now at 1560.20, being reached. There's no guarantee with any of this, including any guarantee that if the 9-ema's support doesn't hold that the targets still won't be reached--but that's the way the support and resistance line up. My thought since yesterday afternoon is that we could well see a consolidation day that would cap any upward gains, so I think any trading plan today should have included that possibility.

Keene Little : 10/9/2007 10:08:48 AM

Correction, my ES stop is at 1569.75.

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

The ES short at 1569 was a test of resistance following the 3-wave bounce and was a good setup. As such, now that it has pulled back I'm lowering my stop now to two ticks to a new high so 1570.75. I added to my short position from 1572 on Friday and my stop on the entire position is now 1570.75.

Jeff Bailey : 10/9/2007 10:04:27 AM

10:00 Market Watch found at this Link

Jane Fox : 10/9/2007 9:55:57 AM

Interestingly the AD line as now fallen back to +578.

Linda Piazza : 10/9/2007 9:54:57 AM

The SPX has set an upside Keltner target near 1558.76-1159.39, depending on whether you're watching a 15-minute or 10-minute chart. Let's study the 15-minute because it tends to be the one I watch the most. On that chart, bulls want the SPX to maintain 15-minute closes above the 9-ema that's currently at 1553.55 but rising sharply. This maintains an upside target of 1558.76, with the next target above that at 1560.05. The SPX is at 1557.30 as I type and perhaps due for a pullback--oops, beginning as I type--and I have to say that I'm always a bit skeptical of new targets set in the first 15 minutes of trading, as this one was. The USDJPY is continuing to drop, and although that's not as reliable an indicator as it once was, it's not encouraging me to serve as a cheerleader for bullish positions. It's encouraging me to do what I would have done anyway due to the possibility that another consolidation day could occur: suggest that you have plans in place for capturing bullish gains and not letting them turn into losses.

Jane Fox : 10/9/2007 9:54:11 AM

Here are the jtHMA charts of the US$ and since the monthly is red (bearish) you would be looking for a "sell the rally" type of trade. As you can see the daily charts have turned green so it is setting up for a short but you need the 120/60 to turn back red for your entry. I mention this only because these charts are so important to our potential gold trade. Link

Linda Piazza : 10/9/2007 9:49:23 AM

In my 9:43:05 post, when I referred to the TRAN's relative underperformance, I was referring to its underperformance on the daily chart (today again testing the 200-sma from the underside, for example), not the underperformance today in particular. Today, it's gaining, too, along with other indices, although it's hitting potential resistance as I type. The TRAN is at 4984.38 as I type.

Jane Fox : 10/9/2007 9:47:53 AM

DAX takes a huge spike up but the USDJPY is falling. I like to see these two in sync.

Jane Fox : 10/9/2007 9:46:39 AM

AD line is climbing and is now at +801 and the VIX is hovering at daily lows so the bulls have control and I would not be short here.

Linda Piazza : 10/9/2007 9:44:33 AM

USDJPY dropping, now at 117.02, testing the psychologically important 117.00 zone and the overnight low. This typically isn't supportive of equity gains, but it's not too worrisome yet. Watch it, though.

Jane Fox : 10/9/2007 9:43:39 AM

SPX daily charts has a 38.20% retracement right at the 1500 support. I don't want to sound like a broken record here but I think a retracement back to this level would be very healthy for the market. Link

Keene Little : 10/9/2007 9:43:25 AM

ES is struggling with 1569 and that's the level I like for a short play with a stop at 1571. The setup is good and the stop is tight.

Linda Piazza : 10/9/2007 9:43:05 AM

The SOX turns lower this morning. In the past, that would have been a warning for bulls on the tech-related indices, but lately, the techs have surged without the participation of the SOX. Is this a sign of changing times, the new supposed cyclical nature of the semis we were supposed to see evolving, or is this, like the TRAN's relative underperformance, a warning, although not one that can be used for market timing?

Jane Fox : 10/9/2007 9:38:42 AM

All markets open above their respective PDHs except the Russell 2000.

Linda Piazza : 10/9/2007 9:38:46 AM

During Friday's big gains, it was the SPX's 10-minute Keltner chart that showed the most relevance, although I typically prefer the 15-minute one. The 10-minute one today shows the SPX testing first Keltner resistance just over 1556, with next resistance on 10-minute closes at about 1559.21. RSI is above 80, but RSI can trend on this chart, so that's no guarantee of a reversal in the making. SPX at 1556.09, at that first Keltner resistance.

Jane Fox : 10/9/2007 9:37:05 AM

VIX opens below is PDL and that is bullish as well.

Linda Piazza : 10/9/2007 9:36:21 AM

If today is going to be another of those three to five consolidation days that we typically see after the SPX has gained big, then gains might be capped this morning. There's no guarantee--if upside momentum is strong enough, the SPX won't consolidate that long or at least may again eschew its typical 10-sma test--but bulls need to at least factor in what they'll want to see and when they'll want to take profits.

Jane Fox : 10/9/2007 9:35:57 AM

AD line is a bullish +624 but not overly bullish.

Jane Fox : 10/9/2007 9:35:23 AM

Certainly does look like Crude has very good support at $79.00 and a close below this support would be the green light to take a short term (very short term) short in crude. Link

Jane Fox : 10/9/2007 9:32:46 AM

Here is the daily chart of the US$ and it looks like it could be making a reverse H&S and forming a bottom. This of course would not be good for a long position in Gold. Trading is never easy is it? Link

Linda Piazza : 10/9/2007 9:31:02 AM

While the Nikkei was open last night, the USDJPY continued drifting down off yesterday's high, but it never violated 117.00 and has bounced a little after the Nikkei closed. It's at 117.18 as I type. Perhaps because the Nikkei was closed Monday, the only USDJPY action that was correlative with U.S. equity action yesterday was that action that occurred while our markets were open. So, let's watch to see what happens this morning.

Keene Little : 10/9/2007 9:26:41 AM

The equivalent level for SPX would be resistance around 1557-1558 and any higher than 1559.30 would suggest new highs coming.

Jane Fox : 10/9/2007 9:26:36 AM

I want to be long gold and I know there are a few MM subscribers out there who want to be as well, however, we want to buy a dip and not the top so how do we do that? Well the best way I know how to identify a dip is with the jtHMA charts and they are telling me Gold is now in a dip (daily charts red) but we need the 120/60 charts to turn green before we can enter a position. I will keep my eyes on these charts and alert you all when this occurs.

The other thing a goldbug has to keep his/her eye on is the US$ because these two mostly trade hand in hand but my thoughts are if crude resumes its bullishness then that relationship becomes less and less important allowing Gold to climb. Link

Keene Little : 10/9/2007 9:25:04 AM

Using an all-hours chart on ES, an a-b-c bounce with the 2nd leg up equalng 162% of the 1st is at 1569 and a 62% retracement of the drop from Friday is at 1568.25. So if this bounce is to be just a correction of the decline we should see top around 1568-1569. Any higher than 1570.50 probably means new highs coming for the market. Link

Tab Gilles : 10/9/2007 9:14:29 AM

Yahoo (YHOO) Yahoo buys 10% of Chinese B2B company Alibaba.com. It already owns 40% of its parent company. Link

Take a look at one of Alibaba's competitors, Global Sources (GSOL), should see activity there today. Link PnF Quadruple Top Breakout; Price Objective $34.50. Link

Jane Fox : 10/9/2007 9:14:00 AM

When Crude is under $80.00/bl the normal relationship between Gold and the US$ is back in play as these overnight charts show.

Notice the DAX is supporting the bullishness you are seeing in the American markets. Link

Jane Fox : 10/9/2007 9:07:47 AM

All the markets made higher highs and lows during the overnight session and they all stayed within their previous day ranges except, you guessed it, the tech stocks, the NDX futures, NQ. I must admit it feels strange having the techs in a bullish leadership role. They certainly have been the leader down for the last 7 years but I cannot remember (since 2000) the last time they have been the leader up. Link

Linda Piazza : 10/9/2007 8:32:43 AM

No repos mature today. If the Fed announces a repo, it will amount to a net add. Lately, the Fed has been reducing the number of repos it announces, perhaps as the most immediate worries switch from fears of a liquidity crunch to fears related to the dollar's weakness. When I began seeing the Fed allow some days of net drains, I wondered if there might not be some effort underway to prop up the dollar or at least not increase its weakness by adding to liquidity, but I didn't feel my background in economics was strong enough to allow me to come to any conclusion. It might have been a silly idea for all I knew. Yet I do see that the dollar, while far from strong has at least moved off its lows while we were also noticing that the Fed was reducing the amount sloshing through the system in relationship to the repos that hadn't yet matured. I don't know how lasting the Fed's efforts will be, if that's indeed what's going on, but I still think it's important to ask the questions, to try to figure out what's going on underneath the surface.

Why? How does this impact traders or investors? Well, for one thing, if you're buying stock or options on particular companies, the dollar's strength or weakness can impact our companies, depending on where the bulk of sales and/or materials purchases might be. What if you're a big company buying expensive materials overseas, paying with dollars but selling most products domestically? What if you're buying most materials here but exporting much of what you produce? One company might benefit from a strong dollar while another might see its sales boom when the dollar weakens.

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