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OI Technical Staff : 10/12/2007 9:59:59 PM

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Keene Little : 10/12/2007 4:23:56 PM

One thing the bulls will need to do on Monday is get SPX back above 1563-1565 and keep it there. That level is still a wall for the bulls.

Jeff Bailey : 10/12/2007 4:21:28 PM

YM 14,189

Jeff Bailey : 10/12/2007 4:21:12 PM

Have a great weekend!

Jeff Bailey : 10/12/2007 4:20:44 PM

If long YM from 14,129 and back-test of GREEN #3 after seeing GREEN #6, give it to the bears here at 14,187, but make him pay at the offer.

Keene Little : 10/12/2007 4:14:01 PM

Assuming for now that we're going to get another leg up on Monday the question at that point is whether it will complete a 3-wave correction of yesterday's decline or if instead it will be the middle of a larger rally to new highs. It's too early to tell but I would actually like to see the more short term bullish (pink) price pattern play out since it would coincide with the Oct 17 turn date. Link

Jeff Bailey : 10/12/2007 4:01:20 PM

YM 14,173 alert! ... session high

Keene Little : 10/12/2007 3:58:11 PM

Looks like some short covering into the close as a few shorts throw in the towel and not take a chance over the weekend.

Keene Little : 10/12/2007 3:57:09 PM

There's been no change to the SPX 60-min chart I posted earlier--we're either getting a slow start to the next leg down or else it's just consolidating in preparation for another leg up. It's certainly not worth the risk of holding a position over the weekend. We'll see what develops on Monday. Link

Jeff Bailey : 10/12/2007 3:48:26 PM

OK ... need to get going. Will see if there's a "Merger Monday" for DOW.

Jeff Bailey : 10/12/2007 3:47:03 PM

Swing trade put alert! ... establish DOW Strangle ... with three (3) of the Dow Chem DOW OCT. $45 Puts (DOW-VI) at the offer of $0.35.

Jim Brown : 10/12/2007 3:44:50 PM

If the Russell futures do break below about 843 I would switch sides and become more bearish.

Jim Brown : 10/12/2007 3:44:01 PM

I am a little more bullish today that I was yesterday based in part by the strength in the Russell. The futures refuse to give up the 844 level and with earnings pessimism in full bloom we have more opportunity for an upside surprise next week than potential for earnings misses. Those companies that were going to warn already have and they probably over warned just in case. Now they can beat the revised estimates.

Linda Piazza : 10/12/2007 3:41:22 PM

The SPX did break below 1557.30, but it didn't stay there. Anything could happen when MOC orders hit, but is "anything" likely to happen? Not that I can tell from my charts. Over the last forty or fifty minutes, the 10-minute 9-ema has served as resistance, with that at about 726.75 on the SPX (about 726.79 on the OEX), but that's being retested again with a tall green candle spiking up to it. The TRIN had been rising but has spiked down sharply. The VIX isn't doing much. Neither is the USDJPY. So far, there's been no follow through in any direction and nothing on my charts warns me that's about to change yet.

Jeff Bailey : 10/12/2007 3:39:14 PM

VIX 17.74 -6.03% ...

Jeff Bailey : 10/12/2007 3:37:38 PM

DOW $46.74 +4.46% ...

Keene Little : 10/12/2007 3:37:21 PM

The reason I say a bounce from here could be more bullish is the fact that October 17th is a very important cycle date, including a Bradley Model turn date (the most important one of the year supposedly). That date has been known all year and most (myself included) assumed it would mark a bottom of some kind. If we rally into that date instead then it could mark an important top. One leg at a time until this clears up...

Jeff Bailey : 10/12/2007 3:36:51 PM

Swing trade long alert! ... for three (3) of the Dow Chem DOW Oct. $50 Calls (DOW-JJ) at the offer $0.45.

Keene Little : 10/12/2007 3:32:51 PM

This afternoon's price action looks like a consolidation pattern and fits as wave-B in a larger A-B-C bounce pattern (or more bullishly it could be a 1-2-3). A pullback to SPX 1554 would fit an internal Fib projection for the end of the wave-B pullback and then another rally leg up on Monday: Link

As I mentioned earlier, the key level is yesterday's low--as long as that holds then the bulls still run this show.

Jeff Bailey : 10/12/2007 3:32:50 PM

Dow Chemical (DOW) $46.54 +3.84% ... jumps on speculation of buyout.

Jeff Bailey : 10/12/2007 3:25:41 PM

Email "Confusion:" ... TRIN 1.14 +32.95% measures up/down volume on NYSE, TRINQ 0.56 -63.63% measures up/down volume on NASDAQ.

If at any time you are "confused" by something I type here, PLEASE ask me.

TRIN has little to do with NASDAQ!!!!

Linda Piazza : 10/12/2007 3:23:34 PM

SPX 1557.30 has marked the low side of the consolidation since about 10:10 this morning, so bears would like to see that broken soundly, and bulls, of course, would not. The SPX has vulnerability to a line now at 1551.79, but it's been setting and erasing that vulnerability since midmorning without ever driving toward it. I just don't see anything yet that lets me know that this push is more valid than the others and that price will break this time. It could: there's just nothing on the charts to tell me whether it will or not. Nor is there anything to tell me that it can't zoom higher.

The TRIN is again climbing, however, and this relative bearishness compared to most of the afternoon should be watched.

Linda Piazza : 10/12/2007 3:10:18 PM

There is sometimes a change in the tenor of trading when the bond market closes, so this drop since the bond market close should be closely watched in case there's follow-through. I just don't see anything yet that gives any confirmation, so my charts just aren't telling me anything.

Linda Piazza : 10/12/2007 3:08:33 PM

Bears are pushing. So far, the USDJPY at least isn't supporting the downward push. I don't look at this as the be-all, end-all indicator any longer, but I'd like to see it moving the same direction as prices as confirmation. VIX isn't doing much. TRIN is trying to push higher, though, currently at 1.18, so there's mild confirmation from that quarter, but not from much else yet. So far, I'd have to advise some mild skepticism about expecting downside follow-through. So far. Keep an eye on the TRIN.

Linda Piazza : 10/12/2007 2:48:08 PM

Nothing happening. Yet. Since there's been nothing happening, I took a look at what weekly charts will show for this week's candle. If the SPX, OEX and Dow were to close anywhere near their current levels, their charts would show near-doji at the top of steep climbs. Before you bears get too excited about the possibility of this being the second of a potential three-part reversal signal (with next week being required to be a down week to complete it), take a look at week before last's candle. On the SPX, for example, the candle was a more classic doji with a long lower tail, a better potential reversal signal, perhaps, and that was followed last week with a strong climb. Potential reversal signals aren't always followed by confirmations and reversals. All it tells us for now is that there was some hesitation about following through on the breakouts. And that's only if prices end somewhere near their current levels.

Keene Little : 10/12/2007 2:39:13 PM

Another obscure factoid for a boring Friday.

SPX has actually been positive in October for 8 of the last 11 years, the 3 exceptions being the 3 Octobers during the 2000-2003 bear market. I heard that on CNBC last week and it surprised me but I checked and it's true. So, if SPX closes below 1527.25 (October 1st low), on October 31st, it would be a heads up that we might be starting a new bear market.

Thanks Mark.

Jeff Bailey : 10/12/2007 2:38:57 PM

Trade Blotter of CLOSED and OPEN trades that I've made at this Link

Jeff Bailey : 10/12/2007 2:22:30 PM

USD/JPY 117.45

Jeff Bailey : 10/12/2007 2:21:25 PM

Day trade short cover alert! ... the full position in shares of Coeur D' Alene Mines (CDE) at the offer of $3.90.

Linda Piazza : 10/12/2007 2:16:23 PM

Markets in the U.K. today focused on a survey by the Royal Institution of Chartered Surveyors. The survey showed that the number of members recording a fall in property prices increased, and that increase was apparently a "shock," a timesonline.com article noted. Dresdner Kleinwort downgraded homebuilder Barratt Developments, saying it was their "biggest Sell," (which just strikes me as funny, for some reason) according to the article. However, some positive news surfaced, at least news that was viewed positively: THE TIMES revealed that Virgin Group had expressed interest in mortgage lender Northern Rock. All in all, the news was mixed, but it didn't help most homebuilders.

Why should this matter to us? First, we have been seeing some signs that what's happening here with relationship to the housing market in the U.S. is also happening elsewhere, and if it's spreading elsewhere, then the rest of the globe's economies are not going to hold us up if we falter. And, if you think it can't impact us, remember back to how adversely news of Northern Rock's needing to be bailed out by the Bank of England shook many of the markets across the globe. So, the Northern Rock news should be somewhat reassuring if no further similar shocks occur. Most are still assuming that Asian markets and particularly Japan's banks, had little exposure to the instruments that were devalued due to the subprime mess. Is that true? Is there another Northern-Rock type bomb ready to explode? I don't know if that question has been fully answered yet.

Jeff Bailey : 10/12/2007 2:08:05 PM

Day Trader's Tip! ... In a queit session, even though YOU have a target at a potentially institutionally derived level, try NOT to place your "buy to cover" orders for all to see, especially if you're able to monitor your trade.

"Retail" traders will see it, and my try and stack up in front of you.

Keene Little : 10/12/2007 2:02:42 PM

The price action since this morning's high has certainly taken on more of a consolidation look to it and therefore turns it more bullish. Another leg up for SPX could have it tagging its broken uptrend line again near the 62% retracement at 1564.87. No good setups here--more chop can be expected.

Jeff Bailey : 10/12/2007 1:47:07 PM

Day trade short stop/target adjustments alert! ... Lower stop to $3.97 and raise target to $3.88 (from $3.85).

CDE $3.92 x $3.93.

Keene Little : 10/12/2007 1:40:46 PM

So far SPX did a picture-perfect tap of its broken uptrend line (actually it missed it by a few cents) so the picture here looks bearish: Link . But don't discount the idea that we could see a larger upward correction into next week (or something even more bullish). The bull killer here would be a move to a new low below yesterdays but until then both sides need to stay vigilant.

Speaking of bull killer, October is known as the bear-killer month. I've heard many people mention this in the past few weeks. But we need a decline in order for that to be true. Have you seen a decline (yesterday's puny move doesn't count)? This year has been the year of opposites where the usual calendar events have been reversed. Might that be true for this month as well? Something to think about.

Linda Piazza : 10/12/2007 1:40:16 PM

The TRAN is going sideways.

So, all in all, I'm not finding a whole lot of confirmation that potential downside targets mentioned for the SPX and OEX will be met. I was searching these other indications because I thought some skepticism was in order, and I wanted confirmation before we believed too strongly that what we were seeing was anything more than choppy price action. Unfortunately, these charts still aren't predicting much about any direction.

Linda Piazza : 10/12/2007 1:37:57 PM

At 839.54 as I type, the RUT has rolled over a bit more strongly, although it's just come back to test the 38.2% retracement of yesterday's range and it could bounce from that up to test the 10-minute 9-ema at 840.98 before it falls. A sustained climb back above that 9-ema would erase the downside theme, though.

Linda Piazza : 10/12/2007 1:35:54 PM

USDJPY at 117.39, trading essentially sideways, holding 117.35-ish support. So far, that's not suggesting that downside targets on indices such as the SPX will necessarily be met. It's supporting the "sideways" theme, so far. Too much lower, though, and it begins to lend more credence.

Linda Piazza : 10/12/2007 1:33:41 PM

So far, bulls aren't doing such a good job of breaking out the SPX to the upside. Perhaps, as the stop-running time of day nears, bears are going to give it a try. The SPX has now set a potential downside target of 1553.63, but I don't know that I'd give it a lot more credence than any upside tests, especially given when the target is being set, as the end of the lunchtime lull approaches. For the OEX, the equivalent potential target is 724.09. Ditto the skepticism. I'll take a look at some of the underpinnings of the market and tell you in minute or two if they support the idea of downside.

Jeff Bailey : 10/12/2007 1:28:42 PM

EWJ $14.50 x $14.51

Jeff Bailey : 10/12/2007 1:27:01 PM

Looked for news earlier on any recomposition, but could find anything.

Jeff Bailey : 10/12/2007 1:26:16 PM

SMH $36.28 +0.86% ...

Jeff Bailey : 10/12/2007 1:25:53 PM

USJ/JPY 117.42 ... CDE $3.91 x $3.92

Jeff Bailey : 10/12/2007 1:24:41 PM

SNDK -1.70% and MU -1.04% now.

"flash" and "DRAM" ... After Costco's earnings review, rather surprised at SNDK.

Jeff Bailey : 10/12/2007 1:23:14 PM

SMH ... See my 10:25:19 post.

Keene Little : 10/12/2007 1:21:08 PM

Thanks to Allen:
TS charts show $SOX up 4.67 as I type. Qcharts SMH shows something else entirely. I don't know what's up with that but I trust the TS number over Qcharts.

Strange, SMH shows a gap down and still down but SOX shows gap up and still up. Not sure what's going on there.

Jeff Bailey : 10/12/2007 1:21:00 PM

Oh ... OK. Thanks. Just trying to get a pulse into the close.

Keene Little : 10/12/2007 1:17:50 PM

Jeff, I'm not short oil. The break of the downtrend line from Sept 28th negated the bearish setup: Link

Jeff Bailey : 10/12/2007 1:13:29 PM

Keene! Will you be holding your oil futures short position over the weekend?

Keene Little : 10/12/2007 1:10:06 PM

Today's rally is without the banks, without MER, and without the semis. These are not rally killers but they sure should make bulls nervous about the rally. Dead cat bounce comes to mind.

Keene Little : 10/12/2007 1:07:17 PM

The one thing about the 62% retracement levels is that there are likely a lot of bears watching that level as an opportunity to get short (or bulls to get out) so we might not see the DOW or SPX hits those levels. The RUT is practically there and NDX is slightly above it. So you can see where this morning's strength lies. The speculative fervor continues with buyers running back into the sexy techs (but without the semiconductors so watch out on that one).

Keene Little : 10/12/2007 1:02:35 PM

The 62% retracement for the DOW is at 14103.

Keene Little : 10/12/2007 1:01:53 PM

The equivalent support-turned-resistance level for the DOW is about 14137.

Keene Little : 10/12/2007 1:01:06 PM

If you short YM, a better stop would be just above 14200 where it found support yesterday morning. That would likely be a resistance level now.

Keene Little : 10/12/2007 12:57:47 PM

YM is about to tag the 14171 level and I think it will be worth an attempt to short it there (14170), stop 14190. Quick try (if it gets there), tight stop.

Linda Piazza : 10/12/2007 12:30:59 PM

So far, I'm just not seeing much that's telling me about next direction, as I said earlier. Keltner channels are lining up the way they do when volatility flattens. Breakouts or breakdowns don't go much of anywhere. The VIX and TRIN were both bearish earlier this morning but both have dropped, which leans more toward the bullish side. The USDJPY was bullish, but it's dropped, too, and then flattened, so it's lost its bullish tenor. Just a mix that tempts one to micro-analyze, and that's not a good thing to do.

Linda Piazza : 10/12/2007 12:25:54 PM

New breakout attempt on the SPX, this time accompanied by one on the OEX. Watch for 10-minute close above the Keltner line now at 1561.63, and hopefully significantly above, as a sign that this push is succeeding or a close at or below it as a sign that it isn't. SPX at 1562.34 as I type.

Jeff Bailey : 10/12/2007 12:25:48 PM

Adding the CNOOC Oct $175 Call (CEO-JO) and $180 Call (CEO-JV) to near-term watch list.

CEO $174.83 +3.27% ...

Linda Piazza : 10/12/2007 12:23:44 PM

So much for the RUT dipping to 840.54. It fell to only 840.97 before climbing again.

Keene Little : 10/12/2007 12:21:48 PM

I'm sure most of you at one time or another have been with someone and you see a cloud that looks like an animal and you try to convince the other one it's really there. We like to find familiar shapes in lots of things. The same thing happens in the market as we stare at the charts. Would it surprise you to hear that I see a bear poised over a bull, teeth and claws bared and ready for attack? OK, that's a stretch. But maybe this little ascending wedge on YM is signifying a short play setup if it gets one more push higher: Link . YM 14171 would be a 62% retracement of yesterday's decline and the top of its wedge pattern.

Linda Piazza : 10/12/2007 12:17:27 PM

It looks as if the RUT just about nailed exactly a 61.8% retracement of yesterday's range about an hour ago. It's now dropping back to test the 50% level at about 841.46. If it were to break strongly above the 61.8% level at just under 844, then the Keltner charts make 847.01-848.08 look likely, although there's a gap in that area that might turn back attempts to advance. RUT at 841.69. Right now, however, it looks likely that the first thing the RUT might do is drop back toward 840.54 or maybe even 836. These setups don't always pan out, but that's what looks most likely.

Linda Piazza : 10/12/2007 12:07:00 PM

The SPX in fact was not able to maintain its so-called breakout, by only a few cents, about 40 minutes ago. The inverse H&S's right shoulder is lengthening. When this happens on a regular H&S, we start supposing that bears had the intention but not as much strength as was needed to bring that intention to fulfillment, and I think we should be supposing the same thing about bulls right now. They attempted to muster strength as was demonstrated by the potential inverse H&S, but they couldn't convincingly confirm that strength and now the formation falls apart. Bulls still haven't given up, but this formation is no longer valid, in my opinion. I don't see anything that points me any one particular way as far as next direction in the near term, unfortunately.

Jeff Bailey : 10/12/2007 11:50:41 AM

EWJ $14.53 x $14.54

Jeff Bailey : 10/12/2007 11:49:47 AM

Yes ... a "crossed market"

Jeff Bailey : 10/12/2007 11:49:31 AM

EWJ $14.54 x $14.54

Jeff Bailey : 10/12/2007 11:48:52 AM

Oh ...

Jeff Bailey : 10/12/2007 11:47:31 AM

USD/JPY 117.51 ... CDE $3.94 x $3.95

Jeff Bailey : 10/12/2007 11:44:05 AM

USD/JPY & CDE ... 5-minute interval charts Link

Keene Little : 10/12/2007 11:48:03 AM

From Mark (past contributor to the Monitor--thanks Mark):
Bored today and using the time to do research.

Factoid.

QQQQ --- yesterday was the highest volume day since the August 16 lows, so if traders are looking for volume to confirm the bearishness, there it is.

10/11/07 volume = 239,752,711
8/16/07 volume = 362,429,880

Average daily volume = 104,000,000

Linda Piazza : 10/12/2007 11:40:50 AM

The SPX closed the last 10-minute period just a little above the Keltner resistance we were watching, but only a little. The OEX has not. This renders the "breakout" on the SPX a little questionable. SPX bulls want to see the SPX maintain 10-minute closes above a Keltner line now at about 1561.80.

Keene Little : 10/12/2007 11:39:15 AM

It will be interesting to see if the 1563-1565 area for SPX remains resistance. As you know, this is the area I've been talking about for quite a while now as a potentially significant level to find a market top. Fibs, time, EW, market symmetry (harmonics), cycle studies, you name it and they all seem to be pointing to this level and this time as the potential for a market high (as in THE high).

Yesterday SPX rallied above 1565 but so far has been unable to close above that level. If it turns into resistance today then it just adds to my feeling that we are in fact topping here.

Keene Little : 10/12/2007 11:33:41 AM

Actually the broken uptrend line for SPX is now just above 1563. The 62% retracement of yesterday's decline is at 1564.87.

Keene Little : 10/12/2007 11:30:13 AM

The market is not backing off. SPX is now running into its broken uptrend line just above 1562. The pattern of the bounce off yesterday's low leaves me guessing as to whether it's impulsive or corrective. The trend line makes for a good place to try the short side but so far resistance hasn't held back the DOW or NDX so caution is required.

The bulls obviously liked the dip as another buying opportunity. If this is a 2nd wave correction to a 1st wave decline then a sharp correction (that sucks in the bulls) is very typical and then a sharp reversal follows. So both sides need to exercise caution. Stay disciplined here.

Jeff Bailey : 10/12/2007 11:25:06 AM

CDE $3.94 (unch) ... you know where it has been right?

Jeff Bailey : 10/12/2007 11:24:42 AM

DXY 78.24 +0.20% ... you know where we are right?

Jeff Bailey : 10/12/2007 11:23:18 AM

Day trade short alert! ... for full position in shares of Coeur D' Alene Mines (CDE) $3.94 (unch) at the bid.

Stop goes $3.99 for now. Target $3.85 by the close.

Linda Piazza : 10/12/2007 11:14:04 AM

So far, neither the SPX nor the OEX is giving up its test of the 10-minute 120-ema, and that should be a bit troublesome for bears. There's also a little inverse H&S on each of their 10-minute charts, and there was bullish price/RSI divergence as the head was formed on each.

As you've heard me say many times lately, I don't believe in these formations' trustworthiness any longer, but they perhaps still give some insight into what's going on, so all should acknowledge here that bulls are at least attempting to muster strength. Whether they'll be successful or not, I don't know yet. Bulls want to see confirmed 10-minute closes now above 1561.74 on the SPX and about 727.82 on the OEX and bears want to see prices roll down beneath their lows produced during the 10:40 ten-minute candles.

Jeff Bailey : 10/12/2007 11:03:08 AM

Reminder Alert! ... Next Friday is October option expiration.

Keene Little : 10/12/2007 11:01:40 AM

We're getting a little pullback now. I'm expecting we'll see a somewaht boring Friday especially after yesterday's big move. It's a good time to sit back and watch for a bit and see what sets up next. Don't feel the need to trade just to trade.

Jeff Bailey : 10/12/2007 11:01:33 AM

Coldwater Creek Shares Down 28% After Co Cuts Guidance

CWTR $7.84 -27.78% ...

Linda Piazza : 10/12/2007 10:59:57 AM

The USDJPY has now broken down below the rising trendline off yesterday afternoon's low. (I include overnight data because what happens when Japan's markets are trading is important, too.) That trendline was at about 117.45 when broken and the USDJPY is now at 117.37 as I type, at potential historical and Keltner support. This is not something that equity bulls prefer to see, but it's not a terrible sign yet, not with potential support here. Bulls do not want to see further declines and especially not sharp ones, however.

Jeff Bailey : 10/12/2007 10:56:17 AM

Alcoa (AA) $38.31 +0.60% ... slight lift from rising 21-day SMA ($37.88) UP through trending higher 150-day SMA ($37.65).

Analysis: Shorter-term strength relative to longer-term price action.

Jeff Bailey : 10/12/2007 10:53:10 AM

MM Profiles Analysis: except for OLN, not as bullish as yesterday's action points.

Jeff Bailey : 10/12/2007 10:46:46 AM

NVR Corp. (NVR) $467 -3.07% ... exited bullish play yesterday at $486.

Jeff Bailey : 10/12/2007 10:45:58 AM

SanDisk (SNDK) $48.89 +0.39% ... exited bullish play yesterday at $50.06.

Jeff Bailey : 10/12/2007 10:45:08 AM

Financial SPRDs (XLF) $35.39 +0.22% ... exited bullish play yesterday at $35.60.

Linda Piazza : 10/12/2007 10:44:28 AM

So far, for both the SPX and OEX, the 10-minute 120-ema's that I've been mentioning as likely strong resistance have held as resistance on 10-minute closes. However, those intial layers of resistance that the indices bulldozed through are now being converted to support. So, for now, we're seeing resistance at the 120-ema's (1560.95 and 727.70) on 10-minute closes, support at the 9-ema's on 10-minute closes. Resistance still has a slight edge over support, but only slightly. RSI hasn't risen into the extreme levels yet.

Jeff Bailey : 10/12/2007 10:44:21 AM

Intercontinental Exchange (ICE) $158.36 +1.25% ... exited bullish play yesterday at $161.39.

Jeff Bailey : 10/12/2007 10:43:29 AM

Olin Corp. (OLN) $22.63 +1.93% ... exited bullish play yesterday at $22.57.

Linda Piazza : 10/12/2007 10:26:48 AM

The SPX made it through some layers of Keltner resistance without packing them together, which would have happened if it had not driven so strongly toward them. That effectively weakens them. It's now facing that resistance that I termed probably strongest, near 1561.04 as I type, and potentially serving as resistance on 10-minute closes. It doesn't look as strong as it looked earlier, but this is typically a strong S/R level. The SPX is at 1560.01 as I type. Analogous levels for the OEX are resistance at 727.74 on 10-minute closes, with the OEX at 727.28. I should mention that both indices have further potential resistance just above those key levels I've mentioned.

Jeff Bailey : 10/12/2007 10:25:19 AM

Semiconductor HOLDRs (components) at this Link Component weighting at far left ... Not sure why SMH -2.6% ...

Keene Little : 10/12/2007 10:23:39 AM

NDX has bounced back up to the mid line of its parallel up-channel: Link . This would be a typical resistance level after yesterday's move down to the bottom of the channel. Whether it bounces around and heads higher or lower from here is the bigger question. But for now it would be a logical place to pull back.

Linda Piazza : 10/12/2007 10:14:04 AM

The SOX has risen to retest its 200-sma and -ema's from beneath. At 489.75 as I type, it's at the 200-ema and just above the 200-sma. The SOX sometimes chops around near these averages without respecting them as either resistance or support, but this just us one measure by which to watch the SOX, with its non participation in the rally off the summer's lows a bit concerning, at least to me.

Linda Piazza : 10/12/2007 10:11:13 AM

The TRAN is driving up toward resistance from about 4920 to 4931, but perhaps strongest right about 4925.70, at least on 15-minute closes. The TRAN is at 4922.90 as I type.

Jeff Bailey : 10/12/2007 10:01:27 AM

PetroChina Hits Record On Buffett Sale, High Oil ... Reuters Story Link

PTR $207.37 +7.28% ...

Linda Piazza : 10/12/2007 9:59:59 AM

SPX resistance is firming up on the 10-minute chart, with strongest resistance at about 1561.12 on 10-minute closes. The SPX is at 1556.86 as I type. Analogous levels for the OEX are as follows: strongest resistance at about 727.78, with the OEX at 725.68 as I type.

Jeff Bailey : 10/12/2007 9:59:54 AM

Retail Sales Jumped Up In September ... AP Story Link

Linda Piazza : 10/12/2007 9:56:15 AM

The USDJPY climbed all night, moving off its 3:30 low yesterday afternoon of 116.99. It's formed a rising trendline that's now crossing at about 117.43, if I'm eyeballing it right. The USDJPY is at 117.50 as I type. The significance? Although the inter-market relationship hasn't been as strong lately, equity bulls generally want to see this currency pair climbing while bears generally want to see it falling, just as a type of breadth indicator. Note that even if it's climbing, though, it's got potentially significant resistance in the 117.80-ish area, resistance that knocked it back strongly.

Keene Little : 10/12/2007 9:52:47 AM

Tech bulls certainly looked at the sharp decline yesterday as a buying opportunity--they're piling right back in.

Keene Little : 10/12/2007 9:51:50 AM

Depending on how the uptrend line from Sept 25th for SPX is drawn it's currently near 1558 or 1562 (heading higher obviously over time). After the big move down yesterday it would be fitting to see a consolidation day today so a bounce, pullback and higher bounce later today could get it up to the 1564-1565 area that I showed on the 60-min chart last night (below).

Linda Piazza : 10/12/2007 9:47:17 AM

The Fed has announced a repo in the amount of $7.500 billion. That leaves a net drain of $2.000 billion. That increases the amount sloshing through the system to $37.500 billion.

Linda Piazza : 10/12/2007 9:45:02 AM

The SPX is pushing above the 9-ema and headed toward next resistance. Last night in the Wrap, I told readers to watch, in this instance, for potentially strong resistance at the 10-minute 9-ema. That's now at 1561.21, with other resistance ranging down to 1558.70 and up to 1563.13. This resistance zone is seeming to firm up and may even now be firm enough to stop all but the most determined push higher. The analogous numbers for the OEX are the 120-ema at 727.82, with resistance ranging from 726.48 to 728.58.

Keene Little : 10/12/2007 9:43:22 AM

For the DOW watch for potential resistance near 14054 which is where it will hit its broken uptrend line from Sept 25th.

Linda Piazza : 10/12/2007 9:40:26 AM

OEX, SPX and Dow are testing their 10-minute 9-ema's this morning. Those are at 725.24, 1555.56 and 14021.30, respectively, on 10-minute closes. Until and unless those indices close above those 9-ema's on 10-minute closes, they're continuing the same tenor that persisted yesterday, with resistance at those averages.

Jane Fox : 10/12/2007 9:38:22 AM

My daughter and I are on our way to great white north, Canada so I will not be in the Monitor today and Monday. See you all on Tuesday.

Linda Piazza : 10/12/2007 9:35:52 AM

A reader expressed a wish last night that I would return to my previous habit of including some OEX commentary. Here's a daily chart of the OEX that's similar to the one posted earlier on the SPX, so read my 9:22:05 post for information on how to--and how not to--interpret this: Link . One point that I want to make is that RSI has been trending at extreme levels, so of course at some time it absolutely had to break that RSI trendline. That's just one more reason why you have to wait for price confirmation before you would-be bears jump in, and another reason why you'd better know ahead of time where your stops would be in case your wrong and this RSI signal is a false one.

Linda Piazza : 10/12/2007 9:22:05 AM

RSI trendline breaks sometimes lead or else occur concurrently with price trendline breaks. I like to watch RSI (and, sometimes, CCI) because those two indicators tend to lead a bit, but there's a price to pay for that lead. The signals they give are sometimes false. In fact, you might see an RSI trendline break at the end of the day, and, if the next day goes the opposite direction, that RSI trendline break might be magically erased, as if it had never existed. That's the background. Now here's the SPX daily chart, one you'll see again in this weekend's Trader's Corner: Link What's this telling us? First, let's look at what it's not doing. It's not promising that price will break through the green trendline. What it is doing, though, is giving you a heads up, to make your plans in case that trendline break occurs.

Those plans will differ, according to the type of play you're in, the size of your account, and when you entered the play. If you were one of the brave and bright (braver and brighter than I was, certainly) ones who went long at the summer's low, perhaps you've set your stop at some account-appropriate level beneath that green trendline, or perhaps you ought to consider doing so. If you're aggressive and have been wanting a bearish entry, perhaps you'll take one on the trendline break, with a stop set an account-appropriate level above it in case a break is quickly reversed. If you're conservative and have been looking for a bearish entry, perhaps you'll wait for the trendline break, if any occurs, then for a dip and a bounce to retest the trendline, and will enter only on a failure or rollover from beneath that trendline. That's a valid tactic, but there's risk there, too: risk that the trendline break will be abrupt and won't retest. That's a risk that always exists, but special characteristics of this chart (a la Pring's corrective fan principle) make it look a little more likely that a break could be precipitous, if any occurs.

A note about my commentary. Once upon a time, I was a subscriber reading commentary by other writers. I, like many options traders, am an independent sort. I wanted to learn from the other writers, but I didn't always take their advice. Sometimes I would find myself on the opposite side of an official trade. I still trusted these writers or I wouldn't have been subscribing to the site. I wanted their outlook on how things stood on my side of the trade, too. So, now that I'm a writer on the site, that's what I try to do.

I'm not wishy-washy. I'm trying to give help to all subscribers, whether they're in a long-term bullish trade, a just-entered bearish one, or something else. Just as with RSI, though, there's a tradeoff. If I'm attempting to give advice to all subscribers, I'm not giving trade-specific setups and parameters.

I can't, even if my own inclination, based on what I wanted when I was a subscriber, was different. My personal situation includes a family member who has frequent medical procedures that require me to often run off to tend to something, either via phone or travel. I have switched my own trading style accordingly and also because my study has convinced me that it's more profitable in the long run to engage in options trades in which I'm garnering money by selling options, not buying them. But that personal situation means that I can't in good conscience set up a trade for readers, even if I thought I occasionally found a can't-be-missed day trading or swing trading opportunity. It's not always apparent from my commentary, but I'm often engaged for long periods in listening to results of tests, making arrangements to be at Texas Children's Hospital or meeting a schoolbus for a granddaughter when her younger sister is at Texas Children's.

So, while it might not harm your trade if I've giving "what I see" type advice and disappear at a crucial moment, it might if I'd issued a specific trade and then disappeared at that moment. Medical emergencies are no respecters of FOMC meeting results, a sudden drive higher or dive, or any other market occurrence. Believe me, I know.

I'm not always right in any commentary I give. Sometimes I don't have a clue what's going to happen next. My Keltner channels might be scrambled by market action, or I might think some about-to-occur economic event could overrule what was setting up on the technical side. If I don't know what I think is going to happen, I'll certainly tell you. Keene has often been complimentary of female traders, perhaps giving us more credit than we deserve for being good traders as a whole, but what I think female traders perhaps do better at times than male traders is willingly confess when they don't know something. So, you heard me yesterday and at other times say that something was going on that I don't understand. I don't consider that wishy washy: I consider that taking a stand, actually. I certainly wish someone had said to me from time to time when I was a new subscriber that something was fishy and I ought to be very careful about entering any trade.

Keene Little : 10/12/2007 9:16:23 AM

Equity futures started their rally from 3:30 AM but then made a stronger climb starting at 8:00 and the 8:30 reports only caused a little interruption in that climb. Looking at the all-hours ES chart I see a 3-wave bounce off ysterday's low with the pullback into the 3:30 AM low. Two equal legs up is at 1569.25 which places it between a 38% and 50% retracement of yesterday's decline. Watch for possible resistance there. I tend not to use all-hours charts but it will be interesting to see if it comes into play this morning.

Linda Piazza : 10/12/2007 8:07:38 AM

A repo in the amount of $9.500 billion matures today. Because the government allowed a net drain of $10.500 billion yesterday and because of the maturation of the $9.500 billion repo today, the amount sloshing through the system (repos not yet matured) has been reduced from Wednesday's $50.000 billion to today's $30.000 billion. That's a more normal number for the short period in which I've been watching these, with $50.000 billion being high. We'll see what the Fed does later and how that impacts these numbers.

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