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Keene Little : 10/25/2007 12:17:26 AM

Thursday's pivot tables: Link and Link

There are several possibilities for the next move in prices but my best guess for tomorrow is a little more upside before the a-b-c bounce off Monday's low is complete, and then tip back over and head for new lows.
DOW: Link
SPX: Link
NDX: Link
RUT: Link

OI Technical Staff : 10/24/2007 9:59:59 PM

The Market Monitor has been archived.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

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Jeff Bailey : 10/24/2007 6:45:19 PM

Current OPEN MM Profiles that I've made and Watch List at this Link ... Have an OPEN order (not filled at this point) to buy 100 shares of TEX ... IF ... it trades $75.01.

Be alert on TEX trade tomorrow morning!

Go Rockies !!!!

Jeff Bailey : 10/24/2007 6:34:52 PM

USO $67.98 +3.26% ... DAILY Pivot Levels for tomorrow are ... $65.23, $66.61, Piv= $67.29, $68.67, $69.35.

Jeff Bailey : 10/24/2007 6:28:04 PM

YM 5-minute interval chart with today's recap at this Link

When you see Keene, Jane, or Linda mention MACD, just remember that it is only responding to Moving Average. Pick up on what 21-pd and 200-pd cross-over does when MACD is at an "extreme."

More importantly ... the KEY LEVEL.

If your "head is spinning" as levels keep changing like the tide from wave analysis, use pivot levels!!!! Become the DISCIPLINED institutional trader!

If you keep changing the levels, then what levels are you trading?

Jeff Bailey : 10/24/2007 6:01:38 PM

TEX $77.50 (25) x $78.00 (300)

Jeff Bailey : 10/24/2007 6:00:04 PM

TEX $77.06 (300) x $78.00 (300)

Jeff Bailey : 10/24/2007 5:59:35 PM

TEX $76.00 (11) x $78.00 (100)

Jeff Bailey : 10/24/2007 5:59:12 PM

TEX ... $77.40 x $78.00

Jeff Bailey : 10/24/2007 5:58:40 PM

What you've got to be careful of as an extended session equity short in TEX, is that you don't come in at $79, thinking you'll cover at $76.01.

If a bull, or short-covering bear that likes the earnings wants, he/she will run the offers backs up the scale to cover 1,000 shares.

Jeff Bailey : 10/24/2007 5:55:31 PM

TEX ... bids $76.00 inet. $78.86 exhausted.

Jeff Bailey : 10/24/2007 5:53:34 PM

TEX .. ticks $78.86

Jeff Bailey : 10/24/2007 5:52:42 PM

Educational: ... here's a quick look at thinly traded Terec (TEX) on 5-minute interval chart. Showing INET Level II. Link

Jeff Bailey : 10/24/2007 5:39:46 PM

TEX ... up-ticks 600 at $79.99.

Jeff Bailey : 10/24/2007 5:39:26 PM

TEX ... up-ticks 100 at $79.00

Jeff Bailey : 10/24/2007 5:37:28 PM

TEX ... ticks $78.86 (900 shares)

Jeff Bailey : 10/24/2007 5:37:08 PM

There's 1,300 at $78.86 ... if that gets taken out, be ready!

Jeff Bailey : 10/24/2007 5:36:40 PM

TEX ... ticks $79.35

Jeff Bailey : 10/24/2007 5:35:56 PM

TEX ... ticks $80.00

Jeff Bailey : 10/24/2007 5:27:45 PM

TEX ... ticks $80.50

Jeff Bailey : 10/24/2007 5:25:45 PM

Swing trade COVERED Long alert! ... please place an order to buy 100 shares of Terex Corp. (TEX) at $75.01.

If filled, this would be covered by the TEX Nov. $80 Puts (TEX-WP).

(see 04:43:05)

Jeff Bailey : 10/24/2007 5:23:29 PM

Let's stick a bid at $75.00, just in case.

Jeff Bailey : 10/24/2007 5:22:56 PM

TEX ... ticks $81.00

Jeff Bailey : 10/24/2007 5:20:22 PM

TEX $82.93 +0.92% ... ticks $81.99 extended.

Jeff Bailey : 10/24/2007 5:19:52 PM

Terex (TEX) ... Full Earnings Press Release Link

Jeff Bailey : 10/24/2007 5:19:04 PM

TEX ... Backs 2007 Rev $8.8-$9B

Jeff Bailey : 10/24/2007 5:18:32 PM

TEX ... Backs 2007 EPS $5.50-$5.70

Jeff Bailey : 10/24/2007 5:17:26 PM

TEX ... Q3 sales $2.20B

Jeff Bailey : 10/24/2007 5:14:09 PM

TEX ... EPS $1.45

Jeff Bailey : 10/24/2007 5:13:54 PM

TEX earnings hitting the wires ...

Jeff Bailey : 10/24/2007 5:10:30 PM

Nothing on TEX yet.

Jeff Bailey : 10/24/2007 5:10:07 PM

Express Scripts (ESRX) $57.37 -1.76% ... volatile extended on headline numbers. $61.00, then $57.00, now $58.60.

Jeff Bailey : 10/24/2007 5:04:36 PM

If resident outside of California ... Please check with your tax advisor.

Jeff Bailey : 10/24/2007 5:02:35 PM

Murphy Oil (MUR) $77.05 +1.81% ... spikes to $78.00 on headline numbers.

Jeff Bailey : 10/24/2007 5:01:48 PM

California residents that are "tax sensitive" may want to put together a list of California Muni-bond mutual funds. Made a killing before the Terminator took office and got things stabilized. Crisis selling of Ca-debt was a bargain!

Jeff Bailey : 10/24/2007 5:00:00 PM

S&P Cuts Rtg on Long Beach Fin Auth's Bond To 'A+'

Jeff Bailey : 10/24/2007 4:58:24 PM

Seeing several muni-bond downgrades among California municipalities. Probably "wild fire" related.

Jeff Bailey : 10/24/2007 4:43:05 PM

Long Put Trader's Tip! ... if long put an option into an earnings report and you think the stock might fall on the headline numbers, as long as you have NOT overleveraged, you can place a bid to actually buy the stock in extended session.

Example: Say you are long one (1) $80 put, and you have a downside target of $77.

Should the stock dart lower to $77, or $76, or $75, or $74, you might "lock in" a profit against the put.(Remember: Long an $80 put gives you the RIGHT to sell the stock at $80)

Then be able to wait until the next day's cash session open to trade the option!

Jeff Bailey : 10/24/2007 4:32:58 PM

Terex Corp. (TEX) $82.93 +0.92% ... waiting on earnings. Consensus is for EPS of $1.47 on Rev of $2.21B.

Next quarter consensus is $1.41 on Rev of $2.33B.

Jeff Bailey : 10/24/2007 4:10:25 PM

YM 13,713 (MONTHLY Pivot)

Jeff Bailey : 10/24/2007 4:06:57 PM

YM short cover alert! 13,716

Jane Fox : 10/24/2007 4:04:52 PM

Economic reports for tomorrow:

8:30a.m. Initial Jobless Claims For Oct 20 Week. Expected: -22K. Previous: +28K. 8:30a.m. Sep Durable Goods Orders. Expected: +1.5%. Previous: -4.9%.

10:00a.m. Sep New Home Sales. Expected: -2.5%. Previous: -8.3%.

10:00a.m. Sep Help-Wanted Index. Previous: 23.

11:00a.m. Oct Kansas City Fed Mfg Index. Previous: 4.

Keene Little : 10/24/2007 4:04:45 PM

Thanks Linda. It's going to be an easy write-up tonight. I'm just going to put a big question mark on the first page and tell readers to read your Wrap tomorrow (wink).

Keene Little : 10/24/2007 4:03:52 PM

It's not just the 60-min candle but also the daily candle for the DOW is a dragonfly doji (open and closing prices at the high of the day) so a red candle tomorrow would complete the reversal pattern. Until then it could be just an indecision day.

Linda Piazza : 10/24/2007 4:02:07 PM

Keene, I don't envy you, writing tonight's Wrap. Good luck.

Jeff Bailey : 10/24/2007 4:01:45 PM

YM traders following my signal alert! ... have your finger on the button to the close. I do NOT hold YM futures trades overnight.

Linda Piazza : 10/24/2007 4:01:17 PM

I've been studying the daily charts. Remember the SPX's old trend pattern of moving big, consolidating near the high for a few days while the 10-sma played catch up, then dipping quickly to the 10-sma and bouncing hard, beginning the whole process again? A few days ago, I began wondering if the rally was over, shouldn't we see something similar set up in reverse? Big drop, sideways (and probably more volatile sideways) consolidation while the 10-sma played catch up, bounce up to the 10-sma and then a decline from that resistance to start the whole thing over again? The current pattern chopping out this week is certainly a big consolidation pattern, if that's what it is, but wouldn't that be true if volatility expanded when markets moved to the downside? So, I don't think the range of these days this week can rule out that kind of pattern. Neither does it prove it's happening. I'm just watching and wondering, trying to think it through, and I think you should entertain all possibilities, too, as you're planning your trades.

Jeff Bailey : 10/24/2007 4:00:34 PM

YM short alert! here at 13,718. Stop 13,720. Target 13,660

Keene Little : 10/24/2007 3:58:51 PM

The 60-min candle is a hanging man doji at resistance for the DOW and SPX (downtrend lines from Oct 11th). The bulls will need to punch it higher tomorrow otherwise a 1st hour red candle would complete the reversal signal.

Jeff Bailey : 10/24/2007 3:51:59 PM

Day trader "neutral" or flat to the close.

Jeff Bailey : 10/24/2007 3:51:27 PM

YM 13,662 ... snug at DAILY Pivot.

Jeff Bailey : 10/24/2007 3:51:03 PM

CNBC ... saying Fed officials not commenting on rumor of Fed Discount Rate cut.

Jeff Bailey : 10/24/2007 3:42:02 PM

From 03:30-03:35, YM went from 13,727 to 13,679.

Linda Piazza : 10/24/2007 3:41:50 PM

If the SPX holds this into the close, this is going to be a remarkable bounce of the low of the day. If it holds near the current 1512-ish zone (dropped a little as I typed), it's going to match or nearly match the 8/10 performance, when the SPX closed almost 24 points off the low of the day. Like today, that bounce came after the SPX retested a low produced a few days earlier, the 8/06 low. When the 8/06 low held with the SPX producing a slightly higher low, bulls celebrated or shorts mourned or both, because buying and/or short-covering fueled that big bounce on 8/10 as well as some follow-through the next trading day, on 8/13.

You know the rest of the story, though, don't you? After the doji produced on 8/12 and 8/13, the SPX rolled over again into the summer's low hit on 8/16. Am I predicting such a rollover? No way. Am I saying that we can't believe that every bounce off an equal low or nearly equal low means that all is well? You betcha. I don't like this market, so I'm keeping up my warnings just to exercise good account management, whatever type of play you have.

Jeff Bailey : 10/24/2007 3:40:31 PM

What a day for the YM in the Pivots ... Wow!

Jeff Bailey : 10/24/2007 3:39:25 PM

YM 13,663 ...

Keene Little : 10/24/2007 3:34:00 PM

That was quick. That last little push higher could have completed the 5-wave move up off this afternoon's low and is a good short against the high now.

Jeff Bailey : 10/24/2007 3:30:48 PM

Hearing some chatter of potential Fed move.

Keene Little : 10/24/2007 3:28:53 PM

Looks like a small consolidation so far. Whether it proceeds higher again into the close or waits for tomorrow, it still looks like it needs a small 5th wave up to finish the rally off this afternoon's low.

Jeff Bailey : 10/24/2007 3:24:44 PM

Probably eases back into DAILY Pivot ...

Jeff Bailey : 10/24/2007 3:24:17 PM

YM 13,683 ... afternoon high still 13,714.

Jane Fox : 10/24/2007 3:18:13 PM

Wow that has been quite a move off the bottom. Link

Jeff Bailey : 10/24/2007 3:17:14 PM

CME $653.67 +3.00% ... "ditto"

Keene Little : 10/24/2007 3:17:00 PM

SPX now tagging its downtrend line so it's a good place for the small consolidation.

Linda Piazza : 10/24/2007 3:16:55 PM

Fib levels don't matter much, either, apparently.

What apparently has mattered today, of course, is the bullish divergences that were seen early this morning. Those consisted of price/RSI divergences on the 15-minute chart and the Keltner-style divergence shown in the chart I linked early this morning. Such divergences warned that plans should be made--profit-protecting plans if in bearish plays, entry plans if aggressive and wanting new bullish entries--but didn't prove that they would ever need to be put into effect. I wasn't sure how much credence they should be given, particularly as the first rise looked like a choppy bear flag rise. The dip from that rise that began at about 12:45 also looked choppy, so I had to warn again that I wouldn't necessarily believe the downside targets that were being set up. But charts just weren't predicting what would happen next until there was a 15-minute close above the 9-ema, a close that also brought the SPX above the previous swing high at about 12:45 and confirmed a higher low.

Now prices are driving up toward yesterday's closing high. Will that potential resistance matter? Will the 15-minute Keltner resistance at 1513.20 on 15-minute closes, or above it at 1518.82 matter? If you're in bullish plays, I'd be ratcheting up my stops just in case they did. I have no proof that they will and I'm still having trouble interpreting what's happening today, which is either a sign that things are in disarray or that I'm just having an out-of-it day today, something that happens to all of us from time to time.

Keene Little : 10/24/2007 3:16:22 PM

With the punch higher now, that little bitty pullback just past 2:30 PM now looks like a small 2nd wave correction which makes the thrust higher since then a 3rd wave. That means hgiher then a small consolidation and then higher again. Only after that final push higher would I consider a short play now. Bulls in control now.

Jeff Bailey : 10/24/2007 3:15:56 PM

Oh my! ... ICE $175.85 +4.37% ... a 52-week high!

Jeff Bailey : 10/24/2007 3:14:47 PM

YM 13,713 ...

Jeff Bailey : 10/24/2007 3:12:29 PM

Bold move further ... above DAILY Pivot 13,662 ... That "shouldn't have happened!"

MONTHLY Pivot in play (13,713)

Keene Little : 10/24/2007 3:11:51 PM

The downtrend line for SPX from Oct 11th is at 1515 by the end of the day so that's upside potential for the day I think.

Jeff Bailey : 10/24/2007 3:11:33 PM

YM short stopped alert! ... 13,669

Jeff Bailey : 10/24/2007 3:08:11 PM

YM short Alert! ... here at 13,648. Stop 13,669. Target 13,610.

Keene Little : 10/24/2007 3:07:14 PM

Tough call right here. If this bounce is going to fail it should do it right here. Nibble on a short here but keep your stop tight and pull it down to a new high for the bounce as soon as it rolls over (if it does).

Keene Little : 10/24/2007 3:05:32 PM

Like 1490 for SPX, keep an eye on GOOG 660--the top of its gap up on Tuesday. If that breaks I suspect its gap will get closed (651) in a heartbeat. If the bulls push this one higher again, the top of its steep up-channel is now near 680.

Jeff Bailey : 10/24/2007 3:05:41 PM

Collars Lifted alert! ...

Jeff Bailey : 10/24/2007 3:02:06 PM

EIA's This Week In Petroleum Link

Keene Little : 10/24/2007 3:01:46 PM

I don't like the pattern for a short here (DOW 13600). Maybe SPX 1508-1510.

Jane Fox : 10/24/2007 3:00:42 PM

Wilshire 5000 has a very clear line of support and resistance. Link

Jeff Bailey : 10/24/2007 3:00:01 PM

Short squeeze alert! ... in the USO $67.68 +2.81% ...

Jane Fox : 10/24/2007 2:59:38 PM

Unfortunately the DOW has a very clear line of resistance as well. Link

Jane Fox : 10/24/2007 2:58:45 PM

Sometimes the market gives us a gift and that gift today is a very clear support. Bullish above and bearish below. Link

Keene Little : 10/24/2007 2:53:49 PM

The same Fib projection for the bounce in the DOW (today's wave-c = 162% of wave-a) would take it to 13605, basically on top of its 62% retracement at 13602. Round number resistance at 13600?

Linda Piazza : 10/24/2007 2:52:16 PM

I don't know whether it's because I was away for a day and have lost the feel for the action that comes from watching it moment-by-moment or because the action really is difficult to game today, but I'm honestly not finding much that's trustworthy on the charts today. That's one reason that I'm mentioning Fib levels so often because they at least give us something objective to watch.

Keene Little : 10/24/2007 2:47:06 PM

SPX 1490 is proving itself to be a very important level. One can only imagine now the number of stops placed just below that level. So far the RSI is holding above its broken downtrend line on the 2nd retest--60-min chart: Link . Keep an eye on it as it could provide an early warning for a break of 1490 if RSI drops first. If MACD manages to get above zero then something bullish is going on. But if it continues to find the zero line resistance and turns back over here, look out below.

Tab Gilles : 10/24/2007 2:45:25 PM

Weekly EIA Report Link

Jeff Bailey : 10/24/2007 2:44:10 PM

YM 13,592

Linda Piazza : 10/24/2007 2:44:05 PM

Obviously, the SPX is no longer producing 15-minute closes beneath its 9-ema. Nor is the OEX, so those former downside targets are erased. Only the top one was reached. Honestly, charts are scrambled enough that it's difficult to predict what might happen next. Those who persisted in a bullish play have been rewarded, but you still need to keep your wits about you because the SPX has now tested the 50% retracement of the decline off yesterday's high, with that at about 1504.63 and with the SPX having just tested 1505.09, with Keltner resistance near that level, too. That's often powerful resistance.

Jeff Bailey : 10/24/2007 2:41:34 PM

Wash Mutual (WM) $28.99 +0.06% ... reversing morning losses.

Keene Little : 10/24/2007 2:36:30 PM

For today's bounce it's now looking like we had a wave-a up, wave-b pullback (the choppy decline was giving it away) and now a sharp wave-c up. Equality in the two legs up is at 1502.60 which was just tagged. But the deeper wave-b pullback suggests the 2nd leg up (wave-c) could go to 162% projection of wave-a which is just under 1510. A 62% retracement of today's decline is at 1508.20. Heading higher again as I type. Link

Keene Little : 10/24/2007 2:30:11 PM

Looks like the short covering rally wins. It was setting up that way with the bullish divergences.

Jeff Bailey : 10/24/2007 2:26:29 PM

With program collars in, that's the pivot trading pros.

Jeff Bailey : 10/24/2007 2:25:28 PM

YM ... right back at 13,561 ... DAILY S2 held.

Jane Fox : 10/24/2007 2:24:46 PM

My short was stopped at 13564.

Jeff Bailey : 10/24/2007 2:21:30 PM

YM short stopped alert! ... 13,539

Jeff Bailey : 10/24/2007 2:21:11 PM

YM short lower stop alert! ... to 13,539.

YM 13,531 here

Linda Piazza : 10/24/2007 2:20:29 PM

For the OEX, the 15-minute 9-ema is at 698.82 with black-channel resistance at 698.07. As long as those are maintained on 15-minute closes, a downside target of 693.95 is set, although the 695.50-696 support zone should be acknowledged.

Linda Piazza : 10/24/2007 2:19:24 PM

SPX 15-minute 9-ema at 1496.09, with black-channel resistance just below that, at 1495. As long as those continue to be resitance on 15-minute closes, a downside target of 1486.21 is set, although 1490-1491 potential support should be acknowledged, no matter what Keltners say.

Keene Little : 10/24/2007 2:14:55 PM

The big question now is whether we'll see another test (or break this time) of SPX 1490. The 60-min chart shows a bullish divergence at this morning's low compared to Monday's so now watch to see if today's retest leaves a shorter term bullish divergence or not. If it does then be ready for a short covering rally. But if it breaks lower then it could accelerate as stops start getting hit to the downside.

Jane Fox : 10/24/2007 2:13:38 PM

If you waited for the extra confirmation and took your YM short at 13539 you can lower you stop to 13564.

Linda Piazza : 10/24/2007 2:13:00 PM

The SPX hit the highest of the two downside targets listed in my 2:00:22 post despite the target being set during the typical stop-running time of day. As long as the SPX is producing 15-minute closes below both the 9-ema, now at 1497.07 and the channel line that's now at 1495.25, it maintains a new downside target of 1486.49. However, the 1490-1491 level could obviously provide support, since it has for three tests this week so far.

Jeff Bailey : 10/24/2007 2:12:14 PM

YM short lower stop again alert! ... now lower stop to 13,549.

YM 13,519 and DAILY S2.

Jane Fox : 10/24/2007 2:06:08 PM

Stop on the short from 13539 is 13573 and target is 13505.

Jeff Bailey : 10/24/2007 2:04:35 PM

YM short lower stop alert! ... to break even.

YM 13,530 here ...

Keene Little : 10/24/2007 2:01:34 PM

The pullback from the bounce is either very bearish and about to let go to the downside or else it's a corrective pullback that will lead to another high. If it's the latter, watch for SPX 1493-ish to hold.

Linda Piazza : 10/24/2007 2:00:22 PM

SPX 15-minute 9-ema, now at 1497.94, continues to act as resistance on 15-minute closes. SPX has set a downside target of about 1492.60, with 1486.87 a possibility according to that 15-minute chart, but I'd be leery of targets set during this typical stop-running time of day.

Jane Fox : 10/24/2007 1:58:39 PM

AD volume continues to make new daily lows but it is the only internal telling me to be short. The others are just taking a lazy ride down a lazy river and are mostly flat.

This is the reason I put my short under the last swing low - I wanted that extra confirmation.

Jeff Bailey : 10/24/2007 1:58:36 PM

Then DAILY S2 (13,519) of course

Keene Little : 10/24/2007 1:53:41 PM

Can you run us a chart on GOOG to see some possibilities on where this may be going?

As per the setup I showed yesterday, with GOOG hitting the top of its steep up-channel from September (with negative divergence): Link and its longer term channel from 2006: Link I'm thinking it has topped out. Short against yesterday's 677.60 high.

Jeff Bailey : 10/24/2007 1:53:08 PM

YM 13,558 ... need the further weakness at "dynamic" 19.1% 13,541.

Jeff Bailey : 10/24/2007 1:52:18 PM

Feel free to join in Jane! Might need you at 13,576 though.

Linda Piazza : 10/24/2007 1:50:02 PM

The SPX has now established a pattern of being pressured lower by a descending 15-minute 9-ema, with that now near 1498.50, just under it. However, the pressuring-lower process is as choppy as the climbing-up one was and not completely trustworthy as a prediction of next direction. The stop-running time of day is upon us, though, so perhaps something will happen to break up the patterns. Be careful during this period of time.

Jane Fox : 10/24/2007 1:40:29 PM

I don't want to be stepping on Jeff's toes but I see a YM short at 13539.

Jeff Bailey : 10/24/2007 1:38:09 PM

YM short alert! ... here at 13,566. Stop 13,589. Target 13,465.

Keene Little : 10/24/2007 1:28:22 PM

It's looking like the small sideways consolidation over the past hour will lead to another leg up in the bounce. If so I'll then be looking for two equal legs up for a possible top to the bounce.

Linda Piazza : 10/24/2007 1:22:27 PM

For the OEX, the 15-minute 9-ema is now at 700.15, the Keltner support that it's been testing over the last 45 minutes now at 698.33, with those levels important sort of defining a S/R zone that's been important over the last few hours and being important on 15-minute closes.

Jeff Bailey : 10/24/2007 1:14:27 PM

Oil thoughts: The reason I (Jeff Bailey) have profiled just 1/2 position in the USO is this.

Substantial decline in inventory, but potential strength in US$ has two different sides of a trade at odds.

I think there will be some that are simply trading oil inverse of dollar, but there are those that will trade the supply/demand picture.

Linda Piazza : 10/24/2007 1:10:56 PM

SPX finding resistance on 15-minute closes at the 9-ema, now at 1499.79, support on a lower channel line, now at 1495.77. It's fallen out of its first flag-like rising channel, but it might be just widening that channel in preparation for a stronger climb, up through or to the 38.2 or 50% retracements of the drop off yesterday's closing high. One or the other of those Keltner levels is going to be broken. Don't know which yet.

Keene Little : 10/24/2007 1:06:18 PM

On the chart for SPX that you posted Monday night, you highlighted in yellow the upturn in the RSI which broke it's downtrend from Oct. 5th. Was there a significance that you wished to point out? Alan

Trend lines can be drawn on your oscillators the same as on price. Oftentimes you will see the oscillator trend line get broken before the one on price and it provides a heads up for the price break. It doesn't always happen that way but often enough to watch for it. That's why I'm watching to see what RSI does off its broken downtrend line today--a break back below it would be a bearish heads up.

Linda Piazza : 10/24/2007 1:07:15 PM

About managing risk: Different writers and traders have differing views about managing risks. If you're in credit spreads, for example, how do you go about managing risk? One thing that I've been doing over the last few option-expiration cycles is to take advantage of any big moves to close out some of my credit spreads and remove as much risk from my portfolio as soon as I can. I haven't been in any front-month credit spreads the week of option expiration for the last couple of opex cycles, and I hope I'm not for November, either. Those credit spreads have big risks from two directions: price movements and any expansion in volatility which can act to widen a spread in some instances. I was worried about what might happen in the calendar month of October, so I didn't put on any November bull put spreads because of my by-now-well-advertised feeling that I could adjust a bear call spread easier in a trending-higher market than I could a bull put on in a cascading-lower market, so this week, I'm trying to use the weakness to close out as many of the bear call spreads as I can.

What am I slowly getting around to saying? If you've got some bear call credit spreads in your porfolio right now, take a look at how much of your collected credit you'd be able to keep if you were to close them out right now and whether that amount is enough for you. Monday, I was able to close out 20 contracts of some SPX 1660/1670's I had for $0.10 by legging out of them, buying-to-close (it's always imperative to BTC the sold strike first when legging out) the 1660's for $0.15 and then selling-to-close the 1670's for a nickel. I gave up $0.10 of my total profit, but there are still more than three weeks to go until November opex, and I removed that $20,000 risk from my portfolio. A little while ago, I gave up a little more--$0.15--to close out 20 NOV RUT 900/910 credit spreads, giving up some of my collected profit but removing another $20,000 of risk from my portfolio.

Seemed worth it to me. Others will conclude that the SPX was never going to hit 1660 or the RUT 900 by the end of November's opex period and those things could have just sat there and I could have kept all my collected credit. I think perhaps they're right, but I also think I'd milked those credit spreads for most of their profit and I didn't think the risk was worth trying to get the last $0.10-0.15 out of them.

You decide what's best for you. I'm just advising that you should be thinking about risk, too, and how much risk you're willing to assume or keep in your portfolio and how much of your profit you're willing to give up to remove the risk. Those credit spreads have absolutely terrible risk/reward odds, although you have probability working on your side. There's always a tradeoff in any kind of options play, so you're accepting that terrible risk/reward ratio because the probability is that you'll be unlikely to incur the loss. However, you don't have to sit on these credit spreads until opex. Increasingly often, I'm not.

Jeff Bailey : 10/24/2007 1:00:16 PM

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

Closed out the EWJ-WO at target of $13.80.

Stopped/closed out the SYH-WK at SPY $149.90.

Jeff Bailey : 10/24/2007 12:48:23 PM

ProShares ETF's Page ... Link

Keene Little : 10/24/2007 12:48:14 PM

I'm playing with a couple of different wave count ideas but in the meantime I'm noticing the pullback in the RUT had its RSI pull back again to its broken downtrend line and bouncing (same for SPX). That's bullish if it holds. Link

Jeff Bailey : 10/24/2007 12:46:43 PM

Yes it does Linda ... yes it does.

Jeff Bailey : 10/24/2007 12:41:32 PM

Deadly when used with your pivot levels.

Jeff Bailey : 10/24/2007 12:40:15 PM

Any equity futures day traders noting on 5-minute interval charts relationship between PRICE action and what happens when 21-pd SMA crosses 200-pd SMA?

Linda Piazza : 10/24/2007 12:39:55 PM

The rise off this morning's low certainly looks like a choppy, bear-flag-like rise, doesn't it? I've been fooled before and I will be again when such a choppy rise suddenly gives way to a pronounced climb when some critical level is exceeded. For now, the look of that climb gives me even more reason to believe that this bounce was just a given and that we shouldn't yet absolutely conclude, without a doubt, that this morning's support won't be retested or even will hold if it is. We just don't know.

Jeff Bailey : 10/24/2007 12:38:28 PM

BIX.X 324.66 -2.64% ... call it 325.

Jeff Bailey : 10/24/2007 12:37:47 PM

RUT.X 802.21 -1.99% ...

Jeff Bailey : 10/24/2007 12:37:27 PM

OEX 700.22 -1.21% ...

Linda Piazza : 10/24/2007 12:37:10 PM

The SPX is again rising to test the 38.2% retracement of its fall from yesterday's closing high into this morning's low, with that Fib level at about 1501.07. It's also testing the 15-minute 9-ema which has risen to just underneath 1501.

Jeff Bailey : 10/24/2007 12:37:08 PM

How do humans do it?

Jeff Bailey : 10/24/2007 12:36:48 PM

SPX 1,500 -1.26% ...

Jeff Bailey : 10/24/2007 12:36:06 PM

DXY's WEEKLY Pivot ... 77.70

Jane Fox : 10/24/2007 12:35:33 PM

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

Jeff Bailey : 10/24/2007 12:35:27 PM

GLD $75.26 +0.03% ... back to test WEEKLY Pivot ($75.36).

Jeff Bailey : 10/24/2007 12:32:41 PM

USO $66.78 +1.44% ... back to test WEEKLY Pivot.

Jeff Bailey : 10/24/2007 12:28:28 PM

DXY 77.63 (30-min delayed) ...

Jeff Bailey : 10/24/2007 12:27:40 PM

USD/JPY 114.097 at the bid.

EUR/JPY 162.383 at the bid.

Jeff Bailey : 10/24/2007 12:25:32 PM

FOREX FOCUS: Yen Sellers Quiet, Wait For Calmer Markets ... It looks like volatility is propping up the yen, temporarily at least. Two important groups of traditional yen sellers are unsettled by recent swings in the currency markets, preferring to stand on the sidelines, writes Katie Martin.

Jeff Bailey : 10/24/2007 12:24:31 PM


DJ- Rating agency says its 3Q net income fell 13% to $136.9 million, or 51c a share, as weakness in global credit markets ate into its business and is expected to linger until year end. Analysts expected EPS of 55c.

MCO $46.20 -2.49% ...

Jeff Bailey : 10/24/2007 12:23:21 PM


DJ- Biotech group reports profit of $159.3 million, or 58c a share, from $16 million, when results included a $219.2 million goodwill impairment charge. Revenue rises 19% to $960.2 million.

GENZ $75.74 +3.03% ...

Jeff Bailey : 10/24/2007 12:22:01 PM


DJ- Financial-services group reports a net loss of $360.6 million, or $3.51 a share, on a loss in its credit derivative portfolio. Excluding that, operating earnings are $1.88 a share, matching expectations.

ABK $51.94 -7.03% ...

Jeff Bailey : 10/24/2007 12:20:56 PM


DJ- General Dynamics posts a 25% rise in 3Q net income, citing robust government spending and booming sales of business jets, and raises its full-year outlook. Shares gain 2%. Northrop Grumman also raises its 2007 guidance, and its shares gain 2%.

GD $88.59 +1.71% ... NOC $81.21 +2.11% ...

Jeff Bailey : 10/24/2007 12:18:38 PM


DJ- Subprime mortgages aren't the only challenge facing the home-mortgage lender. Some loans, known as option adjustable-rate mortgages, classified as prime when they were originated are now going bad at a rapid pace.

CFC $14.35 -4.71% ...

Keene Little : 10/24/2007 12:17:48 PM

Two equal legs up for the bounce off this morning's low is at SPX 1504.72 which is right on top of the 50% retracement of this decline. That's the level to watch for a short entry to see if we then headback down for new lows.

Jeff Bailey : 10/24/2007 12:17:33 PM


DJ- Railroad operator's earnings slip to $386 million, or 97c a share, hurt by new tax laws and rising oil prices. Excluding charge, earnings match expectations of $1.02 a share. Revenue falls 1.7% to $2.35 billion.

NSC $51.73 -4.14% ...

Jeff Bailey : 10/24/2007 12:16:19 PM


DJ- Supplier of high-tech components posts net income of $617 million, or 38c a share, a penny better than expected. Revenue grows 21% to $1.55 billion, matching estimates. But firm sees 4Q earnings at 36c-38c, below consensus.

GLW $22.92 -7.35% ...

Jeff Bailey : 10/24/2007 12:15:18 PM


DJ- Shares tumble 18% after Wachovia downgrades semiconductor group Broadcom to market perform from outperform, citing valuation and quarterly earnings that came in below its expectation due to higher R&D costs.

BRCM $34.47 -18.04% ...

Linda Piazza : 10/24/2007 12:12:14 PM

We're moving into the lunchtime lull, a time when selling pressure often temporarily eases on down days, a purely anecdotal observation and not a scientific one, and it may be that we see some chop now until the end of the lunchtime lull. If you automatically entered a bullish trade at the retest of Monday's low, you want to see sustained values above 1496 and preferably above the 15-minute 9-ema, currently at 1500.54. I would be snapping a Fib bracket on the decline from yesterday's closing high and being particularly careful at the 38.2% (approx. 1501.07), 50% (approx. 1504.63) and even 68.2% (approx. 1508.20) retracements if the SPX should rise that high.

The 38.2% level is being approached as I type.

Jeff Bailey : 10/24/2007 12:06:03 PM

US Oil Fund (USO) $67.07 +1.88% ...

Jeff Bailey : 10/24/2007 12:05:41 PM

TURKISH FORCES BOMB REBELS ALONG IRAQ BORDER DJ- Turkish warplanes bomb positions of Kurdish rebels along the Iraqi-Turkish border as Turkey's military steps up its anti-rebel operations and local leaders discuss the scope and duration of a possible offensive into northern Iraq.

Jeff Bailey : 10/24/2007 12:05:06 PM


DJ- Aircraft maker posts net income of $1.11 billion, or $1.44 a share, boosted by higher commercial airplane deliveries. Wall Street expected EPS of $1.24. Firm cuts its 2008 revenue view on delivery delays.

BA $94.19 -0.80% ...

Jeff Bailey : 10/24/2007 12:04:08 PM


DJ- Energy firm's earnings fall to $3.67 billion, or $2.23 a share, as profit margins from refining oil slump amid record prices for crude. Analysts expected EPS of $2.17. Revenue falls 4.2% to $46.1 billion.

COP $81.04 -2.64% ...

Jeff Bailey : 10/24/2007 12:02:47 PM


DJ- Home resales decline 8% in September to a 5.04 million annual rate, their lowest pace in nearly 10 years, amid continued mortgage-market problems. Economists expected a 5.25-million rate. Median home price dips 4.2% to $211,700.

Jeff Bailey : 10/24/2007 12:02:04 PM


DJ- Financial-services firm swings to a deeper-than-expected net loss of $2.24 billion, or $2.82 a share, on the back of a $7.9 billion write-down in its fixed-income trading business. CEO O'Neal, who was paid $51 million last year, says his team bears responsibility for the aggressive exposures to weak mortgage and structured securities markets and for lax risk control and vows to downsize the structured businesses and sell 'non-core' assets. Merrill also suspends stock buybacks. Fitch and Standard & Poor's downgrade firm and warn more cuts may be in store.

MER $63.23 -5.79% ...

Keene Little : 10/24/2007 12:02:00 PM

If the current bounce off this morning's low stays relatively small it could be just a 4th wave in the move down from yesterday afternoon's high. That would mean another minor new low with bullish divergence that sets up a larger bounce. So watch for that possibility to trade this on the long side to see what kind of bounce develops.

Jeff Bailey : 10/24/2007 12:01:01 PM

Greenspan: US Recession Chances Under 50%

Jane Fox : 10/24/2007 12:00:49 PM

Although the VIX is not making new daily highs and the AD volume ratio is not making new daily lows, the AD volume continues to make new daily lows so I would not be thinking long quite yet.

Linda Piazza : 10/24/2007 12:00:26 PM

Today, the Fed announced a repo of $6.500 billion. No repos matured today so that was a net add. The total sloshing through the system has risen again, to $46.000 billion today and tomorrow sees a whopping $40.000 billion expiring. Thursdays tend to see the biggest numbers of maturing repos of any day of the week, but so far in October, only 10/11 has seen a bigger number maturing in one day--$46.000 billion.

Linda Piazza : 10/24/2007 11:54:31 AM

I'm just returning from picking up the dogs from the boarding kennel and getting settled at my desk again, so I'm scrambling, not having watched the markets at all yesterday. What I can note quickly is that yesterday's bounce in the SPX did not retrace even a full 38.2% of the decline from the 10/11 high to the 10/22 low. Now, this morning, we've had an equal-low test with a slightly lower low than the 10/22 low and the almost obligatory bounce from that support.

Is that support ultimately going to hold? That's what everyone wants to know. Unfortunately, I don't have the answer more than anyone else does. Here's what I see, though. There was bullish price/RSI divergence when you compare Monday's early morning punch lower with today's punch, although both produced RSI levels below 30. On a Keltner basis, the SPX looked better this time than it did on Monday. Link

So, there are two heads-up for bears to be careful and make sure they have their profit-protecting plans in place, but no final assurances for bulls that the support has held and all is great for the future. Notice the black channel line? (Note: it's moved up to 1496.21 since I snapped and uploaded the chart.) First, the SPX would have to begin producing 15-minute closes consistently above that channel line to even begin to change the tenor of things because otherwise, that's holding as resistance now, and further rollovers to test lower Keltner support might occur.

That looks like it may be happening since the chart was snapped, but the 15-minute period hasn't closed yet. Next, the SPX would have to begin producing consistent 15-minute closes above the 15-minute 9-ema, now at 1501.47, bouncing from it instead of down from it.

My opinion? My opinion is of even less usefulness than it might be at other times because I don't have any feel for how prices have moved and haven't been here to watch and observe. However, I believe that the bounce was almost a given from a retest of Monday's low, so the fact that there was a bounce isn't proof of much yet. We're being given some tentative signs that we should watch for the possibility of a sustained bounce, but absolutely no proof that a bounce is going to be sustained.

Jeff Bailey : 10/24/2007 11:48:55 AM

Transports (TRAN) 4,817 -2.54% ... giving back yesterday's gains and then some.

Jeff Bailey : 10/24/2007 11:46:51 AM

235 contracts ...

Jeff Bailey : 10/24/2007 11:46:18 AM

Notable seller of the PTR-WL's at the CBOE offer of $0.40. He/she was there when other offers were $0.65.

Keene Little : 10/24/2007 11:43:38 AM

After this morning's sharp decline the test is now on. If it's bearish we'll get a correction of the decline followed by a new low--you'll want to be short on that kind of breakdown. But if this pullback finished a larger correction from yesterday morning then we'll get another sharp rally leg back above yesterday's high. We've seen many sharp pullbacks like this that test recent lows and then a strong rally follows. I'm not discounting that possibility yet.

Keene Little : 10/24/2007 11:33:47 AM

Semiconductors are also down hard (-4.4%) and SMH has now broken below the lower neckline that I showed yesterday on its chart: Link

Jeff Bailey : 10/24/2007 11:31:38 AM

Pacholder High Yield (PHF) $9.17 +0.77% ...

Jeff Bailey : 10/24/2007 11:30:59 AM

BIIIIG bid in Treasuries ... 10-year Yield ($TNX.X) down 8.4 bp at 4.321% ... under MONTHLY S1 (4.353%), WKLY S1 still below at 4.286%.

Jane Fox : 10/24/2007 11:27:51 AM

HMMM find your bottom - good choice of words Jane.

Jane Fox : 10/24/2007 11:27:11 AM

If you want to find a bottom keep your eye on the VIX for it is days like today when the VIX shines. All you need to do is find a divergence between the VIX and the S&P futures and you will find your bottom.

Jeff Bailey : 10/24/2007 11:26:59 AM

BIX.X 321.56 -3.57% ...

Jeff Bailey : 10/24/2007 11:26:37 AM

SPY $149.18 -1.70% ...

Jane Fox : 10/24/2007 11:25:02 AM

Follow the VIX and the money will follow you. Link

Jeff Bailey : 10/24/2007 11:24:47 AM

Washington Mutual (WM) $28.04 -3.21% ... I agree Keene!

Jeff Bailey : 10/24/2007 11:23:33 AM

USD/JPY 113.843 at the bid.

Jane Fox : 10/24/2007 11:23:25 AM

This selloff is throughout all markets. Not one is been spared. Link

Keene Little : 10/24/2007 11:23:25 AM

Banks and brokers are down hard today (-3.8% and -4.3%, resp.) and that's pulling SPX down more relative to the DOW.

Jeff Bailey : 10/24/2007 11:21:29 AM

Swing trade put target alert! for the iShares Japan EWJ Nov $15 Puts (EWJ-WO) at the bid of $1.15 ($1.15 x $1.25).

EWJ $13.80 -1.49% ...

Can "work" the option at $1.20 if you like. If short the underlying (wink), take profits!

Jane Fox : 10/24/2007 11:18:44 AM

DOW has still not given a buy signal yet. Link

Jane Fox : 10/24/2007 11:12:38 AM

Looks like Crude has found support again at $84.00/bl. This would be a good spot to get long crude with the ETF USO and a stop would be a close below this support. Link

Keene Little : 10/24/2007 10:55:40 AM

Oil has rallied higher today and hit my stop at 87. I took out $1.40 on the trade but obviously disappointed it bounced back this much. The price pattern is not clear enough at this point to figure out where oil is headed next. Off to the sidelines on that one.

Jeff Bailey : 10/24/2007 10:52:55 AM

Swing trade call option stopped alert! ... with the SPY $149.90 -1.20% ... stopped on the SPY Nov $153 Call (SYH-KW) at the bid of $1.80

Jane Fox : 10/24/2007 10:51:04 AM

WASHINGTON (MarketWatch) -- A bill that would require licensing mortgage originators and standards for subprime mortgages won support from two federal banking regulators Wednesday. Comptroller of the Currency John Dugan and FDIC Chairman Sheila Bair said they were supportive of the bill authored by Rep. Barney Frank, D-Mass. and others in testimony prepared for a House Financial Services Committee hearing.

However, Federal Reserve Governor Randall Kroszner warned that any new legislation should not restrict responsible lending or securitization of mortgages.

"Getting this balance right is particularly critical now, as many borrowers facing rate adjustments may need to refinance into more affordable loans," Kroszner said in testimony prepared for delivery. Kroszner said Congress should also not approve any measure that would have a "detrimental impact on the ability of lenders to securitize loans."

Jeff Bailey : 10/24/2007 10:46:50 AM

See that daily interval bar chart of the USO? Not as many bars as FFIV had from 10/09 thru 10/17, but similary supply/demand dynamic.

We know there's been shorting of oil futures the last week, month(s)

Jane Fox : 10/24/2007 10:46:12 AM

The internals are just getting bearishier and bearishier. Link

Keene Little : 10/24/2007 10:45:48 AM

SPX has now joined the DOW in breaking its uptrend line from Monday. If we get a bounce that fails at the broken uptrend lines then we'll have something more bearish going on.

Jane Fox : 10/24/2007 10:37:16 AM

DOW is having a hard time getting above its 50EMA here. Link

Jeff Bailey : 10/24/2007 10:32:45 AM

Swing trade long alert! for 1/2 position in the US Oil Fund (USO) at the offer of $66.95. Stop goes $65. Target $70.00.

Jeff Bailey : 10/24/2007 10:31:33 AM

BIIIG draw in crude supplies.

Jeff Bailey : 10/24/2007 10:30:28 AM

Swing trade sell NAKED put alert! ... for one (1) of the Intercontinental Exchange ICE Nov. $150 Puts (IHH-WJ) at the bid of $1.45.

ICE $173.87 +3.16% ...

This trade would OBLIGATE the put seller to BUY 100 shares of ICE for $150 less the $1.45 premium received.

Jane Fox : 10/24/2007 10:21:06 AM

WASHINGTON (MarketWatch) -- Sales of existing homes and condos fell 8% in September to the lowest level in at least eight years, further evidence that the credit squeeze in mortgage markets is hurting home sales, the National Association of Realtors reported Wednesday.

Sales of existing homes and condos fell to a seasonally adjusted annual rate of 5.04 million, the lowest since 1999, when the real estate group began tracking combined single-family and condo sales. The 8% drop was the largest monthly percentage decline in that period.

Nationwide, sales of existing homes were down 19.1% in September compared with September 2006. Sales were much weaker than the 5.22 million pace expected by economists surveyed by MarketWatc

Keene Little : 10/24/2007 10:18:20 AM

The pullback from yesterday afternoon's high has two equal legs down now for SPX and DOW. If there's to be a bounce, this is where it should find support. Otherwise it's going to start looking more bearish.

Jane Fox : 10/24/2007 10:19:52 AM

Internals are bearish and I see nothing to hint that will change in the next little while. The bears have the ball and the AD line at -1612 tells me they have field position as well. Link

Keene Little : 10/24/2007 10:16:13 AM

Bad home sales data should now prompt talk about a "guaranteed" rate cut at the end of the month and start another rally. It would be incorrect logic but since when is the market logical.

Jane Fox : 10/24/2007 10:12:09 AM

U.S. Sept. existing single-family sales lowest in 10 years

U.S. Sept. existing-home median price down 4.2% in past year

U.S. Sept. existing-home inventory rises to 10.5 months

U.S. Sept. existing-home sales 5.04mln vs. 5.22mln expected

Keene Little : 10/24/2007 10:07:57 AM

Because we've been in such a choppy pattern, the key downside level for the DOW is at 13541 (SPX 1503.61). Until that level is broken I'm still expecting another leg up to the bounce off Monday's low.

Keene Little : 10/24/2007 10:04:34 AM

The DOW has now pulled back to its uptrend line at 13615, make that it's now breaking its uptrend line. SPX doesn't hit its uptrend line until closer to 1505.

Jeff Bailey : 10/24/2007 10:03:19 AM

MBA's Weekly Mortgage Application Survey Link

Tab Gilles : 10/24/2007 10:00:35 AM


IRS Warns Taxpayers of New E-mail Scams

CINCINNATI - Another recent e-mail scam tells taxpayers that the IRS has calculated their "fiscal activity" and that they are eligible to receive a tax refund of a certain amount.

An IRS press release explains, taxpayers receive a page of, or are sent to, a Web site (titled "Get Your Tax Refund!") that copies the appearance of the genuine "Where's My Refund?" interactive page on the genuine IRS Web site. Like the real "Where's My Refund?" page, taxpayers are asked to enter their SSNs and filing status.

However, the phony Web page asks taxpayers to enter their credit card account numbers instead of the exact amount of refund as shown on their tax return, as the real "Where's My Refund?" page does.

Moreover, the IRS does not send e-mails to taxpayers to advise them of refunds or to request financial information.

Jeff Bailey : 10/24/2007 9:59:41 AM

Washington Mutual (WM) $28.48 -1.69% ... notable 52-weeker at the big board.

Jeff Bailey : 10/24/2007 9:59:08 AM

Altria (MO) $72.57 +0.66% ... notable 52-weeker at the big board.

Jane Fox : 10/24/2007 9:58:00 AM

AD line is a bearish -1054.

Keene Little : 10/24/2007 9:42:03 AM

We could see a sideways consolidation this morning that chews up time instead of price in a deeper pullback. Beware the chop and whipsaw.

Keene Little : 10/24/2007 9:20:27 AM

Equities have been chopping up and down since Monday's low and that price action continued last night. I'm still hoping to see a pullback today that leads to another push higher as a setup for the next short play. Keep an eye on the uptrend lines.

Jane Fox : 10/24/2007 9:12:55 AM

LOS ANGELES (MarketWatch) -- Southern California wildfires already blamed for more than $900 million in losses continued to rage out of control Tuesday night, pushing officials to concede they may only be able to contain the infernos while they blaze a trail west to the Pacific Ocean.

Fueled by hot, dry Santa Ana winds, fires raged across many parts of the region for the third straight day, taxing exhausted firefighters and the state's thinning resources, and chasing a reported 881,500 people from their homes.

San Diego Fire Captain Kirk Humphries told the Associated Press that, "If it's this big and blowing with as much wind as it's got, it'll go all the way to the ocean before it stops ... We can save some stuff but we can't stop it."

Jane Fox : 10/24/2007 9:11:53 AM

NEW YORK (MarketWatch) -- Merrill Lynch, the nation's largest broker, reported a loss Wednesday for the third quarter and said the its write downs for bad mortgage loans and related securities was almost $8 billion, well above the firm's own previous estimate from just a few weeks ago.

"These losses are relatively larger than those reported previously by other broker dealers and universal banks that have already reported," DBRS analysts said in a report issued Wednesday. "Merrill appears to have been much more exposed in its securitization businesses." Merrill holds the leading position in CDO securitization.

Jane Fox : 10/24/2007 9:10:41 AM

Crude seems to have stabilized at $85.00/bl overnight and that makes the US$/Gold relationship a little more pronounced, Gold down and US$ up. Link

Jane Fox : 10/24/2007 9:03:35 AM

Markets are consolidating at their previous day mid point and sort of bearish because of the lower lows. It is very difficult to make any kind of prediction as to direction once the cash opens, I'm afraid. AD line will probably open below +500 though. Link

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