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Keene Little : 11/13/2007 11:14:27 PM

Wednesday's pivot tables: Link and Link

Tuesday's rally for the DOW and SPX stopped right at their downtrend lines from Oct 31st. I'd expect at least a pullback from here (whether the market cares about what I expect is the real question). There's even the possibility that it could set up a gap down on Wednesday just to further frustrate traders who hate the gap moves that start the trading days. As bullish as Tuesday was its rally leg could be the completion of a 4th wave correction which would set up another decline to at least retest Monday's low to finish the 5-wave count from Oct 31st (pink):
DOW 60-min: Link
SPX 60-min: Link

But a break above the downtrend lines, and hopefully a retest to set up a long play, could see a rally on up to the DOW 13450/SPX 1490 area before next resistance. SPX 1490 has been an important level all year. As depicted in dark red, I see the possibility for a pullback and then a break of those resistance levels with a rally into next week. That would surely get the bulls excited and frustrate the heck out of the bears but I would view it as only a counter-trend bounce before the market tips back over and heads back down again.

I left the NDX chart from Monday night alone and show it with Tuesday's updated prices. So far so good for its bounce projection. The question is whether it pulls back a little before rallying further (assuming it will): Link

The RUT rallied up to the mid line of its parallel down-channel so it too could pull back a little before continuing higher (assuming it will): Link

OI Technical Staff : 11/13/2007 9:59:59 PM

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Jeff Bailey : 11/13/2007 4:46:06 PM

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

Miss Piggy Goes To Wall Street

Keene Little : 11/13/2007 4:45:25 PM

I left the NDX chart from last night alone and show it with today's updated prices. So far so good for its bounce projection. Link

Jeff Bailey : 11/13/2007 4:30:48 PM

Good Gravy! ... Amerco (UHAL) $79.32 +8.85% ...

Jane Fox : 11/13/2007 4:04:12 PM

SPX will probably do its 1490 test tomorrow. Link

Jane Fox : 11/13/2007 4:02:04 PM

EGADS! I suspected $RUT would revisit support turned resistance at 790 but I didn't suspect it would test it today. Link

Keene Little : 11/13/2007 4:08:39 PM

For SPX the downtrend line from Oct 31st is currently just above 1481 which is where today's rally took it to. I'd expect at least a pullback from here. There's even the possibility that it could set up the gap down tomorrow just to further frustrate traders who hate the gap moves that start the trading days. Similar to the DOW's chart, this rally leg could be the completion of a 4th wave correction which would set up another decline to at least retest Monday's low to finish the 5-wave count from Oct 31st (pink): Link

But a break above the downtrend line, and hopefully a retest to set up a long play, could see a rally on up to the 1525 area by early next week. That would surely get the bulls excited and frustrate the heck out of the bears.

Jeff Bailey : 11/13/2007 4:02:29 PM

US Sep Pending Home Sales Index Rises; 1st Increase Since June

DJ- A forward-looking indicator of home sales in the U.S. inched higher during September, a glimmer of good news for the ailing housing sector.

The National Association of Realtors' index for pending sales of previously owned homes increased at a seasonally adjusted annual rate of 0.2% to 85.7 in September from August's 85.5, the industry group said.

The increase was the first since June. NAR senior economist Lawrence Yun said the housing market will improve from demand and an abundance of safer mortgage products.

"The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we're forecasting if buyers regain their confidence about the long-term benefits of homeownership," he said, adding, "Over the near term, home sales are likely to be fairly flat as the lingering impact of the credit crunch filters through the system through the end of the year."

The NAR index, based on signed contracts for previously owned homes, was 20.4% below the level of September 2006.

"Even with relatively low fourth-quarter sales, 2007 will be the fifth-highest year on record for existing-home sales," Yun said. "The median existing-home price in 2007 will have fallen by less than 2% from an all-time high set in 2006."

Existing-home sales are projected at 5.67 million this year and 5.69 million in 2008. That compares with 6.48 million in 2006, the third-highest year on record.

Existing-home prices are expected to decline 1.7% to a median of $218,200 for all of 2007 and hold essentially even in 2008 at $218,300, the NAR said.

The NAR's pending home sales index was designed to try to measure the housing market's future direction. It is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn't closed. Pending sales typically close within one or two months of signing.

By region, the Northeast decreased 10.1% in September from August; it fell 23.1% since September 2006. The Midwest rose 5.4% in September from August; it fell 14.4% since September 2006. The South increased 1.5% in September from August; it dropped 19.7% since September 2006. The West dipped 0.1% in September from August; it plunged 25.6% since September 2006.

Linda Piazza : 11/13/2007 3:45:24 PM

I have to leave early this afternoon.

Jane Fox : 11/13/2007 3:44:44 PM

Economic Reports for tomorrow include:

7:00a.m. MBA Mortgage Refinancing Index. Previous: -3.2%.

8:30a.m. Oct Producer Price Index. Expected: +0.4%. Previous: +1.1%.

8:30a.m. Oct PPI, Ex-Food & Energy. Expected: +0.2%. Previous: +0.1%.

8:30a.m. Oct Retail & Food Sales. Expected: +0.2%. Previous: +0.6%.

8:30a.m. Oct Retail & Food Sales, Ex-Autos. Expected: +0.4%. Previous: +0.4%.

10:00a.m. Sep Business Inventories. Expected: +0.4%. Previous: +0.1%.

Keene Little : 11/13/2007 3:41:33 PM

The downtrend line from Oct 31st on the DOW is currently just above 13300. While it takes a move above 13446 (the Nov 2nd low) to negate any remaining chances for the bearish wave count (which calls for another drop in the 5th wave for the move down from Oct 31st), a rally above 13300 would suggest the bottom is in for now. In that case we could see a move eventually up to the 13700-13800 area before topping out. At least that's the potential high which would still keep the overall down trend intact. Link

These little bear market rallies are very hard to judge as far as what it could mean for the next day. If it's primarily short covering then it won't last. If there's some real buying here then it could develop legs into the end of the week at least. If we do get another leg down before setting up the stronger bounce then maybe a retest of yesterday's low makes for a good downside target.

Jeff Bailey : 11/13/2007 3:19:34 PM

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

CLOSED/covered the 1/3 short position in CDE at $4.18.

RAISED STOP on DUG to $42.35.

Linda Piazza : 11/13/2007 3:11:06 PM

Okay, it looks as if SPX bulls may indeed be faced with the dilemma I mentioned earlier this afternoon: SPX values that are zooming up toward the 200-sma and -ema's, with a tall, big-range candle for today. Be planning your exit strategy if you decided earlier that you would exit today if faced with this dilemma, as seemed possible. If you plan to hang on, you still need a just-in-case plan in case the SPX rolls over going into the close.

Keene Little : 11/13/2007 3:10:35 PM

Market just keeps spurting higher. These little bear market rallies can catch a lot of shorts off guard. The problem is follow through and we won't know about that until tomorrow. This could just as easily be followed by a gap down tomorrow and further frustrate traders who think that there could be more than a 1-day trend developing. But overall I've been expecting a bullish opex week and this is a good start.

Jeff Bailey : 11/13/2007 3:09:04 PM

Sector Losers ... Utilities -0.47%, HMOs -0.07% ... all other sectors in U.S. Market Watch are green.

Jeff Bailey : 11/13/2007 3:05:48 PM

Swing trade short cover alert! ... Let's cover the 1/3 short position in shares of Coeur D' Alene Mines (CDE) at the offer of $4.18.

Linda Piazza : 11/13/2007 2:57:06 PM

The OEX and SPX are both testing the Keltner levels (shoved just a little higher now) specified in my 2:40:29 post. If there are pullbacks now, bulls would like to see the 15-minute 9-ema's hold on 15-minute closes. Those are at 1463.83 and 683.03 on the OEX.

Keene Little : 11/13/2007 2:53:30 PM

The risk today, in thinking about a short play setup, is that this late in the day it's not high odds to get a reversal. Usually buyers who are late to the party and bears who are ready to throw in the towel both start chasing the market higher if it doesn't reverse by 3:00.

Keene Little : 11/13/2007 2:47:40 PM

Along with the DOW potentially hitting resistance at or below 13250, and the idea that I discussed earlier about today's leg up being the completion of the 4th wave correction in the move down from October 31st, here's why I'm thinking the 4th wave idea, shown on this SPX 15-min chart: Link

Today's leg up, so far, looks like a small ascending wedge for wave-E of the 4th wave and that would finish it off, to then be followed by the 5th wave down and then a bigger rally into the end of the week.

Linda Piazza : 11/13/2007 2:40:29 PM

The OEX has now reached potential Keltner resistance on 15-minute closes, with that at 684.78 and 685.47 currently. Congruent Keltner lines for the SPX are at 1468.72 and 1470.45.

Jeff Bailey : 11/13/2007 2:37:02 PM

Coeur D' Alene Mines (CDE) $4.16 +0.72% ...

Jeff Bailey : 11/13/2007 2:36:33 PM

Goldcorp (GG) $33.19 +2.59% ...

Jeff Bailey : 11/13/2007 2:36:07 PM

USD/JPY 110.38

Keene Little : 11/13/2007 2:35:51 PM

NDX looks ready to leave a negative divergence on its 10-min chart with this afternoon's high. There's not the same negative divergence on the DOW or SPX but with the DOW pressing up into its 13225-13250 resistance area I like the setup for a short play. I'd want the stop above 13250 though so trade accordingly.

Jeff Bailey : 11/13/2007 2:35:51 PM

GBP/USD 2.0695

Jeff Bailey : 11/13/2007 2:35:13 PM

EUR/USD 1.4593

Jeff Bailey : 11/13/2007 2:34:45 PM

US Govt. Posts $55.56 Billion Budget Deficit In October

DJ- The U.S. federal government ran a monthly budget deficit of $55.56 billion in October, the Treasury Department said Tuesday.

Treasury's monthly budget statement shows the October deficit was up 13% from October 2006.

Outlays were $233.73 billion last month, up 8% from October 2006.

Government receipts in October were $178.18 billion, up 6% from a year earlier.

In September, the government had a surplus of $111.57 billion, revised a bit from the previous estimate of $111.56 billion.

The October deficit figure was smaller than the Congressional Budget Office's estimate of a $59 billion shortfall for the first month of fiscal year 2008.

Individual income tax receipts totaled $95.56 billion in October. Corporate taxes totaled $5.96 billion.

Last month the government paid net interest on the federal debt of $18.20 billion. Net interest on the federal debt excludes interest paid on nonmarketable government securities held by federal trust funds, such as Social Security. The Treasury said it plans to release budget data for November on Dec. 12.

Linda Piazza : 11/13/2007 2:23:45 PM

I'm going to advise that SPX and OEX bulls begin thinking, already, of what they might do at the end of the day. What if the SPX zooms up to its 200-sma, for example? You will be left with a big-range candle parked at resistance. If I were prescient, I'd tell you what to do, but since I'm not, I can't tell you anything other than that you ought to think about what will happen to your positions if you're in an options play, particularly a NOV options play, and the SPX does a chopping-around or consolidation thing tomorrow after such a big-range day.

Moreover, you need to think about how you'll handle stops as the end of the day approaches. We've seen some times when prices just cave at the end of the day. How close are those stops going to be set?

Linda Piazza : 11/13/2007 2:16:44 PM

The OEX is facing what may be strong resistance at 684.57 and 685.45 on 15-minute closes. It's been leading the SPX today by some measures but the SPX is also soon to face the congruent Keltner lines, at 1468.81 and 1470.53 on 15-minute closes. Bulls would like to see both just power through those potential resistance levels, but if they don't, they'd like to see only minor pullbacks to group before trying again. For now, though, the resistance tests haven't quite occurred.

Linda Piazza : 11/13/2007 2:08:53 PM

I have nothing much to add other than to say that bulls of course need to guard their profits and bears, honor their stops if hit. Some bears may have been in long-term trades for some time, and might have wider stops that are perhaps are not yet even challenged. For example, they might be set just above the 200-sma or -ema or at a certain Fib retracement of the decline off October's high. If you're in shorter-term positions, a trade you anticipated to be a day trade using options expiring this week, your stops are different.

I don't know what to anticipate. I see a mixture of indicators today. The VIX is way down, of course, but now at potential Keltner support on daily closes on the daily Keltner chart. Will the VIX climb again and equities roll down, perhaps some time this week? The TRAN has posted a strong gain now, but is still below one neckline version of a year-long-in-the-making H&S that has now been confirmed. Is it just consolidating before another decline sends it falling away from that neckline? Some individual financials and indices such as the BKX are performing strongly, but the BKX is in that 97.60-98.00 range that has caused it problems over the last week or so.

Jeff Bailey : 11/13/2007 2:06:55 PM

China Telecom (CHA) alert! $70.25 +12.23% ... trade at $70.00 gets stock's PnF chart back on a buy signal. Preliminary bullish vertical count (under construction) to $84.

Jane Fox : 11/13/2007 2:05:02 PM

Traders have decided to take some profits off the table and Crude is falling like a rock. I believe it could get all the way down to $85.00/bl before it finds support. Link

Keene Little : 11/13/2007 2:04:38 PM

Just above the DOW's 200-dma is the broken uptrend line from July 2006 (ignoring the spike down in August) near 13250 (the same location as the top of the parallel down-channel for this month). Between 13225 and 13250 would be a good place to watch for a short play to set up since we should get at least a pullback before proceeding higher into the end of the week (assuming we will). Or we could head down for one more new low before starting a stronger bounce.

Keene Little : 11/13/2007 1:57:33 PM

The DOW's 200-dma is just under 13225 so that could introduce some selling back into the market this afternoon. Otherwise there's the possibility for some short covering if it can be pushed above it.

Linda Piazza : 11/13/2007 1:55:58 PM

The SPX has now also made it above the descending trendline off Thursday's last swing high, closing above it during the last 15-minute period. That trendline is now at about 1462.80, so bulls would like to see that level maintained now that it's been breached.

Jane Fox : 11/13/2007 1:55:32 PM

Look at the DAX! WOW! Link

Jane Fox : 11/13/2007 1:53:52 PM

AD volume making new daily highs but the VIX is not making new daily lows. HMMMMM

Keene Little : 11/13/2007 1:53:20 PM

If it can keep pushing higher now the next resistance level I see for the DOW is near 13250 which is the top of its parallel down-channel for November's price action. It's a little higher for SPX around 1471 now.

Jeff Bailey : 11/13/2007 1:48:56 PM

Brazil Sells BRL2.96 Billion In Face Value LTN Bonds

DJ- The Brazilian Treasury Tuesday sold the equivalent of 2.96 billion Brazilian reals ($1.67 billion) in LTN bonds at an interest rate range considerably wider than at a similar auction a week ago.

Also Tuesday, the treasury rejected all market offers in the sale of inflation-linked NTN-F bonds. Traders said Tuesday's auction results reflected continued government and market jitters over the international credit crisis.

The government sold LTNs for two maturities in 2008 and 2010 at an average interest rate range of 11.33% to 12.04%. The range was considerably wider than at a similar auction a week ago, when LTN bonds were sold in a range of 11.61% to 11.99%.

The government did not sell all of the LTN bonds on offer Tuesday. It offered BRL4.0 billion in face value bonds.

The government offered BRL450 million in face value NTN-F bonds, which are linked to the domestic inflation rate, but accepted no offers. At a similar auction a week ago, the government also failed to accept any market offers. At an auction in late October, the government sold NTN-Fs at an interest rate range of 11.789% to 11.934%.

Brazil's market has been sensitive since late October to the global credit crisis. An earlier period of international credit jitters, in July and August, saw rising interest rates at Brazilian bond auctions.

Keene Little : 11/13/2007 1:46:01 PM

NDX is challenging this morning's high.

Keene Little : 11/13/2007 1:45:35 PM

Big pop higher and now SPX is challenging its downtrend line from last Thursday. It needs to keep going now otherwise this could be the pre-2:00 head fake move to be followed by some selling.

Jane Fox : 11/13/2007 1:41:59 PM

Stopped at 13211.

Linda Piazza : 11/13/2007 1:40:27 PM

The TRAN is finally bouncing a bit harder. It's at 4659.04 with the high of the day at 4678.48, a number that jambs it up at the resistance offered by one neckline version of a potential H&S.

Jane Fox : 11/13/2007 1:40:07 PM

DOW makes a double top at 13208 and I have my stop at 13211. My short is not looking too good unfortunately.

Jane Fox : 11/13/2007 1:35:06 PM

I was trying to take advantage of a corrective dip but I guess the internals are just too strong.

Jane Fox : 11/13/2007 1:27:16 PM

My short from 13168 has a stop at 13211 and will not lower it until I see a reason to.

Jeff Bailey : 11/13/2007 1:23:56 PM

Iran (update)

DJ- After years of stonewalling, Iran has given the U.N. nuclear agency blueprints showing how to mold uranium metal into the shape of warheads, diplomats said Tuesday, in an apparent concession meant to head off the threat of new U.N. sanctions.

But the diplomats said Tehran has failed to meet other requests made by the International Atomic Energy Agency in its attempts to end nearly two decades of nuclear secrecy on the part of the Islamic Republic.

Jeff Bailey : 11/13/2007 1:22:31 PM

JP Morgan CEO: CDO Trading Exposure $1.5B, None Subprime

DJ- JPMorgan Chase & Co. (JPM) Chief Executive Jamie Dimon said Tuesday that exposures to complicated securities called collateralized debt obligations aren't a significant negative for the bank.

The bank has $1.5 billion in exposure to CDOs in its trading business, none of it related to subprime, Dimon said, adding a little detail to disclosures made when the bank reported earnings about a month ago.

The bank had $6.8 billion in CDOs in its warehouse - meaning the securities were awaiting further structuring or sale - as of Sept. 30.

"I think we're fine," Dimon said.

Analysts have been hungry for information about such exposures, given the prevalence of securities backed by subprime mortgage loans in many CDOs.

Banks such as Merrill Lynch & Co. (MER), Citigroup Inc. (C) and Morgan Stanley (MS) have taken billions of dollars in writedowns to reflect the declining value of positions related to CDOs.

JPMorgan wrote down $339 million net of hedges to reflect declines in the value of its CDO warehouse and unsold positions in the third quarter.

JPM $44.75 +5.56% ...

Jeff Bailey : 11/13/2007 1:19:08 PM

Iran Fails To Meet Other IAEA Requests On Nuclear Work - Envoys

Jeff Bailey : 11/13/2007 1:18:39 PM

Iran Gives IAEA Plans To Mold Uranium Into Warheads - Envoys

Keene Little : 11/13/2007 1:09:43 PM

Today is turning into another one of those that's been so frustrating for traders--one and done. We get these quick moves out of the gate, often with a gap that precludes an entry, and then nothing more than chop and/or retracement. Techs have now pulled back the most after rallying the most this morning. Its pullback looks like it could lead to something more to the downside. But the others look more corrective and more or less just drifting lower. Still nothing makes me want to jump on one side vs. the other (unless you're looking for quick scalps).

Jane Fox : 11/13/2007 1:06:24 PM

Short YM short from 13168.

Linda Piazza : 11/13/2007 1:04:54 PM

The TRAN is now more than 47 points off its high of the day, still sinking. This is a divergence of sorts, as those hoping for strength in the OEX, SPX and Dow want to see it corroborated or lead by strength in the TRAN. The financials are making up for the tepid TRAN, though. Just keep the TRAN's relative underperformance in mind, especially in this environment.

Linda Piazza : 11/13/2007 12:45:48 PM

The OEX is so far maintaining its breakout above its descending trendline off Thursday's last swing high. Those in short-term bullish positions want to see the OEX produce a new high of the day. The SPX will be facing the analogous trendline at about 1464, if I'm eyeballing it correctly.

Jeff Bailey : 11/13/2007 12:32:24 PM

SIRIUS HOLDERS APPROVE MERGER WITH XM

DJ- Sirius Satellite Radio shareholders approve an amendment and the issuance of Sirius stock, allowing for a proposed merger with XM Satellite Radio where XM holders receive 4.6 shares of Sirius stock for each share of XM.

SIRI $3.51 +2.93% ...

XMSR $14.22 +3.56% ...

Jeff Bailey : 11/13/2007 12:30:29 PM

IEA SAYS HIGH OIL PRICES HITTING WORLD DEMAND

DJ- There are signs that super high crude oil prices have started to depress oil demand as drivers in the world's industrialized nations start to feel the pain of almost $100 oil, says the International Energy Agency.

Jeff Bailey : 11/13/2007 12:28:32 PM

Russell 2000 Index ($RUT.X) 777.51 +1.35% ...

Jeff Bailey : 11/13/2007 12:28:04 PM

SMALL BUSINESS OPTIMISM INDEX SLIPS

DJ- Small business optimism declines by 1.1 percentage points to 96.2 in October from September's 97.3, weakening sharply after the Fed cut interest rates, according to the National Federation of Independent Business' Small Business Optimism Index.

Keene Little : 11/13/2007 12:25:30 PM

I can't quite put my finger on it but something doesn't feel right about this rally. After the initial pop higher we've seen the market chug a little higher but the overlapping highs and lows (other than the techs) gives the appearance of weakness. But if it manages to keep stair stepping higher then it makes me wonder if Uncle Ben and the Treasury are providing a helping hand today. If so then when they stop so too will the market. Stay cautious.

Linda Piazza : 11/13/2007 12:20:50 PM

The TRAN is still not participating in the midday bounce attempts, still pulling back from its early morning high.

Financials are participating, at least some of them. The BKX, for example, has broken over 97.20-ish resistance and is now at 97.59. The USDJPY has not broken over its next level of resistance, though, with that in the 110.40-110.60-ish range and with the USDJPY at 110.33 as I type. Mixed signals today.

Jane Fox : 11/13/2007 12:16:30 PM

I am going to try a short YM at 13168. STop at 13211 and target 13138.

Jeff Bailey : 11/13/2007 12:14:12 PM

ADOBE DOWN, NAMES NARAYEN CEO

DJ- Shares fall 5% after software firm names its current President and COO Shantanu Narayen as CEO, effective Dec. 1. Adobe expects fiscal 4Q 2007 revenue near high end of its $860 million to $890 million target.

ADBE $39.99 -5.21% ...

Jeff Bailey : 11/13/2007 12:12:57 PM

HOME DEPOT 3Q NET DROPS 27%, CUTS OUTLOOK

DJ- Home-improvement retailer reports earnings of $1.09 billion, or 60c a share. Earnings from continuing operations are 59c a share, a penny less than expected. Retailer predicts 2007 earnings from continuing operations to decline by as much as 11%.

HD $28.63 +0.59% ...

Jeff Bailey : 11/13/2007 12:11:03 PM

WAL-MART 3Q NET GAINS 7.9%, RAISES FORECAST

DJ- World's largest retailer earns $2.86 billion, or 70c a share, helped by tight controls on costs and inventory, setting "the stage for a successful fourth quarter" despite mounting economic worries for its lower-income shoppers.

WMT $46.24 +6.76% ...

Jeff Bailey : 11/13/2007 12:08:21 PM

Goldman 's CEO Sees No Big Write-Down ... MarketWatch Story Link

Jeff Bailey : 11/13/2007 12:06:32 PM

Bank of American (BAC) $45.48 +3.41% ...

Jeff Bailey : 11/13/2007 12:05:57 PM

Bank of America $3 Billion Write Down (update) ... AP Story Link

Linda Piazza : 11/13/2007 12:03:09 PM

The TRAN is just not cooperating with the late morning attempt to move higher, at least not yet. After pushing higher this morning, it's been in a tight descending channel since about 10:15.

Keene Little : 11/13/2007 11:46:52 AM

Still pushing higher so follow it up if long. This SPX 30-min chart zooms in a little closer to the consolidation pattern (4th wave correction) that I showed on the 60-min chart last night. It's possible it's going to form a slightly larger correction, the top of which is near 1464. That might be resistance for at least a pullback if not another leg down to finish the wave count with a 5th wave down (pink): Link

So the bulls want to see 1464 get broken and then 1474 to say there's a very good chance we're not still in the 4th wave since a break above 1474 would also be a break above the Nov 9th high and above the top of a parallel down-channel. Continue to trade this market cautiously, taking profits sooner rather than later, in case we're not done seeing some whipsaw price action.

Linda Piazza : 11/13/2007 11:43:21 AM

The OEX has broken above the descending trendline off Thursday's last swing high. Remember the 200-sma and -ema's up above at 684.30 and 685.75.

The SPX has not yet broken above its congruent trendline, now crossing at about 1464.10, but it's rising toward a test. The SPX's 200-sma and -ema's are at 1483.78 and 1475.75.

Jane Fox : 11/13/2007 11:41:46 AM

The DOW is the first to cross above its PDH. NDX is right behind though. Link

Jane Fox : 11/13/2007 11:35:02 AM

The SPX jtHMA charts are telling me it is not time to get back into this market yet. Link

Linda Piazza : 11/13/2007 11:32:15 AM

Hmm. Just took a look at the TRAN. It's been trendine down since about 10:15. That's when it retested a horizontal line I had drawn as one version of a neckline for a big H&S that it had been forming since early this year. I've mentioned it in some Wraps and I think showed it last Thursday. Those will bullish hopes for today might watch the TRAN. You want it to zoom back above its previous 4678.82 high of the day, and you certainly don't want it to drop strongly now that it's retested that neckline.

One note about the neckline. It's just one version. This is a long-term formation, so does one look at the weekly charts and cut off the few lower candle shadows that pierce this neckline version, drawing a best-fit version that seems to have the most relevance? Or does one draw the neckline strictly along the bottom of all candle shadows, too? It's sometimes as much art as science, and so this version may not be the only version being watched.

Also, a note about H&S formations and those types of formations on the TRAN in particular: the TRAN sometimes seemingly confirms such formations and then bounces hard and invalidates them. Whether it does this time or not is yet to be seen, but keep that in mind.

Keene Little : 11/13/2007 11:21:19 AM

The DOW has been chopping higher this morning and that makes it look short term bearish. I suspect we're going to see at least a larger pullback before rallying further. But there is just enough disagreement between the indices to make a trading call difficult right here. I'd tighten up stops if you're long.

Jeff Bailey : 11/13/2007 11:21:07 AM

Goldman Sachs (GS) $227.77 +6.16% ... #6 weighting, and doing a lot of a bull's work. Has been the STRONGEST by far of components the last several weeks.

Jeff Bailey : 11/13/2007 11:19:19 AM

Bank of America Sees $3B 4Q Pretax Write-Down For CDOs

BAC $44.49 +1.15% ... #1 weighting in XLF $31.01 +2.51% ...

Jane Fox : 11/13/2007 11:18:15 AM

NDX never did make a predictive H&S pattern it just dropped but I do see the MACD was warning us. I was watching the MACD in the other three markets, which do not have MACD divergences, and I never noticed this one. Interesting. Link

Linda Piazza : 11/13/2007 11:16:10 AM

I'm watching the OEX in particular this morning because this big-cap index is challenging the descending trendline off Thursday's last swing high and the SPX still has a way to go before that trendline is faced. The trendline is now at about 678.90 for the OEX, with the OEX at 678.85.

There's some danger to bullish hopes here, of course. The day started off strongly and now there's been a sideways move that's a bit akin to the sideways move that we saw yesterday about this time.

Jane Fox : 11/13/2007 11:13:53 AM

The level of resistance the SPX has to break is the now infamous 1490. Link

Jane Fox : 11/13/2007 11:12:36 AM

The DOW has to close above 13400 for me to get long the DOW again and even then I will have to see that level hold up as support. It could be a while before I take another long on the DOW. Link

Jane Fox : 11/13/2007 11:09:42 AM

I am on the sidelines until I see a close above resistance at 790.00. Link

Jane Fox : 11/13/2007 11:00:06 AM

The DOW and NDX are making new daily highs but SPX and RUT are not. These are odd bedfellows. Link

Jeff Bailey : 11/13/2007 10:55:53 AM

Swing trade bearish long raise stop alert! ... for the UltraShort Oil & Gas (DUG) to $42.35 (from $39.00).

DUG $45.33 +1.29% ...

Jane Fox : 11/13/2007 10:55:51 AM

It looks like Gold may be finding support at the $800 area. Link

Keene Little : 11/13/2007 10:55:01 AM

The tech sector is clearly the more volatile one lately. After getting crushed the past week it's the one that's up the strongest today.

Jeff Bailey : 11/13/2007 10:52:53 AM

DUG $45.40 +1.45% ... has cleared its MONTHLY 80.9% retracement ($44.91).

Jeff Bailey : 11/13/2007 10:52:07 AM

US Oil Fund (USO) alert! $71.42 -1.85% ... after kiss of WEEKLY S2 ($71.38).

Linda Piazza : 11/13/2007 10:51:51 AM

The SPX is finding support along its 15-minute 9-ema on 15-minute closes, but as long as it's below that descending trendline off Thursday's late high, it's still in a downtrend, so bulls want better than a sideways move along the flattening 15-minute 9-ema. That trendline is at about 1565 now for the SPX, about 678.90 for the OEX.

Jane Fox : 11/13/2007 10:51:21 AM

Consolidating at daily highs means there is a greater probably the markets will break higher than lower.

Jeff Bailey : 11/13/2007 10:50:08 AM

Countrywide Mortgage Funding Down 48% Last Month ... DJ- Countrywide Financial Corp. (CFC) said its October mortgage loan fundings fell 48% from a year earlier as the company continues to suffer from the ongoing credit crunch.

The nation's largest mortgage firm said it funded $22 billion in loans last month, with average daily applications dropping 34% to $1.8 billion. The company's pipeline was $41 billion as of Oct. 31, compared with $61 billion a year earlier and $42 billion on Sept. 30.

President and Chief Operating Officer David Sambol said, "October's operating results continue to be indicative of current market trends."

However, he noted, total fundings were up 4% from September and average daily applications and the mortgage loan pipeline were flat with the previous month.

Subprime fundings were 0.2% of total mortgage loan fundings in October.

The loan delinquency rate grew to 5.94% last month from 5.9% in September. The year-earlier rate was 3.97%.

Last month, Countrywide used its Countrywide Bank unit, a federal savings bank, to fund more than 90% of its loans, up from 89% in September. The bank provides a more stable source of funding than the commercial-paper market and other short-term instruments that were the only source of funding for dozens of smaller lenders that have collapsed in recent months. The savings bank also can borrow from the Federal Home Loan Banks, government-sponsored cooperatives.

Countrywide originates or funds roughly one out of every six mortgages in the U.S.

The company said commercial real estate funding volume slid 59% to $752 million in October.

Last month, Countrywide said it expects to return to profitability this quarter after posting its first quarterly loss in 25 years.

CFC $13.11 -0.60% ...

Keene Little : 11/13/2007 10:49:34 AM

It's looking like the market wants to rally higher from here but there's just enough weakness to keep me guessing. So far the overall feeling is consolidation and that keeps it bullish for now.

Jane Fox : 11/13/2007 10:32:35 AM

AD volume up and VIX down is telling you the bulls have ball and an AD line over +1000 tells you they have field position as well. Link

Keene Little : 11/13/2007 10:24:01 AM

The market is pushing against their resistance levels but not quite making the break yet. If the downtrend lines can be broken watch for retests to hold. We're short term overbought here so we could get a little larger pullback first.

Jeff Bailey : 11/13/2007 10:21:34 AM

Sector Winners ... Retail +2.79%, Broker/Dealer +2.73%, Airlines +2.70%, Money Center Banks +2.03%, Regional Banks +2.07%,

Jeff Bailey : 11/13/2007 10:20:00 AM

Sector Losers ... Oil -0.76%, HMO's -0.16%, Software -0.09%

Linda Piazza : 11/13/2007 10:18:35 AM

The SPX's 15-minute 45-ema is now at 1458.24, and it's temporarily, at least, again providing resistance.

Linda Piazza : 11/13/2007 10:15:38 AM

The OEX is already testing that descending trendline off the last high last Thursday, with that at about 679.75 now and the SPX at 679.75 as I type.

Jeff Bailey : 11/13/2007 10:10:45 AM

SPY $145.90 +1.52% ...

Jeff Bailey : 11/13/2007 10:10:08 AM

VIX.X alert! 25.89 -16.72% ... undercutting WEEKLY Pivot.

Linda Piazza : 11/13/2007 10:09:24 AM

The USDJPY is now at 110.30. It fell back a bit after testing the bottom of that resistance zone that begins at about 110.40, but it's still challenging it.

Linda Piazza : 11/13/2007 10:02:14 AM

The SPX drove right up to the 15-minute 45-ema that I mentioned (now at 1458.31) and fell back. It hasn't fallen far. Markets are really iffy right now, as I said yesterday, so bulls want continued signs of strength. One of those would be continued support from the 15-minute 9-ema, now at 1452.19, on 15-minute closes.

For the OEX, that average is at 676.41.

Keene Little : 11/13/2007 9:58:17 AM

NDX also hit the top of its descending wedge (shown on its 10-min chart last night), near 2020, and the RUT came close to its downtrend line at 79. So another push higher by the market will have them all breaking resistance. Those resistance levels will obviously be coming down as the day progresses and until they're broken stay aware of the possibility that we haven't seen the final lows for this move down yet.

Jane Fox : 11/13/2007 9:58:04 AM

Internals are giving the bulls a little bit of heartache here. Both the AD Ratio and the DAX are making new daily lows. Link

Keene Little : 11/13/2007 9:53:16 AM

If we've got the start of something at least a little more bullish here, it would be pretty typical for the market to pull back and shake out the weaker longs before pressing higher again. So watch the Fib retracement levels for this morning's jump up as potential support levels for a long play entry.

Linda Piazza : 11/13/2007 9:51:05 AM

The Federal Reserve, through the Federal Reserve Bank of NY, has announced a repo in the amount of $11.250 billion. That's a net add since no repos mature today. That increases the amount sloshing through the system to $51.500 billion, the most that's been sloshing through the system since 9/26 when there was $56.000 billion sloshing through the system. I haven't been able to determine a close relationship between the amount sloshing through the system and immediate stock market performance, however. The 9/26 period started that last bump up to the 10/11 high, so it's tempting to conclude that the Fed is goosing equities. However, on 10/10, a close $50.000 billion was sloshing through the system and the next day was the last hurrah of that particular rally.

Keene Little : 11/13/2007 9:47:44 AM

SPX did the same thing at 1458--bulls need to break that level in order to break out of its descending wedge pattern.

Keene Little : 11/13/2007 9:47:00 AM

The DOW made it back up to the top of its descending wedge pattern, at 13112, and has pulled back a little. That's the level the bulls need to break in order to declare a bottom is in. Otherwise the risk is that we could see another leg down within the descending wedge.

Linda Piazza : 11/13/2007 9:44:45 AM

The USDJPY is now at 110.40, retesting a resistance level that extends up to last night's 110.53 high. So far, it's still climbing, supporting equity gains, but watch this resistance level.

Linda Piazza : 11/13/2007 9:42:55 AM

The OEX's 15-minute 45-ema is now at 679, and that's potential resistance on 15-minute closes. The descending trendline off Friday's near-closing high is near 680.

Linda Piazza : 11/13/2007 9:41:22 AM

Here are a few short-term potential resistance levels to keep in mind on the SPX: The 15-minute 45-ema was resistance on 15-minute closes all day yesterday. That's now at 1458.46. A descending trendline off last Thursday's near-closing high, touched Friday afternoon, too, and resistance then, too, is now at about 1467, if I'm eyeballing it right. And, 10-minute Keltner channels, which have been important the last several days, show potential resistance on 10-minute closes at 1465.06 and then 1469.05. Obviously, bulls want to see all those levels surmounted while bears want them to hold as resistance.

Keene Little : 11/13/2007 9:38:11 AM

With the big move up this morning, and after the setups I showed last night for a rally out of the descending wedges, it's a bullish signal here for a potential rally into the end of the week now. Be looking to buy the dips for now.

Jane Fox : 11/13/2007 9:37:33 AM

The VIX opens below its PDL and is now making new daily lows supporting the S&P's futures new daily highs.

Jane Fox : 11/13/2007 9:35:24 AM

AD Line is a bullish +1334 and climbing so the bulls have the reins this morning.

Jane Fox : 11/13/2007 9:24:31 AM

LONDON (MarketWatch) -- The dollar extended declines against European rivals on Tuesday, on continued worries about the state of the U.S. economy as well as data showing overseas inflation accelerating. "While the U.S banking sector remains vulnerable to further sub-prime fallout and while the economy is shrouded in uncertainty, the dollar will struggle," said Peter Stoneham, managing analyst at IFR Forex Watch. The euro rose 0.5% at $1.4588 and the British pound gained 0.6% at $2.0675. The dollar rose 0.3% at 109.90 yen after the Bank of Japan held interest rates at 0.5%.

Jane Fox : 11/13/2007 9:23:52 AM

LONDON (MarketWatch) -- Saudi oil minister Ali Naimi told the Financial Times in an interview Tuesday that OPEC won't announced a production increase at this weekend's Riyadh summit. "OPEC ministers are not going to meet to discuss supply and prices and the head of states definitely are not going to discuss it," he said. Naimi said he was "concerned" about the global economy but dismissed worries about the adequacy of energy supplies. "There are very pessimistic views, that we do not share, about supply, adequacy of supply, and there are also pessimists who keep saying that we are going to run out of fossil fuels, especially oil," he told the newspaper. "These pessimists about the adequacy of supply and adequacy of reserves in the future, I think they are doing a lot of damage to the stability on the market."

Jane Fox : 11/13/2007 9:07:52 AM

Isn't it amazing how the US$ and Gold charts are almost mirror images of each other? And then look at how closely Gold and Crude trade to one another. Needless to say Gold is a very important commodity and one we should all be watching.

I still consider the USDJPY a market we need to keep an eye on, although it may be in the process of becoming less important for, as Linda has pointed out, the carry trade may be moving away from the US$ making this currency less predictive. However I would still watch it and the fact that it is not making new overnight highs like the American equity markets is a concern. Link

Jane Fox : 11/13/2007 8:59:55 AM

Remember I was saying the market will do whatever it can to administer as much hurt as it can. Well it has taken a huge chunk out of the bulls lately and I think it is now ready to take its chunk out of the bears. This way it will be fed and then may take a breather leaving both the bulls and bears to lick their wounds.

Overnight shows the bulls in control. Link

Linda Piazza : 11/13/2007 8:58:32 AM

Again today, no repos mature. We still have $40.250 billion sloshing through the system. I'll let you know if any repos are announced later this morning.

Linda Piazza : 11/13/2007 8:57:12 AM

Time to look at what's happening with the USDJPY. As you know, the USDJPY has been tumbling lately, showing the same correlation with or prediction of U.S. equity movement that it did in February and August. I've questioned lately how much correlation it would continue to have because of various factors. One is that there should be two components to the whole carry trade idea. One is whether the yen will stay low enough to encourage some to borrow yen and the other is whether, even if the yen remains low enough, if any borrowed funds would be put to work buying equities, specifically U.S. equities. Those borrowing yen must feel that there's enough potential for equity price escalation to be greater than the carrying costs for the borrowed yen.

Both of those premises have been questioned lately, so I've urged that while we continue to watch this currency pair for corroboration, we don't give it be-all, tell-all status any longer. Last night, a relevant development occurred in Japan. The Bank of Japan met and decided to keep its interest rate unchanged at 0.5 percent. In addition, the accompanying statement mentioned concerns about weakness in the U.S. economy and potential global spillover if that occurs. Although the interest-rate decision wasn't unanimous, that statement and Japan's own signs of continuing deflation (decline in core consumer price index) perhaps dampened fears that the BOJ will soon rate interest rates and thereby perhaps strengthen the yen. This was somewhat countered by a monthly economic report offered later last night that said that the Japanese central bank expects a moderately expanding economy. However, the steep strengthening of the yen against the dollar (or, the steep decline of the dollar against the yen) has stopped for now and the USDJPY is rising from the premarket 109.12 low yesterday. It's at 110.13 as I type, with resistance overnight showing up at about 110.40.

If there's a relief rally, if you will, in the USDJPY, that might support the idea of a relief rally in U.S. equities today, so watch that USDJPY level. Despite my anticipation that we're due sometime for a sharp relief rally in U.S. markets, I still am not suggesting long positions for anyone but those who don't need my advice anyway, because I'd rather subscribers miss a relief rally than be caught in a rally that suddenly turns over at some as-yet-unknown place or after some as-yet-unreleased negative news. However, I do think that bears need to watch this in case there's a sharp upward move in the USDJPY, supporting or predicting a similar upward move in U.S. equities.

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