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Jeff Bailey : 12/11/2007 2:19:20 AM

YM ... up 37 at 13,788.

Keene Little : 12/10/2007 10:37:26 PM

Tuesday's pivot tables: Link and Link

The sideways consolidation on Friday led to another leg up on Monday and it looks like the same setup for another leg up on Tuesday. If we get it then that should do it for the wave count (meaning a rally into FOMC will almost surely lead to a sell-the-news event). It is possible that Monday's high was the last high for the rally leg from Tuesday, Dec 4th. It takes a break back below Friday's low to confirm that. In the meantime I'm leaning towards another push higher.
SPX 60-min: Link
NDX 60-min: Link

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

The Market Monitor has been archived.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

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

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

Jeff Bailey : 12/10/2007 6:22:51 PM

Closing Internals found at this Link

Jeff Bailey : 12/10/2007 6:04:54 PM

FORD SHUTS TRUCK PLANTS EARLY AHEAD OF HOLIDAYS

DJ- Dearborn, Mich., plant that builds F-150 pickups and a Louisville, Ky., plant that builds Explorer SUVs go dark two weeks ahead of their normally-scheduled holiday shutdowns amid tepid demand.

Jeff Bailey : 12/10/2007 6:03:16 PM

WAMU To Discontinue Subprime Lending Unit ... DJ- Seattle bank will discontinue all remaining lending through its subprime mortgage channel, and eliminate 2,600 positions, or about 22%% of its Home Loans staff. Firm plans to raise billions through preferred stock offering, and cut its dividend to 15c from 56c in moves designed to generate $3.7 billion in additional capital.

Jeff Bailey : 12/10/2007 5:28:51 PM

January Crude (cl07f) settled down $0.42, or -0.48% at $87.86.

Jeff Bailey : 12/10/2007 5:20:34 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 12/10/2007 4:35:06 PM

Semiconductor HOLDRs (SMH) $33.69 +0.80% ... ticking $34.00. WEEKLY R1 $33.99

Jeff Bailey : 12/10/2007 4:33:46 PM

Texas Instruments (TXN) $32.67 +0.58% ... jumps to $33.69 on quarterly update headlines.

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

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

Jeff Bailey : 12/10/2007 3:57:21 PM

Honeywell Boosts Dividend, Proposes Shareholder Plan ...

HON $59.52 +1.72% ...

Linda Piazza : 12/10/2007 3:55:21 PM

I'm noticing that the TRAN's daily RSI has punched above the 70.0 level. Although the TRAN's RSI occasionally trends at this level, it sometimes reverses quickly, so if trading the SPX, OEX and Dow, keep an eye on it.

Jeff Bailey : 12/10/2007 3:46:30 PM

Buy program premium ... SPY $151.83 +0.60% ...

Keene Little : 12/10/2007 3:33:49 PM

Looking at the wave count for the leg up from Dec 4th, today's consolidation has me thinking we haven't seen the final 5th wave up yet--that should be due next. The first upside Fib projection for it is near 1520 (so a minor new high) but could continue to near 1530 to the top of a parallel up-channel for the wave count. Assuming it bounces (not a given yet) then a subsequent break of its uptrend line, shown on this 30-min chart, would be a sell signal. Link

Linda Piazza : 12/10/2007 3:32:49 PM

The SPX has begun trading back and forth across the flattening 15-minute 9-ema. It's lost its role as a benchmark for short-term strength or weakness. The SPX is again testing the Keltner breakout level, at about 1513.25 now, on 15-minute closes.

Keene Little : 12/10/2007 3:22:44 PM

Today's price action looks a lot like Friday's (slightly different shape but overlapping highs and lows while it marches sideways) and that gives me the impression that we'll see another leg up tomorrow. Today's high and Friday's low gives us our key price levels to see which way this is going to go next. In between could be filled with lots of chop and whipsaws, especially heading into tomorrow's FOMC.

Jeff Bailey : 12/10/2007 3:10:30 PM

10-year Yield ($TNX.X) finished up 2.9 bp at 4.149%.

Keene Little : 12/10/2007 3:10:23 PM

They're just jerking traders around right now. Both sides are probably getting whacked with these buy and sell programs going off.

Linda Piazza : 12/10/2007 3:03:36 PM

The SPX tests the breakout level as I type, with further support at 1509.60 on 15-minute closes. The tenor of trading sometimes changes after the bond market closes, so be watchful for any such changes. For now, SPX short-term bulls want to see the SPX scramble back above the 15-minute 9-ema, now at 1513.64 and maintain 15-minute closes above it.

Keene Little : 12/10/2007 2:58:00 PM

That sell program has SPX breaking its uptrend line now. The DOW is down testing its line.

Jeff Bailey : 12/10/2007 2:57:43 PM

XLF $31.69 +1.57% ...

Jeff Bailey : 12/10/2007 2:57:29 PM

Sell Program Premium ... SPY $151.55

Linda Piazza : 12/10/2007 2:57:49 PM

By some Keltner measures, the SPX is looking a bit weaker than it did earlier. It's tending to find resistance rather than support at its 15-minute 9-ema, for example. However, it still maintains breakout status on a Keltner basis as long as it's maintaining 15-minute closes above a Keltner line now at 1511.71. It's also maintaining levels above the 1509-1510 zone that marked the breakout when looking at Friday's resistance levels. Conclusion? No definitive signs that prices are going to just give way or anything like that yet, but some signs exist that short-term bullish traders should be watching their stops. Remember, too, not to trust any technical setup--including these signs of incipient weakness relative to the earlier performancess--too much today, ahead of tomorrow's FOMC decision. Be cautious.

The SPX dropped as I typed.

Keene Little : 12/10/2007 2:51:29 PM

As I had mentioned earlier today, the wave count for the leg up from Dec 4th can be satisfactorily counted as complete with today's rally and that means the A-B-C rally from Nov 26th could be complete. So the risk for the bulls is that we're about to resume the next big decline. A drop below Friday's low (so below 1502) would trigger a sell signal. But until that happens I see the possibility for the rally to continue up to a Fib projection at 1545. Back above today's high near 1518 would trigger a buy signal for another leg up. Link

Jeff Bailey : 12/10/2007 2:47:29 PM

If long the YM just after its 02:11 inflection low (50% dynamic), would snug a stop to break even.

DAILY R2 (13,726)

Jeff Bailey : 12/10/2007 2:44:55 PM

YM 13,738

Keene Little : 12/10/2007 2:29:23 PM

SPX is testing its uptrend line from Dec 4th but the DOW didn't quite make it down to its uptrend line. The bounce is hardly bullish yet and has me wondering if it'll drop a little further where SPX could retest its broken downtrend line from Oct 11th through Oct 31st, currently just below 1510. But at this point I think long against this afternoon's low is the right trade now--keep your stop tight.

Linda Piazza : 12/10/2007 2:19:43 PM

SPX found resistance on its last 15-minute close at the 9-ema, now at 1513.96. Although this is not alarming yet, this is not what SPX short-term bulls want to see. The SPX is so far still above the breakout level, now at 1510.97. Support below that is near 1509.

Keene Little : 12/10/2007 2:13:26 PM

One more drop from here would give us a 5-wave move down from this afternoon's high and could be an end to today's sideway consolidation and set up another rally leg. All the more reason to watch for support at the uptrend lines from the 4th. Might even want to nibble on a long there.

Linda Piazza : 12/10/2007 2:12:38 PM

The USDJPY is at 111.64 as I type. It's been moving sideways in a tight range since about 4:00 am EST on Friday. It's been finding support at about 111.44 and resistance at about 111.84. Could it continue moving sideways straight into the FOMC meeting? Certainly it could, but it wouldn't be predicting any fun for U.S. equity traders if it did. Watch for a break one direction or the other out of that tight range.

Jeff Bailey : 12/10/2007 2:06:19 PM

If short the YM just after 01:25 at 13,760, would snug stop down to 13,738.

Jane Fox : 12/10/2007 2:04:08 PM

Now I need the market to continue downward. If it reverses and heads back up I will need to do some deep breathing exercises that are supposed to reduce stress.

Jane Fox : 12/10/2007 2:02:28 PM

That one totally tricked us. It broke out of the consolidation one way then reversed to break out the other way. This is called expanding the trading zone and is disasterous on trading strategies that use breakouts.

Linda Piazza : 12/10/2007 2:02:45 PM

The SPX has dipped to the bottom of the smallest Keltner channel, something I thought it would actually do a little sooner. It's taken this stop-running time of day to bring it down to that potential support, at the current 1512.78 level. The breakout Keltner level is below at 1510.67, and short-term bulls want that to hold on 15-minute closes if it's tested. Bulls do not want the SPX to begin finding resistance on 15-minute closes rather than support at the 9-ema, which is now at 1514.49.

Jane Fox : 12/10/2007 2:00:27 PM

Well darn it anyhow. Stopped at 13719.

Keene Little : 12/10/2007 1:58:02 PM

The buy program just past 1:00 PM was probably to test resistance, or see if they could get some follow through. No follow through so now some sell programs could be testing support. Keep an eye on the uptrend lines from last Tuesday, Dec 4th for potential support (SPX 1512, DOW 13680).

Jeff Bailey : 12/10/2007 1:32:00 PM

TRINQ 0.61 -40.77% ... NASDAQ A/D 1,751:1,188

NH/NL 95:77

Jeff Bailey : 12/10/2007 1:30:33 PM

TRIN 0.69 -25% ... NYSE A/D 2,122:990

NH/NL 110:70

Linda Piazza : 12/10/2007 1:27:43 PM

The SPX's 15-minute 9-ema has risen to 1515.39, important on 15-minute closes. The bottom of its smallest channel has flattened and now is at 1513.04, with the breakout level below that, now having risen to 1510.25. Short-term bulls want that last support to hold on tests, if it's tested. So far, the SPX isn't pulling back far.

Jeff Bailey : 12/10/2007 1:26:25 PM

RUT.X 794.00 +1.07% ... should note that Friday's action did have RUT NH/NL reverting at 35:28.

5-day NH/NL ratio 29.0%, 10-day NH/NL 23.1%

Keene Little : 12/10/2007 1:25:07 PM

Never short a dull market comes to mind here. But it's hard to trust the upside with the negative divergences on the charts. It could be simply a lack of sellers today (and perhaps into tomorrow). I'm not so sure the bulls want to see a rally into FOMC but they can worry about that afterwards.

Jane Fox : 12/10/2007 1:21:29 PM

I am now long YM from 13761 with a stop at 13719.

Jeff Bailey : 12/10/2007 1:20:48 PM

Nice little buy program underway ... YM 13,762

Jeff Bailey : 12/10/2007 1:18:18 PM

US Oil Fund (USO) $69.30 -0.18% ... $0.50 box to match futures. Link

Jeff Bailey : 12/10/2007 1:16:30 PM

US' Bodman: "Clear And Present Challenge To Meet US Fuel Demand"
Hopes OPEC Will Increase Oil Supplies
Low Global Oil Inventory Pushing Up Oil Prices
Speculators Add To Volatility, Not To Oil Price
Geopolitics, Iran, Venezuela Keep Oil Price High

Keene Little : 12/10/2007 1:02:52 PM

If the RUT manages to push a little higher watch 795 where it would have two equal legs up from Nov 26th. That could complete an A-B-C correction to the Oct-Nov decline. It doesn't have to get there and like the others the wave pattern could be considered complete after this morning's quick rally. Link

Jeff Bailey : 12/10/2007 12:57:13 PM

XLF ... 30-minute interval chart at this Link

Linda Piazza : 12/10/2007 12:46:07 PM

So far, the SPX has maintained 15-minute closes above its 9-ema, currently at 1514.58, but we're still in the lunchtime lull period when it could easily dip to the bottom of its smallest rising Keltner channel, with the bottom of that channel at 1512.96. The OEX is behaving similarly, with its 15-minute 9-ema now at 705.93 and with the bottom of its smallest channel at 705.03. SPX and OEX short-term bulls don't want to see 15-minute closes beneath 1509.55 and 704.08, respectively, however, as those are the breakout levels.

Keene Little : 12/10/2007 12:44:38 PM

The DOW is trying to test this morning's high but so far is leaving a glaring negative divergence on the charts, including against Friday's high. I still prefer the short side here but I'm not sure much is going to work before FOMC. We've got a market held captive right now.

Jeff Bailey : 12/10/2007 12:42:03 PM

XLF $31.87 +2.14% ... reverse h/s neckline held ($31.73). WEEKLY R1 ($32.00) still near-term resistance.

Jane Fox : 12/10/2007 12:40:53 PM

I will take YM long at 13761 just over the daily highs. The stop will be just below this consolidation at 13719. This is a 42 risk so the target will be at 13761 + 42 = 13803 adjusted down to 13799.

Jeff Bailey : 12/10/2007 12:39:27 PM

Bank of America Says Closing Money Market Fund ... Reuters Story Link

BAC $46.24 +1.93% ...

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

As often happens during the lunchtime lull, the SPX's 15-minute 9-ema has flattened. During such times, the SPX often drops back to the bottom of its smallest channel (or climbs to the top of it on a day when it's been falling) to test that support. That support is now at 1512.57 on 15-minute closes. So, a retest and holding of that support wouldn't mean that much if that's all that happens. However, if you're in bullish positions, you don't want it to drop further than the breakout level, currently at 1509.35 on 15-minute closes. Be careful of trusting any technical analysis system too much today and tomorrow, and that includes the Keltner channels I like to watch, but do find something that helps you guide your decisions.

Jane Fox : 12/10/2007 12:07:06 PM

Keene, I'm with you this is painful.

Jane Fox : 12/10/2007 12:06:48 PM

The US$ has not fallen anymore than it had from this morning so now I am in serious doubt about the Gold rally. Link

Keene Little : 12/10/2007 12:06:38 PM

I vote for an FOMC announcement this afternoon so we can get this wait over with. Pretty slow trading today.

Jane Fox : 12/10/2007 12:05:34 PM

Well I was wrong about Crude, it has not broken out of its consolidation and now I wonder if the Gold rally will hold. Link

Jane Fox : 12/10/2007 12:03:51 PM

Goldbugs have won this round.

I have not yet looked at the Crude and US$ charts so let's guess where they are now. I guess Crude has broken out of its consolidation and the US$ is continuing to fall. Link

Jeff Bailey : 12/10/2007 12:02:46 PM

XLF $31.82 +1.98% ...

Jeff Bailey : 12/10/2007 12:02:25 PM

BAC $46.04 +1.47% ...

Jeff Bailey : 12/10/2007 12:02:07 PM

Bank of America Says Closing Money Market Fund

Jane Fox : 12/10/2007 12:02:00 PM

Notice how the NDX made a 61.80% retracement of its rally from the August lows and it recovered. Link

Jane Fox : 12/10/2007 12:00:05 PM

The S&P will retrace from here but how far would you allow it to go before you thought HMMM maybe this is more than just a retracement. From this chart I would say if it closed below the 50% retracement at 1463 then I would start to worry but only a close below 1400 would turn me bearish.

On has to wonder if 1490 will hold up as support and it may but that level is becoming so obvious to traders that I think it has been rendered almost unusable. Link

Jane Fox : 12/10/2007 11:54:54 AM

Here is how the markets are trading in relation to their previous day ranges. Link

Keene Little : 12/10/2007 11:47:11 AM

If we get another leg down in this morning's pullback I've got some Fibs lining up around the 50% retracement of this morning's rally as potential support.

Jeff Bailey : 12/10/2007 11:33:25 AM

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

Keene Little : 12/10/2007 11:32:03 AM

Now that we've started a pullback watch the 38%-62% retracement zone for potential support if the rally is to continue. As I mentioned earlier, the minimum upside Fib projections for the DOW and SPX have now been reached and NDX tagged its Fib target (and top of its rising wedge) at 2141 so the pieces are in place to call this the end of the bounce off the Nov 26th low. I'm now watching to see how the pullback develops for more clues as to what's next. If you shorted the bounce then lower your stop to a new daily high for now.

Jeff Bailey : 12/10/2007 11:22:27 AM

Bank of America (BAC) $46.25 +1.91% ... gets active on CNBC report it has frozen one of its SIV-related money market funds.

Linda Piazza : 12/10/2007 11:19:38 AM

Keep the TRAN on your radar screen, too, if you're not already doing so. I know that Keene posts about the TRAN, too. This morning, a few minutes ago, the TRAN finally exceeded Friday's 4904.89 high. It's at 4901.54 as I type, being pushed back a little after reaching a day's high today of 4915.19. SPX, OEX and Dow bulls don't want to see it drop below this morning's 4847.67 low before reaching another new HOD, as that would now confirm a double top (well, nearly) formation. I have to warn, though, that the TRAN is already a master at seemingly confirming formations only to reverse and head back the other direction. So, just keep it on your radar screen. Whichever direction you're leaning in your SPX, OEX and Dow trades, you'd like to see the TRAN going that same direction.

Linda Piazza : 12/10/2007 11:09:25 AM

The SPX's 15-minute 9-ema is now at about 1513.25. The OEX's, near 705.30. Those following the strongest trend, scalping, want continued 15-minute closes above those 9-ema's.

Jeff Bailey : 12/10/2007 11:09:17 AM

MBIA (MBI) $36.45 +21.45% ... released for trade.

Jeff Bailey : 12/10/2007 11:06:28 AM

XLF-LG are $0.37 x $0.39.

VIX.X 20.48 -1.77% ...

Jeff Bailey : 12/10/2007 11:05:45 AM

Swing trade call adjustment alert! ... for the Financial Select SPDRs XLF Dec $33 Call (XLF-LG).

RAISE target to $34.75 in the underlying. ESTABLISH Stop at $31.50 in the underlying.

XLF $32.06 +2.75% ...

Jeff Bailey : 12/10/2007 11:02:47 AM

MBIA Getting $1 Billion From Warburg Pincus ... MarketWatch Story Link

Jane Fox : 12/10/2007 10:59:25 AM

I mistakenly stated earlier today that there were no economic reports today but there was a 10:00 Pending Home Sales.

Keene Little : 12/10/2007 10:58:57 AM

NDX is now pushing a little higher and is approaching potential resistance near 2141 while the DOW and SPX chop their way higher (in what looks like an ending pattern to the upside).

Jane Fox : 12/10/2007 10:58:36 AM

WASHINGTON (MarketWatch) -- A gauge of future home sales increased 0.6% in October, the second straight increase, a real estate trade group reported Monday.

The pending home sales index is down 18.4% compared with October 2006, the National Association of Realtors said.

Pending sales increased 16% in the Northeast and 8.4% in the West. Pending home sales fell 7.8% in the South and 1.4% in the Midwest.

Pending home sales track signed sales contracts, which typically close in one or two months, when they are reflected in the existing-home sales data released by the realtors.

"The worst part of the credit crunch" is already reflected in the data, said Lawrence Yun, chief economist for the NAR.

Yun said he believes existing home sales will gradually rise over the next year as "pent up demand" is unleashed.

Jane Fox : 12/10/2007 10:57:01 AM

The internals are telling me the bulls have the ball this morning. Link

Jeff Bailey : 12/10/2007 10:55:22 AM

Sears, Restoration Enter Confidentiality Pact ... AP Story Link

SHLD $114.25 -0.64% ...

RSTO $7.02 -0.56% ...

Linda Piazza : 12/10/2007 10:53:43 AM

The SPX's 15-minute 9-ema is now just under potential Keltner support at 1512.70, with the two converging. To preserve the strongest upward trend, that support should hold on 15-minute closes, it certainly wouldn't be surprising to see a punch down toard 1510-ish potential support. The breakout level for the SPX is now at 1507.59 on 15-minute closes, and short-term bulls do want to see that support preserved.

Jeff Bailey : 12/10/2007 10:41:44 AM

MBIA Shares Halted; Rival Bond Insurers Jump ... MarketWatch Story Link

Keene Little : 12/10/2007 10:36:43 AM

The push up to new highs for the DOW and SPX looks like the 5th wave for this morning's rally leg. This should set up the short play so look to short it.

Linda Piazza : 12/10/2007 10:35:21 AM

The SPX 15-minute 9-ema has now climbed to 1511.16 and is still climbing.

Linda Piazza : 12/10/2007 10:30:13 AM

For OEX traders, today's breakout level is currently 702.92 on a 15-minute closing basis. The 15-minute 9-ema is currently at 703.75.

Keene Little : 12/10/2007 10:29:25 AM

This morning's rally for the DOW and SPX looks like it could use another push higher following the current small consolidation (to give us a 5-wave move up). At that point it should lead to at least a pullback to correct it so watch for negative divergences to confirm the rally could be ending and then look for a short entry. If it is finishing the rally from last Tuesday then it will be a good short play setup for a larger decline.

Jeff Bailey : 12/10/2007 10:25:13 AM

INVESTOR JOSEPH LEWIS LIFTS BEAR STEARNS STAKE

DJ- Joseph Lewis, the billionaire investor who three months ago spent about $860 million for a 6.97% stake in Bear Stearns, lifts his stake in the mortgage-scarred investment bank to 8.01% in recent days.

BSC $105.44 +4.45% ...

Jeff Bailey : 12/10/2007 10:24:06 AM

S&P CUTS 14 SIV RATINGS, OUTLOOK

DJ- S&P says it cut its ratings on debt of structured investment vehicles, some from investment grade to deepest junk, and assigned a negative outlook to most other SIVs. S&P didn't provide dollar amounts affected by the downgrades.

Jeff Bailey : 12/10/2007 10:23:22 AM

MGIC TO LIMIT COVERAGE OF HIGHER-RISK LOANS

DJ- Mortgage insurer MGIC Investment outlines its plan to limit coverage for borrowers with poor credit and of higher risk loans, as well as to charge more for some loans in declining markets.

MTG $29.34 +8.86% ...

Linda Piazza : 12/10/2007 10:22:56 AM

The USDJPY has now bounced back to the former best-fit ascending trendline off the 12/05 early morning low. At 111.68 as I type, it's back below that trendline, having pierced it a few minutes ago. Those of you in bullish plays want to see it climb back into the channel whose bottom boundary is that rising trendline off the 12/05 low. You don't want to see a rollover that then produces a new low of the day.

I say that, but we have to consider the possibility that the intermarket relationship between the USDJPY and U.S. equity performance may shift and may not be static. For example, what would a climb in the USDJPY right now signify? Perhaps it would signify that currency traders don't believe that the Fed will ease much tomorrow or that tomorrow will be a one-and-done. While that might preserve the relationship of the USD to the yen, and thereby preserve the yen carry trade as it applies to U.S. equities, I don't think equity markets would particularly like that outcome with regard to the Fed. So, treat this intermarket relationship with some caution today. Note what's happening, keep in mind the usual correlation of the movement of U.S. equities and the USDJPY, but don't depend on that correlation today. Use the USDJPY's actions as a warning to prepare plans, not as the end-all and be-all indicator that it once seemed to be.

Jeff Bailey : 12/10/2007 10:21:31 AM

AMERICAN MORTGAGE WITHDRAWS ADJUSTED FFO VIEW

DJ- REIT withdraws 2007 view for adjusted funds from operations of 95c to $1 because of widening credit spreads on certain assets and U.S. Treasury yield declines.

AMEX:AMC $2.30 -45.88% ...

Jeff Bailey : 12/10/2007 10:19:36 AM

MERRILL TAKES KNIFE TO CREDIT-CARD GIANTS

DJ- Merrill Lynch cuts American Express, Discover and Capital One to sell, saying 'deterioration in consumer credit and spending will continue to undermine the fundamentals of each and lead to share price declines.'

AXP $57.64 +1.19% ...

DFS $17.27 +3.04% ...

COF $51.24 +2.89% ...

Keene Little : 12/10/2007 10:16:06 AM

On the SPX 60-min chart I posted last night (below) the first upside Fib projection for the 5th wave is at 1517.16 (5th wave = 62% of the 1st wave) so once that level is reached it will be a time to be cautious about topping. The levels for the DOW to watch are 13728 and then 13805.

Linda Piazza : 12/10/2007 10:15:33 AM

The SPX is now in breakout mode on its 15-minute chart. Bulls need to pick some barometer by which you measure whether the uptrend is continuing. You definitely want 15-minute closes to continue above the breakout level, now at 1506.73 on 15-minute closes, but as the SPX continues higher, you might not want to risk a dip all the way to that level. The 9-ema is now at 1508.76 but still climbing. After the SPX climbs sufficiently high, if it does, those of you in short-term scalping-type plays might want to begin following the SPX higher with your stops, perhaps by placing them an account-appropriate amount below that rising 9-ema.

On the day before an FOMC meeting, when the SPX's breakout mode is already showing that, while upward momentum is strong, prices are extended, you don't want to risk some out-of-the-blue reversal.

Jeff Bailey : 12/10/2007 10:14:32 AM

SHELL PEARL PROJECT MAY BREACH $18B COST, START 2010

DJ- The world's largest project to turn natural gas into transport fuels, Royal Dutch Shell's Pearl plant in Qatar, risks breaching its $18 billion budget and won't begin production until the middle of 2010, people close to the situation say.

Jeff Bailey : 12/10/2007 10:13:36 AM

PACIFIC ETHANOL SUSPENDS CALIFORNIA PROJECT

DJ- Pacific Ethanol suspends construction of a California ethanol plant because of weak market conditions. Imperial Valley project, near Calipatria, will resume when market conditions improve.

PEIX $5.91 -3.27%.

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

CHINA PPI AT 2-YEAR HIGH, RAISES INFLATION FEARS

DJ- China's producer price index increased at its fastest rate in more than two years in November, indicating a continued buildup of inflationary pressures and intensifying concerns over economic overheating.

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

FREDDIE MAC ALTERS DELINQUENT LOAN BUYS

DJ- Freddie Mac revises its mortgage-purchasing guidelines to allow more badly delinquent loans to remain in participation-certificates pools, which show partial ownership of participating capital.

FRE $35.99 +1.26% ...

Jeff Bailey : 12/10/2007 10:10:22 AM

LAFARGE BUYS ORASCOM CEMENT

DJ- French cement maker Lafarge says it acquires Egypt's Orascom Construction Industries Cement group. The deal values Orascom Cement at euro 8.8 billion, with an assumption of euro 1.4 billion in net debt, Lafarge says.

Jeff Bailey : 12/10/2007 10:07:08 AM

MCDONALD'S US SAME-STORE SALES RISE 4.4%

DJ- McDonald's November U.S. same-store sales climb 4.4%, boosted in part by its premium roast coffee and breakfast menu sales. Worldwide sales increase 16.3% in the month, or 9.6% in constant currencies. Global same-store sales increase 8.2%.

MCD $61.05 +1.47% ... notable 52-weeker at the big board.

Jeff Bailey : 12/10/2007 10:05:46 AM

UBS WINS TWO NEW BIG INVESTORS, WRITES DOWN $10B

DJ- UBS is selling a 9% stake to a Singapore government fund as part of a move to strengthen capital after it announced a further $10 billion in write-downs on subprime holdings. The bank also says it now expects to post a net loss in 4Q, after having said earlier that it expects a profit overall. Chairman says the bank has sufficient capital even if the subprime market deteriorates further.

UBS $51.47 +1.96% ...

Jeff Bailey : 12/10/2007 10:04:11 AM

US Pending Home Sales Index +0.6% In October
Down 18.4% from October 2006

Keene Little : 12/10/2007 10:03:29 AM

NDX came within a point of a Fib projection at 2136 on Friday and hasn't been able to top that yet. It's possible to count the move complete as of Friday's high on that index which is another reason Friday's low is important. But if the techs can continue to push a little higher as well then the top of a potential ascending wedge, currently near the 62% retracement of the November decline (2141), makes for a good upside target for now. Link

Jane Fox : 12/10/2007 9:55:23 AM

VIX is testing its daily lows telling me the bulls are stronger than the bears.

Jane Fox : 12/10/2007 9:54:30 AM

AD line is now +539 so it looks like the bulls are getting stronger.

Jeff Bailey : 12/10/2007 9:51:29 AM

MBIA Inc. (MBI) $29.98 ... halted news pending.

Linda Piazza : 12/10/2007 9:50:58 AM

The SPX did manage a first 15-minute close above the first Keltner resistance at 1506. Next resistance on a Keltner basis is at about 1510 on 15-minute closes. Of course, there's Friday's early morning high of 1510.63, too, as potential resistance, as well as the 61.8 percent retracement of the decline off the October high in that 1511-1512 zone, too. Lots of potential resistance to be faced here, so bulls want internals on their side.

Linda Piazza : 12/10/2007 9:47:27 AM

At 111.49 as I type, the USDJPY has fallen below a best-fit trendline drawn off the 12/5 low established at 6:00 am EST. It's also testing Keltner support at about 111.52 on 15-minute closes. It's had only one 15-minute close beneath that Keltner support since Wednesday morning. Equity bulls would like to see that support hold and they then want to see a retest of the supporting trendline, now at about 111.73, with that NOT holding as resistance. They don't want to see a bounce to that trendline and a rollover from it.

Linda Piazza : 12/10/2007 9:42:36 AM

The SPX is back at/below that first Keltner resistance I mentioned. The first 15-minute period has still not ended, of course, but the resistance is, so far, holding. The resistance is just below 1506 now.

Jane Fox : 12/10/2007 9:42:10 AM

AD line is -6.00 giving us no clues as to who has control this morning.

Jane Fox : 12/10/2007 9:38:43 AM

The US$ is my last hope for ideas as to which way Gold will resolve and unfortunately this market is not helping much either. The US$ is on it way to make a 38.2% retracement from a rally off the November 23rd lows but we do not know if this retracement is only a retracement or if it is something much more bearish until the it completes. Link

Linda Piazza : 12/10/2007 9:37:23 AM

Until you've got proof that the day is setting up differently, be a little wary of trusting your technical indicators today. The day before and of an FOMC meeting can be one in which signals are set up, but there's no follow through on the signal. Unless you see an undeniable trend set up, don't bet the farm on any signal being reliable. Be cautious how much you're spending on your bets today.

Linda Piazza : 12/10/2007 9:35:04 AM

On the 15-minute chart, I show potential SPX resistance near 1506 on 15-minute closes and then at 1509.70-1510 on 15-minute closes. The SPX, at 1507.40 as I type, is of course above that first resistance mentioned, but I mention it because the 15-minute period is far from completed. Bulls don't want to see the SPX close this first 15-minute period below that resistance after it's been pierced as that shows that it held, at least on first test.

Keene Little : 12/10/2007 9:27:59 AM

Nice recovery off the overnight lows in equity futures. We'll now get to see if the market stays trapped in a trading range like Friday or instead rallies in the 5th wave of the leg up from last Tuesday. Until proven otherwise (with a break below Friday's low) I'd be looking to buy the dips for now.

Jane Fox : 12/10/2007 9:27:47 AM

No help from the Crude market though because it is in a consolidation zone as well. Link

Jane Fox : 12/10/2007 9:26:23 AM

Gold was up during the overnight session but still within a consolidation zone, a zone I have no clue as to how it will resolve based solely on this chart so I need to look at the US$ and Crude for further ideas. Link

Jane Fox : 12/10/2007 9:21:29 AM

WASHINGTON (MarketWatch) -- In a glorious bit of timing, the Federal Reserve is expected to cut interest rates on Tuesday for a third straight meeting, just days before government data are released showing some of the highest inflation rates in decades.

That's all you need to know about the Fed's balance of risks: Policymakers are much more worried about the illiquid credit markets and the possible hit that the credit squeeze could have on the economy than they are about the risks of inflation breaking out.

"Don't look now, but while we're in the midst of an easing cycle, the U.S. is facing a 4% inflation rate," wrote Avery Shenfeld, an economist for CIBC World Markets. "But for now, none of this matters, as both bonds and the Fed are focused on the credit crunch and its growth threat."

The economic data have been weak, but not disastrous, since October's meeting, when the Fed signaled that it thought it was done cutting rates. It's not the immediate economic situation that's brought the Fed back into the game of cutting rates, it's the horrendous condition in the credit markets, which are arguably worse off now than they were in August.

Jane Fox : 12/10/2007 9:20:00 AM

The economic calendar is mostly empty today but we are looking ahead to Tuesday's Fed decision and questioning whether to expect a quarter-point or half-point lowering in rates.

Linda Piazza : 12/10/2007 9:18:35 AM

Friday's SPX candle was a small-bodied candle sitting at the top of its rise off the November low, following immediately after Thursday's tall green candle. So far, futures are set up to show a positive opening, which bulls definitely want to avoid the appearance of a potential reversal. A gain today or even another consolidation day beneath the 1511-1512 next resistance level would look more bullish than a decline, but on a daily chart basis, I don't see anything too definitively bearish occurring unless the SPX drops below the 1479-1483 support zone and sustains levels below it. Potential support is closer, too, near 1490-1492, but I think it would take a daily close beneath the 72-ema now at 1479.57 to look definitively bearish. Anything else, while definitely detrimental to long positions, would just look like a pullback through a rising channel the SPX may be building, a pullback to test support. If the SPX drops back but doesn't drop below that 1479-1483 level, I think we're in the "not sure what happens next" category. For now, though, we may not have to worry about what a pullback means, but that kind of depends on what happens if early action sends the SPX up into the 1509-1511 zone, doesn't it? If you're in bullish positions, spend a little time this morning deciding how you'll treat a test of 1511, if it should occur, and how you'll protect profits if the SPX should get knocked back from the 1509-1512 zone.

Jane Fox : 12/10/2007 9:17:28 AM

Higher highs and lows tell you the bulls have control of the overnight equity index markets but only since about 4:00ET. Notice the overnight lows for the NDX futures (NQ) and the S&P futures (ES) were their respective previous day lows (PDL). The DOW (YM) is the only market to break its PDH so far. Link

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