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Keene Little : 1/22/2008 11:31:57 PM

Wednesday's pivot tables: Link and Link

There was a rotten AAPL that smelled up the place after hours and equity futures have dropped even lower as the night has progressed. But the overseas markets, if they rally, could easily lift our futures by the morning so nothing is a given. I had shown a 10-min chart of SPX to show how Tuesday's consolidation could lead to another leg up in the rally off Tuesday's low: Link

If SPX drops below 1300 (which it will if futures open down as much as they're currently down--ES is -16 at 1293) then Tuesday's consolidation could be part of a larger pullback in which case I would expect to see SPX find support near 1290. Much below that and we risk a drop back down to test Tuesday's low or slightly lower. Then we'd find out if a larger bounce will start (pink wave count on the 60-min chart) or if we'll only get relatively minor bounces as the market works its way lower (dark red count): Link

Not shown on the 60-min chart, but a distinct possibility, is a sideways consolidation tomorrow that lasts another day or two before dropping lower.

OI Technical Staff : 1/22/2008 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The Market Monitor has been archived.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 : 1/22/2008 6:10:44 PM

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

Trade Blotter of CLOSED trades January-to-date at this Link

Jeff Bailey : 1/22/2008 5:53:39 PM

Rather bullish developments for forward crack spreads today. Refiners should start firming to trading higher into the summer driving season from here.

Broader equity market still "jittery enough" to stay away from NAKED puts in my RISK management opinion. At, or slighly out-the-money long calls best. Start with partials for now.

Jeff Bailey : 1/22/2008 5:46:09 PM

Closing U.S. Market Watch found at this Link

Feb Crude Oil (cl08g) settled down $0.72, or -0.79% at $89.85.

Rolls to March (cl08h).

Jeff Bailey : 1/22/2008 5:01:20 PM

Closing Internals found at this Link

Tab Gilles : 1/22/2008 5:01:17 PM

AP Billionaire investor George Soros said the world was facing the worst financial crisis since World War Two and the United States was threatened with recession, according to an interview with the Austrian daily Standard. "The situation is much more serious than any other financial crisis since the end of World War Two," Soros was quoted as saying. He said over the past few years politics had been guided by some basic misunderstandings stemming from something which he called "market fundamentalism" - the belief financial markets tended to act as a balance. "This is the wrong idea," he said. "We really do have a serious financial crisis now." Asked whether he thought the United States was headed for a recession, he said: "Yes, this is a threat in the United States". He added he was surprised how little understanding there had been on how recession was also a threat to Europe. European shares fell nearly 6 per cent on Monday, their biggest one-day slide since the September 11 attacks of 2001, as fears of a US recession and more write downs in the financial sector sparked a broad-based selloff.

Keene Little : 1/22/2008 4:37:37 PM

Price volatility is definitely here. ES is down 25 points from this afternoon's high near 3:30 PM. That's a big move and yet on the 60-min chart it looks like a minor correction after the rally off this morning's lows.

Jeff Bailey : 1/22/2008 4:37:13 PM

Texas Instruments (TXN) $29.06 -1.35% ... bids to $30.04 on headline numbers.

Tab Gilles : 1/22/2008 4:33:01 PM

Apple warns on Q2

Keene Little : 1/22/2008 4:32:55 PM

Oops, futures selling off again. Someone get on the hotline and call the PPT back in for action.

Jeff Bailey : 1/22/2008 4:32:54 PM

Apple Computer (AAPL) $157.50 -2.39% Link ... get's active at $148.50 on headline numbers.

Keene Little : 1/22/2008 4:31:38 PM

The pattern for gold (and silver) became less clear after today's price action. The daily candle, as shown on the daily chart of GLD, is a bullish engulfing candlestick. The pattern of the decline from its last high is beginning to look more corrective than impulsive. Both of these things lead me to believe we could get another push higher in the metals. Link

The US dollar got pummeled today thanks to the Fed's "strong support of the dollar" (cough). With the US aggressively lowering interest rates while the Europeans hold their interest rates higher, it simply makes investments in the US less attractive, hence less demand for US dollars. That puts upward pressure on commodities.

So it's a little iffy right here for gold and silver. I prefer the short side but I'm waiting now to see how the equity rally plays out as I suspect equities and commodities will trade mostly in synch. A drop back below today's low in gold would likely usher in more selling.

Keene Little : 1/22/2008 4:07:47 PM

This SPX 10-min chart shows the sideways consolidation today as wave-b that should lead to another run higher in wave-c. There are a couple of other possibilities including only a minor new high above today's that then leads to a stronger pullback but unless SPX breaks below 1300 I'd look for an upside resolution out of this. Link

Jeff Bailey : 1/22/2008 4:05:23 PM

Wachovia Bank (WB) goes out $31.99 +3.86% ...

Jeff Bailey : 1/22/2008 4:04:53 PM

China Telecom (CHA) goes out $74.30 -10.48% ...

Linda Piazza : 1/22/2008 3:59:01 PM

It doesn't look as if the SPX will create a new high unless it does some strong climbing in the last few minutes of trading. The day's candle is currently a doji with a long lower shadow. This is a potential reversal signal, but you absolutely must remember the "potential" in potential reversal signal, remembering also that we've seen other potential reversal signals followed by strong declines. It happened 1/03 and 1/07, just to name a few times. Although the 1/16 candle wasn't a doji, it was a small-bodied candle at the bottom of a decline, right above support, and its potential reversal signal wasn't honored, either. So, if you're taking home a bullish position overnight, based on what looks like a strong potential for reversal, remember the risk you're also taking home. While in normal times, I'd think there was a decent chance of carry through at least for a morning, if not several days, these are far from normal times, and I'm not sure of anything.

Keene Little : 1/22/2008 3:56:35 PM

We might even get the pullback into the close instead of tomorrow morning and if it holds (or futures rally tonight) then a rally tomorrow is likely.

Keene Little : 1/22/2008 3:55:37 PM

If we see another pullback tomorrow morning that holds above the trend line along the lows of today's sideways consolidation then we should get another rally leg out of it. Any break of the lows of the consolidation, e.g., below SPX 1300 (ES 1301), could see a deeper pullback at a minimum (for a possible retest of today's low). I suspect the PPT will be less active tomorrow since they've accomplished what they wanted today.

Linda Piazza : 1/22/2008 3:48:59 PM

Both the 15-minute 45-ema and the top trendline of the broadening formation held as resistance on the SPX's last 15-minute close. Let's see what happens into the day's close. As I've urged all day, I urge you to use this bounce to re-evaluate, to decide how much risk you're willing to carry overnight.

Keene Little : 1/22/2008 3:42:43 PM

CME looks good for a rally from here. It looks to have completed a 5-wave move down from December and today's candle is a very bullish engulfing candlestick, engulfing the last two days. The leg down from December may have completed an A-B-C pullback (green wave count) which would mean a rally from here to a new high. Or it completed a larger degree 1st wave down and now we'll get a 2nd wave correction (dark red count). Link

Either way we should get a bounce back up to the 620 area at a minimum. But first it needs to get up through potential resistance near the current price level. As noted on the chart, the 50-week moving average has supported pullbacks since 2003 and now it has bounced back up to this level.

Linda Piazza : 1/22/2008 3:43:52 PM

I posted the SPX's intraday chart with that descending broadening formation earlier today. Here is it currently: Link When seen on a 30-minute chart instead of a 15-minute one, the bottom support line was pierced with the candle closing at the channel line, not below it as it did on the first 15-minute period.

Linda Piazza : 1/22/2008 3:35:49 PM

There's that pesky 15-minute 45-ema again, with other SPX resistance layered above. Some of that resistance is important--the top of the broadening formation on the intraday charts and the weekly 200-ema, of course, near today's high.

Jeff Bailey : 1/22/2008 3:35:46 PM

Sector Losers ... Software -3.77%, Pharmaceuticals -3.37%, Utilities -3.39%, Networking -3.02%

Jeff Bailey : 1/22/2008 3:34:19 PM

Sector Winners ... Retail +5.36%, Regional Banks +3.92%, Broker/Dealer +2.61% and Gold Bugs +1.64%

Linda Piazza : 1/22/2008 3:24:50 PM

That 15-minute 45-ema has been important on the SPX's chart. That moving average is now at about 1317.30. It's been sinking all day, knocking back the SPX each time it's tested it. That means that it would be a short-term positive if the SPX could sustain 15-minute closes above it. That hasn't happened yet. The SPX is at 1310.65 as I type.

Keene Little : 1/22/2008 3:12:52 PM

I strongly suspect the PPT was involved in today's rally. They were created to handle the kind of "crisis" facing the stock market so you can be sure they were active this morning. Now they'll probably stuff a few more dollars into the markets this afternoon so as to keep it from dropping. Everyone is concerned about the close so if they can hold the DOW above 12K there will be high-fiving all around after the close. All they have to do is keep those nasty bears from foiling their plans.

Linda Piazza : 1/22/2008 3:10:12 PM

Possibly important SPX resistance is above from 1317.80-1318.53 on 15-minute closes. The descending top trendline of the SPX's descending broadening formation on the intraday charts is now near 1324-1325, I believe, and bulls would like to see a breakout and sustained values above that.

If that happens, what next? If the SPX closes at or above its current 1314.61 level, it's going to show a strong spring off support on its daily chart. That's also a good sign for a relief rally, but it's only a good sign of a potential relief or technical rally. Do be clear that, although I anticipated the relief rally to get started last week and I, for one, wouldn't be surprised if it lasted days or even a week or two, there's no assurance here. If you're in this market, either long or short, you're taking home risk.

Jeff Bailey : 1/22/2008 3:09:14 PM

03:00 Internals found at this Link

Linda Piazza : 1/22/2008 3:03:01 PM

You've weathered the day's action--at least I hope you have. Now, we move into the last hour of trading. It's time for you to start thinking about what you need to see into the close to hold onto trades and whether you want to lower some of the risk in your trading portfolio before tomorrow's open. This is true whether you're short or long.

Tab Gilles : 1/22/2008 2:59:42 PM

The last hour of trading is pivotal...will it close strong like the DAX or will traders sell into strength? Link

Keene Little : 1/22/2008 2:49:22 PM

I think, based on what I believe is playing out in the longer term patterns, that we should be looking to buy the pullback if we get another one this afternoon or tomorrow morning. It could just rally higher from the current consolidation and any break to a new high from here should be a good long play for another leg up. The risk is that if we're into a 4th wave correction through next week, they're about the worst wave to trade because of the choppy and whipsaw nature of these corrections.

Jeff Bailey : 1/22/2008 2:44:39 PM

S&P Banks (BIX.X) 242.87 +2.74% ... wavers either side of WEEKLY Pivot (243.65).

Linda Piazza : 1/22/2008 2:44:23 PM

I wish I felt more certain that markets are going to hold up into the close and could reassure you that they will. I think it's possible, but I don't think I can go so far as to say it's probable. If the SPX were firmly above 1326, I'd feel better, but I think from 1317 up to 1326, there are all kinds of barriers arrayed in the SPX's path.

The good news? Since 12:45 pm ET, the SPX has been maintaining 15-minute closes at or above the benchmark that measures the breakdown status, so even on the short-term 15-minute chart, the SPX is no longer in breakdown status. The bad news? That channel line is still sliding down. The SPX hasn't consolidated sideways firmly enough or risen high enough to flatten it and turn it up again, so the SPX can essentially hold that support on 15-minute closes, looking better on a Keltner basis, but still turn lower. That support is now at about 1303.20 on 15-minute closes with the SPX at 1303.70 as I type. We need a bounce.

Linda Piazza : 1/22/2008 2:35:01 PM

The SPX closed the just-completed 15-minute period at the flattening 9-ema, now at 1308, but the SPX has now dropped below it. Next support at 1303.45 and then 1300.58 on 15-minute closes. Next resistance above the 15-minute 9-ema is 1317.51 on 15-minute closes. The descending trendline from the descending broadening formation that began forming late last week now crosses just under 1325. The SPX is at 1306.44 as I type.

Jeff Bailey : 1/22/2008 2:24:07 PM

Republican Fred Thompson Quits Race For US President

Keene Little : 1/22/2008 2:24:01 PM

The interesting thing about the dark red wave count on the NYSE and SPX charts posted is that it calls for relatively minor rally into the end of the month (likely to be choppy) and then a continuation lower. That would suggest further disappointment after the end-of-month FOMC meeting. If the market doesn't get another .50 cut Jim Cramer could have a little hissy fit again.

Linda Piazza : 1/22/2008 2:20:03 PM

The SPX's slanting lower Keltner support held (barely) on the last 15-minute close. That Keltner support is now at 1304.09 on 15-minute closes, with the 9-ema potential resistance now, at 1308.40 on 15-minute closes. So far, from a Keltner outlook, the SPX is looking tentatively okay, although it needs to turn higher soon and pull support up with it, or it risks just sliding down descending support that is "holding." We really need to see a 15-minute close above about 1318.20.

Keene Little : 1/22/2008 2:16:47 PM

Using the NYSE daily chart pattern for a potential decline, I've modified the SPX daily chart to coincide with its pattern, and using this morning's low as the end of a small 3rd wave (dark red wave (iii) on the chart). It takes a rally above about 1370 to suggest we're into the pink wave count that calls for a rally into Feb/Mar. Link

Otherwise I'm expecting to see the market stair step lower into April. The difference between this chart and the one posted last night is that the low for the first larger wave down (bold blue wave 1) would be closer to 1100 rather than 1000. The slope of the down-channel more closely approximates the one on the NYSE that I posted earlier (1:44).

Jeff Bailey : 1/22/2008 2:13:27 PM

US Dollar Index (DXY) 76.36 -0.65% ... (30-minute delayed) ... WEEKLY Pivot 76.04. Near kiss of WEEKLY R2 (77.36) this morning.

Jeff Bailey : 1/22/2008 2:11:35 PM

StreetTracks Gold (GLD) $88.00 +0.66% ... ~$880.00 spot.

Jeff Bailey : 1/22/2008 2:10:57 PM

BUSH WON'T RULE OUT LARGER STIMULUS PLAN

DJ- Amid increasing economic uncertainty and shaky global stock markets, White House says it won't rule out increasing size of proposed economic stimulus package. Spokeswoman says 1% of GDP was "starting point" for the plan.

Jeff Bailey : 1/22/2008 2:08:23 PM

MBI-QU are $2.15 x $2.30

Jeff Bailey : 1/22/2008 2:07:56 PM

UTX-QN are $6.10 x $6.20

Jeff Bailey : 1/22/2008 2:07:35 PM

SIL-BC are $1.00 x $1.15

Jeff Bailey : 1/22/2008 2:07:14 PM

VYH-AE are $1.90 x $1.93

Jeff Bailey : 1/22/2008 2:06:51 PM

SWC-PB are $2.35 x $2.50

Jeff Bailey : 1/22/2008 2:06:30 PM

KSS-BJ are $0.30 x $0.35

Jeff Bailey : 1/22/2008 2:05:44 PM

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

Linda Piazza : 1/22/2008 2:02:58 PM

Some downside testing going on. Those who want the SPX to remain steady or maybe even bounce again want Keltner support now at 1304.99 to hold on 15-minute closes.

Linda Piazza : 1/22/2008 1:47:35 PM

It looks as if the SPX ended that 15-minute period at the 9-ema. It's pushed it a little lower than its previous 1309.50-ish level. Nearest potential support is now at 1305.64 on 15-minute closes. Above the 9-ema, nearest Keltner resistance is at 1318.01 on 15-minute closes.

Linda Piazza : 1/22/2008 1:44:36 PM

We have so much volatility in the markets these days that a 47.62 range for the day for the SPX looks like a big day on my intraday charts, but nothing all that wildly spectacular. We spend whole months when a 7-point range would have been a reasonable expectation.

Keene Little : 1/22/2008 1:44:06 PM

I've found over the years that the NYSE (NYA.X in QCharts) trades very well technically. It follows trend channels, hits its Fibs nearly on the nose and provides some of the cleaner EW patterns. So I've run through the same exercise with it as I did for the SPX in last night's charts. Link

Just using the daily chart for now, I like the setup for a bounce here that could take us into the end of the month, but not make a lot of progress to the up side. After that we should see it stair step lower into the spring before setting up a rally into the summer (and then an ugly fall, literally).

Linda Piazza : 1/22/2008 1:35:46 PM

We're approaching a typical stop-running time of day, from about 1:35-1:55 pm ET. Of course, there's nothing too typical about today. As I type, I've rolled up to the 15-minute SPX chart, and the SPX is retesting the 15-minute 9-ema, at about 1309.50 on 15-minute closes. Those who hope for a steadying in the markets and maybe even a continued bounce want to see that hold on 15-minute closes, and then a sustained push above the 1321.91 high of the day.

Potential resistance is at 1320.25 on fifteen-minute closes, just below the weekly 200-ema. The descending trendline of that descending broadening formation I've been mentioning since last week is now at about 1326.50. It would be a major short-term development to see the SPX sustain values above that trendline, breaking through that broadening formation to the upside. For now, we should consider that there's potentially strong resistance layered just overhead.

Jeff Bailey : 1/22/2008 1:29:34 PM

13-week Yield ($IRX.X) down 49 bp at 2.30%.

Jeff Bailey : 1/22/2008 1:28:53 PM

US 3-Month Bills: 2.37%; 35.25% At High

DJ- The U.S. Treasury awarded $21.00 billion in three-month bills at Tuesday's auction at a high rate of 2.370%.

The Treasury received bids totaling $52.22 billion and accepted $21.00 billion, including $1.79 billion of non-competitive tenders. The dollar price was 99.400917 and the investment rate, or bond-equivalent return, was 2.424%.

The Treasury also sold $36.50 million of bills to foreign and international monetary authority accounts on a non-competitive bidding basis.

The bid-to-cover ratio, an indication of demand, was 2.49, Treasury said.

Tenders submitted at the high yield were allotted 35.25%.

The median rate was 2.280%; that is, 50% of the amount of accepted competitive bids were tendered at or below that rate.

Of the competitive bids accepted, 5% were tendered at or below the rate of 2.140%.

The Federal Reserve purchased $7.34 billion in bills for its own account in Tuesday's three- and six-month bill auctions. When the auction was announced, the Fed held $12.34 billion of maturing bills.

The bills awarded to the Federal Reserve are in addition to the public offering amount.

Accepted indirect bids for the three-month bill were 18.0% of the total competitive amount, up from 17.5% in last week's three-month bill auction.

The high rate was down from 3.080% at the previous three-month bill auction.

The high rate was the lowest since the rate of 2.320% at the three-month bill auction on Jan. 24, 2005.

The issue is dated Jan. 24 and matures on April 24, 2008.

The CUSIP number on the three-month bill is 912795D99.

Jeff Bailey : 1/22/2008 1:21:53 PM

VIX.X 30.65 +12.76% ...

Jeff Bailey : 1/22/2008 1:21:32 PM

Swing trade put alert! ... for one (1) of the MBIA, Inc. MBI May $7.50 Puts (MBI-QU) at the offer of $2.25.

No stop for now, target $2.50 in the underlying.

MBI $12.05 +40.93% ...

Jeff Bailey : 1/22/2008 1:12:39 PM

01:00 Internals found at this Link

Linda Piazza : 1/22/2008 1:11:57 PM

The SPX day's high so far has been 1321.91, and it's about to be challenged. The five-minute chart shows potential resistance on five-minute closes at 1320.23. SPX at 1317.45 as I type.

Linda Piazza : 1/22/2008 1:09:32 PM

I've been mentioning since last week the broadening formation that was forming on the bottom of the SPX's decline. Technical texts teach us that such broadening formations are indicative of emotion-based trading. When they're seen at the top of a climb, they're bearish. As I mentioned last week, experts are either silent on the subject of broadening formations at the bottom of a decline or else do consider them potentially bullish, so the jury is out as to whether they are or not. It's time to show the one on the SPX's chart: Link Whether it's truly bullish (good for a relief or technical bounce) or not, it's clear that the resistance, now just under 1330, has been important over the last few days, so a clearing of that resistance might be important, too. For now, watch for potential resistance at that red trendline.

Keene Little : 1/22/2008 1:05:03 PM

Short term price action, with the consolidation near the highs, looks bullish. But we could get another leg down for a slightly larger a-b-c pullback from this morning's high. SPX 1295 would be the potential support area if that happens. Any drop back below 1290 would suggest at least a test of this morning's low.

Linda Piazza : 1/22/2008 1:00:17 PM

TRIN at 0.88, still uncomfortably close (for bulls) to 1.00 but below it for now.

Linda Piazza : 1/22/2008 12:59:08 PM

Bulls would like to see sustained SPX values above the 12:10 ET high of 1312.94 as the first step to a newly improved tenor. The SPX is at 1312.38 as I type.

Linda Piazza : 1/22/2008 12:50:26 PM

Sideways. No prediction of next direction.

Jeff Bailey : 1/22/2008 12:46:34 PM

Dow Diamonds (DIA) $119.47 -0.91% ... PnF chart where today's action has bearish vertical count column still under construction to $94 or INDU 9,400 equivalent. Link

Only 30 stocks here, so perhaps the best index to utilize a bullish/bearish vertical count on.

My "moderate recession" call was for INDU to trade within a range of 10,000 to 13,400 in 2008. Close 12,600 with Republican president. 10,200 with Democrat president.

Keene Little : 1/22/2008 12:38:55 PM

The GOOG weekly chart shows price came down very close to the bottom of its long term up-channel near 555. Obviously a break below it would be a signal that its bull market is over. But until that happens one could easily argue that it's a great buying opportunity here: Link

The daily chart shows the pink wave count for an a-b-c pullback from November that would set up a larger bounce into Feb/Mar. The dark red count shows the possibility for a smaller bounce as part of a pattern with stair steps lower into March. A break below 550 would be a bearish signal. Link

Jeff Bailey : 1/22/2008 12:32:41 PM

ANALYSIS Technicians Split On How Far Stocks Fall ... As it becomes evident a preemptive move by the Federal Reserve will do little to stave off a massive retreat from U.S. equities, many major indexes are breaking below levels that had served as support.

Jeff Bailey : 1/22/2008 12:31:40 PM

DUPONT 4Q NET FALLS 37% ON YEAR-AGO TAX GAIN

DJ- Chemicals maker reports net income of $545 million, or 60c a share. Prior-year results included an income-tax benefit. Excluding items, per-share earnings are 57c. Net sales rise 11% to $6.98 billion. Wall Street expected EPS of 49c.

DD $42.78 +0.18% ...

Jeff Bailey : 1/22/2008 12:30:53 PM

YAHOO EXPECTS CUTS IN STAFF TO CURB BUDGET

DJ- Yahoo expects to cut staff in some areas under a drive to rein in its budget. The exact extent of any future layoffs isn't known, though one person familiar with the matter estimates they potentially may affect hundreds of workers.

YHOO $20.20 -2.79% ...

Jeff Bailey : 1/22/2008 12:30:01 PM

EBAY CEO WHITMAN PLANS TO RETIRE

DJ- EBay Chief Executive Meg Whitman is preparing to retire. Recently Whitman has been delegating more daily responsibilities to her lieutenants, sources say, and decision about her departure could come within weeks.

EBAY $27.76 -2.04% ...

Jeff Bailey : 1/22/2008 12:29:08 PM

PAULSON SEES BIPARTISAN SUPPORT FOR STIMULUS PACKAGE

DJ- Treasury Secretary Paulson says he's optimistic that the Bush administration can work with congressional leaders to quickly enact a temporary fiscal stimulus package this winter.

Jeff Bailey : 1/22/2008 12:28:43 PM

ECB'S STARK SAYS ANY ARTIFICIAL STIMULUS DOOMED TO FAIL

DJ- Central banks shouldn't use monetary policy to stimulate economies systematically and thereby risk compromising price stability, Juergen Stark, member of the European Central Bank's executive board says.

Jeff Bailey : 1/22/2008 12:28:14 PM

NY MAY ADD CAPITAL TO BOND INSURER MARKET

DJ- New York Insurance Department is closely monitoring the health of bond insurers and working closely with companies to stabilize the market. Without being specific, the department says more injections of capital are possible.

Linda Piazza : 1/22/2008 12:21:04 PM

TRIN 0.98. Bulls or just those who want the markets to steady would like it to ease back again, well below 1.00. The VIX is at 30.81, finding support on 15-minute closes at Keltner support from 30.60-30.66. Bulls would like the VIX to lose that support on 15-minute closes.

Linda Piazza : 1/22/2008 12:13:46 PM

I now consider the SPX five-minute chart's H&S invalidated unless there's a quick reversal down through 1299.20 on a five-minute close. This gives us a little information. At least for the short-term period, bears didn't have enough strength to drive the SPX down toward what looked like a projected 1280-ish target. That doesn't mean that bulls have enough strength to drive it up through 1321-1324 resistance, though.

Linda Piazza : 1/22/2008 12:10:33 PM

I forgot to mention that another way that head-and-shoulders formations can be invalidated is when the right shoulder extends out too far in time. I consider such formations just insight into what's going on underneath the market action. An extension of that shoulder too far in time means that bears had the intention to drive prices lower but they just can't make it happen in a timely manner. If it extends too long, bulls will gain courage to attempt to drive prices higher. This is just all very short-term stuff. That right shoulder is beginning to extend too far on the SPX's five-minute chart. I wouldn't consider the formation invalidated just yet, but if the SPX either rises to a new high or else takes more than another fifteen minutes or so to confirm the formation, I'd consider it invalidated.

Keene Little : 1/22/2008 12:06:14 PM

The techs look a little weaker today but this morning's low looks like it could have finished the leg down from the December high (maybe one more minor new low or a retest of the low. The dark red wave count calls the decline from December as the completion of the 3rd wave down (which nearly achieved 162% of the 1st wave down). This count calls for a 4th wave correction which could take it back up to the broken uptrend line from October 2002, currently neear 2380, before continuing lower next month. Link

If this morning's low completed an A-B-C pullback from the October high (pink wave count) then we'll be due a larger and longer-lasting bounce. We could see a rally into April and up to the broken uptrend line from July 2006, perhaps back up to the 2600 area by that time.

But if this morning's low is broken and price doesn't recover quickly then we'll be into a much more bearish wave count, similar the dark red count shown on the SPX charts posted last night.

Linda Piazza : 1/22/2008 12:05:41 PM

And now we get the drop back to the neckline of the potential H&S on the SPX's five-minute chart. It looks to me as if it would require a five-minute close below 1298.60 to confirm that H&S. The potential downside target would be about 1278-1280, but I would be leery about believing the evidence of a H&S forming on a five-minute chart, especially since it hasn't yet been confirmed. We're using it to benchmark action only, not to predict a downside target. It's common to see H&S's invalidated by a sharp bounce that begins at or slightly below the neckline or else just as the right shoulder begins rounding over. SPX at 1304.84 as I type.

Jeff Bailey : 1/22/2008 12:01:32 PM

FOMC's Statement Link

Jeff Bailey : 1/22/2008 12:00:17 PM

UnitedHealth 4Q Profit Matches Forecasts ... AP Story Link

UNH $51.20 -5.88% ...

Jeff Bailey : 1/22/2008 11:59:14 AM

JNJ's Q4 Profit Rises Nearly 10% ... AP Story Link

JNJ $65.31 -1.47% ...

Jeff Bailey : 1/22/2008 11:57:41 AM

Ambac Posts $3.26 Billion Quarterly Loss ... AP Story Link

(See today's FOMC decision)

Jeff Bailey : 1/22/2008 11:55:58 AM

Bank of America (BAC), Wachovia (WB) Profits Plunge ... AP Story Link

BAC $37.47 +4.19% ...

WB $31.12 +1.03% ...

Linda Piazza : 1/22/2008 11:54:32 AM

As Tab mentioned, the European markets closed in positive territory. In fact the DAX closed more than 400 points above its day's low. Since the DAX's value is in the six thousands, that's a huge percentage move.

Linda Piazza : 1/22/2008 11:52:18 AM

The SPX steadied near 1300. Now it's rising toward the 1309-1312 area. See my 11:39:39 post for the significance. Bulls want a new high and for that new high to be sustained. Bears want another rollover beneath 1300 an for that to be sustained.

Tab Gilles : 1/22/2008 11:45:16 AM

European markets close up...lets see how the U.S. does on the close?

Jeff Bailey : 1/22/2008 11:41:40 AM

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

Linda Piazza : 1/22/2008 11:39:39 AM

A few "if" statements to consider here: If the SPX steadies near 1300 and if it then climbs up to about 1309-1312 but stalls there, it will be building a potential head-and-shoulders formation on its five-minute chart. We'll then need to watch to see if the formation is invalidated by a climb to a new high of the day or if it's confirmed by a sustained drop beneath 1300 once the right shoulder has been built. If it's built and then confirmed, it looks as if the downside target would be near 1280. Those are just "if" statements. None may come true, but they give us a possible scenario against which to benchmark the action.

Keene Little : 1/22/2008 11:38:28 AM

We're now into the first larger pullback for the day so it will hopefully tell us whether it was just a PPT-inspired bounce that traders simply sell into or instead is the start of something a little more short term bullish.

Jeff Bailey : 1/22/2008 11:36:49 AM

Not getting a QCharts data feed for $INDU, so 12,099.30 not accurate.

Not getting a data feed for BKX.X, so 77.59 not accurate.

Not getting a data feed for DJUSHB, so 282.32 not accurate.

Jeff Bailey : 1/22/2008 11:34:03 AM

11:30 AM US Market Watch at this Link

Linda Piazza : 1/22/2008 11:30:59 AM

The USDJPY is now near its high of the day, at 106.86 as I type. Resistance is near 107.00-107.05.

Linda Piazza : 1/22/2008 11:29:14 AM

The SPX is dropping just below its flattening five-minute 9-ema, with that now at about 1310.10. Further potential support is at 1303.70, but that's light support. Those hoping for a steadying would rather that the SPX steady right here, holding near the five-minute 9-ema if not bouncing from it. The SPX is at 1309.95 as I type.

Linda Piazza : 1/22/2008 11:26:04 AM

I want to be clear: I've been talking today about what you need to see if you want the markets to steady or bounce. Does that mean I think this is the bottom? No way. Maybe it could be, but I don't see the signs yet. As I revealed on these pages and in my Wraps a few months ago, I went to cash or cash equivalents in almost all our accounts months ago, being about 90% cash or cash equivalents. I have about 5% in my current trades, with the margin being held against my spreads. Cash isn't a good long-term bet but we're now in semi-retirement and protecting our money is paramount. I've been looking for signs that it's time to start edging back into the markets again, but I frankly haven't seen them yet. I do, however, believe that one of these days, we could see a massive rally begin, maybe even one that persists for days or even a week or two. Will it begin today? I have no idea. Therefore, I'll say again what I said earlier. If what happened yesterday around the globe and this morning proved to you that you have too much risk in the markets, consider how you might use any bounce to reduce some of that risk. Consult your broker about your short-term trades. Consult a financial planner about your long-term risks. I'm neither, and my needs and yours are different. I have a disabled granddaughter whose unreimbursed medical expenses on top of the ones insurance pays are sky-high each month, and whose mother can't work full-time because of her daughter's frequent medical procedures and therapies. I can't afford to not have that cash available, but your needs are likely completely different than mine.

Tab Gilles : 1/22/2008 11:23:15 AM

Could the reason the Fed cut 75 basis points today; be the report from the Chicago Fed this morning showing that the economy is very close to recession. Link History suggests the risk of recession is high when the three-month average of this index drops to -.70.

Jeff Bailey : 1/22/2008 11:18:17 AM

11:00 Internals found at this Link

Linda Piazza : 1/22/2008 11:15:17 AM

The SPX is now butting up against that weekly 200-ema near 1321 that I mentioned earlier today as possible resistance if the SPX could get that high. At the time (9:57:47 post), that seemed impossibly high. This was support on a weekly close last week, the reason that I suggested it might be resistance, but what the SPX cut through on its way down can be cut right back through on its way up. Anyway, my warning at that 9:57:47 post was for the sake of those who might need to make profit-protecting decisions here or just to warn others that this could be a decision point for short-term action.

Jeff Bailey : 1/22/2008 11:12:15 AM

New lows looking more "climactic" near-term.

Linda Piazza : 1/22/2008 11:04:36 AM

The advdec line tests a descending trendline that's been forming on its five-minute chart since Friday about 1:00 pm ET. That descending trendline crosses at about -900, with the advdec line now at -1001 and with further resistance higher, at about -850 on five-minute closes.

Keene Little : 1/22/2008 11:01:54 AM

The daily chart of the RUT shows how a rally from here would fit into the larger downside pattern. It would be either part of a larger bounce back up to its downtrend line (pink) or another 2nd wave upward correction (dark red). Regardless, the short term potential here is a big bounce into early February. Link

If the RUT does rally out of this then the pink wave count on the SPX charts that I showed in last night's charts (1:15 AM below) would be the likely price path (instead of the more bearish dark red count). It will be important to see any retest of this morning's lows hold in order for the short term bullish prospects to have a chance.

Linda Piazza : 1/22/2008 11:01:52 AM

Five-minute SPX Keltner resistance now at 1309.10 is shaping up to be important. Potential support on five-minute closes is now at 1303.19, and then lower, near 1296. The SPX is at 1305.40 as I type, between that short-term resistance and support.

Linda Piazza : 1/22/2008 10:56:44 AM

I expected a VIX attempt at bouncing from about 31, but it slipped a little lower, to the Keltner line now at 30.38 but then at the VIX's 30.35 swing low. It's attempting a bounce now, but it doesn't look big yet. Resistance now exists at about 31.00-31.30, but it's resistance on a short-term chart and won't hold up against an onslaught. VIX at 30.72 as I type.

Linda Piazza : 1/22/2008 10:53:19 AM

The SPX is now testing the five-minute 9-ema, at 1302.50. Further support is at 1295-1297, and those hoping for a steadying of the markets certainly want one of those, preferably the 9-ema, to hold on five-minute closes. The SPX edged below it as I typed, with the SPX at 1301.37, but with several minutes left in this five-minute period. The danger, of course, is of the bottom just letting go again.

Keene Little : 1/22/2008 10:50:54 AM

The interesting thing about the RUT is that it has a potentially bullish pattern with its descending wedge for its decline from December. This morning's spike down below the bottom of the pattern, and now a recovery back up above the line, looks bullish. Confirmation would be a break above its downtrend line near 690. RUT 120-min chart: Link

Linda Piazza : 1/22/2008 10:48:28 AM

The advdec line is now at -1175, almost at its high of the day. My charts show potentially strong resistance just above, at about -1100 on five-minute closes. So far, this is definitely going the direction you want if you want markets to steady or even climb, but this is short-term evidence only and now you'd like to see values that hold at -1400 or perhaps as low as -1500 on five-minute closes on pullbacks.

As I typed, the advdec line did begin a pullback. It's at -1232 now, not such a big pullback yet.

Keene Little : 1/22/2008 10:46:08 AM

Looks like the RUT will be the first to close this morning's gap down--only about a point away now.

Linda Piazza : 1/22/2008 10:45:39 AM

TRIN now at 0.67.

Jeff Bailey : 1/22/2008 10:44:58 AM

Short squeeze alert! ... yg08g 891.40 +1.13% ...

Tab Gilles : 1/22/2008 10:44:31 AM

NASDAQ New Highs [Oct 1998 bottomed @ 25] Link

NASDAQ New Lows [Oct 1998 peaked @ 350] Link

$NYSE

$NYHGH Link

$NYLOW Link

Linda Piazza : 1/22/2008 10:38:51 AM

The SPX's five-minute 9-ema has now risen to 1300.18. You want support there and down to about 1297.50 to hold on five-minute closes. Anticipate likely strong resistance that will push the SPX back to test support at the opening level of 1312.94, with the five-minute chart showing resistance also just under 1310. I'm not sure that will unfold, of course, but build some scenarios in your mind about what you want to happen or don't want to happen as benchmarks against the unfolding action.

Tab Gilles : 1/22/2008 10:38:23 AM

$VIX Link $VXN Link

Linda Piazza : 1/22/2008 10:36:26 AM

The DAX is at 6726.76, down 63.43 points (0.93%). This is an improvement over its 6720.71 low of the day, but the DAX also has resistance at about 6770-6780 or so that it needs to get past.

Jeff Bailey : 1/22/2008 10:34:29 AM

Mini Silver March (yi08h) $16.11 -0.71% ...

Jeff Bailey : 1/22/2008 10:34:05 AM

Mini Gold Feb (yg08g) 886.80 +0.61% ...

Linda Piazza : 1/22/2008 10:33:14 AM

The VIX has been in freefall since 10 minutes after the open. It's at 31.22 as I type. However, it's approaching potential support in the 30.17-31.03 area. Anticipate a potential bounce, which means that equities could pull back to test support. You want that equity support to hold if you want further gains or for markets just to steady.

Jeff Bailey : 1/22/2008 10:32:37 AM

Decent volume spike of 256K in Apex Silver Mines (SIL) $15.46 +4.53% ... at 10:05-10 AM EST to $14.92.

Linda Piazza : 1/22/2008 10:30:25 AM

Okay, if the markets steady, you've still got some decisions to make. Do you have positions in danger? Are you realizing now that you took on more risk than is comfortable for you? Should you consider using a bounce to lessen some of that risk? There's no right or wrong decision here, but if you're offered that opportunity today, think about it.

Keene Little : 1/22/2008 10:30:13 AM

SPX has reached the level where it has two equal legs up in this morning's bounce (at 1307.41). It's a corrective (3-wave) bounce until proven otherwise.

Linda Piazza : 1/22/2008 10:28:34 AM

SPX five-minute support gathering near 1297-1299. You want that to hold on five-minute closes, if tested.

Linda Piazza : 1/22/2008 10:27:39 AM

Advdec line testing its high of the day at -1546 . . . and exceeding it as I type. Remember you want sustained gains if you're long or else just hoping for a staunching of the bleeding.

Tab Gilles : 1/22/2008 10:27:12 AM

Heres a chart of the DJIA from 1982 thru 1996.

To equal the October 1987 crash, the market today (DJIA) would have to fall 2700 points!

Link

Changes To The Fed Funds And Discount Rates January 1, 1990 - December 11, 2007 Link

Linda Piazza : 1/22/2008 10:26:02 AM

TRIN 0.88. Bears, be forewarned that this indicator is no longer on your side. This could change in a heartbeat, and bulls shouldn't take this as a sign that they can pile into long positions beyond their risk tolerance. (Mine is about zero right now!) However, it's a sign in the bulls' favor, not the bears'.

Linda Piazza : 1/22/2008 10:24:41 AM

Advdec line now at -1713, still climbing although it's dealing with potential resistance now.

Linda Piazza : 1/22/2008 10:23:31 AM

First five-minute close above the five-minute 9-ema for the SPX. I do not want to overemphasize the importance of this: it's just a first tentative and minor sign of improvement and it hasn't yet been retested to see if that 9-ema is going to hold as support now. That's what you want to happen if you want a steadying: you want sustained five-minute closes above that 9-ema, now at 1294.71, and you then want SPX gains big enough to turn that 9-ema and its surrounding channel higher.

Jeff Bailey : 1/22/2008 10:22:59 AM

Petroleo Brasileiro (PBR) $94.74 +0.10% ... bucks the trend in oil producers.

Linda Piazza : 1/22/2008 10:21:31 AM

VIX at 33.19. It's five-minute 9-ema is now at about 33.10, so those hoping for equity gains would like to see sustained five-minute closes beneath 33.00 for the VIX.

Linda Piazza : 1/22/2008 10:20:30 AM

TRIN 0.97.

Linda Piazza : 1/22/2008 10:19:29 AM

Since I'm studying the SPX on a five-minute Keltner chart, I'm doing the same with the advdec line (the advance/decline line). Some support is being shown at the Keltner channel line now just above -2300, with five-minute advdec candles forming right along that line. There needs to be more, though, if we hope to see sustained equity gains: the advdec line needs to bounce. Otherwise, there's some question about the sustainability of any short-term bounce in equities. The advdec line is now at -2133 with the five-minute 9-ema at -1998 currently, although these numbers change quickly with the advdec line.

Jeff Bailey : 1/22/2008 10:17:56 AM

Wachovia's (WB) Earnings Press Release at this Link

Linda Piazza : 1/22/2008 10:14:10 AM

The SPX charged right back up to its five-minute 9-ema, now dropped to 1293.02 and was knocked right back again. We still have a few minutes in this five-minute period although it's not looking great for a close above it now.

Linda Piazza : 1/22/2008 10:12:49 AM

The DAX is down 109.08 points or 1.61% to 6681.11. It's been trying to form a floor at about 6600 after trading as low as 6420.71 this morning. Will it be successful? We'll have to watch, but a climb into positive territory would be good to see.

And here's how fast things change today. While I was typing, the DAX bounced and is now down only 71.90 points or 1.06%.

Keene Little : 1/22/2008 10:11:09 AM

While the banks are getting a nice bounce today, the wave pattern for the leg down from Jan 11th would look best with another new low in order to complete a 5-wave move down for that leg. A rally above 247 would suggest we've seen the bottom for now but until that happens I would say today's bounce will fail and the banks will drop marginally lower. Link

They should be very close to a tradeable bottom and could bounce while the rest of the market sells off further into next month. But the monthly chart shows we should get a final leg down later this year to complete the move down from the January 2007 high: Link

Jeff Bailey : 1/22/2008 10:06:04 AM

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

ADJUSTED target on the one (1) (SWC-PB) to $2.80.

Stopped/Close out the WB-NZ at the bid of $3.90 as WB traded up through adjusted stop of $30.00.

Closed out the (CHA-NO) for $8.00 as CHA had traded down to $69.76, then up to $73.00 and down to $71.00.

Linda Piazza : 1/22/2008 10:05:35 AM

I'm rolling down to a 5-minute chart for the SPX. Here's what I'm seeing: the SPX charged right up to the five-minute 9-ema this morning and fell back from there. That average has now dropped to 1294.15 (and is still dropping), so the first task you want to see accomplished if you want to market improvement is to see sustained five-minute closes above that level. I want to reiterate that that would nothing but the shortest-term, most tentative of signs, but you do want to see at least that. Right now, the SPX is doing battle with that descending trendline that had described its descending broadening formation that was forming at the bottom of its decline over the middle to end of last week. That's at about 1287 right now.

Linda Piazza : 1/22/2008 9:59:54 AM

TRIN at 1.03.

Linda Piazza : 1/22/2008 9:59:33 AM

VIX at 33.88.

Linda Piazza : 1/22/2008 9:57:47 AM

The SPX is now back above the weekly 200-sma. Those hoping for a steadying in the markets want to see 1290-1292 hold as support. The 200-ema, support on last week's close, is at 1321, and that can be presumed to be possible resistance now on a sustained climb.

I'm glad to see some steadying and a bounce this morning, for the sake of everyone heavily invested in the markets, but please don't count too many chickens just yet. They haven't hatched.

SPX edged back below 1290 as I type.

Linda Piazza : 1/22/2008 9:54:18 AM

The DJUSHB, the Dow Jones U.S. Home Construction Index, is charging higher after dropping in early trading. It's slightly positive for the day. Viewed on a daily chart, it's clear that the bounce that began 1/09 still looks a bit bear flag-like, but, still, it's bouncing today.

Jeff Bailey : 1/22/2008 9:52:05 AM

Apex Silver Mines (SIL) $14.83 +0.27% ...

Jeff Bailey : 1/22/2008 9:51:47 AM

Kohls (KSS) $40.63 +1.72% ...

Linda Piazza : 1/22/2008 9:51:14 AM

The USDJPY is again trying to break above the descending trendline off Wednesday high. If it could break higher and maintain higher values, and if there are any yen carry trades that weren't unwound in the debacle overseas, then a sustained break above that trendline would be good news. The USDJPY is now at 106.42, with that trendline right about at that area, too.

Keene Little : 1/22/2008 9:51:01 AM

We're getting a nice bounce off this morning's initial low and for obvious reasons the bulls want to see it not get sold into. Banks are in the green so that could change the tenor of the market. The thing to remember is that a short covering rally can be very strong as it starts to feed on itself. Whether it can last is the real question.

Linda Piazza : 1/22/2008 9:47:28 AM

VIX dropping to 34.51. Expect some volatility, even in this volatility measure, but this is at least the direction that those hoping for a steadying want to see.

Linda Piazza : 1/22/2008 9:46:36 AM

TRIN now bouncing between about 1.09 and 1.40. Those hoping for a steadying of course want to see it drop through that 1.00-1.09 support level.

Jeff Bailey : 1/22/2008 9:46:18 AM

Swing trade put stopped alert! ... for the one (1) Wachovia Bank WB Feb $32.50 put (WB-NZ) at the bid of $3.90.

WB $30.11 -2.24% ...

Linda Piazza : 1/22/2008 9:45:10 AM

The advdec line did not find support at -2100 but instead has fallen to -2256, near Thursday's -2276 low. No support yet, although it's bounced just a little as I typed.

Jeff Bailey : 1/22/2008 9:44:07 AM

Swing trade put place order to close alert! ... one (1) of the Stillwater Mining SWC April $10 Puts (SWC-PB) for $2.80.

SWC $7.71 -5.16% ... SWC-PB $2.50 x $3.10

Linda Piazza : 1/22/2008 9:43:13 AM

I see potential SPX resistance at 1290-1292. The weekly 200-sma is in that zone, as is the former descending support line of the broadening formation that had been forming on the SPX's intraday chart, forming since Thursday morning. If the SPX bounces, watch how it acts in that zone as a first guide.

I wish I could tell you what to expect, where true resistance and support lie, what will happen by the end of the day. I can't.

Jeff Bailey : 1/22/2008 9:42:24 AM

Stillwater Mining (SWC) $7.43 -8.61% ... covering 1/2 position in short in personal account here. Options not yet gridded.

Jeff Bailey : 1/22/2008 9:40:12 AM

Swing trade put filled alert! ... for the China Telecom CHA Feb $75 Put (CHA-NO) for $8.00.

Linda Piazza : 1/22/2008 9:39:54 AM

On 8/16, the VIX hit an intraday high of 37.50. The VIX is at 36.45 as I type, nearing a test of that 8/16 high. If you want to see markets steady, you of course want a sharp pullback a la the 8/16 one.

Linda Piazza : 1/22/2008 9:38:13 AM

The TRIN hit a high of 3.30 and is now at 1.70. Those hoping for an equity bounce or just some steadying from the free fall want to see TRIN come down more.

Jeff Bailey : 1/22/2008 9:37:52 AM

Swing trade put place order to close alert! ... with CHA $70.28 -15.32% ... place an order to close out/sell the one (1) CHA Feb $75 Put (CHA-NO) for a LIMIT of $8.00.

CHA-NO are $5.80 x $8.00

Tab Gilles : 1/22/2008 9:37:20 AM

Bright spot: Annaly Capital (NLY) Up 26 cents at $18.50

Linda Piazza : 1/22/2008 9:37:13 AM

The advdec line isn't as negative as I would expect it to be. While I don't know if that's any sign of anything at all, it's not even as negative as it was late Thursday, at least not yet. Watch for potential support in the -2100 area. I'm not saying to expect it there; just watch to see if we get our first bounce in the advdec line from that area. It's at -1943 as I type.

Keene Little : 1/22/2008 9:36:55 AM

Interesting that the techs are down harder than the small caps this morning. Probably because the small caps have already seen some stronger selling in recent weeks.

Keene Little : 1/22/2008 9:35:02 AM

Tab, re: your 9:25 comment, I guess it was obvious they'd try to do something this morning. But as I suspected, the market now is not sure whether to panic along with the Fed. The Fed's effort to flame the shorts appears to have been shot down in flames instead.

Linda Piazza : 1/22/2008 9:34:32 AM

The SPX opened below the breakdown level on the daily Keltner chart, with that level now at 1312.38 on daily closes. Anyone hoping for a recovery wants to see a bounce above that by the close.

Another benchmark to watch: the WEEKLY 200-sma at just above 1291, being hit as I type.

Please do not count on any particular support holding. You've had the examples of the Asian and European markets over the last couple of days. Something will hold sometime or another. We'll have a massive relief or technical bounce. But will it be today? There's no way of knowing.

Jeff Bailey : 1/22/2008 9:32:55 AM

Swing trade put adjustment alert! ... for the one (1) Wachovia Bank WB Feb. $32.50 Put (WB-NZ) ... CANCEL TARGET ALERT! Establish stop at $30.00 in the underlying.

WB $28.84 -6.46% ...

Linda Piazza : 1/22/2008 9:31:38 AM

My broker (BrokersXpress) has put a warning on its site saying, "Due to market volatility, we encourage the use of Limit Orders. Please review your orders."

Jane Fox : 1/22/2008 9:30:08 AM

Please be advised that I will not contributing to the MM today and will return tomorrow. It may be a good thing that I cannot watch the market today.

Jane Fox : 1/22/2008 9:29:17 AM

Dateline WSJ - The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut its target for the federal funds rate by three-quarters of a percentage point to 3.5%, the biggest single move it has made on interest rates since a three-quarter percentage point increase in November 1994.

The Fed, in a departure from recent tradition of moving rates at regularly scheduled meetings of policy makers, took the action week before its scheduled January 29-30 meeting "in view of a weakening of the economic outlook and increasing downside risks to growth."

It hinted that it is prepared to keep cutting rates if necessary, saying, "Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks. "

"This is very constructive and I think it shows this country and the rest of the world that our central bank is nimble and can move quickly in response to market conditions," Treasury Secretary Henry Paulson said following the move.

After the Fed announcement, trading in the federal funds futures contracts indicated markets anticipate the Fed will bring the target for the federal funds rate to 2.75% by mid-March.

Fed officials have been particularly concerned that falling markets could lead financial institutions to sell assets or pull back on lending, exacerbating the market decline and worsening a credit crunch. Federal Reserve Chairman Ben Bernanke signaled his growing concern about the economy when he last week endorsed fiscal stimulus to assist the Fed in heading off or moderating a recession.

Stock futures quickly reclaimed some early losses after the Fed's move, but sank lower and retested the day's lows.

Linda Piazza : 1/22/2008 9:29:12 AM

If there is any lightening of the mood today, it was in watching Rick Santelli and Jim Cramer argue this morning. I wonder if there are a lot of similar arguments going on at Davos?

Tab Gilles : 1/22/2008 9:25:24 AM

Keene...don't you just love Bernanke's timing?

Linda Piazza : 1/22/2008 9:19:21 AM

I'm looking at the DAX's chart. The DAX gapped down almost 200 points last night and traded down 369.48 points below the previous day's close. That's huge for the DAX. It's been climbing ever since, since well before our FOMC announced its rate cut, but it did then bounce all the way up above the top of the gap. It's since been knocked back and is down 145.04 points or 2.19% as I type. The trouble is that the shape of the climb, since the first few minutes, has been a zigzagging shape that's typically reversed. Those hoping for strong gains here would like to see the DAX break back above the top of that gap again, at 6790.19, and maintain values above that, but the DAX may continue to be volatile until after the U.S. equity markets open. Those who bought into the decoupling theory may be reevaluating because the world's markets may need the U.S. equities to strengthen before they can do so. Can you imagine how many weak hands, how many first-time stock holders, might have been in China's markets, for example?

Keene Little : 1/22/2008 9:16:38 AM

So the Fed panics and cuts .75. The foreign markets got a pop along with our futures but then gave up their gains. So much for faith in the ability of the Fed to help. They're now out of bullets and the markets know it. But as Linda has already commented, beware of extreme volatility as the PPT forces buy programs and then traders sell into them in an attempt to get the best price possible to unload. But bear market rallies can be violent and strong so don't assume all rallies will be immediately sold into.

Linda Piazza : 1/22/2008 9:06:29 AM

The USDJPY's pop above that trendline didn't last long. It's back below the trendline now, testing its 7:30-ish ET swing low of 106.05. It's at 106.02 as I type, just below that swing low. The overnight low was 105.81. This has just been part of the volatility, the kind we might anticipate in equity markets, too.

Linda Piazza : 1/22/2008 8:43:26 AM

I would love to tell you some support levels to watch this morning, but it should be clear by the reaction around the globe yesterday and last night that such predetermined levels don't matter. Moreover, the possibility of some massive volatility at the open exists. You can bet that buyers and sellers will both be active in the market, with some dumping stock on any bounce and some determined to buy now that the Fed is perceived to be coming to the rescue. The swift action will scramble charts, too, making any predictions nearly impossible. If your positions are such so that you can wait out that early volatility and then make decisions, I would certainly urge doing so, but that doesn't mean that I urge staying in a losing position beyond the point that you should stay in it.

Linda Piazza : 1/22/2008 8:27:24 AM

Strange reaction in the USDJPY. Last night, the Bank of Japan kept its interest rate steady, as expected. The Fed has now lowered ours. That should be driving the dollar lower against the yen, but instead USDJPY has just broken out above a descending trendline that had been in place since late Wednesday. That's not the first expectation for this currency pair, but I'd been watching all morning to see if there was a breakout above that descending trendline, as that would be at least minimal good news. Let's see if it holds.

Linda Piazza : 1/22/2008 8:22:24 AM

Be prepared for some volatility.

Linda Piazza : 1/22/2008 8:22:06 AM

CNBC is announcing that the Fed has decided to lower its target rate by 75 basis points.

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