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Jeff Bailey : 2/1/2008 2:29:29 AM

Weekly/Monthly/Quarterly index pivot matrix Link

DXY's 01/31/08 close was 75.18.

Jeff Bailey : 2/1/2008 2:07:22 AM

Closing Internals found at this Link

Jeff Bailey : 2/1/2008 1:50:00 AM

January's Trade Blotter of CLOSED Trades that I have made (upper half) and current OPEN trades (lower half). Link

For the month of January, the S&P 500 (SPX.X) thought by most to be the benchmark for performance investment performance fell 6.1%.

A $10K account would have see an approximate +5.503% as profiled.

I consider the +5.503% as having UNDERPERFORMED a 6.1% (up or down) move in a major benchmark as I trade both BULLISH and BEARISH.

I can't say that there are, or were any "bad trade" profiles CLOSED. Looking in the rearview mirror, the QQQ-MW, which was the put side of a "strangle" on the QQQ (made money on the call side too) could have been held longer, but when it hit initial target, I thought that half of the strangle had served its purpose. Several exit on put positions though not overly profitable, do look to have been the recent inflection low for the S&P 500, and for many of those trades.

I try to work as hard as I can on my trade profiles here in the MM to MAKE YOU MONEY. Several of the trades in the blotter also utilized adjustment techniques that I have tried to teach traders and clients over the years.

I do hope that you can understand some of my "frustrations" when it seems that so much focus the last two months has been to SHORT gold, a commodity that has RISEN more than 9% in January and more than 14% in two (2) months, when there was AMPLE opportunity to short securities that were FALLING 10% in a single day and in a DOWNWARD trend!

The trend is thought by MOST to be used as a FRIEND, not an enemy.

Jeff Bailey : 2/1/2008 12:59:03 AM

PowerShares Dorsey/Wright Technical Leaders (NYSE:PDP) $25.00 +1.37% ...

PowerShares Press Release and introduction Link

PDP Fact Sheet Link

As you can see, the DWTL Index has vastly outperformed the S&P 500 (SPX.X) since 1997 benchmark.

Jeff Bailey : 2/1/2008 12:42:21 AM

I want to apologize to subscribers for today's disagreement. All I was trying to do was follow the more easily understood educational articles from Elliot Wave International Link and show you what a wave count looks like.

I feel the chart shown in the QQQQ Link which became today's target of me not knowing how to draw straight lines and count from 1 to 5 was offensive to my character and professional standing in the industry.

As posted in the 1/24/2008 Market Monitor, Dorsey/Wright and Associates covered the topic of relative strength when making stock selection decisions. The article touched on "predictive" methods of price action, one of them was Elliot Wave and the "esoteric wave counts" pitfalls. Perhaps Keene's criticism of my wave counts shows the "esoteric nature" of wave counts.

Here is that article Page 1 Link Page 2 Link Page 3 Link

Esoteric: Understood by or meant for only the select few who have special knowledge or interest.

Belonging to the select few.

Private; secret; confidential

Intended to be revealed only to the initiates of a group.

Keene Little : 1/31/2008 11:17:37 PM

Friday's pivot tables: Link and Link

If SPX is in a rising wedge pattern (supported by the multitude of 3-wave moves inside the pattern), then it could tolerate a little higher Friday (top of the pattern is near 1392) before turning back down and then back up as per the pink wave count on the 60-min chart: Link

The key level to the downside is Thursday morning's low near 1334--that would negate the rising wedge pattern and suggest a drop down to 1320, possibly as low as 1290, would be next. Otherwise I'm thinking we could see SPX chop its way higher over the next couple of days to the 1400 area.

I want to apologize for the public disagreement with Jeff in Thursday afternoon's postings. I was trying to make sure readers who are trying hard to understand EW don't get confused by made up terminology and counts. I know better than to get into those arguments with Jeff and I apologize for making it public. Disagreements are healthy and I seek out different opinions from mine so as to keep me honest. But it needs to be done more professionally than what our exchange was. I want to ensure that we maintain a professional trading site and not get into bickering. You deserve better than that and it won't happen again.

OI Technical Staff : 1/31/2008 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 : 1/31/2008 7:29:09 PM

Email Question/Comment:... Good day
Your charting thoughts about where gold, oil might be headed. When you changed the anchor points that was interesting. Some have been shorting gold since the 600's but he seems to be a perma bear on everything. What about banks and where can money be safe?

Jeff's Reply ... I'm glad you found my "change the anchor" point interesting. Perhaps a good example of how a trader can change things to continue to see things as they want to, but not as they are. I used to do the same thing when I started out learning about technical analysis. Finally, a long-time market technician pulled me aside and said, "Jeff, your passion for technical analysis is terrific, but you've got to learn that sometimes, it tells you what you do not want to believe."

I was shocked! But I took his criticism to heart, understood his experiences were greater than mine, and I adopted that very line of thinking. Sometimes, when I state a scenario based on the technicals outlined, the market doesn't always agree. The stop is the level that tells me my scenario, based on the technicals and other information at hand was not being confirmed.

If I were to look at my trade blotter and see 20 "short" inititated trades in gold as it rose from $600 to current levels, I would certainly have to question myself as to being overly bearish the metal.

As for banks. Where can money be safe?

I'd have a BEARISH position on a mortgage bond stock to begin with. If something does happen there, there won't be a "safe place" on the initial reaction.

I'll work on some BULLISH bank trades.

Keene Little : 1/31/2008 6:41:07 PM

Tuesday's update on CME showed my expectation for a pullback to complete wave-b of an a-b-c bounce off the January 22nd low ( Link ) and I think yesterday's low completed it: Link

Today's candlestick is a bullish engulfing pattern so we should see some upside follow through to a new high for the bounce to complete wave-c and 2 (dark red count in mid February), perhaps around the 675 area (or it might only double-top against Monday's 652.74 high). Any higher than 675 would probably confirm we're into the bullish wave count that's looking for a new all-time high in the coming months.

Jeff Bailey : 1/31/2008 6:32:32 PM

Dec'07, Jan'08 and NEW Feb'08 MONTHLY Pivot Levels found at this Link

Note(s): Check out Column N and Month Range, then Column O and % Range Traded. HUGE VOLATILITY. Just goes to show how BIG WRONG bets can be costly and how "little bets" and be BIG WINNERS!

Columns T and U are for a running 3-months.

Now, we've HAD to use the "conventional retracement" for the better part of the last two weeks when most of our QUARTERLY and MONTHLY S2 were violated. Maybe we can find the OVERLAP with NEW MONTHLY and the conventional you and I (Jeff Bailey) have been placing on our charts.

Do you see how some of my "mentionings" regarding STRONGER and WEAKER index just from the conventional retracement now show up in the new MONTHLY?

Levels, level, levels that will be LEFT in place.

Keene Little : 1/31/2008 6:14:11 PM

As I've been showing in my weekly newsletter updates, the patterns for the home builders index (DJUSHB-- Link ) and the banks (BIX.X-- Link ) look very similar in that both look like they could use another low before putting in a longer term bottom. The BIX is getting close to the top of its parallel down-channel for price action since its low in August, currently near 297.

Price doesn't have to stop there, or get there, but these channels do a pretty good job at identifying support and resistance. You can see the price action around the mid line of the channel as well. Assuming we see another leg down, a Fib projection for the move matches up closely with the March 2000 low near 212 and makes for a good downside target. But any rally above 309 (key level there) would suggest a tradeable bottom is already in.

Jeff Bailey : 1/31/2008 6:04:27 PM

As I get as precise of highs and lows for the month as I can, I'm doing so by looking at 5-minute intervals. QCharts' Daily intervals are not correct for many of the indexes/sectors tracked in the index pivot matrix.

I've also attached some "conventional" retracement by only using these daily intervals.

Oh ... check out a VIX.X chart. Take a downward trend from that 08/16/07 inflection high (37.50), then attach the trend to the 11/12/07 inflection high (31.09).

Once you do that, FOLLOW the extension of that trend.

See how the VIX.X still rides ON TOP of the extended trend?

This suggests to me that OPTION action among S&P 500 components/index is starting to see call buyers/put sellers and call sellers/put buyers finding an equilibrium.

With VIX.X still finding "resistance broken, serving support" a technician like myself (disciplined and unbiased) thinking we've still got a more "fearful" amount of market participants. Or more market participants that still see RISK to the downside.

Let's get those MONTHLY Pivot levels up shall we?

Jeff Bailey : 1/31/2008 5:50:28 PM

Note: BIX fell 2.3% in September'07, then -6.4% October'07.

So, one easy test I'll want to put in my StockTrader's Almanac for 2/29/08 is to come back to these notes.

IF BIX.X not -2.3% after BIG gain in January, then "bottom" may well be in.

If BIX.X up BIG again in February, do I need to make adjustment to my "modest recession 2008" forecast.

Jeff Bailey : 1/31/2008 5:45:56 PM

S&P Bank Index sees biggest percentage monthly gain since August'07 (+3.2%).

Jeff Bailey : 1/31/2008 5:33:41 PM

We get NEW MONTHLY Pivot levels at today's close! REMEMBER! Equity Indices all saw MONTHLY S2 exhausted in January.

Will note that RUT.X 713.30 +2.56% is ONLY major equity-based index followed in my Pivot Matrix that closed ABOVE its MONTHLY S2.

BIX.X 290.09 +4.40% ... CLOSES ABOVE MONTHLY Pivot!

Just as we use conventional retracement to "define" a range, the MONTHLY Pivot Levels (retracement) us a PRIOR MONTH's range and CLOSE (regular session only) to dissect the prior month's range.

Jeff Bailey : 1/31/2008 5:35:08 PM

US Dollar Index (DXY) 75.22 +0.25% (30-minute delayed) ... Here's the DXY chart with your MONTHLY Pivot retracement we've been following. REALLY MAKES SENSE for trader that is trading the scenario of Dollar inverse gold. Again ... disciplined trader that can make adjustments. Understands the basics. Doesn't try to get too fancy. Link

As mentioned ... I've see the "sloppy" trade at the edges of the channels (see today's charts). Know what to LOOK FOR. Be ALERT to. LOOK at the BIG PICTURE.

Keene Little : 1/31/2008 5:05:35 PM

I'm assuming for now that we're going to see the market press a little higher but it could be after a pullback tomorrow. The rising wedge idea still has a lot of potential so a pullback to about SPX 1350-1360 and then a final bounce up to the 1400 area could set up the next decline. Any drop from here below 1334 would negate the rising wedge idea and turn more immediately bearish. Link

Jeff Bailey : 1/31/2008 4:57:30 PM

DJ- President Bush's '09 Budget To Nearly Freeze Most Domestic Programs

Jeff Bailey : 1/31/2008 4:50:22 PM

Google (GOOG) ... Earnings Press Release Link

Current Quarter and Forward Analyst Estimates Link

Keene Little : 1/31/2008 4:38:27 PM

On Tuesday I showed a daily chart of AAPL with a wave count that is looking for a 5th wave down ( Link ) and as of today's close it doesn't look much different: Link

The 60-min chart shows a sideways triangle pattern that has formed since last week's low and this is typical for a 4th wave correction: Link . Today's rally popped it above the top of the pattern so any drop back down tomorrow would be a sell signal and it could kick off the 5th wave down, with a downside target at the August low of 111.62. If the 5th wave equals the 1st wave then we get a downside target of 102 (as shown on the daily chart).

Keene Little : 1/31/2008 4:12:39 PM

GOOG is now below last week's low. It's looking like we're still in the bearish wave count, as shown earlier-- Link

Jeff Bailey : 1/31/2008 4:06:35 PM

Google (GOOG) $564.30 +2.92% ... plunges to $523.68 on headline numbers.

see YHOO, see QLD decision, see 03:56:11

Jeff Bailey : 1/31/2008 4:03:41 PM

MBIA (MBI) $14.89 +6.66% ...

Keene Little : 1/31/2008 4:03:15 PM

GOOG is now tumbling after hours.

Jeff Bailey : 1/31/2008 4:02:49 PM

CNBC saying Reuters sources say there is still possibility of rating downgrade on MBIA.

Keene Little : 1/31/2008 3:58:42 PM

This is why I said trail your stop up--let the market take you out with maximum profits.

Linda Piazza : 1/31/2008 3:58:10 PM

Did you all exit at once? Smile. This is the reason for all the cautions. I know they're tiring, but in my opinion, they're necessary or I wouldn't be giving them. So far, the decline wasn't too drastic, with the SPX bouncing as I type back above the 9-ema again, but we're going to have to see what reaction tomorrow's reports bring.

Keene Little : 1/31/2008 3:56:59 PM

Sudden sell program hit across the board. Not sure why yet.

Jeff Bailey : 1/31/2008 3:56:11 PM

See the subtle "lag" in GOOG within the wave when you compare to the QQQQ?

Jeff Bailey : 1/31/2008 3:53:28 PM

Very similar, but it makes "so much sense" doesn't it? Too much for some!

What's its weighting in the QQQQ?

Linda Piazza : 1/31/2008 3:52:05 PM

The SPX's upside target is now 1389.77 with support at 1380.80 and then 1376.53 on 15-minute closes. If you're exiting by the close, it's time to snug up stops or even to think about getting those orders in. The SPX is sometimes sticky to exit, particularly when the desk gets busy and there are earnings after the close that could radically change the tenor if they're disappointing.

Linda Piazza : 1/31/2008 3:43:44 PM

Keltner resistance for the SPX at 1379.80 on 15-minute closes. The 9-ema is still rising and is now at 1373.31. Bulls want that to hold on 15-minute closes. As I do most every day this time lately, I'm warning that it's time to make your should-I-carry-my-position overnight decisions and act accordingly. Here's my take: I pointed out before or at the market open on Wednesday 1/23 that I thought there had been some big money accumulation the day before. Since then, we've seen a rise but the rise is choppy and in line with a bear flag rise. Nothing I see in the shape of that rise encourages me to believe that it's time to stop being prepared, each and every day, for apotential rollover. Moreover, if you look at that rise, you see strong days alternating rather frequently with weak days. So, you know what you're risking if you hold overnight, and so you need to make sure that you're not holding positions that are too large for your risk management style. If I had a large gain today, particularly if I had them in February calls and particularly if I'd gone too far out on a limb and bought more than I should of those calls, I'd be using this bounce to lower my risk and lock in some profits. (Just to clarify, I don't day trade or even swing trade any longer--well, maybe once every six months or so, I get bitten by the bug and buy a contract or two of something, but not now.) If you've got a big account and you dabbled in a contract or two of something cheap, maybe you feel differently.

Jeff Bailey : 1/31/2008 3:42:12 PM

I think it can... I think it can ...

Jeff Bailey : 1/31/2008 3:38:41 PM

Swing trade call option alert! ... for one (1) of the Toll Brother TOL June $25 Calls (TEP-FE) at the offer of $3.00

No stop for now, target $31 in the underlying.

TOL $23.66 +7.64% ...

Keene Little : 1/31/2008 3:38:35 PM

The first resistance level, from a Fib projection perspective, would be SPX 1384.18 where the 2nd leg up today would equal 62% of this morning's rally. That would also be a retest of yesterday's high and very likely resistance by itself as traders who were trapped by yesterday's sharp selloff use today's rally to get out of their positions. That selling might be what's giving the rally somewhat of a choppy feel here.

Keene Little : 1/31/2008 3:34:41 PM

If I use this morning's high as the mid point of a rally that will have two equal legs up then I get SPX 1399.46 for an upside target. Once again that 1400 level is popping up as an upside target and potentially strong resistance if it gets there.

Jeff Bailey : 1/31/2008 3:31:41 PM

AAPL $136.10 +2.95% now ...

Jeff Bailey : 1/31/2008 3:28:17 PM

SPY alert! $138.02 +2.30% ... 38.2%. Not what "perma-bears" were thinking last night.

Keene Little : 1/31/2008 3:27:56 PM

I've updated the daily chart of the home builders that I show each week in the OI Newsletter: Link . If the index (DJUSHB) can make it a little higher and tag the Fib projection at 409.43 (2nd leg up = 162% of the 1st leg up off the November low) that could finish the 4th wave correction (dark red a-b-c bounce off the November low for wave 4). I like this count because the pullback from the December high was a 3-wave move and suggests it's part of a larger correction rather than the last leg down (which needs to be a 5-wave move).

From a Fib projection standpoint the setup is very interesting. In the move down from July 2005, two equal legs down would be at 216 where the 2nd leg down is the drop from February 2007. For the 5th wave of the that 2nd leg down, it would equal the 1st wave (the most common Fib relationship between the 1st and 5th waves) at 213. For a drop from 1118 back in July 2005 that's pretty darn close correlation for an end to its decline. If it plays out this way I believe it will finally be time to start buying home builders again.

Now, so Jeff can understand this, the bullish (green) wave count would be in play if price rallies above 445 (I'm using the 200-dma there), hence the green target symbol at that level. Rally above that and we're in the bullish wave count. Stay below there and we're in the bearish (dark red) wave count.

Jeff Bailey : 1/31/2008 3:26:21 PM

February Unleaded (rb08g) final settlement is $2.3091. So any "artificial" impact on crack spread should be done.

Jeff Bailey : 1/31/2008 3:19:21 PM

SPY $137.50 +1.91% ... "ditto" DIA's 38.2%.

Jeff Bailey : 1/31/2008 3:18:47 PM

DIA $126.15 +1.90% ... testing my commentary.

Juuuuust below 38.2%.

Jeff Bailey : 1/31/2008 3:18:05 PM

QQQQ alert! trades yesterday's post-FOMC high.

Jeff Bailey : 1/31/2008 3:16:29 PM

03:00 Internals found at this Link

the 11:00 Link

Linda Piazza : 1/31/2008 3:17:07 PM

The SPX's 15-minute 9-ema is at 1370.07, and bulls want to see that continue to provide support on 15-minute closes. Resistance is just ahead at 1378.71 on 15-minute closes, with this the same resistance line from which the SPX was knocked back earlier today. You've had time to reformulate your profit-protecting plans as this resistance line was again approached, so keep those plans handy. Sustained moves above that resistance set up a potential upside target near 1389, but we're a long way from that target being set, much less achieved right now and absolutely anything can happen. I noted earlier this morning, as the market was opening, that I thought we needed to factor in the possibility that the SPX would test but then close above the daily 10-sma, and that may well happen, but that doesn't mean that I've changed my overall view that we absolutely have to be vigilant for another big rollover at any time.

Jeff Bailey : 1/31/2008 3:12:18 PM

CNBC ... Rick Santellie mentioning some strong profit taking into the Treasury close. By gosh that might well be right.

Shorter-dated 5-year finished down a still hefty 11.2, but well off low yield of 2.729%

Jeff Bailey : 1/31/2008 3:08:16 PM

Biiiig volume at the big board ...

Keene Little : 1/31/2008 3:06:06 PM

The pattern of the rally now is starting to take on a bit of a choppy appearance and that could mean an ending pattern for the move up. Be careful if long now--pull your stops up tight since it could suddenly let go. But let the market tell you when it's ready for a deeper pullback by following it up with your stop.

Jeff Bailey : 1/31/2008 3:00:30 PM

You like AAPL short here Keene?AAPL $135.34 +2.39% Link

Jeff Bailey : 1/31/2008 2:58:07 PM

You mean "talk to the brick wall." (wink)

Jeff Bailey : 1/31/2008 2:56:58 PM

Lowes (LOW) $26.43 +4.3% ...

Jeff Bailey : 1/31/2008 2:56:31 PM

Home Depot (HD) $30.88 +5.03% ...

Jeff Bailey : 1/31/2008 2:56:12 PM

Retail and homebuiling? ...

Jeff Bailey : 1/31/2008 2:55:11 PM

DJ Home Construction (DJUSHB) alert! 391.76 +14.75% ... "ground hogs" it 150-day SMA again. (see 1/29/08 MM)

Keene Little : 1/31/2008 2:51:39 PM

Talk to the hand Jeff.

Jeff Bailey : 1/31/2008 2:52:27 PM

I'm not crutiquing it Keene. In fact I'm kind'a trying to use it for those that are interested in "Elliot Wave" counts.

You're always telling me how you have an opinion and just because it differs with anyone elses, you are entitled to it.

Now I'm giving confused traders my opinion, but I'm not changing the technicals and drawing 10 possibilities.

Even further, I'm sticking my neck out with TRADE PROFILES to demonstrate conviction based on observations.

You've been "teaching" us about elliot wave for years now.

Linda Piazza : 1/31/2008 2:49:54 PM

The SPX's rising 15-minute 9-ema is now at 1367.68 with next potential resistance at about 1372 and then at 1377.98.

Keene Little : 1/31/2008 2:45:16 PM

And Jeff, if you can't understand the key levels and how they point to which wave count to use, I guess you're just not paying attention and would rather ridicule than learn. Tch, tch.

Keene Little : 1/31/2008 2:43:08 PM

Like I said before Jeff, understand a technique yourself before you critique it. You are showing you have no earthly idea what a wave count should look like when you show something like your QQQQ chart in your 2:02 post with a made up wave count. Get it right.

Jeff Bailey : 1/31/2008 2:41:03 PM

SPX 1,368.25.

Jeff Bailey : 1/31/2008 2:40:34 PM

This has really confused a couple of subscribers and me so I'm trying to "clear things up" a bit. Take out the noise. Link

I can see how even a "waiver" says "we could go up, down, or sideways from here."

Jeff Bailey : 1/31/2008 2:37:51 PM

Don't be confused ... stick with your ORIGINAL wave count (my count is correct based on observation of wave). Look how clean it is. I'll show you confusion in a second.

Jane Fox : 1/31/2008 2:37:28 PM

Here are jtHMA charts. I am still bullish but long ago I decided if the monthly jtHMA turns red I was going to move entirely to cash or at least reduce my exposure to the long side.

This will actually be a good day to exit those positions because the monthly is red and the daily is green. which means I am selling on a retracement. Link

Keene Little : 1/31/2008 2:34:44 PM

Jeff, nice try on your wave count on QQQQ (2:02). You have "slight" overlap between waves 1 and 4 and wave 3 is the shortest, both of which violate important EW rules (unless it's in some kind of wedge pattern in which case 4 can overlap 1). Keep working at it, you'll get there. Also, there's no such thing as a wave channel and you're confusing readers.

Jeff Bailey : 1/31/2008 2:34:39 PM

Shorts may be picking it up with their covering.

Jeff Bailey : 1/31/2008 2:34:17 PM

Hmmm ... RUT.X +2.17% ...

Jeff Bailey : 1/31/2008 2:31:48 PM

QQQQ ... 15-minute interval chart Link

I'm using 15-minute for no other reason other than to get several days of time observation, but be able to see the DAILY Pivot levels of each day and note the "that's different" trade at a DAILY R2 on 1/25/08 early morning.

Then review QLD trade and thoughts based on the observations.

Linda Piazza : 1/31/2008 2:29:24 PM

Whatever you do, don't get too complacent today.

Keene Little : 1/31/2008 2:29:11 PM

If SPX can continue higher from right here then I see yesterday's high near 1386 as the next resistance level. But if prices stall here and we consolidate near today's highs for the rest of the day it will tell me two things. First, we should get another leg up after the consolidation completes so that's at least short term bullish. Second, after another leg up we'd have a 3-wave rally off this morning's low (instead of a 5-wave up because a larger consolidation here is already starting to stretch bigger than a 4th wave correction).

When I see a lot of 3-wave price action, as we've seen since last week's low, it tells me we are probably in a triangle pattern. Wedges are triangle patterns and we could be in a rising wedge off last week's low. That would tell me the whole move up from last week's low is just one big complex correction (rather than the start of a new rally leg that would take us to new market highs).

A rising wedge as depicted here (with the pink wave pattern) would be bearish but perhaps not until SPX makes it up to 1400: Link . But if the bears take over at any time and drop SPX below this morning's low near 1334 then we should see a relatively quick trip down to the 1320 area, possibly as low as 1290 before bouncing again.

Linda Piazza : 1/31/2008 2:28:27 PM

The SPX now tests that upper Keltner resistance that's been shoved above 1372 now, to 1372.36. Next resistance is back at the resistance line that knocked back the SPX earlier today, with that Keltner line now at 1377.35. It's time to again be thinking of how you'll protect your bullish gains if that line is tested again and if prices are again knocked back. The 9-ema is now at 1366.67 and still rising beneath the SPX, with lower support near 1360.

Jeff Bailey : 1/31/2008 2:26:43 PM

QQQQ $45.07 +1.57% ... benchmark the goog

Jeff Bailey : 1/31/2008 2:26:12 PM

Google (GOOG) alert! $662.28 +2.55% ... 19.1% retracement.

Linda Piazza : 1/31/2008 2:11:57 PM

The SPX's 15-minute 9-ema is now at 1364.39, so bulls want that to hold on 15-minute closes. The next resistance is at 1371.14 on 15-minute closes. Remember that caution from earlier: a triangle may be setting up, so you'd like for a rising 9-ema to keep bouncing prices. The analogous figures for the OEX are the 9-ema at 636.18 and the next potential resistance at 639.26.

Jeff Bailey : 1/31/2008 2:05:06 PM

What does a wave look like? ... Link

Again, I'm not a "waiver" but can go to a source.

Jeff Bailey : 1/31/2008 2:02:27 PM

QQQQ ... with our retracement and an elliot wave count using Andrews Pitchfork (modified schiff) Link

In a few minutes, we'll "zoom in" with finer intervals.

Linda Piazza : 1/31/2008 1:28:12 PM

So far, the SPX maintains the support of its 9-ema on 15-minute closes. That's at 1362.05 currently. Remain aware of potential resistance at 1372.80 and then again, stronger, at 1376.60 on 15-minute closes.

Jeff Bailey : 1/31/2008 1:20:48 PM

Seeing some "lower wave channel" in the QQQQ starting to show some significance last 5.5 sessions.

Jane Fox : 1/31/2008 1:20:41 PM

Here is a very good example of the MACD moving down as price moves sideways. This is bullish. Link

Jane Fox : 1/31/2008 1:17:04 PM

Both the DAX and USDJPY are telling us the bulls have control but the other "internals" are mixed. Link

Jeff Bailey : 1/31/2008 1:16:50 PM

01:00 Internals found at this Link

Keene Little : 1/31/2008 1:10:50 PM

GOOG reports tonight and I'm trying to see if the charts are telling us anything about what we can expect to see as a reaction to earnings. Unfortunately I could argue equally strongly for a pop higher tomorrow as for a continuation lower.

The move down from last Friday looks like it has lower to go but I'm not sure if we'll first see more of a sideways chop for a couple of weeks (meaning a bounce back up tomorrow as part of that, shown in pink on the daily chart) or if it will head lower from here before another corrective bounce (dark red). It takes a rally back above last Friday's high near 525 to turn the chart short term bullish (green) otherwise GOOG is in a bearish wave pattern: Link

Jeff Bailey : 1/31/2008 1:09:36 PM

Way too much money going into Treasuries today for equity bulls to be overly optimistic.

Linda Piazza : 1/31/2008 1:04:29 PM

The SPX did barely maintain a 15-minute close above its 9-ema, but with that average flattening, it might be possible for the SPX to cross all the way through its smallest Keltner channel. The lower boundary is now at 1353.27. That's a typical lunchtime lull action, but today is anything but typical and bulls would prefer that the 9-ema or else 45-ema support be maintained on 15-minute closes. The 9-ema is currently at about 1361.45 and the 45-ema at 1358.58. For the OEX, they're at 634.70 and 633.41 respectively, with the lower channel line at about 630.78.

Jeff Bailey : 1/31/2008 1:00:09 PM

AAPL's DAILY Pivot at $132.54 ... AAPL $133.90 after direct kiss of DAILY R1.

Keene Little : 1/31/2008 1:00:27 PM

For YM the equivalent pullback level to watch is 12430. Much lower than that and it'll start to look more bearish.

Keene Little : 1/31/2008 12:58:41 PM

Two equal legs down in the pullback from the high would be at SPX 1353.51 (ES 1353.50). That would be a bit deep for a 4th wave pullback (for the bullish expectation that we'll get a 5th wave up for today's rally) but it wouldn't violate any EW rules so watch for potential support there. If it drops any lower then it would increase the likelihood that today's bounce will be left as just a sharp 3-wave correction and new lows would be on their way.

Jeff Bailey : 1/31/2008 12:57:47 PM

QQQQ $44.60 +0.51% ... slips under its DAILY Pivot.

Jeff Bailey : 1/31/2008 12:56:01 PM

VIX.X 26.77 ... still under its DAILY Pivot.

Jeff Bailey : 1/31/2008 12:55:38 PM

SPX 1,361.15 +0.39% ... slips back below DAILY Pivot.

Jane Fox : 1/31/2008 12:47:17 PM

Bulls really like this action today. If we close above yesterday's highs I think the next stop is 1440. Link

Jeff Bailey : 1/31/2008 12:48:30 PM

One question that we'll never no a true answer to ... "If I had shorted and held on to an AAPL short at $190 with a target of $140, what would I be doing here?"

We know the bearish vertical count has been achieved to.

Jeff Bailey : 1/31/2008 12:44:41 PM

Apple (AAPL) $134.67 +1.88% ... bumping the $135 strike and DAILY R1. This is yesterday's highs.

Jane Fox : 1/31/2008 12:40:05 PM

VIX is totally in sync with the S&P futures (ES). Link

Linda Piazza : 1/31/2008 12:39:14 PM

The SPX's 15-minute 9-ema has risen to 1360.93. Bulsl would like to see that hold on 15-minute closes. For the OEX, the 9-ema is now at 634.52.

Jeff Bailey : 1/31/2008 12:41:30 PM

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

CLOSED out the QLD at RAISED stop of $74.40. While the stop was ABOVE the DAILY Pivot, I do need to "compensate" a bit with the QLD as it isn't overly liquid compared to the QQQQ. I teach traders to places stops on longs "just below" a pivot level in order to allow the computers to "turn on" if they're going to buy. With QLD and other ProShare leveraged securities, I need to compensate for subscriber trading.

When we get stopped, or hit a target (I try and place targets just BELOW a level) I need to try and make sure there will be liquidity for us to all get filled.

Keene Little : 1/31/2008 12:25:34 PM

I'm still keeping my eye on gold for some clues as to what's next. The euro looks like it's consolidating before another run higher and the dollar lower. That should have gold rallying higher. That's not a given at this point so I can't recommend a long play on gold, but nor can I recommend a short play here. Watching and waiting for now to see what sets up.

Keene Little : 1/31/2008 12:22:04 PM

Yesterday's strong post-FOMC rally punched right up through resistance at 1370, the August 2007 low but then gave it all back. Today it popped quickly above it and has since pulled back below it again. Needless to say, if SPX gives up this morning's gains after hitting that resistance level again, the bears will feel emboldened to jump back in with gusto.

On the other hand, if the bulls can get SPX back above 1370 and stay there, there are likely plenty of shorts who won't stick around and the short covering could light a fire under the rally and propel it up to the next resistance level near 1400.

Jeff Bailey : 1/31/2008 12:19:57 PM

Excellent observation Linda!

Jeff Bailey : 1/31/2008 12:19:13 PM

QQQQ $44.68 ... benchmark for QLD exit.

Jeff Bailey : 1/31/2008 12:18:15 PM

Swing trade long stopped alert! ... for the Ultra QQQQ (QLD) $74.40 ...

Linda Piazza : 1/31/2008 12:11:02 PM

I mentioned earlier this morning that when the USDJPY hit the lower Keltner boundary, as it had this morning, any time over the last ten days, it had subsequently bounced at least to the Keltner line that was then near 106.75, I believe. That line is now at 106.83 and the USDJPY hit it a few minutes ago. This line sometimes caps gains, although not always, of course. If you're in bullish equity plays, you want to see the USDJPY break above that Keltner resistance or at least manage sustained values above 106.48. The USDJPY is at 106.66 as I type.

Linda Piazza : 1/31/2008 12:07:26 PM

I spent a few minutes studying the NAPM-NY, the Chicago PMI, and the Kansas City Fed Manufacturing Report and look what happens! The SPX approached 15-minute Keltner resistance at 1375.32. Without a breakout situation, that number usually begins capping gains, but this isn't a usual situation, is it? Still, I would be aware, if in bullish positions, of that potential resistance, with the SPX's current reaction to it showing how potent it might still be. The 9-ema is now at about 1360, but bulls would really like to see 1364-1366 hold as support on 15-minute closes. If no further push higher is forthcoming immediately, then they'd like to see consolidation near 1364-1366 while the 9-ema rises up underneath.

I'm wondering if we're not still caught up in the post-FOMC typical triangle-building exercise. Usually that triangle's widest swings are hammered out in the immediate post-FOMC reaction, just after the announcement, with the break from the narrowing triangle coming the next day, but don't rule out the possibility that this is the hammering out of a triangle now and not a great recovery off the low that can be completely trusted.

As should be clear, I'm not trusting too much these days. Although I said at the open that you should factor in the possibility tht the SPX might pierce its 10-sma but then bounce back above it, and so you'd think I'd be totally reassured right now, we have to keep our eyes open at all times in this market climate. We have to keep building those what-if scenarios and testing the market action. So, if you're on the bullish side, you're glad to see this bounce, but you're aware that nothing is preventing a steep decline, perhaps toward that 10-sma again although maybe only to 1354-1355, as a big triangle is hammered out.

Keene Little : 1/31/2008 12:04:46 PM

SPX (and ES) stopped right at the 78.6% retracement of the drop from yesterday, the "line in the sand" as far as retracements go. Any retracement that exceeds that amount virtually guarantees a complete retracement and more.

Keene Little : 1/31/2008 12:02:45 PM

If the bulls can put something together here, we should now see only a small pullback/consolidation followed by another push higher. That would create an impulsive 5-wave move up off this morning's low and indicate more bullish things ahead, after a pullback following that 5-wave move. Right now the bounce ff this morning's low is still just a 3-wave correction of yesterday's decline (albeit a strong correction) so a strong decline from here would be bearish. We should soon know which is playing out.

Jeff Bailey : 1/31/2008 11:57:35 AM

Swing trade long raise stop alert! ... for the Ultra QQQQ (QLD) $75.45 +2.74% ... to $74.40.

Keene Little : 1/31/2008 11:55:30 AM

The risk now, in thinking about chasing this higher, is that it's got the appearance of short covering (prompted by the PPT?) and it's hard to know where that buying will suddenly stop (like yesterday afternoon). These are volatile times and it's real easy to get whipped around.

Keene Little : 1/31/2008 11:53:56 AM

It should have stalled by now. Don't be looking for a short play now. Buying is strong.

Keene Little : 1/31/2008 11:51:53 AM

A turn back down from here is a short and then use the last high for your stop. But let it show some signs of stalling/dropping otherwise the alternate interpretation of the wave count calls for a strong rally directly from here

Jeff Bailey : 1/31/2008 11:50:55 AM

A bull's target is a bear's assessment of upside risk.

Just as a bear's target is a bull's assessment of downside risk.

Jeff Bailey : 1/31/2008 11:49:56 AM

Based on yesterday's DIA/SPY observations at 38.2%, what are we wanting to monitor VERY closes with QQQQ, should it unfold. Where will the sellers LIKELY be?

Jeff Bailey : 1/31/2008 11:46:26 AM

Swing trade raise stop alert! ... for the Ultra QQQQ (QLD) $74.23 +1.18% ... to $73.00

Congratulations for now. Good adjustment!

Jeff Bailey : 1/31/2008 11:44:02 AM

11:40 AM Market Watch ... showing a "NetSinceOpen%" today Link

Keene Little : 1/31/2008 11:43:19 AM

One more small push back up would look good for completing a 3-wave move up from this morning's low and I'd look for a shorting opportunity--look for confirmation with bearish divergences at the new high. Whether it only leads to another correction before pressing higher again or starts the next decline can't be known yet but I think the setup should be a good one to try.

Linda Piazza : 1/31/2008 11:37:31 AM

The SPX hit next resistance at 1361.11 on 15-minute closes and pulled back. Bulls want to see it close 15-minute periods above the rising 9-ema, with that average now at 1354.60, to see the upward trend begin to be established. They would actually prefer 15-minute closes above 1356.80 and even above 1360, which is near the 50% retracement of the decline from yesterday's post-FOMC bounce into this morning's low. So, bulls still aren't out of the woods, but improvements in Keltner outlook continue.

Jeff Bailey : 1/31/2008 11:36:31 AM

Day trader's RUT.X +1.19% ... NDX +0.21% ... OEX +0.13% ... INDU +0.11% ...

Jeff Bailey : 1/31/2008 11:35:23 AM

You're getting it. You could use the "rising tide" or "falling tide" analogy too.

Jeff Bailey : 1/31/2008 11:34:12 AM

As we look at the intra-day internals, think of the 5-day NH/NL ratio as the "head" of an inchworm/snake, and think of the 10-day NH/NL ratio as the "tail," which usually follows.

If something grabs hold of the "head" what does the tail usually end up doing?

Jeff Bailey : 1/31/2008 11:32:36 AM

11:00 Internals found at this Link

Keene Little : 1/31/2008 11:32:27 AM

SPX pushed right up through the 1359 level and the short term pattern for the 2nd leg up doesn't look complete yet. A 62% retracement at 1366 (ES 1366.75) looks like it could be in next.

Jeff Bailey : 1/31/2008 11:31:42 AM

I've got a lot of upside al_rts and downside al_rts set with my QCharts ... getting more upsides. How about you?

Jeff Bailey : 1/31/2008 11:30:49 AM

Kohls (KSS) alert! $45.61 +5.77% ... up for 2008! "Ground hogs" its 50-day SMA.

Jeff Bailey : 1/31/2008 11:29:34 AM

Retail HOLDRS (RTH) alert! $95.12 +3.78% ... up for 2008!

Jeff Bailey : 1/31/2008 11:28:43 AM

QLD $73.64 +0.39% ...

Jeff Bailey : 1/31/2008 11:28:22 AM

QQQQ $44.44 +0.15% ...

Jeff Bailey : 1/31/2008 11:27:56 AM

Qualcomm (QCOM) alert! $41.76 +3.67% ... 80.9% retracement.

Jeff Bailey : 1/31/2008 11:20:22 AM

TRIN high this morning stopped dead at WKLY Pivot. Low stopped dead at the waterline of 1.00

Linda Piazza : 1/31/2008 11:15:31 AM

Big potential H&S on the RUT's 15- and 30-minute chart, with the formation setting up since last Thursday and with the RUT's bounce this morning a bounce up into a potential right shoulder. I show resistance at about 700, of course, but that's not just presumed round-number resistance. It's also compounded of a descending trendline originally drawn off the 1/24 and 1/25 highs as well as potential Keltner resistance now at 700.49 on 15-minute closes. So, if you're hoping that the RUT will lead the way higher, you want it to push strongly above 700 and then 707 and maintain values above that. If you're hoping for the RUT to lead prices lower, you want it to roll down through today's low and then through Monday's. Between Monday's low and about 700-707, the jury is out in my opinion. That's a big jury-is-out zone, but right-shoulder formation periods are notoriously difficult to trade.

Linda Piazza : 1/31/2008 11:09:18 AM

The SPX has just completed a 15-minute close above the resistance now at 1350.64 and is testing the 15-minute 9-ema at about 1352.25. The SPX is at 1353 as I type. While this isn't proof positive of anything, it certainly sets up a more favorable Keltner outlook if the SPX can maintain values above that benchmark average at 1350.64 and especially above the 9-ema.

For the OEX, these values are at about 630.40 and 630.70, respectively. The OEX is at 630.63 as I type. Remember that in both cases, the climbs still look bear-flag like today, so the evidence is still tentative. The advdec line keeps hitting new highs of the day, but is now at benchmark resistance itself, at about +250. The USDJPY also continues climbing, but is facing resistance of its own. The USDJPY's Keltner performance over the last ten days suggests it may eventually climb at least to a Keltner line now at about 106.75, but even if it it repeats that performance, that performance includes some hours-long consolidation periods along the way.

Jane Fox : 1/31/2008 11:06:28 AM

VIX is looking very strong today but bulls would like to see the AD Line stronger. The AD line is barely above 0 but considering it started the dayat -1608 I guess that is pretty good. Link

Keene Little : 1/31/2008 11:03:31 AM

It looks like the 2nd leg up has started. Two equal legs up for SPX is at 1358.77 (ES 1361.25) which is near the 50% retracement of the drop from yesterday, at 1359.93 (ES 1360.25).

Jeff Bailey : 1/31/2008 10:59:41 AM

Amazon.com (AMZN) $72.71 -2.02% ... like we would do with YHOO, this morning's low of $68.86 would be a "drag down" 0% to morning low of $68.86.

Jeff Bailey : 1/31/2008 10:58:01 AM

S&P Retail Index (RLX.X) alert! 413.76 +2.04% ... 38.2% conventional (10/11/07 relative high to recent lows)

Jeff Bailey : 1/31/2008 10:57:07 AM

Bailey's Basics: ... Here is an old article from Jeffrey Canavan that worked for me at PremierInvestor.com ... Great technician and believed strongly in the "snake analogy" and how MARKET and SECTOR action worked ...

(03/23/2001) ... Earlier we had mentioned that the Semiconductor Index (SOX.X) was trying to take on the role of the head of the snake, and the Telecom Index (IXTCX) was the tail. For those of you not familiar with the snake analogy, the premise is that you have to monitor the strongest sector (the head), as well as the weakest sector (the tail) to get a feel for what is going on in the market. This morning the Dow and the Nasdaq were higher, but volatile. Later in the morning I noticed the Telecom Index had turned negative. The SOX and other tech sectors were still holding onto gains, but later that hour the SOX turned negative.

Usually the head should lead and the tail should follow, but if the tail is weak enough it can drag the strong sector down with it. I'm guessing the weakness in the SOX is some profit taking going on before the weekend, but if one sector starts moving keep an eye on the other for confirmation.

Keene Little : 1/31/2008 10:50:52 AM

After this morning's bounce off the low, if we get a choppy pullback then we can expect another leg up to create an a-b-c correction of the drop from yesterday. So far price action is consolidating near the high of the bounce and that has me thinking we will get another leg up (perhaps after a little more pullback first).

Jeff Bailey : 1/31/2008 10:49:27 AM

Pacholder High Yield (PHF) $8.09 +0.37% ... On 1/22/08, my intra-day chart would show 400 shares did trade at $7.40 (my qcharts' bar looks "bad tick" down to $7.28 and I see no volume or tick on intra-day. What I want you to do is take your 0% at $7.40. Then have your 100% at $9.25 and this fall's highs.

This security becomes your "basket of junk bond" observation.

As we were looking for signs of recovery out of the 2000-2002 recession, "junk bonds" and BANKS were the PRIMARY indicator that we were coming out of the recession.

Linda Piazza : 1/31/2008 10:47:37 AM

On the SPX's 15-minute chart, nearest support at 1344.55 on 15-minute closes is being tested. Further potential support is at 1341.43. Nearest resistance--presumed strong resistance--is at 1350.60 and then again at 1352.39 on 15-minute closes. The SPX is at 1345.81 as I type. Of course, we know that on the daily chart, the 10-sma is just below, too. Until and unless the SPX maintains 15-minute closes above at least 1560.60 or so, the Keltner setup shows continued vulnerability to lower prices. Those hoping for a steadying and then gains would rather see something more positive than this consolidation at the day's low, but the next direction isn't yet determined in my opinion.

Both the advdec line and the USDJPY should be watched. The advdec line did bounce sharply, although it got knocked back from resistance now at about -300. If you're hoping for further equity gains, you want to see the advdec line sustaining values above that. If the advdec line falls again (now at -621), you at least want to see support near -950.

Jeff Bailey : 1/31/2008 10:38:44 AM

The "reason" we can't make the QLD look exactly like the QQQQ is because of December's capital gain distribution. When we take the same range of retracement on the QLD as we do on the QQQQ, that big capital gain distribution creats the ~$3 difference.

QLD $72.50 -1.15% ... its 19.1% is at $75.65.

Jeff Bailey : 1/31/2008 10:35:31 AM

QLD $72.70 -0.88% ...

Jeff Bailey : 1/31/2008 10:35:02 AM

QQQQ alert! $44.18 -0.40% ... 19.1% retracement from underneath.

Jeff Bailey : 1/31/2008 10:34:19 AM

To be VERY truthful ... my analysis based purely on technical PRICE action is that NDX/QQQQ are LAGGERED and this point of the game.

QQQQ $44.06 -0.69% is UNDER its 19.1%.

RUT.X is HOLDING its 19.1%. Should it break this morning's low, that will likely have the STRONGER DIA and SPY softening up.

This is where you can begin to think, or visualize an inchworm. How it moves. It "slinks" .

Right now I see the "tail" as the QQQQ. Can it firm and gain any traction, or will it continue to slip?

RUT.X just up from the tail.

At the other end DIA and SPY is more toward the head.

Right now I see the inchworm as being stretch out. If the "head" can anchor and have the tail "draging up", that's when the equity market will "coil"

Linda Piazza : 1/31/2008 10:32:55 AM

The USDJPY is now at 106.14, so there's been a first slight improvement in the tenor of this currency pair. It's slight evidence only, but each time the USDJPY has hit the lower 15-minute Keltner channel line (as it did this morning) in the last 10 days, it's subsequently bounced up at least to a channel line that's now at about 106.75 but still descending. And each time it's bounced after hitting its lower Keltner line the last ten days, U.S. equities have, too. So, keep the USDJPY on your radar screen this morning. Be aware of potential resistance that can stall the USDJPY for hours, now located at about 106.25-106.50. What's happened the last ten days is no proof of what will happen in the future, but I wouldn't want to ignore the possibility that it will.

Jane Fox : 1/31/2008 10:29:19 AM

Crude bulls are getting worried here because this Head and Shoulders pattern is just about to confirm Link

Jane Fox : 1/31/2008 10:27:19 AM

The bulls will be encouraged to see that the DOW did make it to resistance at 12700. Link

Jeff Bailey : 1/31/2008 10:26:33 AM

Dow Transports (TRAN) 4,627.15 +0.25% ... retracement from 5,023 to 4,069 ... see the action? Yesterday's high taps 61.8%. This morning's low taps 50%. Days before you can see how a test of the level above found a decline, but the level below held.

Market participants are certainly working these levels.

Jeff Bailey : 1/31/2008 10:23:40 AM

Russell 2000 (RUT.X) 694.06 -0.20% ... yesterday's high not close to its 38.2% retracement (10/11/07 high is what I think we should be using of 852.06). Morning low finds support at 19.1% of 688.60.

Linda Piazza : 1/31/2008 10:22:07 AM

The advdec line has so far sustained values above -800, the first tentative sign of improvement in Keltner outlook. It's dealing with further resistance at -300, though, being knocked back from its test of that resistance. It's at -684 as I type, with the potential Keltner support on 15-minute closes at about -880 by the time it might be touched, if it is. So, important test.

Linda Piazza : 1/31/2008 10:20:16 AM

Sliiight improvement in the Keltner setup for the SPX when the 15-minute Keltner chart is viewed. The SPX now has potential support at 1345.40 on 15-minute closes, with significant resistance still looming at 1350.65-1353.47 on 15-minute closes. The SPX is at 1346.28 as I type. If you want a steadying of the SPX, you want that Keltner support to hold while the overhead resistance softens. Then you want a punch up through 1351 and preferably through 1353.50, with that punch higher to be sustained. If you want lower prices, you want this Keltner support to fail on 15-minute closes and for the SPX to roll down to a new low.

Jeff Bailey : 1/31/2008 10:18:54 AM

What I'm gathering from MBI's earnings is that they're using the "equity-side" of things to sustain enough capital on the balance sheets to have reserves enough to hold AAA rating. While they are losing money hand-over-fist at this point, the dillution to shareholders isn't necessarily bad. When you're losing money, but dilluting shareholder, the losses/share actually become less.

The BIGGEST downside risk still remains a credit downgrade, or the ability if needed to make additional "equity-like" offerings to raise cash until credit markets firm enough.

Jane Fox : 1/31/2008 10:14:39 AM

Well it certainly looks like I should have taken the long that setup :(

Keene Little : 1/31/2008 10:14:30 AM

Gap closure for SPX would be a 38% retracement (1353.83) of the drop from yesterday afternoon to this morning's low.

Jane Fox : 1/31/2008 10:12:34 AM

Here is where the rubber hits the road. I expected the SPX would find resistance at 1400 and since it did not make it all the way to this resistance that is our first bearish sign. Now we have to see if this retracement will make a higher low. This higher low will be very very important. Link

Jeff Bailey : 1/31/2008 10:09:18 AM

BIX.X 275.14 -0.97% ... also tested its 38.2% retracement yesterday. Link

Linda Piazza : 1/31/2008 10:09:09 AM

The advdec line is now at -815, with potential resistance at about -800. The advdec line needs to sustain values above that resistance to keep improving the tenor. The advdec line is at its highest value for the day, but it needs to sustain this climb.

Linda Piazza : 1/31/2008 10:07:54 AM

USDJPY now at 105.93.

Linda Piazza : 1/31/2008 10:06:35 AM

The SPX is back through the daily 10-sma, but will it stay above it into the close? That's a possibility that I presented in my 9:30:11 post, a scenario that you needed to factor into your thoughts for today, but it's still not a probability and remains only a possibility. The SPX has resistance at 1344.62 on the 30-minute chart, with stronger resistance aligning itself from 1348.65-1356.70. This is resistance that currently looks stronger than support. So, the SPX needs either a strong surge (watch the advdec line) up through that resistance or it's going to have to chop around for a while now, while Keltner resistance softens.

Those are the "if it continues bouncing today" ideas. Of course, the other possibility remains that the SPX gets pushed back from the resistance currently being tested and rolls down to a new low. That possibility can not yet be ruled out, so factor in vulnerability to 1330.

Jeff Bailey : 1/31/2008 10:06:05 AM

SPY $134.29 -0.45% ... also tested its 38.2% retracement yesterday. Morning low of $133.20 not that close to 19.1%. Chart from Monday's Wrap Link

Keene Little : 1/31/2008 10:04:06 AM

Futures have recovered the losses following the 8:30 reports this morning so it could be a resistance level here as those who were trapped by that drop use this opportunity to exit their long positions.

Jane Fox : 1/31/2008 10:02:48 AM

Gold seems to be building a top here. Link

Linda Piazza : 1/31/2008 10:00:41 AM

The USDJPY has risen just underneath the 106 level, at 105.92 as I type. It needs to sustain values above 106 (perhaps 105.95) to even begin to change the tenor and corroborate the idea of an equity bounce.

Linda Piazza : 1/31/2008 9:58:37 AM

Strong bounce in the advdec line.

Jane Fox : 1/31/2008 9:57:23 AM

My system is telling me long at 12331 but I'm not sure I would be taking it due to the AD line. So I am going to step aside.

Jane Fox : 1/31/2008 9:54:53 AM

but the VIX is making new daily lows so expect chop.

Jane Fox : 1/31/2008 9:54:11 AM

AD line is a very bearish -1377

Linda Piazza : 1/31/2008 9:53:13 AM

After approaching but not quite hitting its downside Keltner target, the advdec line is now at -1396 as it attempts a bounce. Currently, it needs to bounce as high as -750 and sustain values above that before its Keltner outlook improves much, but those who hope for a steadying are at least seeing some bounce.

Jeff Bailey : 1/31/2008 9:52:13 AM

MBIA Inc. (MBI) $13.17 -5.65% ... Earnings Press Release Link

Linda Piazza : 1/31/2008 9:51:07 AM

At 105.84 as I type, the USDJPY has hit its 15-minute target and is in fact bouncing from its second test of that Keltner target. It must sustain values above about 106, however, before we consider any change in tenor at all.

Linda Piazza : 1/31/2008 9:48:31 AM

TRAN headed lower again, although it remains well off its low of the day.

Linda Piazza : 1/31/2008 9:47:52 AM

For you OEX traders, the 30-minute Keltner target and potential support was at 620.24. The OEX approached that target but didn't hit it, and I'm not sure if it will be hit. The setup certainly shows continued vulnerability to that level, but that could change by the conclusion of the first 30 minutes of trading. I'm watching the advdec line (advance/decline line), which closely approached but also did not hit its downside target. So far, it's a little off its low but not yet bouncing strongly. The TRAN has been, though, and I use both those as indicator or leading indices for the SPX, OEX and Dow. So, I have mixed evidence here.

Keene Little : 1/31/2008 9:44:36 AM

After breaking above its downtrend line from Dec 26th on Monday, SPX is back down to it near 1338. It could be enough to get traders in and give us a bounce. If that doesn't hold then the next support level is the Monday low at 1323.

Linda Piazza : 1/31/2008 9:42:56 AM

Huge bounce beginning in the TRAN. I don't know if it will hold and the TRAN remains negative, but keep it on your radar screen as it's retraced well more than half the first 15-minute range.

Linda Piazza : 1/31/2008 9:37:39 AM

Keltner look at the advdec line: The advdec line currently has a downside target of about -1700, with the advdec line at -1525 as I type. That target also serves as potential support, so be watchful for a bounce in the advdec line. Hasn't happened yet.

Jeff Bailey : 1/31/2008 9:37:02 AM

Swing trade long raise stop alert! ... for the 1/4 position in the Ultra QQQQ (QLD) $71.97 -1.88% ... to $71.50

Linda Piazza : 1/31/2008 9:35:17 AM

Here we go. The SPX heads straight down to and through potential Keltner support on the 15- and 30-minute charts. Remember that it's not whether these channel lines are pierced but whether they're violated on a 15- or 30-minute close that determines whether support or resistance held. Although it seems unlikely right now that a bounce will head back above those support levels before the 15- and 30-minute closes, it isn't impossible.

The SPX has also pierced the 10-sma. If you're in bearish positions, you now must be thinking about the possibility that a daily close could be back above that moving average, so as 1330-1335 potential support is approached (1329.09 on the 30-minute chart), do be making some decisions about how to protect the profit you have in case the SPX steadies and bounces from that level.

Jane Fox : 1/31/2008 9:31:51 AM

Dateline WSJ = WASHINGTON -- Consumer spending grew during December but the increase was much smaller than the surge in the prior month, while income accelerated.

Consumer spending makes up about 70% of U.S. economic activity. Adjusted for inflation, consumer spending in December was flat, according to Thursday's report on income and spending. The data revealed a price index for personal consumption expenditures rose 0.2% in December compared to the prior month. The PCE price index excluding food and energy, or core PCE, also rose 0.2%.

Personal consumption climbed by 0.2% compared to the month before, the Commerce Department said Thursday. November spending rose a downwardly revised 1.0%; originally, November spending was seen 1.1% higher.

The report also showed personal income increased at a seasonally adjusted rate of 0.5% compared to the month before. Income rose an unrevised 0.4% in November.

Economists had forecast a 0.4% increase in personal income during December and a 0.1% rise in consumer spending.

Jane Fox : 1/31/2008 9:30:13 AM

WASHINGTON (MarketWatch) -- First-time jobless claims rocketed higher last week.

Initial claims for state unemployment benefits rose 69,000 in the week ended Jan. 26, reaching 375,000, the Labor Department reported Thursday. It marked the highest level since early October -- and the biggest weekly jump since September 2005 in the wake of Hurricane Katrina. Read government release.

Before this sharp rise, jobless claims had fallen by a net of 51,000 since late December, confounding economists who had expected claims to gradually rise as the nation's economy slowed.

Analysts had been expecting an increase, but nothing nearly as large as last week's gain: The consensus forecast as compiled by MarketWatch had called for claims to rise to about 320,000

Linda Piazza : 1/31/2008 9:30:11 AM

Futures are much lower, of course, with SPX futures approximately 21-22 points below fair value. Cash indices don't always behave in accordance with futures' action, but let's look at where the SPX might be if it did. That would mean that the SPX might drop down toward 1330-1335. On the way, it's going to encounter the daily 10-sma, now at 1343.49. One scenario we might consider is that this is a needed 10-sma test, so factor in a scenario in which the SPX tests or perhaps even pierces the 10-sma, only to close back at or above that moving average. That's a possibility but of course not a probability here, before the open, when we can't assess what's happening. Do not count on this scenario unfolding, using it as an excuse not to honor your stops or your trade management plan. Just keep it on the radar screen, thinking ahead to how you'll treat a 10-sma test if you're in bearish positions, for example.

Rolling down to a 30-minute chart, I see potential support near 1348-1350. If that is violated on a 30-minute close, as seems possible at this juncture, a potential downside target of 1330 is set, with that channel level often providing support on 30-minute closes when tested. Again, no promises, but factor it in as a possible scenario. Do remember that caution "on a 30-minute close," however, when applied to the first 30 minutes, as we sometimes see false breakouts or breakdowns during amateur hour. Be prepared for that possibility.

So, the first zone in which to watch for potential support is the 1343-1348 zone, with vulnerability down to 1330-1335 entirely possible but not exactly probable yet.

Keene Little : 1/31/2008 9:20:33 AM

After a recovery attempt during the overnight hours, equity futures got hammered back down after the European markets opened and currently trade closer to their lows. After giving up the big post-FOMC rally yesterday and closing in the red, followed by a big gap down this morning, it can't be anything but depressing for the bulls. The only question in my mind this morning is whether or not we'll get gap closure before heading lower again.

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