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Keene Little : 2/8/2008 1:56:53 AM

Friday's pivot tables: Link and Link

The price pattern is at an interesting point and I'm hoping it will provide some important clues by the end of the day Friday. The DOW 60-min chart shows the two scenarios I mentioned briefly at the end of the day Thursday--one is looking for another rally leg to perhaps the 12400 area (dark red) and the other is more of a sideways triangle to play out over the next day or two (pink): Link

If we get a higher pop on Friday (dark red) that is then followed by a break below Wednesday's 12122 low it would be potentially very bearish and you'll want to be short the market and hang on for the ride (for some strong 3rd waves to the downside). But if the market chops sideways it will be a b-wave. The significance of that is that it will point to another leg down (pink) but likely only for a retest of the January low to then be followed by a strong rally back above Monday's high. The rally back up is better shown on the daily chart: Link

This is where the predictive power of EW can be useful. It's not foolproof of course but it helps establish some probabilities to help you decide how you would want to play the next few weeks (such as into March opex). I will of course be updating this along the way.

One other factor I'm keeping my eye on is what might happen in the bond market. The price pattern of the 10-year yield chart (TNX) looks like a bigger bounce is in progress and should rally up near 4%. It could rally up to 4.3% later this month or next. That would of course mean bonds sell off, money will free up and possibly rotate into stocks. The possible bounce in yields might look like one of the two scenarios on this TNX daily chart: Link

As a very good example of an A-B-C bounce with the b-wave forming a sideways triangle, the 60-min chart shows how the triangle had the requisite a-b-c-d-e wave count and then took off to the upside from Tuesday's low. It stalled at the first Fib projection near 3.8% but should press higher with an upside target near 4%: Link

Jeff Bailey : 2/8/2008 1:41:20 AM

The earnings of companies in the Standard & Poor's 500 index that have issued fourth-quarter reports are running 23.6% lower than year-earlier results, according to Thomson Financial.

Of the 500 companies, 356, or 71%, had reported earnings for the quarter as of Thursday. So far, fourth-quarter earnings have come in 11.7% lower than analysts' expectations.

Compared with a year earlier, earnings of S&P 500 companies are expected to fall 20.2% in the fourth quarter. That figure reflects actual earnings for the companies that already have reported and average estimates for the rest.

For the first quarter, analysts, on average, expect earnings of the S&P 500 companies to rise 1.4% from the year-earlier period.

The following table shows how the 356 companies that have reported performed in the fourth quarter, compared with analysts' average expectations.

Positive surprises 114 / 32%
Positive reports 98 / 28%
On target 48 / 13%
Negative reports 48 / 13%
Negative surprises 48 / 13%

(Positive and negative surprises include companies that deviated from expectations by at least 5%, with adjustments when the numbers are near 0 and the percentage difference becomes meaningless. Positive and negative reports are from companies that deviated by less than 5%.)

The following table shows how the companies are doing against year-earlier results, with one company not reporting those figures.

Above year-ago 239 / 67%
Matched year-ago 5 / 1%
Below year-ago 111 / 31%

Thomson Financial said 50, or 60%, of the 84 companies in the S&P 500 that provided previews for the first quarter as of Thursday will miss analysts' mean expectations; six, or 7%, expect to meet analysts' expectations; and 28, or 33%, anticipate they will beat the projections.

At a comparable time last year, 58, or about 67%, of the 86 companies in the S&P 500 that provided first-quarter previews warned of shortfalls; 14, or about 16%, anticipated on-target results; and 14, or about 16%, projected higher-than-expected earnings.

OI Technical Staff : 2/7/2008 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 : 2/7/2008 6:55:01 PM

NYSE NH/NL Ratio Chart Link

Jeff Bailey : 2/7/2008 6:45:21 PM

See, even when the NYSE did get that 49:57 on 02/01/08 the market sold it.

Jeff Bailey : 2/7/2008 6:44:12 PM

My best guesstimate is lower into expiration. But I've got my tests.

Jim Brown : 2/7/2008 6:42:26 PM

Important Reader Survey - As we head into 2008, we wanted to take a moment and invite you to participate in a short subscriber survey to help us better meet your needs.

As I'm sure you can appreciate, we have a wide range of traders and investors that trade a variety of stocks, options and futures across various time horizons. What's more, the market has introduced and expanded the use of ETFs and emini futures contracts. We felt it was time to take a quick snap shot of your investment and trading styles and get your thoughts and ideas in order to help us better tailor the content and focus of the Market Monitor.

Please click here: Link

Thank you in advance for your quick response to the attached survey. Your feedback is important to us.

Jeff Bailey : 2/7/2008 6:29:40 PM

If we saw another 16:100 NH:NL at the big board tomorrow, the 5-day NH/NL ratio would fall back into O at 22.00%.

We'd need to see a 02/01/09 SIMILARITY of 49:57 to still keep the 5-day NH/NL ratio at 28.5%. So there's a test.

Jeff Bailey : 2/7/2008 6:24:06 PM

VIX.X 27.66 -4.52% today. (so, more call buying/put selling than there was call selling/put buying.

However, for the WEEK, VIX +15.15% (so, more call selling/put buying than call buying/put selling).

And for the MONTH VIX +5.57%.

Jeff Bailey : 2/7/2008 6:20:46 PM

Closing Internals at this Link

NYSE's 5-day NH/NL ratio does stay in column of X (see 01:35:04 Post and the 11:00 Internals post at 11:24:09)

Jeff Bailey : 2/7/2008 6:11:11 PM

What would be further helpful is to know where the open interest is at.

Jeff Bailey : 2/7/2008 6:11:08 PM

While SPY $133.93 +0.66% looks like it is in "no man's land" between conventional retracement (we know where 19.1% and 38.2% is) right now, we also know that WEEKLY S1 is at $134.57, and MONTHLY Pivot is $136.79.

Jeff Bailey : 2/7/2008 6:10:28 PM

Quick note: For those that do think today's action looked OP-EX.

Last month, the THURSDAY before OPEX was 1/10/08.

My "internals" would show that both the NYSE and NASDAQ NL figures reached a trough on the 1/09/08. We then saw NL abate a bit, for about 3-days, then another PUSH lower into the expiration.

If anything, the QQQQ being BELOW its 19.1% is a WARNING sign that the 19.1% are vulnerable and RISK should be assessed to 0.00% conventional.

The MOST new highs we saw from 01/10/08 to the Monday of Op-EX was ... 67 at the NYSE and 56 at the NASDAQ.

I can only have you "pretend" that VLO recently traded a 52-week high, to then have you understand that in a DOWNWARD trending MARKET, market participants will still buy stocks, then SELL COVERED CALLS (even on the strongest of stocks) and even when they think they got the inflection low.

If we start to see the number of NEW HIGHS increase ABOVE last month's pre Op-Ex, then we get some observation that maybe, just maybe, some bullish positions are trying to be saved, or some demand is firming into THIS expiration.

Jeff Bailey : 2/7/2008 5:37:13 PM

We did exactly that with Adelphia when the pudding hit the fan on their quarterly earnings.

Analyst asked ... "what about all these off balance sheet loans" you guys have.

Doh!

Jeff Bailey : 2/7/2008 5:33:50 PM

See, IF MBI were $1.50 right now, we couldn't do anything with the MBI-QU.

But if it "plunges" to $1.50 extended, you could buy 100 shares, and be COVERED with the put MBI-QU.

Then even if MBI were to OPEN the next morning at $4.00, you've got $2.50 gain in the 100 shares that was really "no RISK".

Jeff Bailey : 2/7/2008 5:31:24 PM

MBI $13.00 ..

Jeff Bailey : 2/7/2008 5:28:32 PM

IF MBI were to do such a thing (as SCA), with 1 put contract (100 shares equivalent), what a trader could do is be ready to "buy long (covered)" 100 shares of MBI at $1.50.

The MOST YOU COULD EVER LOSE then is $1.50/share.

Then at the next day's OPEN, you could look to SELL THE PUT for a nice gain (depending on what strike you had).

Then HOLD the 100 shares (cost of $1.50/share?) then should shorts come in and cover, to say $2.50, turn and DUMP the 100 shares for a $1.00/share gain. Then move on.

Jeff Bailey : 2/7/2008 5:23:24 PM

The lowest SCA traded was an extended session low of $1.40 on 01/18/08.

The mortgage insurance stocks are "so short" that players want to cover, free up cash and move on.

Jeff Bailey : 2/7/2008 5:18:27 PM

EXXON WINS FREEZE ON VENEZUELA ASSETS (see 05:08:25 PM)

DJ- Exxon Mobil secures court orders to freeze more than $12 billion in worldwide assets of Venezuela's state-owned oil company, as it prepares to dispute the nationalization of a multi-billion dollar oil project.

Jeff Bailey : 2/7/2008 5:17:06 PM

Those that may be holding puts on other mortgage insurers. SCA's chart may be of use in future.

IF $1.50 comes, take it and move on. Can try and squeeze blood from a turnip, but bulk of damage done.

Jeff Bailey : 2/7/2008 5:14:05 PM

MOODY'S CUTS AAA RATING OF SCA UNITS

DJ- Moody's Investors Service cuts its AAA rating on three units of Security Capital Assurance to A3, saying the fifth-largest U.S. bond insurer has been weakened by its exposure to the U.S. residential mortgage market.

SCA $2.60 -6.13% ...

Jeff Bailey : 2/7/2008 5:11:59 PM

US CONSUMERS INCREASE BORROWING

DJ- Consumer credit outstanding grows $4.50 billion in December to $2.520 trillion, as the economy braked to a crawl. That follows a revised higher $17.1 billion climb in November. Wall Street expected a $7.5 billion rise in December.

Jeff Bailey : 2/7/2008 5:08:25 PM

Venezuela Debt Plunges Further On Courts $12B Asset Freeze

Jeff Bailey : 2/7/2008 5:07:38 PM

Treasury's Paulson Commends Senate For Passing Economic Plan

Jeff Bailey : 2/7/2008 5:03:42 PM

2 million blocked in MO at $74.10.

Jeff Bailey : 2/7/2008 4:59:12 PM

INDU went out at 12,247 ... Breadth was 20:10. Top 10 weighted were 5:5.

Jeff Bailey : 2/7/2008 4:47:44 PM

MTG and ABK seem "steady" ... MBI $13.40 now.

Jeff Bailey : 2/7/2008 4:45:37 PM

US Dollar Index (dxy) 76.83 (30-minute delayed) ... stamped 04:14:01

Jeff Bailey : 2/7/2008 4:44:32 PM

US Senate Votes In Favor Of Amended Economic Stimulus Plan

DJ- The U.S. Senate voted Thursday in favor of an economic stimulus plan worth roughly $166 billion through 2009. A final vote sending the measure to the House for its final approval was expected shortly.

The bill includes rebate checks worth up to $600 for workers, more for families with children, and tax incentives for businesses purchasing equipment before the end of the year.

The plan is roughly $5 billion larger than the version originally approved by the House.

The Senate expanded the measure to make rebate checks worth $300 available to seniors living off of Social Security benefits and disabled veterans.

Jeff Bailey : 2/7/2008 4:42:38 PM

MBIA Inc. (MBI) $14.20 -0.56% ... slips to $13.65 extended.

Jeff Bailey : 2/7/2008 4:36:43 PM

Per my 03:33:12 ... It would seem "odd" to me that a BROAD LARGE CAP index trades so close to $133.50 6 days into expiration.

Just as "odd" to see VERY NARROW Mega-cap index at $122.50.

Also "odd" to see VERY BROAD Small Cap at $70.00

Just as "odd" to see NARROW and LARGE Cap at $43.00.

Where today's lows get MARKED and correlated with SPY and RUT.X 19.1% conventionals, and oscillate all day.

What isn't all that odd is that we see this type of "oddity" usually on a Thursday before Op-Ex.

Keene Little : 2/7/2008 4:15:59 PM

This updated DOW daily chart shows how the two possibilities that I showed on the 60-min chart (3:54 PM) would look from a daily perspective: Link

Jeff Bailey : 2/7/2008 4:13:10 PM

Cognizant Tech (CTSH) $27.28 -0.07% ... jumps to $30.27 extended on headline numbers.

See trade blotter. 11/06/07 ... day shorted $31.38, stopped $31.90 on NEGATIVE quarter.

Jeff Bailey : 2/7/2008 4:01:02 PM

VXO.X 29.61 -5.18% ...

Jeff Bailey : 2/7/2008 4:00:44 PM

VIX.X 27.68 -4.45% ...

Jeff Bailey : 2/7/2008 4:00:11 PM

Swing trade bullish call alert! ... for one (1) of the Altria MO June $75 Calls (MO-FO) at the offer of $3.70.

MO $74.31 +2.13% ...

Jeff Bailey : 2/7/2008 3:58:58 PM

I like it ...

Jeff Bailey : 2/7/2008 3:57:01 PM

Altria (MO) $74.20 +1.99% ... back UP to conventional 38.2%

Keene Little : 2/7/2008 3:54:51 PM

With all the corrective movements back and forth I'm thinking two possibilities from here. First of all, notice where the DOW stopped today--right up against the bottom of its broken parallel up-channel from the January low (SPX did the same thing): Link . This is very common to see (a retest of the the broken channel) and suggests any bounce here is not going to make much headway.

The two possibilities that I'm showing are a little more bounce (dark red) before turning lower and it's a very bearish wave pattern with hard selling to follow. But it needs a higher bounce to "look" right as a correction of this week's decline (today's bounce is too short in time and price).

The pink count shows a sideways triangle playing out over the next day or two and then another leg down to match this week's decline. That would take it down to the January low. The interesting thing about the pink wave count is that it would then call for another big rally leg to match or exceed the one from the January low to Feb 1st.

If price just drops lower from here and drops below 12122 then I don't think it will amount to much but we have to respect the possibility that it's going to simply stair-step lower inside the parallel down-channel I've drawn in (light grey). If it were to drop out the bottom of that down-channel then get short and hang on.

Linda Piazza : 2/7/2008 3:47:43 PM

Time to make your end-of-day decisions, if you're not too dizzy to do so. I actually felt pretty Barring a decline much below the low of the day in the closing minutes, today's candle may suggest either consolidation or further upside tomorrow, but . . . well, if you've been around trading today, you know what these markets are like and you know how little standard lore means. Assess your risk and make your decisions.

Jane Fox : 2/7/2008 3:42:49 PM

Keene you are right about the Darmamine. Look at these overnight charts. Link

Linda Piazza : 2/7/2008 3:42:22 PM

Some of you will be noticing a potential inverse (or reverse) head-and-shoulders formation on the SPX's 15-minute and 30-minute charts. It looks to me as if the neckline is now at about 1346, but I'd certainly want to see 15-minute closes above that 1350-1352 zone before I believed in it too strongly. Actually, I don't believe in H&S targets necessarily being met any longer, but watching the formations does give me some insight into the psychology of the markets. Often you'll see the right shoulder fall apart when the bulls don't have enough steam to confirm the thing.

Be aware that such formations are often rejected at the neckline or invalidated soon after a seeming confirmation.

Jeff Bailey : 2/7/2008 3:36:27 PM

US Earnings: Q4 Results Down 23.6% Vs. 2006, Dn 11.7% Vs. Views ... will review later.

Jeff Bailey : 2/7/2008 3:35:07 PM

Avon Products (AVP) $39.22 +2.80% ... 61.8% conventional.

Keene Little : 2/7/2008 3:34:43 PM

And right back up again. Did you take your Dramamine before trading today?

Jeff Bailey : 2/7/2008 3:33:12 PM

When I see this Link

I've got to think Op-Ex.

$133.50 , $122.50, $70.00 and $43.00

Linda Piazza : 2/7/2008 3:32:36 PM

Earlier (2:37:20 post, for example), I speculated that the Keltner potential support was looking firmer than it had earlier, but mentioned that this was an observation based on a short-term chart only. That support did in fact turn out to be stronger, and here we go again with the OEX bouncing from it. Dizzy yet? The SPX is about to test 1336.50-ish resistance on 15-minute closes and then the higher, firmer resistance still waits. That's converging from 1345.64 to 1350.54, and of course there's yesterday's swing high just under 1352. So, if the SPX should continue gaining, a real question mark, again you need to know how you'll deal with that zone if it's tested. Declines can come quickly, as can gains.

Jeff Bailey : 2/7/2008 3:18:05 PM

03:00 Internals found at this Link

Keene Little : 2/7/2008 3:14:05 PM

It's a sharp thrust back down but two equal legs down for SPX would be at 1319.44, near this morning's low. I mention it because it's possible we'll reverse back to the upside with the potential to build a sideways consolidation pattern over the next day or so.

Linda Piazza : 2/7/2008 3:09:16 PM

SPX potential Keltner support at 1326.36, then at 1325.74 on 15-minute closes. Below that is further support at 1320.84.

The reason that I like following a benchmark such as the 15-minute 9-ema is that it gives an early warning when something has changed. The usual trajectory of a trend change when watching a benchmark such as this is a bouncing from a rising (or down from a declining) moving average. Then there's a flattening of the average as the momentum slows, and prices tend to trade across it without each move meaning much. Then gradually, prices start moving away, either resuming the prior trend or starting a new one and the process begins again.

However, in this climate, that middle process is sometimes shortened or done away with entirely. Sometimes there's no chopping back and forth and we just seesaw from one trend right into the other. Still, a stop a certain length below (or above in a descent) a moving average such as the 15-minute 9-ema helps keep losses smaller than they would be otherwise, if you're inclined to trade in this atmosphere.

Of course, you wouldn't use a 15-minute moving average to determine benchmarks for a long-term trade, although you might use them to fine-tune entries or exits. There's no right or wrong chart interval or average, for that matter. Experiment. Don't like my 9-ema? That's okay. For the Wraps, I tend to follow the 10-sma on the daily chart because most follow it more than other averages. Although I don't mention it much because it's difficult for subscribers to follow, I actually favor the 7-minute charts for the SPX and OEX when they're moving fast.

Jeff Bailey : 2/7/2008 3:07:38 PM

Much "Put support" forming yet? Didn't have any last month.

Jeff Bailey : 2/7/2008 3:06:56 PM

SPY $133.00 benchmark at 03:00

Keene Little : 2/7/2008 3:06:18 PM

Taking out the dip just before noon would leave today's bounce confirmed as just a 3-wave bounce and a correction to this week's decline. Again, we could get another leg up in a larger bounce would it would remain a bounce and nothing more bullish than that.

Jeff Bailey : 2/7/2008 3:06:26 PM

Some "round numbers" DXY 77.00 ... TYX.X 4.500%

Jeff Bailey : 2/7/2008 3:01:02 PM

LXK $34.49 -2.59% ...

Jeff Bailey : 2/7/2008 3:00:44 PM

HPQ $40.85 -3.10% ...

Jeff Bailey : 2/7/2008 3:00:27 PM

Kodak Sees 2008 inkjet printer sales possibly tripling.

EK $19.31 +3.42% ...

Jeff Bailey : 2/7/2008 2:59:13 PM

S&P Affirms 12 First Franklin Mortgage Loan Trust Ratings On 2 Dls

Jeff Bailey : 2/7/2008 2:57:51 PM

Cincinnati Bell (CBB) $4.31 +12.82% ... Outlook "stable" on wireless improvement.

Tab Gilles : 2/7/2008 2:51:52 PM

Cisco Systems (CSCO) The optimistic CEO; John Chambers has now become more cautious concerning the economic outlook. Is it a contrarian signal? Link

Keene Little : 2/7/2008 2:49:01 PM

The pullback has now left an overlaps wtih this morning's first high so either the bounce has been confirmed corrective (3-wave bounce) or else the market is getting ready to blast higher in a 3rd of a 3rd wave up. I'm leaning towards the corrective bounce. It doens't mean we can't get another leg up in a larger bounce but it does warn of us of potential chop, especially if it chops sideways for another day before letting go to the downside again.

Jeff Bailey : 2/7/2008 2:47:21 PM

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

Note: Options bids may not be correct.

Jeff Bailey : 2/7/2008 2:42:16 PM

UTX has also fallen back below its 38.2% conventional. bounce high was 50%.

Jeff Bailey : 2/7/2008 2:41:33 PM

I feel, based on observation, great pressure building in these markets.

Jeff Bailey : 2/7/2008 2:40:53 PM

DIA $122.08 -0.14% ...

Jeff Bailey : 2/7/2008 2:40:38 PM

United Tech (UTX) alert! $71.18 -0.96% ... know where this one is. "Neckline" extension. See blotter 1/16/08 and 1/23/08.

Linda Piazza : 2/7/2008 2:37:20 PM

While the SPX held the support of the 15-minute 9-ema on the last 15-minute close, it's dropping below it now, and the outcome isn't determined. I thought that overhead resistance was firm, and apparently so did others who didn't even wait for it to be tested before selling into the rise. In a sustained climb, the SPX is going to drop back to the lower channel support from time to time, with that now at 1329, but in this climate, is this pullback part of the normal-and-expected pullback to stronger support or the beginning of another downturn? You just don't know so you have to honor your stops, wherever you set them.

Right now, support looks much stronger than it did earlier, giving at least a little hope that it will hold somewhere above 1321 or so, but that's still a long way down and only a short-term chart by which I'm making this somewhat subjective judgment.

Jeff Bailey : 2/7/2008 2:38:21 PM

The only "reason" or observation I could make as to DRG.X -1.40% is Romney dropping out of race.

In my 2008 economic forecast, I touched on the main candidates and policy and possible impact. I felt Mr. Romney was likely the "most sympathetic" to this sector.

Jeff Bailey : 2/7/2008 2:28:10 PM

DJ- Israel Cuts Power To Gaza By 1% - Defense Ministry

Jeff Bailey : 2/7/2008 2:22:49 PM

USO $69.55 +0.76% ...

Jeff Bailey : 2/7/2008 2:22:04 PM

GLD $89.83 +0.98% ...

SLV $166.56 +1.71% ...

Jeff Bailey : 2/7/2008 2:21:21 PM

Apex Silver (SIL) $13.21 +2.80% ...

Keene Little : 2/7/2008 2:21:13 PM

The one thing that still has me nervous about even thinking short term bullish into opex is the pattern I see in the banks and home builders. I know each of those can drop while the broader market rallies but it would be a struggle for the rally.

While the banks and home builders look due for a bounce I don't see it as anything more than a correction of this week's decline and it looks like the decline to new lows should resume after that. So don't be betting the farm on a rally into opex--risk management is absolutely critical in this market right now, above all else that you do.

Jeff Bailey : 2/7/2008 2:20:53 PM

GoldCorp. (GG) $35.25 -0.11% ...

Jeff Bailey : 2/7/2008 2:20:27 PM

US Dollar Indx (DXY) 76.93 +1.04% (30-minute delayed) ...

Jeff Bailey : 2/7/2008 2:19:54 PM

TREASURY WON'T INTERVENE IN BOND-INSURER CRISIS

DJ- Treasury's Robert Steel says department is closely monitoring the monoline insurance crisis but doesn't plan to intervene, seeing it as a "private market-oriented situation." He sees plan to modernize financial-services rules in the 1Q.

Jeff Bailey : 2/7/2008 2:19:21 PM

MERCK TO PAY $650M TO SETTLE MEDICAID CHARGES

DJ- Drug maker agrees to pay more than $650 million to settle allegations it didn't pay proper rebates to Medicaid and other government health-care programs, and improperly paid doctors to prescribe its products.

MRK $45.60 -0.24% ...

Jeff Bailey : 2/7/2008 2:15:21 PM

I have some downside al_rts set under the "3 stooges" just in case it hits.

Jeff Bailey : 2/7/2008 2:14:41 PM

MBI $14.91 +4.41%

ABK $10.94 (unch)

MTG $15.95 +3.84%

Some reports earlier sessions was we could see credit downgrades today. I haven't seen any news of such at this point from ratings agency.

Keene Little : 2/7/2008 2:12:40 PM

This NDX 60-min chart is actually a better one: Link . I corrected the Fib projection for the leg up into opex (if that's what's coming) to show two equal legs up at 1880 and then where the 2nd leg up would equal 162% of the 1st leg up. So we'll either get (potentially) a marginal new high for the bounce off the January low or up to 1982 and a little better than a 62% retracement of the decline from late December.

Jeff Bailey : 2/7/2008 2:12:12 PM

NY CRITICAL OF RATINGS REFORM PLANS

DJ- New York Attorney General wants ratings agencies to do more in their efforts to fix how they rate mortgage bonds, calling the moves so far "window dressing" that fall short of the systemic reform needed to restore investor confidence.

Jeff Bailey : 2/7/2008 2:11:33 PM

TECHNICAL CDO DEFAULTS REACH $97B

DJ- Standard & Poor's says that it received technical defaults known as event of defaults on $97 billion of collateralized debt obligations as of Tuesday. That's an increase from the previous week, when the tally was $84 billion.

Jeff Bailey : 2/7/2008 2:10:56 PM

PAULSON SAYS CONGRESS SHOULD RAISE TAXES TO FIX AMT

DJ- Treasury Secretary says raising taxes on some taxpayers to offset the cost of protecting others from the alternative minimum tax is appropriate in the context of broad fiscal reforms. But, such tax increases shouldn't happen this year.

Jeff Bailey : 2/7/2008 2:08:09 PM

DJUSHB 372.03 +4.40% ... 150-day SMA 378.42

Jane Fox : 2/7/2008 2:07:33 PM

The NAZ is your weak link. Link

Jeff Bailey : 2/7/2008 2:07:07 PM

Toll Bros. (TOL) $21.93 +3.92% ..

Jane Fox : 2/7/2008 2:06:52 PM

The small caps are usually the odd man out but not this time. This chart of the RUT.x (Russell 2000 cash index) is very similar to the SPX and DOW. Link

Jeff Bailey : 2/7/2008 2:06:20 PM

Forex Economic Calendar for Today Link

Linda Piazza : 2/7/2008 2:05:42 PM

The SPX's 15-minute 9-ema has now risen to 1337.73. Resistance, looking rather firm, is at 1350-1351. Keep in mind also yesterday's swing high of 1351.96, so I'd extend that resistance area up to 1352. Begin making plans, if you didn't after the previous warning, of how you'll treat a test of this area if you have bullish profits in hand.

For the OEX, the 15-minute 9-ema is now at about 619, with possibly strong resistance at 624-626.

Jeff Bailey : 2/7/2008 2:05:07 PM

US JOBLESS CLAIMS FALL BY 22K IN WEEK

DJ- Initial jobless claims fall by 22,000 to 356,000 in the week that ended Feb. 2, seeming to temper the stunning surge reported a week earlier. Economists expected a decrease of 32,500 to 342,500.

Jane Fox : 2/7/2008 2:04:20 PM

The picture I have been painting for the SPX is the same for the DOW. If the rally off today's lows closes above the February 1st highs then the reverse head and shoulders confirms and I think the bulls have a good chance of at least revisiting all time highs at 14198 sometime this year. It may take a while but once we have that reverse head and shoulders confirm the bulls are back in the driver's seat. Link

Jeff Bailey : 2/7/2008 2:03:55 PM

BOE REDUCES KEY RATE TO 5.25%

DJ- Bank of England cuts its key interest rate to 5.25% from 5.5%, a move that sends the U.K.'s FTSE 100 Index lower, and says inflationary risks will prevent it from easing policy rapidly. The European Central Bank opts to keep interest rates steady at 4.00%.

Keene Little : 2/7/2008 2:03:20 PM

I had shown on last night's NDX 60-min chart ( Link ) the possibility for a drop down to 1716 where the leg down from Friday would achieve 162% of the 1st leg down from January 25th (the green a-b-c wave count for wave B).

That's right where NDX found support and the rally off that low is now looking impulsive (trend change): Link . As shown with the green wave count from here, there is the possibility for a stronger rally into opex. It now takes a break below this morning's low to negate that bullish wave count. Buy the pullbacks for now (and hope the RUT starts to play a little catch-up). I'll be testing the rally every step of the way for signs of failure.

Jeff Bailey : 2/7/2008 2:03:06 PM

DJ- Argentina's Inflation-Linked Bonds Drop After Low CPI Report

Jeff Bailey : 2/7/2008 1:59:34 PM

Yes ... both would be better. Have some October high to attach conventional to.

Jeff Bailey : 2/7/2008 1:58:48 PM

Or also iShares Hong Kong (EWH)

Jeff Bailey : 2/7/2008 1:57:51 PM

Could use the iShares Xinhua China 25 (FXI) as bull security.

Jane Fox : 2/7/2008 1:54:49 PM

LOS ANGELES (MarketWatch) -- Former Massachusetts Gov. Mitt Romney suspended his run for the Republican presidential nomination Thursday after a disappointing showing on Super Tuesday, effectively handing the reins to frontrunner U.S. Sen. John McCain, R-Ariz.

Jeff Bailey : 2/7/2008 1:54:00 PM

FXP description Link

Jane Fox : 2/7/2008 1:53:54 PM

Internals are totally different from yesterday. They are telling you loud and clear the bulls have the ball today. Link

Keene Little : 2/7/2008 1:53:01 PM

NDX is stronger--already past the level for two equal legs up (1762.18) and the RUT is struggling just past 62% for the 2nd leg up. It's a bit of a fractured market and especially so between the techs and small caps and that's usually not a real healthy situation.

Jeff Bailey : 2/7/2008 1:51:39 PM

FXP alert! $97.21 -4.69% ... slips back under mid-point of "Bailey Wave" and resulting 50% of an "bull fit 38.2%" (low close $62.10 from 12/06/07 to 38.2% fit close of $88.99 on 12/17/07).

Keene Little : 2/7/2008 1:50:57 PM

SPX is now right up near the price projection for two equal legs up from this morning's low, at 1341, so watch for weakness to short.

Linda Piazza : 2/7/2008 1:47:57 PM

If you're in short-term bullish trades, you're glad to see the SPX's 15-minute 9-ema turning up and the SPX producing continued 15-minute closes above that rising 9-ema. It's at 1333.09 as I type. The SPX has just hit a new high for the day, another improvement. On the 15-minute chart, the SPX was tackling resistance at about 1337, so bulls were glad to see a 15-minute close above that. Next resistance on this chart is now just under 1350, and it looks significant, so I'd have some what-if plans for how to deal with that level, if touched.

For the OEX, the 15-minute 9-ema is now at 617.63. Next resistance, looking significant, is now at 624-625.

Keene Little : 2/7/2008 1:45:48 PM

I'm playing around with some Fibs on various indices and remembered one little Fib trick that's worth reminding you about. Depending on how your Fibonacci retracement tool works, see if it projects 127%, 138% and 162% beyond the 100% retracement level. You will very often find a move that goes to the 127%/138% extension of the previous move before reversing. That sounds a little confusing so look at this SPX 30-min chart: Link

The leg up from Jan 31st to Feb 1st was completely retraced with this week's decline. When that happens, watch the level where the move would achieve 127%-138% of the previous move (the rally leg in this case). For this example, the 127% level at 1317.32 was in fact support for a reversal of the decline.

You don't necessarily know how far the reversal will go (today's bounce in this case) but these Fib reversals are common enough to watch for trading opportunities. This works on any time frame. And if price goes through both the 127% and 138% then watch for 162%.

Jeff Bailey : 2/7/2008 1:39:45 PM

There is NO WAY humans can make such a price tie for over 3,000 stocks.

Jeff Bailey : 2/7/2008 1:37:02 PM

NYSE Composite ($NYA.X) 8837.84 ... 19.1% at 8,733.94. Session low was 8,731.35

Jeff Bailey : 2/7/2008 1:36:07 PM

Good job ... we're on the same page.

Jeff Bailey : 2/7/2008 1:35:04 PM

01:00 Internals found at this Link

Note: 11:00 and 01:00 internals .... It would take a closing measure of 28.00% for the NYSE's 5-day NH/NL measure to see a 3-box reversal back lower.

Jeff Bailey : 2/7/2008 1:29:25 PM

Why selling of "safest" Treasuries? No/little reward?

Jeff Bailey : 2/7/2008 1:28:37 PM

PHF 8.46 +0.59% ...

Jeff Bailey : 2/7/2008 1:28:15 PM

30-year up 11.0 bp at 4.484% ... went through WKLY R1 as if it didn't exist. It's going 4.538% today.

Jim Brown : 2/7/2008 1:27:12 PM

Important Reader Survey - As we head into 2008, we wanted to take a moment and invite you to participate in a short subscriber survey to help us better meet your needs.

As I'm sure you can appreciate, we have a wide range of traders and investors that trade a variety of stocks, options and futures across various time horizons. What's more, the market has introduced and expanded the use of ETFs and emini futures contracts. We felt it was time to take a quick snap shot of your investment and trading styles and get your thoughts and ideas in order to help us better tailor the content and focus of the Market Monitor.

Please click here: Link

Thank you in advance for your quick response to the attached survey. Your feedback is important to us

Jeff Bailey : 2/7/2008 1:26:57 PM

10-year up 9.3 bp at 3.711% ... probed WEEKLY R1.

Jeff Bailey : 2/7/2008 1:25:51 PM

5-year Yield up 8.9 bp at 2.763% ... best levels of session.

Jeff Bailey : 2/7/2008 1:21:42 PM

Disciplined traders will do the same.

Jeff Bailey : 2/7/2008 1:21:09 PM

For those that have taken computer programming ... computers make desicions based on IF, THEN, ELSE statements.

Jeff Bailey : 2/7/2008 1:20:41 PM

I would now have to think ... INDU/DIA has been STRONGEST under weaker conditions. IF BULL BUYING to be present, then INDU/DIA should lead.

ELSE ... short covering at support levels.

Jeff Bailey : 2/7/2008 1:17:37 PM

INDU traded DAILY Pivot again. Couldn't quite make it above morning high.

Linda Piazza : 2/7/2008 1:13:27 PM

Another improvement in tenor: The SPX has closed a 30-minute period above the 30-minute 9-ema as well as above the former resistance now at 1331.69. That means nothing if those levels can't be maintained on future 30-minute closes, but let's see what happens.

Turning back to the 15-minute chart, I see that the 9-ema has now risen to 1330.58, so short-term bulls would like to see that level maintained on 15-minute closes. The SPX is coming back to test it as I type.

Keene Little : 2/7/2008 1:06:19 PM

After gapping down this morning I see CSCO has now closed its gap, essentially trading at the flat line here. Nice bullish reversal but it will need to get back above 25.30 to negate the bearish pattern and down-channel: Link

Jeff Bailey : 2/7/2008 1:01:52 PM

Only major to NOT trade its conventional 19.1%.

Jeff Bailey : 2/7/2008 1:00:49 PM

$125 Op-Ex?

Jeff Bailey : 2/7/2008 1:00:26 PM

DIA $122.46 +0.16% ... sesssion low was $121.25. Not quite a test of that $121.00 large block level from 1/18/08.

Now sticks its head back above "Bailey Wave" lower channel.

Keene Little : 2/7/2008 12:58:06 PM

If equities can push to new daily highs now, watch for two equal legs up to see if a reversal sets up--SPX 1341, DOW 12285, NDX 1762 and RUT 705.30. The RUT has the most work to do and NDX has already made a new daily high.

Linda Piazza : 2/7/2008 12:52:20 PM

For the first time since about 3:00 yesterday afternoon, the SPX has produced a 15-minute close above the breakdown benchmark. That's another small sign. Now it needs to maintain 15-minute closes above the 9-ema, now at about 1328.70, and it needs to rise fast enough to turn that 9-ema higher.

On the 30-minute chart, it's dealing with resistance at about 1333, resistance that has held on 30-minute closes since about noon yesterday. However, it is above the 30-minute 9-ema, now at 1330.41, so the next step in improvement would be for the SPX to maintain levels above that 30-minute 9-ema into the end of this 30-minute period.

Jeff Bailey : 2/7/2008 12:47:00 PM

DJ- Chile Peso: Ends Weaker Ahead Of Central Bank Rate Decision

Linda Piazza : 2/7/2008 12:44:51 PM

A note of warning: I think I heard early this morning on CNBC that Fisher will be speaking at 1:00 pm ET this afternoon, so in a few minutes. While the round-table discussion dismissed Fisher as a "player" among the FOMC members, some thought his comments could impact the markets, with the consensus being that any impact might be negative. I haven't yet been able to confirm any of this information, but wanted to give you a heads up just in case.

Jeff Bailey : 2/7/2008 12:41:26 PM

Currency: ... Should note that Brazil's currency is "Real"

A noun, not an adjective.

Jeff Bailey : 2/7/2008 12:37:38 PM

RIO $30.166 +0.66% ... almost got back to $32.50 on 02/04/08 (see trade blotter)

Keene Little : 2/7/2008 12:37:02 PM

So much for a further pullback, at least not yet. We've got choppy price action in both directions now so the ultimate direction for the day is still up in the air. If we get a rally to a new daily high then I'll be looking for where the bounce off this morning's low will have two equal legs up--the bulls will want to see those levels exceeded.

Jeff Bailey : 2/7/2008 12:36:43 PM

PBR $111.58 +5.25% ...

Jeff Bailey : 2/7/2008 12:36:00 PM

DJ- Brazil Stocks Reverse Course To Trade Higher; Real Stable

Jeff Bailey : 2/7/2008 12:28:46 PM

I've got 20-DyNet% ... oil -4.78% and unleaded -4.23%.

Jeff Bailey : 2/7/2008 12:27:55 PM

Sunoco Boosts Qtr Div to $0.30/share from $0.275

SUN $58.98 +0.47% ... Tested 19.1% conventional $57.73

Jeff Bailey : 2/7/2008 12:25:57 PM

Pharmaceutical Index (DRG.X) 307.16 -1.80% ... notably weak.

Jeff Bailey : 2/7/2008 12:25:34 PM

CNBC saying WallStreet Journal saying Romney set to withdraw from race.

Linda Piazza : 2/7/2008 12:22:14 PM

"I think I can, I think I can." The SPX closed another 15-minute period at the 15-minute 9-ema, if not quite above it. Now the SPX comes up for yet another test of its breakdown benchmark, now near 1329.40.

I want to emphasize again that these are just small signs we're watching. They're akin to an RSI or CCI reading, sometimes leading the market but sometimes also giving false readings.

Jeff Bailey : 2/7/2008 12:21:48 PM

CME's PnF chart Link

"Bottom" of Dorsey's 10-week trading band $496.

Jeff Bailey : 2/7/2008 12:17:12 PM

Pacholder High Yield (PHF) $8.46 +0.59% ... Should PHF close here, then SEC Yield would be 9.40%

Jeff Bailey : 2/7/2008 12:15:55 PM

Or VALUATION?

Jeff Bailey : 2/7/2008 12:14:58 PM

Why did CME trade that low yesterday? Key level of some sort. Market? Sector?

Jeff Bailey : 2/7/2008 12:11:27 PM

CME same chart as yesterday, but "stacked lower" retracement. Link

Linda Piazza : 2/7/2008 12:09:35 PM

We just saw the first 15-minute SPX close above the 9-ema, now at about 1326.50, but the SPX remains beneath the breakdown benchmark, now at 1329.35, and the 9-ema is flat, not climbing, so there's not a lot yet on which to hang hopes for improvement. Just something that's better to see than not to see. We need to see a 15-minute close above that benchmark.

Keene Little : 2/7/2008 12:07:21 PM

The little bounce over the past 30 minutes looks corrective and leads me to believe we're going to see another drop lower.

Jeff Bailey : 2/7/2008 12:01:11 PM

Remember the "2 level close" technique? Once a close above/below SHOULD NOT be able to hold a CLOSE 2-levels above/below.

Use your "Bailey Wave" observation from yesterday. RISK/REWARD.

Jeff Bailey : 2/7/2008 11:53:23 AM

You know have I've taught you the "stacked retracement" technique?

Jeff Bailey : 2/7/2008 11:52:49 AM

CME $529.13 +9.04% ... juust back above what would have been your 0% conventional.

Trader's trick ... add a -19.1% and -38.2% to CME.

Jeff Bailey : 2/7/2008 11:51:00 AM

JC Penney (JCP) $47.48 +8.62% .... 38.2% conventional. Session high was $48.69.

Keene Little : 2/7/2008 11:37:30 AM

CME update: after dropping sharply yesterday, CME has bounced today and looks like we hould see a correction of the 2-day drop. The price pattern could be set up for a little volatility for the rest of the month before heading much lower again: Link . Any rally back above its broken uptrend line from April 2005, currently near 580, would negate the bearish wave count.

Jane Fox : 2/7/2008 11:37:01 AM

And here are how the cash markets are trading in relation to their previous day highs and lows. Link

Jeff Bailey : 2/7/2008 11:35:51 AM

Sheeeeooooot .... DXY's WKLY R2 76.62 ... computers in control

Jeff Bailey : 2/7/2008 11:35:04 AM

GG $34.81 -1.36% ... 50% conventional (1/14/08 high to recent 01/22/08 low). Sits on WKLY S2

Jane Fox : 2/7/2008 11:34:17 AM

Here are the overnight charts and how the markets are trading in relation to the overnight highs and lows. Link

Jeff Bailey : 2/7/2008 11:32:17 AM

US Dollar Index (DXY) alert! 76.69 +0.72% (30-minute delayed) ... 50% conventional.

Jeff Bailey : 2/7/2008 11:30:56 AM

OK ... seeing VIX.X sitting smack on its MONTHLY Pivot (28.26) so far today.

Jeff Bailey : 2/7/2008 11:30:03 AM

Obviously we observed some type of technical buying in SPY/RUT.X at conventional 19.1% .

Jeff Bailey : 2/7/2008 11:29:10 AM

VIX.X 28.84 -0.44% ...

Jeff Bailey : 2/7/2008 11:28:52 AM

Where's the heavy OI on SPY for Feb?

Linda Piazza : 2/7/2008 11:28:41 AM

Tentative, light support for the SPX at about 1324.60 is sort of holding on 15-minute closes. The SPX closed jsut beneath it in the last 15-minute period. However, values are being pressured lower by that breakdown benchmark now just above 1330, and so the SPX must begin producing sustained 15-minute closes above that benchmark before we believe much has changed: Link

Jeff Bailey : 2/7/2008 11:27:09 AM

Remember! Next Friday is February OP-Ex.

Jeff Bailey : 2/7/2008 11:26:47 AM

OK ... January 18th was January OP-Ex.

Jeff Bailey : 2/7/2008 11:25:58 AM

On January 18, the SPY was falling and at the time the recent "inflection low" from your 0% conventional was not yet known. However, you will now note 19.1% marks that day's close. We're there now.

Jeff Bailey : 2/7/2008 11:24:09 AM

11:00 Internals found at this Link

01/18/08 Internals at this Link

Linda Piazza : 2/7/2008 11:08:20 AM

On the SPX's 30-minute chart, the potential downside target is now at 1305.76. The SPX has not been able to maintain 30-minute closes above the 30-minute 9-ema, with that now at 1330.75. The SPX is at 1326.69 as I type.

Keene Little : 2/7/2008 11:07:11 AM

After a bit of a volatile morning things have quieted down and the market hovers around the flat line. I agree with Jeff (mark that on your calendar--wink) that this morning's highs and lows are important--play the direction of the break of either.

Linda Piazza : 2/7/2008 11:06:24 AM

There's some slight improvement in the SPX from a Keltner standpoint, but the SPX remains in breakdown mode on the 15-minute chart. Potential support near 1325.10 on 15-minute closes may be strengthening, with further support circling up near 1318.30. The 9-ema is flattening. But the SPX needs to make it above that breakdown benchmark on 15-minute closes and sustain values above that. That benchmark is now at 1330.74.

Jeff Bailey : 2/7/2008 11:04:38 AM

Morning lows and highs at RUT and SPY look important now.

Jeff Bailey : 2/7/2008 11:04:16 AM

About as squared up as it could be at the big board ... A/D 1464:1460 ... TRIN 1.01

Jeff Bailey : 2/7/2008 11:00:36 AM

BP Under "Full Investigation" For Jan Texas City Refinery Fatality ...

BP $62.90 -1.27% ...

Jeff Bailey : 2/7/2008 10:58:39 AM

MBIA Inc. (MBI) $14.72 +3.08% ... 19.1% conventional at $18.64.

Jeff Bailey : 2/7/2008 10:57:07 AM

Bank Of America Held 7.06% Ambac Stake As of Dec. 31

BAC $43.07 +1.70% ... 50% conventional right here.

ABK $11.30 +3.38% ... 19.1% conventional at $17.63.

Jeff Bailey : 2/7/2008 10:49:48 AM

Yahoo Talks With Google Intensify ... DJ- Yahoo Inc.'s (YHOO) negotiations with Google Inc. (GOOG) have intensified as Yahoo Chief Executive Jerry Yang races to find alternatives to Microsoft Corp.'s (MSFT) takeover offer, a person familiar with the matter said Wednesday, The Los Angeles Times reported on its Web site Thursday.

Former executives say Yahoo has long considered turning over its search advertising business to Google, according to the report. Doing so would mean that Google would place paid ads on Yahoo search pages, and the two companies would share the money generated. That would dramatically increase revenue and cut costs for Yahoo, according to the report.

Linda Piazza : 2/7/2008 10:46:16 AM

The SPX's 15-minute 9-ema is now at 1328.75. It's testing lower support at about 1326.25. Those hoping for improvement would rather not see the SPX close this 15-minute period below the midpoint of the 10:00 15-minute candle. That midpoint is at 1325.23. The SPX is at 1326.52 as I type, but remember that these levels I'm pointing out are just short-term, early signs. They're showing you what's being attempted, but you should not rely on them as showing the longer-term picture.

Jeff Bailey : 2/7/2008 10:44:02 AM

US Dollar Index (DXY) 76.56 +0.54% (30-minute delayed) ...

Keene Little : 2/7/2008 10:42:21 AM

The DOW and SPX have dropped back down below their downtrend lines from Monday which is a warning that the bounce might not hold. But if the current pullback is followed by another push higher then it will look good for a bottom for now. It's still a little iffy for either direction.

Jeff Bailey : 2/7/2008 10:42:30 AM

Treasury's Paulson: Extending Unemployment Would Send "Wrong Signal"

DJ- Extending unemployment benefits now would send the "wrong signal" to financial markets, U.S. Treasury Secretary Henry Paulson said Thursday before the House Ways and Means Committee.

According to the most recent data, nationwide the unemployment rate is 4.9%. By comparison, during the last recession, lawmakers waited until unemployment had grown to 5.7% before voting to give unemployed workers and extra 13 weeks of unemployment benefits.

"I understand there are different levels of unemployment in different states, (but) 4.9% unemployment is low by any historical standard," Paulson said.

Paulson said it would be a mistake to extend benefits given that average.

"I just think the signal we send to the world...is the wrong signal," he said.

Jeff Bailey : 2/7/2008 10:39:21 AM

EIA Weekly Nat. Gas Storage Table at this Link ... Draw of 200 Bcf

Jane Fox : 2/7/2008 10:38:22 AM

VIX is in sync with the S&P futures today. I like it when the VIX and ES are in sync - it makes my trading a whole lot easier. Link

Linda Piazza : 2/7/2008 10:30:41 AM

There has of course been a first 15-minute close above the SPX's 15-minute 9-ema, but the 1334-1335 level is indeed proving problematic as the SPX has punched above but is now back below it. The 15-minute 9-ema is now at 1329.47, so those hoping for continued improvement in tenor want to see that maintained now on 15-minute closes as a second sign. The breakdown benchmark on this chart is now at about 1332.20 and a third step would be prices maintained above that. This is all still iffy. The SPX is at 1331.72 as I type.

Jane Fox : 2/7/2008 10:26:46 AM

Ok here is where things are started to get interesting. The SPX has now retraced 61.80% of the rally from yearly lows and is testing the lows from January 28th. I suspect a rally from here and where that next swing high ends will be very telling. Link

Jeff Bailey : 2/7/2008 10:22:28 AM

YHOO $28.82 +0.94% ...

GOOG $509.75 +1.62%

MSFT $28.46 -0.21% ...

Linda Piazza : 2/7/2008 10:22:23 AM

Already this morning, the SPX has traded in a more-than-20-point range. Amazing. If you're good at scalping, you can make tremendous amounts of money in this market. If you're great at scalping, but not so good at trade management, you're still going to lose big. You can have a 80/20 win/loss split in terms of the number of winning trades versus losing ones, but if you let your losses get too big in this market, they're going to eat up everything you made in all those winning trades plus some.

Jeff Bailey : 2/7/2008 10:21:12 AM

CNBC reporting that YHOO and GOOG talks intensifying.

Linda Piazza : 2/7/2008 10:19:19 AM

Here's that 1334-1335 zone that I mentioned earlier. I wouldn't be surprised to see some consolidation near here as it's a key short-term level . . . but even as I type the SPX is punching above that, to 1336.58 currently.

Next resistance is near 1340-1342.

Jeff Bailey : 2/7/2008 10:19:17 AM

Airline Index (XAL.X) 38.60 +3.51% ... back above 50% conventional. Highs of 2008 here.

Linda Piazza : 2/7/2008 10:17:27 AM

When the SPX punched higher, it punched right up to the 30-minute 9-ema, with that now at about 1332.50. Remember that it's got to maintain 30-minute closes above that moving average as a first step in erasing the 1307-ish downside target. It's got to do more, though: it's got to gain enough that it turns the 9-ema higher again, and then it needs to start bouncing from that 30-minute 9-ema. I'll mostly be watching the 15-minute chart today because it gives quicker signals, but we shouldn't forget this chart, either.

Keene Little : 2/7/2008 10:16:40 AM

A good short term downtrend line to use now, looking at the DOW and SPX is the one from Monday afternoon--the DOW rallied up to its downtrend line and has pulled back a little. SPX stopped just short of its downtrend line. A pullback here followed by another push higher (could be happening as I type) should break those downtrend lines and would be a good signal that the leg down from Monday can be counted complete and I'd be looking to buy pullbacks from there.

Linda Piazza : 2/7/2008 10:10:51 AM

The SPX is above the 15-minute 9-ema, of course, but hasn't yet closed a 15-minute period above it. I know that both Keene and I (without consulting each other, by the way) have been on the lookout for a potential flush out this morning followed by a bounce (or at least a bounce attempt, on my part), but I still must caution that this bounce isn't a proven entity yet.

Still, you just can't second guess things too much these days because a "big" range today means a whole different thing than a "big" range a year ago. If your stops are hit, you just have to honor them because the SPX can and does swing wildly from one direction to the next these days. And then if things turn around again and you could have made another thousand dollars or lost a thousand dollars less, you have to tell yourself that in the long run, proper trade and account management are going to be more important than this loss or lost opportunity.

Keene Little : 2/7/2008 10:08:08 AM

Big reversal back up now. Buy programs across the board has started short covering and now we'll see if it can get some follow through.

Jane Fox : 2/7/2008 10:08:07 AM

AD line started at -1159 but is now +254

Jeff Bailey : 2/7/2008 10:06:48 AM

Russell 2000 Index ($RUT.X) 694.72 +0.32% ... buyers present at 19.1% conventional.

Jeff Bailey : 2/7/2008 10:05:17 AM

BG Group profits up 25%, ups Brazil field estimate ... MarketWatch Story Link

That's a pretty large revision to field reserves.

Linda Piazza : 2/7/2008 10:04:30 AM

Normally, if you're in bearish OEX trades, your task is easy, as I've noted before once a trend is in place. (In fact, last weekend's Trader's Corner article dealt with picking a benchmark and following it with your stops.) Depending on whether you're in a quick scalping play or in a longer-term trade, you'll want to monitor different benchmark levels. However, if you're looking for the first sign of even minor improvement, you'll at least be watching the 15-minute 9-ema, whether or not you align your stops with that particular benchmark. That's now at 1326.84 for the SPX, with further resistance at 1328.06. Because of the quick move down this morning, that's still quite a distance away from the low of the day, giving up a bit of profit even to see this first benchmark test, so decide if you want to do that. Decide quickly.

Jeff Bailey : 2/7/2008 10:02:20 AM

Petrobras Inaugurates First Bi-fuel Plant ... Press Release Link

PBR $108.13 +1.99% ...

Jeff Bailey : 2/7/2008 9:55:54 AM

Russell 2000 Index (RUT.X) 688.39 -0.59% ... slips below 19.1% conventional.

Linda Piazza : 2/7/2008 9:55:56 AM

The SPX is now below the weekly 200-ema but is still above the weekly 200-sma.

The 15-minute 9-ema is now at about 1328.80.

As noted earlier, the target shown on the 30-minute Keltner chart is now near 1307. In Keltner terms, that will remain a potential target until and unless the SPX maintains 30-minute closes above the 9-ema on that chart, with that now at 1332.54, but maintain some slight skepticism about it, as a relief rally could occur at any time due to the sometimes-seen Thursday-before-opex activity.

Jeff Bailey : 2/7/2008 9:54:58 AM

SPY $131.77 -0.96% ... slips below 19.1% conventional.

Linda Piazza : 2/7/2008 9:49:51 AM

Here's another benchmark to watch: As might be imagined, while the SPX is in breakdown mode on its 15-minute Keltner chart, the VIX has moved into breakout mode, in opposition. For the first sign of any change in tenor in the VIX, it will need to maintain 15-minute closes beneath its climbing 9-ema, with that now at about 28.80. It will remain in breakout mode on that chart until and unless it maintains values beneath about 28.40. The VIX is at 29.36 as I type.

Linda Piazza : 2/7/2008 9:46:05 AM

And neither the SPX nor the advdec line are so far maintaining their pushes higher. The advdec line is now at -602. It's still not as negative as I would expect on a day like today, but it's definitely not breaking through that overhead resistance on this 15-minute period anyway. Sorry, those of you in the 1300/1290 SPX bull put credit spreads. I'm not in them, but I was certainly pulling for you to see early and immediate SPX gains to ease some of the worry and erase that potential downside target on the 30-minute chart.

Keene Little : 2/7/2008 9:44:41 AM

Futures got a big rally off their pre-market lows and now we're left to wonder whether or not the lows will be tested. It's a common enough occurrence to be cautious about the long side until we see what kind of pullback we get.

Jeff Bailey : 2/7/2008 9:42:32 AM

Intl. Business Machines (IBM) ... $101.42 -2.12% ... slips below 19.1% conventional.

Linda Piazza : 2/7/2008 9:41:56 AM

Wow, look at the advdec line go! It's climbed all the way into that Keltner resistance zone that I mentioned in my 9:35:31 post, but it hasn't broken free of it or maintained a 15-minute close above it. As a first step, a 15-minute close above about -60 would be good, but the advdec line needs to eventually get above about +300 to +400. It's at 38 as I type, having fallen back while I was typing from the 184 high.

Linda Piazza : 2/7/2008 9:39:29 AM

For the first, slightest sign of improvement, the SPX needs to being producing 15-minute closes above the 9-ema on that chart, now at 1331.49, but it really needs to punch above and stay above about 1334-1335, as I noted earlier.

For the OEX, the analogous figures are the 15-minute 9-ema at 616.41 for the slightest improvement and a need to maintain about 618-619 for even a slightly more believable sense that the tenor was improving.

Keene Little : 2/7/2008 9:36:19 AM

NQ has a big bounce off its morning low. It's currently the weaker index but has the best recovery so far off the pre-market lows.

Linda Piazza : 2/7/2008 9:35:31 AM

Keltner outlook on the advance/decline line: The advdec line is not yet as negative as one would expect with futures as low as they were, but it's early. The advdec line is at -675 as I type, testing light Keltner support on 15-minute closes. Next potential support is at about -1150; next resistance begins at about -300 but extends up to about +300. Obviously those who want equities to steady want to see the advdec line steady and rise up to test and then push through that next resistance.

Linda Piazza : 2/7/2008 9:32:39 AM

For a first benchmark of any slightest improvement at all, the 15-minute 9-ema for the SPX is now at 1330.77, but of course continuing lower as I type. The SPX is now at 1322.11, hitting the weekly 200-ema.

Jane Fox : 2/7/2008 9:28:37 AM

Crude seems bent on confirming its head and shoulders and that is never a good sign for Goldbugs. Link

Jane Fox : 2/7/2008 9:27:35 AM

Gold looks to have found resistance at its January 14th swing high but the question is, will it retrace to breach the February 5th swing low and build a head and shoulders like Crude is doing or will that swing low be a higher low and Gold rallies to new yearly highs. I am betting on the latter and have a long position with the ETF, GLD. Link

Linda Piazza : 2/7/2008 9:27:03 AM

Futures action shows weakness this morning, of course, exacerbated by Wal-Mart's same-store sales figures. For a long-term view, I wanted to point out that the SPX's 200-week ema is now just over 1322; the 200-week sma at 1294.73.

As of the close, the SPX was in breakdown mode on its 15-minute chart, so we can presume resistance at the marker for that breakdown mode, especially since the SPX spent some time consolidating just above it and then retesting after it broke down. Currently, that's at 1333.68, and I'd need to see the SPX maintaining values above about 1334-1335 before I thought there was any improvement in tenor.

Rolling up to the 30-minute chart to get a potential downside target now that the SPX is in breakdown mode on the 15-minute chart gives a potential downside target of about 1307.50. I hesitate to believe in any targets too strongly on a Thursday before opex week. Those can be trickster days, days in which big money flushes out market participants in an early move and then sets up their own plays. However, if one anchors a Fib bracket at the 2/1 high and the 1307 level, the 50% level comes at about 1351.30, an approximate locus for a lot of highs, lows, opens and closes of 30-minute candles, so it's a target we can't completely discount, either. As long as the SPX maintains 30-minute closes beneath the 30-minute 9-ema, now at 1334.48, that potential target is maintained.

Clearly, then, the 1334-1335 zone becomes an early benchmark. That benchmark will change as the day progresses, but if there should be an early dip and then an immediate bounce, you're going to want to see the SPX maintaining values above 1334-1335 before you believe too strongly in that bounce. I'll follow up with updates as the markets open and those benchmark levels change.

Keene Little : 2/7/2008 9:21:26 AM

Equity futures rallied into positive territory last night until the European markets opened. Since then it was a steady decline to an early morning low with ES giving up 25 points from high to low. That's a big move. They're off their early-morning lows but we'll start the day with a big gap down. Just be careful of the flush and reversal.

Jane Fox : 2/7/2008 9:21:08 AM

I was watching the futures at the open of the overnight session (4:30ET) and saw a great big green candle building and thought, "The market liked the Cisco message." I walked away for awhile and when I got back the great big green candle had turned to a great big red candle. The market is so fickle.

It looks like the bulls were able to regain some of that "great big red candle" but then lost it again and made new overnight lows.

No market is above its previous day lows and that is always bearish. Link

Jane Fox : 2/7/2008 8:59:53 AM

NEW YORK (MarketWatch) -- Forget about gift-card use that pushed holiday sales into January or retailers' appetizing clearance sales.

With consumers worried about their wallets, retailers may be about to report the industry's worst January sales numbers on record.

U.S. chain-store sales in January are expected to be flat and even decline from a year earlier, according to the International Council of Shopping Centers.

By either measure, that would be the worst reading, unadjusted for inflation, since 1969 when ICSC began to compile the data, according to ICSC's chief economist, Michael Niemira said.

ICSC already lowered the January forecast twice from an original estimate of a 1.5% gain during the month, Niemira said.

"It's an economic blizzard that seemed to be weakening demand," Niemira said. "The story of recession seemed to be in every daily newspaper.

It just starts to increase the worry level. As the uncertainty got worse, the consumers' unwillingness to spend seemed to get worse."

Still, some retailers are expected to fare better than others even as retailers across the board are expected to be impacted by consumers faced with higher gasoline prices and food costs as well as declining housing and mortgage markets, analysts said.

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