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Jeff Bailey : 2/26/2008 2:36:45 AM

S&P 500 (SPX.X) 60-minute interval chart Link

Same conventional retracement I've been showing. "Wave #1" identifies "bull alert" from January low to early February high. "Wave #2" identifies reversal back to "bear confirmed" with "Wave #3" under construction.

Jeff Bailey : 2/26/2008 2:22:50 AM

Bull Alert! ... Monday's action finds Dorsey Wright & Assoc. S&P 500 Bullish % (BPSPX) reversing back up to "bull alert" status at 36.00% (36.15% actual). Link

A close above 1,349 on Wednesday would confirm a 3rd "wave" move higher to 1,387-1,390.

Keene Little : 2/26/2008 1:35:25 AM

Tuesday's pivot tables: Link and Link

Looking at SPX I've found 3 different Fib retracements/projections that point to 1379 as a potentially important level if the rally continues a little higher on Tuesday. First, using the 30-min chart I'm showing where the 127% Fib projection off the previous decline (from last Thursday's high to Friday's low) is located just under 1379. This is just above the top of a parallel up-channel for price action since the Feb 7th low (possible bear flag pattern): Link

I'm also showing a potential rising wedge for the rally off Friday's low. The 3-wave moves for each of the two legs up so far have me thinking this is the correct pattern. It needs a pullback early Tuesday and then a final high (as depicted in dark red). It then calls for a steep decline to follow so I'll be watching this for a short play to set up.

The 78.6% Fib retracement of the Feb 1-7 decline is also just under 1379 and then two equal legs up from the Feb 7th low is just over 1379. These are highlighted in yellow on this 60-min chart: Link . If the rally continues beyond 1379 then the next Fib cluster (not as tight) is 1411-1417.

The daily chart shows, with the dark red count, the possibility for a minor new high followed by a continuation of the decline: Link . There are a few possibilities from here but the other one that has some merit, as shown in pink, is for a continuation of the sideways triangle pattern into early March before getting another leg up into March opex and a possible run to 1460. That scenario would become more likely the longer we see price chop sideways.

So first up will be a shorting opportunity if price rallies a little more on Tuesday (after a pullback) and stalls around 1379. If price keeps rallying then ride with the bulls up to the 1411-1417 area.

OI Technical Staff : 2/25/2008 9:59:59 PM

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

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Jeff Bailey : 2/25/2008 6:13:24 PM

Closing U.S. Market Watch found at this Link

April Crude Oil settled up $0.42, or +0.43% at $99.23.

April Unleaded settled up $0.0091, or +0.34% at $2.6854.

Jeff Bailey : 2/25/2008 5:15:06 PM

MBIA Eliminates Quarterly Dividend To Preserve $174 Million ... Press Release Link

Jeff Bailey : 2/25/2008 5:13:50 PM

MBIA $14.35 x $14.40

Jeff Bailey : 2/25/2008 5:13:28 PM

MBIA Inc. (MBI) $14.58 +19.70% ... ticking $14.49 extended.

Jeff Bailey : 2/25/2008 5:10:53 PM

CNBC reporting MBIA (MBI) has cut dividend.

Jeff Bailey : 2/25/2008 4:58:35 PM

Closing Internals found at this Link

Jeff Bailey : 2/25/2008 4:41:44 PM

EIA: US Retail Gasoline +8.8C In Week To $3.13/Gal, Most Since 6/04/07

DJ- The national average retail price of regular gasoline rose 8.8 cents a gallon to $3.13 a gallon in the latest week, the Energy Information Administration said Monday.

Prices were at the highest level since June 4, 2007, and were 74.7 cents above a year ago. The price jump comes as crude oil prices continued to trade near $100 a barrel after topping that level with record highs a week ago that also sent gasoline futures prices to record highs.

Gasoline stocks nationwide are the most since February 1999, but high crude prices have the biggest impact on gasoline prices.

East Coast gasoline prices jumped 10.2 cents in the week to $3.148 a gallon, the highest since Sept. 5, 2005, just after Hurricane Katrina disrupted supplies from key Gulf Coast refineries. Prices in the lower Atlantic region were a record high at $3.153 a gallon and 84.2 cents above a year ago. Gulf Coast prices were the most since May 28, 2007, while prices in other regions hit their highs since December 2007 or even more recently.

National average prices have risen 5.7%, or 17 cents a gallon, in the past two weeks.

EIA's gasoline price survey is collected through a telephone sampling of approximately 900 retail gasoline outlets.

East Coast +10.2c Vs. Week Ago @ $3.148
Midwest +3.4c Vs. Week Ago @ $3.08
Gulf Coast +11.5c Vs. Week Ago @ $3.056
Rocky Mountains +9.2c Vs. Week Ago @ $3.051
West Coast +12.8c Vs. Week Ago @ $3.265
California +13.7c Vs. Week Ago @ $3.328.

Keene Little : 2/25/2008 4:06:16 PM

Here's the updated SPX 60-min chart with the dark red wave labels calling for an end to this bounce here or slightly higher (1379) before it heads lower again: Link

Keene Little : 2/25/2008 3:58:26 PM

I haven't updated the potential dark red wave count on the SPX 60-min chart--wanted to get it posted before the close to show resistance just above (in case we get an immediate reversal tomorrow morning).

Keene Little : 2/25/2008 3:56:33 PM

The updated SPX 60-min chart shows a break of its downtrend line from Feb 1st and now heading for the top of a potential parallel up-channel (bear flag?) from the Feb 7th low, currently just under 1377. Right above that is the Fib level near 1379 for two equal legs up in the bounce off the Feb 7th low, and if it can break above that level then the 1411 level would be in play. Link

Linda Piazza : 2/25/2008 3:49:23 PM

Here's the test of the top of the SPX's triangle on its daily chart. In fact, I believe that although this is the level I eyeballed this morning, the SPX is actually a little over the top of that triangle. (SPX at 1372.20 as I type.) It's probably closer to 1369, so bulls don't want too big a pullback in the last few minutes of trading.

I also began questioning late last week whether a triangle breakout either direction would mean as much as I once thought it would, so when you hear me question it now, you'll know that I'm not just changing my tune based on something I see today. The triangle is now narrowing all the way to its apex and prices tend to break out of valid triangles about 2/3 of the way through. When they narrow almost to their apex, any price movement at all is a breakout or appears to be. So, temper your expectations with this triangle breakout. As I always do this time of day, I warn you to assess how much risk you have on the table and whether you want to hold that much risk overnight.

Keene Little : 2/25/2008 3:47:55 PM

I'm watching ES here and the move to a new high just reached the level where it is 127% of the drop down from the 2:30 high, at 1375.25. This level is important because the bounce to a new high could be part of a larger downward correction unless it can get past the 127% level. The bulls need to keep this rallying going into the close.

Jeff Bailey : 2/25/2008 3:46:38 PM

DIA $125.72 +1.55% ... tries to pull free of WKLY R1.

Jeff Bailey : 2/25/2008 3:46:10 PM

Altria (MO) $74.21 +0.82% ... takes a look at WEEKLY R1/Conventional 38.2%.

Jane Fox : 2/25/2008 3:42:42 PM

The internals are quite bullish. Link

Jane Fox : 2/25/2008 3:39:34 PM

Dateline WSJ - U.S. economic growth will slow to a crawl during the first half of this year, and inflation will continue to rise, according to a survey of economists scheduled for release today.

The latest quarterly survey by the National Association for Business Economics shows 55% of respondents expect the U.S. to avoid a recession. But they expect the nation's gross domestic product to grow at an annual rate of just 0.4% in the first three months of 2008, followed by a 1% pace in the second quarter.

Of the 45% who predicted the U.S. will enter a recession this year, most expect a "short and shallow" downturn. Only a few are projecting a "deep, protracted slide in economic activity."

Despite the slowing economy, the forecasters raised their inflation estimates. At the end of 2008, they expect consumer prices to increase 2.5% from a year earlier. And they predict a key gauge of prices that excludes food and energy will rise 2% during that time.

The survey of 49 forecasters took place from Jan. 25 to Feb. 13, the association said.

Most of the economists expect the Federal Reserve to lower the target for its benchmark interest rate to 2.5% from the current 3% by the end of the year. Many also believe that the government's fiscal-stimulus package will help spur faster growth in the second half of 2008.

The forecasters expect home prices, as measured by the Office of Federal Housing Enterprise Oversight, to drop 4% this year, the first such decline in the index's history. They also expect consumer spending to grow by just 1.8%. Most say credit availability will limit growth but don't expect a major crunch. They predict GDP will grow 2.9% over the course of 2009.

Jane Fox : 2/25/2008 3:37:54 PM

Economic Reports for tomorrow include:

8:30a.m. Jan Producer Price Index. Expected: +0.4%. Previous: -0.1%.

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

10:00a.m. Feb Conference Board Consumer Confidence. Expected: 80.5. Previous: 87.9.

10:00a.m. Feb Richmond Fed Manufacturing Index. Previous: -8.

Keene Little : 2/25/2008 3:35:38 PM

Pushing back up towards the spike highs but if the rally doesn't keep going then the retest will leave bearish divergences on the charts. So bounce looks like a correction so far which points to a failure of the test.

Linda Piazza : 2/25/2008 3:33:02 PM

The MID might have hit a new high, but the SPX hit 30-minute resistance. It's still not breaking out, with that resistance now at 1369.25 on 30-minute closes.

Linda Piazza : 2/25/2008 3:31:51 PM

Another clarification about my 2:48:07 comment that "I've always been taught to be concerned when there's a breakout above a key level and then volatility expands." There are many ways to talk about volatility, but I wasn't talking about the VIX. I was talking about the way that as soon as prices broke above the flag formations, price bars widened both to the upside and the downside. However, my concern appears to be misplaced and what I've been taught led to useless worries, as here are markets performing well. The MID, that index I've been watching today, has just hit a new high of the day.

Jeff Bailey : 2/25/2008 3:30:48 PM

Looking for a short squeeze on MBI above the "warrant $16.20."

Jeff Bailey : 2/25/2008 3:29:33 PM

MBI $15.16 +24.05% ...

Jeff Bailey : 2/25/2008 3:29:13 PM

Swing trade call alert! ... for one (1) of the MBIA Inc. MBI May $15.00 Calls (MBI-EC) at the offer of $2.70.

Jane Fox : 2/25/2008 3:26:39 PM

DOW is breaking through its downward trendline as well. Go bulls go!!!! Link

Jeff Bailey : 2/25/2008 3:26:30 PM

In my opinion, based on the work we did for the MBI convertible, today's news out of S&P is analagous to a "stay of execution" for MBI. At least in regards to May $7.50 puts.

Jane Fox : 2/25/2008 3:25:01 PM

Oh my goodness SPX is now peaking above its downward trendline. This is a good sign but it has a looonnnngggg way to go yet. But you know the old saying, "Rome was not built in a day." Whatever that means. :) Link

Linda Piazza : 2/25/2008 3:22:51 PM

In my 9:26:34 post this morning, I said that "in normal times, I would have expected the SPX to even jump up to test the top of its triangle on its daily chart, with the top of that triangle now at about 1372-1374, if I'm eyeballing it correctly." The SPX is approaching the top of that triangle, but an arduous and strange path it's taken to get even this high today. In that early post, I was concerned about the way the futures were reacting to strength in global bourses, and during the day, there's been reason to be concerned about the way the SPX gets flattened every time prices peek above breakout levels. These bulls are not giving up, however, and the SPX currently rises again toward what should be important Keltner resistance near 1368.75. It's already back at 7-minute Keltner resistance, nudging it higher but not able to break out above it, and I'm just not sure at this point whether the obvious strength of the sellers or the never-give-up attitude of the buyers today is going to ultimately win the day.

Jeff Bailey : 2/25/2008 3:21:30 PM

03:00 Internals found at this Link

Linda Piazza : 2/25/2008 3:05:06 PM

You've gotta say this for the bulls today: they are not giving up. Every time there's selling that knocks them down, they jump right back up. Both the 7- and 30-minute charts suggests that they've got quite a job ahead of them to break through the about the 1368.50 level on the SPX and about 630 on the OEX, however.

Linda Piazza : 2/25/2008 3:02:54 PM

A subscriber asked me to clarify my comment about being taught to be concerned when volatility expands immediately after a breakout. What I meant was what the subscriber surmised: the breakout may be a false one.

Linda Piazza : 2/25/2008 3:01:06 PM

I entered my March credit spreads beginning January 25. I originally had 108 contracts, all 10-point spreads, on the SPX, OEX and RUT. I had more bear call spreads than bull put ones (70 bear call versus 38 bull put) just because of my market bias at the time I was putting those on, so didn't have full iron condors on all positions. Some were unmatched bear call spreads. I had $78,000 margin held against those, so brought in a 3.7% return on my margin held by the time that I paid commissions, so I guess it's not a terrible result, but I sure liked the higher returns better. I keep noting this because this is one of the drawbacks of closing out credit spreads early for $0.15-0.20. Your earnings will be lower, which is of concern for those of us who are aleady eking out small monthly income against our margin held. It's something to consider when you're deciding how you want to manage your trades, particularly those trades that can be hard to manage when they start going wrong. I'd rather do my managing when they're going right, but it's a decision that is different for each of us traders.

Keene Little : 2/25/2008 2:58:28 PM

SPX could not have come much closer to taking out the key level to the upside--1369.23 on Feb 13th. The high of that spike was 1369.18. The DOW's spike fell short of its 2/13 high at 12572 by points.

Jeff Bailey : 2/25/2008 2:56:38 PM

MBIA / S&P Ratings ... Reuters Story Link

Jeff Bailey : 2/25/2008 2:55:18 PM

S&P Takes MBIA's top "AAA" Rating Off Credit Watch

Jeff Bailey : 2/25/2008 2:54:32 PM

Swing trade put(s) exit alert! ... for the two (2) MBIA Inc. MBI April $7.50 Puts (MBI-QU) at the bid of $0.70.

MBI $13.986 +14.61% ...

Linda Piazza : 2/25/2008 2:53:13 PM

I was able to close out the last of my March credit spreads today, keeping 60% of my original credit, which is how I'm handling locking in my profit during this current market environment. I closed 15 contracts of MAR 1130/1120 bull put credit spreads for $0.20. I'm sure not liking the lower total earnings when I close them out for 60%, as I'd prefer 80%, but I'm certainly liking taking the risk off the table early and locking in my profit. Anyway, I mention it for the same reason I have so many other times lately--others have asked me to do so.

Keene Little : 2/25/2008 2:48:12 PM

The Roman candle on NDX has now been retraced and there's overlap with the previous high in its bounce off today's low. Just more chop and whipsaw. If you're in a position in this market you literally can't afford to look away. And there's a good chance your stops are going to get hit no matter where you place them. There are much better times to trade than this. Keep your powder dry until this log jam breaks (some time this week).

Linda Piazza : 2/25/2008 2:48:07 PM

Sellers clearly still lurk overhead. Will they win or will the buyers? Right now, that's just not clear, but I've always been taught to be concerned when there's a breakout above a key level and then volatility expands.

Linda Piazza : 2/25/2008 2:45:47 PM

Here's that 7-minute chart I showed earlier today for the SPX: Link and for the OEX: Link . Of course, in true trending situation, if the markets begin trending higher, they're going to push the boundaries of a 7-minute chart higher with them, but this is showing the potentially significant resistance being tested, with the SPX and OEX both becoming a bit more volatile after attempting to punch through this.

Jeff Bailey : 2/25/2008 2:43:16 PM

ABK $11.50 +7.37% ...

Jeff Bailey : 2/25/2008 2:42:57 PM

MBI $13.79 +13.13% ...

Jeff Bailey : 2/25/2008 2:42:39 PM

PMI $7.62 +2.69% ...

Jeff Bailey : 2/25/2008 2:42:28 PM

RDN $7.66 +0.39% ...

Jeff Bailey : 2/25/2008 2:42:18 PM

MTG $15.60 +5.40% ...

Keene Little : 2/25/2008 2:39:40 PM

And now coming right back down again. The shorts really are their own worst enemy. But it now takes a break below this afternoon's low to turn the price pattern at least a little more bearish. The break above this morning's high puts the DOW and SPX on a bullish path until proven otherwise.

Linda Piazza : 2/25/2008 2:38:32 PM

I got called away for a few minutes, and I return to see that the SPX has shot higher while I was gone. So has the MID, the former leading-indicator index that had once been leading indices higher. However, the MID, at least, has now shot up to test last Thursday's high of 815.17, with the MID having reached a high of 814.62 today, so if it's stepping in as a leading indicator again, be wary of it having hit potential resistance.

Jeff Bailey : 2/25/2008 2:33:06 PM

MBIA, Inc. (MBI) alert! $14.30 +17.32% ...

Keene Little : 2/25/2008 2:30:20 PM

With SPX and the DOW to new daily highs it certainly looks bullish for a continuation higher now. NDX is pulling up the rear so it's acting as a possible brake for the move. Need to see them join the bullfest. This is one nervous market.

Jeff Bailey : 2/25/2008 2:31:59 PM

Fitch Warns Mortgage Insurers Of Possible Cuts (update)

DJ- Fitch Ratings has put credit ratings of various insurers on watch for downgrades because of continued weakness in the U.S. mortgage markets, especially foreclosures on mortgages backed by subprime and reduced or limited-documentation borrowers.

"Fitch believes a number of the major players in the industry will need to raise significant additional equity in the near future or risk having their ratings downgraded," it said.

The firms facing possible downgrades include MGIC Investment Corp. (MTG), Radian Inc. (RDN) and PMI Group Inc. (PMI)

Fitch said MGIC needs to raise more capital in the next several months or it will cut the rating to AA-. The ratings agency also put Radian's AA- rating on watch for possible downgrade because of its exposure to subprime mortgages. Fitch said Radian lacks enough capital to maintain that rating and is likely to be cut a notch unless it raises more money. Fitch added that PMI needs to raise capital during the next several months or its ratings could be cut up to two notches.

As for Triad Guaranty Capital Inc. (TGIC), which has been facing a downgrade by Fitch, the agency said, "Absent obtaining additional capital resources within a short time frame, it is likely that Fitch will lower" its ratings.

Bond insurers have had to raise billions of dollars in capital to forestall possible downgrades in their credit ratings as worries about the value of the securities they've insured persist. For mortgage insurers, increasing foreclosures mean those firms are on the hook for covering more mortgages. Fitch noted the industry isn't likely to return to "healthy" levels of profitability until 2010.

Keene Little : 2/25/2008 2:28:24 PM

Looks like another little short squeeze move again--all indices hit with some buy programs and now the shorts take over.

Jeff Bailey : 2/25/2008 2:21:16 PM

QQQQ ... Daily interval chart with conventional retracement and bar chart up/down trends Link

On Friday I had asked subscribers to place some trends on their major US equity indexes, and look at them in the context of YOUR economic forecast for 2008.

My (Jeff Bailey's) forecast was for a modest recession in 2008. I'm looking for the QQQQ's UPWARD trend to start finding some significance as it is the only trend I currently have for a bar chart that would depict a reasonable trend for moderate recession.

Following the extendsions of both up and down trend would have QQQQ $53.33 or $35.85 end of December 2008.

Linda Piazza : 2/25/2008 2:09:04 PM

I don't see anything in the SPX's intraday pattern to tell me which way it's going next. I see a potential H&S that set up this morning but was invalidated without the bears even being able to push the SPX back to the neckline when the head started forming. I see that invalidation followed, not by the kind of jubilous gains that we used to see when a bearish formation was rejected, but instead by chopping around near what should have constituted the right-shoulder area. Neither bears nor bulls seem to have the strength to get anything done. I had hoped to see a formation set up that we could watch, perhaps a triangle, but I don't see anything at all with regular-enough parameters to trust any directional predictions or decisions to it. Right now, down looks slightly easier than up for the SPX, but all it takes is a move above about 1356 that is clearly sustained to change that outlook.

Jeff Bailey : 2/25/2008 2:07:17 PM

USGS- Quake Off Indonesia Had 6.7 Magnitude

Jeff Bailey : 2/25/2008 2:06:30 PM

Tsunami Warning Issued After Quake Off Indonesia's Sumatra

Jane Fox : 2/25/2008 1:52:10 PM

Here is a look at the overnight ranges and how the markets are trading in relation to those ranges. NDX futures (NQ) is well below its overnight range whereas the other three are trading within their respective ranges. Link

Linda Piazza : 2/25/2008 1:50:40 PM

Here's something I've been watching this morning. Remember how the MID, the S&P Midcap Index was taking over from the RUT for a while as one of those indices that was zooming higher, leading indices higher? Today, it's been outperforming some other indices on a Keltner basis. It's pulled back off its high, as have many other indices, but it's closed every 15-minute period since 10:00 am ET above the Keltner level now at about 803.90, a level that's analogous to the SPX's 1355.60 level and the OEX's 624.10 level. Something's going on, a divergence, and whenever I see divergences, particularly in indices that once played a leading role, I start paying attention. I don't know what the divergence means yet, but I'm just watching, wondering.

Keene Little : 2/25/2008 1:48:33 PM

With NDX leading the parade back to the downside, and in case it's just going to be more of the same choppy 3-wave moves followed by a reversal, watch for possible support where today's drop will have two equal legs down just under 1760 (NQ 1763).

Linda Piazza : 2/25/2008 1:45:12 PM

I said in my 1:24:02 post that an SPX drop down to about 1351.60 looked about as likely as a climb, and that drop did occur. The Keltner setup now again shows vulnerability to more of a decline, currently down to about 1348, but that same setup earlier did not result in the expected drop. For the OEX, there's vulnerability to about 620-621, and the OEX has already closely approached that potential target and support on 15-minute closes.

Keene Little : 2/25/2008 1:28:44 PM

GOOG is heading lower again and has a price pattern that suggests a move down to at least 450 before bouncing again. Price remains in its down-channel for now and makes me wonder how much NDX can bounce without the high flyers. And without the techs leading the way to the upside I'd stay cautious about any rally attempt. GOOG daily chart update: Link

Linda Piazza : 2/25/2008 1:24:02 PM

Another 15-minute SPX close slightly above a Keltner channel line, but again produced with a small-bodied candle, this time with a long upper shadow and a smaller lower one, too. Bulls can point to the continued closes at or above about 1355.50 as signs that the SPX is breaching that resistance; bears can point to the shapes of the candles and the fact that the SPX isn't building on gains. Me? I just think it's still being tested, without an outcome. A drop down to about 1351.60 looks about as likely as a climb to about 1359.60.

Jeff Bailey : 2/25/2008 1:17:55 PM

01:00 Internals found at this Link

Linda Piazza : 2/25/2008 1:14:02 PM

As I'm typing, I'm watching the SPX jump above and below about 1355.30. It's still testing that Keltner resistance near here, neither clearly breaking out nor pulling back. The OEX is having even more trouble with its analogous resistance, near 624.15 on 15-minute closes.

Linda Piazza : 2/25/2008 1:02:56 PM

The SPX just managed to eke out a close just avoe the next Keltner resistance. This was accomplished on a small-bodied candle with an upper shadow, showing a pullback from the candle's high. I'm not impressed by this "breakout" and you shouldn't be yet, either. It constitutes a test, in my mind and not a clear breakout.

Jeff Bailey : 2/25/2008 1:01:41 PM

Euro Spot Link ... 0.01 box chart. For the DXY, the obvious range is 1.44/1.50.

With euro so close to its bullish vertical count, would have to think the "turn" comes to the downside.

I think there is near-term potential for euro to indeed trade 1.50. US equities "dart lower" for a good lower risk bull entry, retest the lows. Then see euro whip back lower, DXY rally as do US equities.

Keene Little : 2/25/2008 12:55:30 PM

The bounce off today's low has retraced about 38% of the decline off this morning's high. If price stalls here it could set up another leg down.

Jeff Bailey : 2/25/2008 12:49:50 PM

If today were the last day of February, then DXY's MONTHLY Pivot would be 75.80. Not much different than February's 75.83.

Jeff Bailey : 2/25/2008 12:46:00 PM

The dollar index "has to be the trigger" for an equity breakout higher. I'm thinking WEEKLY Pivot/MONTHLY Pivot correlation for now.

If we're going to get the turn, it will likely be early part of March.

Linda Piazza : 2/25/2008 12:34:40 PM

The OEX still looks vulnerable to a drop toward 620.80 if it can't maintain 15-minute closes back above about 623.90 or at least 623.14.

Linda Piazza : 2/25/2008 12:33:04 PM

The SPX did drop to the first level of vulnerability, but has so far found support there (about 1353.06 currently) on 15-minute closes. Until it gets past about 1355 on 15-minute closes and sustains levels above that, it still looks vulnerable to a deeper drop, perhaps even to 1347-1347.20, however.

Linda Piazza : 2/25/2008 12:31:05 PM

Others may have mentioned it already, but I'm noticing that the RUT is dropping more heavily than some other indices, at least on a Keltner basis, during this 15-minute period.

Linda Piazza : 2/25/2008 12:10:37 PM

Vulnerability now on the SPX to 1351.80 or perhaps even 1347 unless the SPX can sustain 15-minute closes above about 1355.50. For the OEX, there's vulnerability to about 622.10 or perhaps even 629.76 unless the OEX can sustain 15-minute closes above about 624.

Keene Little : 2/25/2008 12:00:58 PM

The downtrend line from Feb 1st for SPX, through last Thursday's high, stopped this morning's rally so today's high becomes an important level--break that and there's a good chance we'll see the key level at 1369 get broken as well and that sets up the possibility for a run to either 1379 or 1411 (pink): Link

But so far the rally off Friday's low, as sharp as it is, is only a 3-wave move. In other words it's still just another corrective move inside a bearish consolidation pattern that has formed since the Feb 1st high (and really since the January low). A drop below Friday's low could confirm the very bearish wave count (dark red) that calls for a series of 3rd waves to unfold to the downside.

In the meantime we continue to wait for price to let us know which price pattern is playing out.

Linda Piazza : 2/25/2008 11:50:12 AM

The OEX dropped all the way back to the 15-minute 9-ema, falling beneath that average on the 7-minute chart. Potential support exists now at 623.87 on 15-minute closes and it really is important for short-term bulls that this support hold. If not, the OEX has potential to decline to 622.30 or even 620.77.

For the SPX, those numbers are 1354.69 potential support on 15-minute closes with vulnerability to 1351.80 or even 1347 if that fails.

Jeff Bailey : 2/25/2008 11:41:35 AM

Marathon's Alvheim Oil Vessel Departs Haugesund Dock

DJ- Marathon Oil Corp. (MRO) Monday said its Alvheim floating, production, storage and offtake, or FPSO, ship has set sail from the west Norway town of Haugesund to the deepwater Aamoeyfjord where final work will be carried out to prepare for it to start producing oil and gas.

The Alvheim project is Norway's biggest current oil field development, and will produce around 120,000 barrels of oil a day when it reaches plateau output.

Marathon spokeswoman Emma White said the vessel has sailed to deeper water for thrusters to be fitted and final tests to take place over a two to three week period.

Alvheim, which has been in dock in Haugesund for two years, will then be taken out to sea to start producing and processing petroleum from Kneler A and B, Kameleon and Boa, and satellite field Vilje.

White said there isn't a final sailing date for the vessel to leave Aamoeyfjord, but added that, weather dependent, first oil is likely by the end of the first quarter.

Lifeboat testing has been concluded successfully on Alvheim, and thruster installation has begun. After that, Alvheim will undergo a "stagger test," which checks the pressure of all cargo and ballast tanks to ensure their integrity before the vessel heads out to its final offshore location, Marathon said.

The FPSO will produce at peak capacity within 4-6 months of startup.

The project was originally slated to cost $1.2 billion, but a year's delay has pushed costs up.

Marathon has a 65% stake in the Alvheim project while Lundin Petroleum AB has 15% and ConocoPhillips (COP) 20%. The Vilje field is operated by StatoilHydro ASA (STO) with a 28.85% share, with Marathon holding 46.90% and Total (TOT) 24.24%.

MRO $51.66 +0.21% ...
COP $81.79 +1.46% ...
STO $29.67 -0.80% ...
TOT $75.46 +0.94% ...

Jeff Bailey : 2/25/2008 11:34:51 AM


DJ- A poll reveals that U.S. economists see just about even odds that the U.S. is either already in a recession or will be soon, and expect a "significant" rebound later in the year on a double jolt of fiscal and monetary stimulus.

Jeff Bailey : 2/25/2008 11:34:04 AM


DJ- Service on Google's YouTube Web site was disrupted around the world for several hours yesterday after a botched effort by the Pakistan government to block access to a video clip critical of Islam.

Linda Piazza : 2/25/2008 11:34:04 AM

The SPX's 7-minute 9-ema is now at 1359.09. For the OEX, it's at 625.40. Both are being tested. Short-term bulls would like to see both hold on 7-minute closes and for both indices to bounce back toward resistance tested earlier. When the 15-minute versions have time to catch up, I'll roll back up to the 15-minute charts again. For now, as I warned earlier, just before that last punch into the highs of the days, short-term bulls need to have their profit-protecting plans in order.

Jeff Bailey : 2/25/2008 11:33:19 AM


DJ- Venezuela's oil vice minister says the country will find a way to defeat ExxonMobil in a U.K. court in coming days despite the company's clout, calling the ongoing dispute with Exxon "not a big deal" for either party.

Jeff Bailey : 2/25/2008 11:32:16 AM


DJ- The Organization of Petroleum Exporting Countries is expected to pump around 250,000 barrels a day less in February versus January as some members start to pull in output ahead of the end of winter in main consuming nations.

Linda Piazza : 2/25/2008 11:31:33 AM

Continuing my 11:18:23 post: Kaletsky claims that "[i]n 1982, when Mexico and Brazil defaulted, every leading American, British and European bank effectively became insolvent, with non-performing loans worth more than 100 per cent of equity capital. And most of them, including Citibank, Deutsche, Chase Manhattan, Llods and Midland, remained effectively insolvent until 1988. The situation in Japan in the 1990s was even worse." Kaletsky went on to detail some recent comments by learned people, naming the reasons why this crisis could be the worst. Maybe it is, he concludes. Maybe each is getting worse and there will eventually be a financial apocalypse. But maybe most people involved in the markets have careers spanning 25-30 years, and maybe this crisis is just the worst they've seen. In the past, when markets are rallying and we've heard the "this time is different" cry, we've heard it with disdain, being knowledgeable traders who understand that nothing really changes. Maybe we should incorporate just a little of that skepticism when we hear the "this time is different" cry with reference to the current crisis, too, Kaletsky proposes.

Kaletsky didn't convince me to stop planning my what-if scenarios for a prolonged bearish market with regard to my personal finances. Kaletsky didn't convince me to pile into bullish positions, especially since the commentary was not meant to suggest that "depressions never happen." However, after much research recently, I was about ready to send my husband to the feed store for a bunch of feed sacks (harking back to my grandparents' stories) and then to the bank to withdraw all our money, to store in said sacks! Smile. I think I'll take a few deep breaths instead.

Jeff Bailey : 2/25/2008 11:31:29 AM


DJ- Standard and Poor's updates the ratings on 23 structured investment vehicles, keeping most of them at previous levels as the SIVs' bank sponsors have stepped in of late with liquidity support.

Jeff Bailey : 2/25/2008 11:29:50 AM


DJ- Home-improvement retailer's earnings fall 33% to $408 million, or 28c a share, on continued sales weakness, which the home-improvement retailer expects to persist for several more quarters.

LOW $24.66 +4.53% ...

Jeff Bailey : 2/25/2008 11:28:49 AM


DJ- Citigroup shares drop 1.5% after Oppenheimer drastically cuts its 2008 earnings expectations for Citigroup, saying that illiquid markets will force the banking giant to sell up to $100 billion in assets.

C $24.74 -1.51% ...

Jeff Bailey : 2/25/2008 11:27:27 AM


DJ- Electronic Arts makes unsolicited $2 billion cash offer to buy publisher of the hit Grand Theft Auto videogame after that company's board last week rejected the proposal as insufficient. The $26-a-share offer is a 50% premium over Friday's closing price.

ERTS $48.11 -3.27% ...

TTWO $26.30 +51.49% ...

Jeff Bailey : 2/25/2008 11:24:05 AM

Crude Oil futures ~$99.00 as CRB traded 400.00.

Jane Fox : 2/25/2008 11:22:54 AM

Dateline WSJ - WASHINGTON -- Existing-home sales fell for the sixth month in a row during January as consumers stood on the sidelines watching prices slide for property.

Home resales fell to a 4.89 million annual rate, a 0.4% decrease from December's revised 4.91 million annual pace, the National Association of Realtors said Monday. Originally, the NAR estimated sales at 4.89 million in December.

The median price in December was $207,000. Falling prices have kept would-be buyers from signing off on property as they wait in hope for still-lower price tags.

"Inventories are high, so it's not surprising prices are declining," NAR economist Lawrence Yun said.

Lenders have tightened their standards on home loans, contributing to the credit crunch that is restraining the U.S. economy. Those tighter standards have priced marginal buyers out of the market and made purchasing more difficult and costly for prime borrowers.

"Subprime loan and other risky mortgage products have virtually disappeared from the marketplace, and over the past five months, this has been reflected in soft but fairly stable home sales," Mr. Yun said.

The January resales level was above Wall Street expectations of a 4.81 million sales rate for previously owned homes.

Jeff Bailey : 2/25/2008 11:22:14 AM

US Dollar Index (DXY) 75.52 (unch) ... also 30-minute delayed.

Will benchmark the dollar here. In future, may want to test "inflation" and "deflation" and/or "stagflation" interpretations.

Jeff Bailey : 2/25/2008 11:19:54 AM

CRB Index (CRY) Alert! 400.00 +0.33% (30-minute delayed) ... gets the trade at "psychological" round number.

Linda Piazza : 2/25/2008 11:18:23 AM

For those of you who, like me, are researching global markets and getting worried--more than worried--about what we're reading, you might find an article by Anatole Kaletsky, writing in the online version of The London Times a bit consoling. While Kaletsky acknowledges the damage that a failure to bail out the bond insurers might cause, he questions whether this really is the "worst financial crisis the world has faced"? To be continued.

Jane Fox : 2/25/2008 11:18:20 AM

Here is the SPX with a wedge drawn in and although it does not draw as nicely as the DOW's wedge, it is still telling us the bulls are putting pressure on the upward trendline. I would not be making any kind of trading decisions based on this but it is interesting to watch. Link

Jeff Bailey : 2/25/2008 11:13:03 AM

11:00 Internals found at this Link

Friday's Internals at this Link

Linda Piazza : 2/25/2008 11:09:58 AM

The SPX hit the upper Keltner resistance on the 7-minute chart I posted at 10:58:16. It's pulled back but it has not fallen to the 7-minute 9-ema yet, with that average at 1358.42. Again, we're looking at this on a 7-minute close. I'm following this because the SPX adheres so well to that upper or lower channel boundary, and because the 15-minute 9-ema is still so far beneath the current price, at about 1353.75 that we need a shorter-term outlook. So, if you're bullish the SPX, you want that rising 7-minute 9-ema to provide support on 7-minute closes and for the SPX to rise and keep nudging that 7-minute Keltner resistance higher or even create a breakout mode on that chart.

Linda Piazza : 2/25/2008 11:02:38 AM

Similarly, the OEX also often conforms well to the outer boundaries of support/resistance on the 7-minute Keltner charts. It, like the SPX, sometimes nudges resistance a little higher as it's climbing or support a little lower, but when those outer boundaries are approached, the short-term move is sometimes drawing to an end. That doesn't mean that you bears should automatically think it's time to enter new positions, but it does mean that bulls should know how they'll protect their profits if the outer boundaries should hold. For the OEX, that's now at about 626.57, but you should remember that it can get nudged higher over a number of hours. Just be aware of the significance of the levels being tested.

Linda Piazza : 2/25/2008 10:58:16 AM

While I follow the 7-minute SPX chart in my own studies, I don't often post what I'm watching because posting something about "on 7-minute close" can prove confusing. When did the 7-minute period begin, some might question, and not all have the ability to follow 7-minute charts on their own platforms. However, the SPX often conforms rather well to support and resistance on the 7-minute chart, especially outer-boundary support and resistance, although it sometimes nudges it to one direction or the other. However, if you're bullish, I wanted you to see why I think you now need to have profit-protecting plans in order for your short-term trades. Resistance that may be significant is being approached: Link

Jeff Bailey : 2/25/2008 10:51:55 AM

US Dollar Index (DXY) 75.56 +0.05% (30-min delayed) ... slight reversal from early morning lows. Hovers at lower end of "Bailey Wave" channel. Sign of strength would be move ABOVE WEEKLY Pivot to kick off 3rd wave.

Jane Fox : 2/25/2008 10:42:34 AM

Here is a chart of the DOW. Instead of putting support and resistance on the chart like I did for the SPX I decided to draw a wedge. This is a neutral wedge because it is not pointing up or down but all the same a break of the upper trendline or the lower may give us a hint as to which side is getting stronger, the buyers or the sellers. Link

Linda Piazza : 2/25/2008 10:41:08 AM

What bulls now need to see happen is for the SPX to maintain 15-minute closes above 1353.75 long enough for the 15-minute 9-ema to zoom up underneath it. For the OEX bulls, you want the OEX to maintain support at 623.47 on 15-minute closes long enough for the 15-minute 9-ema to climb up underneath it.

Jeff Bailey : 2/25/2008 10:39:06 AM

Natural Gas Index (XNG.X) 602.91 +2.11% ... that's a 52-weeker.

Jeff Bailey : 2/25/2008 10:38:31 AM

10-year Yield ($TNX.X) up 8.5 bp at 3.875%. Extends move above WEEKLY Pivot. Frees up some cash.

Jeff Bailey : 2/25/2008 10:37:19 AM

QQQQ $43.88 +0.45% ... not a bank in the bunch.

Jeff Bailey : 2/25/2008 10:37:02 AM

SPY $136.03 +0.30% ...

Jane Fox : 2/25/2008 10:36:35 AM

The internals are making a statement; not a bold statement but still a statement. They are bullish. Link

Jeff Bailey : 2/25/2008 10:36:40 AM

BIX.X 263.10 -1.03% ... gave up WEEKLY Pivot just after the open. Back for a look here. BIG test for trader's bias here.

Keene Little : 2/25/2008 10:28:54 AM

The DOW and SPX pushed to new daily highs but the banks have only made a small correction of this morning's decline. Tread (trade) carefully here.

Keene Little : 2/25/2008 10:25:39 AM

For the past three days SLV has been stalled near the Fib projection at 179.22 (two equal legs up from August) and trend lines that define the top of its parallel channel and rising wedge. Some bearish divergences continue to support a top forming here and I still like the short side on the metals. Link

Jane Fox : 2/25/2008 10:22:39 AM

VIX is still spiking but is hovering at daily lows telling me the bulls now have the ball but the AD line at +565 says they do not have field position. This means if you take a trade expect it to take heat - no matter which side you trade.

Linda Piazza : 2/25/2008 10:21:37 AM

The SPX is still having some difficulty, apparently, in sustaining values above the Keltner breakout level, which is now at 1353.47. This is just still too iffy to call yet.

Jane Fox : 2/25/2008 10:19:03 AM

AD line is now back above 0 and climbing but still not overly bullish at +556.

Jeff Bailey : 2/25/2008 10:15:07 AM

Altria (MO) $73.73 +0.17% ... WKLY Pivot at $73.15 untested. Overlapping WKLY R1 ($74.20) and conventional 38.2% ($74.20) this week.

Jeff Bailey : 2/25/2008 10:13:24 AM

Dow Diamonds (DIA) $124.11 +0.25% ... after kiss of WEEKLY Pivot.

Jeff Bailey : 2/25/2008 10:12:20 AM

Citigroup (C) $24.40 -2.86% ... atop this morning's most actives. Sitting on its WEEKLY S1.

Jane Fox : 2/25/2008 10:12:16 AM

I may quit showing this chart because it is getting quite boring and may wait until it breaks support or resistance which it does not seem likely in the near future.

On the other hand it is very interesting to have the SPX so indecisive for this long. Does this mean traders/ investors are waiting to exhale, waiting for the other shoe to drop? I know I am waiting for someone else to blink first.

How is that for a list of clichis :) Link

Jeff Bailey : 2/25/2008 10:10:57 AM

Toll Bros. (TOL) $21.35 +0.14% ...

Linda Piazza : 2/25/2008 10:10:55 AM

For the OEX, Keltner levels to watch on the 15-minute chart are 623.32 and 619-620.16 for sustained 15-minute closes above or below them.

Linda Piazza : 2/25/2008 10:09:57 AM

Hopefully all this chopping around will result in some sort of triangle or other formation setting up, with parameters that we can watch to determine when a breakout occurs. For now, the best I can offer is sustained 15-minute closes above the Keltner line now at 1353.37 or below 1344-1345.37.

Jeff Bailey : 2/25/2008 10:08:09 AM

StreetTracks Gold (GLD) $92.55 -0.88% ...

Keene Little : 2/25/2008 10:08:03 AM

The banks rallied hard Friday on the rumors that there would be a plan to save the bond insurers. Most of that rally has been given up this morning. Keep your eye on the banks (BIX) to see if they confirm any bounce on the broader market.

Linda Piazza : 2/25/2008 10:06:13 AM

So we're not through with volatility. That spike almost brought the SPX up to Keltner resistance at 1353.29 on 15-minute closes and was quickly repelled. So, we know there are still some sellers lurking. Potential support is now at 1345.30 on 15-minute closes. The OEX has already tested that analogous support, however, at 620.15 now on the OEX, and has bounced from it. It looks to me as if buyers and sellers are battling it out this morning, with prices caught between support and resistance.

Jeff Bailey : 2/25/2008 10:05:30 AM

DJ- Dollar Gains Vs. Euro Afer US Existing Home Sales Data

Jane Fox : 2/25/2008 10:03:55 AM

Jan. existing-home median price down 4.6% in past year

Jan. existing-home inventories up 5.5% to 10.3-months

Jan. existing-home sales stronger than 4.80M expected

Jan. existing-home sales fall 0.4% to 4.89 million pace

Jeff Bailey : 2/25/2008 10:03:43 AM

US January Existing Home Sales Drop 0.4% To 4.89 Mln Rate
Inventory of Unsold At 10.3 Months Supply
Median Existing Home Price -4.6% On Yr. To $201,100

Jane Fox : 2/25/2008 10:00:22 AM

The relationship between Crude (green), Gold (red) and the US Dollar (black) seems to be getting back into sync lately. Link

Jeff Bailey : 2/25/2008 9:59:22 AM

S&P Affirms Most Ratings On 23 SIVs

Linda Piazza : 2/25/2008 9:56:54 AM

The SPX has dropped to test that first potential support, with that at 1348.32 and the SPX actually a little below it. Next potential support is now at 1345.25 on a Keltner basis, but we know that this whole 1346-1347 zone has served as S/R. For now, we'll watch to see if this first support holds on a 15-minute close.

Jane Fox : 2/25/2008 9:56:52 AM

Gold and crude are the only two markets I will consider taking a long position and then I would only use a "pure" play. A pure play is futures position or an ETF that uses the futures like GLD or USO. I would not be in a long Gold or Crude position with stocks because 70% of a stock's movement is dependent on the stock market itself. Link

Jane Fox : 2/25/2008 9:53:44 AM

VIX is making new daily highs supporting the bears so far today.

Jane Fox : 2/25/2008 9:50:31 AM

AD line is now under 0 but still in neutral territory at -190

Linda Piazza : 2/25/2008 9:49:02 AM

Potential SPX support is rising, now at 1348.22, although that's light support. Potential resistance is now at 1353.06 on 15-minute closes. For the OEx, the levels are potential first but light support at 620.93 and resistance at 623.17, all on 15-minute closes.

Linda Piazza : 2/25/2008 9:44:35 AM

From a 15-minute Keltner chart standpoint, the SPX has next potential support at about 1345.20-1346 if the 1353 area doesn't hold as support into the end of this 15-minute period. Doesn't look as if it's going to.

Keene Little : 2/25/2008 9:44:11 AM

The quick morning pop up right after the cash market opened was immediately sold into so that set the early-morning tone for the market.

Linda Piazza : 2/25/2008 9:42:36 AM

Keltner outlook on the advdec line: The Keltner line did break out Friday afternoon, but if it sustains values low about -150, it will be erasing that breakout. It's at -202 as I type.

Jeff Bailey : 2/25/2008 9:39:13 AM

Weekly/Monthly/Quarterly Index Pivot Matrix at this Link

Linda Piazza : 2/25/2008 9:39:13 AM

The SPX is testing the daily 30-sma. On an intraday chart, it's testing the same resistance it ended up testing Friday afternoon. It overran that resistance by a bit Friday afternoon and this morning, too, with that resistance at just over 1353, but you should distrust such small overrunnings of resistance or support when they occur last thing in the trading day or in the first few moments of the trading day, and should consider that resistance or support as still being tested. In other words, we don't know yet whether that small overrunning was meaningful or whether the resistance essentially held.

Jane Fox : 2/25/2008 9:37:16 AM

The VIX has started the day with a spike which is making it hard for me to "read" it. These spikes seem to be par for the course of late and I am getting real tired of them.

Jane Fox : 2/25/2008 9:35:44 AM

AD line is a neutral +391 so it is not talking this morning.

Jane Fox : 2/25/2008 9:34:45 AM

I was watching the futures yesterday when they opened and saw a very nice gap up then I just watched them continue to climb. Unfortunately though that bullishness was short lived and the bears were able once again to push the futures back to where they opened and in the case of the NDX futures to new overnight lows. Link

Linda Piazza : 2/25/2008 9:26:34 AM

Futures are about equal with fair values this morning, so that's not giving traders much sense of ultimate direction. However, I've always been taught that you should pit futures action against what you're seeing in other global markets, and our flat futures are being pitted against gains across many other markets. So, the evidence isn't quite a neutral as it would look at first glance. If these were normal times, a day like Friday's, producing a candle like Friday's, would suggest that indices are going to see more upside follow through. In normal times, I would have expected the SPX to even jump up to test the top of its triangle on its daily chart, with the top of that triangle now at about 1372-1374, if I'm eyeballing it right. These are not normal times, however, and I'm a little concerned about the lack of response to gains on other global bourses, so I'm going to have to take a wait-and-see attitude. If the SPX should gain, watch particularly the daily 30-sma, now at 1356.60, as it might be resistance on daily closes.

Keene Little : 2/25/2008 9:23:52 AM

Equity futures had a nice rally going last night until the European markets opened. It's looking like we'll see the market open up near the flat line. After Friday's strong rally into the close, leaving price stuck inside its trading range, stay cautious about continued whipsaw price action.

Jane Fox : 2/25/2008 9:09:21 AM

SEATTLE (MarketWatch) -- The resignation of America's unheeded and under-funded chief accountant and watchdog, along with the billion-dollar bullhorn he's been given, are the ultimate sell signals for America's stock investors.

David Walker, comptroller general of the General Accountability Office (GAO) has since 1998 been the objectively informed and outspoken critic of America's balance sheet. He has criticized supporting Iraq's dysfunctional government, pork barrel spending by Congress, unrealistic "universal health care plans" we can ill-afford or support, the escalating risks of huge deficits, fiscal vulnerability to hostile foreign governments, and a lack of will to reform our government.

"David Walker has proven that one person can make a difference," Senate Budget Committee Chairman Kent Conrad, D-N.D., said in a release. "As Comptroller General for the last decade, he has been a tireless and effective advocate for the need to make our nation's long-term fiscal situation a priority."

Facing indifference on the Hill and unrealistic spending promises, Walker is resigning with five years still remaining in his term to head the newly formed Peter G. Peterson Foundation.

Peterson, senior chairman of The Blackstone Group and Commerce secretary in the Nixon administration, has pledged an astounding startup budget for the foundation of $1 billion.

Jane Fox : 2/25/2008 8:57:14 AM

Dateline WSJ - Investors will pay attention to speeches from Federal Reserve Governors Randall Kroszner and Frederic Mishkin. European Central Bank President Jean-Claude Trichet will also deliver remarks.

Among stocks to watch, Electronic Arts on Sunday unveiled a $2 billion unsolicited bid to buy Take-Two Interactive Software - its second offer in recent weeks, and one that again was rebuffed by the maker of Grand Theft Auto video games.

Genentech is likely to move after the Food and Drug Administration granted accelerated approval for Avastin, in combination with paclitaxel chemotherapy, for the treatment of patients who have not received chemotherapy for their metastatic breast cancer.

Nordstrom and Sotheby's are due to report earnings.

Meanwhile, Visa released the proposed terms of its long-expected initial public offering early Monday, saying it plans to sell as much as $17 billion in stock, which would make it the biggest IPO in U.S. history.

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