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Keene Little : 2/29/2008 12:48:22 AM

Friday's pivot tables: Link and Link

The SPX 30-min and daily charts I showed towards the end of the day on Thursday show what I'll be watching for on Friday. I'm assuming for now that we're going to see at least another leg down that matches the one from Wednesday's high to Thursday's morning low. If SPX drops rapidly below the bottom of the down-channel shown on the 30-min chart, and especially below 1350, it's going to look more bearish than the pink price depiction that calls for a continuation in a sideways triangle for another 2 weeks.
30-min: Link
daily: Link

Both sides have some work to do to break the current log jam and get out of this choppy trading range that's full of whipsaws. Continue to take profits early--there are not trends until one of the key levels on the daily chart is broken.

Jeff Bailey : 2/29/2008 12:17:18 AM

Closing Internals at this Link

OI Technical Staff : 2/28/2008 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The Market Monitor has been archived.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 : 2/28/2008 4:42:52 PM

VIX.X 23.53 +3.70% ... closed juuuuust above its QUARTERLY Pivot (23.22).

Don't forget! March marks end of Q1 calendar.

Jeff Bailey : 2/28/2008 4:41:10 PM

SPY ... March "Max Pain" looks to be around $135.00.

Jane Fox : 2/28/2008 4:26:59 PM

Economic Reports for tomorrow included :

8:30a.m. Jan Personal Income. Expected: +0.2%. Previous: +0.5%.

8:30a.m. Jan Personal Spending. Expected: +0.2%. Previous: +0.2%.

9:45a.m. Feb Chicago PMI. Expected: 50. Previous: 51.5.

10:00a.m. End-Feb Reuters/U Of Mich Sentiment Index. Previous: 69.6.

Keene Little : 2/28/2008 4:20:03 PM

It will be interesting to see what the VIX does if it reaches its short term downtrend line from Feb 11th, currently near 24: Link . Notice the small descending wedge pattern which calls for another drop to the bottom of the wedge which would have it testing its uptrend line, just below its 200-dma, next week. This is a bullish pattern so if it's bullish for the VIX it is of course bearish for equities. I'll be watching this one closely.

Jeff Bailey : 2/28/2008 4:14:46 PM

Dell Computer (DELL) $20.87 +0.48% ... slips to $20.40 on headline numbers.

Jeff Bailey : 2/28/2008 4:12:24 PM

Deckers Outdoor (DECK) $126.46 -0.58% ... Halted, news pending.

Keene Little : 2/28/2008 4:10:51 PM

The price pattern calls for lower tomorrow but the obvious challenge is holding a short overnight. This has been a very risky market to hold any positions over night.

Jeff Bailey : 2/28/2008 4:09:28 PM

Hansen Natural (HANS) $44.15 +0.56% ... jumps to $47.60 on headline numbers.

Jane Fox : 2/28/2008 4:09:00 PM

My bad - DGP is the Double Gold Long.

Jane Fox : 2/28/2008 4:06:08 PM

ETN - stands for Exchange Traded Notes

Jane Fox : 2/28/2008 4:05:10 PM

THe Double short ETNs but the way are DZZ, DGP and DGZ but you would never even think of doubling down on Gold - would you?

Jane Fox : 2/28/2008 4:02:56 PM

My goodness could you imagine doubling down on Gold - Now that is scary!!!!

Jane Fox : 2/28/2008 4:02:34 PM

Deutsche Bank manages several ETNs, listed the new gold offerings on the NYSE Arca. They are DB Gold Double Short ETN , DB Gold Double Long ETN and DB Gold Short ETN .

"The ETNs will be the first to offer investors short or leveraged exposure to gold," Deutsche Bank said.

ETNs are debt securities that have similarities to exchange-traded funds, or ETFs.

The "double short" ETN would offer investors twice the monthly inverse, or opposite, performance of a gold-futures index, plus the return of a benchmark of U.S. Treasury bills. So if gold lost 1% for the month, the ETN's gold exposure would aim to deliver a positive 2% return.

Keene Little : 2/28/2008 4:02:30 PM

Wasn't it Bernanke & Co. who told us last year that the subprime problem would be self-contained in it's own little corner? I rest my case.

Jeff Bailey : 2/28/2008 3:59:06 PM

Bernanke Rejects '70s Stagflation; '01 Also Not Good Analogy

DJ- U.S. Federal Reserve Chairman Ben Bernanke said Thursday that the current mix of slow growth and rising inflation is nowhere near the conditions of the 1970s, commonly referred to as "stagflation."

But just as things aren't as bad as they were three decades ago, in many ways they aren't as favorable as seven years ago, the last time the U.S. experienced a notable downturn, Bernanke suggested, since the current housing downturn has much wider effects than the bursting of the technology bubble in 2001.

"I don't anticipate stagflation," Bernanke said in response to questions from the Senate Banking Committee, where he delivered the second leg of his semiannual economic testimony to Congress. "I don't think we're anywhere near the situation that prevailed in the 1970s."

He should hope so. At its worst, stagflation makes a Fed chairman's job nearly impossible as a self-reinforcing rise in energy prices, wages and overall inflation ties the Fed's hands as the economy sputters and joblessness rises.

Recent data have stoked those fears in the U.S. The economy grew just 0.6% in the fourth quarter, the Commerce Department said Thursday, and isn't expected to fare better this quarter. In fact, almost half of the economists surveyed in a recent National Association for Business Economics poll said the economy is either already in a recession or will be soon.

While Bernanke and the Fed continue to forecast expansion, albeit sluggish early this year, he did tell lawmakers Thursday that the recent rise in weekly jobless claims does point to a higher unemployment rate.

Still, rather than declining as economics textbooks say inflation should under those conditions, price pressures have been on the rise. That is due largely, Bernanke said, to higher oil prices, which he thinks will at least flatten out and in turn ease pressure on overall prices.

That scenario is central to the Fed's recent policy response. A common theme of Bernanke's two-day appearance before the House and Senate was that the Fed faces three "fronts" - namely a weaker economy, jittery financial markets and uncomfortably high inflation. Bernanke made it clear the Fed's central concern is on the first two, thus the 225 basis points in rate cuts since September despite inflation rates above the Fed's assumed comfort zone.

Bernanke defended that easing campaign, particularly the 125 basis points in rate cuts over an eight-day period in January, calling it the "right thing to do."

"We will see that the Fed lowered interest rates faster and more proactively than in any other previous episode," Bernanke told Sen. Jim Bunning, R-Ky., a frequent critic of Fed policy.

Bernanke also said the recession in 2001 isn't the right comparison to the current slowdown, either, even though both were triggered by an asset-price collapse - technology in 2001 and housing last year.

"The decline in home prices is creating a much broader set of issues, both for borrowers and homeowners, but also for the credit markets," he said.

Yet Bernanke's testimony also gave reason to think that the Fed won't ultimately be able to be as aggressive as they were from 2001 to 2003, when the federal-funds rate went all the way down to 1%. Financial markets generally expect an additional 100 basis points in rate cuts this year, to 2%.

"We do have greater inflation pressure at this point than we did in 2001," Bernanke said, while the dollar is weaker than it was seven years ago and the government's fiscal position is "less advantageous" than in 2001, when it was running a surplus.

So while there are some similarities to the past, "I guess as a Russian novelist once said, unhappy families are all unhappy in their own way and every period of financial and economic stress has unique characteristics," he said.

Jane Fox : 2/28/2008 3:56:37 PM

Funny how the market never lets you think you are a smarty pants too long. I thought Gold would be heading down to at least retest the bottom trendline but it is certainly proving me wrong. Link

Keene Little : 2/28/2008 3:55:58 PM

Zooming in a little closer on the SPX 60-min chart that I had posted earlier, this 30-min chart shows a down-channel for price action since yesterday's high: Link . If price drops out the bottom of the channel and breaks below 1350 that would be a bearish heads up. But if it finds support at the bottom of the channel then it could get another rally leg before turning lower again (pink). The bulls need to rally SPX back above yesterday's high near 1388 to get this back on a bullish path.

Jane Fox : 2/28/2008 3:54:54 PM

Well well look at what Crude is doing today. I knew it was going to break that $100/bl. Link

Linda Piazza : 2/28/2008 3:48:04 PM

If the SPX closes the day anywhere near its current level, it will have created a rough approximation of an evening-star reversal pattern on its daily chart. The Dow's pattern is a clearer and more classic completion of its reversal signal.

Before bears get too excited or bulls too worried, both drops bring the respective indices back to the the tops of their former triangles. So far, this consists of only a drop to retest that former resistance to see if it holds as support. So far, as I type, it is, but that could change in the next minutes. However, taking all the evidence together, I wouldn't be surprised to see the SPX and Dow to drop down to test either their 10-sma's or their 30-sma's on the daily chart. As long as they hold that support on daily closes, the action wouldn't be too long-term bearish, but bulls need to assess the possibility of a drop down to retest those moving averages as they're making their end-of-day decisions.

Keene Little : 2/28/2008 3:41:58 PM

With 20 minutes to go, I'd lower my stop a little on a short play (try to get it to breakeven at least). A buy program is all it takes to get a short-covering rally into the close.

Jane Fox : 2/28/2008 3:27:47 PM

I suspected the DOW would make a retracement here and think tomorrow will be a down day as well. As long as the DOW stays above the magenta downward trendline I will consider this a selloff due to hitting resistance. Link

Linda Piazza : 2/28/2008 3:27:26 PM

The SPX's 30-minute support level--the level that did produce about two hours' worth of consolidation today, as it had on Monday-- is now at 1363.95 on 30-minute closes. The OEX's is at 628.30.

Jane Fox : 2/28/2008 3:25:40 PM

AD volume is heading down but the VIX is not supporting it. AD ratio is also not making new daily lows and does not support it either. This means we have a ----- well as I just stated --- a choppy mess. Link

Jane Fox : 2/28/2008 3:23:49 PM

My goodness this has been a choppy mess today and as you can see the VIX is not helping one little bit. Link

Linda Piazza : 2/28/2008 3:20:14 PM

If you're bullish, you see the pullback since Tuesday as a bull flag. If you're bearish, you see it as a H&S formation with a declining neckline or else part of a larger H&S forming since Monday, this one with a rising formation. When you see competing bullish/bearish formations on charts and when bulls and bears can argue with equal heat about what's being depicted, you know that you're going to get chop. I still am labeling it as a broadening formation and that warns me that the trading is emotion-based, and so I'm not tempted to draw either a bullish or a bearish conclusion too soon. I advise that you withhold judgment as much as possible, too.

Jeff Bailey : 2/28/2008 3:19:36 PM

03:00 Internals found at this Link

Linda Piazza : 2/28/2008 3:16:06 PM

Remember that we have Dell earnings after the close and the Chicago PMI tomorrow morning. Decide if you intend to hold overnight with those potentially market-moving events.

Keene Little : 2/28/2008 3:08:42 PM

That spike down should be the kickoff to the next leg down to a new daily low. Short againt this latest bounce high is a good play.

Linda Piazza : 2/28/2008 2:59:36 PM

The SPX continues to test the resistance at about 1372.30 on 15-minute closes. For the OEX, that's at about 631.95. I keep studying these charts for "the" right interpretation, but I still keep coming up with potential broadening formations with the action in the middle of that broadening formation not particularly amenable to technical analysis. Is this a head-and-shoulder formation or is that a bull flag pulling back off yesterday's high? If you're bullish, you're seeing one thing, if, if bearish, another.

Keene Little : 2/28/2008 2:59:28 PM

NDX is about to test this morning's high and could make a minor new high before dropping back again. If you look at price action over the past 3 days and draw trend lines along the lows and highs you can see the rising wedge pattern. This is typically an ending pattern in a rally. But if price pops out the top of it (for more than a throw-over) get long and hang on because the move up could be strong.

Jeff Bailey : 2/28/2008 2:50:59 PM

California Gasoline Use Fell To 7-year Low Amid Nov'07 Price Spike

DJ- Gasoline demand in California, the biggest U.S. fuel market, fell 3.7% year-to-year in November 2007 as pump prices jumped more than 35%, state data show.

Figures released Thursday by the California Board of Equalization, which tracks taxable gasoline sales in the state, show daily purchases fell in the month to the lowest level since September 2000.

November gasoline sales averaged less than 950,000 barrels a day, down nearly 7% from the October level.

California gasoline prices in November averaged $3.394 a gallon, up 35.3% from a year earlier, and the second-highest for any month, after May 2007, U.S. government data show. November's year-to-year price surge was the biggest in any month since September 2005, after hurricanes disrupted refinery operations in the vital U.S. Gulf Coast region, and was the fourth largest in any month on records dating back to May 2000.

California gasoline demand has fallen in each of the last six quarters to the third quarter 2007 and in last six straight months of 2007. On average in the first 11 months of 2007, demand is lagging a year earlier by 1.2%, or less than 10,000 barrels a day. In 2006, California gasoline use averaged 1.03 million barrels a day, down 0.7%, or 7,300 barrels a day, from a year earlier.

California consumes one of every 10 barrels of gasoline used in the U.S. daily.

Data from the federal Energy Information Administration show nationwide gasoline demand in November was up a fractional 0.5% from a year ago, to 9.249 million barrels a day and up in the first 11 months of the year by a similar amount, to 9.29 million barrels a day.

Keene Little : 2/28/2008 2:46:53 PM

Ideally one more move higher and that should finish the c-wave so watch those Fib levels for a short play to set up.

Keene Little : 2/28/2008 2:44:20 PM

Right now both the DOW and SPX are struggling with their 38% retracement levels of the decline from yesterday's highs (12621 and 1372.84, resp.). For SPX the 50% retracement is right on top of the Fib projection just under 1376.

Keene Little : 2/28/2008 2:36:32 PM

Got a big buying spike there but so far it looks like it could be the c-wave of an a-b-c bounce off this morning's low. The Fib projection for the 2nd leg up (162%) is at DOW 12636 and SPX 1375.71. But the c-wave has already achieved its minimum so it could reverse back down at any time.

Linda Piazza : 2/28/2008 2:26:13 PM

Potential resistance on 15-minute closes is at 1372.80 on the SPX and 632 for the OEX.

Jeff Bailey : 2/28/2008 2:20:12 PM

GLD with a revised "bull fit 38.2%" and stacked Bailey Wave Link

This retracement also looks to have some significance as to how market participants are trading.

Jeff Bailey : 2/28/2008 2:07:14 PM

StreetTracks Gold (GLD) ... updated daily interval chart. Most "bearish" Bailey Wave from a couple of weeks ago. Same "bull fit 38.2%." However, should bullishness continue to build, adjustments should be made Link

Keene Little : 2/28/2008 2:04:49 PM

Still bear flagging here so not much of a change in the last 90 minutes. I'm still expecting lower out of this.

Linda Piazza : 2/28/2008 2:01:08 PM

The SPX is still stuck, still consolidating just above potential (Well, not "potential" any longer, but "proven," right?) Keltner support at 1363.54 on 15-minute closes. For the OEX, that's at about 627.90.

Linda Piazza : 2/28/2008 1:58:25 PM

Today the USDJPY is below the January low. A few months ago, I'd fit a Fib bracket to the then-decline off the June, 2007 high and determined a possible target near 105.17, which is a few cents above today's low of 105.06. However, in the meantime, the descending supporting trendline has dropped to about 103.50 and I see potential Keltner support on daily closes in the 104.23 and 103.47 regions, too. RSI has dropped into a zone that sometimes predicts reversals, but often only after a bullish divergence is produced on a small bounce and last little decline. Conclusion? The USDJPY may be approaching a bounce zone, but it could have further vulnerability to 103.50 or so, too. If there's a bounce and attendant bounce in U.S. equities, be careful of the possibility of a second rollover to create that bullish divergence. Doesn't always happen, but it does sometimes.

Jeff Bailey : 2/28/2008 1:52:02 PM

iShares Silver (SLV) ... updated daily interval chart. Same "bull fit 38.2%" but recent strength has me stacking the "Bailey Wave" Link

Market participants seem to be trading.

Linda Piazza : 2/28/2008 1:29:19 PM

I deliberately waited a few moments as the SPX pushed above the 15-minute resistance at about 1368.25 to see if the SPX was going to be able to build on that push or if it was just part of the consolidation. With the SPX now at 1368.08, it's certainly not yet clear that the 15-minute close slightly above that resistance was really a clearing of the resistance or instead just part of the testing of it. If it's going to rise higher, watch 1370.55 and especially 1373.38 for potential resistance on 15-minute closes.

For the OEX, watch 631.42 and then 632.26 for potential resistance on 15-minute closes.

Jeff Bailey : 2/28/2008 1:27:01 PM

Utilities HOLDRs (UTH) $125.36 -0.88% ...

Jeff Bailey : 2/28/2008 1:25:27 PM

Canadian Nat. Resources (CNQ) $76.73 +4.55% ... Cut to "hold" from "buy" at GMP

Linda Piazza : 2/28/2008 1:21:58 PM

The Federal Reserve's figures on outstanding commercial paper shows the first gain in four weeks. It was a significant gain, of $23.6 billion on a seasonally adjusted basis. The three weeks of steadily decreasing outstanding commercial paper raised concerns about corporations' abilities to raise funds using this short-term paper without going to banks for more expensive loans.

Jeff Bailey : 2/28/2008 1:20:33 PM

Moneyflow @ 01:00 PM EST Link

Keene Little : 2/28/2008 1:19:43 PM

The bounce off the low is still looking corrective (overlapping highs and lows between the bounces and dips) and looks like the other two bounces yesterday afternoon and this morning. It takes a rally above this morning's bounce to negate the bearish pattern here.

Jeff Bailey : 2/28/2008 1:11:55 PM

01:00 Internals found at this Link

Jeff Bailey : 2/28/2008 12:48:35 PM

RUT.X 706.88 -1.33% ...

IWM $70.47 -1.30% ...

Jeff Bailey : 2/28/2008 12:45:41 PM

PHF $8.43 +1.07% ...

Keene Little : 2/28/2008 12:45:10 PM

There's not much to the bounce off the lows and it looks like it will lead to another move lower once it's finished. The top of a little parallel down-channel for today's decline is currently near SPX 1370 (and coming down) so watch for potential resistance at or below that level.

Jeff Bailey : 2/28/2008 12:44:58 PM

BIX.X 257.94 -3.22% ... probing correlative 19.1% conventional and WEEKLY S1.

Linda Piazza : 2/28/2008 12:44:45 PM

Support near 1363.45 on 30-minute closes. I mentioned earlier that the last time the SPX tested this support, it consolidated near it for about two hours. We've got about forty minutes to go to match that record.

Of course, I'm not suggesting that it will be matched exactly. I'm saying that sometimes you can compare one with the other and, from symmetry, get some idea of what to expect. The SPX also has strong potential resistance on 15-minute closes near 1369.20, so the SPX is stuck between one and the other, at least temporarily, so the consolidation fits what's shown on the charts, too. Both support and resistance look strong, and we're just going to have to wait until enough time expires or there's a strong enough move to push through one or the other.

Jeff Bailey : 2/28/2008 12:41:03 PM

Brazil Sell BRL1.25 Bln Face Value NTN At 12.41%-12.46%

Jeff Bailey : 2/28/2008 12:39:58 PM

30-year Treasury Yield ($TYX.X) ... Down 9.7 bp at 4.554%

Jeff Bailey : 2/28/2008 12:38:44 PM

Terminology: LTN's are Long Term Notes

Jeff Bailey : 2/28/2008 12:38:26 PM

Brazil Sells BRL4.5 Billion Face Value LTNs At 11.55%-12.44%

Jeff Bailey : 2/28/2008 12:32:35 PM

iShares Silver (SLV) $196.09 +2.48% Link ...

Jeff Bailey : 2/28/2008 12:29:51 PM

StreetTracks Gold (GLD) $95.33 +0.58% Link ... $0.40-box to match futures.

Jeff Bailey : 2/28/2008 12:26:08 PM

Bernanke: ... Mentioning that PRICE is reflective of global supply and demand regarding commodities.

Rings true to PnF chartists.

Linda Piazza : 2/28/2008 12:24:15 PM

It's old news by now, but my research was taking me other directions earlier: Moody's has apparently taken or considered (still clarifying) negative ratings actions on a number of U.S. regional and community banks.

Linda Piazza : 2/28/2008 12:18:11 PM

I'm moving to a 30-minute chart for a potential target. The SPX has potential support at 1363.36 on 30-minute closes. If it loses that support on 30-minute closes, it will be setting a potential downside target of 1353.86. It has not yet set that target and it should be considered a potential target only. However, those in bearish positions should be setting up new profit-protecting plans for a test of that zone, if it is tested, in case a bounce is swift. Bulls who might have been tempted to enter on the current support test, might be assessing that vulnerability to lower prices, deciding where they want their stops to be in case of a downturn.

On the OEX, that potential support on 30-minute closes is at 628.04, and the downside target if that support is lost on 30-minute closes would be at 623.05. Same cautions as with the SPX. No target is set and it's a potential target only if set.

Keene Little : 2/28/2008 12:11:34 PM

The sideways triangle pattern shown on the SPX daily chart would call for lots more price action like we've seen during the month of February--lots of chop and whipsaw (which is great if you sold some spreads above and below the trading range). The 60-min chart zooms in a little closer on how it could play out into next week: Link

A break below 1327 would be a heads up that something more bearish is happening and a break below 1317 would negate the triangle pattern. The current pullback followed by another rally above yesterday's high would be a bullish heads up that the next rally leg is already in progress.

Jeff Bailey : 2/28/2008 12:01:54 PM

DOE's Bodman Urges OPEC To Boost Production

DJ- The Organization of Petroleum Exporting Countries should increase crude production to ease pressure on painfully-high record oil prices, Energy Secretary Samuel Bodman said ahead of an OPEC meeting next week.

Bodman, speaking on the sidelines of a budget hearing on Capitol Hill, said OPEC members needed to heed the market signaling supply shortages fear with prices per barrel within striking distance of the inflation-adjusted high of $103.76.

The Secretary also told reporters that even though the national average retail gasoline price was already at $3.13 a gallon before the annual price increase in the build up to the driving season, he didn't believe $4 a gallon was inevitable.

Jeff Bailey : 2/28/2008 12:00:04 PM

DJ- Precious Metals At Record As Dollar Tumbles

Linda Piazza : 2/28/2008 11:54:31 AM

Moving back to the SPX's 15-minute chart, I see potential resistance on 15-minute closes at about 1367.55-1368, with the 9-ema now at 1369.44. This is the same band of lines that appeared to be strong support earlier and wasn't, and now it appears to be strong resistance, but perhaps won't be. For the OEX, that resistance is near 629.75 with the 9-ema now at 630.94.

Keene Little : 2/28/2008 11:48:57 AM

The pink wave count on the SPX daily chart, showing a sideways triangle playing out into March followed by another rally leg, would support the idea for a top to the bounce off the January low in the March timeframe. That would meet the symmetry between 2002-2003 and 2007-2008: Link

Linda Piazza : 2/28/2008 11:48:15 AM

I'm back. Potential SPX Keltner support on 30-minute closes is near 1363.20. The last time the SPX tested this support, on Monday, it consolidated there for about two hours, moving in about 6 point ranges above and below that average, so the possibility of the same kind of action exists today. There's a definite rounding-over pattern on the SPX since last Monday, but the difficulty in these rounding-over patterns is knowing when support will be finally breached, if it is. (Important "if" there.) You always know afterwards and even as it's happening, because it's usually met with a big downdraft, but it's hard to predict when or exactly where it will happen. It's not like a rectangular pattern where you can point to a horizontal trendline and say that's the level to watch.

Keene Little : 2/28/2008 11:45:01 AM

I had mentioned in last night's newsletter that there is the potential to see another leg up for the rally off the January low and for it to top out around the 2nd or 3rd week. This would meet the symmetry we're seeing in the market between the July and October 2002 lows and then the March 2003 pullback to a higher low vs. the July and October 2007 highs and now potentially a rally to a lower high in March 2008. The pattern I showed for TNX also supports this idea.

Jeff Bailey : 2/28/2008 11:42:28 AM

Murphy Oil (MUR) $82.90 +1.81% ... 80.9% conventional.

Keene Little : 2/28/2008 11:40:55 AM

I had thought bonds would sell off a little more before rallying but it looks like just the opposite today, and the buying in the bonds may be taking money out of stocks. I've redrawn a potential up-channel for the bounce in the 10-year yield (TNX), which is different from the chart I used in last night's newsletter. The bottom of the channel is currently near 3.61% (trading at 3.71% this morning): Link

The correction of the drop in TNX, from June 2007 to January, should take longer and get a little higher and that's why I believe it will head higher again after the current pullback is finished. The channel is a guide for now and as shown with the Fib projection for two equal legs up at 4.3% it would also be a 50% retracement of its decline. The top of the channel crosses those Fibs towards the end of March.

Jeff Bailey : 2/28/2008 11:37:53 AM

US Dollar Index (DXY) Alert! 73.807 (30-minute delayed) ... DAILY S2 here. Last pivot level to MONTHLY S2.

Jeff Bailey : 2/28/2008 11:27:19 AM

Would also draw attention to "crack spread" deterioration near-term.

Jeff Bailey : 2/28/2008 11:25:44 AM

11:18 AM Market Watch ... With 1-year high and low observations. Link

Jeff Bailey : 2/28/2008 11:24:22 AM

US Dollar Index (DXY) Alert! 73.96 -0.33% (30-minute delayed) ... darts to new 52-weeker.

Linda Piazza : 2/28/2008 11:22:22 AM

I'll be away for a few minutes.

Jane Fox : 2/28/2008 11:25:48 AM

That was one strong sell program but as you can see it did not bring the VIX to a new daily high and we now have your classic divergence. Link

These moves seem to come out of nowhere lately and don't give us any warning - I really really hate that.

Linda Piazza : 2/28/2008 11:20:32 AM

The VIX is back at potential Keltner resistance, the same resistance it tested earlier this morning. That resistance is now at 23.31. Equity bears want the VIX to break up through this level and sustain 15-minute closes above it. Equity bulls want it to be knocked back again, and then to sustain levels below 22.69. Although this morning the VIX is conforming exactly to these Keltner levels, Keltner levels tend to be more of approximations for the VIX than exact levels, but this gives you some guidelines at least. The VIX is at 23.19 as I type.

Linda Piazza : 2/28/2008 11:15:42 AM

I was wrong. That SPX Keltner support that looked so firm was not only not strong enough to keep the SPX consolidating a bit longer, but it also wasn't strong enough to keep the SPX from piercing it. That support is now at about 1368.50 on 15-minute closes. The SPX is currently below that level, but with the possibility exists that it could bounce back above it by the end of the 15-minute period. This could of course be a fake-out move, and I would definitely watch for that possibility. However, the sluggishness of the early bounce, the shortness of the consolidation period at 1375-1377 and the piercing of this support should be raising the possibility of further declines. These are crazy markets these days, so I would definitely still keep my profit-protecting plan updated if in bearish trades in case that zoom higher does occur, as this could be the level from which it would occur, if it's going to do so.

Keene Little : 2/28/2008 11:12:31 AM

The bounce failed to close this morning's gaps and now to new daily lows. Techs are back in the red so we've got a bearish tone for the day, or at least the morning.

Jeff Bailey : 2/28/2008 11:12:28 AM

11:00 Internals found at this Link

Tab Gilles : 2/28/2008 11:05:39 AM

Weekly EIA Report Link

Jane Fox : 2/28/2008 11:03:08 AM

Although I usually use the SPX, I will be using the DOW chart to get a feeling for the general market. I have decided to use the DOW because it has hit a very obvious resistance whereas the SPX has not.

The DOW hit resistance yesterday and I posted that I thought the balance of this week it would either consolidate here or retrace then next week tell us which way it would go.

So next week the bullish scenarios are:
1. Close above resistance
2. Retest of the head & shoulders neckline (magenta trendline) and rally from there

Or the bearish scenarios
1. Break through the swing low made on Feb 22nd.(right shoulder) Link

Linda Piazza : 2/28/2008 11:00:54 AM

The SPX is turning down toward support that looks firm in the 1369 zone, firm enough that the SPX might not even dip all the way to that support. This fits with the possibility that the SPX might just consolidate for a while under or at 1375-1377, as I mentioned as a possibility earlier. Of course, we can and do get swift out-of-nowhere moves lately that undo everything seen on a short-term chart, but that consolidation is a possibility.

Linda Piazza : 2/28/2008 10:56:29 AM

A quote from Ken Goldstein, labor economist at The Conference Board, with his quote included in the Board's Help-Wanted Index today: "The latest data on job advertising in print suggests there's virtually no chance that labor market activity will improve over the next few months. To the contrary, there is a chance the labor market could grind to a halt."

Jane Fox : 2/28/2008 10:54:01 AM

VIX's trajectory is bullish but the AD volume's trajectory is bearish. When these two disagree I usually defer to the VIX unless the AD volume trajectory is in a very clear. However, today I also have the AD ratio agreeing with the VIX.

I read the internals as bullish and would be careful if trying short positions. Link

Keene Little : 2/28/2008 10:53:31 AM

A tech rally could be a leading indicator for a broader market rally but a tech rally without the participation of the semis is suspect. It could be a sign that we'll have a choppy day (for a change).

Keene Little : 2/28/2008 10:46:51 AM

I see there's an effort to rally the market since the gap down. First order of business for the bulls is to close the gaps, which the techs have already done and in the green. But now the price pattern for the techs is looking more like an ending pattern as it chops its way higher. It'll be interesting to see whether or not the bulls can do more than gap closure on SPX and DOW futures while the techs potentially finish their rally.

Jeff Bailey : 2/28/2008 10:45:12 AM

GoldCorp. (GG) $44.13 +1.68% ... that's a new 52-weeker. Continues to suggest the commodity has not yet seen its highs.

Linda Piazza : 2/28/2008 10:42:35 AM

Both the SPX and the OEX are climbing into the potential resistance zones mentioned earlier, with the SPX at 1375.05 and the OEX at 633.23 as I type. Bears want the SPX to find resistance either at the 1375.50-ish level or the 1377.17 level on 15-minute closes and turn down again, while bulls want prices to climb higher, but the chart setup suggests that neither may get their wishes granted immediately. I wouldn't be surprised to see some consolidation start soon, confounding all.

Jeff Bailey : 2/28/2008 10:37:18 AM

AMEX Nat Gas Index (XNG.X) 620.87 +2.62% ... that's another 52-weeker.

Jeff Bailey : 2/28/2008 10:36:07 AM

EIA: Weekly Nat. Gas Storage Table Link ... Draw of 151 Bcf

Jeff Bailey : 2/28/2008 10:34:55 AM

President Bush: Withdrawing From NAFTA Wouldn't Be Good Policy

Jeff Bailey : 2/28/2008 10:32:16 AM

AbitibiBowater Inc. (ABH) $14.60 -11.67% ... Posted a fourth-quarter loss of $250 million, or $5.09 a share, compared with net income of $107 million, or $3.58, a year earlier. The adjusted loss in the latest quarter was $2.34 a share. Sales of $1.49 billion were up from $861 million. The company said it has removed almost one million metric tons of high-cost capacity during the first quarter, "while also making significant inroads on its cost-synergy target of $375 million from the combination of Abitibi-Consolidated and Bowater." It said it expects to announce in the second quarter its decisions regarding Phase 2 of its comprehensive review of operations.

Jeff Bailey : 2/28/2008 10:28:04 AM

Dress Barn Inc.'s (DBRN) $14.50 +15.35% ... Said fiscal second-quarter net income dropped 56% to $7.4 million, or 12 cents a share. Analysts expected 6 cents a share. The Suffern, N.Y., women's apparel retailer said sales for the quarter ended Jan. 26 increased 1.5% to $345.6 million while same-store sales declined 4%. Dress Barn affirmed its fiscal-2008 earnings estimate of $1.05 to $1.10 a share.

Jane Fox : 2/28/2008 10:25:57 AM

Gold is pushing up against its upper trendline but the MACD is not. This is a very good clue that Gold needs to take a rest.

Even though Gold has many outside influences I still use the charts because I believe they are the best way to factor in all those externals forces. As you all know, I am a firm believer that everything anyone knows about a market is in the charts because all those "opinions" will be made with money and are therefore shown in the charts. Link

Linda Piazza : 2/28/2008 10:20:04 AM

The SPX's 15-minute 9-ema, potential resistance on 15-minute closes, is now at 1374.99, with further potential resistance on 15-minute closes at 1377.12. For the OEX, those numbers are both clumped near 633.50-633.70.

Jeff Bailey : 2/28/2008 10:13:57 AM

Monster Worldwide (MNST) $28.36 -2.57% Link ...

Linda Piazza : 2/28/2008 10:13:28 AM

The VIX broke up through another level of Keltner resistance this morning and is maintaining that level (22.95) as support on 15-minute closes as it challenges the next resistance at 23.32 on 15-minute closes. Equity bears want sustained values above 23.32; equity bulls want sustained levels first below 22.85 and then below 22.61. The VIX is at 23.06 as I type.

Jeff Bailey : 2/28/2008 10:12:42 AM

US Conference Board: January's Help Wanted Index 21 Vs. December's 22

Linda Piazza : 2/28/2008 10:10:29 AM

The advdec line level did steady near that trendline that I'd mentioned earlier. As I type, the advdec line is now at -1200 again, about where it was then. It hasn't bounced much from its low, corroborating the hesitation we're seeing so far in the indices. There's nothing much yet to be foretold from this action except that there's some hesitation as President Bush begins his press conference and Fed Chairman Bernanke begins his second day of testimony. It's possible to conclude, I guess, that the lack of that de rigueur early bounce is somewhat bearish, but I don't know that I'd go that far yet. I think we've been seeing some emotion-based trading and so market participants are now hesitant until they hear what's being said.

Jeff Bailey : 2/28/2008 10:03:28 AM

Germany's Adjusted Jobless Rate 8.0% ... inline with consensus.

Jane Fox : 2/28/2008 10:02:37 AM

VIX has reversed course and is now making new daily lows.

Linda Piazza : 2/28/2008 9:57:30 AM

Remember that we have the Fed chairman speaking again today. Also, President Bush has scheduled a press conference for 10:00 to deal with some issues related to the housing market and the war, among other matters, so it could be that markets will be again at the whim of whatever news bullets are coming out of those two events.

Linda Piazza : 2/28/2008 9:55:22 AM

We're not getting the quick bounce that's been the de rigueur move of late, but the SPX is attempting to steady at Keltner support now at 1367.95 and about 1370.10 on 15-minute closes. First Keltner resistance gathers near 1376.60-1377.60 on 15-minute closes. The OEX is beginning to bounce as I type from potential support at 629.57 and 630.12 with resistance gathering at 633.80-634.20 on 15-minute closes. If both should rise into that resistance, watch for rollover potential there.

Jane Fox : 2/28/2008 9:48:46 AM

VIx is supporting the bears making new daily highs.

Jane Fox : 2/28/2008 9:48:21 AM

AD line is indeed well 0 and well below -1000 at -1410.

Linda Piazza : 2/28/2008 9:41:39 AM

Keltner outlook on the advdec line: Before the Keltner outlook, I have to mention a more traditional one. The advdec line approaches and almost touches a slightly rising trendline that's been in place since the morning of 2/15. That's at about -1300. Now for the Keltner outlook. If the advdec line should bounce from that trendline, we should watch for rollover potential when it reaches about -400 to -300. It currently has a downside target of about -2400, but it's not going to reach that target unless it's going to be a really, really bad day on the markets. For right now, I think it's possible that the advdec line may soon steady and then we'll see whether it barrels lower, through that trendline, or whether it bounces up to test resistance. It's at -1209 as I type.

Linda Piazza : 2/28/2008 9:37:40 AM

Okay, here we go. Short-term bears who can't afford to lose should have just-in-case profit-protecting plans in place now. There's absolutely nothing that prevents this formation from transforming again, this time into a bull flag sort of formation. There's no evidence of that yet, but you don't want to let a bounce get too big and turn your profits into loses.

Linda Piazza : 2/28/2008 9:35:15 AM

If the SPX begins a bounce, I would look for first resistance near 1375 (historical) and then, perhaps stronger, at about 1378 if a bounce should get that far.

Linda Piazza : 2/28/2008 9:34:29 AM

The OEX's potentially strong support on 15-minute closes is at 629.54 and 630.15. Unless the OEX barrels through that, you might watch for first bounce potential as the OEX approaches that zone. I would now expect first resistance to be near 634 if the OEX does bounce.

Linda Piazza : 2/28/2008 9:33:09 AM

Yesterday's SPX 1372 low could also help provide support.

Jane Fox : 2/28/2008 9:31:44 AM

DAteline WSJ - MF Global will take a $141.5 million bad-debt provision due to losses incurred by one of its traders in the wheat-futures market in the course of a few hours on Wednesday morning.

The news sent shares of the brokerage down in premarket trading to $25.92 after closing at $29.28 Wednesday.

The registered representative involved with the trades has been terminated effective immediately, said MF.

It blamed the loss, which represents about 6% of company equity, on a failure in MF's retail order entry systems which permitted its representative to book positions in his own account that were wiped out within hours. The unauthorized activity resulted in him incurring the loss, which the company is responsible to settle.

MF believes it has made the appropriate adjustments to its order entry systems to prevent a recurrence, adding that it has engaged a third-party risk technology consultant to review its relevant order-entry systems.

The wheat-futures loss is the second high-profile incident in recent months to involve a purported rogue trader. The discovery at MF Global comes a month after French bank Societe Generale said that a rogue trader rang up more than $7 billion in losses on his company's account by allegedly placing unauthorized bets on European stock indexes.

Keene Little : 2/28/2008 9:27:56 AM

I will be away from the market for about the first hour. Watch for the familiar pattern of the overnight corrective pullback followed by a spike up. See the all-hours chart of ES as an example. One change is the deeper pullback we've got this morning. But it doesn't remove the possibility for a whipsaw rally.

Linda Piazza : 2/28/2008 9:26:30 AM

SPX futures closed almost 11 points below fair value. If the SPX drops in accordance with that futures' action--and you know by now that I'm going to warn that it doesn't always do so--then it will be dropping into the 1369-1370 zone. The SPX has potentially strong short-term Keltner support on 15-minute closes at 1368.03 and 1370.72. We know that also coincides with historical S/R. So, unless it barrels through that zone, short-term bears might decide ahead of time how they'll protect profits at that zone.

Jane Fox : 2/28/2008 9:23:51 AM

It is not surprising the markets were weak overnight. First of all the DOW hit resistance yesterday and is due for a rest and secondly the GDP data out at 8:30 was certainly not market friendly.

I suspect the AD line will open well below 0 and may even open below -1000. Link

Jane Fox : 2/28/2008 9:20:52 AM

Dateline WSJ - MF Global announced a $141.5 million bad-debt provision, blaming a trader's losses in wheat-futures market.

Jane Fox : 2/28/2008 9:14:27 AM

WASHINGTON (MarketWatch) -- The U.S. economy slowed sharply in the fourth quarter, growing at a 0.6% annual rate, unrevised from last month's estimate, the Commerce Department reported Thursday.

For all of 2007, the economy grew at the weakest pace in five years, rising at an inflation-adjusted 2.2% after a 2.9% gain in 2006.

Many -- but not all -- economists believe a recession has now begun, based on data showing declining employment, incomes and industrial production. For the current quarter, economists are predicting no growth.

Gross domestic purchases -- the total value of goods and services bought by U.S. residents -- fell 0.3% in the fourth quarter, the first decline since the last recession quarter in 2001.

The revision to fourth-quarter gross domestic product was a tick lower than the 0.7% growth expected by economists surveyed by MarketWatch

Jane Fox : 2/28/2008 9:13:24 AM

WASHINGTON (MarketWatch) -- First-time claims for state unemployment benefits rose 19,000 last week, reaching the highest level since late January, the government reported Thursday. The number of initial claims in the week ended Feb. 23 gained 19,000 to 373,000, according to the Labor Department.

The four-week average of initial claims fell 1,250 to 360,500.

Recipients of state jobless benefits rose 21,000 to 2.81 million in the week ended Feb. 16, reaching the highest level since October 2005. The four-week moving average of continuing claims rose 24,250 to 2.78 million, also reaching the highest level since October 2005, when Hurricane Katrina flooded the jobless rolls.

The seasonally adjusted insured unemployment rate remained at 2.1%.

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