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Jeff Bailey : 3/1/2008 12:09:24 AM

There were several market moving stories today, but the one that looks to have had the biggest impact was in the bond market. A good trade that simply went bad, got worse, wasn't managed and now the time has come to pay the piper.

According to reports, more than one hedge fund has been holding, or putting on a trade where they were short shorter-term treasuries and used the capital from the short position to take long positions in the muni-bond market.

A "perfect sense" trade on the surface for sure. But be wary the trader that tries to eat on the "contrarian" perspective for a living. When real money is at risk, the "contrarian" had better know when to call it quits when the trade moves against them. You've seen it. The contrarian trades AGAINST the market.

I have not yet seen the details of the muni-bond side of the trade, but with information at hand from the various CME Regional Housing futures followed, my best guess is the heavy exposure will likely be Southern California, Las Vegas, or Miami. Perhaps all three?

A couple of weeks ago, Warren Buffett offered to "bail out" some of the mortgage-related lender's muni portfolios. Clever indeed as the lion attacks the tastiest prey in the herd.

Today, Pimco's Bill Gross reveals what is at hand. An investment opportunity to take advantage of the less fortunate. The rogue hedge fund that let things get out of hand.

I posted some news regarding the Houston Independent School District pulling a $385M offering today. Oh, there's a market for it, but with muni bond prices falling, at this time, it evidently doesn't make sense to go with the offering as the coupon rate would have to be "too high." Yes, timing is important, even with muni bond offerings.

Even thoughs with a firm tax base behind them. But when the muni market takes a hit, the entire muni market will have to adjust.

Again, it is my guess, but I'm going to have to think the muni bond area that is most heavily under pressure (and client sources do confirm such notion) is bond offerings that were done within the past year on new housing developments, where those developments have been put on hold, and the tax revenue hasn't come, even as roads and utilities were placed (via bond offering).

Certianly we've read some of the homebuilders earnings reports where they themselves have cancelled plans to build new communities, or scaled back the size of a community plan. Yet the municipality already floated the bond.

Jeff Bailey : 2/29/2008 11:11:58 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 2/29/2008 11:11:01 PM

Closing Internals at this Link

OI Technical Staff : 2/29/2008 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.

Keene Little : 2/29/2008 6:21:45 PM

Time to take another stab at a longer term price projection for SPX, based on my assumption that Bear Market Phase II is underway. Starting with the 60-min chart, today's close leaves two possibilities. The first is for an immediate decline on Monday, perhaps with a gap down as a couple of 3rd waves start to unfold. Link

But I'm leaning towards a bounce on Monday and maybe into Tuesday. I'll be looking for evidence in the bounce (assuming we get it) as to whether it will be just a correction and then head for new lows or instead will be the start of a larger rally up to a potential upside target near 1455.

On the daily chart I'm keeping the possibility for a continuation in a sideways triangle into mid March before the rally leg to 1440-1460 and then drop back down hard from there (bold pink). The dark red is clearly more bearish and whether we drop immediately on Monday, or bounce first and then head down, it's a bearish wave pattern that should drop to the 1150 area and then stair step lower into April and ultimately drop through 1000. Link

The weekly chart shows two possibilities based on whether the current consolidation is a 4th wave in the move down from October or a series of small 1st and 2nd waves in the developing 3rd wave. The dark red count shows a quicker (in time) drop to the 800 area before it sets up a larger bounce: Link

The pink count assumes the current triangle consolidation (which would not be finished yet as it needs another leg up inside it) is a 4th wave and the 5th wave down after this triangle finishes would set up a bigger bounce into June before letting go to the downside, ultimately working its way down to the 445 area next year.

This is obviously specuation on my part but they are patterns based on EW, Fibs and time ratios. Once the current consolidation makes it clearer what's playing out in the short term I'll then be able to update the longer term charts to reflect that. Have a great weekend.

Jeff Bailey : 2/29/2008 4:57:27 PM

Berkshire Hathaway ... Earnings Press Release Link

Letter To Shareholder Link

Jeff Bailey : 2/29/2008 4:54:26 PM

Speaking of Mr. Buffett ...

Jeff Bailey : 2/29/2008 4:51:50 PM

Again ... here is an example of some early work I began doing for a client (muni bond underwriter / broker / investor) in mid-February, using PHF and its portfolio of "junk bonds" as well as other individual "junk" to begin ascertaining where "peak value" for muni bonds under crisis mode will begin. (from 2/22/08 MM post at 2:44:40 PM EST) Link

Jeff Bailey : 2/29/2008 4:40:28 PM

Ms. Garrets model will more than likely be very close to what you and I have been doing with "junk bond" yields. As PRICES of muni-bonds have fallen sharply the past three days (deleveraging from hedge funds long munis via their short Treasuries) I would have to think that Mr. Buffett, Mr. Gross, and perhaps myself are seeing opportunity here.

Keene Little : 2/29/2008 4:32:55 PM

The NDX daily chart shows the sideways triangle and the two scenarios out of it. Two equal legs up for an A-B-C bounce off the January low would be near 1912. It could even head a little higher to its downtrend line from October near 2000 (pink wave count): Link

It's important to understand that the wave pattern is clearly longer term bearish as it's highly unlikely to be the start of a more bullish wave count (having to do with the sideways triangle pattern most often found in 4th wave and b-wave positions). Still, a rally to 1900, or 2000, would be a nice trade to the long side.

If it is a 4th wave triangle then we've started the 5th wave down from yesterday's high and might have completed just the 1st wave of wave-5 (dark red). The downside Fib projection is close to 1550.

Jeff Bailey : 2/29/2008 4:34:33 PM

Houston Independent School District Pulls $385M Muni Issue

DJ- The Houston Independent School District said Friday that it had withdrawn a planned $385.4 million municipal bond issue, citing the rapid recent rise of interest rates in the municipal bond market.

"This has never happened before," said Melinda Garrett, chief financial officer of the HISD.

Garrett said Friday that the bond issue, originally slated for next week, had been withdrawn after financing models used to price such offerings indicated that the cost of the planned financing would be prohibitive.

"These rates are way over where my financing model is," she said. "We're going to wait to see where the market is next week before we decide anything else."

Problems with bond insurers and failed auctions have wrecked havoc on the municipal bond market in recent weeks, leading to large-scale selloffs that have depressed municipal bond prices and caused yields to spike.

Garrett said the window for issuing the notes at an affordable interest rate had closed at a remarkably quick pace.

"If we could have gone earlier this week with the issue, the school district right next door got a 4.92% (interest) rate on its notes just last week," she said. "But then another district priced its (offering) at 5.2% yesterday and had no takers." She said another nearby district was unable to fill its order book even after offering a 5.4% interest rate on its planned bond offering.

Garrett said she was not sure whether the HISD might pursue other options, such as reducing the size of the issue or otherwise restructuring it.

Jeff Bailey : 2/29/2008 4:30:47 PM

US Bank Business Loans Up $4.3 Billion In Latest Week
National Jumbo CDs Down $1.7 Billion
Home Equity Up $1.3 Billion

Jeff Bailey : 2/29/2008 4:29:08 PM

Mexico's December Mining Production Down 10.7% On Year

Jeff Bailey : 2/29/2008 4:28:36 PM

Mexico's December Copper Output Down 38.6% To 18,730 MT

Jeff Bailey : 2/29/2008 4:27:57 PM

Mexico's December Gold Output Down 17.2% To 3,438 KG

Jeff Bailey : 2/29/2008 4:27:28 PM

Mexico December Silver Output Down 5.9% To 193,578 KG

Jeff Bailey : 2/29/2008 4:26:22 PM

Northrop Grumman (NOC) $78.61 -1.70% ... jumps to $82.38 extended as Wall Street Journal report it has won Defense tanker contract. (see 12:45:16 MM Post)

Jeff Bailey : 2/29/2008 4:23:28 PM

Gold, Silver Close at Record Highs ... GLD juuuuuust shy of resulting 100% from our "bull fit 38.2%" and upper-end of "Bailey Wave" channel.

Keene Little : 2/29/2008 4:18:37 PM

So many traders see the sideways triangle patterns playing out and many are expecting to play the break and that worries me (from a contrarian perspective). Might we see a head fake break in one direction to catch too many leaning to one side of the boat, tip them over and then reverse it hard?

With that in mind, the pink wave count shown on this NDX 60-min chart shows a reversal off today's low for a rally back above the Feb 1st high (for a large A-B-C bounce off the January low): Link

While we could see some immediate follow through to the downside on Monday, I'm thinking that even for the more bearish case we'll first see a bounce that then tips over for a hard decline (dark red). We'll just have to let Monday's early-morning price action help answer that question.

Linda Piazza : 2/29/2008 4:04:19 PM

Have a good weekend, everyone. I don't know about the rest of you, but these markets are wearing me out! My credit spread positions have been profitable for the last seven months, but what little profit for such great amounts of effort! The same is true of our efforts to add commentary and make sense of the markets. I know from talking to them that every single one of my colleagues puts in hours and hours of work to write this commentary and I, for one, appreciate all their efforts.

Now we all need to get away from these markets for the weekend--including subscribers--and reconnect with the people (and animals, for I know that at least three of us are owners of goldens and/or labs) who mean something to us. Remind yourselves why you're doing this. Breathe.

Keene Little : 2/29/2008 4:01:51 PM

If they can close ES at or above 1332 it's going to look like a possible throw-under below the uptrend line from Feb 11th. That could leave everyone guessing as to whether we get downside follow through on Monday or a reversal off the support level. This market has been really good at reversals just when you think you've got a trend started.

Linda Piazza : 2/29/2008 3:57:54 PM

I don't know which way these markets are going to eventually break. I haven't felt comfortable stepping back into equities with our money yet, so obviously I have some concerns and I'm in the "it needs to retest" camp. However, I'm not entirely sure that will happen immediately, and maintaining some skepticism about it. You need to be prepared for anything.

Linda Piazza : 2/29/2008 3:55:52 PM

Weekly SPX chart showing the tests of the (green) weekly 200-ema over the last couple of months: Link This obviously could be pierced next week, but look how often it's been tested without a weekly close beneath it. Be careful with your bets if you're holding over the weekend.

Jane Fox : 2/29/2008 3:54:52 PM

Economic Reports for Monday March 3rd include:

10:00a.m. Jan Construction Spending. Previous: -1.1%.

10:00a.m. Feb ISM Manufacturing Business Index. Previous: 50.7.

Jeff Bailey : 2/29/2008 3:53:15 PM

iShares Russell 2000 (IWM) $68.13 -3.11% ... trades 19.1% conventional.

Linda Piazza : 2/29/2008 3:52:37 PM

In case you miss it inside that last post, the SPX is fast approaching its weekly 200-ema at about 1322.85 with the weekly 200-sma at about 1297.99.

Linda Piazza : 2/29/2008 3:51:53 PM

I was just looking at my annotations on last night's daily chart for the SPX. It reads: "Watch for potential support there [at the 30-sma] if the SPX drops, but if that doesn't hold, then support near 1330 may be tested." All day, I kept being worried (on behalf of bears who needed to protect their profits) about whether the SPX was going to bounce any moment, however.

As you make those end-of-day and end-of-week decisions, remember that you can't count on anything in this market. In normal times, a steep drop through the end of the day would suggest that not all sellers got a chance to get out. It would suggest some potential follow-through on Monday, but perhaps only with a doji-type day produced. These are not normal times, however, and we can't count on normal reactions. What you may not be aware of if you're looking only at daily charts is that the SPX's weekly 200-ema and -sma's are being approached, with the weekly 200-ema at about 1322.85 and the 200-sma at 1297.99.

Keene Little : 2/29/2008 3:50:45 PM

If you're feeling bearish about this market, and this breakdown is turning me that way, pick up a few puts before the close. It's possible we could see a big gap down on Monday (but too risky to hold a futures position). Go slightly OTM and that way you can get rid of them quickly Monday morning for minimal loss if it looks like we'll bounce instead.

Keene Little : 2/29/2008 3:48:36 PM

The next possible support level for SPX/ES is the Feb 22nd low near 1327 (heading there now). For the DOW it would be the uptrend line from Feb 11th near 12200: Link

Jane Fox : 2/29/2008 3:46:01 PM

Fortunately we only have 15 minute left 'til the cash markets close otherwise I'm afraid SPX's support at 1320 may not hold up today. Link

Jane Fox : 2/29/2008 3:44:46 PM

Crude hit a high of 103.02 today.

Linda Piazza : 2/29/2008 3:44:52 PM

Just as this morning's bounce looked choppy, composed of alternating green and red candles, this afternoon's decline since about 2:00 ET is beginning to look that way, too. So far, the SPX's 15-minute 9-ema is still serving as resistance on 15-minute closes and that's what bears want to see, but you need to be making those end-of-day decisions. If you're trading the SPX, you might notice some difficulty getting trades filled during busy times of day, and the close on a Friday could be one of those times. If it's your intention to close out and take your profits home for the weekend, you might begin thinking about when you're going to get your order in. Be aware that the SPX could just dive into the close today and if you close out any time soon, you could be missing another few points of profits. However, it's easier to sell-to-close puts and get an advantageous price when prices are still dropping than it is to do so when all the shorts decide to cover at the end of the day, if they should decide to do so. It's a bit of a guessing game, as it always is, but consider this as you make your decision.

Jane Fox : 2/29/2008 3:42:48 PM

I have talked about when a MACD divergence is not a divergence. When price is consolidating at daily lows and the MACD is climbing, conventional divergence theory says this is bullish but I have found this pattern to be just the opposite and very bearish.

Here is a classic example of it. Link

Keene Little : 2/29/2008 3:41:35 PM

I've been stopped out at 1331 and I'll be remaining flat for the weekend.

Jeff Bailey : 2/29/2008 3:41:21 PM

Origin Agritech (SEED) $6.65 +0.15% Link ...

Keene Little : 2/29/2008 3:40:38 PM

NDX is fighting to hold onto its uptrend line from January as well. This is a must-hold area for the bulls. Otherwise the bearish wave patterns start to move to the front of the line.

Keene Little : 2/29/2008 3:39:01 PM

The DOW found support at its uptrend line from January, at 12270. So if the market can't bounce into the close but instead breaks down from here, the bullish setup will have failed and I'll simply step aside. It could be fear of the dark and people exiting before the weekend or it could be start of something much stronger to the downside (Black Monday?). Considering the risk of holding a position over the weekend, unless there's a big cushion on my long play here, I will prefer to be flat (or hedged).

Linda Piazza : 2/29/2008 3:36:28 PM

If the dollar doesn't pull up soon, we'll soon all be taking up quilting again to use up the fabrics from outgrown clothing because we can't afford to buy new textiles. We'll be growing our own food, tooling around town on bicycles. We'll be reading by candlelight made from our own beeswax candles.

I'm not serious, of course, but am exaggerating how difficult it will be for us to afford imported products.

Jeff Bailey : 2/29/2008 3:26:37 PM

03:00 Internals found at this Link

Jane Fox : 2/29/2008 3:26:30 PM

Here is McMillan's weekly commentary.

We still have some bullish indicators, but there are a few others that are weakening, so it's more of a mixed picture now. $SPX is right at the forefront of the battle. If it's not the primary predictor, it's at least the scorecard. $SPX was stuck in a rather narrow range between 1340 and 1370 for nearly two weeks. That didn't necessarily mean that there was no volatility, though: $SPX had daily ranges of over 20 points on every day in that period, and over 25 points on most days. Now that $SPX closed above 1370, we turn our gaze upward. There is resistance for $SPX at 1390-1400. A close above there would be very positive, and would probably mean that the current rally is going to extend for a at least a few more weeks. A failure at that level, though, and we could easily be back down testing support at 1325 in very short order.

The equity-only put-call ratios have been correctly bullish, when the weighted ratio -- in early February -- finally confirmed the standard ratio's buy signal. With the upward movement this week, you'd think these reliable indicators would be turning even more bullish, but they haven't. As you can see from Figures 2&3, both have developed a "wiggle" or slight "hook" on the far right hand side of their charts. At the present time, our computer analysis of these charts still says they're on buy signals. But if they truly roll over and begin to trend higher, then that would be a big negative for this market.

Market breadth (advances minus declines) has been a reasonably good predictor this year. So, the fact that breadth indicators are now overbought is worth noting. As our readers know, an overbought condition is not -- by itself -- negative. In fact, it shows that a lot of issues are participating in this week's rally. However, if breadth can't maintain itself at these strong levels, then it would be time to worry. Declines led advances by a slight amount today. If declines outnumber advances again Thursday, then a sell signal will have been issued. So it is imperative for the bullish case that breadth continues to expand.

The volatility indices ($VIX and $VXO) have been decreasing steadily, and that is a bullish sign for the broad market. Ever since $VIX peaked near 30 in late January, it's been in a downtrend and the broad stock market has been in a less enthusiastic uptrend. As long as this condition persists, $VIX is a bullish intermediate-term indicator for the market.

So, we have mixed indicators. $SPX has broken out over resistance but is now encountering a potentially stronger resistance area. The equity-only put-call ratios are on buy signals, but the "hooks" at the ends of their charts might lead to sell signals. Breadth is positive now, but if it weakens, a sell signal will result. Only $VIX seems solidly bullish.

At this point, the best tack would be to lighten up with $SPX near the 1390-1400 resistance area. You can re-enter on the long side if $SPX breaks through there and continues on above 1400. Otherwise, you'll be glad you took some profits as the next correction unfolds

Keene Little : 2/29/2008 3:25:47 PM

Got the bounce. Now raise your stop to 2 or 3 ticks just below the low, so ES 1331 stop.

Linda Piazza : 2/29/2008 3:18:32 PM

The SPX's 15-minute 9-ema is now at 1336.52, and the OEX's, at about 616.20.

Keene Little : 2/29/2008 3:16:04 PM

This should be it, try a long play here with a stop no lower than ES 1330.

Linda Piazza : 2/29/2008 3:09:19 PM

I've been studying charts, seeing if over the last hour anything is bouncing big, falling far, showing us anything predictive. Nothing is. If you're in bearish positions, it's soon going to be time to make those decisions about whether you're going to hold over the weekend. If you're not, you'll want to start cinching your stops up tighter so that you're taken out near the bottom if a bounce gets going too strong. If it then reverses the moment you're taken out and drops to a new low, still congratulate yourself on locking in those gains.

If you're holding over the weekend, you probably won't want to cinch your stops up so tightly, but you still want to make sure that you don't let a profit turn into a loss and that you maintain some kind of buffer. Before you make the decision to hold overnight, though, be aware how theta will impact your option's price due to the passage of time. For example, imagine that you have a 1335 MAR put. As I type, the bid/ask is 30.00 x 32.00. If all else stays the same (volatility, interest rates, etc.) and the SPX opens exactly where it is now Monday morning, the theoretical price of that option will be 24.43. This is theoretical and the actual options prices can be quite different, but it confirms the idea that, with all other things equal, the SPX would have to drop quite a bit more Monday morning to make up for the theta-related decay in price over the weekend.

Keene Little : 2/29/2008 3:04:53 PM

One more minor new low (may not get it) would be a good setup now. Looking for bullish divergence against the morning low and very short term divergence against the last low at 2:30. ES came within 2 ticks of its downside target at 1332 and NDX tagged its target at 1749. If you're short, pull your stop down tighter now.

Jane Fox : 2/29/2008 2:53:54 PM

Once you see the AD volume in this steady 135 degree angle you can be rest assured fading will not work.

Jane Fox : 2/29/2008 2:52:39 PM

This is an AD volume trajectory that trumps all other internals, even the VIX. Link

Jane Fox : 2/29/2008 2:51:40 PM

I have moved the lower trendline down on the SPX chart so it tags all the swing lows and so far it is holding up but I think the 1320 support is destined to have a revisit. Link

Jane Fox : 2/29/2008 2:49:54 PM

I have taken the magenta trendline off the chart because it has become of little use now.

Jane Fox : 2/29/2008 2:48:39 PM

This retracement should be putting the bulls at full alert now. The reverse head and shoulders has basically been negated and a bullish pattern that does not go to full target is quite bearish.

However the bulls still have a ways to go before I will throw them out with bath water. Link

Jeff Bailey : 2/29/2008 2:36:37 PM

Oil Service HOLDRs (OIH) $175.71 -3.77% ... back to test 50% conventional.

Jeff Bailey : 2/29/2008 2:34:49 PM

PAL at its WEEKLY Pivot

Jeff Bailey : 2/29/2008 2:33:39 PM

Taders are really working over this WEEKLY R2 in SWC aren't they?

Jeff Bailey : 2/29/2008 2:28:23 PM

US Oil Fund (USO) $81.00 -0.56% ...

Jeff Bailey : 2/29/2008 2:28:03 PM

OPEC PANEL HEARS DATA BACKING NO OIL INCREASE

DJ- A technical panel that gauges the state of the oil market hears there is no evidence to support an increase in production, as the numbers point to an overhang of supply against demand.

Keene Little : 2/29/2008 2:22:31 PM

I need to step away for about 30 minutes.

Keene Little : 2/29/2008 2:21:25 PM

ES is now approaching potential support near 1332. If it looks to be putting in a low there, with bullish divergences on the short term charts, particularly against this morning's low, it's a good setup for a long play.

Linda Piazza : 2/29/2008 2:20:35 PM

As a reminder, the 2/22 SPX intraday low was 1327.04. Also as a reminder for those who believe such a negative day will always see selling into the close, as is often true of such days, the SPX began climbing during the 3:15 candle that day and by the close had added more than 27 points to that low-of the day. That's why I keep cautioning to have your profit-protecting plans in place, just in case.

Keene Little : 2/29/2008 2:15:40 PM

Silver has gone ballistic, literally. By rallying above both its longer term up-channel from August and then above its shorter term up-channel from December, this is the very picture of a parabolic rise. I suppose it could be different this time but probably not--all parabolic rallies end badly. At this point though I'd like to see silver (YI, May) make it up to its Fib projection at $20.88. Link

Keene Little : 2/29/2008 2:10:28 PM

From a short term perspective it looks like oil should push a little higher to complete its move up from Feb 21st which in turn could complete the move up from the January low. That would also have it touching the top of a potential expanding triangle, typically a topping pattern. A rally to about $104 could do it. Link

Linda Piazza : 2/29/2008 2:07:58 PM

My version of a fitted Fib bracket suggests 1332-1333 may be next support if the SPX keeps falling, and I think that Keene was suggesting possible support in that area, too. The SPX's daily Keltner chart suggests that about 1326.30 could be support on daily closes. Remember that I wouldn't be surprised by a bounce, either.

Keene Little : 2/29/2008 2:03:55 PM

Gold (YG, April) finally made it up to the top of its rising wedge pattern (rising wedge unless the rally keeps heading north and breaks out the top of it) and today looks to be leaving a potential evening star reversal pattern. That pattern needs a down day tomorrow to confirm it. So do you feel lucky? Shorting it here is the setup but keep it on a tight leash. Link

Linda Piazza : 2/29/2008 2:01:38 PM

Some of those divergences I mentioned earlier have now been erased. The VIX has climbed to a new high of the day. The advdec line has not yet dropped to a new low, though, and neither has the USDJPY. These are minor divergences for now, but your job now if in bearish positions is to make sure that your profits don't turn to losses if a bounce should get started. Keep following the SPX lower with your stops.

Jeff Bailey : 2/29/2008 1:58:51 PM

Would be something if PBR pulled an AAPL

Jeff Bailey : 2/29/2008 1:58:02 PM

Petroleo Brasileiro (PBR) $118.40 -5.17% ... probes 19.1% conventional again.

100% DOWN at 1/22/08 low. 0% we've been dragging UP at recent high.

Linda Piazza : 2/29/2008 1:53:42 PM

Here's a 15-minute Keltner chart, with a Fib bracket superimposed, showing where the SPX is: Link The SPX can of course break down out of the channels. It can also do what it did Tuesday and Wednesday in reverse--bounce a little and then come back and hit the channels again at a lower level, producing Keltner-style and other bullish divergence--but the Fib brackets fit well with consolidation zones, too, although I personally think they would fit better with a drop toward 1332-1333.

Jeff Bailey : 2/29/2008 1:50:42 PM

So many waves ... it can get very confusing.

Jeff Bailey : 2/29/2008 1:50:10 PM

Will be looking for a long in VLO back near base of "Bailey Wave" (7/10 to 8/16 to 10/11) and conventional 19.1%.

Linda Piazza : 2/29/2008 1:48:46 PM

Those slight divergences I mentioned in my 1:38:45 (bullish for the SPX, but oh-so-tentative) still exist. In addition, the SPX price/RSI chart showed a slight but of course tentative bullish divergence. Anyone who has traded any length of time has seen prices cascade lower with all sorts of bullish divergences being produced all along the way, so do not let this guide your actions, but do use it as a warning to keep your profit-protecting plans updated.

Keene Little : 2/29/2008 1:46:55 PM

Because of the Fibs, wave pattern potential and uptrend line I still like the idea of a long play around ES 1332. That's "only" 8 points lower.

Jeff Bailey : 2/29/2008 1:46:25 PM

Various Energy Futures @ 01:00 PM EST ... March Unleaded, NY ULS Diesel and Heating Oil expire today. Link

Jeff Bailey : 2/29/2008 1:46:07 PM

Various Energy Futures @ 01:00 PM EST ... March Unleaded, NY ULS Diesel and Heating Oil expire today.

Linda Piazza : 2/29/2008 1:42:18 PM

I keep listing Keltner targets but sometimes I just have trouble believing they're going to be hit. I "know" that there's support somewhere on the chart, support that isn't there on Keltner charts. The SPX didn't hit the original target from this morning, down below 1337, but it did almost hit the current target, now at 1338.89. Keltner lines are dynamic and that line had risen while the SPX consolidated.

Linda Piazza : 2/29/2008 1:38:45 PM

Careful: these slight new low of the days on the price charts for some indices are not accompanies by new advdec line lows or USDJPY lows, nor new VIX highs, although all those could change rather soon.

Keene Little : 2/29/2008 1:38:30 PM

It looks like the next leg down is in progress. Along with potential support at DOW 12270 (and then 12200), NDX could find support at its uptrend line from January, currently near 1749. The line is the bottom of its triangle pattern and everyone will be watching that line carefully. A break of it would likely trigger a lot of stops.

Linda Piazza : 2/29/2008 1:36:29 PM

No climb toward the top of the smallest channel. In stead the SPX dropped to test support, now at 1338.94 and about 1340 on 15-minute closes. For the OEX, it's at 617.51 and 606.63 on 15-minute closes.

Linda Piazza : 2/29/2008 1:26:52 PM

The SPX's 15-minute 9-ema has flattened, and we've been in the lunchtime lull period, so a possible next thing to have happen is for the SPX to drive up toward the top of its smallest channel, with that now at 1348.56. It's not a given, as big money people coming back from lunch might decide to run prices down and test whether buyers will step in instead, but a run across to the other side of the smallest channel is a typical thing to happen this time of the day. Unfortunately, bears won't know what will happen after such a runup, if it does occur, until after it does.

Jane Fox : 2/29/2008 1:23:03 PM

AD volume trajectory is telling very clearly the only trades you should be making today are, "Selling rallies." Link

Jeff Bailey : 2/29/2008 1:19:49 PM

01:00 Internals found at this Link

Jane Fox : 2/29/2008 1:07:38 PM

Here is a link to the whole article I referenced in my last post. Link

Jane Fox : 2/29/2008 1:08:43 PM

NEW YORK (MarketWatch) -- The mortgage crisis and resulting credit crunch are likely to have a big negative impact on economic growth over the coming year, a new study prepared by several prominent economists and released Friday has concluded.

"Feedback from the financial market turmoil to the real economy could be substantial," it said. The report was released at a forum on U.S.

The report was released at a forum on U.S. monetary policy in New York in which several senior Federal Reserve officials and economists were participating.

The report estimates that the credit crunch is expected to push down growth by 1.3 percentage points over the next 12 months.

After an initial period where several financial markets seemed immune from the crisis, the credit crunch is now gathering storm.

Almost as alarming is the report's conclusion that this crisis is unique in the annals of U.S. economic history but now may serve as the template for more crises to come.

Keene Little : 2/29/2008 12:52:45 PM

The sideways triangle pattern for the DOW would have it dropping to the 12200 area before setting up another rally back up to the top of it, as shown in pink on its 60-min chart: Link

A break below 12200 would be trouble, confirmed with a break below the key level at 12155. The daily chart shows the bullish triangle with a leg up into the latter part of March (again, in pink): Link

Linda Piazza : 2/29/2008 12:48:26 PM

Another 15-minute SPX close beneath the 15-minute 9-ema. That's what bears want to see, but they want that resistance confirmed by a decline to a new low. So far, that's not happening. I'm not the only person who can draw a trendline, and you can bet there are lots who have drawn that trendline off the January low and see it as a point at which to buy, so we have a bear versus bull battle going on. Who will win? I don't know, but if there's a sudden swoop lower, watch for potential support in that 1336-1337 zone and perhaps even earlier, at 1340.00.

Jeff Bailey : 2/29/2008 12:45:16 PM

Defense Dept To Announce Refueling Tanker Winner @ 5 PM EST

DJ- The U.S. Defense Department said Friday it has signed a huge contract for refueling tanker aircraft for the U.S. Air Force, capping a fierce battle between Boeing (BA) and European rival EADS (EADSY).

The winner of the estimated $40 billion contract was expected to be announced at 5 p.m. EST (2200 GMT).

John Young, defense undersecretary for acquisition, technology and logistics, signed the tanker contract on Thursday, the Pentagon media office said in an email.

"Late yesterday (Thursday), Mr. Young as the Milestone Decision Authority signed the Milestone B Acquisition Decision Memorandum for the KC-X program," the email said, referring to the program for purchasing 179 refueling tanker aircraft for the U.S. Air Force.

The Chicago-based Boeing Co. has been considered the heavy favorite to win the contract.

Boeing is competing against a team led by Boeing's arch-rival, the European Aeronautic Defence and Space Co. (EADSY), parent of Airbus, and U.S. peer Northrop Grumman Corp. (NOC).

Boeing and EADS-Northrop have battled for more than a year to snare the strategically important contract.

A Pentagon acquisition panel met Monday to consider the bids.

Initially, a similar tanker contract had been awarded to Boeing in May 2003 but subsequently was annulled under allegations of procurement fraud.

In 2005, the Defense Department inspector general concluded that the awarding of the contract to Boeing amounted to a hidden subsidy to the U.S. firm.

Following that report, the U.S. government reached final agreement with Boeing on a record $615 million settlement to resolve criminal and civil procurement fraud allegations.

Linda Piazza : 2/29/2008 12:33:16 PM

The SPX's and OEX's 15-minute 9-ema's did hold as resistance on that last test (12:30:16 post), but they're being tested again as I type. It currently looks almost equally likely that the SPX will climb toward 1348.36 as it will drop to 1340.49.

Jeff Bailey : 2/29/2008 12:30:22 PM

On 1/31/08, PHF closed $8.08.

Linda Piazza : 2/29/2008 12:30:16 PM

The SPX's 15-minute 9-ema is currently at about 1346.50 and is being tested as I type. Equity bears want it to hold as resistance on 15-minute closes. I'm not entirely sure it will this time. For the OEX, that average is at about 620.50 and the OEX isn't yet quite up to that average as I type.

Jeff Bailey : 2/29/2008 12:28:59 PM

PHF $8.43 -0.23% ... this is "riskiest" of bond classes. Based on $0.075/month, or $0.90/year dividend, SEC Yield currently 10.67%

Keene Little : 2/29/2008 12:24:04 PM

The market is only consolidating near the lows while the a-d line continues to deteriorate. It's likely new lows will follow. The DOW's uptrend line from Jan 22nd is currently near 12270 and there's not much between here and there for support.

Jeff Bailey : 2/29/2008 12:23:29 PM

iShares offers three (3) ... California Muni (AMEX:CMF) $100.93 -0.89%

New York Muni (AMEX:NYF) $100.00 -2.10% ...

S&P National (AMEX:MUB) 97.44 -0.40% ...

Linda Piazza : 2/29/2008 12:21:39 PM

Previous SPX low of the day: 1342.48. For the OEX, it was 618.12.

Jeff Bailey : 2/29/2008 12:19:54 PM

BIG profits during the California debacle a couple of years ago!

Jeff Bailey : 2/29/2008 12:17:14 PM

5-year Yield ($FVX.X) down 14.4 bp at 2.579% ... would be a good comparison benchmark to your next step out of risk.

Fed Govt. Treasury is "safest."

Muni next level.

Linda Piazza : 2/29/2008 12:13:01 PM

The advdec line hit a low of -2220 today, just above the potential Keltner support (and previous target), now at about -2300. The advdec line is now at -2042, attempting a bounce that's rather tepid so far. Still, watch this now that the advdec line has essentially hit its target and potential support.

Linda Piazza : 2/29/2008 12:08:57 PM

The SPX's 15-minute 9-ema, now at 1346.60, has so far held as resistance on 15-minute closes. Potential Keltner support is now at 1337.16 and 1339.62 on 15-minute closes. For the OEX, those numbers are 620.65 potential resistance on 15-minute closes and 615.84 and 617.53 potential support.

Jeff Bailey : 2/29/2008 12:06:12 PM

Excellent, excellent move in my opinion. If interested, check with your TAX ADVISOR first for taxable accounts if looking to invest in munis outside of your state of domicile.

Jeff Bailey : 2/29/2008 12:04:59 PM

PIMCO'S GROSS EYES MUNI BONDS, AGENCY RMBS

DJ- Bond giant PIMCO will move its money out of U.S. Treasurys and corporate-credit markets and into U.S. municipal bonds and government agency securities over the next few months as these assets are offered at rock-bottom prices, managing director Bill Gross says.

Linda Piazza : 2/29/2008 11:58:32 AM

The SPX's 15-minute 9-ema is now at 1347.59. The OEX's is at 621.08. So far, the bounces still look like bear flags, destined to break to the downside, but remain aware of the possibility that this bounce could get stronger instead.

Jeff Bailey : 2/29/2008 11:49:33 AM

Colombia Nov-Jan Urban Jobless Rate 10.6% Vs. 12.8% Year Ago

Jeff Bailey : 2/29/2008 11:48:34 AM

Colombia Jan Urban Jobless Rate 12.4% Vs. 14.4% Year Ago

Jeff Bailey : 2/29/2008 11:48:08 AM

Chile Peso Closes At Fress 10-year High Amid US Econ Concerns

Jane Fox : 2/29/2008 11:47:27 AM

The SPX has already broken through its upper trendline. Unfortunately the reverse head and shoulders pattern on the SPX chart was not as clear as it was on the DOW chart and is one of the reasons I have been using the DOW chart to determine the general market direction this week. Another reason is the DOW tested resistance and the SPX did not.

OK here is something interesting. Take a look at SPX's swing high at 1400 and the swing high made on Feb. 27th. Now look at the MACD. Do you see a bullish MACD divergence here? Link

Linda Piazza : 2/29/2008 11:46:17 AM

The Dow has already bounced back to its 30-sma, I'm noticing.

Jeff Bailey : 2/29/2008 11:41:03 AM

QCharts Server Selection: To switch servers, press the CTRL then the ALT then the N keys.

Jane Fox : 2/29/2008 11:40:51 AM

Well the DOW has done almost exactly what I thought it would; test resistance, retrace and then test the neckline of the head & shoulders.

Next week the bulls need the DOW to return to 12800 resistance and then break through. If they do not they, then they need to hold on to the swing low from Feb 11th at 12069 (~12000).

The bulls would be in real trouble if support at 12000 breaks. Link

Linda Piazza : 2/29/2008 11:40:25 AM

So far, the bounce still doesn't look too big, but it's looking a bit stronger than it did.

One of my possible scenarios for the day has always included the possibility that the SPX could close the day at or above its 30-sma. It's not the only scenario that I can foresee, but I think that's a viable possibility, that bounce back to the 30-sma and a close somewhere near it. That's why I've kept warning of the potential support near 1342 and the need for bears to have their profit-protecting plans in place.

For now, though, we just have the expected bounce from near 1342, up to test the descending 15-minute 9-ema, and we're going to have to see how that turns out.

For bulls testing the waters, I'd be very watchful of potential resistance swamping your trade at any moment, but particularly near the daily 30-sma, if the SPX should rise that far, so perhaps in the 1352-1354 range. Understand, I'm not suggesting a bullish trade, but I know there are some out there who must already be in them.

Keene Little : 2/29/2008 11:31:04 AM

The ES 60-min chart shows the lower lines of the two potential triangle patterns. The bullish triangle is the one where the bottom starts from the Feb 7th low and is near 1332. But the uptrend line from the January low was nearly tagged this morning at 1340. A bounce back up to test its broken down-channel, or the bottom of this morning's gap down, could get it back up to 1353-1355: Link

I had mentioned the move down from Wednesday's high could be viewed as only a 3-wave move so far. If price consolidates for a good part of today and then heads lower again it would give us a 5-wave move down (which would be bearish sign). But if the decline continues with only small bounces then the 2nd leg down (the drop from yesterday afternoon's bounce) would achieve 162% of the 1st leg down at 1331.80, practically right on top of the uptrend line from Feb 7th.

Linda Piazza : 2/29/2008 11:30:28 AM

The USDJPY has climbed above one level of Keltner resistance but it needs to maintain 15-minute closes above it (104.11) and then break above Keltner resistance near 104.34 before it's displayed even a short-term change in tenor. Do keep a watch on this, however, as this currency pair dipped into potentially strong Keltner support. It's at 104.17 as I type.

Linda Piazza : 2/29/2008 11:28:25 AM

The SPX bounce isn't yet impressive, but since it comes from a level that could be important support, bears should remain watchful. The SPX's 15-minute 9-ema is now at 1348.37; the OEX's, at 621.56.

Jeff Bailey : 2/29/2008 11:25:22 AM

QCharts server 209.202.214.25:23100 has accurate SPX/OEX quotes.

Jeff Bailey : 2/29/2008 11:20:01 AM

Carrizo Oil (CRZO) $57.76 -6.12% ... being cut to "neutral" from "add" at CapitalOne

Linda Piazza : 2/29/2008 11:16:49 AM

The SPX's 15-minute 9-ema is now at 1349.45; the OEX's, at 622.02. If the indices bounce up to test these, bears want them to hold as resistance on 15-minute closes; bulls, of course, want the opposite.

Jane Fox : 2/29/2008 11:17:48 AM

Earlier this week I mentioned the VIX will always trump the AD volume as an internal unless the AD volume has a very very clear trajectory. Today the AD volume trumps the VIX. This is the kind of trajectory I was talking about. Link

Jeff Bailey : 2/29/2008 11:15:03 AM

11:00 Internals found at this Link

Jane Fox : 2/29/2008 11:14:05 AM

The markets are very oversold and we should get a reactionary bounce soon but you need to have a lot of evidence that any upward moves is not just noise.

Jane Fox : 2/29/2008 11:12:46 AM

VIX is in sync with the S&P futures and telling me it is not a time to try a fade. Link

Keene Little : 2/29/2008 11:12:02 AM

QCharts ver. 5.1 is having a problem with some CBOE symbols (SPX, OEX, RUT and VIX) with spike lows this morning that is making their charts less then worthless. No estimate for when it will be fixed (probably not until the weekend at least. For all its talked about reliability, eSignal has done nothing but make QCharts worse.

Jane Fox : 2/29/2008 11:10:41 AM

AD line is a very bearish -2101 and has actually made a low of -2184 earlier.

Linda Piazza : 2/29/2008 11:04:38 AM

The MID has taken over leadership status the last week or two, and it's been leading to the downside today. It's now hit and even slightly exceeded its downside Keltner target analogous to the SPX's 1336-1337 level.

What does that mean for the SPX? It means that it still has vulnerability to the 1336-1337 level, that it's not impossible that it will be hit, but I'd certainly keep my eye on the MID now, watching for a bounce. Out of the MID, SPX and OEX, the MID has tended to be the leader (both to the upside and the downside), the SPX, the next in line and the OEX the follower. On upside moves the MID has led, the SPX hasn't quite gotten to the same Keltner levels or else arrived there after the MID, and the OEX has underperformed. On downside moves, the MID has led to the downside, the SPX has either not quite gotten to the same target or else arrived there later, and the OEX has outperformed by not falling as ominously, at least on a Keltner basis.

Jeff Bailey : 2/29/2008 10:59:12 AM

Coeur D' Alene (CDE) $4.82 -0.41% ... slips under mid-point of "Bailey Wave" $~4.87. I've got my Andrews Pitchfork (Modified Schiff) from 8/29/07 to "Wave #1" relative high of 11/07/07. More importantly, conventional from 4/19/06 relative high to 8/28/07 low. Need resulting 38.2% of $4.82 to hold closes. WKLY Pivot $4.75.

Keene Little : 2/29/2008 10:58:54 AM

I'm back (almost--having some computer troubles for the past 20 minutes). SPX has clearly violated the 1350 level and looks like a bearish start to something more significant to the downside. But this market has shown the ability to reverse on a dime no matter which direction it has gone the day before.

Right now the move down from Wednesday can be viewed as just another 3-wave move down (albeit a sharp move down) and we're still within the sideways triangle trading range. Take nothing for granted. If and when we get a bounce (still waiting for my charts to update real time) and it makes it up to the bottom of the broken down-channel (near 1353) I'll be watching to see if it acts as resistance now.

Linda Piazza : 2/29/2008 10:58:12 AM

If you're in a bearish SPX or OEX position, you now have the easier task. You now follow the SPX and OEX lower with your stops, setting them an account appropriate level away from the current levels. Be aware that the SPX is trying to steady near that 1342 level that I've been mentioning since last night's Wrap, but that doesn't mean it will do so all day. I wouldn't let a bounce get too big and turn profitable trades into losing ones, though. If the SPX should drop to 1336-1337 and the OEX to 614.50-615.50, those of you in bearish positions need to know how you'd address a drop into that potential support. If you've got 2 contracts or 40, would you automatically exit a portion and lower the stop to breakeven on the rest? Would you automatically exit all and just watch what happens next? Would you just cinch up your stop?

Linda Piazza : 2/29/2008 10:54:57 AM

The advdec line is now at -2202 as I type, with potential support now just below -2300. There's no sign of a bounce yet, but keep a watch on this if your charting service provides you with the feed for this.

Jeff Bailey : 2/29/2008 10:54:34 AM

iShares Silver (SLV) $194.19 -1.25% ... slips back under the mid-point of stacked "Bailey Wave" (see DXY and SLV charts from yesterday)

Jeff Bailey : 2/29/2008 10:53:05 AM

DXY tapped the mid-point of "Bailey Wave" yesterday, then again today's session.

Jeff Bailey : 2/29/2008 10:52:20 AM

US Dollar Index (DXY) 73.79 +0.08% (30-min delayed) ...

Jeff Bailey : 2/29/2008 10:51:44 AM

PAULSON SEES 'UPS AND DOWNS' FOR DOLLAR

DJ- U.S. Treasury Secretary believes a strong dollar 'is in our nation's interest' even as its value sinks versus competing currencies, tying its value to expectations for U.S. growth, which he says faces significant headwinds.

Linda Piazza : 2/29/2008 10:50:42 AM

The USDJPY has bounced from its day's low of 103.81 to its current 104.14 level. In doing so, it's bounced right up to next resistance at about 104.15-104.34. It needs to produce sustained 15-minute closes above that resistance before there's a change in even short-term tenor, but if you're in bearish equity positions, keep a watch on this since my Keltner and other charts tell me that this currency pair may be close to support.

Linda Piazza : 2/29/2008 10:53:19 AM

I'm out of all my March credit spreads, but if I were still in any, I'd have been using today to see if I could close out some of the bear call spreads for minimal amounts, locking in most of my profit and removing the risk in case of some kind of massive relief rally. If you're so inclined and are in March credit spreads, take a look and see if some might be exited for account appropriate levels. I try to lock in 60% of my original credit, being conservative and quick to exit in these markets, but I prefer to be able to exit for $0.10-0.15, locking in the rest of my profit. If a credit spread that I'd originally entered for $0.50-$0.60 was now worth only $0.10, there's no way I'd let it sit for the next three weeks, the risk still there, but that's just me.

Linda Piazza : 2/29/2008 10:43:15 AM

The OEX's rising trendline off its January low now crosses at about 614.50. The OEX has not hit it yet this morning. As I said with the SPX, that trendline has only two touches as yet, so I don't consider it 100% valid. However, unlike the SPX, the OEX's 15-minute Keltner target and the trendline's suport roughly coincide. The OEX's downside target is currently 615.46 as predicted on the 15-minute chart.

Jeff Bailey : 2/29/2008 10:41:31 AM

March Palladium (pa08h) 567.00 -3.11% ... has slipped back under resulting 100% of "bull fit 38.2%"

Jeff Bailey : 2/29/2008 10:40:30 AM

N. American Palladium (PAL) $8.39 -6.27% ...

Jeff Bailey : 2/29/2008 10:40:01 AM

Swing trade put alert! ... for one (1) of the Stillwater Mining SWC Mar $20 Puts (SWC-OD) at the offer of $1.35. No stop for now, target $17.00 in the underlying.

SWC $20.30 +2.21% ...

Linda Piazza : 2/29/2008 10:40:02 AM

Here's the SPX pausing at that trendline off the January 23 low of 1270.05 and the 2/22 low of 1327.04. Those are only two touchpoints and I prefer three for establishing a trendline, so the trendline is not yet authenticated, if you will. However, it may be enough to stall the decline, at least for a while, and that's why I told current bears to be watchful of bounce potential and not yet to count on the 15-minute target near 1336-1337 being hit. It's possible that the trendline could prompt a bounce that takes the SPX back to its 30-sma, for example. There's no firm evidence of this yet, but the VIX is hitting short-term resistance, and the advdec line, approaching potential short-term support.

Jeff Bailey : 2/29/2008 10:30:36 AM

AIG SEES NEGATIVE OPERATING EARNINGS THROUGH 2008

DJ- Problems in U.S. housing market will put the skids on American International Group's operating earnings for the year, after causing more than $15 billion in losses for 2007, the company's chief executive says.

AIG $46.96 -6.36% ... was #12 weighted in DIA/INDU/YM at last night's close

Jeff Bailey : 2/29/2008 10:19:50 AM

Valero Board OKs $3B Buyback ... AP Story Link

Jeff Bailey : 2/29/2008 10:17:56 AM

S&P: Valero Ratings Unaffected By Increased Share Repurchase

Jeff Bailey : 2/29/2008 10:15:23 AM

3Com Corp. (COMS $3.49 +19.93% ... Shares jump on news that the networker continues to work on securing the sale of the company to a U.S. investment firm and its Chinese partner.

Linda Piazza : 2/29/2008 10:15:11 AM

The OEX's current downside Keltner target is 615.34 on the 15-minute chart. Assess vulnerability to that level, absolutely have a profit-protecting plan in mind for bearish trades at that level, but do not count on it being hit.

Linda Piazza : 2/29/2008 10:14:08 AM

If you're in bearish SPX trades and the SPX breaks lower again, remember that potential rising trendline support somewhere around 1342. The current Keltner target on the 15-minute chart is at 1336.19. Note: The SPX began dropping lower as I typed.

Linda Piazza : 2/29/2008 10:12:08 AM

The VIX, at 24.97 as I type, approaches potential Keltner resistance on 15-minute closes at 25.33. It's still got some room to climb up to that upside target, but watch for bounce potential through here. Equity bears would like to see any VIX pullbacks be small, of course. Right now, the 15-minute 9-ema is only at 24.03 but it's still climbing. The VIX doesn't adhere as well to the Keltner lines as do the indices, so you can't use these as exact benchmarks, but you can look at them as sort of guidelines.

Jeff Bailey : 2/29/2008 10:08:29 AM

Strike At Peru's Buenaventura SAA Mines To End At Midnight (update)

DJ- A three-day strike at four Buenaventura SAA (BVN) mines in Peru will end at midnight Friday, a union official said.

The unionized workers at the four mines started a 72-hour strike on Wednesday.

Luis Castillo, secretary-general of the National Mining Federation, told Dow Jones Newswires that some 5,500 miners put down their tools at the Orcopampa, Antapite, Uchucchacua and Caraveli mines to back demands for better access to information about company earnings.

Buenaventura's CFO Carlos Galvez previously said that the three-day work stoppage will cost $2 million in gold production and $1 million of silver production.

Castillo said the workers are demanding immediate access to company profit information, but Galvez said it was "nonnegotiable," adding that the miners' share of profits is based on sworn tax statements that won't be available until late March.

According to Peruvian law, the workers are entitled to 8% of company profits.

In the first nine months of this year, the company's mines produced 295,034 ounces of gold.

Antapite, an underground mine located in the department of Huancavelica, produced 53,544 ounces of gold in the first nine months of 2007, a decline of 32% from the same period a year earlier.

The Orcopampa mine, in the department of Arequipa, produced 198,789 ounces in the first nine months of 2007.

Company officials have forecast that Uchucchacua, in the department of Lima, could produce some 10 million ounces of silver in 2007 and about 11.5 million of silver in 2008.

It produced 6,860,183 ounces of silver in the first nine month of 2007.

Buenaventura has a 43.65% stake in the giant Yanacocha mines, which isn't being affected by the strikes, nor are other mines in which Buenaventura has a stake, the company has said.

Linda Piazza : 2/29/2008 10:08:20 AM

The OEX has now set a potential Keltner downside target of 615.57, but as I suggested with the SPX earlier, I'd retain some skepticism as yet about that potential target being met. The OEX's 15-minute 9-ema is now at 626.08 with historical S/R in the 628 zone. Bears want to see the OEX either begin to fall again or else just consolidate sideways until the 15-minute 9-ema drops closer, so that any bounce to test that average isn't much of a bounce.

Linda Piazza : 2/29/2008 10:02:35 AM

In last night's Wrap, I posted a chart of the USDJPY that suggested that it had vulnerability to the 103.47-104.23, where support might be found on daily closes. The USDJPY is at 130.90 as I type, just above significant (but sliding lower) Keltner support and a supporting (but descending) trendline. It's possible that the dollar could just collapse against other currencies, but the more likely result from the Keltner outlook at least is that the dollar/yen pair at least may be approaching a short-term bottom. That may not happen today, but if it does, equities may bounce along with the USDJPY. Here's the rub, though: once RSI dips below 30 on this currency pair, there's often a short-term bounce, bringing RSI higher, too, and then there's another downturn. On that downturn, when you see value/RSI bullish divergence, you're more often being given a signal that a bounce will be sustainable. It's not always the way it sets up, but it's often enough that you should know that any equity/USDJPY bounce that we get now still might not be "the" bounce.

For now, be forewarned that the USDJPY is approaching Keltner and trendline levels at which it might find support.

Jeff Bailey : 2/29/2008 10:01:27 AM

University of Michigan End-Feb Sentiment 70.8 Vs. Jan 78.4
Current Index 83.8 Vs. Jan 94.4
Expectations 62.4 Vs. Jan 68.1
12-month Inflation Forecast +3.6% Vs. Jan +3.4%
5-year Inflation Forecast +3.0% Vs. Jan +3.0%

Linda Piazza : 2/29/2008 9:53:55 AM

Keltner outlook on the advdec line: The advdec line has vulnerability to -2300 and has potential resistance at -1700 to -1400. It has historical S/R in the -1200 zone. If the advdec line should bounce, watch for potential resistance in those zones. If it should drop, watch for potential support to begin at any time, but particularly as -2300 is approached, if it is.

Jeff Bailey : 2/29/2008 9:51:55 AM

US Chicago PMI Adj Feb Index 44.5 Vs. Jan 51.5
Prices Paid Index 44.5 Vs. Jan 51.5
Supplier Deliveries 39.6 Vs. Jan 61.7
Employment Index 33.5 Vs. Jan 47.0
New Orders Index 48.8 Vs. Jan 44.7

Linda Piazza : 2/29/2008 9:46:32 AM

No bounce yet. On the 15-minute chart, the SPX has set a downside target of 1336.30, but we haven't see yet what the first countertrend bounce will do and where the SPX will go from there. Unless the SPX drops straight down to that potential downside target, don't count too strongly on it being met since the ascending trendline off the January low appears to cut a little higher than that, at about 1342, if I'm eyeballing it correctly.

Linda Piazza : 2/29/2008 9:40:21 AM

Here's the SPX's daily 30-sma being approached. On the 30-minute chart, there's potential support on 30-minute closes at about 1356.25. I understand that the SPX is below that now, but we haven't seen a 30-minute close yet. What I'm saying is watch for the first countertrend movement that begins about now. Bears don't want it to get too big and for the SPX to rocket back above 1356.25 and then above 1360.72 (near 30-minute Keltner S/R but also the daily 10-sma) and stay there. I'm not saying that will happen, as there are no signs yet that it will, but it's a possibility.

Linda Piazza : 2/29/2008 9:34:03 AM

I noted in last night's Wrap that if my feet were held to the fire and I was forced to make a guess, my guess would be that, given the evening-star pattern on the daily chart but the likely support (on daily closes) of the 30-sma, I would think a test of the 30-sma might be in order. However, I wasn't sure then how the SPX would act if it tested that moving average, and I'm not sure now, either. If it's tested this morning, remember that it could serve as support on daily closes. It's at 1352.68 as of yesterday's close.

Remember the 10-sma's potential support, too, both intraday and on daily closes. That's now at about 1360.41.

It's possible that we could see prices fall further, possibly to the rising trendline off the January low, now at about 1342, if I'm eyeballing it right. It's possible that trendline could be violated and deeper support tested. Just don't count on it in this market just because futures are weak. If in bearish positions, protect your profits. If contemplating bullish positions at some so-called support level, remember how transient support can be if a strong downdraft gets going. Make sure you have all your ducks in a row.

Keene Little : 2/29/2008 9:27:11 AM

Equity futures had dropped a fair amount by 8:00 PM last night and then traded sideways/up until 4:00 AM when they just let go to the downside. We're going to open the day with a big gap down which will threaten a break below the down-channel I showed on the SPX 30-min chart.

If it's unable to recover and drops below 1350, and stays below, then it's possible we'll have a very bearish wave pattern playing out. Be careful about trying to pick a bottom until the market proves itself with a retest of whatever low it initially finds.

I'll be out for the first hour again so I'll be back with you around 7:30.

Jane Fox : 2/29/2008 9:23:14 AM

Crude is getting overdone as well but at least its MACD is following price to a higher high. A retracement back to the 50% fib level would not surprise me and keep this chart bullish. On further inspection I see the 61.80% level sitting at a swing high made on January 30th so it could even reach that far, although I kind of doubt it will. Link

Jane Fox : 2/29/2008 9:19:55 AM

I am sticking to my previous analysis that I think the Gold market is in for a retracement. This is way overdone and if it moves higher from here before a retracement then we have more going on behind the scenes than is available to us poor technical analysts. Link

Jane Fox : 2/29/2008 9:08:13 AM

The overnight session was just an extension of yesterday's downward trend. It does look like the markets may have bottomed out for now but I would expect yesterday's lows to be resistance today. I don't think the bulls will have control today so I would be keeping an eye on the daily charts to see where this week ends. The bulls need to prove themselves and keep the charts reasonability bullish if we want the very important close above resistance next week. Link

Jane Fox : 2/29/2008 8:53:34 AM

Dateline WSJ - WASHINGTON -- Consumers accelerated their spending at the start of the year even as income growth dipped, while a key indicator of inflation held steady at a spot above the Federal Reserve's comfort zone.

Personal consumption climbed in January by 0.4% compared to the month before, the Commerce Department said Friday. December spending rose an upwardly revised 0.3%; originally, December spending was seen 0.2% higher.

The growth in spending was a positive sign given fears the economy might be headed into recession. Yet taking into account rising prices, spending in January was flat.

The data revealed a price index for personal consumption expenditures rose 0.4% in January compared to the prior month. The PCE price index excluding food and energy, or core PCE, rose 0.3%. Compared with a year earlier, the PCE price index climbed 3.7% in January. The year-over-year climb in December was 3.6%.

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