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Jeff Bailey : 3/4/2008 12:05:17 AM

AUD/USD 0.92695 -1.31% ...

Keene Little : 3/3/2008 11:30:04 PM

Tuesday's pivot tables: Link and Link

I had shown a 5-min and 60-min chart for SPX at the end of the trading day on Monday to show how price rallied up to potential resistance by the end of the day. A failure to rally higher than Monday's high will be bearish. 5-min: Link and 60-min: Link

But there is still a chance for the bulls to pull their rumps out of the fire here if they can get a rally going on Tuesday, even if it will be only good for a bounce before turning back down. The NDX pattern looks like it has broken down but it maintains the possibility for a bounce back up on Tuesday morning, although that could be tough with the INTC news (60-min chart): Link

By breaking below the bottom of its triangle pattern, currently near 1754, and the uptrend line from Jan 23rd, currently near 1741, it doesn't look good for the bulls. But until it breaks the key level at 1715 (Monday's low was 1716.52) there remains the possibility for a rally. The first resistance levels are those noted above at the trend lines with the upper one near 1754 a more likely target before heading back down (dark red).

It takes a rally back above 1808 for the bulls to get this turned around. But the sideways triangle pattern could tolerate another rally leg to a lower high (maybe another week's worth of choppy price action) before starting the 5th wave down. So continue to expect the unexpected until a key level breaks.

Jeff Bailey : 3/3/2008 11:20:22 PM

Australia's RBA Raises Cash Rate Target To 7.25%

DJ- The Reserve Bank of Australia Tuesday raised its official cash rate target by one quarter of a percentage point to 7.25%, the 12th consecutive hike since mid-2002.

The widely expected hike follows a 25-basis-point rise in February. It is the first back-to-back monthly increase since the end of 2003.

The RBA has clearly signaled its concerns about rising inflation and said it expects the rise in the consumer price index to hit 4.0% on year in the first quarter, well above the central bank's 2%-to-3% target band.

In February, the RBA forecast inflation would remain above its target band until mid-2010.

The RBA said in its minutes of last month's meeting that its board had pondered a 50-basis-point hike to rein in inflation.

A 17-year-old economic expansion has put capacity constraints at the top of the list of economic concerns, with inflation now creeping higher.

Analysts expect the RBA to continue hiking rates until economic growth slows to a subtrend rate.

Jeff Bailey : 3/3/2008 11:03:03 PM

I did not see/hear that news until now. I did not mention it in this evening's market wrap.

Jeff Bailey : 3/3/2008 11:02:22 PM

Intel Lowers Gross Profit Margin Outlook ... AP Story Link

OI Technical Staff : 3/3/2008 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 : 3/3/2008 6:14:58 PM

Pelosi: US Congress To Examine EADS Air Tanker Deal

DJ- Congress is to examine the U.S. military's decision to award a $35 billion aircraft contract to a Northrop Grumman Corp. (NOC) and European Aeronautic Defence & Space Co. (EADSY) group, dealing a blow to its wholly American rival Boeing Co. (BA), officials said Monday.

"The Air Force's decision to award the contract for a much-needed modernization of the nation's aerial tanker fleet to Northrop Grumman and Airbus raises serious questions that Congress must examine thoroughly," Speaker Nancy Pelosi said in a statement.

"Given the ramifications of this decision for the United States, the Air Force must explain to Congress how it meets the long-term needs of our military and the American people," said Pelosi, D-Calif.

The Defense Department announced Friday that it was awarding the deal for a fleet of in-flight refueling craft to the group that includes EADS, which makes the Airbus aircraft, instead of U.S. aerospace giant Boeing.

Jeff Bailey : 3/3/2008 6:14:48 PM

Closing U.S. Market Watch at this Link

April Crude settled up $0.61, or +0.60% at $102.45.

April Unleaded settled up $0.0021, or +0.08% at $2.6720.

April Heating Oil settled up $0.0339, or +1.21% at a record $2.8408.

Jeff Bailey : 3/3/2008 4:28:58 PM

Closing Internals at this Link

Keene Little : 3/3/2008 5:12:12 PM

Bulls don't want to see a kiss goodbye at a retest of today's broken uptrend line (SPX 5-min chart): Link . What they need is a rally above 1335 to get it back above its broken uptrend line from Feb 7th where it's still struggling underneath it (60-min chart): Link

Keene Little : 3/3/2008 4:02:14 PM

With the techs the weaker index today I look to the semis for some clues as to which way the techs might go. Unfortunately SMH has been in a tight consolidation since the January low that mimics the broader market. It takes a move above 30, last week's high, to point towards 32-34 for the next leg up (as part of an A-B-C upward correction off the January low). Link

A break below the January low at 26.70 is needed to put the bears back in control. Just like the broader market, anything in between is just a trading range and could easily get another leg up inside the consolidation pattern.

Jeff Bailey : 3/3/2008 3:59:00 PM

iShares Hong Kong (EWH) $18.578 +0.65% ... threaten a "doji" close.

Linda Piazza : 3/3/2008 3:58:17 PM

Friday afternoon, I noted that "[i]n 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." (3:51:53 post) I went on to remind readers that these are not normal times, but we did get the normal reaction after a day like Friday's. Barring a big move in the last few minutes, we'll get a doji or almost-doji type day. So, in normal times, what would be next?

Either further consolidation or an actual bounce would be the next likeliest event in normal times. We've seen some times lately when these types of days are followed by straight-down drops and it could happen again, but you need to factor in the possibility that this is a (short-term) reversal signal, too.

Linda Piazza : 3/3/2008 3:53:09 PM

Traders should be aware that we have several rate decisions across the globe this week. Australia's is tonight at 10:30 pm ET, I believe. The Bank of Canada's is tomorrow morning at 9:00 am ET. The Bank of England and ECB make their decisions on Thursday. I mention this because these developments can and most likely will impact currency moves and those can and most likely will impact equity moves. Obviously, I don't know what the decisions will be, but just be aware that it's not going to be just what happens in the U.S. this week that impacts our trades.

Jeff Bailey : 3/3/2008 3:52:23 PM

IShares Russell 2000 (IWM) $67.95 -1.32% ... threatens to close below its conventional 19.1% ($68.14) for first time since closing above on 1/23/08.

Jeff Bailey : 3/3/2008 3:50:53 PM

SPY $133.15 -0.50% ... threatens a "doji" close

Linda Piazza : 3/3/2008 3:48:48 PM

Next potential Keltner resistance for the OEX lies at 613.55 on 15-minute closes. Potential support at 611.41.

Linda Piazza : 3/3/2008 3:48:08 PM

Two SPX fifteen-minute closes now above the 15-minute 9-ema. That doesn't guarantee anything, except that the SPX is now more likely to retest the resistance now at 1331.53 on 15-minute closes.

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

Dow Diamonds (DIA) $122.48 -0.43% ... threatens a "doji" close.

Linda Piazza : 3/3/2008 3:34:40 PM

Another 15-minute SPX close above the 9-ema. As I said earlier, the resistance that's now near 1331.80 will be more important.

Jeff Bailey : 3/3/2008 3:33:28 PM

03:00 Internals found at this Link

Linda Piazza : 3/3/2008 3:24:56 PM

The SPX is testing the 15-minute 9-ema but hasn't of course maintained a 15-minute close above it yet. More important resistance will be at 1332.21 for the SPX and 613.83 for the OEX.

Linda Piazza : 3/3/2008 3:08:34 PM

The SPX's 15-minute 9-ema is now at 1325.73; the OEX's, 610.96.

Jeff Bailey : 3/3/2008 3:02:27 PM

GLD $97.17 +1.02% ... $~971.70 spot.

Jeff Bailey : 3/3/2008 3:01:54 PM

SLV $201.11 +2.25% ...

Jeff Bailey : 3/3/2008 3:01:28 PM

Apex Silver Mines (SIL) $12.60 -5.19% ... notable new 52-weeker.

Jeff Bailey : 3/3/2008 3:00:52 PM

Dynamic Materials (BOOM) $54.76 -3.91% Link ... Today's trade at $55.00 is a double bottom sell signal. Negates bullish vertical count to $76. Preliminary bearish vertical count to $50.

Jeff Bailey : 3/3/2008 2:59:08 PM

Swing trade stopped alert! ... for the 1/4 position in shares of Coeur D' Alene Mines (CDE) $5.07 +5.18% ...

Keene Little : 3/3/2008 2:58:01 PM

The home construction index (DJUSHB) has dropped below the Feb 15th low and that should be the sign that it's into the 3rd wave down in what could be the final larger degree 5th wave of its decline. The key level for the bulls is now 400--that would be a break above both last week's high and the downtrend line from January 2007. In the meantime a drop down to the 213-216 area could put in a bottom for this index. Bullish divergence against the November low would help confirm that. Link

Linda Piazza : 3/3/2008 2:44:16 PM

The SPX is now at potential Keltner support at about 1324.20 on 15-minute closes, and drifting a little beneath it as I type. The 15-minute 9-ema, now at 1328.12 continues to provide resistance on 15-minute closes when tested, and so the short-term tenor remains the same. The SPX is at 1323.47 as I type, testing that support.

Linda Piazza : 3/3/2008 2:39:55 PM

The advdec line just isn't bouncing from support yet. It's holding that support and perhaps looking as if it's trying to steady there, but will it steady? Not sure. The advdec line is at -914 now, just below tentative support at about -900. The advdec line sometimes overruns support or resistance a bit, so this drop beneath it isn't serious yet, but the failure to bounce is a bit concerning for equity bulls.

Keene Little : 3/3/2008 2:37:08 PM

On Friday I had shown an expanding triangle pattern for oil which could be interpreted as a bearish topping pattern. I pointed out the top of the pattern was near $104 and thought we'd hit it soon. The short term pattern supports the idea that we'll see at least another small move higher, so at least a little above $104. If we see a throw-over above the pattern (currently at 104) and then a drop back inside it would be a sell signal. Link

Linda Piazza : 3/3/2008 2:35:21 PM

The OEX's 15-minute 9-ema is now at 612.23.

Linda Piazza : 3/3/2008 2:35:02 PM

For the last hour and 15 minutes, the SPX's 15-minute 9-ema has again provided resistance on 15-minute closes, so you need to watch it again for a first insight into a tentative change of tenor. Such a change in tenor didn't last long earlier today, with the resistance now at 1333.44 immediately knocking back the SPX. The 15-minute 9-ema is now at 1328.91.

Jeff Bailey : 3/3/2008 2:28:30 PM

US State Department: Welcomes Security Council Vote On Iran

Keene Little : 3/3/2008 2:26:49 PM

It would appear techs could lead the way to the downside. NDX is testing this morning's low and if it breaks there's not a whole lot of support before the Feb 7th low near 1715 (12 points lower).

Linda Piazza : 3/3/2008 2:24:46 PM

The advdec line is now at -819, dropping deeply into that potential support zone. Equity bulls want support to hold up at about -900 and for the advdec line to bounce again. Bears want it to keep rolling down through that support.

Meanwhile the SPX drops to test potential support now at 1324.75 on 15-minute closes, deeper than I thought it would on an advdec pullback to test support. This is Keltner-style support. If it holds on 15-minute closes and prompts a bounce, the SPX is still far from out of trouble, but is actually looking better on a Keltner basis than it did when it dropped this morning.

Jeff Bailey : 3/3/2008 2:17:38 PM

UN Security Council Imposes 3rd Round Of Sanctions Vs. Iran

DJ- The U.N. Security Council has approved a third round of sanctions against Iran with near unanimous support.

The move on Monday sends a strong signal to Tehran that its refusal to suspend uranium enrichment is unacceptable and becoming increasingly costly.

The vote was 14-0, with one abstention from Indonesia.

Iran's U.N. ambassador, Mohammad Khazee, told the council just before the vote that his government wouldn't comply with the "unlawful action" against its "peaceful nuclear program."

For the first time, the resolution bans trade with Iran in goods that have both civilian and military uses.

Jane Fox : 3/3/2008 2:17:30 PM

The VIX is giving me bullish vibes so I do not think we will make new daily lows and if we do they will not stick. How is that for keeping myself off the limb? Link

Jeff Bailey : 3/3/2008 2:13:45 PM

DBD $38.11 +58.00%

UTX $69.25 -1.78% ...

Jeff Bailey : 3/3/2008 2:13:11 PM

Diebold: Rejects UTX Offer ... "Not the right time" for United Tech Offer

Jane Fox : 3/3/2008 2:08:32 PM

My goodness gracious (or has Jeff would say, "Good Gravy") look at Crude. It has hit a high of 103.95 just shy of $104/bl. Link

Linda Piazza : 3/3/2008 2:08:14 PM

There went the advance/decline line and there went the SPX down to the 1326.80-1328.30 zone I mentioned in my 1:59:06 post. The SPX is at 1327.53 as I type, having reached a low of 1326.93 during this 15-minute period.

What happens next? I still think the SPX's move looks like a possible bear flag, so anything I say should be put into that context. The advance/decline line is still dropping, toward what may be stronger support (was earlier), now at about -700 to -900. Watch for bounce potential (in the advdec line and hence, in equities) from that area. It's at -607 as I type.

Keene Little : 3/3/2008 2:05:55 PM

Instead of climbing up to the top of the rising wedge pattern SPX just broke below it (the uptrend line from this morning. Now we'll have to watch to see if it stays stuck in more of a sideways consolidation, which would still be bearish.

Jeff Bailey : 3/3/2008 2:01:18 PM

Toyota Motor (TM) $108.80 +0.23% ...

Jeff Bailey : 3/3/2008 2:00:53 PM

DJ Correction: Toyota's Feb US Sales Fell 2.8%, Not 6.6%

Linda Piazza : 3/3/2008 1:59:06 PM

If the advance/decline line should end this 15-minute period anywhere near its current -243 or below that, it's looking vulnerable to a drop to about -520. If it drops, it could carry the SPX lower with it. That wouldn't be a big drop in context of the advance/decline line's values today, so I'm not sure it would do more than send the SPX down toward 1326.80-1328.30 even if it happens.

Keene Little : 3/3/2008 1:54:42 PM

Looking at the SPX 5-min chart I'm seeing a small bearish rising wedge which calls for one more leg up to finish it. A small throw-over could see about 1337 as a top for this pattern so watch for a short play to set up near there. If it keeps rallying much above 1338 then there's a good chance we would instead see a strong rally in a 3rd of a 3rd wave up for the climb off this morning's low. Link

Linda Piazza : 3/3/2008 1:54:40 PM

The Keltner resistance at 1334.20 on 15-minute closes has proven itself to be significant when it turned the SPX back from its high of the day earlier (when it was a little higher, too), so bulls want to see the SPX now sustaining 15-minute closes above that level. The advance/decline line broke below its triangle support but has now popped right back up to test it. As I said in my 1:10:25 post, that triangle had narrowed almost to its apex, so I was not sure that a "breakout" was truly meaningful, as it wouldn't take much movement to break the support or resistance. Right now, it's not giving many clues.

Jeff Bailey : 3/3/2008 1:54:02 PM

SWC $21.60 +5.21% ...

PAL $8.59 +4.12% ...

Jeff Bailey : 3/3/2008 1:52:43 PM

General Motors Feb Light Vehicle Sales 268,737 Vs. 308,411 (-12.86%)
GM 1Q Production Forecast Unchanged At 965,000 Vehicles
2Q N. America Production Forecast 1.08M Vehicles

Jeff Bailey : 3/3/2008 1:35:35 PM

US Oil Fund (USO) $82.20 +2.21% ...

Jane Fox : 3/3/2008 1:35:28 PM

It is becoming very obvious that 1320 is SPX's support and I would be very surprised if the bears were strong enough today to break that support. As I stated last week, I think this week we will see a reactionary rally and where that rally ends will tell us a lot. The SPX has been in this trading range since January 23rd and although you may think it will never break out it when I does break out it will probably do it in fine fashion. Link

Jeff Bailey : 3/3/2008 1:35:06 PM

Russia: Will Back UN Sanctions Vs. Iran If No IAEA Motion Bid

DJ- Diplomats say Russia has set conditions on its backing of new United Nations sanctions against Tehran for its nuclear activities.

The diplomats told The Associated Press on Monday that Moscow wants European nations to drop plans for an Iran resolution at a 35-nation board meeting of the International Atomic Energy Agency. They said Russia was upset that it was not told earlier about such plans.

Grigory Berdennikov, the chief Russian delegate to the IAEA, told the AP that he was not happy about the planned resolution.

Jeff Bailey : 3/3/2008 1:24:19 PM

CME's Feb'09 Miami Housing Futures down 10.40 from Friday's 204.00. Now bid/ask 165.00 x 194.00

Jeff Bailey : 3/3/2008 1:21:13 PM

CAMPAIGN 2008 ... McCain's Platform: Big Tax Cuts, With Caveats ... Republican presidential nominee cast himself as a defender of the Bush tax cuts he voted against, but added caveats to a "no new taxes" vow he made two weeks ago.

Jeff Bailey : 3/3/2008 1:18:00 PM

US, EU FILE WTO CASE OVER CHINA'S NEWS RULES

DJ- U.S. and European Union file a case at the World Trade Organization against China over rules they say put foreign financial-news organizations at a competitive disadvantage.

Jeff Bailey : 3/3/2008 1:17:08 PM

GM TO IDLE FIFTH PLANT DUE TO AXLE STRIKE (update)

DJ- General Motors is preparing to idle its fifth assembly plant because it will run out of parts, reflecting the impact of the American Axle & Manufacturing Holdings strike.

Keene Little : 3/3/2008 1:17:01 PM

ES continues to find its broken uptrend line from Feb 7th as resistance (shown in earlier chart-- Link ). I don't often use after-hours trading for EW analysis (except for currencies and commodities) since they're not always reflective of the majority of traders) but looking at the choppy corrective climb off last night's low and finding resistance at that broken trend line sure looks bearish. So far ES hasn't been able to do much more than close this morning's gap.

Linda Piazza : 3/3/2008 1:10:42 PM

The way the SPX is climbing, its back and forth action, unfortunately looks more like a bear flag than anything else. The triangle possibility that I saw setting up in the advdec line (hence, predicting a consolidation pattern of some sort in the equities) at 11:31:24 post has indeed set up. It's now narrowing enough, though, that a breakout may not be difficult to manage or particularly meaningful when it comes since it will take only a little jit or jot one direction or the other to break out of it now. Equity bears would like to see the advdec line sustain 15-minute closes beneath the 9-ema at about -270. Equity bulls would like to see the advdec line reach a new high of the day.

Jeff Bailey : 3/3/2008 1:10:10 PM

01:00 Internals found at this Link

Jeff Bailey : 3/3/2008 1:02:32 PM

UK RULES IN FAVOR OF NOKIA AGAINST QUALCOMM

DJ- U.S. mobile technology firm Qualcomm faces another blow in its legal battle against handset maker Nokia, after a U.K. High Court Judge rules that its claims over patent infringements are invalid.

NOK $35.52 -1.36% ...

QCOM $41.31 -2.54% ...

Jeff Bailey : 3/3/2008 1:00:50 PM

FORD TO CUT SHIFT AT KENTUCKY PLANT

DJ- Ford Motor says it is cutting a production shift at its Explorer plant in Louisville. The struggling auto maker says that up to 800 workers could be laid off this summer as the company reduces the number of shifts from two to one.

Keene Little : 3/3/2008 12:59:29 PM

I mentioned the bubble that's being created in commodities. It's not just the run up in prices but also the bullish enthusiasm that is typically seen in bubbles. It seems most, including gold bulls, see another doubling in prices before the year is out. The following data on the number of bulls as a percent of total traders should be an eye opener:

Daily Sentiment Index readings from www.trade-futures.com: Swiss Franc 97%; Euro 98%; Yen 93%; Crude Oil 93%; Heating Oil 93%; Gold 97%; Silver 97%; Platinum 93%; Corn 93%; Oats 94%; Soybean 97%; Soybean Oil 98%; Soybean Meal 93%; Cocoa 98% and the CRB Index 96%. Slightly less but still seeing very bullish sentiment can be found in U.S. T-notes (10-year) 83%; Nat Gas 88%; Wheat 85%; Coffee 86%; Sugar 88% and Cotton 89%.

At the opposite end is the universally hated U.S. dollar with 7% bulls which of course is essentially the opposite of the euro. When you see this kind of bullish enthusiasm you should be thinking bubble. And when you think bubble you should be very careful about thinking the long side.

Commodities have entered dangerous territory and this includes gold and all the gold bulls who predict $1500-2000 by the end of the year. It's so common during the bubble phase to simply extrapolate the move to new highs. But when fear starts to strike the money will exit the commodities faster than most expect.

Jeff Bailey : 3/3/2008 12:59:22 PM

UNITED TECHNOLOGIES OFFERS $2.63B FOR DIEBOLD

DJ- United Technologies is making an unsolicited $2.63 billion cash offer to acquire all of Diebold, a maker of automatic teller machines, security systems and other computer hardware.

DBD $38.76 +60.69% ...

UTX $69.07 -2.04% ...

Jeff Bailey : 3/3/2008 12:57:41 PM

HSBC NET UP 21% DESPITE SUBPRIME LOSSES

DJ- Shares in U.K. banking giant rise 4.5% after it posts a jump in full year net profit to $19.14 billion as sharp growth in its Asian operations helps offset hefty impairments on subprime and other loans in the U.S. consumer finance business.

HBC $78.62 +4.47% ...

Jeff Bailey : 3/3/2008 12:51:42 PM

SWC $21.47 +4.57% ...

PAL $8.53 +3.39% ...

Jeff Bailey : 3/3/2008 12:50:59 PM

Toyota USA Feb Car Sales 182,169 Vs. 187,330
USA Division Feb Sales Fell 6.3%
Lexus Division Feb Sales -9.3%
USA Toyota Division Feb Passenger Car Sales Fell To 89,723
USA Toyota Division Camry Sales +4.3%
USA Toyota Division Feb Light Truck Sales -4.9%

Keene Little : 3/3/2008 12:41:13 PM

The drop in the U.S. dollar is creating a lot of inflationary problems for our country and it seems especially so in commodities which may be the last bubble to pop. From stocks to real estate to commodities it seems hot money has found the next asset class in which to run higher in a parabolic climb. This one will also collapse under its own weight but in the meantime there's no stopping it.

The dollar got a good bounce this morning but it has a little further to drop before finding potential support at the bottom of its down-channel from 2006, currently near 73 so not much further down. Link

Linda Piazza : 3/3/2008 12:37:38 PM

The SPX is doing battle with the Keltner resistance at 1335.22 on 15-minute closes. For the OEX, that's at 615.07. Both may need to retrace back to their 15-minute 9-ema's, at 1331.29 for the SPX and 613.36 for the OEX.

Jeff Bailey : 3/3/2008 12:21:49 PM

Stillwater Mining (SWC) $21.46 +4.52% ...

N. American Palladium (PAL) $8.57 +3.87% ...

Jeff Bailey : 3/3/2008 12:20:43 PM

Ford Motor (F) $6.27 -3.98% ...

Jeff Bailey : 3/3/2008 12:19:53 PM

Ford Motor Feb Sales Down 7%
Feb Total Co Sales 196,681 Vs. 211,150 (-6.9%)
Total Brand Sales 164,915 Vs. 173,794 (-5.1%)
Total Truck Sales 117,198 Vs. 123,600 (-5.2%)
Total Car Sales 47,717 Vs. 50,194 (-4.9%

Keene Little : 3/3/2008 12:19:46 PM

I'm getting another one of those sideways triangle feelings. Sure have gotten a lot of those lately. This would be a bearish consolidation pattern but it could take several more hours before it breaks down.

Linda Piazza : 3/3/2008 12:14:27 PM

I wrote earlier that the possibility existed that the advance/decline line would set up in some kind of a consolidation pattern, possibly a triangle. It's just turned back from a lower high, keeping alive that possibility. The 15-minute 9-ema has been rising, and it's providing support so far on 15-minute closes, with that now at -456 and with the advance/decline line now at -253, so the possibility of a triangle still exists and may be even stronger now. Fortunately, it appears to be narrowing quickly, so a breakout might occur sometime this afternoon.

A subscriber wrote to question me about why I'd said previously that no one wanted to see such a triangle set up. That's because the SPX and OEX tend, to some degree, to be led by the advance/decline line. If it consolidates, they might, too. Such consolidation patterns are murder to trade and they flatten indicators (and my Keltner channels) so that it's difficult to predict what will happen next. We've been tortured enough by zooming prices that then settle into a consolidation pattern and then start over, with little predictability.

Jeff Bailey : 3/3/2008 12:05:14 PM

New York Attorney General: Fannie, Freddie To Only Buy Loans Under New Standards

DJ- New York Attorney General Andrew Cuomo said Monday that Fannie Mae (FNM) and Freddie Mac (FRE) will enter cooperation agreements to only purchase loans that meet new standards designed to ensure independent and reliable appraisals.

In a press release, Cuomo said the mortgage giants also have agreed to create an independent organization to implement and monitor the new appraisal standards. It will be funded by $24 million from Fannie Mae and Freddie Mac.

The Office of Federal Housing Enterprise Oversight, Fannie Mae's and Freddie Mac's regulator, also has agreed to the creation of the independent institute, which will be called the Independent Valuation Protection Institute.

"With this agreement, Fannie Mae and Freddie Mac have become leaders in transforming the mortgage industry," Cuomo said in a statement. "Now national banks have a clear choice: Immediately adopt the new code and clean up appraisal fraud in the mortgage industry or stop doing business with Fannie Mae and Freddie Mac - it is that simple."

The new standards include requirements that prohibit mortgage brokers from selecting appraisers, prohibit lenders from using "in-house" staff appraisers and lenders will be prohibited from using appraisal management companies they own or control.

Cuomo was expected to discuss the deal in more detail at a press conference at 11 a.m. EDT Monday.

Last year, Cuomo sued First American Corp. (FAF) and its eAppraiseIT unit for allegedly colluding with Washington Mutual Inc. (WM) to use a list of preferred appraisers to artificially inflate mortgage appraisals. The lawsuit is pending in U.S. District Court in Manhattan.

The Wall Street Journal reported last month that Washington Mutual, which isn't a defendant in Cuomo's lawsuit, is cooperating with probes by federal investigators. The company told the Journal that "there has been no systematic effort by WaMu to inflate home appraisals."

In November, Cuomo's office issued subpoenas to Fannie Mae and Freddie Mac seeking information about loans they purchased, including those purchased from Washington Mutual; information about their due diligence practices, and information about appraisals and valuations by the originating lenders.

The mortgage giants also agreed at the time to retain an independent examiner to review all Washington Mutual appraisals and mortgages they purchased.

Linda Piazza : 3/3/2008 12:01:31 PM

The USDJPY is just off its high of the day. It's at 103.56, with the high of the day at 103.67, and with presumed strong resistance at 103.75.

Keene Little : 3/3/2008 11:53:55 AM

The DOW continues to consolidate on top of its uptrend line from Feb 7th, shown earlier (10:15). The longer it consolidates the more bearish it will become and another break below 12200 could then find that level becoming resistance.

Linda Piazza : 3/3/2008 11:53:08 AM

The SPX's 15-minute 9-ema is now at about 1328.65; the OEX's, at about 612.20.

Keene Little : 3/3/2008 11:40:35 AM

Getting another bounce again. This is where we should get an idea about the short term direction of the market--a rally to a new daily high or a drop to a new daily low from here should set the direction for the day.

Jeff Bailey : 3/3/2008 11:37:12 AM

Swing trade long raise stop alert! ... on the 1/4 position in shares of Coeur D' Alene Minex (CDE) $5.10 +5.80% ... to $5.07.

Linda Piazza : 3/3/2008 11:31:24 AM

Big jump in the advance/decline line again as it approached the potential support zone. We don't know if this bounce is going to hold any better than the previous one, but this bounce did come from just above the 15-minute 9-ema, now at -688.

A new possibility is beginning to be apparent on the advance/decline line at least: a consolidation pattern, possibly a triangle, setting up between the day's highs and lows. No one wants to see that happen as it might predict something similar on equity charts, but it's now a possibility if not yet a probability.

Jane Fox : 3/3/2008 11:30:37 AM

Soybeans - now who would have ever thunk!

Jane Fox : 3/3/2008 11:29:35 AM

Ok here is the chart I posted at 11:21 with the market revealed. Link

Linda Piazza : 3/3/2008 11:27:09 AM

Hmmm. The USDJPY is not dropping as the SPX and some other equity-based indices do. It's not at a new high of the day, but it's close to challenging the previous high. We don't usually see it heading the opposite direction as equities. I don't think this intermarket relationship (currencies/equities) is always the same and certainly not always good for market timing, and any bounce in the USDJPY must be put into the context of its steep decline. However, be aware that the direction of the current move, at least, is contrary to the SPX decline off the day's high.

Jeff Bailey : 3/3/2008 11:24:57 AM

11:00 Internals found at this Link

Note: It would take a closing session measure of 36.00 or lower to see the NYSE 5-day NH/NL measure reverse 3-boxes lower.

Jane Fox : 3/3/2008 11:21:59 AM

See if you can guess what market this is. Link

Jane Fox : 3/3/2008 11:17:47 AM

I would say the reverse head and shoulders I found on the DOW daily chart has pretty well been negated. Link

Keene Little : 3/3/2008 11:16:31 AM

What currently looks bearish about this morning's drop and bounce, when looking at the ES all-hours chart, is the break of the uptrend line from Feb 7th and this morning's kiss goodbye retest of it. I'm not feeling so bullish about a bounce at this point and I think caution is required. ES 120-min chart: Link

Jane Fox : 3/3/2008 11:16:23 AM

Here are the overnight ranges. It is not looking too good out there is it? Link

Linda Piazza : 3/3/2008 11:16:02 AM

The advance/decline line has continued dropping rather than consolidating sideways as equity bulls would have preferred. As I said earlier, no Keltner support lay anywhere near after the rebound and so it remained vulnerable to a pullback. The pullback so far, however, has maintained above the rising 15-minute 9-ema, now at about -780 and has kept the advance/decline line in the upper half of its Keltner channels. The conclusion? The action is not as bullish as it could have been, but potential support still exists near -780 down to -850 and then again at about -1050, and that support may again hold. Watch for bounce potential as that potential support is approached. The advdec line is at -622 as I type.

Linda Piazza : 3/3/2008 11:10:55 AM

The USDJPY has not fallen back into that seeming bear flag but has instead maintained support on what was at first the top trendline of that flag. That's a minor good sign for those who are bullish equities or who would like to be, but it's not yet anything definitive. The dive in the USDJPY has been so strong that these little signs have to be cast in context. So far, so good, though, with a tentative sign of improvement.

Keene Little : 3/3/2008 10:50:57 AM

NDX is making a deeper retracement of this morning's bounce and looks a little bearish here. It's possible we'll see a minor new low (watch for potential support near 1728) to finish a 5-wave move down from Friday's mid-day bounce. The others haven't pulled back nearly as deep

Linda Piazza : 3/3/2008 10:46:45 AM

The SPX is not maintaining support above its 15-minute 9-ema now at 1330.77, something that I warned that bulls needed to see now that the SPX had produced its first 15-minute close above that average. That resistance that had been grouping overhead (see my 10:21:37 post) did stop the SPX. Equity bulls would rather the support at the 15-minute 9-ema would have held into the 15-minute close, but the advance/decline line's pullback is not huge so far, so keep a watch on that for some guidelines, too.

Jeff Bailey : 3/3/2008 10:39:45 AM

US Oil Fund (USO) $82.00 +1.96% ...

Jeff Bailey : 3/3/2008 10:38:59 AM

EIA: US '07 Revised Gasoline Use +0.4% At Record 9.29M B/D
US '07 Rise In Gasoline Demand Smallest Since '91
US '07 Distillate Use +1.2% To Record High 4.22M B/D
US End '07 Commercial Oil Inventories Lowest Since '03
US End '07 Crude Stocks Lowest Since '04
US End '07 Gasoline Stocks Most Since '04

Linda Piazza : 3/3/2008 10:33:17 AM

The USDJPY is now at 103.44, testing the resistance that I'd mentioned earlier. The currency pair has broken above the seeming bear flag's resistance trendline but now it needs to maintain values at or above this Keltner resistance or it risks being pushed back into the flag again.

Jeff Bailey : 3/3/2008 10:32:12 AM

Weekly, Monthly, Quarterly Index Pivot Matrix at this Link

Major index support correlation at SPY QS2/WS1

Jane Fox : 3/3/2008 10:30:16 AM

NEW YORK (MarketWatch) -- Gold and crude-oil futures surged to new record highs Monday morning, propelled by sharp weakness in the U.S. dollar. Gold for April delivery hit a record of $991 an ounce, while crude oil for April delivery soared to a record of $103.51 a barrel on the New York Mercantile Exchange.

Linda Piazza : 3/3/2008 10:27:39 AM

Here's what I was seeing on the advance/decline line this morning, for those who are interested: Link

Keene Little : 3/3/2008 10:25:55 AM

At this point I'd say this morning's drop was a little capitulation to flush out the remaining sellers. Considering the wave pattern and where support was found I'd look to buy dips today. But if price drops back below this morning's low then I'd turn a whole lot more bearish in a hurry. SPX 1350 makes for a potential high for the bounce over the next day or two.

Jane Fox : 3/3/2008 10:21:44 AM

WASHINGTON (MarketWatch) -- Spending on U.S. construction projects dropped 1.7% in January as outlays on private residential projects took another tumble, the Commerce Department reported Monday.

Economists surveyed by MarketWatch had been looking for a decline of 0.7%.

On a year-over-year basis, construction spending fell 3.3% in January.

Spending on private residential construction declined 3.0% in January, on the heels of falling by 2.6% in December.

On a year-over-year basis, construction spending on private homes was down 19.7% in January. The decline in private residential construction spending reflects the weak state of the U.S. housing market.

Spending on private construction projects fell 2.2% in January, putting the year-over-year drop at 6.4%.

Public construction spending slipped 0.2% in January, with year-over-year outlays up 6.6%.

Meanwhile, the Commerce Deparment revised data on construction spending for December to show a drop of 1.3%, bigger that the prior estimate of a 1.1% decline

Linda Piazza : 3/3/2008 10:21:37 AM

A first 15-minute close above the 15-minute 9-ema for the SPX. That moving average is now at 1331.21, pushed higher as the SPX rose. This is just a first tentative change in tenor. Now the SPX needs to charge past resistance grouping at 1336.07-1337.50. If there's not a surge, that's going to stop the SPX for at least a little while.

Jane Fox : 3/3/2008 10:20:50 AM

WASHINGTON (MarketWatch) -- The U.S. manufacturing sector contracted in February, the Institute for Supply Management reported Monday. The ISM index fell to 48.3% in February from 50.7% in January. Readings under 50% indicate more firms are contracting than expanding. Economists surveyed by MarketWatch expected the index to fall to 47.5%. The new orders index fell to 49.1% from 49.5%. The production index fell to 50.7% from 55.2%. Seven of 18 industries were growing in February.

Jane Fox : 3/3/2008 10:18:51 AM

VIX is now making new daily lows so the bulls are getting stronger and there is a very good chance the rest of the day will be bullish. If the markets make a new daily low then of course that scenario is off the table but with the selling we saw last week, the markets are due for at least a reactionary bounce.

Keene Little : 3/3/2008 10:15:48 AM

The DOW did a brief throw-under below the uptrend line from Feb 11th, the bottom of the potential sideways triangle pattern, at 12200. Assuming support will hold for now a bounce from here could be a 2nd wave correction to correct the leg down from last Wednesday. It could be good for a 300-point rally and would continue the whipsaw appearance of this market: Link

The pink wave count calls for a continuation sideways in the triangle pattern for another 2 weeks or so before getting a rally leg out of it (the one that could take the DOW up to 13300 but only after a lot more sideways chop).

Linda Piazza : 3/3/2008 10:15:32 AM

The SPX and OEX are both challenging their 15-minute 9-ema's (OEX's now at 613.33) without either yet being able to climb above them. We're still in the early sorting-out period after the ISM, so reserve judgment as much as possible. The advance/decline line is still showing a strong bounce from support, though, with the advance/decline line now at -177.

Linda Piazza : 3/3/2008 10:11:26 AM

Big zoom up in the USDJPY after the ISM. That's a little puzzling to me (weakness leading to possible Fed easing which isn't usually dollar-positive, but maybe the ISM and its implications have already been priced in) but those who want to see equities sustain any gain want to see the USDJPY keep gaining. Note, however, that it's gaining within a pattern that looks suspiciously like a bear flag. Currently, the USDJPY would have to sustain gains above 103.45 or so to make the climb look less like a bear flag. It's at 103.21 as I type.

Jeff Bailey : 3/3/2008 10:08:07 AM

Gold Corp. (GG) $44.28 +2.47% ...

Jeff Bailey : 3/3/2008 10:07:47 AM

Coeur D' Alene Mines (CDE) $5.04 +4.56% ...

Linda Piazza : 3/3/2008 10:07:35 AM

The advance/decline line is climbing from that support zone I've been mentioning all morning. It's at -242 as I type. So far, the support zone has held, but we're still early in our reaction to the ISM, and it could all change.

This points out the reason that I like to watch the advdec line on a Keltner chart. Despite the negative numbers all day, I've been able to see that, on a Keltner basis, the advance/decline line has actually been outperforming its late-week action.

Jeff Bailey : 3/3/2008 10:07:24 AM

AMEX Gold Bugs ($HUI.X) 502.675 +3.43% ... lurches above 500.00.

Linda Piazza : 3/3/2008 10:04:53 AM

After last week's Chicago number and the previous Philly Fed, the 48.3 number for the ISM wasn't a big surprise. In fact, we could see some relief that it wasn't worse, a kind of sell-the-rumor, buy-the-fact type of reaction. I'm not promising that, but remember it as a possibility.

The SPX's 15-minute 9-ema is now at 1329.92, and you need to see 15-minute closes sustained above that before there's even the slightest change in short-term tenor. Then you need to see consistent closes above the resistance now at 1336.50-1338.30. Until then, the SPX remains in breakdown mode on the 15-minute chart.

Jeff Bailey : 3/3/2008 10:06:22 AM

US ISM Feb Mfg Business Index 48.3; Consensus 48.0
ISM Feb Prices Index 75.5 Vs. Jan 76.0
ISM Feb Employment Index 46.0 Vs. Jan 47.1
ISM Feb New Orders Index 49.1 Vs. Jan 49.5
ISM Feb Production Index 50.7 Vs. Jan 55.2
ISM Feb Inventories Index 45.4 Vs. Jan 49.1

Jeff Bailey : 3/3/2008 10:02:40 AM

US Construction Spending -1.7% In January; Consensus -0.7%
December Revised Lower To -1.3% From -1.1%

Linda Piazza : 3/3/2008 10:00:22 AM

Note about this weekend's newsletter: I mistakenly resubmitted the previous week's article for my Trader's Corner article. The article that was intended will appear in this weekend's Trader's Corner. I apologize for the mistake.

Linda Piazza : 3/3/2008 9:57:47 AM

The advance/decline line is now at -901. It's attempting to steady in that potential support zone that I've been mentioning this morning. This may not mean a whole lot ahead of the Construction and ISM numbers in a few minutes, but I'm just letting you know what's happening.

Jane Fox : 3/3/2008 9:57:14 AM

Oh little Hansel Hold back the Dyke. You gotta save your momma. You gotta save your papa. You gotta save the entire stock market. (hopefully you all remember this little song)

SPX has made a low of 1322 so far today. If it closes below 1320 all bullish bets are off the table and we will all hold our breath to see if yearly lows can support this market.

MACD is still telling me 1320 support has a good chance of holding up. Remember I am looking for a close below support . Link

Keene Little : 3/3/2008 9:52:12 AM

No surprise--that manufactured rally off the 6:30 AM low has now been given back. We could get a move the rest of the way down to test the overnight lows (e.g., ES 1320). Much lower and we'll get a test of the important 1317 level.

Linda Piazza : 3/3/2008 9:51:28 AM

I live in Texas, so I hear echoes of "Remember the Alamo" when I keep saying this, but remember the ISM. It could either exacerbate the weakness or turn the markets on a dime.

Linda Piazza : 3/3/2008 9:50:09 AM

The SPX is back to the weekly 200-ema. The USDJPY dropped slightly below a rising trendline off the overnight low, but didn't go far and hasn't yet touched that low. The advdec line is dropping into that potential support zone, now from about -950 to about -1350. It's at -1045 as I type. Watch for bounce potential, although it's now showing up yet.

Linda Piazza : 3/3/2008 9:43:35 AM

So far, the USDJPY is maintaining the support of a rising trendline off the overnight low, but it's currently testing it again. That line is at about 102.81 and the USDJPY is at 102.87 as I type.

Jane Fox : 3/3/2008 9:39:52 AM

AD line opened at -97 but has fallen to -693 and AD volume tajectory is lookin downright bearish.

Linda Piazza : 3/3/2008 9:39:25 AM

I hesitate to say too much about setups this morning ahead of the ISM because setups may not mean too much. However, here's the Keltner outlook for the advance/decline line: The advdec line might be negative but it actually opened up in the upper or supposedly bullish half of its Keltner channels. It is, however, stranded in the middle of nowhere, between supposedly strong support and supposedly strong resistance. As I type, it's diving quickly toward that support, beginning at about -950 and extending down to about -1350. It's at -663 as I type. Watch for potential support and a possible first bounce attempt of the day (on the AD line and in NYSE-listed equities) as the AD line approaches that potential support.

Jane Fox : 3/3/2008 9:37:53 AM

Looks like crude is not taking a rest either yet I think a retracement back to around $95.00/bl is still a possibility. Link

Linda Piazza : 3/3/2008 9:35:43 AM

Remember that the SPX's weekly 200-ema is just below at 1322.94, with the weekly 200-sma below that at 1299.15. For the OEX, those values are at 620.07 and 605.58, with the OEX obviously already below the weekly 200-ema.

Jane Fox : 3/3/2008 9:31:17 AM

The Institute of Supply Management's manufacturing gauge for February may fall back under the 50 mark, economists predicted, after regional polls in New York, Philadelphia and elsewhere indicated downturns. Readings under 50 in the ISM index indicate that the manufacturing sector is contracting, but it takes a much weaker reading near 41 to indicate a recession, economists say. The ISM data is due out at 10 a.m. EST.

Jane Fox : 3/3/2008 9:30:12 AM

Here is the poor greenback, all torn and tattered. Link

Linda Piazza : 3/3/2008 9:23:59 AM

From past experience, I've learned to pay attention not only to how our futures perform overnight but also to the way they perform in relationship to other bourses. We had weakness overnight, but futures have been recovering off their overnight lows, despite weak European markets. We've also seen the USDJPY begin a series of choppy higher highs and higher lows after the overnight debacle that sent it to an overnight low of 102.59.

We still have the important February ISM to come this morning at 10:00 am ET. Be cautious about drawing too many conclusions ahead of that. As you may know by now, some believe that futures began their recovery off the lows when rumors began circulating that a FOMC meeting this morning was in fact an emergency meeting that might result in a rate cut. As you may also know, that meeting is in fact a regularly scheduled meeting, one that had been previously announced and which takes place a couple of times a month, according to CNBC.

On balance, then, we've seen a couple of things: bulls would like to buy if given the opportunity, but markets are still weak and still subject to moving on a whim on a rumor. I've been cautioning subscribers to be careful for a long time now, and this morning isn't the time to stop.

Be aware, whatever decisions you're making this morning, of the importance of the ISM. Watch the USDJPY. On the 15-minute SPX chart, the SPX will not have changed tenor even in the slightest until it can maintain 15-minute closes above the 15-minute 9-ema now at 1333.57. It will maintain a breakdown mode on that chart as long as it maintains 15-minute closes below about 1337.50.

Jane Fox : 3/3/2008 9:23:54 AM

Lately I have been posting that I thought Gold needed to make a retracement but I see once again I was wrong. I still think Gold needs to make a retracement but not yet. The US$ is very weak again today and is the driving force behind Gold. Link

Keene Little : 3/3/2008 9:20:45 AM

Equity futures sunk to their overnight lows at 9:00 PM and have had a choppy climb since that time. They've had a big push up since the lows near 6:30 AM and once again it makes me suspicious that it may be a manipulated rally. Bottom line is that we remain stuck in a large trading range and until it's broken we have to be wary of continued chop and whipsaw price movement.

Jane Fox : 3/3/2008 9:20:42 AM

This is not what I would call bullish overnight trading. the markets certainly look like they are trying to make a bottom and the S&P futures (ES) is sort of making new overnight highs, albeit the only market to do so, but it is not convincing. At least it is not convincing me. Link

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