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Jeff Bailey : 3/12/2008 12:46:07 AM

NASDAQ Comp Bullish % (BPCOMPQ) Link ... still holding in a column of X. Would take 22.00% measure to reverse back to "bear confirmed"

Today's action in Dynamic Materials (BOOM) $42.20 -7.35% Link has me scratching my head. Earnings and forward guidance looked very strong. I was very surprised the stock traded $46 when we covered the puts.

Jeff Bailey : 3/12/2008 12:39:28 AM

StockCharts.com's $BPNYA Link

NYSE Comp ($NYA) Link

Jeff Bailey : 3/12/2008 12:37:20 AM

NYSE Bullish % (BPNYSE) saw a net gain of roughly 9 stocks to reversing higher PnF buy signals Link which isn't a lot considering today's rally. Should the NYSE Composite ($NYA.X) take out last week's high, then I'd think we see some more meaningful internal sign of strength returning.

Jeff Bailey : 3/12/2008 12:27:38 AM

Today's Fed and Central Bank (ECB, BOC and Swiss Bank) move was surprising to me. Late last night I was wondering what the next move would be.

One thought I had was that the Fed try "doing nothing." Don't cut, see what happens. But experimentation like that when the market seems to need liquidity didn't make much sense.

Several brokers predicted an intermeeting rate cut yesterday, which wasn't a bad thought as we were back at the 1/22/08 lows.

But the dollar weakness and its impact on commodity prices have become an issue.

Today's move another example of creativity we've never seen before.

The Fed and Central Banks loan $200 billion and it doesn't become an outright bail out. Something that would be HIGHLY criticized by Wall Street.

The $200 billion loan pumps more liquidity to the banks, but may not put downward pressure on the dollar as would another 50, or 75 bp rate cut.

The $200 billion also brings in some selling to Treasuries.

There has to be some Treasury bulls that were betting on further rate cuts (which may still come) to really have their prices rising and yield falling further.

While I try to think, or compensate for Central Bank activity/policy, these bankers keep coming with the surprises.

Keene Little : 3/11/2008 10:34:39 PM

Wednesday's pivot tables: Link and Link

I think we need to keep our eyes on the DOW tomorrow and the potential test of its broken uptrend line from October 2002, currently just above 12200: Link . Obviously bears will want to see a kiss goodbye there and bulls will want to drive price right up through that potential resistance line and close above it.

As mentioned towards the end of the day Tuesday, the big rally off Monday's low is so far only a 3-wave move and as such is just a correction of the decline so far (albeit a strong and sharp correction). A drop back through Tuesday's mid-day low would leave the bounce as just a correction so depending on which symbol you like to trade, that's the key level for the bears to recapture.

If we get a little higher and then a relatively shallow pullback/consolidation followed by another new high then we'd have an impulsive 5-wave advance off Monday's low and confirmation of a trend change. That's what the bulls will want to see. So we should be close to finding out what Tuesday's rally means in the bigger picture but for now anything goes.

Jeff Bailey : 3/11/2008 10:17:28 PM

Closing U.S. Market Watch found at this Link

OI Technical Staff : 3/11/2008 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 : 3/11/2008 6:42:08 PM

SPX Options Montage at this Link

Jeff Bailey : 3/11/2008 6:27:45 PM

SPY Options Montage at this Link

Jeff Bailey : 3/11/2008 6:07:26 PM

"Max Pain" Theory Values (updated)

DIA= $122.00
SPY= $133.00
QQQQ $45.00
IWM= $75.00
USO= $80.00

Jeff Bailey : 3/11/2008 5:03:11 PM

Unusual Puts/Calls Option Activity at this Link

Jeff Bailey : 3/11/2008 5:01:02 PM

Altria (MO) $75.25 +0.68% ... Mar $75 Calls showed unusual activity.

Jeff Bailey : 3/11/2008 4:59:16 PM

iShares FTSE (FXI) $146.30 +9.62% ... Mar $130 Calls showed unusual activity.

Jeff Bailey : 3/11/2008 4:48:56 PM

US Rep Frank: Bond Insurers Have Month To Right The Market

Jeff Bailey : 3/11/2008 4:13:15 PM

BIX.X 245.34 +10.13% ... I've heard of online banking, but they're trading more like Internets of years ago. Might have to change their beta.

Keene Little : 3/11/2008 4:11:57 PM

As scary, and difficult, as it is to short strong bear market rallies, resistance in the DOW 12170-12200 area could be a very good setup for a short play. It might not even get there tomorrow morning as I look at the short term wave pattern and see the possibility for it to be complete at today's close. We shall see what it does in the morning.

Jeff Bailey : 3/11/2008 4:09:41 PM

SPY $132.55 +3.55% ... turns 6.6 million in last 10-minutes. Still 5 to go.

Keene Little : 3/11/2008 4:08:03 PM

Two equal legs up for the DOW, off yesterday's low, is at 12171, so about 15 points higher than today's close. It's still possible, as sharp as it is, for the bounce to be just a 3-wave correction to the decline and that it will then tip back over and resume the decline. Notice too that the bounce is taking the DOW right back up to its broken uptrend line from October 2002: Link

Jeff Bailey : 3/11/2008 4:07:36 PM

Biiiiig volume toward the close

Jeff Bailey : 3/11/2008 3:58:44 PM

UltraShort Xinhua (FXP) $86.30 -18.78% ... what a move.

Jeff Bailey : 3/11/2008 3:57:23 PM

QQQQ $42.74 +3.56% ...

Jeff Bailey : 3/11/2008 3:56:55 PM

BIX.X 244.69 +9.30% ...

Jeff Bailey : 3/11/2008 3:56:34 PM

IWM $67.30 +3.90% ...

Jeff Bailey : 3/11/2008 3:56:18 PM

RUT.X 671.60

Jeff Bailey : 3/11/2008 3:56:02 PM

DIA $123.37

Jeff Bailey : 3/11/2008 3:55:53 PM

SPY $132.00 +3.12% ... gets the trade at overlapping $132.00.

Keene Little : 3/11/2008 3:55:44 PM

I was reading in one of my many daily reports an interesting tidbit about how to interpret the market if it closes at its high or low, particularly after an extended move. Yesterday's close was at its low following several days of selling. The author pointed out that this is a sign of capitulation (of longs). No hard selling, no screams of agony, just selling right into the close. There was no fear among the short sellers. (This was one reason I pointed out the ISEE chart last night).

The overconfidence in the short sellers at yesterday's close got them in trouble this morning with the huge gap up. Now here we are approaching the end of the day and it looks like we're going to close at the high for the day. Shorts are covering into the close which could be considered capitulation by them. Are there also some overconfident bulls here? Could they wake tomorrow with a nasty surprise with a big gap down after some nasty after-hour news?

I'll say it again--take nothing for granted in this market. It's one of the more nervous markets that I can remember in a long time.

Linda Piazza : 3/11/2008 3:47:20 PM

Begin making those shall-I-hold-overnight decisions if you haven't already. It doesn't look possible that the SPX could fall from here with such a tall green candle likely for the daily chart, but then perhaps it didn't look likely that it could pop today about this time yesterday when the candle was going to be a long red one that barely held up above support. Please note that all that's happened so far is that we've gotten a pop up to the 38.2 retracement of the recent decline. I do think it's possible that we'll get a rally that lasts at least several days if not several weeks one of these days, but is this it? I don't know.

Even if it is, the likely outcome tomorrow if these were normal times, after such a big-range day, is a small-range one (perhaps, rather, a small-bodied one with or without long upper and lower shadows).

Keene Little : 3/11/2008 3:35:56 PM

The bearish point about the NDX chart that I just posted that I should point out is that the next leg down could be a doozy as a strong 3rd wave unfolds (the 3rd wave of wave 5) which would likely have NDX breaking 1600 very quickly. That's the bearish potential anyway if it fails here. Keep that in mind if you bought today's bounce. Both sides need to continue to be cautious and take nothing for granted. Take profits when offered.

Linda Piazza : 3/11/2008 3:32:42 PM

The USDJPY has risen high enough to invalidate the little H&S on its intraday chart. It's currently retesting the high of the day, having risen above it. Now it's dropped back a little from its 103.52 high of the day and is at 103.33 as I type. Equity bulls are glad to see these gains but would like to see the USDJPY maintain values above the previous high of the day at 103.48 to validate those new highs on the equities. You can't always ask for corroboration or market-timing information on each little jit and jot, but in the current climate, you'd like as much validation as possible.

Jeff Bailey : 3/11/2008 3:30:07 PM

Petroleo Brasileiro (PBR) $114.43 +5.36% ... today's trade at $114 a 3-box reversal. Bulls can play here with tight stop at $106. Risking $8 to bullish vertical count of $162.

Keene Little : 3/11/2008 3:29:24 PM

NDX has now achieved two equal legs up in today's bounce at 1727. A little higher and it will achieve the same amount as the rally off the March 4th low to the March 5th high (about 60 points). So yesterday's low near 1673 + 60 = 1733 which would also place it at the top of a parallel down-channel based off the trend line along recent lows, as shown on the 60-min chart: Link

If the bulls can drive NDX above 1733 they will have done well and it would be a heads up that the key level at 1767 could be next. In the meantime, watch price action around the 1733 area.

Linda Piazza : 3/11/2008 3:22:15 PM

The SPX's 15-minute 9-ema and other support now extends from 1302.85-1304.78 on 15-minute closes. For the OEX, the potential support on 15-minute closes is at about 603.82 and then again at 602.02. The OEX is closely approaching a 38.2% retracement of the recent decline, with that at 607.69. If you're an OEX trader, be aware that it will take a strong push higher (which covering shorts could of course supply) to push the OEX beyond that barrier, too, without a period of consolidation near there. Begin deciding now if you're planning to hold overnight or hold your whole bullish position overnight. If you're not, you might think about beginning to step out of positions as that resistance zone is approached. Your risk is that the OEX will continue to zoom higher for another 40 minutes or so until the close and you'll lose out on more of your potential gains. Your risk if you don't is that the SPX could hit that barrier and be bounced back all the way toward 602-603 or maybe even back toward 600. We just don't know in this kind of climate. The same goes for SPX traders as the SPX approaches 1316.80, the approximate level for the 38.2% retracement of its recent slide.

Jeff Bailey : 3/11/2008 3:17:54 PM

Bears Stearns (BSC) $62.50 +0.35% ... battles back from session low of $55.42.

Jane Fox : 3/11/2008 3:16:20 PM

I think Crude will find support at $100/bl. Link

Jeff Bailey : 3/11/2008 3:14:58 PM

03:00 Internals found at this Link

Jane Fox : 3/11/2008 3:14:30 PM

Here is the daily charts of the SPX showing the double bottom. Link

Keene Little : 3/11/2008 3:07:13 PM

The banks got a very strong bounce today thanks to the Fed's promise of all the cash they could need, and more. The bears are closing positions and will ask questions later. Remember, the money the Fed is making available are loans and the fundamental problem of downgrading poorer performing bonds, and the associated writedowns, has not changed one iota. The banks are still in serious doodoo. But this is what bear market rallies are all about.

The two best possibilities for the banks (BIX), as I currently see them, are for a continued rally to perhaps test the Feb 1st high near 300 (pink) or a turn back down to a new low to finish a 5-wave decline from the Feb 1st high (dark red): Link . The new low could/should find support around the March 2000 low near 212. It takes a break above 274 to negate the dark red count.

Jeff Bailey : 3/11/2008 2:59:05 PM

Zions Bancorp. (ZION) $49.04 +8.97% ... reclaiming 19.1% conventional.

Linda Piazza : 3/11/2008 2:50:59 PM

If the SPX does climb--something we don't know yet as significant resistance on intraday and daily charts is tested--I would watch for potentially strong resistance near 1316.80, a 38.2% retracement of the recent slide. That's also near considerable potential Keltner resistance on the 30-minute chart, with that at 1317.28-1319.11 on 30-minute closes currently. I'm not suggesting that the SPX would necessarily get to that level today, even if it should climb the rest of the day. If it should climb, think carefully about how many of the bullish profits you might have gathered that you want to leave on the table tonight and how much you'd like to lock in sometime in the last hour of trading with that next level of resistance ahead. Think especially carefully if the SPX should end the day near 1304. It's testing (just above) a descending trendline off the 1/28, 2/07 and 3/04 lows, a trendline that it broke through on Friday, with that trendline at about 1304, if I'm judging it correctly. So far, this just constitutes a retest of that resistance. As much of a breath of fresh air that this day has been for those who are bullish, it could reverse from that level tomorrow in a kiss-goodbye reaction if it can't get well clear of it by the close.

Who am I kidding? These markets can reverse no matter how high they get today. They can zoom no matter how low they might get another day. I think we're ready for a big relief rally, and I spent the big decline getting rid of all my April bear call spreads in case that's what will happen, but any such rally should be held suspect in what I've been saying is a troubled market for a while. Don't go home with more risk than you can afford in any direction.

Keene Little : 3/11/2008 2:46:15 PM

Not surprisingly, those indices that have been the most sold off are the ones experiencing the biggest rallies today. The banks (BIX) are up 7% today. Gotta love them bear market rallies--the shorts are taking profits and running.

Keene Little : 3/11/2008 2:43:31 PM

The advance-decline line is still lagging by not making a new high with price. This is bearish divergence but is simply a warning at this point and not confirmation that the rally can't make it further.

Keene Little : 3/11/2008 2:41:28 PM

The DOW broke its downtrend line from the end of February and now SPX is getting ready to test its downtrend line, currently near 1305.

Linda Piazza : 3/11/2008 2:41:24 PM

New high of the day for the SPX. Now it has to maintain values near here and not get quickly knocked back.

Linda Piazza : 3/11/2008 2:26:13 PM

This current action is the reason for my 12:00:06 post that if this morning's pop higher had showed that you had too much risk on the table (signs: heart-palpitations, watering eyes, dry mouth), you might consider using the downdraft to lighten your risk. We still don't know how this will all turn out as the SPX approaches the day's high and tests the gathered Keltner resistance, but the possibility of a move up through that resistance exists and has existed all day. So does a quick downdraft.

That resistance exists up to about 1303.44 currently, with the resistance in force on 15-minute closes. We need to see sustained closes above that resistance, not just a quickly reversed pop above it or a few-cent move above it, to believe that the resistance has been breached.

Jeff Bailey : 3/11/2008 2:20:38 PM

Dow Diamonds (DIA) $120.36 +2.01% ... back for another look at WKLY Pivot.

Keene Little : 3/11/2008 2:14:47 PM

The NYSE lags the other averages in testing this morning's high (which for NYSE was 8758 and it's currently printing 8714) which is another indication of lack of market internals--not all the stocks are participating in this 2nd leg up but only the ones making up the big averages.

Jeff Bailey : 3/11/2008 2:13:02 PM

CITIGROUP TO INJECT $1B IN HEDGE FUNDS

DJ- Bank is committed to inject $1 billion to shore up six of its hedge funds which have been pressured by a tightening in the municipal bond market, The New York Times reports.

C $20.98 +6.55% ...

Linda Piazza : 3/11/2008 2:11:54 PM

The VIX is doing a whole lot of jumping around. It did pierce that support I've been mentioning, now at 27.37-27.51, but it certainly didn't close any 15-minute periods below it. Instead, it jumped higher and is now at 28.19. Equity bulls want it to round down again and fall beneath that potential Keltner support and stay there. Bears want it to continue to a new high, although the VIX's action is counterbalanced by other under-the-market indicators that are more bullish, such as the TRIN's current 0.66 value.

Keene Little : 3/11/2008 2:11:49 PM

As Linda has already observed, the market internals are not supporting the price test of this morning's highs so be cautious about the long side here.

Jeff Bailey : 3/11/2008 2:11:07 PM

MBIA Inc. (MBI) $11.25 +4.45% ... MBI-EC are $1.10 x $1.25 ... light action with 404 traded.

Keene Little : 3/11/2008 2:10:19 PM

We've got a test of this morning's spike high in progress. Can the bulls do it?

Jeff Bailey : 3/11/2008 2:09:47 PM

INDYMAC SEES 1Q HIT ON CREDIT SPREADS

DJ- Lender's bottom line will be hurt by widening credit spreads amid 'panic market conditions' caused by the housing downturn, margin calls and other uncertainties.

IMB $5.54 +17.87% ...

Linda Piazza : 3/11/2008 2:08:50 PM

The A/D line is nowhere testing its previous high of the day, lagging the price action a bit. The A/D line is bouncing and was at extreme levels this morning, so I'm not making too much of this divergence yet. And, of course, the SPX has not yet made a new high and is only approaching the old 1303.26 high. The SPX is at 1300.32.

Jeff Bailey : 3/11/2008 2:08:29 PM

THORNBURG SURGES, WORKS TO MEET MARGIN CALLS

DJ- Head of embattled lender says, after reporting a boost to its total 2007 write-downs, that the real-estate investment trust is 'in discussions' with its lenders to form an agreement to meet margin calls. Shares surge 125%, aided by Fed move.

TMA $1.69 +138.02% ...

Linda Piazza : 3/11/2008 2:06:18 PM

The SPX continues rounding up, firming up that right shoulder on the potential inverse (or reverse) H&S. In my opinion, however, the SPX needs sustained 15-minute closes above potential Keltner resistance at 1303.34 to confirm that formation.

Jeff Bailey : 3/11/2008 2:04:10 PM

US TRADE GAP UP LESS THAN EXPECTED

U.S. deficit in international trade of goods and services increases by 0.6% in January to $58.20 billion from December's revised $57.86 billion. Economists expected $59.75 billion shortfall. Exports gain 1.6% to $148.23 billion, while imports climb 1.3% to $206.43 billion.

Keene Little : 3/11/2008 1:37:11 PM

The DOW is now close to tagging its downtrend line from Feb 27th, right at 12K.

Jeff Bailey : 3/11/2008 1:33:35 PM

US Dollar Index (DXY) 73.15 +0.22% (30-minute delayed) ... Fed will be monitoring this closely as will other Central Banks. Today's news gives hint that Central Banks are focusing more and more on dollar's implications.

Activity today in my opinion is to focus on liquidity for banks, but by not easing on rate front, may not bring further dollar weakness, and inflationary pressure as a result. Foreign Central Banks that pitched in will want to see their stronger currency ease against the dollar, hoping to help their exports.

Keene Little : 3/11/2008 1:30:44 PM

To show a little closer view of the daily SPX chart in my last post, this shows a little more clearly the two potential scenarios for price action as I currently see it: Link

Linda Piazza : 3/11/2008 1:28:12 PM

The SPX is rising from the bottom of the inverse H&S's right shoulder, but it's far yet from confirming that inverse H&S. Still, this is action that the equity bulls want to see.

Jeff Bailey : 3/11/2008 1:19:46 PM

01:00 Internals found at this Link

Keene Little : 3/11/2008 1:19:01 PM

Based on the price pattern for the NDX, which I covered in last night's post, I've changed the wave count for SPX to match the NDX, which is my preferred wave count. This is the one that calls the current decline from the end of February as the 5th wave of the move down from October. As such, when it finishes we will then get a multi-month rally to correct the Oct-Mar decline. March has been an important month since 2000, often marking important turning points in the market and therefore an important low this month is fitting.

I'm showing two possibilities now on the daily chart, both pointing to a coming rally. We either bottomed yesterday and will rally back up to test the previous highs near 1390 as part of a longer term sideways consolidation (pink) or we'll drop a little further first to finish the 5-wave move down from October and then start the bigger rally: Link

I show a Fib projection for a 5th wave down (hard to see in the scrunched chart) where it would equal the 1st wave by tagging 1254.73. It takes a rally above 1344 to negate the dark red wave count that calls for a contiunation lower to that Fib target.

If the pink wave count is correct then yesterday's low will hold and today's pullback will lead to another rally leg and break the downtrend that's been in place since the end of February (by breaking above 1307 now), which would tell us that leg down is finished (confirmed with a break above 1344). The 60-min chart shows the two scenarios: Link

I'm showing hints of a descending wedge for the decline from Feb 27th and it calls for one more leg down. The 5th wave of this descending wedge would achieve 62% of the 1st wave down at 1253.46 (common relationship in a wedge pattern), which is close to the 1254.73 projection on the daily chart.

Now we'll let price lead the way to show which count is the correct one but bottom line is I think we're very close to ending the Oct-Mar decline and should get ready to switch to the long side for a while (although it will hardly be a straight line up). It could be for a couple of weeks or it could be for a couple of months.

Linda Piazza : 3/11/2008 1:16:33 PM

The VIX certainly moved above the 28.17-28.27 level that I thought might be resistance on 15-minute closes (10:43:23 post), but not a lot above it. It reached a daily high of 28.64. It is, however, maintaining 15-minute closes above the 15-minute 9-ema rather than below it. So, if equity bulls want to feel any safer at all, they need to see the VIX again maintaining 15-minute closes beneath about 28.00 and then below 27. It's at 28.30 as I type.

Linda Piazza : 3/11/2008 1:06:16 PM

At 102.92 as I type, the USDJPY is consolidating just below significant resistance. This occurs after the USDJPY punched through that resistance earlier today in its zoom off the 101.41 overnight low. So far, there's nothing too bad about that, but those watching the charts will note that today's pattern since about 8:30 comprises a possible H&S formation. A sustained drop below about 102.56 would confirm it while sustained values above about 103.20 would invalidate it. I wouldn't jump to conclusions here about whether the formation is going to be invalidated or confirmed, but do keep it on your radar screen.

Jeff Bailey : 3/11/2008 1:01:22 PM

WellPoint (WLP) $47.26 -28.30% ... Health Insurers Take A Dive On WellPoint's Warning Link

Jane Fox : 3/11/2008 12:57:33 PM

Even though the AD line and volume were very bullish this morning, I noted how the VIX did not seem to be on the bulls team and sure enough the S&P futures have made a series of lower lows and highs in sync with the VIX's higher lows and highs. Link

Keene Little : 3/11/2008 12:52:07 PM

Today's decline looks more like a slow bleed again, the way the declines over the past two weeks have looked. No strong selling but no buying either. This morning's 5-min wonder rally appears to have been strictly a pre-market short-covering rally (Bernanke's modus operandi) that had zero zip nada no follow through buying. Now we've got a new short term down-channel in place from this morning's high and that means continue to stick with the short term and longer term trend, which is down.

Jeff Bailey : 3/11/2008 12:43:14 PM

EIA: US 2008 Oil Forecast Sees Smallest GDP Growth Since 2001.

Linda Piazza : 3/11/2008 12:39:44 PM

No confirmation of a bounce yet on the SPX or OEX charts. If you've been studying SPX and OEX intraday charts, you've likely noticed a potential inverse or reverse H&S on those charts, so you might not be surprised as the SPX is at the bottom of the right shoulder. While I don't count on those formations being confirmed or projecting a target from them, they do provide some guideposts to watch. Does the SPX drop low enough to invalidate the formation? Does the right-shoulder building take too long, also invalidating the formation? Is it confirmed?

What I'm going to say in no way should encourage bulls to hold on longer than they should be holding on, than is appropriate for their trades or account-management practices, but I wouldn't consider the inverse H&S truly invalidated until and unless the SPX sustains values below Friday's low or until and unless it just spins out this right-shoulder building so long that it invalidates the formation that way. That last option would require the rest of today and into tomorrow to do. I wouldn't consider the formation confirmed until the SPX sustains values above about 1303.90 currently.

Jeff Bailey : 3/11/2008 12:39:30 PM

Bear Stearns Slides Again Despite Reassurance On Liquidity

DJ- Shares in Bear Stearns Cos. (BSC) resumed their slide Tuesday, dropping 6.5% despite the company's assurances that its financial position is sound and fresh action by the Federal Reserve that boosted the rest of the financial sector.

The drop followed an 11% decline Monday that was triggered by an upsurge of concern about Bear Stearns' ability to keep funding its obligations. The concerns lacked specifics, and the bank said in a press release after the market closed that they are baseless.

"Bear Stearns' balance sheet, liquidity and capital remain strong," Chief Executive Alan Schwartz said in the release Monday evening.

Nevertheless, those concerns persisted Tuesday, with Bear's stock down $2.52 at $59.78. The cost of protecting a $10 million investment in Bear Stearns debt against default jumped to $640,000 a year after falling to around $565,000 earlier in the day after the Fed stepped in to ease the functioning of credit markets.

Investors are worried that banks, which operate with heavy amounts of leverage, could be hurt by the gumming up of the market for short-term funds. The move by the fed to make $200 billion in Treasury securities available to primary dealers for a longer-than-usual term of 28 days and to accept a range of mortgage-backed debt as collateral gave the broader financial sector a boost.

Banks don't like to have to assert their financial strength for fear of raising more questions than they put to rest. Bear was forced to make similar declarations last year, after a pair of internal hedge funds were left insolvent by mounting losses on complex securities backed by mortgages.

That such a declaration was needed at all is a sign of the stress Wall Street is under ahead of first quarter earnings reports due next week for four banks including Bear. Analysts are expecting another flood of write-downs, as credit losses move from subprime mortgages into areas like LBO loans and commercial real estate.

Analysts at Deutsche Bank today cut their estimate for Bear Stearns' first quarter earnings by two-thirds, warning write-downs could be bigger than expected.

Jeff Bailey : 3/11/2008 12:34:41 PM

EIA: OECD Oil Inventories Seen Above 5-year Avg By End 2008

Jeff Bailey : 3/11/2008 12:31:42 PM

EIA: OECD Oil Inventories Seen Below 5-year Avg At End March

Jeff Bailey : 3/11/2008 12:29:15 PM

EIA: US 2Q 2008 Diesel To Avg. $3.60/Gal, +28% From Year Before
+9.0% From Prior Estimate.

Jeff Bailey : 3/11/2008 12:28:02 PM

EIA: 2Q World Oil Use Seen Up 1.6% Vs. Year Ago

Jeff Bailey : 3/11/2008 12:26:35 PM

US Oil Fund (USO) $85.77 +0.16% ...

Linda Piazza : 3/11/2008 12:26:03 PM

To confirm its bounce, the OEX needs a new high of the day and sustained values above 602.99.

Linda Piazza : 3/11/2008 12:25:30 PM

To confirm any bounce attempt, the SPX needs to achieve a new high of the day and then to produce sustained 15-minute closes above 1303.95.

Jeff Bailey : 3/11/2008 12:25:25 PM

EIA: 2Q, Full Yr 2008 China Oil Use Seen +5.0% Vs. Year Ago

Jeff Bailey : 3/11/2008 12:24:40 PM

IEA: US Retail Gasoline To Avg. $3.37/Gal In Summer

Jeff Bailey : 3/11/2008 12:24:01 PM

EIA: US 2Q 2008 Gasoline To Avg. $3.45/Gal; Revised +3.6%

Jeff Bailey : 3/11/2008 12:23:09 PM

EIA: US 2008 Oil Forecast Revised Down 0.6% Vs. Prior Estimate

Keene Little : 3/11/2008 12:21:25 PM

After tagging the 50% retracement of this morning's rally, SPX is now getting a bigger bounce. Unfortunately the pullback doesn't look complete otherwise I'd be suggesting buying the dip. I'm now watching the top of a new parallel down-channel based on the trend line along today's lows and SPX is now nearing the top of it just under 1294: Link

It looks like it could still be a bull flag but another drop back down inside the down-channel will begin to make it look more bearish than that. Bulls want to see a continuation higher now above 1294.

Linda Piazza : 3/11/2008 12:17:13 PM

The SPX is so far springing right above support that it violated by a minor amount, closing well above it this last 15-minute period. Good sign for bulls, as far as it goes.

Jeff Bailey : 3/11/2008 12:13:23 PM

EIA: US Spot Crude To Average $94.11/Bbl In 2008

Jeff Bailey : 3/11/2008 12:12:54 PM

EIA: US 2008 Oil Growth To Be Just 40,000 B/D On Slow Economy

Jeff Bailey : 3/11/2008 12:11:44 PM

EIA: US Gasoline To Average $3.21/Gallon In 2008; Revised +4.6%

Jeff Bailey : 3/11/2008 12:11:06 PM

EIA: Revises 2008 US Spot Crude Price +8.8%

Jeff Bailey : 3/11/2008 12:10:32 PM

EIA: US 2008 Fuel Use, Excluding Ethanol, To Fall 90,000 B/D

Linda Piazza : 3/11/2008 12:07:46 PM

The TRIN is 0.76 and has been moving lower all day. Nothing bearish about that. We're still seeing mixed signals, some decided bullish and some decidedly bearish. In this kind of climate, you just have to honor your stops and pat yourself on the back for not letting gains turn into losses, or, if that wasn't possible, not letting losses get too big, even if your trade would originally have gone your way and you would have had a profit.

Jeff Bailey : 3/11/2008 12:06:12 PM

Dynamic Materials (BOOM) $41.70 -6.39% ... probes its 1/22/08 intra-day low.

Linda Piazza : 3/11/2008 12:05:56 PM

The A/D line held support on that 15-minute close. We're seeing a few mixed signals here. The A/D line is at 1554 as I type.

Linda Piazza : 3/11/2008 12:05:18 PM

The VIX continues higher.

Linda Piazza : 3/11/2008 12:04:53 PM

There was a minor violation of the SPX's support near 1290.80 on that last 15-minute close. Watch now to see if that level holds as resistance--not a good sign for bulls--or if the SPX springs right back above it, showing that this was just a brief giving way, a stop-running drive lower. The SPX is at 1288.60 as I type.

Linda Piazza : 3/11/2008 12:02:03 PM

The A/D line needs to steady soon or bulls risk it cascading lower again as it's done so many times before. It's at 1557 as I type, testing the Keltner breakout benchmark near 1500-1520.

Linda Piazza : 3/11/2008 12:00:06 PM

I don't know what's going to happen next. I wouldn't be surprised to see the SPX zoom up toward 1304 again but neither would I be surprised to see it drop precipitously. You have to factor in both possibilities and set your stops accordingly. Don't let gains turn into losses, whichever way you're leaning in your trades. However, if you're heavily bearish and this morning's pop higher showed you that you have too much risk on the table, you might consider using this downdraft to lighten that risk.

Linda Piazza : 3/11/2008 11:54:21 AM

If in bullish positions, you have to honor your stops as you never know what this market will do. Here's what I'm noting. The USDJPY has dropped down to retest the peak between the two 101.41 lows, and is a little below it currently. It's also a little below the 103-ish 23.6% retracement of the recent slide lower. It's at 102.90 as I type, but perhaps still within "testing" zones. The A/D line has fallen further, closer to a retest of its breakout marker, with that now at about 1515, but it hasn't yet broken through that support. It's at 1741 as I type. The VIX has risen to test the potential Keltner resistance I mentioned earlier, with that now at about 28.20 and the VIX now at 28.29. So, we have some significant testing going on with several minutes left in this 15-minute period. Some of these under-the-market indicators don't adhere as closely to Keltner S/R as do equities or equity indices, for example, so you should consider them just testing and not yet violating those benchmarks.

Jeff Bailey : 3/11/2008 11:53:09 AM

Bear Stearns (BSC) $57.70 -7.54% ... reverses gains.

Jeff Bailey : 3/11/2008 11:51:52 AM

VIX.X 28.13 -4.25% ...

Jeff Bailey : 3/11/2008 11:48:41 AM

Swing trade put alert! ... for one (1) of the Whirlpool WHR April $80 Puts (WHR-PP) at the offer of $2.95. No stop for now, target $73.00 in the underlying shares.

WHR $83.73 +1.78% ...

Keene Little : 3/11/2008 11:48:28 AM

SPX is now dropping down to the 38% retracement and the bottom of a parallel down-channel for today's pullback (bull flag?). Actually now it's dropping below that as I type.

Jane Fox : 3/11/2008 11:44:50 AM

Now look at the monthly Russell 2000 cash index. It is trading below the 50MA and the 10 has already crossed the 20 something that has not happened since October 2003. Link

Linda Piazza : 3/11/2008 11:41:45 AM

The A/D line is still dropping and the 15-minute candles grow a little larger as it does. That's not alarming yet, but it's not what bulls would most like to see. Potential support has now risen to 1490-1570 on 15-minute closes, and equity bulls want that support to hold, if tested. The A/D line is now at 1911.

Jane Fox : 3/11/2008 11:41:06 AM

Here is a monthly chart of the SPX with a 10/20/50 moving average. Notice how the blue 20MA was support for the rally from the October 2002 lows and how this market is now well below this support. I see the 10 has not yet crossed the 20 but much more decline and that will take place as well.

There has been significant technical damage done of late and it will be very interesting to see if the bulls can bring us back from the brink of this pending bear cyclical. Link

Linda Piazza : 3/11/2008 11:39:42 AM

The SPX's 15-minute 9-ema held as support on a 15-minute close, but it's being tested again. Bulls want it to hold again. The next task that bulls want to see accomplished is a new high of the day, but, more than that, sustained 15-minute closes above resistance gathering up to about 1304.50. That may be a tall order for today. What bulls don't want to see is for support now at 1291.28 to be lost on 15-minute closes. The SPX is 1296.31 as I type.

The OEX's support at the 15-minute 9-ema also held on the 15-minute close. The next task that OEX bulls want to see is a new high of the day and sustained values above resistance up to 602.95. They don't want to see the OEX sustain values below about 597.20.

Linda Piazza : 3/11/2008 11:22:40 AM

After a period of sideways consolidation while the 15-minute 9-ema caught up, the SPX has now dropped to test that moving average. This is all fairly typical behavior as noted in my 10:32:56 post, so not alarming to bulls so far, but bulls really want the SPX to maintain either this support or stronger support now at 1290.94 on 15-minute closes.

The OEX has also dropped to test its 15-minute 9-ema, with potential support there at 599.35 on 15-minute closes. Stronger support can be found at about 597, and bulls want one of these to hold up as support on 15-minute closes and then to prompt a bounce.

Jeff Bailey : 3/11/2008 11:19:08 AM

11:00 Internals found at this Link

Jane Fox : 3/11/2008 11:13:49 AM

We have not seen the AD volume this bullish for quite a while. It is telling you the bulls have the ball today and it is probably not a good idea to go against the trend. Link

Linda Piazza : 3/11/2008 11:10:50 AM

The A/D line continues to pull back, but it's doing so with small-bodied candles on the 15-minute chart. That pullback is minor so far and has taken on a possible bull flag look, so it's not alarming so far. Do keep a sharp watch on this, however, as volume patterns sometimes lead price patterns. Strongest support is far below, now down near 1375-1424 on the A/D line, with that line currently at 2133.

Linda Piazza : 3/11/2008 11:06:59 AM

While it's the 30-minute 9-ema that has been the best benchmark for the SPX recently, the 15-minute version often performs better as a benchmark when the markets are dropping or rising rapidly. The SPX's 15-minute 9-ema is now at 1294.20, and bulls want that to hold up as support on 15-minute closes if the SPX should pull back. The 30-minute version is at 1291.04.

For the OEX, those values are 599.60 and 597.84.

Jane Fox : 3/11/2008 11:03:05 AM

Here is a quick look at the overnight charts and how the markets are trading in relation to the ON ranges and their previous day ranges. Notice the Dow (YM) futures are still above both its overnight and previous day range whereas S&P (ES) is below its previous day range.

The NDX futures (NQ) never did get above its previous day high. Link

Linda Piazza : 3/11/2008 11:02:47 AM

So far, the SPX's pullback still looks bull flag-like, but that can change in an instant. If you're in bullish trades, remain watchful.

Jane Fox : 3/11/2008 10:56:42 AM

SAN FRANCISCO (MarketWatch) -- Behind eye-popping price tags on bread, milk and gasoline, a cheaper greenback is partly to blame.

The five-year slide in the U.S. dollar vs. its counterparts has overlapped with acceleration in consumer inflation. That's no coincidence, say some economists. Since it takes more dollars to import goods and services, such as oil, a weak dollar makes imported goods more expensive.

"The weak dollar is behind all of the inflation pressures," says Ellen Zentner, U.S. macro economist at Bank of Tokyo-Mitsubishi UFJ.

Keene Little : 3/11/2008 10:55:23 AM

It could easily be argued that the price consolidation near this morning's high is bullish and it might eventually be. But so far I could also argue that this morning's spike up is it for the correction to the decline that's been in progress.

Watching SPX for now, which is in between the DOW and NDX in how it's pattern looks, a pullback with two equal legs down this morning is at 1293.35 and a 38% retracement of the bounce off yesterday afternoon's low is at 1291.57. As long as the pullback stays above these levels and consolidates sideways it will look bullish.

Jane Fox : 3/11/2008 10:54:54 AM

SAN FRANCISCO (MarketWatch) -- Fed funds futures dropped sharply Tuesday after the Federal Reserve and other central banks announced measures to funnel more cash into the banking system. The April contract fell to 97.66 from a settlement Monday of 97.785, with the most recent trade implying a about 64% chance of a 75 basis point-cut to interest rates in March from the current level of 3%. A 50 basis-point cut is fully priced in. On Monday, a 75 basis-point cut was fully priced in with traders even giving about 14% odds for a one-point cut, which would mean interest rates would drop to 2% in March.

Jane Fox : 3/11/2008 10:53:15 AM

The S&P cash index found support at 2008 lows but now it has the 1320 support turned resistance to content with. The series of lower lows and highs means the trend is down and until that changes I am on the sidelines. This chart is still telling me the bulls do not have control yet neither do the bears. Link

Linda Piazza : 3/11/2008 10:49:50 AM

Jane has probably mentioned that the VIX dropped lower today and then has been rising since the low reached during the second 15-minute period of the day. A rising VIX is not what equity bulls want to see, so you should be watchful of what's happening here and be warned to remain protective of any profits you have.

I'd like to give a Keltner perspective. This morning's drop in the VIX pushed it right to significant Keltner support, then a little lower but now at 27.07 and 27.34 on 15-minute closes. The rise so far looks like a choppy rise from that support, and so the suggestion might be that the VIX might roll down from some resistance level into another test of that support that held up this morning. That rollover hasn't happened yet. Where might it happen from, if it's going to happen? One possibility is from the 28.17-28.27 level if it should reach that high. The last few 15-minute candles have had upper shadows this morning, so it's possible that it won't get that far. Equity bulls hope not, and equity bears want to see it soar even higher than that. The VIX is at 27.66 as I type.

Linda Piazza : 3/11/2008 10:37:55 AM

The USDJPY continues to gain. It's at 103.36 as I type. If it doesn't quickly reverse, it's confirming the double-bottom formation by climbing above the 103.21 peak high between the two 101.41 lows produced on Friday and last night. It's in a breakout mode on the 15-minute chart, displaying strong upward momentum, but now dollar and equity bulls want it to maintain support on 15-minute closes at about 102.94 if it pulls back. Otherwise, there's danger that the breakout mode will be erased and the momentum wane.

Linda Piazza : 3/11/2008 10:32:56 AM

So far, so good for bulls, but remain careful. Keep your profit-protecting plans updated as significant SPX resistance is being tested this morning. The 30-minute 9-ema is now at 1286.89. The 15-minute version is now at about 1290.50, with other support converging in that zone. Unless you see the A/D line or USDJPY cratering or the VIX soaring or something like that, I wouldn't get too bearish on pullbacks as long as that support holds on 15-minute closes. Significant resistance clumps up to about 1394.85 on 15-minute closes.

For the OEX, the 15-minute 9-ema is now at 597.68 on 15-minute closes, and significant resistance is at about 602.25 on 15-minute closes. The OEX has been at that resistance, but not yet pulling free of it. If it can't do so soon, it may need to pull back to stronger support. Usually on strong days, prices hold up fairly well until the 9-ema zooms up closer than it is now, at which time prices drop to test it.

Do I need to say it again, though? These are not normal times.

Jane Fox : 3/11/2008 10:22:33 AM

Gold is testing its lower trendline and seems to be finding support. Link

Keene Little : 3/11/2008 10:19:43 AM

The DOW's pullback supports the idea that new highs are coming so we have a difference between the blue chips and the techs this morning. I'm not sure who will win the battle.

Linda Piazza : 3/11/2008 10:19:15 AM

As I type, the USDJPY's value is 102.99, with the USDJPY again pushing up to test the 23.6% retracement of its most recent steep decline. It's also testing the 103.21 peak between Friday's 101.41 low and last night's 101.41 low. A sustained move above it would be a confirmation of a double-bottom formation. This would be a double-bottom formation separated by only a little more than a single trading day, however, so would not have as much significance as one produced over weeks or months. In other words, we can't count on any confirmation as being some sort of sign that long-term weakness in the dollar against the yen is over. For right now, however, sustained 15-minute closes above that confirmation level would be corroborative of equity gains.

Linda Piazza : 3/11/2008 10:15:09 AM

The SPX has potential support now ranging from 1287.86-1293.23 on 15-minute closes. So far, the pullback looks minor and the A/D line's action confirms that but remain watchful.

Jane Fox : 3/11/2008 10:11:37 AM

Crude hit a high of 109.72 so far today. Wow! Link

Keene Little : 3/11/2008 10:10:21 AM

I'm watching the pullback for evidence of what could be next and so far it's looking impulsive. That suggests we'll get a bounce now to a lower high and then another decline. It's looking like a one-and-done spike up so far.

Jane Fox : 3/11/2008 10:09:35 AM

Vix is now making new daily highs and the S&P futures is making new intraday lows.

Linda Piazza : 3/11/2008 10:05:40 AM

So far, the A/D line continues to hold up fairly well. It's still well above the benchmark denoting breakout status, with that line now risen to 1333.33, and with the A/D line at 2320.

Linda Piazza : 3/11/2008 10:03:53 AM

So far, bulls are mostly getting their wish. The SPX is consolidating sideways. It's consolidating near former trendline support, the 23.6% retracement of the most recent slide (about 1299.60) and potential Keltner resistance on 30-minute closes at 1299.60. Perhaps they'd rather that the SPX stay a point or two higher than its current 1297.54 level while consolidating, but mostly bulls are seeing what they want to see. So far.

There's not much more to be told about this other than the SPX consolidating sideways and hasn't yet retraced deeply. For bears waiting for a steep decline or rollover, realize that many bears are waiting for the same thing. While we don't yet know what's going to happen, the longer prices hold up, the more desperate shorts are going to be to cover on any small pullback. They'll actually keep prices higher. These markets are crazy, with trading to some degree emotion based, and they can hold up for hours and then suddenly crater on the next development. Generally, however, the longer they hold up, the more the possibility that they'll continue to do so. I'll be scanning other charts, looking for under-the-markets signs that things are going wrong and will let you know what I see.

Jane Fox : 3/11/2008 9:59:10 AM

Now this is very odd, the VIX is not bullish, it is not bearish but certainly not bullish. I expected to see this indicator falling like a rock. Link

Jane Fox : 3/11/2008 9:55:03 AM

The markets are telling us loud and clear the 2008 lows are an area of support area and are into a very nice rally today. AD line is a very bullish +2390

Jane Fox : 3/11/2008 9:50:24 AM

Dateline WSJ = WASHINGTON -- The Federal Reserve Tuesday announced an expansion of its securities lending program, saying it will lend up to $200 billion of Treasury securities to primary dealers.

The $200 billion of Treasury securities to primary dealers will be secured for a term of 28 days rather than overnight as in the existing program by a pledge of other securities, including federal agency debt, federal agency residential -mortgage backed securities and nonagency AAA/Aaa-rated private-label residential mortgage backed securities, the Fed said.

As in December, three European central banks cooperated with the Fed in a coordinated global effort to calm markets. The European Central Bank offered up to $15 billion in U.S. dollars through a renewed currency swap agreement with the Fed, following similar moves in December and January. The Bank of England renewed expanded loan terms it announced in December, widening the range of collateral that U.K. financial institutions can submit for #10 billion ($20 billion) in three-month funds. The Swiss National Bank boosted the amount of dollar funds it announced with its December swap from to $6 billion from $4 billion.

"It is intended to continue the provision of dollar liquidity for as long as the Governing Council considers it to be needed in view of the prevailing market conditions," the ECB said in a statement

Linda Piazza : 3/11/2008 9:47:27 AM

Be aware that the SPX's 200-week sma is now at 1300.01.

Jane Fox : 3/11/2008 9:47:11 AM

Dateline WSJ - European regulators approve Google's $3.1 billion purchase of advertising firm DoubleClick, without conditions.

Linda Piazza : 3/11/2008 9:45:30 AM

Keltner outlook on the A/D line: the A/D line is in breakout mode on its 15-minute chart. It's at -2343 as I type, still climbing. In other words, it's at an upside extreme, showing strong upside momentum. Care should be exercised if it begins dropping rapidly, but otherwise, the momentum is on the side of the bulls, of course. I would not get too bearish equities as long as it's maintaining breakout mode, which at this point would mean continued 15-minute closes above about 1270. That number will rise rapidly over the next period if the A/D line stays near where it is. I'll update every now an dthen.

Keene Little : 3/11/2008 9:45:13 AM

SPX and DOW have clearly broken above their short term down-channels from last Wednesday so we now know that leg down is finished. The top of the larger down-channel (the downtrend line from Feb 27th) is currently near SPX 1309/DOW 12040 so those are the potential resistance levels to watch. Yesterday's late-day SPX 60-min chart showed the potential for a rally up to there before turning back down: Link

Linda Piazza : 3/11/2008 9:42:08 AM

I mentioned resistance near 1305 for the SPX as a market. That resistance is at 602.16 for the OEX, and it's already being tested. Furthermore, the 23.6% retracement of the OEX's most recent slide is at about 600.44, so the OEX is currently above both. Equity bulls would like to see the OEX consolidate sideways near or above the 600-602 zone while equity bears want a sharper pullback. I would not get too bearish unless the OEX begins sustaining 15-minute closes benath about 595.50.

Linda Piazza : 3/11/2008 9:38:56 AM

Lots of types of resistance converge in the 1299.60-1302 and maybe even 1303 level for the SPX. That means that the SPX has now reached possibly significant resistance. One chart even suggests that it won't be until the SPX begins sustaining 15-minute closes above resistance at 1305.08 that it will have cleared that resistance. This is then a dangerous point for both bulls and bears. We should see some retracement soon. Bulls want it to come in the form of sideways consolidation while moving averages play catch up, rising beneath current prices, while bears want a sharp reversal. I would not be too bearish as long as the reversal does not result in sustained 15-minute closes beneath about 1288.

Linda Piazza : 3/11/2008 9:35:15 AM

The concerted action this morning and other factors (yen selling?) have driven the USDJPY up to test a 23.6% retracement of its recent slide, with that number at 103.02. The USDJPY pushed above that, but is currently at 102.72. Equity bulls want to see it continue to gain; bears want it to slide sharply lower now.

Linda Piazza : 3/11/2008 9:31:43 AM

What do you do if you're in a bearish position this morning? That's a tough one, but when futures gap up the way they're likely to do this morning, short-covering often fuels further gains. I think you have to honor your stops. Good luck.

Keene Little : 3/11/2008 9:31:28 AM

My first reaction this morning when looking at the huge spike up in equity futures earlier this morning was that Uncle Ben must have made his early morning attack on the shorts with his flame thrower and another emergency rate cut. No rate cut but the news that the Fed will help more banks with more cash has spooked the shorts. As I had pointed out last night with the ISEE chart we have enough short interest in this market to cause these kinds of short-covering spikes. Whether they'll hold is a completely different story.

Linda Piazza : 3/11/2008 8:45:16 AM

Yesterday near the close, I spoke of the risk that market might gap up today and take away some of the profits bears had accumulated. I suggested that traders, especially the conservative ones, might take at least partial profits to lock in some profits.

It appears that overnight central banks have been working across the globe in ways that might improve equity performance. I've spoken already of the rumors that the BoJ was selling yen, driving the yen lower against the U.S. dollar and euro, even as they were speaking about the possibility of allowing the yen to rise further. Our futures were rising, and I believe that wasn't entirely a coincidence. Now, we've just learned of concerted measures taken by several central banks to increase liquidity. I'm not sure I understand all the complicated measures taken by our Fed and other central banks, but that taken by our bank seems to allow access to the Fed's discount window by the investment banks that have never before had access, and seems to involve some of the measures Jim Brown spoke of as needed in this weekend's newsletter.

Linda Piazza : 3/11/2008 8:11:17 AM

This post concerns the selection of a new governor for the Bank of Japan, and I assure you that this has relevance in our markets. Last week, I spoke of the uncertainty in Japan over the selection of the Bank of Japan's Governor Fukui. Before an election that had upset the former leading party, it had been widely accepted that Deputy Governor Muto would take over the job, but the political situation made that seem less likely. Nevertheless, he was nominated last week. This morning, I'm reading that the Democratic Party of Japan has rejected Muto's nomination due to his "background as a bureaucrat" (Tokyo[Kyodo]). Amid uncertainty about the next governor and his hawkish vs. dovish stance, speculation also arose that the government had sold yen to drive the yen lower overnight.

Here's why this is important: a lower yen against the U.S. dollar (and, thus, a rise in the USDJPY) and euro is usually good for equities. After reaching an overnight low that equalled the Friday low, the USDJPY has been rising. That's good for those who want to see equities firm and even bounce, but there's still far to go and much uncertainty about the eventual direction of the USDJPY. Keep an eye on this and don't get too complacent about any equity bounce if the USDJPY heads south again. Be aware that if, tonight, it looks as if some ultra hawkish appointee is chosen for the BoJ governorship, those USDJPY gains could evaporate.

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