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Keene Little : 4/2/2008 10:32:54 PM

Thursday's pivot tables: Link and Link

The two most probable paths for price tomorrow, that I see, are for a quick rally to finish a 5-wave advance off Monday's low (for a minor new high above Wednesday's) or a continuation lower from Wednesday's close. These are shown by the dark red and pink wave counts on the 60-min charts:
SPX: Link
DOW: Link
NDX: Link
RUT: Link

The SPX daily chart remains a good example of the potential for a large sideways consolidation pattern to play out into May: Link

OI Technical Staff : 4/2/2008 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The Market Monitor has been archived.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 : 4/2/2008 8:53:56 PM

Closing Internals at this Link

Jeff Bailey : 4/2/2008 4:11:57 PM

Interesting ... CNBC reporting that there may have been some hedge funds having aggressively shorted BSC (easier with no up-tick rule), then those hedge funds pulled their accounts creating the liquidity squeeze and collapse of BSC.

When Senator Kennedy was grilling Dr. Bernanke, Bernanke should have at least said "implement the up-tick rule".

Jane Fox : 4/2/2008 4:09:17 PM

Economic Reports on the docket for tomorrow include.

8:30a.m. Initial Jobless Claims For Mar 29 Week. Expected: +2K. Previous: -9K.

10:00a.m. Mar ISM Non-Manufacturing Composite Index. Expected: 49. Previous: 49.3.

12:00p.m. Feb Chicago Fed Midwest Mfg Index. Previous: -0.1%.

Jeff Bailey : 4/2/2008 3:56:53 PM

DIA, SPY, EWG and EWJ daily intervals montage Link

Linda Piazza : 4/2/2008 3:54:47 PM

Barring something big happening in the last few minutes of trading, we do get the doji-type or small-bodied type candle for the day. You know the drill: a small-bodied candle following a large-range day that comes at the top of a climb (off the March low, in this case) can be part of a three-day reversal signal known as an evening-star pattern. It would be completed by a large down day tomorrow. Here's the catch: it's not a confirmed reversal signal yet and it could just be signaling that a consolidation period is needed before the SPX can push above the next resistance zone. You just don't know which it is yet, and you must make hold-overnight-or-not decisions with that uncertainty. If you don't know that these markets can do absolutely anything, then you've been asleep lately. Don't go into the close with more risk in your portfolio than you can afford. I'd be taking partial profits, at least, if in bullish trades, particularly April ones, because there's just too much chance of several days of sideways movement at the best and a sharp pullback at the worst, but that's just me. I'm pretty risk averse these days.

Keene Little : 4/2/2008 3:53:05 PM

It's a very choppy bounce off the low and that makes it look like we're going to get another leg down, probably tomorrow morning.

Linda Piazza : 4/2/2008 3:44:18 PM

It's about time for market-on-close orders. Although the tenor sometimes changes with those orders, I wouldn't be surprised to see the SPX end the day by chopping between potentially strong support and resistance, at 1363 and 1368 on 15-minute closes, respectively.

Jeff Bailey : 4/2/2008 3:40:07 PM

Crazy ... EWJ $12.71 -0.15% ... also kissed its conventional 38.2% at $12.78.

Jeff Bailey : 4/2/2008 3:39:12 PM

EWG $32.20 -0.27% ...

Jeff Bailey : 4/2/2008 3:38:20 PM

DXY looks a bit like it did early December'07 on daily interval chart.

Jeff Bailey : 4/2/2008 3:37:31 PM

Somehwat of a "mixed" trade for the dollar today Link

EUR/USD +0.44%

$/YEN +0.50%

GBP/$ +0.56%

Jeff Bailey : 4/2/2008 3:34:28 PM

DXY traded its WKLY R1 to the fraction.

Jeff Bailey : 4/2/2008 3:32:33 PM

All be darned if VLO doesn't look to print a "doji" today. Looks about the middle of the recent "High Crack" and "Low Crack" benchmarks.

Jeff Bailey : 4/2/2008 3:30:27 PM

My May "Crack Spread" tabulation at today's settlement is 26.48.

Linda Piazza : 4/2/2008 3:26:37 PM

Potentially strong resistance on 15-minute closes for the SPX at 1367.75-1368.57; potentially strong support at 1362.82. For the OEX, those numbers are resistance at 633.67-634.40 and support at 631.

Jeff Bailey : 4/2/2008 3:27:18 PM

Nymex May Crude (cl08k) settled up $3.85, or +3.81% at $104.83.

Unleaded (rb08k) settled up $0.1344, or +5.09% at $2.7736 (a contract settlement high)

Jeff Bailey : 4/2/2008 3:16:50 PM

03:00 Internals found at this Link

Jane Fox : 4/2/2008 3:16:18 PM

Crude has once again bounced off the $100/bl support. Link

Linda Piazza : 4/2/2008 3:15:15 PM

Here's the value of having a potential scenario in mind when you begin the trading day: if you'd had that small-range or doji-type scenario in mind, you'd have been more likely to be quick to take bullish profits when the SPX approached its 38.2% retracement of the decline off the October high. Even when those scenarios don't play out as suspected, you have a benchmark against which to test action. Today, the A/D line's early action supported the scenario, with the early values positive but below the bullish/bearish benchmark on the Keltner charts. However, if you'd had that potential scenario I posited this morning in mind but the A/D line was above that benchmark and rising ever higher, and the SPX punched right through that 38.2% level, you could have reevaluated and thought that it wasn't playing out the way you'd thought. If you'd had in mind entering a bearish trade as that 38.2% benchmark was hit, for example, the difference in what you'd expected would have warned you to be careful if the action had in fact diverged from what you suspected in that scenario. Of course it didn't diverge and that scenario was right, at least so far. Most times, forming a scenario before the open, when you're not wrapped up in what's happening, helps you through your trading day. When it doesn't is when you adhere to that scenario despite differences that keep showing up.

If the SPX decline escalates, the scenario will be wrong, for example, but the possible doji-type or small-range day for today should be cautioning bears now that the SPX might attempt to steady somewhere near here or perhaps somewhere before 1353-1354.

Keene Little : 4/2/2008 3:09:10 PM

From a Fib standpoint the next potential support level is now at DOW 12533/SPX 1361.50 (about to be tagged). This is where the current leg down is 162% of the 1st leg down.

Jane Fox : 4/2/2008 3:06:30 PM

VIX is making new daily highs here confirming S&P futures new daily lows. The bears have control now.

Linda Piazza : 4/2/2008 3:04:45 PM

Next potential support for the OEX is being tested. It's at about 631.50. I think we should suspect that, if the SPX rises, it might be likely to find resistance on 15-minute closes from 634-634.36.

Linda Piazza : 4/2/2008 3:03:46 PM

Next potential support on 15-minute closes for the SPX is 1362.69 on 15-minute closes. I think for now we should suspect that on any bounces, the SPX might be likely to find resistance now from 1367.50-1369.27 on 15-minute closes.

Jane Fox : 4/2/2008 3:02:10 PM

It looks like the SPX will not test resistance before it retests support. Just goes to show this market will not be easy to figure out or trade Link

Linda Piazza : 4/2/2008 2:55:30 PM

Try to suspend too many judgments if the SPX should continue pulling back. It was natural and normal to expect some kind of stalling and/or pullback when the 38.2% retracement of the decline off October's high was approached. It may not be more than stalling, and, the way markets are these days, the picture may even look completely different at the close. Just prepare for the other possibility, another downturn.

Jeff Bailey : 4/2/2008 2:54:32 PM

Chile's Central Bank President Says Doesn't Rule Out Forex Intervention

Linda Piazza : 4/2/2008 2:51:54 PM

The small-range or doji-type day possibility still exists for the SPX. It's just a different type doji currently. Begin thinking about your end-of-day decisions, however, if a doji should be produced. A doji or small-range day after a strong gain, at the top of the climb off the March low, presents the possibility of a three-day reversal signal being completed tomorrow with a sharp downturn. Sideways consolidation or a downturn would appear most likely under normal conditions if we get that doji-type or small-range day today, but these are not, of course, normal conditions.

Tab Gilles : 4/2/2008 2:49:50 PM

Solar stocks are "HOT" today! STP +10.9%; EMKR +12.5%; FSLR +3.51%; SPWR +5%

Linda Piazza : 4/2/2008 2:49:37 PM

No answer yet as the SPX continues to challenge that potential support, slipping beneath it now as I begin this post. The SPX needs to steady now and rise again or its action is more short-term bearish than bullish. If the SPX should rise again, however, short-term bulls must be wary of the possibility that the 15-minute 9-ema now at 1370.76 could be resistance on 15-minute closes.

Tab Gilles : 4/2/2008 2:40:58 PM

Weekly EIA Report Link

Keene Little : 4/2/2008 2:40:17 PM

The Fib projection at SPX 1377 has held strong today so there remains a good possibility we've already seen the high, especially since we're making new lows. But be a little careful here (if short). There's a way to count today's pullback as a larger a-b-c correction. If it's just a correction before heading higher again, two equal legs down at DOW 12586/SPX 1366.76 could be support to launch another rally leg.

Linda Piazza : 4/2/2008 2:38:35 PM

The SPX nears what short-term bulls hope is a bounce point, now at 1366.51 on 15-minute closes. The OEX has already broken through an equivalent level, at 634.12 on the OEX. OEX bulls want a quick bounce.

Linda Piazza : 4/2/2008 2:33:05 PM

Here's where bulls and bears need to be careful, as the potential bulls-don't-want-to-see short-term scenario laid out in my 1:54:11 post (rise up to about 1736.35, sharp downturn) still could be fulfilled. The SPX has a long way to go to sustain values below the breakout benchmark, now at 1366.58, and that benchmark is an area from which prices might still bounce if it's tested. However, bulls should be carefully protecting their profits in case there's a stronger downturn. For now, the doji-type or small-range day still appears possible, but you definitely don't want to see sharp losses end the day.

Keene Little : 4/2/2008 2:22:18 PM

The equivalent upside projection for SPX is 1384.10.

Keene Little : 4/2/2008 2:20:19 PM

If the pullback to this afternoon's low was the end of the 4th wave correction within the rally off Monday's low, then the 5th wave has an upside projection near 12756 where it will equal the 1st wave: Link . That would place the high about 12 points shy of the February 1st high at 12768.

Jeff Bailey : 4/2/2008 2:07:53 PM

SPY $137.31 +0.51% ... 02/27/08 high was $139.14.

Jeff Bailey : 4/2/2008 2:07:11 PM

iShares Germany (EWG) $32.31 +0.06% ... back to probe its 50% conventional. Did this on 02/27/08.

Keene Little : 4/2/2008 2:02:06 PM

The DOW bounced right back up to the broken uptrend line along the lows from yesterday afternoon, currently near 12667. A failure there would be at least short term bearish. 10-min chart: Link

Linda Piazza : 4/2/2008 1:54:11 PM

If, as seems possible (my 1:36:30 post), the SPX is going to spend a period of time chopping back and forth across the 15-minute 9-ema, it's going to be difficult to assess next direction from flattening indicators or oscillators. However, I would be particularly careful if in bullish positions if the SPX were to rise up to about 1376.35 and then roll down sharply through the breakdown benchmark, now at 1366.16. Bulls want that benchmark to hold.

Keene Little : 4/2/2008 1:47:39 PM

The DOW missed its Fib target at 12605 by a point and then got a good bounce so now is when we'll see what kind of bounce develops--either one that takes us to a new high or a consolidation instead. Flip a coin here.

Linda Piazza : 4/2/2008 1:36:30 PM

The SPX's 15-minute 9-ema is now above, near 1371.40. Bulls do not want to see this average now prove to be resistance on 15-minute closes. A normal reaction if this is to be a doji-type day today would be to see the SPX chop back and forth across that average for a while, perhaps after first dipping toward 1365.86. Sustained values below that and then below a dropping 9-ema would look more bearish.

Jeff Bailey : 4/2/2008 1:20:16 PM

01:00 Internals found at this Link

Linda Piazza : 4/2/2008 1:20:04 PM

Anything can happen by the end of the day, but so far, we've had the typical kind of action after a day like yesterday. I was just looking at the A/D line, and it's now at 657, at light support but back below the bullish/bearish benchmark on the 15-minute Keltner chart. Equity bulls don't want to see a sharp decline in the A/D line from here.

Keene Little : 4/2/2008 1:20:01 PM

The 2nd leg down for the DOW is getting close to 162% of this morning's 1st leg down (12605) and that sets up a potential bounce from there. If this is just a correction to the rally then we'll get another leg up to a new high. If it's part of a larger decline we'll get a choppy sideways/up correction of the decline instead. So the next bounce will provide some clues as to what's next for the market.

Linda Piazza : 4/2/2008 1:03:33 PM

So far, all that's happened is that the SPX has dropped down to the other side of its smallest channel, something that I predicted might happen soon in my 12:37:11 post. In and of itself, this isn't particularly alarming, but now we see what happens next. Bulls would prefer that the SPX not close any 15-minute periods below 1369.12 and especially not below 1365.43, the breakout benchmark.

Jane Fox : 4/2/2008 12:53:36 PM

I am long USO as of yesterday and have a stop and reverse at 78.64. I don't cherish the thought of being short Crude but this is what my strategy is telling me and like I stated yesterday, "Change the rules and you change the game."

Linda Piazza : 4/2/2008 12:53:29 PM

I'm caught on the phone.

Jeff Bailey : 4/2/2008 12:48:43 PM

DJUSHB 414.17 +2.47% ... QCharts' %change incorrect. (see early post)

Keene Little : 4/2/2008 12:47:58 PM

If this doesn't start down in earnest then I'm going to start thinking we're into the 4th wave correction that I was expecting earlier. That would mean we'll still be due the 5th wave up to complete the leg up from Monday. That would likely target the DOW 12740-12750 area and possibly the SPX 1384 level.

Keene Little : 4/2/2008 12:41:35 PM

We could be getting that break now. If it breaks below then watch for a retest as another shorting opportunity.

Keene Little : 4/2/2008 12:40:18 PM

So far the decline leaves a bit to be desired from the bearish side. Until the uptrend line along the lows since yesterday afternoon are broken there is still the possibility for this to push higher again.

Linda Piazza : 4/2/2008 12:37:11 PM

Here's another 15-minute 9-ema test on the SPX. The SPX so far isn't springing up from that test of the average, now at about 1373.50, and it's possible that it's time for the SPX to cross back toward the other side of its smallest channel. It hasn't done that since late Monday. The other side of the channel is now 1370.53, and equity bulls would want that support to be maintained on 15-minute closes if tested. Further support is now at 1367.15 and 1365.08, the breakout benchmark. Keep guarding those bullish profits from now on out, just in case.

Jeff Bailey : 4/2/2008 12:35:31 PM

Mexico's Finance Ministry: Forecasting 4% GDP Growth For 2009

Keene Little : 4/2/2008 12:19:27 PM

That last bounce didn't offer us much of a chance to lower our stop on the short play--it's still basically at a new daily high.

Linda Piazza : 4/2/2008 12:11:35 PM

The SPX's 15-minute 9-ema, support since yesterday morning on 15-minute closes, is now 1373.59. The OEX's is 636.49.

Jane Fox : 4/2/2008 12:08:31 PM

The jtHMA charts are slow at responding to trend changes as a matter of fact they stink at trend changes. They shine at identifying rallies to sell or dips to buy but at times like this, when we are in the process of changing from a downward trend to an upward, they do not do well.

So the MDY short I profiled last week would be stopped now.

This of course is another sign the trend is changing. Link

Linda Piazza : 4/2/2008 12:07:59 PM

The OEX's potential resistance on 30-minute closes is now 639.78.

Linda Piazza : 4/2/2008 12:07:27 PM

The SPX is again jammed up underneat the potential resistance on the 30-minute chart, with that at 1377.80 on 15-minute closes.

Jane Fox : 4/2/2008 12:03:54 PM

This is the kind of action you want to see if you are bullish, which I am.

I suspect SPX to test resistance at 1390-1400 then retrace to the resistance turned support at 1360. I suspect that support will hold and will be a springboard for another attempt at breaking resistance. SPX will succeed the 2nd time. Link

Jeff Bailey : 4/2/2008 12:02:14 PM

ICE $156.87 +5.58% ..

Jeff Bailey : 4/2/2008 12:01:50 PM

Swing trade long alert! ... for just more than 1/4 position (5 shares) in shares of CME Group (CME) at the offer of $512.50.

Stop goes $480, target $585.

Keene Little : 4/2/2008 11:54:35 AM

If we get a new high it could leave yet another negative divergence which means it might not stick. We're at a tough wall of resistance here so it should not be easy for the bulls to punch through.

Keene Little : 4/2/2008 11:49:39 AM

We're getting the bounce so it's a good opportunity to short it with your stop at a new daily high.

Jeff Bailey : 4/2/2008 11:48:21 AM

COMMERCIAL BANKS SEEN CUTTING 200,000 JOBS

DJ- Analysts expect the U.S. commercial banking industry to lose 200,000 of its 2 million jobs over the next 12 to 18 months as banks cut costs in the face of the housing market slump and the weak economy.

Jeff Bailey : 4/2/2008 11:47:39 AM

GOLDMAN SACHS SEEN AS LIQUID AS EVER

DJ- Goldman Sachs says it's as liquid as it has ever been, with Wachovia noting that Goldman's pool of liquidity likely at $80 billion, compared with an average of $60 billion during the fourth quarter.

GS $180.82 +2.23% ...

Jeff Bailey : 4/2/2008 11:46:44 AM

MONSANTO 2Q NET DOUBLES ON STRONG DEMAND

DJ- Monsanto doubles fiscal 2Q net income to $1.13 billion, or $2.02 a share, as the agriculture giant posted strong revenue and margin increases and demand drove corn and herbicide sales.

MON $110.00 -2.75% ...

Linda Piazza : 4/2/2008 11:43:12 AM

SPX bulls got their wish with the SPX bouncing from the 15-minute 9-ema. Now they need a higher high to confirm that support. The 9-ema is now 1371.76. Be careful now, though, as stronger resistance is being approached. Anything at all can happen now as traders nervously watch to see if we'll get the typical end-of-week response to big Tuesday gains that Art Cashin warned about this morning.

Jeff Bailey : 4/2/2008 11:40:09 AM

Circuit City (CC) $4.68 +6.59% ...

Jeff Bailey : 4/2/2008 11:39:46 AM

BEST BUY PROFIT TOPS EXPECTATIONS

DJ- Consumer electronics retailer's 4Q net slips 3.4% to $737 million as same-store sales and profit margins dip. Revenue rises 4% to $13.42 billion. Per-share earnings of $1.71 top Wall Street estimates of $1.65.

BBY $44.00 +1.21% ...

Jeff Bailey : 4/2/2008 11:38:43 AM

IMF CUTS FORECAST FOR 2008 WORLD GROWTH

DJ- Fund forecasts the world economy to grow 3.7% in 2008, down from its previous forecast of 4.1%, and expects growth of 3.8% in 2009 'with risks remaining largely on the downside.'

Jeff Bailey : 4/2/2008 11:38:10 AM

US FEBRUARY FACTORY ORDERS FALL MORE THAN EXPECTED

DJ- The Commerce Department says orders for manufactured goods decreased 1.3% in February, following a revised 2.3% drop in January, which was below economists projection of an 0.8% dip.

Jeff Bailey : 4/2/2008 11:36:49 AM

Monster Worldwide (MNST) $25.64 +3.26% ... edges above its 21-day SMA (25.12). 50-day SMA just ahead $26.58.

Jeff Bailey : 4/2/2008 11:35:50 AM

Manpower (MAN) $59.99 +1.35% ... 150-day SMA just ahead at $60.50.

Jeff Bailey : 4/2/2008 11:35:04 AM

Automatic Data Processing (ADP) $44.13 +1.68% ... edges above 150-day SMA ($43.80). 200-day SMA just ahead at $44.82. Has retraced just more than 50% ($43.78) of its late October high to 1/23/08 low.

Jeff Bailey : 4/2/2008 11:32:51 AM

ADP SEES MARCH US PRIVATE-SECTOR JOBS UP 8,000

DJ- Payrolls giant Automatic Data Processing and consultancy Macroeconomic Advisers say U.S. private-sector employers added 8,000 jobs in March, compared with an expected 70,000 decrease forecasted by economists in a Dow Jones Newswires survey for overall March payrolls to be reported Friday.

Keene Little : 4/2/2008 11:31:27 AM

If you shorted the high and want to just scalp this move, pull your stop down closer now. If you want to see if this will turn into something more significant to the downside then leave your stop at a new daily high for now. Once a larger bounce finishes and turns back down then you'll be able to lower your stop to just above the bounce high.

Linda Piazza : 4/2/2008 11:27:23 AM

The SPX's 15-minute 9-ema is now 1371.19; the OEX's, 635.34.

Linda Piazza : 4/2/2008 11:25:34 AM

The A/D line popped above potential resistance on its 15-minute chart, but is struggling to stay above that resistance now up to about 890 on 15-minute closes. The A/D line is 895 as I type. Equity bulls want it to continue climbing while equity bears want to see it roll down now.

Linda Piazza : 4/2/2008 11:23:54 AM

The OEX has not yet quite hit its upside target on its 30-minute chart. That's 639.50 for the OEX. Like the SPX's 30-minute target, this also serves as potential resistance on 30-minute closes.

Jeff Bailey : 4/2/2008 11:16:37 AM

Tell him Ben! ... CUT BACK YOUR PORK SPENDING!

Linda Piazza : 4/2/2008 11:16:55 AM

The SPX has now hit the target set by the 30-minute Keltner chart. That target, now at 1377.27 is also potential resistance on 30-minute closes. We don't know if that resistance will hold any more than anything else has held, but other resistance from the daily chart is being approached, such as the 38.2% retracement of the drop off the October high. If you haven't already, decide how you're going to protect your bullish profits. If you just intended a day or swing trade, is it time to take partial profits off the table, at least? If your call option has doubled in price, is it time to take half off and cinch up the stop on the other half so that you won't lose money now? If you intended nothing more than to collect a certain profit and you've done that, isn't it time to think about following your plan? Others might just choose to follow the SPX higher with account-appropriate stops, but be sure you trust yourself to follow that plan, if that's your plan.

Jeff Bailey : 4/2/2008 11:11:36 AM

11:00 Internals at this Link

Keene Little : 4/2/2008 11:02:08 AM

The DOW is now approaching potentially strong resistance in the 12700-12740 area and SPX in the 1378-1380 area. Watch closely for signs of topping if you want to start nibbling on a short play. Just remember you're trying to stop rising knives here but the wave count for the quick spike up off this morning's low looks good for at least another pullback correction which could develop into something more.

Linda Piazza : 4/2/2008 10:56:43 AM

The SPX's 15-minute 9-ema is 1369.43; the OEX's, 634.87.

Linda Piazza : 4/2/2008 10:46:17 AM

As the SPX zooms up toward the 1377-1379 next potential resistance level (Keltner, Fib, etc.), the A/D line zooms. It, however, zoomed only up to the bullish/bearish benchmark, the 120-ema on the 15-minute chart. Although positive at its current 737 level, it is still below the resistance band now from about +820 to +900, and is facing the potential resistance there on 15-minute closes. Be watchful now as it's possible that the A/D line could roll down, bringing NYSE-listed equity prices lower, too. Equity bulls would instead like to see it break up through that resistance.

Jeff Bailey : 4/2/2008 10:45:43 AM

USO $81.10 +0.04% ...

Jeff Bailey : 4/2/2008 10:42:56 AM

EUR/USD 1.561 -0.02% ...

Jeff Bailey : 4/2/2008 10:39:46 AM

YRCW $14.81 +5.40% ... creeps higher. WKLY R1 $14.59. Conventional 19.1% at $15.29 (9/25/07 relative high to 1/04/09 relative low)

Keene Little : 4/2/2008 10:38:25 AM

New highs already which means we probably haven't started the slightly larger correction that I'm looking for. Either that or we're going to put in a sneaky top as the market makes minor new highs but loses momentum with each until it finally lets go. In the case of the latter and if you're long you'll want to drag your stop up closer and trail it up. By the same token, a drop through the uptrend line along the lows since yesterday afternoon could trigger a short play.

Jeff Bailey : 4/2/2008 10:38:03 AM

PBR $107.81 +3.11% ... best levels here.

Jeff Bailey : 4/2/2008 10:37:42 AM

Decent volume spike for TSO $33.26 +3.46% ...

Jeff Bailey : 4/2/2008 10:37:22 AM

Decent volume spike for VLO $53.00 +2.00%

Jeff Bailey : 4/2/2008 10:36:23 AM

EIA: US Refineries ran at 82.54%

Linda Piazza : 4/2/2008 10:36:21 AM

A bounce from the 15-minute 9-ema and then a new high for the SPX: this is what equity bulls wanted to see. Your tasks are made easy. You can follow the SPX higher with an account-appropriate stop, but you have one other task. You have to decide how you're going to treat a move toward the 38.2% retracement of the dive off the October high at about 1378.40 and then further resistance above that. The 30-minute chart has an upside target currently of 1377.08, but remember that can be resistance, too, on 30-minute closes.

Jeff Bailey : 4/2/2008 10:35:42 AM

EIA: US Distillate Stockpiles -1.629M Bbls; Seen -1.7M

Jeff Bailey : 4/2/2008 10:35:13 AM

EIA: US Gasoline Stockpiles -4.525M Bbls; Seen -2.0M

Jeff Bailey : 4/2/2008 10:34:38 AM

EIA: US Crude Oil Stockpiles up 7.217M Bbls; Seen +2.3M

Jeff Bailey : 4/2/2008 10:33:12 AM

DJUSHB 417.44 +11.26% ...

Jane Fox : 4/2/2008 10:32:03 AM

The VIX is trading mid range and is of little help here which is no surprise. Link

Jeff Bailey : 4/2/2008 10:32:11 AM

Toll Bros. (TOL) $26.00 +3.40% ... X gets the square. Upper end of "Bailey Wave" at $26.79. WKLY R2 at $26.19.

Jeff Bailey : 4/2/2008 10:30:04 AM

DJ- The Skeptic: Euro Cracks In Paper Profits

(partial) Anyone looking for evidence of how a strong euro can hurt even well-run European companies should look no further than prominent paper producers Stora Enso and UPM.

The two Finnish groups have been trying their best to counter unfriendly industry fundamentals like weak global demand for newsprint, high fuel costs and excess capacity. Both companies have been restructuring their manufacturing operations and closing down as much as capacity as they can.

But they are getting jammed from two ends - their euro-denominated output is too expensive in a global paper market - and U.S. manufacturers are taking advantage of the weak dollar to flood European markets with their own produce.

The result? Stora and UPM are in danger of a credit crunch. Don't be surprised if their debt is downgraded to junk at some point this year.

The currency-related dynamics are stark. International Paper (IP), a U.S. manufacturer and a competitor of Stora and UPM has seen its European sales rise 25% in two years, 12% in 2007 alone. Stora's have risen 17% in two years but only 3.2% in 2007. As for UPM, sales in the U.K. fell 2% in 2007. In Finland, its backyard, they fell 6% and in France they were down 8%. Apart from the currency disadvantage, high wood prices have also eaten into their operating earnings. What's hurting the credit profiles of both UPM and Stora is that they are committed to generous cash returns to shareholders through share repurchases and dividends. While this is positive for investors in the short term, it could increase financial risk if fundamentals don't improve as both companies have significant debt in their books. UPM's 2007 operating cash flow fell to EUR867 million from EUR1.2 billion, but net capex rose to EUR425 million from EUR314 million. It kept the dividend payout at EUR392 million. It's a similar story at Stora. Another problem is the sensitivity of paper demand in a slowing economy. According to UBS, demand for graphic paper fell 7% in the last economic slowdown in 2001-02. Graphic paper is vulnerable as publications are hit by lower advertising spending. The Finnish paper makers also face a possible 80% duty scheduled to be imposed on Russian wood exports by the Russian Federation from 2009.

Jane Fox : 4/2/2008 10:30:02 AM

AD line is +392 so above 0 but not anywhere near the bullish marker at +1000.

Jeff Bailey : 4/2/2008 10:25:06 AM

EUR/USD 1.5617 +0.03% ...

Jeff Bailey : 4/2/2008 10:24:13 AM

TSO $32.13 -0.06%

VLO $51.65 -0.52%

PBR $106.55 +1.95%

YRCW $14.36 +2.20%

Jeff Bailey : 4/2/2008 10:22:47 AM

USO $80.90 -0.19% ...

Jeff Bailey : 4/2/2008 10:22:33 AM

EIA Weekly Inventory data due out in about 10 minutes.

Jane Fox : 4/2/2008 10:22:24 AM

Announcement from CME - As previously announced, CME Group will no longer list Russell 2000 and E-mini Russell 2000 contracts as of the September 19, 2008 quarterly expiration as the result of a licensing decision made by the index provider, Russell Investment Group.

To help facilitate an orderly de-listing of these contracts, we will not list July 2008 and August 2008 serial month options on Russell 2000 and E-mini Russell 2000 futures.

Currently we list April, May, June and September 2008 contracts for Russell 2000 and E-mini Russell 2000 options. To maintain the integrity of these contracts, we will continue to add new strikes in accordance with current Exchange Rules.

Linda Piazza : 4/2/2008 10:22:00 AM

Thanks for the linked article in your 10:00:28 post, Jeff. I guess that Dow Jones writer swallows the information whole, though, and doesn't read much from other writers and analysts and Asian specialists who think there's still a whole lot of confusion about what the Bank of Japan's policy is going to be with the government not able to agree on new leadership. Several people of various dovish/hawkish stances have been proposed and discarded as leaders. Just this morning, I was listening to the take offered by Jan Lambregts, head of research for Asia at Rabobank International. He, like many, questions what would happen if a Bear Stearns like event should occur in Japan, for example. "It's become unclear what the LDP would like in a candidate," he says, so it's impossible to predict the stance the BoJ will take.

Linda Piazza : 4/2/2008 10:11:01 AM

So far, so good, for those in bullish equity trade. The SPX maintained its 15-minute 9-ema as support and is now attempting to bounce from it, but this 15-minute period is not yet completed and the day is far from over. Remember to factor in the possibility of a small-range or doji-type day into your trading decisions, as I advised early today. What will happen to your options positions if prices sit here and don't go much of anywhere? Do you have a positive theta combination position so that you'll benefit if prices sit here? Are you instead long an April call position that will lose value if prices sit here?

Jeff Bailey : 4/2/2008 10:00:28 AM

Japan: BOJ Believes Rates Must Rise For Sustainable Econ

DJ- The Bank of Japan's "basic thinking" that interest rates should rise to ensure sustainable growth and price stability will be maintained in the future, according to a Japanese government paper presented Wednesday to a conference of Southeast Asian officials.

"Regarding the conduct of monetary policy, the BOJ's basic thinking has been that given the extremely accommodative financial conditions, the level of interest rates is to be raised if Japan's economy is to follow a path of sustainable growth under price stability," the document said.

The central bank's basic thinking also requires that the pace of interest rate increases should be determined by improvements in the economic and price situation without predetermined view, according to the document seen by Dow Jones Newswires.

"The BOJ's basic thinking will remain the same in the conduct of future monetary policy," it said.

Central bankers, finance ministers and other officials from member states of the Association of South East Asian Nations, or Asian, are meeting in the coastal Vietnamese City of Da Nang until Friday.

The BOJ's benchmark interest rate, which was kept at zero between 2001 and mid-2006, was last raised by a quarter percentage point to 0.5% in February 2007.

Some analysts have said the BOJ should cut interest rates in the world's second largest economy given the slowdown in the U.S. and the aggressive U.S. Federal Reserve rate cuts.

The document says Japan's economy is likely to continue growing moderately but the pace of growth may slow in the near-term due to the current turmoil in global financial markets.

"Considering the seriousness and persistency of the turmoil, it is necessary to continue to monitor financial markets carefully as well as developments in the U.S. economy," the document said.

The document also warned that rising commodity and crude oil prices could hurt corporate profits and restrain consumer spending in Japan and the global economy.

Japan's economy is forecast by the government to grow 2.0% for the current fiscal year that began April 1.

Linda Piazza : 4/2/2008 9:56:01 AM

The SPX's 15-minute 9-ema is now 1364.85, with the breakout benchmark now 1361.85. For the OEX, those numbers are now 633.08 and 631.86.

Linda Piazza : 4/2/2008 9:53:58 AM

I think we're going to have to wait until after the 10:00 numbers before we know anything more than we do now, although if we're going to get a sideways day in keeping with the "small-range days tend to follow big-range ones" theory, we may not know anything until the end of the day. I would add a caveat to that theory, too, because I think big-range days are sometimes followed by doji-type days with long upper and lower shadows. Those wouldn't be small-range days, but the open and close would comprise a small range.

Make decisions in the next few minutes about whether you're holding over the release of that potentially market-moving number.

Keene Little : 4/2/2008 9:51:17 AM

If we get the little consolidation/pullback I would expect it to last for about 2-3 hours before proceeding higher again. I'm hoping it will consolidate sideways for a bit and set up a nice long play.

Jeff Bailey : 4/2/2008 9:45:58 AM

Swing trade call stopped alert! ... for the one (1) GoldCorp GG April $37.50 Put (GG-PU) at the bid of $1.20.

GG $38.50 +2.77% ...

Linda Piazza : 4/2/2008 9:54:37 AM

A/D line now -102. That can change with the factory orders number, but for now, it continues to show as much propensity to drop toward -1150 as to climb toward +850 to +1050 . . . an vice versa.

Linda Piazza : 4/2/2008 9:42:49 AM

The SPX's 15-minute 9-ema is now 1364.43 (and dropping as the SPX does), and equity bulls would prefer seeing that hold on 15-minute closes to preserve the short-term tenor. The breakout benchmark is 1361.50.

Linda Piazza : 4/2/2008 9:41:57 AM

The OEX's 15-minute 9-ema is now 632.90 (and dropping as the OEX does), and bulls want to see that hold on 15-minute closes to preserve the short-term tenor. The breakout benchmark, retested and validated yesterday, is now at 631.71, and equity bulls want to see that hold on 15-minute closes to maintain the breakout status.

Linda Piazza : 4/2/2008 9:39:57 AM

Keltner outlook on the A/D line: the best that can be said is that there's plenty of room for improvement. Although positive at its current +283 level, the A/D line opened below the bullish/bearish benchmark on Keltner channels. It looks as if it might rise toward +850 to +1050 as easily as drop toward -1150, but the converse can unfortunately be said, too. Right now, it's in rising mode and that's what equity bulls want to see continue after the 10:00 numbers.

Jeff Bailey : 4/2/2008 9:34:45 AM

Bernanke: US Economy May Contract In 1st Half Of Year

DJ- Federal Reserve Chairman Ben Bernanke on Wednesday publicly raised the prospect of a U.S. recession for the first time since the current slowdown began last year.

But he also signaled that "much" of the needed economic and financial market adjustment has already taken place and that conditions should improve later this year, suggesting there may not be much need for additional monetary stimulus.

"It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke said in prepared remarks to the Congressional Joint Economic committee.

Linda Piazza : 4/2/2008 9:33:26 AM

There's still no leadership at the BoJ, so remember to factor in possible continued complex and unpredictable currency action.

Linda Piazza : 4/2/2008 9:32:35 AM

I forgot to mention in my first post this morning that the 30-minute chart sets a potential upside target near 1376-1377, approaching that resistance zone that I mentioned in that first post.

Keene Little : 4/2/2008 9:32:03 AM

Equity futures pulled back for much of the overnight session but then rallied sharply off the low just before 6:00 AM. It's another one of those manufactured looking rallies to get the session to open in the green. ES is currently about 10 points higher than its overnight low and I suspect we'll see it head back down and test that low (1363) before heading higher again. That would also get SPX down near 1360 which is the level I'm hoping will hold and then the 5th wave of the rally up to the 1378 area from there.

Linda Piazza : 4/2/2008 9:31:16 AM

As you're making early decisions this morning, remember that we have factory orders at 10:00 am ET and testimony by Fed Chairman Ben Bernanke.

Jeff Bailey : 4/2/2008 9:30:52 AM

MBA's Weekly Application Survey at this Link

Jane Fox : 4/2/2008 9:29:53 AM

Bernanke will be talking at 9:30 just adding to the opening volatility.

Jeff Bailey : 4/2/2008 9:26:24 AM

Brazil's Govt. Mulls Fiscal Restraint Due To Inflation Concerns

DJ- Brazil's government is studying the possibility of tightening its fiscal belt, and thus raising its primary budget surplus, as an alternative to control creeping inflation, according to an unnamed Finance Ministry source, reported local newspaper O Estado de S. Paulo on Wednesday.

Controlling government spending is being considered as an alternative to raising interest rates, said the source.

The official IPCA inflation index registered a rise of 4.6% in the twelve months up to the end of February, which is slightly higher than the government target of 4.5% per year.

Government spending accounted for approximately 20% of GDP in 2007.

The proposed policy would have the side effect of raising the primary budget surplus. Brazil's 12-month primary budget surplus reached BRL109.1 billion in February, the equivalent of 4.18% of gross domestic product, which is higher than the 2008 target of at least 3.88%.

Government tax revenues have been rising consistently amid brusque economic growth. Previously, the government had been increasing spending along with revenues, but the inflation issue has precipitated a rethink.

The benchmark Selic interest rate currently stands at 11.25% per year. The central bank has indicated it may consider raising the rate at its meeting in two weeks time.

Jeff Bailey : 4/2/2008 9:19:08 AM

Asian markets were broadly higher, following yesterdays gains here in the U.S.

Nikkie-225 jumped 4.21% to close at 13,189, while China's Hange Seng rose 3.18% and the Shanghai Composite was up a more fractional 0.56%.

Jane Fox : 4/2/2008 9:18:46 AM

Gold has clearly made a bearish head and shoulders that confirmed yesterday. Geesh, yesterday we had all sorts of head and shoulders confirming. Link

Linda Piazza : 4/2/2008 9:16:44 AM

Wow, I picked a day to miss, didn't I? (Actually, my dentist's office picked it, as that's where I was much of the trading day.) Yesterday as I was leaving, I mentioned potential resistance on the 30-minute SPX chart, but that didn't appear to even slow the SPX. At the time I was leaving, the 15-minute chart had set a potential upside target of about 1361, but I didn't even mention that, feeling that it was certainly too high to be reached in one day. Was I ever wrong!

So, the SPX has created a breakout situation on the 15-minute chart, which means that oscillators such as stochastics and maybe even RSI won't be quite as reliable, if you tend to rely on them. We had a big-range day yesterday, obviously, so the first question to ask yourself is whether you think there could be a smaller-range day today, particularly a doji-type day, sometimes a tendency after such a big-range day. It's a possibility if not yet possible to judge it as a probability, so you ought to factor that possibility into your trading plan. As long as the SPX is maintaining 15-minute closes above about 1361.30, it's maintaining breakout status, and as long as it's maintaining 15-minute closes above its 9-ema now at 1364.91, it hasn't even changed its tenor over the shortest term.

When a massive relief rally gets started, it's just plain silly to talk about resistance levels sometimes because nothing stops it until it's ready to stop, but we should at least consider the resistance converging from about 1378.40-1388.40. The 38.2% retracement of the decline off the October high lies at the bottom of that zone and the February 27 high sits at the top.

Jeff Bailey : 4/2/2008 9:15:18 AM

American Superconductor Gets $18M Order From Sinovel Wind ... AMSC $23.97 ...

Jane Fox : 4/2/2008 9:15:11 AM

The SPX has finally made a higher high, the first since last December, and the trend had officially changed from down to up. Yesterday's move was also a confirmation of the reverse head and shoulders. Link

Jane Fox : 4/2/2008 9:13:24 AM

After the monster gains from yesterday you'd expect the overnight session to be a consolidation with no clear direction but that is not the case. The markets have clearly made higher highs and have breached their respective previous day highs. Link

Jane Fox : 4/2/2008 9:06:02 AM

WASHINGTON (MarketWatch) -- U.S. private-sector companies added 8,000 jobs in March, according to an employment report based on ADP payrolls data released Wednesday.

The report comes two days before the Labor Department issues pivotal economic data on whether nonfarm payrolls for March expanded or contracted.

Adding in some 25,000 jobs typically created by government, the ADP report suggests nonfarm payrolls grew by about 33,000 in March, a performance that would be much better that the drop of 60,000 expected in a poll of Wall Street economists.

Analysts, however, are skeptical of the predictive power of the ADP survey, noting that it has overshot the government's employment report in each of the past four months.

Jane Fox : 4/2/2008 9:03:53 AM

CHICAGO (MarketWatch) -- The volume of mortgage applications filed decreased last week, down a seasonally adjusted 28.7% compared with the previous week, the Mortgage Bankers Association said Wednesday.

Applications for loans to purchase homes and to refinance existing mortgages were up an unadjusted 4.8% for the week ended March 28, compared with the same week in 2007.

Mortgages to purchase homes dropped a seasonally adjusted 11.8% last week, compared with the previous week.

Refinancing applications took a 38.1% dive on a week-to-week basis, according to the MBA's latest survey. In the week ended March 21, applications surged in response to lower interest rates.

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