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OI Technical Staff : 4/18/2008 9:59:59 PM

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Jeff Bailey : 4/18/2008 6:59:44 PM

Most Actives ... SPY, C $25.11 +4.49%, QQQQ, F $7.45 +2.61%, MSFT $30.00 +2.66%, WM $11.80 +1.20%, GE $32.69 +2.09%, IWM $71.67 +1.05%, INTC $22.55 +1.99% and ETFC $3.98 +9.94%.

Jeff Bailey : 4/18/2008 6:54:11 PM

Closing U.S. Market Watch at this Link

13-week Yield up 16 bp this week. 5-year up 37.4 bp, 10-year up 27.2 bp, 30-year up 21.5 bp.

Bulk of cash looks to have stayed here with DXY +0.28%.

Mamoth size of bond market, which dwarfs equity market had some impact.

Jeff Bailey : 4/18/2008 6:30:09 PM

Closing Internals at this Link

Jeff Bailey : 4/18/2008 5:50:07 PM

Money Stock Measure M1/M2 (04/17/08) Link

Should start to see M2 declines should investor sentiment begin to improve.

Jeff Bailey : 4/18/2008 5:36:16 PM

US Dollar Index (dxy) ... 05:00 tick was 71.918. Up 0.45% from Thursday's 05:00 tick.

Jeff Bailey : 4/18/2008 5:30:43 PM

DJ Live- US Bank Business Loans Up $4.4 Bln In Latest Week
National Jumbo CD Down $8.0 Bln; Home Equity Up $2.5 Bln.

U.S. banks' commercial and industrial loans rose $4.4 billion to about $1.480 trillion in the week ended April 9, the latest week for which data are available, the Federal Reserve said Friday.

That followed a $13.4 billion decrease the previous week.

Jumbo certificates of deposit fell $8.0 billion to about $2.079 trillion in the latest weekly data, after shrinking $12.9 billion the previous week. Revolving home equity loans rose $2.5 billion to $504 billion after growing $2.2 billion the previous week.

More weekly Fed statistics Link

Jeff Bailey : 4/18/2008 5:23:53 PM

CBOE Oil Index (OIX.X) 908.89 +1.40% ... goes out at 100% retracement. 01/03/08 high.

Jane Fox : 4/18/2008 4:23:57 PM

SAN FRANCISCO (MarketWatch) -- Crude-oil futures reversed earlier losses, rising nearly $2 a barrel on Friday to close at a new record high of $116.69 a barrel, as news about pipeline sabotage in Nigeria overtook the strengthening dollar to push up oil prices. The front-month contract hit $117 a barrel in electronic trading after markets closed. Crude oil for May delivery gained $1.83, or 1.6%, to settle at $116.69 a barrel on the New York Mercantile Exchange. Earlier it fell to an intraday low of $112.72 as the dollar gained ground. Crude gained 6.2% in the week.

Keene Little : 4/18/2008 4:06:38 PM

The SPX 60-min chart shows my expectation for another leg up (dark red) to finish the rally around 1410-1415: Link . That should set up at least a deeper pullback correction if not something much more bearish. It should be a very nice setup for a short play.

Linda Piazza : 4/18/2008 4:03:18 PM

This last climb over the last few minutes has made the SPX's upper shadow smaller, complicating further any theories about what might happen next. The possibility of a punch up into that 1409-1417 zone increases but its likelihood is not proven.

Linda Piazza : 4/18/2008 3:57:40 PM

I've been studying the SPX's climb off the March low to see if I can glean any information from that as to what we might expect next. It seems that most candles near recent highs that have produced upper shadows as big as the one we have now have resulted in either an immediate downturn (3/12 and 4/07) or a day or so of consoliation and then a downturn (3/24). The 3/19 candle was different, as that day's decline was the total decline before another bounce. The declines were only declines within a then-building rising channel, however.

Conclusion? Just measuring proportions, one would say that the weight would have to go toward further consolidation (perhaps sideways up) and then a decline through the channel or else a straight decline through the channel. Is that what's going to happen? I don't know. The market fooled me today because I'd expected another day of consolidation today.

Keene Little : 4/18/2008 3:48:35 PM

Basically SPX is now between the Feb 1st high at 1396 and the Feb 27/April 7 highs at 1386-1388. It might even bounce around in this range and consolidate for the greater part of Monday. That would increase the probability that we'll then get another leg up. I will become more worried about the possibility for a 5th wave up if SPX breaks down below 1370.

Keene Little : 4/18/2008 3:31:33 PM

SPX is dropping back to the trend line along the highs since Feb 1st, near 1384, and I would expect that to be support for now.

Linda Piazza : 4/18/2008 3:30:55 PM

SPX bulls don't want to see the SPX pull back much more than it has already. It's leaving an upper shadow already for the day, a shadow that pierced one version of a long-term descending trendline (cutting off the upper shadow from the 12/11/07 high) and is now back below that trendline. So far, though, it's staying above the 38.2% retracement of the decline from last October's high into March's low. That's at about 1378.80. A drop below that into the close would show that its resistance held and would also leave behind a long upper shadow. Such long upper shadows show that sellers are overwhelming buyers, at least for the near term. A close right at the current level is going to leave bulls and bears alike with some questions, as it's a close right at one version of that long-term trendline, right at the 2/26 high and below the 2/01 and 2/04 highs. Did the SPX really break out if you're looking at those parameters?

Keene Little : 4/18/2008 3:29:51 PM

So I'll be looking for another rally leg on Monday to set up the short play. The danger, as always, is that the market won't do what I expect and we've already seen the high for this week's rally.

Keene Little : 4/18/2008 3:26:26 PM

Ideally, from an EW perspective, and to get a little higher into stronger resistance for SPX, this afternoon's pullback should be a 4th wave correction in the rally from Tuesday's low. That would set up a 5th wave up to the 1400-1415 area for an excellent short play. After a 5-wave move up we'll be due at least a larger pullback if not the start of the next major decline.

Linda Piazza : 4/18/2008 3:22:20 PM

For the last hour, the A/D line has been finding resistance on its 15-minute 9-ema, declining below the breakout benchmark. It's 1732 as I type. We're soon going to get end-of-the-day/end-of-the-week/end-of-the-opex-cycle reactions, so I'm going to be putting less trust in what the short-term charts say. It's time to begin making your end-of-day decisions if you haven't already. I absolutely, 100% would not let profits evaporate. I've warned of this all day, but especially if you're in April OEX calls that are expiring and you bought those calls this morning, you may have paid a hefty premium for them and you may be finding that premium evaporating. Don't let a profit you held earlier turn into a loss.

Jane Fox : 4/18/2008 3:14:09 PM

The AD volume's trajectory should worry the bears but the VIX should worry the bulls so we will probably have a muddle through last hour. Link

Jane Fox : 4/18/2008 3:10:26 PM

VIX is telling me we are NOT in for a late day rally. A late day selloff maybe but certainly not a rally. Link

Keene Little : 4/18/2008 2:59:54 PM

Catching up on some of the MM notes here and noticed Linda's comment about the LIBOR rate (2:29 PM). I showed a chart a couple of weeks ago that showed the credit spread widening since last summer and how it gave advance warning of an impending top for the stock market. Each time the spread widened more the stock market dropped more.

When the stock market bounced in Nov/Dec the credit spread widened more. The chart showed the credit spread reversed to have it match the stock market decline so the "drop" in the credit spread (widening) was predicting the market rally into mid December would not hold and in fact it collapsed into the January low and caught a lot of people by surprise.

So the widening in the LIBOR rate is important. It's a measure of risk and it's saying people are even more worried about credit risk. This is predicting further declines in the stock market, just as we're nearing some potentially strong resistance. I remain bearish the stock market.

Linda Piazza : 4/18/2008 2:57:18 PM

Although I don't mention it often because most traders don't watch this time interval or Keltner charts, for that matter, here's a three-day SPX Keltner chart I've been watching that tells me that the 1409.50-1417 zone will likely be a tough one for the SPX: Link Until January of this year, the SPX had not closed a three-day period below its 120-ema, the aqua-colored Keltner line that's converging with the descending trendline, since the spring of 2003, other than one close barely below it in August 2004. This will be the first time it's retested it since then, and trendline and Fib potential resistance also converge in that area.

Jim Brown : 4/18/2008 2:50:31 PM

Crude closes at $116.75. Un....believable!!
Nymex crude options expired yesterday with the futures contract pinned at $115. No surprise there. Today crude is up +1.88 ahead of May futures expiration on Tuesday. The CFTC said open interest in crude futures grew by 40% over the last two weeks. The only way for open interest to grow is for somebody to "sell open" the corresponding contract. That means that 40% increase in contracts were traders/institutions initiating new positions either as speculation the price would fall or as a delivery contract to actually supply the oil. Since the open interest is more than 10 times the available oil many, if not most, of those contracts will have to be bought back by Tuesday. This suggests more gains on Monday but once expiration passes we could see a sharp decline.

Jeff Bailey : 4/18/2008 2:47:48 PM

I have to leave for a lunch appointment. Will update at the close, and strategy for open positions later this evening.

Keene Little : 4/18/2008 2:46:18 PM

Oil is pressing higher again today but is doing so against the rallying dollar (and falling euro) and again is not being confirmed by gold. Plus the bearish divergences at the new highs, as seen on the oscillators on the 120-min chart, does not inspire bullish feelings in me about oil: Link . The daily candle looks like a hanging man doji (potential reversal candlestick).

Jeff Bailey : 4/18/2008 2:46:48 PM

Dorsey/Wright sector classification BPAERO ... turned "bull alert" at 30% earlier this month. Was actual 32.71% at last night's close.

It would take a 40% measure for this sector to achive "bull confirmed" status.

Jeff Bailey : 4/18/2008 2:44:06 PM

Honeywell (HON) alert! $61.00 +6.25% ... today's trade at $61.00 is a triple top buy signal.

Linda Piazza : 4/18/2008 2:43:16 PM

Oh, we would be having some gains if the USDJPY were really at 130.78, as I originally typed in my last post. That was supposed to be 103.78, of course. I've corrected it.

Jeff Bailey : 4/18/2008 2:42:41 PM

Forex Currency Live! Link

Eur/$ 1.579 -0.69%

$/yen 104.90 +1.38% ...

Linda Piazza : 4/18/2008 2:42:35 PM

The USDJPY has been falling sharply since about noon today. It's at 103.78 as I type, down from its 104.53 high of the day. Here's a chart (although it won't include the overnight stuff from last night: Link

Jeff Bailey : 4/18/2008 2:41:00 PM

US Dollar Index (DXY) 72.08 +0.56% (30-minute delayed) ... reversing gains to 08:05 AM EDT tick

Jeff Bailey : 4/18/2008 2:38:54 PM

DOE's Bodman: (01:47 PM) ... "Aware" of concerns about emphasis on ethanol.
Concerns about environmental impact "not misplaced"
Environmental concerns not reason to ignore biofuels
Wants "diversity in our biofuels"
This "means moving away" from corn-based ethanol.
No plans to hold off on buying oil for SPR.

Jeff Bailey : 4/18/2008 2:34:42 PM

DJ Live- Nymex Crude At New Record After Pipe Leak

Jeff Bailey : 4/18/2008 2:34:09 PM

US Oil Fund (USO) $93.50 +1.22% ...

Linda Piazza : 4/18/2008 2:33:16 PM

The SPX's and OEX's 15-minute 9-ema's were resistance on this 15-minute period. If these indices can't pull up quickly, next potential Keltner support for the SPX is 1384.62; for the OEX, it's 637.58. As I noted earlier with respect to a dip I thought might happen then, but didn't, such a dip would not be a terrible thing in the grand scheme of things, if that's where it stops, but it might be a terrible thing if your profits evaporate while it's doing so.

Linda Piazza : 4/18/2008 2:29:53 PM

Either last night in the Wrap or yesterday on these pages--I had a rough day yesterday and the brain memory cells aren't all firing again yet--I mentioned the concern about the Libor rate. An inquiry of the rate-setting policies of the British Bankers Association has begun. There's been some thought that some banks were hiding the true rate at which they were loaning each other money through the Interbank system, with the thought that Libor rates might spiral even higher if the true rates were known. Today, I found mention in THE LONDON TIMES of a WSJ article noting a surge in the Libor in response to that inquiry. This rise in the Libor too far above the U.K.'s and U.S.'s key rates is of concern and many people more knowledgeable than I am about these matters are worried that it signals something wrong. So, on the whole, I would agree with Keene. Enjoy the ride higher but keep on your toes . . . just in case.

I would definitely assess how much risk you're carrying into the weekend because we may have more news on this subject by Monday morning.

Jeff Bailey : 4/18/2008 2:24:53 PM

Financial SPDRs (XLF) $26.60 +2.70% ... must have been one of the many alerts I was swamped with at this morning's cash open. Did trade 19.1% conventional ($26.79) just after open $26.73.

Linda Piazza : 4/18/2008 2:21:57 PM

The SPX and OEX did drop to next levels of support. So far, this is just an anticipated action. In fact, I anticipated it about an hour ago, I believe, but it didn't happen until now. Now bulls want to see these indices steady at these levels of support and bounce up past their 15-minute 9-ema's again. They do not want to see those 15-minute 9-ema's now serving as resistance and a steeper decline to begin. The 15-minute 9-ema's are at about 1392.30 on the SPX and 641.60 on the OEX.

Jeff Bailey : 4/18/2008 2:17:03 PM

NYSE Summation Index ($NYSI) Link

-118.85 at Thursday's close.

Jeff Bailey : 4/18/2008 2:15:24 PM

Great short-term observation Linda!

Now a more institutional and the NASDAQ Summation 50-point box chart (as bearish as you can get) Link

-594.39 at Thursday's close. But breaks above December measure, February measure, and March measure.

Jeff Bailey : 4/18/2008 2:11:44 PM

02:00 Internals found at this Link

Linda Piazza : 4/18/2008 2:10:35 PM

Equity bulls would like to see the A/D line maintain 15-minute closes above about 1880. It's now 1912 as I type. That potential support down to about 1880 looks fairly strong, but the A/D line has been battling resistance all day today. There's only so high it can go.

Jane Fox : 4/18/2008 2:09:43 PM

McMillan's weekly commentary - The market staged a strong rally on Wednesday of this week, using Intel's (INTC) earnings as a catalyst, but really spurred by strong gains in oil stocks. This rally has shown that the 1330 level is support for $SPX. We already know that 1380-1400 is resistance. So, right now, $SPX continues to be range-bound between those numbers. Any breakout to the upside would be bullish, of course, and would likely be accompanied by massive short covering. However, we don't really see the technical background for such a rally.

The equity-only put-call ratios continue to be bullish, and have been one of the stalwart bullish indicators since the March bottom. However, there has really been very little progress made by $SPX in several weeks, yet these ratios continue to fall. It is possible that, with enough relatively sideways action in $SPX, these ratios could fall to the point where they would no longer be on buy signals. But that is speculation; the reality is that they are currently bullish.

Market breadth correctly gave a sell signal in late March, the last time $SPX was near the 1390 level. On the subsequent decline to 1330, breadth never got oversold and thus never gave buy signals. That was a bit strange, but it's happened before. Now that $SPX is approaching 1390 again, breadth is expanding. Another round of breadth oscillators sell signals could easily set up if there are few more days of advancing issues -- perhaps as $SPX pokes up towards resistance again.

The volatility indices ($VIX and $VXO) -- especially $VIX have fallen sharply of late. That is bullish, at face value. As long as $VIX is trending lower, the broad market should be able to work its way higher.

In summary, everyone is trying to jump on the bullish bandwagon. Once again, the market seems to be expending a great deal of energy just to get back to resistance. And, if the past is any guide, we expect that resistance to hold. If it doesn't (i.e., if there is an upside breakout), then we'd turn bullish, but not before.

Keene Little : 4/18/2008 1:58:52 PM

The bulls are coming out in force now declaring a bottom is in and long live the bull market. I could of course be wrong (it's been known to happen a time or two, wink) but so far what we're seeing is a typical bear market rally that is correcting the Oct-Mar decline. These will always get people calling a major bottom, until the next one.

Yesterday I showed the monthly DOW and SPX charts with the 18-month moving average. SPX is close to testing it now at 1400 and I mentioned the DOW will probably get up into the 12900-13000 area. When you look at the history of this average, especially for SPX, you will see that once it's broken the first test (and subsequent tests) is an outstanding opportunity to reposition for the new trend (down in this case).

Be very careful about getting sucked into the bullish hype you're hearing out there right now. Let them prove it first which they haven't done yet. If we get another decline going it will be the 3rd wave down and it's called the "wave of recognition" because most begin to recognize that the market is more serious trouble than most thought. The economy, housing and credit problems have a ways to go before they're better. This week's rally does not reflect the true dangers out there so keep your eye on the bigger picture.

Linda Piazza : 4/18/2008 1:56:47 PM

The OEX's 15-minute 9-ema is now 641.70. I said earlier that I thought it might drop back a bit lower than its 15-minute 9-ema, but it hasn't done so yet. It still looks vulnerable to a deeper dip, but this time, it would find next potential support at 640.71. For the SPX, those numbers are 1393 and 1390.69.

Jeff Bailey : 4/18/2008 1:44:10 PM

Beetles Balanced (since 03/31/08 Close) Link

HYG +1.34% this quarter. SEC Yield was roughly 7.437% at 03/31/08 close.

Equity side may have IWM as "most comparable" where smaller caps might have "higher risk" debt in general. (certainly there are some LARGE caps that are deemed RISKIER than some well managed small caps today).

Jane Fox : 4/18/2008 1:39:35 PM

The SPX breaks 1390 but 1400 is still looming. Link

Jeff Bailey : 4/18/2008 1:31:58 PM

Fascinating, fascinating volume in HYG to begin the new quarter.

Jeff Bailey : 4/18/2008 1:29:40 PM

Pacholder High Yield (PHF) $7.81 +1.03% ... Recent NAV for this "closed end" fund. Link

Traded at a 5.52% discount to Net Asset Value.

Has shown history of $0.075/month dividend. Thus $0.90/year.

At $7.81/share, SEC Yield 11.5%.

Jane Fox : 4/18/2008 1:27:34 PM

DOW has broken through its resistance and confirmed its massive reverse head and shoulders. I don't think there is much doubt we have seen a bottom for the short term. Me thinks this bullishness will last at least until the elections later this year. Link

Jeff Bailey : 4/18/2008 1:26:27 PM

So ... HYG has paid $7.189 in dividend last 12 months. At current price $97.82, SEC Yield would be roughly $7.189 / $97.82 = 7.349%.

Jeff Bailey : 4/18/2008 1:21:33 PM

Didn't know we could do this!

More "eratic" dividend history than PHF, but here's the Dividend History for the iShares iBoxx High Yield (HYG) $97.82 +0.46% Link

Jeff Bailey : 4/18/2008 1:16:28 PM

Nipping away at some more Pacholder High Yield (PHF) $7.81 +1.03% ...

Jane Fox : 4/18/2008 1:14:45 PM

ANNANDALE, Va. (MarketWatch) -- The Dow Theory appears poised to go on a buy signal as of Friday's close.

All that's needed for that to happen is for the Dow Jones Industrial Average to close above precisely 12,743.19. That certainly looks likely, since the Dow as of midday was some 125 points higher than that. See Market Snapshot. The Dow Theory, for those who don't know, is the oldest market-timing system still in widespread use.

Though its adherents do not always agree on all aspects of their interpretations, the theory's general outline is clear enough: A buy signal is generated when both the Dow industrials and the Dow Jones Transportation Average reach significant new highs, while a sell signal is triggered when both averages reach significant new lows.

The Dow Transports, for their part, already has more than fulfilled its end of the bargain for such a buy signal, rising decisively above its late-February high.

Jeff Bailey : 4/18/2008 1:14:24 PM

DJ Live- High-Grade Derivatives Index Falls Below 100BPS
High-Grade Derivatives Index Falls On Improving Sentiment.

Jeff Bailey : 4/18/2008 1:13:06 PM

$/yen 104.27 +1.75% ... benchmark live!

Jeff Bailey : 4/18/2008 1:12:17 PM

iShares Japan (EWJ) $13.00 +1.96% ... gets a trade at the $13 strike.

Jeff Bailey : 4/18/2008 1:10:49 PM

We currently have some "China exposure" with YRCW $14.68 +6.14% ...

Keene Little : 4/18/2008 1:09:53 PM

The RUT is hitting potential resistance today at both its downtrend line from October and the Fib projection at 724.52 for two equal legs up off the January low: Link

Jeff Bailey : 4/18/2008 1:09:20 PM

Xinhua China 25 (FXI) Fact Sheet Link

Jeff Bailey : 4/18/2008 1:06:54 PM

I will be out of my office next week as I combine a "grain hedge" seminar in NW Kansas and look for some gobbling toms. However, the Xinhua China 25 (FXI) $147.11 +1.46% ... looks good for a pop to $157.00 into next week.

Keene Little : 4/18/2008 12:57:00 PM

TNX (10-year yield) has bumped into its downtrend line from June 2007 so we could see at least a short term correction in bonds if not another drop back down to its recent lows (which would mean buying in bonds): Link

If we see money rotate next week into bonds we could see selling in stocks. It's been a good rally in the stock market this week but be careful about assuming we'll see more follow through next week. As has been true in this market, don't be bashful about taking profits when offered. But if selling in bonds continues (getting TNX above resistance) then the stock market rally will also likely continue.

Linda Piazza : 4/18/2008 12:56:36 PM

The SPX's 15-minute 9-ema is now 1390.91; the OEX's, 640.84. It's looking possible, though, that both indices could drop into deeper potential support, at 1388.36 for the SPX and 639.67 for the OEX. Bulls want one of those to be preserved as support on 15-minute closes.

Jeff Bailey : 4/18/2008 12:40:59 PM

Last time GOOG gapped this % was 10/20/06.

Jeff Bailey : 4/18/2008 12:38:59 PM

GOOG's GREEN #3 at $548.02, #4 $552.91, #5 $560.83. 19.1% conventional $562.58. Green #6 $568.75.

Keene Little : 4/18/2008 12:36:27 PM

With NDX jumping above its 100-dma and April 7th high it's looking like we could see a move up to its downtrend line from October, currently near 1930. Slightly higher is the top of a parallel up-channel from March and then the 200-dma at 1961. Link

Jeff Bailey : 4/18/2008 12:35:20 PM

Always take the cash. Not the annuity.

Jeff Bailey : 4/18/2008 12:34:43 PM

For those that did take a lotter play in the GOP-DU, would sell 2/3 here at $33.60 bid.

GOOG $543.69 +20.94% ... just above GREEN #2.

Jeff Bailey : 4/18/2008 12:25:39 PM

NASDAQ 100 Index (NDX.X) 1,906.12 +3.54% ... trades 38.2% conventional. 1st time since 1/23/08 low.

Jeff Bailey : 4/18/2008 12:23:17 PM

Gas Prices Push Closer To $3.50 a Gallon, Oil Hits $116 (11:49 AM EDT)

AP Story Link

Linda Piazza : 4/18/2008 12:22:01 PM

The SPX's 15-minute 9-ema is now 1389.04; the OEX's, 639.91. Keep following these indices higher with your stops. Think about setting a profit goal, if you haven't already. If you bought options this morning and they've doubled in value, think about closing out half of them, if you haven't already, and then inching up the stops on the others, at least to breakeven (be sure to include commissions costs when you calculate BE) if not above. That way, you can't lose money.

Jeff Bailey : 4/18/2008 12:21:20 PM

Need more information than that.

Jeff Bailey : 4/18/2008 12:20:41 PM

DJ (intraday / oil) - OIL PRICES TOP $116 ON SUPPLY CONCERN

Nymex crude erases earlier losses and rises to a new intraday record above $116 a barrel, as the market reconsiders its selloff and contemplates supply threats in Nigeria.

Jeff Bailey : 4/18/2008 12:17:40 PM

12:00 Internals found at this Link

NASDAQ NH at 63 does exceed Wednesday's 61:122

Jane Fox : 4/18/2008 12:12:27 PM

Here is a very good article by Mark Hulbert, author of the Hulbert Financial Digest. THis digest has been tracking the advice of more than 160 financial newsletters since 1980. DO NOT READ this if BEARISH Link

Jeff Bailey : 4/18/2008 12:02:41 PM

Dow Transports (TRAN) 5,088.49 +2.03% ...

Jeff Bailey : 4/18/2008 12:02:11 PM

SPX Live! Link

Tractor Tire And Bottom Link

Jeff Bailey : 4/18/2008 12:00:20 PM

NASDAQ 100 Tracker (QQQQ) $46.75 +3.26% ... trades 38.2% conventional. 1st time since 1/23/08 low.

Jeff Bailey : 4/18/2008 11:54:40 AM

Bullish % All (BPALL) Link

BPALL from weekend "The Tractor Tire And The Bottom" Link BPALL Link

Keene Little : 4/18/2008 11:54:22 AM

The DOW has now reached potential resistance and the upside is turning into the risky side. As you can see on this 120-min chart it has now jumped up to the top of a parallel up-channel (the trend line along the last two highs): Link . It has also reached the Fib projection for two equal legs up from the March 31st low, at 12826, which could be important for the potential wave count calling for an end of the rally at that level.

The rally has brought the DOW up very close to its downtrend line from October just under 12900. I would expect at least a pullback from this area. If a pullback is followed by another push higher (shown in green) there's a Fib projection at 13033 and then the 200-dma at 13091.

Jeff Bailey : 4/18/2008 11:46:57 AM

5,000 stocks ... 2,000 stocks ... 500 stocks ...

Jeff Bailey : 4/18/2008 11:46:03 AM

Now understand importance of IWM

Jeff Bailey : 4/18/2008 11:45:42 AM

Take out that intra-day spike lower from 01/23/08 to 12,815 when Wilshire then closed 13,473 on a bar chart. Would be very symetrical h/s bottom. Neckline right here today at your conventional 38.2%.

Jeff Bailey : 4/18/2008 11:42:50 AM

Wilshire 5000 14,005.49 +1.65% Link ... off high of 14,025.98.

See the "bearish triangle" over to left and early-to-mid January?

Jeff Bailey : 4/18/2008 11:39:37 AM

S&P 500 Index (SPX.X) 1,388.82 +1.71% Link ... StockCharts.com does NOT make any adjustments to INDU, SPX, OEX, NDX, RUT.X. Only their trackers DIA, SPY, QQQQ and IWM.

Jeff Bailey : 4/18/2008 11:38:01 AM

DJ (earlier) ELECTRONIC ARTS EXTENDS $2B TAKE-TWO OFFER

Electronics Arts again extends its $2 billion tender offer for rival videogame maker Take-Two Interactive Software and lowers its offer price 26c to $25.74 to reflect dilution from additional shares to be issued to management.

ERTS $52.62 +2.25% Link $26.07 +0.85% Link

Linda Piazza : 4/18/2008 11:36:15 AM

The SPX's 15-minute 9-ema is now 1385.38; the OEX's, 638.19. Equity bulls have the easy job, now, just following the SPX and OEX higher with their stops. Don't get complacent, however. We do not have new A/D line highs to match the new equity highs. We do not have a new TRAN high to match those SPX and OEX new highs. The TRIN is climbing again after producing a higher low.

Jeff Bailey : 4/18/2008 11:35:12 AM

US Oil Fund (USO) $92.50 +0.14% ...

Jeff Bailey : 4/18/2008 11:34:13 AM

DJ (earlier) - AT&T TO CUT 5,000 JOBS, TAKE 1Q $374M CHARGE

Telecommunications giant plans to cut 1.5% of its work force, or 5,000 jobs, resulting in a 1Q pretax charge of $374 million, adding that the reductions wouldn't reduce its overall work force because of new hires.

T $37.85 +0.74% Link

Jeff Bailey : 4/18/2008 11:32:49 AM

DJ (earlier)- STUDENT LOAN'S 1Q NET DROPS 65%

Lender's net tumbles to $15.2 million, or 76c a share, as loan-loss provisions more than double. The company, 80%-owned by Citi, will suspend lending at certain schools and withdraw from the federal consolidation loan market.

STU $106.93 +1.83% Link

Jeff Bailey : 4/18/2008 11:30:46 AM

Software HOLDRs (SWH) $40.59 +1.90% Link ... trades 38.2% conventional.

Jeff Bailey : 4/18/2008 11:29:41 AM

DJ (earlier)MANPOWER 1Q NET SKYROCKETS 27%

Temporary-staffing firm's net surges to $75.5 million, or 94c a share, as overseas strength offsets weakness in the U.S. Revenue jumps 19% to $5.39 billion. Analysts expected EPS of 82c. Firm offers 2Q outlook above Wall Street's.

MAN $$66.02 +14.82% Link

Jeff Bailey : 4/18/2008 11:29:16 AM

Oh my!

Jeff Bailey : 4/18/2008 11:27:57 AM

DJ (earlier)- SCHLUMBERGER 1Q NET GAINS 13%, PLANS $8B BUYBACK

Oilfield-services firm posts net income of $1.34 billion, or $1.09 a share, which includes 3c in earnings from discontinued operations. Wall Street expected EPS of $1.11. Revenue climbs 15% to $6.29 billion. CEO sees strong sector growth in 2H.

SLB $101.50 +6.53% Link ... see the "bullish triangle?" See the "bearish signal reversed?" Powerful, powerful combination of patterns here. I wish I'd seen them at $85 and then at $94. Look for them in other stocks!

Jeff Bailey : 4/18/2008 11:24:34 AM

DJ (earlier) HONEYWELL INTL 1Q NET CLIMBS 22%

Aerospace and tech giant posts net income of $643 million, or 85c a share, boosted by higher automation and control sales. Analysts expected EPS of 82c. Sales jump 11% to $8.89 billion. Firm moves forecast to the high end of its stated range.

HON $59.97 +4.47% Link

Jeff Bailey : 4/18/2008 11:23:12 AM

Terex (TEX) $70.79 +4.84% Link

Jeff Bailey : 4/18/2008 11:21:22 AM

DJ (earlier)- CATERPILLAR 1Q NET GAINS 13% ON DEMAND, PRICES Maker of heavy equipment posts net income of $922 million, or $1.45 a share. Revenue climbs 18% to $11.8 billion on strong mining-industry demand and better pricing. Analysts expected EPS of $1.33 on revenue of $10.77 billion.

CAT $83.49 +6.23% Link

Jeff Bailey : 4/18/2008 11:21:18 AM

Warning! The PnF and bar charts from StockCharts.com may not necessarily reflect true supply (O) and demand (X) due to artificial price adjustments for stocks/ETFs that pay "higher" dividends. Please check more reliable services like Dorsey/Wright & Associates for more accurate depictions of supply/demand.

Jeff Bailey : 4/18/2008 11:17:15 AM

DJ (earlier) - CITI'S WRITE-DOWNS DRIVE LOSS, SEES 9K MORE JOB CUTS

Bank reports a 1Q net loss of $5.11 billion, or $1.02 a share, and says it plans to cut 9,000 more jobs in the 2Q. Results include more than $13 billion in write-downs and credit costs on subprime-related exposures, leveraged loans, Alt-A mortgages and commercial real estate. Revenue plunges 48% to $13.22 billion, which beats the expected figure of $12.77 billion. Fitch cuts bank's credit rating one notch to AA-, and S&P places it on watch negative.

C $25.60 +6.49% Link ...

Jeff Bailey : 4/18/2008 11:14:15 AM

US Oil Fund (USO) $93.02 +0.70% ... reversing losses.

Keene Little : 4/18/2008 11:14:06 AM

The Trannies are now getting closer to the broken uptrend line from March 2003, near 5150 so about 75 points higher: Link . The Fib projection for two equal legs up from the January low is at 5147 so that's the level I've been watching for a short play to set up.

The top of a parallel up-channel for price action since the January low is just above 5200. So far there's a slight bearish divergence between the new price highs and the oscillator highs so it suggests looking for a top is the correct idea.

Linda Piazza : 4/18/2008 11:13:53 AM

The SPX has potential support on 30-minute closes at 1385.52; the OEX, at 638.67.

Jeff Bailey : 4/18/2008 11:13:49 AM

DJ Live- May Crude $115.86/Bbl On Supplies Under Threat

Jane Fox : 4/18/2008 10:59:29 AM

I expected SPX to hit resistance this week or early next week and today it has run smack dab into 1390. It could rally a little higher and maybe even hit 1400 (the top of the upward channel) before it retraces but I suspect the next swing low will be another higher low.

Charts not only move up then down but go from clear to unclear and, since SPX's pattern has been pretty clear the last few weeks, I suspect it will become unclear here shortly. So enjoy the clarity because it won't last. Link

Jeff Bailey : 4/18/2008 10:57:30 AM

Dynamic Materials (BOOM) $46.55 +4.55% ... sticks its head back above conventional 19.1% (left 0% at 01/22/08 low). Has NOT been able to hold a close above this level since re-test of 0% on 3/11/08. Monitor for SIMILARITY to the past, or DIVERGENCE! I'm expecting DIVERGENCE! (see 04/07/08 MM)

Keene Little : 4/18/2008 10:54:56 AM

If you're following the currencies and commodities, with an expectation for the euro and commodities to decline, one caution is what I see for the US dollar. I've been showing a sideways triangle consolidation for the dollar and had thought we would see one more leg up inside the pattern before giving us a final low. We've now had the leg up so the dollar could be ready for a fall (shown in dark red). Link

If it plays out that way then we could see more rally in both the euro and commodities. I like to play each chart based on what I see but the intermarket relationship calls for caution if you shorted either the euro or the commodities such as oil. As shown on the dollar's chart, there is the possibility for a higher rally leg before turning back down (pink) and that would result in a further drop for the euro and commodities before a more significant bounce.

Jeff Bailey : 4/18/2008 10:53:47 AM

DIA, SPY, IWM, QQQQ Montage Daily intervals Link

Jeff Bailey : 4/18/2008 10:51:28 AM

Sounds like a spread triple top.

Jeff Bailey : 4/18/2008 10:51:08 AM

Wilshire 5000 Index (DWC) alert! 14,006 +1.66% ... trades 50% conventional. This is third time since 1/23/08 low. 1st 02/01/08, 2/26/08 and today.

Jane Fox : 4/18/2008 10:47:13 AM

VIX is now dropping as the AD volume is taking off so the bulls are starting to get their act together.

Linda Piazza : 4/18/2008 10:44:04 AM

The SPX and OEX price charts show no signs of trouble as yet for bulls, so keep those other what-if plans made just in case, so that you're not reacting like a deer caught in the headlights if a stronger pullback gets started. Behind the SPX and OEX price charts are signs to remain watchful, but so far, that's all they are.

There's something else, though, to keep in mind if you have about-to-expire OEX options, particularly if you bought calls this morning after the open. Those option prices were probably inflated because everyone was trying to get into them. You know: it's that whole supply/demand thing in operation. As the day goes on, however, some of the extra premium will be leaking out. Also, options' values will begin dropping toward parity with their intrinsic values, the amount they're in the money, that extrinsic value evaporating. So, without further big moves, it may mean that the OEX could climb a bit more but your options could be worth a bit less than they are right now. So, think about what your profit goal was this morning when you entered and how much value you're prepared to let seep away if the OEX continues moving sideways or else pulls back a bit stronger. In other words, in this case, don't base your stop only on the OEX's value, but also on what's happening with your options' values.

Jeff Bailey : 4/18/2008 10:43:47 AM

iShares Russell 2000 (IWM) $71.85 +1.31% ... have probed correlative downward trend and their conventional 38.2% retracement. Biiiiiig test for bulls and bears at these levels.

RUT.X 719.77 +1.66% ... MR2 741.76 then correlative conventional 50% and QRTRLY R1.

Jeff Bailey : 4/18/2008 10:36:12 AM

NASDAQ NH reach 50, match yesterday's tally. Bulls certainly want to see more than Wednesday's 61 by today's close.

Linda Piazza : 4/18/2008 10:32:35 AM

VIX still climbs and so does TRIN. Keep on your toes. Neither is in territory yet that signals trouble for bulls, but keep watching for signs that a pullback could deepen.

Jeff Bailey : 4/18/2008 10:28:29 AM

June Palladium (pa08m) $453.00 -1.77% ...

Jane Fox : 4/18/2008 10:28:17 AM

AD volume is bullish but the VIX is not so be careful. Link

Jeff Bailey : 4/18/2008 10:27:54 AM

StreetTracks Gold (GLD) 89.42 -3.39% ... ~$894.20 spot.

Jeff Bailey : 4/18/2008 10:27:16 AM

US Oil Fund (USO) $91.24 -1.22% ...

Jeff Bailey : 4/18/2008 10:26:52 AM

Global Currencies Link

Eur/$ -1.18%

$/Yen +1.79%

Linda Piazza : 4/18/2008 10:24:40 AM

The TRAN worried me first, now the direction of the VIX and the TRIN does, although all these are only tentative signs. They do, however, warn that equity bulls should again evaluate that scenario that I laid out earlier, that the SPX and OEX could pull back toward their 4/10 highs. As I look at charts now, nothing in the SPX price action shows that to be likely. Plus, there's potential support on the SPX at the 9-ema, now at 1377.14 and then further and potentially stronger support at 1371.68. Don't count on that scenario unfolding, then, but do have what-if plans in place in case it does.

Jeff Bailey : 4/18/2008 10:24:03 AM

10:00 Internals found at this Link

Note(s): It would take a closing session measure of 50.00% or higher for the NYSE 5-day NH/NL measure to reverse back higher. It would take a closing session measure of 28.00% for the NASDAQ's 5-day NH/NL measure to reverse back higher.

Keene Little : 4/18/2008 10:23:58 AM

The sell signal in the euro yesterday has been followed by a confirmation with the break below the rising wedge pattern: Link . The dollar is rallying and as expected, commodities are dropping. Oil has a similar pattern as the euro and also broken down: Link . Gold and silver never confirmed the new high in oil which was bearish non-confirmation. They're also breaking down this morning.

Linda Piazza : 4/18/2008 10:21:42 AM

Jane has probably mentioned this already, but the VIX is climbing. Not far. But it's climbing. So is the TRIN, although at 0.85, it's still below that 1.00 benchmark.

Linda Piazza : 4/18/2008 10:19:28 AM

So far, SPX and OEX equity bulls are getting the reactions they want. The stalling has resulted in a sideways movement, at least so far. The 15-minute 9-ema's are rising under current levels and are now at 1376.80 and 634.07. In strongest trending days, the SPX doesn't even pull all the way back to its 9-ema on this chart, but bulls certainly don't want that potential support violated on 15-minute closes if it does.

The TRAN's strange volatility worries me, but you know me: I'm always on the watch for something that signals trouble to either bulls or bears. This kind of volatility as seen on its 30-minute chart can sometimes be the preliminary part of a topping pattern. I use the TRAN as a sort of indicator index for the SPX, OEX and Dow.

Jeff Bailey : 4/18/2008 10:19:06 AM

AMEX Interactive Internet (IIX.X) 214.02 +3.58% ... gets a trade at 38.2% conventional. First trade since 01/23/08 low.

Keene Little : 4/18/2008 10:14:44 AM

The pullback from the initial rally off Tuesday's low obviously had an unusually small pullback correction to yesterday's low and now we've got a new leg up. Two equal legs up from Tuesday is at SPX 1399.60. But so far SPX has stalled at the top of its large sideways triangle pattern (light blue lines) near 1385. If it can push higher then the next zone of resistance is 1400-1415. Daily chart: Link and 120-min chart: Link

Linda Piazza : 4/18/2008 10:06:37 AM

That TRAN has been extremely volatile lately, hasn't it? Yesterday, it dipped almost to a 50% retracement of the climb off the 4/09 low into the 4/16 high before it bounced in the afternoon. Still, it had the biggest percentage loss of the indices I include in the market internals chart. This morning, it zoomed up but has pulled back sharply. Keep an eye on the TRAN because it can be an indicator index and it's doing something funny over there.

Jeff Bailey : 4/18/2008 9:53:39 AM

VIX.X 19.39 -4.81% ... gets the trade at QRTRLY S1.

Linda Piazza : 4/18/2008 9:52:42 AM

The A/D line certainly wasn't convincingly bullish yesterday, but that VIX and VXN were doing odd things, falling sharply late yesterday. It's always difficult on an opex Thursday, however, to evaluate how much of VIX and VXN movements are related to opex activity, to rolling out to new positions.

Linda Piazza : 4/18/2008 9:49:52 AM

We're getting the expected "pullback" after the first few minutes of trading, as mentioned in my 9:33:47 and 9:34:59 posts. Both the SPX and OEX are pulling back toward their potential upside targets and resistance on 30-minute closes, with both those levels pushed higher by the extreme ramp up in prices this morning. This is natural and normal, but you have to evaluate, too, the potential for prices to pull back further. It would not be a big deal in the ultimate scheme of things--but perhaps a VERY big deal in your profit/loss scheme--for the SPX and OEX to pull back toward their 15-minute 9-ema's, now at 1372.44 and 631.99. I'm not saying that will happen and it would perhaps happen, if it does, by some sideways trading until those averages rise further and only then a stronger dip. However, it remains a possibility.

Linda Piazza : 4/18/2008 9:44:56 AM

It just occurred to me that I forgot to say "last" when I mentioned Thursday's high in my 9:33:47 post. I was reference the 4/10 high, not yesterday's.

Jane Fox : 4/18/2008 9:41:15 AM

THe AD line is a very bullish +1802.

Linda Piazza : 4/18/2008 9:39:57 AM

Keltner outlook on the A/D line: The A/D line has pushed above potential Keltner resistance on 15-minute closes, at 1423. As I type, the A/D line is now 1720, moving quickly toward Wednesday's highs (and typical highs for the A/D line) in the 2000-2200 region. This should temporarily at least slow advances, but what happens after that is up for grabs. If the day is going to continue to be strong, I would expect some period of mostly sideways movement on the A/D line near the high, and concurrent mostly sideways movement on the SPX and OEX. We could get sharp pullbacks in a period of volatility, too, and that will be harder to gauge.

Linda Piazza : 4/18/2008 9:36:45 AM

This action is not the typical and expected action after two days like yesterday and the previous day, but as I said in last night's Wrap, the Nasdaq and Russell 2000, at least, looked about as likely to climb as they did to decline. It's not that I didn't think that markets could climb, but it's just that I thought they might have at least one more day of consolidation before they did. Obviously, my pulse of the markets is wrong for this moment, and so I don't want to be giving too much advice until it's clearer.

Linda Piazza : 4/18/2008 9:34:59 AM

Although I expect a pullback to begin after about five minutes of trading, that "pullback" may instead be nothing more than a brief sideways movement or just a slowing of momentum. I wouldn't be jumping in with short positions this morning until and unless you have ample evidence that your short positions are going to work.

Keene Little : 4/18/2008 9:34:24 AM

By ramping futures pre-market, again, it causes shorts to run for cover and wannabe bulls to chase it higher. It leaves micro pullbacks against the rallies and is very difficult to participate. As always the risk is no follow through this morning but I think the market has an agenda and SPX 1400 (maybe 1415) is it (and DOW 13K).

Linda Piazza : 4/18/2008 9:33:47 AM

The SPX 30-minute chart has a potential upside target of 1384; the OEX, about 638. I thought that if markets moved higher, we'd likely then see a pullback begin from about Thursday's high, but that's not going to happen, obviously. Watch for potential resistance (on 30-minute closes) at those 30-minute targets, now being hit. I wouldn't expect the pullback now to be huge, if there is one, but perhaps back toward Thursday's high.

Keene Little : 4/18/2008 9:27:52 AM

I guess I should have included a 3rd possibility in my chart last night--a strong rally out of the gate. I didn't expect this kind of huge gap up. Equities have climbed strongly off the low near 5:00 AM and looks a bit suspicious but at this point I would expect to see only a small pullback and then another push higher. SPX 1400 by the end of the day is a real possibility (instead of by Monday as I was expecting).

Jane Fox : 4/18/2008 9:17:49 AM

As is Crude. Link

Jane Fox : 4/18/2008 9:16:51 AM

And then of course there is not need for the flight to safety and Gold is selling off. Link

Jane Fox : 4/18/2008 9:15:58 AM

The US $ really liked the news out overnight as well and is in a major rally mode. Link

Jane Fox : 4/18/2008 9:14:58 AM

The bulls were out in full force during the overnight session as investors decided Citigorup's $5.1 billion loss could have been worse and that Google is really a market leader.

Citigroup posted a 1st quarter loss of $1.02/share compared to a $1.01/share profit year over year.

GOOG reported at 31% rise in 1st quarter profit to 1.31Billion. Link

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