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Jeff Bailey : 6/7/2008 2:44:00 AM

Here's the chart I've posted before ... Yen CurrencyShares (FXY) Link

INDU has been "weaker" than other majors within this same retracement benchmark of late.

Part of the "answer my friend, is blowing in the Yen."

Is the 02:21:42 tidbit a clue?

Again, let me sleep on it, clear my head. We'll figure this out.

Jeff Bailey : 6/7/2008 2:38:37 AM

Hey, Yen made a rather large % move up against the dollar today!

Jeff Bailey : 6/7/2008 2:32:51 AM

Currency converter ... Yen into $ Link

I got

Y2.44 trillion = $23.26 billion.
Y850 billion = $8.103 billion (8,102,955,140)
Y600 billion = arrrrgghhhhhh I'm losing it....

I'll work on this Sunday, while I wait for the telephone repair person to come check out the phone line.

Jeff Bailey : 6/7/2008 2:24:27 AM

I love the Internet ... Search ... What does 1 trillion look like?

1,000,000,000,000

Jeff Bailey : 6/7/2008 2:21:42 AM

Late Friday evening, Japan's Financial Services Agency reported that Japanese banks posted Y2.44 trillion in losses at the end of March on investments in securitized products. The amount included Y850 billion in subprime-related losses affected by the U.S. housing crisis, which is up from Y600 billion at the end of Dec'07. The total value of the financial institutions' securitized products at the end of Mar'08, including some other financial products, was Y22.79 trillion.

Ugh! I want to translate that into US$, but it has been a long week and a long day. I need to clear my head so I don't mess it up. My mind at this hour is in no shape to attempt. Thousands, hundred thousands, millions, billions, trillions? How many zero's is a trillion?

Remember the day's when millions were a lot of money?

Jeff Bailey : 6/7/2008 12:00:15 AM

Per 09:43:30 post.

Here's the "Beetle's Balanced" from 12/31/07 Close, where we can use the various Treasury bond like ETF's to also comprehend PRICE movement. Link

For those new to the MM, I'll use this type of ASSET CLASS observation to try and analyze what the MARKET is saying in regards to the ECONOMY.

This screen capture is what $1,000.00 (simple round number only) in each asset class has done (performed) since 12/31/07.

Since we looked at the 5-year YIELD, 10-year YIELD and 30-year YIELD at 09:56:30 PM, it might also be helpful and educational to observe, then understand PRICE movement.

Please note that the "Since 12/31" profit/loss and P/L% does not reflect the payments of monthly, or quarterly dividends of the various securities used the the Beetle's Balanced Benchmark.

For instance, the iShares Lehman 20-year (TLT) has paid five (5) dividends so far this year of $0.32882, $0.34794, $0.40614, $0.33637 and $0.32663 per share. TLT Distributions Link

OI Technical Staff : 6/6/2008 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 : 6/6/2008 9:54:44 PM

Leaders from four of Argentina's most influencial farm groups have hinted that they are willing to lift their nationwide farm strike on Monday. In a note to strikers the group said "keep blocking the sale of grains for export until 24:00 Sunday night, and from then we will remain in a state of alert and mobilization."

Jeff Bailey : 6/6/2008 9:56:30 PM

Closing U.S. Market Watch found at this Link

Some confusion this week regarding commentary on the steepening of the yield curve being negative for stocks.

My comments, based on observation (of such commentary) and teachings is that the generality of such commentary is without merit and does create confusion and uncertainty.

It depends on WHERE the steepening is coming from.

A "steepening yield curve" can come from different ends.

As we saw in January and especially March, when market participants gobbled up treasuries at the SHORTER-DATED maturities in rapid fashion, much FASTER or with greater hunger that LONGER-DATED maturities, that created a "steepening curve."

In the above U.S. Market Watch I try to clarify one commentators "observation."

See how "flat" the curve would be over the 20DyNet (not %, but Net) where the 5-year note YIELD is up 8.1 bp, the 10-year bond YIELD is up 8.8 bp, and the 30-year is up 7.1 bp? That's relatively "flattened."

Now look at the 5DyNet (not %, but Net).

Over the past 5 days, the 5-year note yield FELL 21.0 bp, the 10-year bond yield fell 10.8 bp, while the longest-dated 30-year bond yield fell a more moderate 5.7 bp.

See where the "steepening" came from?

So, in the future, if somebody tells you the "steepening curve" is bearish and the market surges the next day, then they tell you the "steepening curve" is bullish, and the market plunges the next, YOU can learn from those mistakes and simply see where the steepening is coming from.

Why do people buy 3-month, or 6-month Certificates of Deposit? Because they are usually looking for a SAFE place to stick some cash short-term.

Why do market participants BUY shorter-dated maturities? Usually some of the same reasoning, which can impact the curve.

When a steepening yield curve gets more "bullish for equities" is when the BULK, or greater extend of the steepening takes place at the LONGER-DATED maturities, with the SHORTER-DATED maturities also seeing distribution (its yield moving higher, but not at as fast of a rate).

Jeff Bailey : 6/6/2008 8:13:35 PM

Closing Internals at this Link

Jeff Bailey : 6/6/2008 7:34:00 PM

Pakistani Prime Minister Gilani expected to ask Saudi authorities if his country can defer payments on $2 billion worth of oil imports according to sources deemed reliable by the Financial Times. Gilani expected to meet with Saudi officials this evening.

Jeff Bailey : 6/6/2008 6:37:50 PM

TRIN 2.59 +311% ... strongest selling pressure to the close since 04/11/08.

Jeff Bailey : 6/6/2008 6:34:17 PM

U.S. and Canada are about the furthest place away from Israel and Iran. Swiss Franc "neutral" when it comes to global politics.

Jeff Bailey : 6/6/2008 6:22:54 PM

CurrencyShares Home page Link

Jeff Bailey : 6/6/2008 6:10:00 PM

Jimmy C talking about WMT. It's moved up to #10 weighted in INDU. WMT $58.37 -2.39% today.

Jeff Bailey : 6/6/2008 6:08:25 PM

CVX $99.50 -0.49% and XOM $86.79 -2.82% ... are #2 and #3 weighted in Dow Industrials. Today's "basket selling" just the opposite of yesterday's "basket buying"

Jeff Bailey : 6/6/2008 6:06:30 PM

Occi Pet (OXY) $92.70 +1.51% ... only "oil" name in my watch list that posted a gain today.

Jeff Bailey : 6/6/2008 6:01:27 PM

Venezuela's Oil Ministry reporting that the average price for the country's basket of crude oil and refined products fell $4.30 to $113.28 for the week ending 06/06/08, down from $117.58 from the week ended 05/30/08. Average price for the year now stands at $96.61 per barrel. Last year's average was $64.74.

Jeff Bailey : 6/6/2008 5:56:28 PM

Permian Basin Trust (PBT) $23.21 +2.47% ...

Jeff Bailey : 6/6/2008 5:55:43 PM

El Paso, Permian month-ahead natural gas basis differentials at today's close -1.81 and -1.75.

Henry Hub square at 0.000 and 0.005

Jeff Bailey : 6/6/2008 5:43:30 PM

The other night on CNBC, I questioned some of the comments near-term about "investing" in the refiners. Crude oil and unleaded way to volatile and shifts in crack spread so fast of late.

Seem to be better "short term" trading vehicle and try to get the crack spread in right direction. Unleaded is tracking oil's move higher, but when oil moves higher, the unleaded move lags.

cl08n +8.27% 5-days, +9.43% 20days.

rb08n +5.37% 5-days, +10.65% 20days.

Here's how they looked at Monday's close Link

Jeff Bailey : 6/6/2008 5:36:54 PM

TSO $24.75 -6.70% ... on 05/20/08 it closed at $25.67.

Jeff Bailey : 6/6/2008 5:25:39 PM

Nymex Crude Oil futures table ... Open Interest and today's daily estimated volume Link

Jeff Bailey : 6/6/2008 5:19:25 PM

Excellent, excellent observation from CNBC guest regarding volumes on Nymex crude oil futures.

Jeff Bailey : 6/6/2008 5:16:35 PM

July crack by my tabulation now back at 25.61.

VLO back at $46.27 -6.82% ... see table posted a couple of days ago. Looks about $3.75 "undervalued" relative to 5/20/08 crack spread measure of 25.602.

Jeff Bailey : 6/6/2008 5:03:12 PM

Crude oil sees single biggest percentage move in history!

Jeff Bailey : 6/6/2008 5:02:51 PM

Crude oil sees single biggest dollar gain in history! July Crude (cl08n) settled up $10.75, or 8.41% at $138.54.

Jeff Bailey : 6/6/2008 4:51:57 PM

DUG finished $28.40 +2.46% despite the surge in energy prices. Last night I told myself that if I was DUG on pre-market basis above $27.00 that I would adjust the stop a smidge lower, "hoping" that a broad sell-off would have just about EVERY equity in the red.

Didn't see it, so had to let it go.

HUI.X 431.62 +2.50% ... only equity sector I show in the green at the close.

Jeff Bailey : 6/6/2008 4:46:45 PM

Almost a complete flip from yesterday on the up/down volumes. Everybody out of their shorts yesterday, everybody back in today.

If we don't get the "bad news" over the weekend, implied volatility should still hold in decent on a gap reversal. At 10:05 AM EDT, VIX.X was 20.95.

Jeff Bailey : 6/6/2008 4:39:08 PM

Swing trade put establish stop alert! ... for the one (1) ProShares UltraShort Russell 2000 TWM July $68 Call (TWM-GP) at $68.40 in the underlying.

Linda Piazza : 6/6/2008 4:13:35 PM

I can remember days like this in the early days of my trading, days when I wasn't good about setting stops, just wishing the day would end so the pain would be over for that day. I remember days like these, too, when I didn't have good pinned-down exit strategies on the kinds of trades I do now, either, so that I was constantly asking myself, "Is this the spot? Should I give it another day? Should I exit on the next bounce?"

Yesterday, I was tempted into one of my once-every-few months types of directional trades. I don't like those anymore, so I limit myself to one or two contracts, sort of like a granny going into a casino and only playing the nickel slot machines. (There are nickel ones, aren't there?)The signs for a rollover just looked so strong to me, and I ventured into a tiny put position and was stopped out, twice. I could be doing the coulda-woulda-shoulda thing today, but I know when I watch things like this how much of a relief it is to have an exit strategy, not to let things get too far out of whack or losses mount so much that you're just frozen with the need to make a decision, right this moment, and not knowing what that decision should be.

If some of you are in that position today, know that some of us have been in the past, too. It's being in that kind of position that teaches us that we have to do things differently. Rather than chastising yourself, make a plan right now to learn all you can about exit strategies, both when things are going well and when they aren't. Let this experience leapfrog you into a different kind of trading. Spend some time working with your trading platform's order page, learning all the different ways you can set a stop, including triggering a stop loss and profit-limit orders as soon as your options order is filled. You'll feel that you're doing something to improve your trading and it may take the sting out of a day like today. There is an absolute relief in taking a loss when you need to do so and getting out of the trade, something that it's probably easy for many to imagine today in retrospect.

If you're worried and know you'll worry all weekend and absolutely must worry, then schedule some time to do it. How about 9:30-10:00 pm Saturday night? Plan what you'll do, worry about it, write down your plan and then do other things the rest of the weekend.

Jeff Bailey : 6/6/2008 4:07:42 PM

Good info James (03:35:50) ... I think there were a lot of shorts that covered yesterday. Maybe creats the air pocket today. See what happens over the weekend.

Saw some sign today that shorts blew out yesterday, then couldn't bring themselves to short, or buy puts this morning.

Monday could be a humdinger.

James Brown : 6/6/2008 4:03:07 PM

If you're feeling aggressive this might be a short-term top in Patriot Coal (PCX). The stock hit an intraday high and all-time high of $143.53 and is currently trading +0.7% to $135.79. The stock is up quite a bit from $100 to today's high in six days. This looks like a parabolic move that is ripe for a correction.

Keene Little : 6/6/2008 4:01:08 PM

There's potential Gann support at SPX 1362-1364 (180 degrees from the 1440 high in May on the Gann Square of Nine chart) and we're there. So that's another reason we could see a bounce on Monday. It's amazing how well those numbers on the Gann chart work. It looks like selling into the close is going to undercut the number but once again, closing at or near the low (longs covering their positions and bears not afraid) often sets up a reversal the next day.

James Brown : 6/6/2008 3:56:06 PM

There are only 19 gainers in the entire S&P 500 index.

James Brown : 6/6/2008 3:54:59 PM

Dow-component Pfizer (PFE) is getting hammered, down more than 3%, and hitting new 11-year lows. There has been big volume on the last two sessions. PFE near $18.00.

Linda Piazza : 6/6/2008 3:57:05 PM

As I have all week, I've carefully watched the TED spread today, a measure of the risk of defaults. The TED spread did go up today (3.511% to 0.86) and is at a weekly closing high, but the 6/02 high was 0.8486, so the spread's current level and intraday high of 0.87 are not a lot higher yet. The TED spread did not expand wildly today. I keep expecting that to happen, but it didn't. Not yet.

James Brown : 6/6/2008 3:52:32 PM

Just noticed that KB Home (KBH) is getting crushed. KBH is down 8.5% and breaking down under round-number support at $20.00.

The DJUSHB home construction index is down 5.98%.

additional builders...
DHI -6.89%
TOL -5.8%
PHM -9.9%
RYL -6.4%


Linda Piazza : 6/6/2008 3:50:56 PM

No reversal this 30-minute period as the OEX creeps ever closer to the 618.98-621 potential target on various charts. In my 12:44:49 post today, I suggested that if the OEX was to end the day near 620-622 and the VIX near 21-23, you might think about what you're going to do because that puts the OEX at potential support and the VIX at potential resistance. If you haven't made end-of-day decisions yet, you need to do it soon.

Keene Little : 6/6/2008 3:48:56 PM

If some of the selling today is worry about potential news over the weekend about LEH, we could get a relief rally if there's no bad news. Or the market could tank big time if bad news does come out.

James Brown : 6/6/2008 3:35:50 PM

Art Cashin on CNBC saying the lack of short-covering into the weekend was interesting as fear has apparently taken over the market. He was worried about a potential breakdown of support at 1370 for the S&P 500. The SPX is currently down 37.55 to 1366.50.

Jeff Bailey : 6/6/2008 3:35:26 PM

Some chatter today about Israel and Iran.

Jeff Bailey : 6/6/2008 3:34:34 PM

Some oil went into the SPR last week Art. 813,000 barrels. 2.8 million last 4 weeks.

Jeff Bailey : 6/6/2008 3:32:16 PM

Could be Jane! ... According to Dorsey/Wright, last night's BPOEX was 50%.

Here's StockCharts.com's Link

Linda Piazza : 6/6/2008 3:31:29 PM

That certainly doesn't look like a reversal, does it, but there's still a potential reversal signal on the 30-minute OEX candle. If the OEX drops a lot further in the next minute, then the integrity of that candle is compromised, but as it is, it's a potential reversal signal. Just make sure you're protecting profits while realizing all reversal signals don't result in reversals.

Keene Little : 6/6/2008 3:30:28 PM

Nope. No follow through to the little buying spurt. Bears are not afraid and unwilling to cover. Only Monday will tell if they were correct to stay short. If we close at the lows it perversely sets up a rally on Monday. It seems whenever we close at or near the high or low (like yesterday's high) there's no follow through the next trading day. Either longs or shorts cover into the close and then there's no one to do more buying or selling the next day.

Linda Piazza : 6/6/2008 3:27:23 PM

We have a potential reversal signal developing in the shape of this 30-minute period's candle on the OEX. Of course, so did we at the 10:30 candle this morning, and you know how much good that did those hoping for a steadying or a bounce.

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

Bearish trend day today ... A/D's still 616:2504 and 604:2256.

Keene Little : 6/6/2008 3:24:32 PM

Well that little rally attempt fizzled. Let's see if they can try it again.

Jeff Bailey : 6/6/2008 3:24:30 PM

HSBC Holdings (HBC) $82.73 -2.10% ...

Jeff Bailey : 6/6/2008 3:24:05 PM

Discover Financial (DFS) $15.91 -5.69% ...

James Brown : 6/6/2008 3:24:02 PM

Terex (TEX) is another bearish candidate. The stock is slipping under its 50-dma and 200-dma.

Jeff Bailey : 6/6/2008 3:23:27 PM

American Express (AXP) $45.04 -5.03% ...

Jeff Bailey : 6/6/2008 3:22:46 PM

Mastercard (MA) $297.20 -2.92% ...

Jeff Bailey : 6/6/2008 3:22:05 PM

Visa (V) $84.21 -3.47% ...

Jeff Bailey : 6/6/2008 3:21:29 PM

April consumer credit rose by $8.9 billion to $2.565 trillion. Revolving credit increased $300 million to $956.9 billion, compared with a $5.8 billion climb in March. Non-revolving rose $8.6 billion (excludes home mortgages and other estate-secured loans).

James Brown : 6/6/2008 3:18:39 PM

Jacobs Engineering (JEC) is starting to look like a bearish candidate here: Link

Linda Piazza : 6/6/2008 3:18:13 PM

The SPX's 15-minute 9-ema is now 1373.55, and the 30-minute version, 1376.32.

Linda Piazza : 6/6/2008 3:17:27 PM

I tried to give my end-of-day and end-of-week concerns early today in case we got a big relief bounce this afternoon. You can find an OEX chart in my 2:42:57 post and some notations about the VIX in the 2:46:42 post.

Keene Little : 6/6/2008 3:15:40 PM

The DOW and SPX are now breaking their downtrend lines from the bounce just before 1:00 PM. Short term short traders should be out of their positions now. Let the short covering begin. We've seen many times a hundred-point rally in the DOW in the last hour. I have no idea if we'll see it again but that's the risk for short players here.

Linda Piazza : 6/6/2008 3:14:48 PM

The OEX's 15-minute 9-ema is now 624.95. The 30-minute version is now 626.15.

Jeff Bailey : 6/6/2008 3:12:14 PM

Should the current week's high and low in the USO stay as they are and USO close $112.50.

Next week's WKLY Pivot levels would be ... $93.97, $103.23, Piv= $107.95, $117.21, $121.93.

Keene Little : 6/6/2008 3:12:09 PM

The 2nd retest of the SPX 1370 level in the past hour (with minor under-throw) looks like it will hold this time. Bullish divergence at the double bottom and now above the high between the lows looks good for a bottom for the day.

James Brown : 6/6/2008 3:07:29 PM

United States Steel - X - Still posting a gain, +0.48% to $184.00. If X fails here it could be the beginning of a bearish double top pattern. Volume is very low at only 877,000 versus the average volume of 5.1 million shares.

Jeff Bailey : 6/6/2008 3:05:26 PM

Bond market closed with the 13-week down 1.0 bp at 1.800%. While my ticks suggest problems with data feeds on the 5-year, I've got it down a reasonable 10.8 bp at 3.190%. The benchmark 10-year yield fell 8.7 bp at 3.938%, while the 30-year yield was lower by 8 bp at 4.650%.

James Brown : 6/6/2008 3:01:01 PM

Semiconductor stock KLA-Tencor (KLAC) might be a bearish candidate with this head-and-shoulders pattern. chart: Link

James Brown : 6/6/2008 2:57:17 PM

Biotech stock CEPH is up 1%. Earlier today shares had broken through its 200-dma after breaking out from a two-week trading range. This might be worth adding to your watch list.

James Brown : 6/6/2008 2:54:43 PM

A lot of the fertilizer stocks have avoided the sell-off today. That doesn't mean I'd buy them here since they're pulling back and this could look like a failed rally but they're holding up compared to the broader market...

POT +0.35% to $219.62
MON +0.12% to $138.77
MOS +0.23% to $134.73
TRA -0.47% to $45.83
TNH -1.05% to $149.38
IPI +6.6% to $55.00 (new high)
CF -1.89% to $149.25
AGU +0.24% to $93.25
SQM -3.3% to 43.37

Linda Piazza : 6/6/2008 2:52:48 PM

The A/D line has not yet created a lower low, although it is also not bouncing. So, there's tentative bullish divergence, but not an inkling yet of any advantage being taken of that bullish divergence. Therefore, don't count on any turnaround in price action on equities, but do watch carefully.

Linda Piazza : 6/6/2008 2:51:09 PM

The USDJPY's just reached (last 15-minute period) lower intraday low was so far met with a higher RSI value on the 15-minute chart. That's tentative bullish divergence. It's nothing to write home about, especially since the USDJPY isn't moving much from that low of the day, but it's something to watch since I think that the USDJPY should be on everyone's radar screen right now anyway. USDJPY now at 105.10.

James Brown : 6/6/2008 2:49:37 PM

As oversold as Sears Holding (SHLD) looks the stock is breaking down under short-term support to new multi-year lows. -3.6% to $81.75.

Jeff Bailey : 6/6/2008 2:47:40 PM

VIX.X 22.44 +20.45% ...

James Brown : 6/6/2008 2:47:17 PM

Joy Global (JOYG) - No weakness here. JOYG hit another high at $90.00 today. I suspect this is a short-term top as JOYG hits this trendline. chart: Link

Jeff Bailey : 6/6/2008 2:47:01 PM

Swing trade call exit alert! ... for the QSO-GQ at the bid of $3.50.

USO $111.87 +7.62% ...

Linda Piazza : 6/6/2008 2:46:42 PM

Earlier today, I had mentioned potential resistance for the VIX from 21-23. The 23-ish figure came from eyeballing a rising value channel in which the VIX has been moving since about mid-May. It's the counterpoint to the OEX's (and SPX's) declining price channel since then. Either the VIX is going to hit resistance (maybe up to 24.12 according to my Keltner charts and turn down and the OEX and SPX likely will rise or maybe this is the time that the VIX is going to break up through that channel and the indices are going to break down through theirs. Anyway, as I type, the VIX is 22.46, so it's testing what could be strong resistance. Or maybe not.

James Brown : 6/6/2008 2:43:56 PM

Guest on CNBC saying that airlines need to raise fares at least 23% to adjust for higher oil prices.

Saw something yesterday that said airlines need to raise fares by 100% to 300% to account for record oil and thus jet fuel prices.

Whatever the case... airfare is headed higher... especially as several airlines cut capacity.

Linda Piazza : 6/6/2008 2:42:57 PM

For the help or maybe confusion of bears trying to make end-of-day or end-of-week decisions, here's a chart of the OEX from a Keltner perspective: Link

James Brown : 6/6/2008 2:41:06 PM

Research In Motion (RIMM) is flirting with a breakdown from its bullish up trend... but not broken yet. chart: Link

James Brown : 6/6/2008 2:36:34 PM

Russell 2000 small cap index - It's been a painful session but the trend in the RUT is still bullish. Obviously it's a different story with the S&P 500 and DJIA. Chart of the RUT: Link

Linda Piazza : 6/6/2008 2:33:58 PM

The OEX has not managed a single 15-minute close above the 9-ema now at 625.56 all day. It's managed one at that moving average but not above it, and it's pierced it but not been able to stay above it. Therefore, a 15-minute close above it would be a minor change in tenor, but a sign for bears to remain watchful about protecting their profits. Bears need to be thinking about those end-of-day and end-of week decisions anyway. Charts are coming.

Jeff Bailey : 6/6/2008 2:33:23 PM

02:00 Internals found at this Link

James Brown : 6/6/2008 2:32:53 PM

NDX - NASDAQ 100 index has not yet broken its bullish channel. chart: Link

Keene Little : 6/6/2008 2:29:33 PM

USO is pushing up to the "one more high" and approaching 112.50. With the bearish divergences showing up now, at the top of the channel, completed EW count--it all looks good for a setup to buy some puts now.

Jeff Bailey : 6/6/2008 2:27:41 PM

USO $112.13 ... gets that trade.

James Brown : 6/6/2008 2:26:01 PM

For anyone playing the MCD strangle on OI... keep an eye on those June $57.50 puts. They are moving closer to our exit target $1.65.

Keene Little : 6/6/2008 2:24:18 PM

Pretty consistent selling between the four indices today. The DOW, SPX, NDX and RUT are all within a couple of tenths of a percent in their declines today. We don't often see them this much in synch.

Linda Piazza : 6/6/2008 2:21:52 PM

Potential support for the OEX on 30-minute closes is at 623.20. The OEX also has a potential downside target now based on daily and 15-minute charts at 619.89-620.06, so keep that vulnerability in mind. There is a potential downside target of 613.35, too, but the OEX is approaching trendline and other support that could, but isn't promised to, eventually bounce it back toward 632-635 before it turns down toward the lower target. Just keep updating your profit-protecting plans if in bearish trades.

Jeff Bailey : 6/6/2008 2:20:48 PM

Swing trade long sell partial alert! ... sell 1/2 of the current 1/4 bullish position in Six Flags (SIX) at the bid of $2.05.

Once done, should be 1/8 position long.

Keene Little : 6/6/2008 2:19:07 PM

SPX is now hitting potential support near 1370 and NDX near 2000. A v-bottom would not surprise me in the least today. One can only imagine how easy it would be to light off a roman candle with a couple of big buy programs. But if the selling continues hard through support levels, and no bounce back above, it would certainly be bearish.

James Brown : 6/6/2008 2:18:16 PM

Don't forget that June options expire in two weeks.

James Brown : 6/6/2008 2:17:34 PM

Not to overstate the obvious but as a follow up to Keene's comments about a possible flame-out for the USO... If you think this is a temporary top in crude oil or at the very least think crude oil is short-term overbought and due for a correction on Monday... after an $11 (+12%)gain in the USO in two days... then readers could choose between buying puts or maybe even selling calls, which would definitely be the higher-risk of the two. Stop losses will be crucial here if oil continues higher.

A pull back to the top area of its gap higher today would be around $107.50. A 38.2% Fib retracement would be around $106.60.

The June $107 puts are about $2.70 and could move to $4.00ish.
The July $107 puts are about $5.50 and could move to $7.40ish

Just a thought.

Jeff Bailey : 6/6/2008 2:17:34 PM

USO $111.51 +7.27% ... once some shorts do some covering, there will be a few.

Jeff Bailey : 6/6/2008 2:16:22 PM

Thanks Barry! ... In August I believe, there were no shares of USO to short.

Keene Little : 6/6/2008 2:04:21 PM

If you use a downtrend line along the highs since the one just before 1:00 PM now, a break above it should be an indication that the bottom is in for the day. Use it to trail your stop down if short.

Jeff Bailey : 6/6/2008 2:00:25 PM

USO ... With your Quarterly and MONTHLY pivot retracement as well as the stacked "Bailey Wave" Link

Jeff Bailey : 6/6/2008 1:56:07 PM

Upper end of the stacked "Bailey Wave" on USO about $113.75.

Linda Piazza : 6/6/2008 1:54:45 PM

So far, the OEX's 15-minute 9-ema has still been serving as resistance on 15-minute closes. That's now a 627.04. The SPX's is at 1378.66.

Jeff Bailey : 6/6/2008 1:49:55 PM

At 01:38 PM EDT seeing a headline that S&P cuts Ambac's GIC-backed issues to 'AA'; on CreditWatch Negative.

Keene Little : 6/6/2008 1:44:59 PM

Ideally, from a short term perspective in looking at today's rally in USO, it's due one more push to a new high in order to complete a 5-wave move up from this morning's pullback. If we get it watch for resistance around 112.50 (top of its channel). Some OTM August puts could work nicely. Don't go crazy--it's a bit of a lottery play here although I certainly like the setup. Just be willing to risk what you spend on the puts.

Jeff Bailey : 6/6/2008 1:38:00 PM

Helps divide up the levels from just a regular retracement chart shown today.

Keene Little : 6/6/2008 1:37:56 PM

USO could be getting ready to flame out. A reader just informed me (thanks Barry) that Schwab reports no shares available to short. Maybe some of the short covering today will free up some for next week (wink). After breaking its uptrend line from May 1st USO is back up for a retest. It's also back up near the top of a parallel up-channel based on the uptrend line from April 1st (near 112). If the rally doesn't hold we're going to see a huge bearish divergence on MACD. Link

Protect profits if long USO. The wave count can now be satisfactorily considered complete and the 5th wave achieved the minimum Fib projection (62% of the 1st wave) at 110.50. The pieces are in place to call the oil rally complete. Of course that's clearly an early call here.

Jeff Bailey : 6/6/2008 1:36:58 PM

OK ... USO $110.82 +6.60% ... also have your chart with the MONTHLY Pivot retracement. Did see a MONTHLY R1.

Jeff Bailey : 6/6/2008 1:33:47 PM

Can imagine (hopefully not experiencing) what a NAKED call in oil (uso or futures) would be feeling.

Jane Fox : 6/6/2008 1:33:47 PM

How many times I have said I will never short Crude. I know many who thought they were going to ride it all the way down to $100 again.

Jeff Bailey : 6/6/2008 1:32:57 PM

Euro CurrencyShares (FXE) $157.64 +0.98% ... Those FXE-FA are now $1.45 x $1.60

Jane Fox : 6/6/2008 1:32:23 PM

Here is McMillan's weekly commentary - This has been a volatile week couple of weeks, with $SPX rollicking between 1370 and 1405 a couple of times. In fact, today it nearly traversed the entire range in one day. This sets up a potentially volatile unemployment report for Friday morning. In fact, that report was probably one reason why the market rose so much on Thursday. Has the data been leaked? Always possible, of course, but more likely is the fact that shorts did some covering on Thursday -- and it got a bit carried away -- so they didn't have to buy into a potentially sharply rising market in the wake of a positive report Friday morning.

In the broader sense, we are not concerned with one set of economic numbers numbers which the government has every reason to bias in its favor. Rather, we use the "purer" technical indicators of the market itself.

First, the $SPX chart is relatively neutral, with the index bouncing back and forth in the afore-mentioned range. However, the 20-day moving average is now declining, and so as long as that resistance at 1405-1410 holds, the index has a slightly negative bias. A series of lower highs and lower lows would have made the bearish case. But the index never closed below 1370, so that bearish sequence has not yet been established. At this point, a close below 1370 would certainly be bearish. Meanwhile, a close above 1405-1410 would likely indicate another run at the May highs.

The equity-only put-call ratios are bearish. The standard ratio (Figure 2) wavered a bit earlier this week, but re-confirmed its sell signal after that. The weighted ratio (Figure 3) has remained steadfastly on its sell signal. Since these are important intermediate- term indicators, we view their bearishness as meaningful.

Less meaningful is market breadth, which has been notoriously weak and somewhat indecisive all year. At the current time, the last signal was a sell signal, and technically that is still in effect.

The volatility indices ($VIX and $VXO) have been rising for the last couple of weeks. $VIX did establish a series of higher highs and higher lows (see Figure 4), and so this chart is now in an uptrend. An uptrend in $VIX is bearish for the broad stock market. Even today's sharp decline in $VIX didn't change that fact. A $VIX close below point 2 on the chart, at 17.83, would disrupt this bearish pattern.

In summary, the bears had their chance to break this market, but when $SPX failed to close below 1370, a massive short-covering rally took place (the market was not very oversold at the time, but there is always plenty of buying power -- especially when it acts in concert). There are still sell signals from the put-call ratios and a bearish $VIX chart. But if $SPX closes above 1410 and if $VIX closes below 17.83, that would turn the picture bullish, despite the put-call ratio sell signals. We may find out quickly -- as soon as today -- if that will be the case or not

Jane Fox : 6/6/2008 1:28:47 PM

Link

Jane Fox : 6/6/2008 1:27:33 PM

Crude is now up to 136.43.

Jeff Bailey : 6/6/2008 1:25:50 PM

Not at all-time highs with no overhead supply to keep things in check.

Jeff Bailey : 6/6/2008 1:25:28 PM

Wouldn't want to be NAKED call oil either.

Jeff Bailey : 6/6/2008 1:24:24 PM

Oil surging as CNBC mentions possibility of "limit up" conditions for crude oil futures. Good warning there for those short futures.

Not here, not on my watch.

Keene Little : 6/6/2008 1:23:28 PM

After breaking out the top of its parallel down-channel from January 2007 the US dollar has dropped back down to it and its 50-dma at 72.53: Link . The euro is doing the opposite and has bounced up to its 50-dma.

This will be an important test for dollar bulls. If support holds here then another run higher is likely. If it instead keeps heading lower then it will look the bear flag pattern will lead to new lows for the dollar. This would obviously help commodity prices as well (including gold which has also jumped back up to its 50-dma today).

Linda Piazza : 6/6/2008 1:20:13 PM

The TRAN punched lower when OEX and SPX did. That's corroboration. The A/D line did not: that's tentative (but easily reversed) bullish divergence. The USDJPY has not as yet, so the evidence is mixed here, too. There is some corroboration of the renewed weakness, some potential and very tentative bullish divergences.

Linda Piazza : 6/6/2008 1:17:32 PM

The VIX did not yet, at least, confirm that new SPX and OEX low by printing a new high. The VXO, the old VIX computed using OEX options, did. So the evidence is mixed.

Jeff Bailey : 6/6/2008 1:15:21 PM

James! You selling any $100 puts?

Jeff Bailey : 6/6/2008 1:14:29 PM

Short squeeze taking hold.

Jeff Bailey : 6/6/2008 1:14:13 PM

USO $110.57 +6.36% ... gets the trade at PINK 38.2%.

Jeff Bailey : 6/6/2008 1:12:12 PM

VXN.X 25.13 +9.97% ...

Jeff Bailey : 6/6/2008 1:11:54 PM

Swing trade sell covered call(s) alert! ... sell covered two (2) of the NVIDIA NVDA July $27.50 Calls (UVA-GY) at the bid of $0.55.

NVDA $24.17 -2.81% ...

Covered by the long UVA-IX's

Jeff Bailey : 6/6/2008 1:07:46 PM

TSO $25.14 -5.23%
BOOM $41.69 -0.21%
RIO $37.71 -2.58%
NVDA $24.26 -2.37%
USO $109.50 +5.33%
SIX $2.08 -3.25%
TWM $67.90 +4.38%

Linda Piazza : 6/6/2008 1:07:33 PM

The OEX's day's low has been 625.82 and there's light potential Keltner support near there, too, and then again near 624.46, but keep that 620-622 potential target zone on your radar screen.

Linda Piazza : 6/6/2008 12:51:24 PM

The last 15-minute period ended with the OEX having risen up to test the 15-minute 9-ema, now at 628.05 but dropping back from it. The OEX is again testing it this 15-minute period and is in fact a couple of cents above it as I type. If it can hold this level, it might then next test the 628.99-629.36 zone, where it might next find resistance.

Linda Piazza : 6/6/2008 12:46:02 PM

Yesterday, short-term bulls had the easier job, although I hope they listened to cautions that a couple of us were expressing toward the close. All bulls had to do was decide when to take profits and keep cinching their stops up. Today, bears have the easier job as they have the same task. However, as impossible as it seems, it's really not impossible that we could still get some kind of small-bodied candle to end the day, with a bounce up this afternoon to leave a long candle shadow below a small candle body. From this point forward, please do not let a profit turn into a loss.

You do have a bit of planning to do when you decide whether to hold over the weekend, particularly if you're long JUN puts but even to some extent the JUL ones. The VIX has jumped up and that's plumping up your options prices nicely today. However, the VIX is approaching potential rising channel resistance from its day's high up to about 23.00 and that resistance could kick in any time. And, if you're thinking about holding over the weekend, you'll have theta-related time decay, too. So, if you're long puts and you wake up Monday morning with the indices bouncing, even a bit, and volatility dropping, even a bit, you're actually going to get a triple whammy hit on your long puts: from price action, volatility and time.

So, particularly, say if the OEX is to end the day near 620-622 and the VIX near 21-23, you might think about what you want to do. As Keene noted this morning, it's sometimes hard to get back into a bearish trade if prices are just dropping like a stone, so if you take your profits home with you for the weekend, you risk not being able to profit from a further down move next week, perhaps down to that 613-616 level that may be an eventual target. However, particularly if the OEX ends the day near the support near 620-622 and you don't lock in at least some of your profits, you risk waking up and having the OEX try to chug up through the descending price channel in which it's been moving since mid April. Just think about it.

Keene Little : 6/6/2008 12:44:45 PM

While today's decline resets the bearish tone to the market I continue to urge caution to bears that this market may not be ready to drop yet. I'll use NDX and the RUT as my proxies for this since they've been stronger. NDX has been in a clear parallel up-channel from March but a little more worrisome is the potential rising wedge pattern for the RUT.

As shown on the NDX daily chart, it takes a break below Tuesday's low near 1979 to confirm the breakdown from its up-channel. It would also negate the potential for at least another leg up to another minor new high as part of a small ending pattern from the May 23rd low (shown in pink). NDX ideally needs to hold above 2000 in order to get that leg up. Daily chart: Link

I'm also showing, in dark red, the possibility for a choppy decline into the summer (rather than getting hammered to the downside and below the March low before the end of July). It means you should continue to trade this market rather than make any long-term bets. It is far better to take base hits than go for the home run. Even in baseball the base hitters are the more valuable players than the home-run hitters. The question is do you want fame or do you want to grow your account?

The RUT daily chart shows a stronger bearish depiction. Dropping back down into its rising wedge this morning was a sell signal. A break below Tuesday's low near 732 would confirm the breakdown and the rising wedge pattern would likely get retraced very quickly. I also show the possibility for one more push to a marginal new high (pink) as today is so far just an inside day. My bearish call here is clearly early and only a warning at this point. A break below 732 would have me putting more money to work on the short side. Link

Jeff Bailey : 6/6/2008 12:34:15 PM

12:00 Internals found at this Link

Linda Piazza : 6/6/2008 12:34:03 PM

The OEX of course has short-term historical (Tuesday's and Wednesday's intraday lows) at 624.46 and 624.43, if it should drop below today's low. I'm not sure whether it will, but you might look for a bounce attempt there if it does, especially as it also has potential support on 30-minute closes at 623.94. I'm not sure how far any such bounce attempt would get.

Linda Piazza : 6/6/2008 12:23:41 PM

The OEX's 15-minute 9-ema is now 628.32; the SPX's, 1381.18. So far, the OEX and SPX are burning off extreme RSI and other levels by a sideways-up movement, so bears are breathing a bit easier. That makes it more likely, but not a given, that the 9-ema's will hold as resistance on 15-minute closes.

Jeff Bailey : 6/6/2008 12:12:57 PM

USO ... same type of bar chart with retracement as shown for futures today. Link

Jeff Bailey : 6/6/2008 12:07:08 PM

TWM $67.65 +3.99% ...

Jeff Bailey : 6/6/2008 12:06:12 PM

SDS $58.19 +3.74% ... #7 most active ... rarely see this one in the top 10.

Jeff Bailey : 6/6/2008 12:01:52 PM

We'll note that last night's June USO "max pain" was $104. That's pretty close to the 05/20/08 benchmark. In a second you'll see a couple others. Any NAKED calls, in some trouble.

At today's close we'll get new WKLY's. MONTHLY's are 80.63, 91.85, Piv= 100.10, 111.32, 119.57.

Keene Little : 6/6/2008 11:58:50 AM

Today is a good example of when I talk about the market being set up for surprises to the downside. For the DOW in particular, the big rally off Wednesday's low to yesterday's high took a little over a day. It was completely retraced in less than 90 minutes. It's another sign (to me at least) that we're in a bear market.

Jeff Bailey : 6/6/2008 11:57:50 AM

USO's currently July "Max Pain" theory tabulation at last night's close was $100 ... $1 inc.

Linda Piazza : 6/6/2008 11:58:15 AM

The OEX's 15-minute 9-ema is now 629.03; the SPX's, 1382.71. Watch for first resistance on 15-minute closes at those levels, but because the decline was so sharp, I wouldn't be surprised to see a somewhat sharp recovery attempt, either, for the stretched rubber band to send prices up a little higher than they normally would go. If so, watch for a next resistance level at 630.1-632.30 for the OEX and 1387-1388 for the SPX.

Jeff Bailey : 6/6/2008 11:52:49 AM

Most recent short interest data for USO was 05/30/08. According to NASDAQ, SI fell from 05/15/08 17.17M shares to 16.25M shares. Based on average daily volumes, days to cover fell from 1.677 to 1.132. Link

Keene Little : 6/6/2008 11:49:47 AM

I bought some July SPY puts yesterday (finally got the right jobs report.....) and they are working very nicely. Per your last chart, the SPX broke the 1388 so how far do you see this possibly dropping?

Congrats on those puts. It was a safer way to try the short side instead of shorting the futures (which doesn't allow much room for error if you want to control your risk).

If my crystal ball is correct I see us kicking off a big move to the downside and ultimately below the March lows. It could happen before the end of June but that's aggressive. Certainly by the end of July. However, if we're going to stay trapped in a larger consolidation between this year's highs and lows then the move back down could be very choppy and take several months (like the rally from March into June).

If the choppy scenario plays out then at a minimum I believe SPX will drop down to near 1360 if not 1350 before another bounce back up. That along with $2.50 will buy you a cup of coffee. Good luck.

Jeff Bailey : 6/6/2008 11:46:14 AM

Yesterday, there were notes made as to oil seeing its largest dollar amount gain in a single day. Interesting at most. We could see greater single-day gains only because a $5 move at these price levels, when put in percentage terms good for "headlines" and shock value, but percentage more notable.

Linda Piazza : 6/6/2008 11:42:37 AM

The OEX's 15-minute 9-ema is now 629.35 but may have dropped toward 628.95 or so by the time the OEX could rise to test it. That's the first place to watch for rollover potential if the OEX can get past 627.25 on 15-minute closes.

I have to say, though, that the OEX has hit its potential downside target from the H&S formation from yesterday and the A/D line has been at extreme levels that usually aren't maintained too many hours--although they can be a whole day--and so there's the possibility that a bounce back could have more boing, as it is, than one that would have occurred earlier. The OEX threatens to set a new downside target of 621-622, so there's vulnerability to that level, but from this point forward, be particularly careful of your bearish profits, too.

Jeff Bailey : 6/6/2008 11:42:08 AM

July Crude (cl08n) at this Link

Keene Little : 6/6/2008 11:39:28 AM

At this point I can see a completed 5-wave move down in SPX from yesterday's high. If true that sets us up for a correction to this morning's decline. A 38%-50% retracement would have it bouncing up to 1387-1390. So again, protect profits if you don't want to see that big a bounce against your short position. If we get a nice 3-wave bounce up to that area that's when I'll be looking for a shorting opportunity.

Jeff Bailey : 6/6/2008 11:34:48 AM

See the overlap on the July contract?

Jeff Bailey : 6/6/2008 11:32:27 AM

Oh my!

Linda Piazza : 6/6/2008 11:31:35 AM

The A/D line is still dropping, still confirming weakness.

Jeff Bailey : 6/6/2008 11:31:28 AM

Have that 05/20/08 settlement date marked on your charts as shown previously. As well as the 04/22/08.

Jeff Bailey : 6/6/2008 11:30:23 AM

So, on your July and August crude oil futures charts, take a retracement from yesterday's low, then drag up a 100% to $160.00 for now. Again, the bullish vertical count column is still under construction.

Jeff Bailey : 6/6/2008 11:27:26 AM

Continuous Crude Oil ($wtic) Link ... $0.50 box to match futures. I'm showing July Crude having traded as high as $134.67. So at tonight's close, there would be more X's up to $134.50. Here, the bullish vertical count would be .... $122.50 + ((25 x 3) x 0.50) = $160.00

Jeff Bailey : 6/6/2008 11:21:52 AM

Will note that at yesterday's close, Dorsey/Wright's Bullish % All (BPALL) was "bull confirmed" at 46.75% measure. Using this for closest match to a very broad Russell 2000, but closer match to the Wilshire 5000 (DWC) 14,086 -1.77% ...

Linda Piazza : 6/6/2008 11:19:31 AM

Caution here: the USDJPY is still dropping heavily. Take a gander (I'm from Texas, remember) again at that chart I linked in my 9:27:04 post and read my comments there. This is why I just wasn't buying the size of the gains yesterday. The USDJPY wasn't acting right and was against significant resistance.

Jeff Bailey : 6/6/2008 11:18:38 AM

Under the scenario of my recently revised from "modest recession 2008" to "modest economic growth 2008" some backfill not unreasonable.

Jeff Bailey : 6/6/2008 11:15:49 AM

IWM bar chart Link

Then TWM Link

Jeff Bailey : 6/6/2008 11:14:01 AM

IWM's "Max Pain" was roughly $72.00 at last night's close. We'll note that is somewhat correlative with its 150-day SMA and 50-day SMA. As well as its conventional 38.2%. That's our target of support when tied with the TWM.

Linda Piazza : 6/6/2008 11:12:40 AM

The OEX just hit, nearly exactly, the calculated downside target for the H&S that never formed a right shoulder (10:23:44 post).

Linda Piazza : 6/6/2008 11:05:29 AM

The potential short-term downside target on the OEX is now 627.62 with a further (calculated, from partially formed H&S) downside target of 626.74. Right now, the OEX tests first potential resistance at 629.29, and, if it could get past that and maintain levels above that, it might begin to change the picture. For now, though, the potential downside target is in place.

Jeff Bailey : 6/6/2008 11:04:37 AM

USO $108.42 +4.30% ... $0.50-box Link ... to match futures. This column of X, and reversing higher PnF "buy signal" at $105.00 establishes initial bullish vertical count column to ... $99.50 + ((20 x 3) x 0.50) = $129.50.

Jeff Bailey : 6/6/2008 10:59:47 AM

Checking to see if StockCharts.com corrected their USO chart ... $0.50 box. Had bad data in it Wednesday. Get an accurate/new bullish vertical count.

Linda Piazza : 6/6/2008 10:57:05 AM

I heard something this morning about the LIBOR being higher, so I was anxious to get my first look at the TED spread this morning. As I suspected might be true, because it is calculated from the spread between U.S. treasuries and LIBOR, the TED spread is higher today. It's 0.87 or 87 basis points. A "normal" spread is 0.30-0.50, but it hasn't been that since last August. For a week, the TED spread has been in the 0.80-0.85 range, so today's spread is the highest in a week. I'll have a Trader's Corner article this weekend that explains the little I know about the TED spread, but I believe it might be dangerous if we start seeing it climb toward and then maintain values above about 1.00 now that it's been testing (descending trendline) support that has held since last August's spike. Equity bulls don't want to see it spike up through that descending value channel again.

Jeff Bailey : 6/6/2008 10:55:32 AM

VIX.X 20.97 +12.56% ...

Jeff Bailey : 6/6/2008 10:55:11 AM

Swing trade long alert! ... for one (1) of the US Oil Fund USO July $121 Calls (QSO-GQ) at the offer of $2.05.

USO $108.32 +4.20% ...

Keene Little : 6/6/2008 10:52:30 AM

It looks like the selling in the broader averages is starting to wane. Bullish divergences are appearing on the short term charts at the new lows and I'm seeing evidence of small bullish descending wedges forming. This may be more a factor of slowing in trading after the initial flurry of morning trading but it does suggest you tighten stops if you're short and want to protect profits from a potential spike back up. In this crazy market you just can't be too sure of anything. The Fed and the big banks have a vested interest in seeing this market hold up.

Linda Piazza : 6/6/2008 10:49:38 AM

OEX potential Keltner support on 15-minute closes is now 626.66; for the SPX, that's 1378.54. Potential resistance is 630.40 and then the 15-minute 9-ema at 631.72 for the OEX, and 1385.32 then 1388.50 for the SPX.

Jeff Bailey : 6/6/2008 10:46:52 AM

USO "pattern" of 05/02/08 to 5/05/08 currently in play.

Jeff Bailey : 6/6/2008 10:46:05 AM

USO $108.14 +4.03% ... probing its recent all-time high ... so 0% conventional.

Jeff Bailey : 6/6/2008 10:45:27 AM

Euro CurrencyShares (FXE) $157.21 +0.71% ... probing its 19.1% conventional (12/20/07 low to recent 04/22/08 high). Bar chart downward trend just ahead at $157.50.

James Brown : 6/6/2008 10:44:26 AM

Three days ago General Motors (GM) held their annual meeting and announced some truck plant closures and possible plans to sell the Hummer vehicle brand.

This morning there have been a couple of articles out suggesting that Indian carmarker Tata Motors, who recently bought Jaguar and Land Rover, and India's Mahindra and Mahindra (M&M) might be potential buyers for the Hummer brand.

Jeff Bailey : 6/6/2008 10:43:36 AM

10:00 Internals found at this Link

Keene Little : 6/6/2008 10:42:33 AM

I didn't update the bank index (BIX) chart in last night's newsletter because it hadn't changed significantly from Wednesday's. But today's big decline in the banks (BIX is down -3.6% here) has it dropping below the March 2000 low. Not a very good return on your money if you had invested money in the banking sector 8 years ago. Link

The daily chart shows we could get a small bounce in the banks over the next few days before pressing lower still. There's much more bad news for the banking sector that's coming and therefore there are still some shorting opportunities. But I think there's much more fertile ground elsewhere. This sector has taken a big beating already.

Jeff Bailey : 6/6/2008 10:40:37 AM

I'm not certain, due to data feed issues in the bond market, that the 5-year yield jumped to 3.5%. Getting one tick at 10:35 AM EDT of 3.250%.

Linda Piazza : 6/6/2008 10:39:59 AM

Please keep in mind the doji-type or small-bodied candle type day that is possible today. As I've commented, the A/D line has been extreme. Although it remains in breakdown territory, keep a watch on it and prices as the possibility could be that the OEX could now chop around. Right now, it's got a potential downside target of 626.75-627.60, but nothing says it has to hit that target. So, remember the vulnerability to that level and perhaps to the 621-622 level if that should fail, but maintain careful trade- and account-management practices as we could see choppy behavior set at any time.

James Brown : 6/6/2008 10:37:43 AM

Bloomberg.com -- Corn futures marked their third gain in a row to another new record high ($6.4925/bushel). Meanwhile soybeans jumped to a three-month high due ($14.6675/bushel) to excessive rainfall.

Jeff Bailey : 6/6/2008 10:37:08 AM

Sidelines for now. Long-time from the looks of USO $107.77 +3.67% ...

Jeff Bailey : 6/6/2008 10:36:24 AM

DUG alert! $27.40 -0.54% ... At specified stop.

James Brown : 6/6/2008 10:30:47 AM

At Wal-mart's (WMT) annual shareholder meeting, its head of international operations said the company was "exploring opportunities in Russia" and nearby countries in Eastern Europe (source: Reuters). They are also looking at expanding their presence into southeast Asia.

James Brown : 6/6/2008 10:26:17 AM

Apple Inc (AAPL) is showing some relative strength with a minor 63-cent loss to $188.78. There is massive speculation that AAPL will unveil its 3G iphone on Monday. Such an announcement will probably see a breakout over $190 and I wouldn't be surprised to see a pop toward resistance near $200 but there is a huge camp just waiting to sell the news (or post-announcement pop).

Traders could speculate on some higher-risk out of the money calls. We still have two weeks left on June options. Or you could try a straddle or strangles. (edit:) However, if AAPL is only going to rally to $200 (no one knows if or how high they'll rally) then the straddle would not pay off and the strangle would be questionable.

Keene Little : 6/6/2008 10:22:47 AM

I was just informed (thanks Denise) that my links to the pivot tables posted last night are wrong. Sorry about that--here are the two tables for today: Link and Link

Linda Piazza : 6/6/2008 10:23:44 AM

Yesterday, the OEX had formed the left shoulder and head of a H&S formation. Today, it dropped through the neckline without ever forming a right shoulder. That sometimes happens, with the TRAN often in the past dropping through the neckline of a regular H&S or popping up through the neckline of an inverse or reverse one without ever forming a right shoulder. Often, it's a good idea to look at the eventual downside target that would have been in place if the formation had fully formed and figure that there's some vulnerability to that level and, also, perhaps some potential support there. For the OEX, that downside target would have been about 626.75. There's potential Keltner support on 15-minute closes at 627.72, so I would say that if the OEX should drop all the way to 626.75-627.75, bears should perhaps have some ideas about how they'll protect their profits at that level, just in case.

As I type, the OEX is attempting a bounce. Watch now for potential resistance near 631.50 and then especially near 632.80-633.50.

Linda Piazza : 6/6/2008 10:17:02 AM

On the OEX's daily chart, there's now potential for it to slide back toward 621.84 where there's potential support on daily closes, and then a lower potential target now at 613.94. However, a daily close above 636.26 will confuse the issue of whether the OEX is likely to drop to either of those potential targets. It's still sliding down within a descending channel in place since early May, so we should assume that until that channel is broken, it's going to hold, if that makes sense. Sometimes the most simplistic technical analysis tools are the best.

James Brown : 6/6/2008 10:14:34 AM

Best Buy (BBY) had surged to new three-month highs yesterday. The stock gapped lower this morning and is trading down 4.7% after Deutsche Bank downgraded the stock to a "hold". DB claims that an oversupply of flat-screen TVs might lead to price cuts and lowered revenues for the company.

Linda Piazza : 6/6/2008 10:12:28 AM

The USDJPY has just hit a new low of the day and is bouncing off that, so it's confirming, so far, the weakness in equities.

James Brown : 6/6/2008 10:10:54 AM

A Bloomberg.com article is saying that Lehman Brothers (LEH) is in talks to raise up to $5 billion by next week. LEH has already raised $8 billion in capital by selling bonds and preferred shares since February. LEH is up 1.0% to $34.22.

Linda Piazza : 6/6/2008 10:09:54 AM

My supposition was wrong. We're getting the stronger downturn. The OEX now has a potential downside target at 627.70, but the A/D line is at an extreme level, so keep watching.

Keene Little : 6/6/2008 10:07:35 AM

SPX is down to potential support near 1385 which is its broken downtrend line from May 19th, which was broken yesterday.

James Brown : 6/6/2008 10:07:10 AM

CNBC guest... Claiming part of the rise in oil may also be attributed to Israeli government comments that an attack on Iran's nuclear facilities is inevitable.

Keene Little : 6/6/2008 10:06:00 AM

Right after I posted SPX had not broken yesterday afternoon's low it suddenly dropped lower. They're all in synch now and it's bearish.

James Brown : 6/6/2008 10:05:39 AM

CNBC saying there has been a big uptick in volume for $200 September calls for crude oil.

Jeff Bailey : 6/6/2008 10:05:09 AM

Swing trade long alert! ... for one (1) of the ProShares UltraShort Russell2000 TWM July $68 Calls (TWM-GP) at the offer of $3.80.

TWM $67.17 +3.25% ...

Keene Little : 6/6/2008 10:04:06 AM

SPX still has not broken yesterday afternoon's low while the DOW smashed through it and is clearly much weaker this morning than the others. American Express (AXP) and AIG are each down more than -4% and GM and United Technologies (UTX) are in hot pursuit. The oil stocks are helping SPX avoid the same carnage in the DOW.

James Brown : 6/6/2008 10:02:53 AM

Rival miner Southern Copper (PCU) is up 1.9% and breaking out over technical resistance at its 200-dma near $111.

James Brown : 6/6/2008 10:02:02 AM

Gold and copper miner Freeport McMoran (FCX) is up 1.89% to $119.28. Shares are breaking its very short-term trendline of lower highs but the $120 level has been resistance in the past. The P&F chart has a $156 target.

James Brown : 6/6/2008 9:58:00 AM

.... Sector update ....
Biggest Losers:
XAL airlines.... -5.2%
BKX banks ...... -2.9%
BIX banks ...... -3.2%
RLX retailers.. -1.9%
XBD brokers .... -1.6%

Linda Piazza : 6/6/2008 9:57:13 AM

Beginning in about 30 minutes, I'll be in and out this morning but will post as often as possible. Right now, my take is that markets are either going to give way and just dive or else will make some stuttering attempts at stabilizing and maybe bounce, with the OEX in particular then spending may up to an hour or two somewhere near the 634-635.25 zone or maybe even up higher, at 636-637 zone, chopping around there before we know next direction. I give the second scenario a slight edge.

James Brown : 6/6/2008 9:55:38 AM

.... Sector update ....
Leaders:
XNG natural gas index ... +2.7%
OIX oil index ........... +1.99%
OSX oil services index ... +2.5%
DJUSRR railroads ........ +1.8%
GOX gold, XAU gold....... +2.2%, +2.3%

Keene Little : 6/6/2008 9:55:10 AM

I got chased out of my short entries yesterday and went home flat. It's obviously difficult now to enter a short position this morning since I have no idea if or when a big spike back up is going to happen. So I'm waiting for a bounce to see if we get some kind of corrective pattern to the upside to then short.

Some like to trade breakdowns/breakouts, and do well at it, but I've found it to be a difficult way to keep stops relatively close and still avoid whipsaws. So I look for bounces in a decline to get short or pullbacks in a rally to get long. If I miss entering a trade today it will be frustrating but that's the way the game goes. This is a game of more missed opportunities than trades you manage to catch a ride on.

Jeff Bailey : 6/6/2008 9:54:42 AM

Swing trade stopped alert! ... Traders long the 1/4 position in the ProShares Ultra Short Oil & Gas (DUG) $26.48 -3.99% ... should be stopped at the open.

Linda Piazza : 6/6/2008 9:53:02 AM

If the OEX drops instead, next potential support is at 631.10 on 10-minute closes.

Linda Piazza : 6/6/2008 9:52:41 AM

The OEX didn't quite get up to the 634.60 region during that last bounce, but it may yet get there. If so, be sure to watch for rollover potential there or maybe now at about 635.40 if it should get past the 634.60 region.

James Brown : 6/6/2008 9:52:08 AM

Computer Sciences (CSC) is bucking the trend with a 2.8% gain and a pop above round-number resistance at $50.00. The stock was upgraded with its price target raised to $60 before the bell.

James Brown : 6/6/2008 9:49:15 AM

Societe Generale has turned negative on Credit Suisse (CS) and UBS and downgraded both of them to a "sell".

Jane Fox : 6/6/2008 9:46:40 AM

AD line is a very bearish -1488

Linda Piazza : 6/6/2008 9:46:07 AM

The OEX ended that first 10-minute period above potential support now at about 632.95 but it's still testing that level. If the OEX should bounce now, watch for potential resistance on 10-minute closes at 634.60-634.74, if it should get that far.

Jane Fox : 6/6/2008 9:45:27 AM

NEW YORK (MarketWatch) -- Talk of mergers is propelling shares of oil-services companies, with Wall Street placing bets that the $3 billion acquisition of W-H Energy Services announced this week isn't the only spring-summer marriage in the works.

Firms that help extract precious oil and gas are in vogue as an investment play on prospects for long-term growth in energy demand worldwide.

As oil and gas become harder to extract, those companies get hired for such services as horizontal drilling and deep-sea exploration -- in 10,000 feet of water in the Gulf of Mexico, for example.

By contrast, refiners and petroleum and natural-gas producers have seen their shares trade more in line with the shorter-term fluctuations in commodity prices.

James Brown : 6/6/2008 9:45:19 AM

sorry, Linda, I didn't see your post on the TRAN.

James Brown : 6/6/2008 9:44:30 AM

Dow Jones Transportation Average (TRAN) is down 2% after setting a new closing high yesterday.

XAL airline index -6.2%
DJUSRR railroads +3.1%


Linda Piazza : 6/6/2008 9:44:24 AM

BIG drop in the TRAN, all the way to potential support on 15-minute closes at about 5370, with the TRAN at 5373.93 as I type. If the TRAN bounces now, I would be careful of rollover potential in the 5397-5404 region. I'm watching this as a sort of indicator index, not trading it.

James Brown : 6/6/2008 9:41:38 AM

Dow-component AIG is down 3.2% and trading near multi-year lows around $35.18. There are some headlines out this morning about the SEC probing AIG over some credit default swaps in the subprime mortgage markets.

James Brown : 6/6/2008 9:39:36 AM

Coal producer Arch Coal (ACI) is up 2.77% to another new high at $72.68 after being upgraded by MER this morning.

A few coal stocks...
FDG +1.4%
BTU +2.2%
MEE +3.8% to another new high.

Linda Piazza : 6/6/2008 9:38:29 AM

Keltner outlook on the A/D line: The A/D line dove straight down to potential Keltner support on 15-minute closes at about -1305 (-1352 currently). RSI also dove below 30 (10.74 currently). This is usually a sign that things are getting extreme, so we might expect some sort of steadying or bounce attempt to kick in over the next 5-10 minutes. I'm not saying it's going to get far, as I don't know that, and what may instead happen is a sideways/sideways-down movement that burns off the overdone conditions that way. Just be careful and watch.

Keene Little : 6/6/2008 9:36:18 AM

With the continued decline after the cash market opened and the breaking below yesterday afternoon's lows (not quite for SPX yet), it's a clear sell signal. Yesterday was one collosal head fake bull trap.

James Brown : 6/6/2008 9:36:13 AM

National Semi (NSM) is up sharply after reporting earnings last night. The company beat estimates by 8 cents. Management raised revenue guidance for the next quarter. NSM +5.9% to $24.01.

Linda Piazza : 6/6/2008 9:35:07 AM

The 10-minute charts proved more predictive yesterday, so I'm going to be watching them for the first few minutes today. The OEX has potential support on 10-minute closes at 634.69, already breached but with many minutes left in the 10-minute period and again at 632.99. Bulls of course want this to hold and it may. If it does, however, and the OEX bounces now or later, be wary of rollovre potential in the 635.50-637 range. We'll tie it down better when charts sort themselves out better after this big move.

James Brown : 6/6/2008 9:33:08 AM

USO oil ETF trading up $4.40 to $108.33.

James Brown : 6/6/2008 9:32:18 AM

Crude oil is now UP $6.28 to $134.07.

Jane Fox : 6/6/2008 9:32:13 AM

Once I hit my profit target I switch over to the Simulator and practice for the rest of the day so I am not tempted to take any more trades and put my hard earned profits at risk.

James Brown : 6/6/2008 9:31:42 AM

Oil stock Cabot Oil & Gas (COG) has seen two firms both upgrade their price targets to $80.00. Shares closed at $66.57 yesterday. Coincidentally the P&F chart is bullish with an $81 target. The stock broke out above resistance at $64 yesterday.

James Brown : 6/6/2008 9:29:21 AM

ENSCO Intl. (ESV), is an oil services stock, and it's seen its price target upped to $86 today. The stock closed at $74.54.

Jane Fox : 6/6/2008 9:28:59 AM

I start trading Crude when the pit opens at 9:00ET and quit when I have my daily profit target or 11:30ET whichever comes first. So far I have never had to trade to 11:30 and many days done by 9:30ET.

Jane Fox : 6/6/2008 9:27:46 AM

Crude has been a lot of fun to trade today and giving us Crude traders many many opportunties.

James Brown : 6/6/2008 9:27:40 AM

Oil and natural gas stock Penn Virginia (PVA) has had its price target raised to $86. Shares have exploded from $53 to $69 in just the last five days.

Linda Piazza : 6/6/2008 9:27:04 AM

Here's a USDJPY chart that I showed yesterday, except this time on a weekly time interval with a semi-log chart, but with yesterday's annotations. The USDJPY is at an important level and absolutely should be watched. Some scary things happened in U.S. equities the last two times the USDJPY tested this trendline and then turned down from it, so U.S. equity bulls want any downturns to be non-existent or small, while bears hope that if the trendline is broken, it's broken by a sideways movement of the USDJPY and not a strong upthrust through it: Link

Jane Fox : 6/6/2008 9:27:03 AM

Crude is heading back to $135.09, at 134.30 now.

James Brown : 6/6/2008 9:24:08 AM

Crude oil is now UP $5.00 to $132.79.

James Brown : 6/6/2008 9:23:28 AM

July 4, 2008.

James Brown : 6/6/2008 9:23:10 AM

Reason for oil's rally??

Morgan Stanley is now saying Crude oil will hit $150/barrel by July 4th.

Linda Piazza : 6/6/2008 9:21:34 AM

I used pretty strong language for me in the MM yesterday. I said, "I'm just not buying this," referencing the degree to which the OEX and SPX had gained. Believe it or not, that's strong language in my case! I had warned subscribers the day before that it looked likely that we'd get a bounce attempt, but they should keep in mind that OEX vulnerability to 613-616 remained. All day yesterday, I kept seeing some concerning signs, but the OEX soared past the 633-635 resistance zone that I thought was likely to stall any advances.

What now? In my 3:57:38 post yesterday, I said, "Big-range day today forecasts a possible small-range doji-type day tomorrow, but doesn't prove it will happen. I honestly think people have to be concerned about a downturn, too." That's still what I think.

It's not outside the realm of things to have the OEX sometime today punch up toward its 30-sma, now at just a hair under 642. The last time that the OEX climbed into its current range, it left candle shadows spiking up toward the 30-sma on the daily candles before turning down. So, despite the dour futures action, we should factor in a vulnerability to that action. There's potentially strong support near 636.60-637 and again near 633.60-635, so it's possible that the OEX will ping-pong from resistance either at yesterday's high or the 642 level and one of those support levels, creating that doji or small-bodied candle.

However.

Be aware of the possibility of an actual all-day downturn that reverses most or all of yesterday's gains. It could happen and it does happen in this market environment.

I think we could be in the process of chopping out a broad summertime trading range that's going to prompt choppy trading conditions but hopefully be broad enough to allow for some trading opportunities. And that's the most hopeful of my potential scenarios for this summer. The other is that we soon see a strong downturn.

Keene Little : 6/6/2008 9:14:16 AM

Equity futures have not recovered from their initial spike down on the jobs numbers and that raises the question about what will happen after the cash market opens. I mentioned in last night's newsletter and posting that the bulls will be in trouble with an immediate down opening that doesn't reverse quickly. I'll be watching NDX since a break below 2037.50 (NQ 2038.75) would be a sell signal out of its rising wedge pattern. NQ's low so far is 2042.75.

Yesterday's rally smelled funny, as if someone (the Fed and their banking buddies) knew this morning's number was going to be bad and helped jam the market higher in hopes of getting a lot of shorts out of the market. But take nothing for granted here--we've seen countless times where the pre-market move is completely reversed after the cash market opens. If there's manipulation going on it will continue this morning in an attempt to prop the market up. The last thing the Fed and banks need is a declining stock market on top of a declining real estate market.

Jane Fox : 6/6/2008 9:12:23 AM

Crude is now trading at 131.80.

James Brown : 6/6/2008 9:11:46 AM

The USO oil ETF is now poised to gap open more than $3.00 to $106.52.

James Brown : 6/6/2008 9:10:47 AM

I'm kicking myself for not buying the USO near $100.00!!!!

James Brown : 6/6/2008 9:10:22 AM

Wow! Crude oil is now UP $4.01 to $131.80.

Linda Piazza : 6/6/2008 9:09:27 AM

James, I'm looking at a forecast that was for a drop of 57,000 jobs, so your information was in line with those. I think it may be the big jump in the umemployment rate that was the problem.

James Brown : 6/6/2008 9:07:14 AM

I thought most of the estimates on the jobs report were for a drop between 60,000 and 70,000 jobs. Although I actually heard one analyst last night looking for a gain of 20,000.

Jane Fox : 6/6/2008 9:04:29 AM

Overnight markets did not like the employment data out this morning. I suspect the AD line will open quite negatively. Link

James Brown : 6/6/2008 9:02:47 AM

S&P futures are down -8.50

Dow futures are down -66

Nasdaq futures are down -10.80

James Brown : 6/6/2008 9:01:35 AM

Crude oil currently... UP another $2.95 to $130.74

Jane Fox : 6/6/2008 9:00:34 AM

WASHINGTON (MarketWatch) - The U.S. unemployment rate jumped by a half percentage point to 5.5% in May on the biggest increase in seasonally adjusted unemployment in 33 years, the Labor Department reported Friday.

Nonfarm payrolls fell by 49,000 in May, the fifth consecutive decrease and in line with expectations of economists.

The economy has lost 324,000 jobs so far this year.

Unemployment rose by 861,000 to 8.5 million, the government said. It is the biggest increase in unemployment since January 1975.

The 0.5 percentage point increase in the unemployment rate was a shock, as economists expected a much smaller 0.1 percentage point gain to 5.1%. The jobless rate is the highest since October 2004. It was the biggest percentage point gain in unemployment since 1986.

The report is likely to have little impact on the Federal Open Market Committee, which meets in three weeks. Analysts expect no change in the 2% federal fund target rate in the near future.

Fed officials have said they believe the economy and the job market are likely to worsen in coming months before bouncing back by the end of the year.

James Brown : 6/6/2008 8:59:55 AM

Asian market update.... >
Chinese Shanghai Composite.... -0.66%
Hong Kong Hang Seng ......... +0.61%>
Japanese NIKKEI 226 Index ... +1.03%>

European markets.... >
French CAC 40 ............. .... -0.56%
German DAX ................ .... -0.61%
English FTSE 100 .......... .... -0.27%


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