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Jeff Bailey : 6/12/2008 1:23:32 AM

Beige Book District Summary of CME Regional Housing Futures Aug'08

Boston (Washington, DC) BOS= 155.20, WDC= 192.00 .. Retailers expect more cutbacks in consumer spending, but inventory and employment levels have remained stable. Manufacturers are struggling against rising materials costs and report deteriorating business conditions. Manufacturers also are restructuring to trim payrolls. Demand for energy-related equipment is growing. Commercial leasing activity has slowed in recent weeks.

New York 192.40 ...Economy has weakened since last report. Housing sales are down sharply from a year earlier and tourism activity has softened. Attendance at Broadway theaters has dropped. Office vacancy rates are rising. Consumer spending is little changed from a year ago, and inventories are mixed. Bankers report little change in loan demand and refinancing activity. However, lenders are reporting a "notable rise" in late payments for consumer loans.

Atlanta (Miami) 193.40 ... Business activity contracted with retailers and auto dealers reporting disappointing sales. Tourism continued to be positive. Most new home builders reported sales flat-to-up slightly. Banks reported loan demand for all loan categories down. Commodity price increases were noted in energy, metals and agricultural goods. Ability for business to pass on costs to customers varied.

Chicago 144.80 ... Economic activity expanded but at a slower pace than during previous periods. Consumer spending is sluggish. Retailers are feeling increased pressure to pass higher food and energy prices along to consumers. Residential construction appears to be stabilizing, and nonresidential construction posted a steady increase. Business lending remains strong while consumer lending declined.

Kansas City (Denver) 124.60 ... Economic activity little changed and showed modest growth with consumer spending flat. Manufacturing activity improved slightly as exports rose. Higher commodity prices fueld activity in energy and agricultural sectors. Residential real estate activity rose seasonally, while commercial market was steady. Realtors, mortgage lenders, and moving companies all reported seasonal pickup in sales. While home prices continued to edge down, demand for lower priced homes was stronger than demand for high-end homes requiring jumbo mortgages.

San Francisco (Los Angeles, San Diego, Las Vegas) SF= 155.80, LA= 192.40, SD= 174.80, LV= 154.80 ... Economic activity is little changed. Price pressures are subdued for non-food and non-energy products. Housing markets remain exceptionally weak. Credit standards have further tightened. Producers of agricultural and natural resource products report strong sales.

See Also (MM 06/11/08 at 03:09:18 PM) Link

Table from Monday's Wrap Link

Keene Little : 6/12/2008 12:02:29 AM

Thursday's pivot tables: Link and Link

I had been showing charts of SPX all day on Wednesday and closely followed the decline from Tuesday's high. It completed, or is near completing, a 5-wave move down from Tuesday and is therefore ready for at least a bounce to correct the decline from Tuesday. The bulls will be winners if they can retrace back up to Tuesday's high but until that happens we're in a bearish wave pattern and I will be looking for a bounce correction to position short again.

But the DOW is at a very interesting level and if there was ever a time for the bulls to step in and drive this back up, now is the time. I've shown the weekly chart many times recently, including in the newsletter, and showed a very important long-term uptrend line from 1974 through the October 2002 low. This line is where the January and March declines found support. Tuesday's close is essentially back down to that trend line now: Link

Looking at the daily chart that I've been using for a long time, the bottom of the shallow up-channel from January is near 11930 which is also where the bottom of a new down-channel from the May 19th high is located (they cross on Thursday): Link . While the break of the longer-term uptrend line near 12080 would be significant I think breaking below 11930 would be icing on the cake for bears and so I've made it a key level to the downside.

But with SPX reaching its downside Fib projections near 1336 (down to 1334 which is also where it would close the April 16th gap) while the DOW hits its long-term uptrend line, this is the time for the bulls to step in. If you're brave and can buy in the face of danger while looking over the edge of the cliff, this is your chance. We'll see how it looks Thursday morning after the open.

Jeff Bailey : 6/11/2008 11:11:36 PM

June "Max Pain" Theory Levels

DIA= $125 ... $1 inc.
SPY= $135 ... $1 inc.
QQQQ $49 ... $1 inc.
IWM= $72.00 ... $1 inc.
SMH $33.00 ... $1 inc.
XLF $25 ... $1 inc.
USO $105 ... $1 inc.

Last update was 06/06/08 at 01:27:02 AM EDT Link

Jeff Bailey : 6/11/2008 11:01:18 PM

Mini-Dow Sep. (ym08u) ... settled at contract low of 12,102.

Jeff Bailey : 6/11/2008 10:45:27 PM

Closing Internals found at this Link

Jeff Bailey : 6/11/2008 10:29:04 PM

EIA: Refinery Inputs, Capacity, #Days Supply, USO Closes and DXY/Euro Benchmark table I keep at this Link

DXY's 05:00 PM EDT tick was 73.267. Eur/$ closing tick (05:00 PM EDT) was 1.5551.

Jeff Bailey : 6/11/2008 10:20:31 PM

I'd have to look long and hard for any "silver linings" in today's tape. If there was one, it was that a short squeeze in the USO didn't unfold above $112.13 (see 01:42:06 PM).

Crude oil inputs into refineries did abate a bit to 15.319M barrels/day (from prior week's 15.480M b/d). 4-week average rose to 15.295M b/d.

OI Technical Staff : 6/11/2008 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 6/11/2008 9:59:08 PM

Anheuser Busch (BUD) $58.35 +2.09% ... (see 03:04:43 PM). Last tick was $62.73 extended.

If long, would take profits at tomorrow's open.

Jeff Bailey : 6/11/2008 9:57:11 PM

InBev Makes Unsolicited $46B Bid For Anheuser-Busch ... AP Story Link

Jeff Bailey : 6/11/2008 9:55:05 PM

EIA's This Week In Petroleum Link

Most recent (06/03/08) Colorado State University Hurricane Forecast Link (.pdf file)

Jeff Bailey : 6/11/2008 9:43:38 PM

Yen CurrencyShares (FXY) $93.29 +0.43% ...

Jeff Bailey : 6/11/2008 9:42:47 PM

iShares Japan (EWJ) $12.88 -1.45% ... $13.14 was the high today (see 09:37:39 AM). Ends @ #32 most active.

Jeff Bailey : 6/11/2008 9:41:05 PM

Energy SPDRs (AMEX:XLE) $86.90 +0.61% ... #31 most active.

Jeff Bailey : 6/11/2008 9:40:20 PM

Grey Wolf (AMEX:GW) $9.32 +3.32% ... still strong @ #30 most active.

Jeff Bailey : 6/11/2008 9:38:51 PM

Ambac Financial (ABK) $1.90 +1.60% ... #25 most active. Other than QID $41.36 +4.57% ... first most actives to show a gain.

Jeff Bailey : 6/11/2008 9:35:38 PM

Most Actives ... SPY $133.94 -1.47%, XLF $22.41 -2.90%, QQQQ $47.38 -2.38%, WM $6.06 -9.28%, LEH $23.75 -13.63%, C $19.21 -5.18%, IWM $71.87 -1.73%, WB $18.97 -3.99%, BAC $28.85 -2.59%, GE $29.83 -1.64%.

Keene Little : 6/11/2008 4:13:48 PM

ISEE call/put index showed heavy put buying yesterday and today and has dropped the index down to 74. It's getting down to the level that has marked bottoms before. If we're truly entering a very bearish market where the floor is about to drop out, these sentiment indicators will get a lot more oversold so they're not necessarily good timing signals. But they provide a heads up to at least be careful when you're trading with the crowd and the bearish side is getting crowded.

Keene Little : 6/11/2008 4:09:17 PM

The one thing to keep in mind for tomorrow is that it's the Thursday prior to opex week. This is the head-fake day. Therefore a quick low in the morning that gets reversed would still fit the pattern. This pattern is getting more and more recognized and "they" will have to figure out something else soon. Maybe today's decline is part of that change. We'll soon find out.

Keene Little : 6/11/2008 4:06:43 PM

The clock ran out and we don't know if we'll get a bounce now. The bulls have one chance here and they've got to rally this market immediately tomorrow. Maybe a quick spike down at the open but it will need to reverse immediately. If it doesn't bounce then the potential is for an ugly selloff tomorrow.

Keene Little : 6/11/2008 4:00:56 PM

With the short term downside Fib projection right on top of gap closure near 1334 it would make for an ideal setup to try the long side. Ideal setups are as rare as hens teeth. SPX has now tagged the level for two equal legs down from May 19th (1336.91) and still dropping but it now warrants caution for those who are short. Trail your stop down closer now and let a bigger bounce take you out. If SPX breaks much below 1333 and holds below, the next downside target is 1295. 60-min chart update: Link

Linda Piazza : 6/11/2008 3:59:09 PM

The USDJPY today pulled back sharply from its overnight high, but by the time of the cash open here, it was already stabilizing, and it's risen most of the day, until about 2:15 when it began to lose momentum. In other words, its actions haven't been in keeping with what we usually see as corroboration of U.S. equity weakness, either. I fully recognize that the old inter-market relationships may not always persist, and I've also anticipated that the USDJPY's sharp advance would stall at the 200-sma and -ema tests, but usually when the USDJPY is climbing during our market hours, so are equities, or at least their drops are limited. This action and the VIX's make me wonder: are the OEX and some other indices just sinking under the impulse of the previous downside momentum, but with that momentum waning? I honestly don't know the answer.

Linda Piazza : 6/11/2008 3:51:09 PM

The strange thing is that while the OEX has been trending down in a price channel today, the VIX has been trending down in a channel, too. Of course, the VIX is currently hitting the top of today's channel (established after the initial pop in volatility) while the OEX is hitting the bottom, but both have been trending lower. . . . or maybe that's better said as chopping lower.

Keene Little : 6/11/2008 3:47:29 PM

If I've got the wave count correct for the move down from yesterday's high, the 5th wave will equal the 1st wave at 1334.89, only 46 cents above gap fill. Nice downside target for the long play setup.

Keene Little : 6/11/2008 3:46:15 PM

One other downside target for SPX to remind you of is gap fill from the gap up on April 16th. ES would close its gap at 1336 and SPX at 1334.43.

Linda Piazza : 6/11/2008 3:45:20 PM

The OEX has potential support on 15-minute closes at 609.19.

Jeff Bailey : 6/11/2008 3:44:00 PM

Dow breadth still bearish at 3:27

XOM +1.25%, CVX +0.91% and DD +0.45% struggles to hold gains.

AA $39.52 -7.49%, C $19.27 -4.88%, GM $16.17 -3.80%, AXP $42.66 -3.81%

Keene Little : 6/11/2008 3:43:00 PM

OK, getting the move down as we head into the final 30 minutes. As long as it doesn't get carried away to the downside this is the leg that should be finishing the decline from yesterday's high and set up a rally tomorrow.

Jeff Bailey : 6/11/2008 3:38:51 PM

VLO $44.81 +0.47%
TSO $22.48 -2.09%
FTO $26.49 +0.56%
WNR $11.12 -3.47% ...

Linda Piazza : 6/11/2008 3:38:03 PM

The next potential time period when something could happen price-wise occurs at 3:40 pm ET when the market-on-close orders become visible, although not to us unless we have expensive subscriptions. Sometimes a price movement begins then, but I don't know if even that will change this setup. As you know, I anticipated and noted Monday morning that we could follow the 2/05 period's pattern when four days of consolidation followed a candle that traded Friday's range almost exactly and I used terms such as "drive us batty." We're certainly being driven batty now.

Jeff Bailey : 6/11/2008 3:37:38 PM

USO $111.07 +3.78% ...

UGA $64.67 +4.22% ...

Linda Piazza : 6/11/2008 3:28:05 PM

The VIX is still maintaining a downward trajectory since the early morning push higher. Strange, and maybe offering some kind of warning? If this were tomorrow, I'd think it could be some kind of opex effect, but it may be a day early for that. Besides, the VIX is attempting to push higher as I type, so that downward trajectory may soon be undone. It looks as if the VIX would need to pop above about 23.78 to break out of the small descending channel. It's at 23.70 as I type.

Jeff Bailey : 6/11/2008 3:24:52 PM

RIO $34.52 -2.07% ... Is "the destiny" trade ever going to happen?

Linda Piazza : 6/11/2008 3:23:49 PM

The OEX has potential support on 15-minute closes at 610.49 and 609.48.

Jeff Bailey : 6/11/2008 3:23:48 PM

SIX $1.85 -3.14% ... tries to battle back. It's been a "roller coaster" of a ride for traders in recent weeks.

Linda Piazza : 6/11/2008 3:22:46 PM

"It" or "they" are taunting us all, Keene.

Keene Little : 6/11/2008 3:15:24 PM

Any guesses as to whether this log jam will break before the close? Ugh.

Jeff Bailey : 6/11/2008 3:11:15 PM

Fed Beige Book (On/Before 01/07/08) at this Link

Jeff Bailey : 6/11/2008 3:10:11 PM

Fed Beige Book (On/Before 04/07/08) at this Link

Linda Piazza : 6/11/2008 3:09:45 PM

The OEX's potential support on 15-minute closes is sinking, with the breakdown benchmark now down to 609.75. However, the OEX is actually holding support at a higher level, at a Keltner channel line now at 610.76. This is a sign of slight improvement in tenor, but it's not a significant sign yet and it's not going to help those who can't afford to let the OEX keep sinking into the sinking support.

Jeff Bailey : 6/11/2008 3:09:18 PM

Fed Beige Book (On/Before 06/02/08) at this Link

Jeff Bailey : 6/11/2008 3:04:43 PM

Anheuser Busch (BUD) $58.23 +1.80% ... gets a pop.

Linda Piazza : 6/11/2008 2:56:49 PM

Nothing happening. We just have to wait it out. If this continues into the close, that means that you have a third day in which you have to make somewhat blind decisions about carrying over the next day. However, that pattern from 2/05 warned us that one big down day covering nearly the same range does not guarantee that markets are going to crater afterwards. We may not follow the rest of the post 2/05 pattern, with the indices breaking out of the slightly lower consolidation to the upside and then climbing into a new and broader chop zone and spending weeks there. However, the 2/05 example did at least warn us that we couldn't count 100% on indices cratering too much further, at least not immediately.

Keene Little : 6/11/2008 2:47:21 PM

The RUT has a little cleaner looking pattern today with a 5th wave down (for the move down from yesterday afternoon) completing this afternoon. That would mean we should at least get a bigger bounce to correct the decline. The more bearish interpretation of the wave pattern is mega bearish which is why I continue to harp about SPX 1336-1337. Any break lower than that level would have me looking only at the short side and in a big way.

It's make or break time because the bullish setup here is for the completion of a 3-wave pullback from May 19th which would be the setup for a big rally back up. It's too early to tell which scenario will play out but we're on the edge right here.

Linda Piazza : 6/11/2008 2:36:28 PM

Now that the OEX has hit and tested its downside daily Keltner target and its weekly 200-sma, almost anything can happen, including a bounce from here. We have to recognize now, however, that the OEX has been in a downtrend since early May, so in a downtrend that's persisted that long, we have to look for places in which there would be rollover potential. One of those would certainly be in the 617-618 range, and there are others higher, too, in case a several-day or several-week gain gets started. But before any of those comes the 615.25-616.25 zone. For now, though, we have to see if the OEX can even maintain support at its 15-minute 9-ema now at 612 or the benchmark breakout at 610.15. The possibility exists that it will, but it's not a probability yet.

I would not be surprised to see a stronger bounce attempt now that the Beige Book didn't swamp markets, but I'm not sure how successful that attempt will be.

Jeff Bailey : 6/11/2008 2:32:05 PM

02:00 Internals found at this Link

Linda Piazza : 6/11/2008 2:28:31 PM

I've already mentioned that the Bank of Japan's two-day meeting begins tonight. What else happens overnight? The ECB's monthly bulletin will be released at 4:00 am ET. As far as I can tell, this is a sort of equivalent to our Beige Book, with the bulletin including a lot of statistical data that the ECB uses to make rate decisions. An hour later, the Eurozone's Industrial production is released. The U.S.'s releases then begin at 8:30, including retail sales, initial and continuing unemployment claims and the Import Price Index.

Keene Little : 6/11/2008 2:23:02 PM

This market can't decide whether to get up off the mat or go for the 10 count. The ref is up to 8 and counting very slowly and the market looks like it wants to get up. Another quick spike down to SPX 1337 would be a good finish here but it will need to hurry up. There is the possibility it will simply start rallying out of here but unfortunately that's not a very good looking setup at the moment.

Linda Piazza : 6/11/2008 2:20:28 PM

Although nothing is finalized yet today, bears still need to keep updating their profit-protecting plans.

Jeff Bailey : 6/11/2008 2:16:50 PM

FXE $155.77 +0.67% ...

Jeff Bailey : 6/11/2008 2:11:41 PM

USO $111.36 +4.05% .... back juuuuuuust above MNTHLY R1. MNTHLY 80.9% ($112.13) and Friday's close held somehow.

Linda Piazza : 6/11/2008 2:11:07 PM

No big reaction yet to the Beige Book, but it takes some time to sort through it. So far, the OEX is maintaining 15-minute closes above the breakout benchmark now at 610.53 but so far it's also just mostly staying within the sideways chop zone established today.

Jeff Bailey : 6/11/2008 2:06:23 PM

USO $111.14 +3.84% ...

Jeff Bailey : 6/11/2008 2:05:59 PM

If USO is going to see a reversal ... now would be the time.

Jeff Bailey : 6/11/2008 2:02:47 PM

Fed Beige Book being released ...

Keene Little : 6/11/2008 1:56:45 PM

With USO tagging 112 it has me out of my short play on that one. It could be setting up for a double top, especially when looking at the negative divergences on the 30 and 60-min charts, so I'm watching it carefully for signs that might happen. So far today's trading volume on USO is very low-- maybe just some shorts freeing up some stock (wink). But for the time being I'm on the sidelines and watching this for now.

Linda Piazza : 6/11/2008 1:52:40 PM

So far until now, the TRAN has held above this morning's low. As I type, it's not far above that 5060.10 low, however, at 5088.56 as I type. Like the other indices, it's just chopping around in a triangle shape so far.

Jeff Bailey : 6/11/2008 1:43:36 PM

FXE $155.81 +0.69% ...

Linda Piazza : 6/11/2008 1:43:30 PM

Remember the Beige Book in about 20 minutes. If you haven't done so already, make decisions about whether you want to hold all your positions open into that release.

Jeff Bailey : 6/11/2008 1:42:06 PM

Short squeeze alert! US Oil Fund (USO) $112.23 +4.86% ...

Linda Piazza : 6/11/2008 1:41:53 PM

More of the same. The OEX just narrows its pattern. There's a slight look of a bullish falling wedge to the OEX's pattern today, but that's nothing to hang one's hat--or trades--on today.

Jeff Bailey : 6/11/2008 1:40:26 PM

Panera Bread (PNRA) $47.52 -3.68% Link ... having recently achieved its bullish vc.

Jeff Bailey : 6/11/2008 1:39:05 PM

Corn +4.00%, Wheat +7%

Keene Little : 6/11/2008 1:27:46 PM

We got the bounce so now we should only get one more new low to finish the decline. Keep an eye on SPX 1336-1337 for evidence of a bottom being put in. Any drop to a new low followed by a rally above the bounce high near 1:15 PM would signal a bottom is in. That might be a safer way to try the long side rather than picking a bottom (and also a level to place your stop if short).

Jeff Bailey : 6/11/2008 1:22:50 PM

Most Actives ... QQQQ $47.73 -1.66%, GE $29.97 -1.18%, INTC $22.10 -2.55%, SPY $134.89 -0.77%, MSFT $27.33 -2.00%, WM $6.15 -7.93%, CSCO $25.71 -2.46%, MER $36.59 -3.58%, AMAT $19.02 +0.26%, RIO $34.70 -1.56%

Linda Piazza : 6/11/2008 1:19:05 PM

The OEX is again testing its 15-minute 9-ema, now at 612.20. The OEX is currently at 612.40, having just closed a 15-minute period barely above that 9-ema. There has not been a 15-minute close above that 15-minute 9-ema all day until now, but this was only a minimal close higher. This is a tentative short-term change in tenor, but the OEX needs to build on this improvement quickly and sustained closes above that 9-ema or else it's not a meaningful change, even over the short-term period.

Keene Little : 6/11/2008 12:55:40 PM

We're either seeing a small descending wedge forming since the initial bounce off this morning's low at 10:30 AM or we're still consolidating sideways (depending on which index you look at). Each is pointing to the same thing though--a little bounce that forms another lower high and then a final low. That's for the bullish setup (after the final low) but if this suddenly lets go to the downside, especially with much of a break below SPX 1336, then it will be bearish and I would not be looking to buy a dip.

Jeff Bailey : 6/11/2008 12:42:11 PM

Swing trade long raise stop alert! ... for the US Oil Fund (USO) $111.15 +3.90% ... to $109.

Linda Piazza : 6/11/2008 12:36:48 PM

The TRIN is now 1.19, bearish but down from its earlier high of 1.40.

Linda Piazza : 6/11/2008 12:35:47 PM

The VIX is moving out sideways, not confirming equity weakness by printing new daily highs, but certainly not dropping too far yet, either. There's potential resistance on 15-minute (and daily) closes at about 24.43 currently, with some support obviously at the 15-minute 9-ema, along which it's trailing. The VIX is 23.79 as I type.

Jeff Bailey : 6/11/2008 12:33:59 PM

12:00 Internals found at this Link

Linda Piazza : 6/11/2008 12:33:40 PM

Potential support for the OEX at 15-minute closes now at 611.25 but extending down to 609.49 with lighter support. The OEX has kind of trailed along this Keltner channel line all day, not able to move much above it but not really breaking down below it, either. It's closed a few 15-minute closes below it, but not enough lower that it was ever possible to judge that the support had been clearly broken.

What definitely hasn't happened today is a single 15-minute close above the 15-minute 9-ema. That's now at 612.60, so such a close would make a short-term change in tenor.

Jeff Bailey : 6/11/2008 12:29:29 PM

DIS $33.48 -1.03% ...

Jeff Bailey : 6/11/2008 12:28:04 PM

Swing trade stop alert! ... on the remaining 1/8 position in shares of Six Flags (SIX) $1.80 -5.75% ...

Linda Piazza : 6/11/2008 12:14:25 PM

The OEX's 15-minute 9-ema is now 613.20; the SPX's, about 1346.30.

Keene Little : 6/11/2008 12:10:03 PM

We either put in a funky bottom on that retest of the low or else we're still consolidating before the 5th wave down to complete the decline from yesterday's high. Not sure which yet but it would be a cleaner finish if this consolidation is followed by a new low to set up a better opportunity to test the long side.

Linda Piazza : 6/11/2008 12:01:59 PM

The TRAN's daily chart, showing the broadening formation that I've been mentioning (along with others, probably, too): Link A breakdown out of this formation would be bad for the SPX, OEX and Dow, I believe, and would perhaps suggest a TRAN trip down to 4910 or maybe even 4805, but I don't see a breakdown yet.

Jeff Bailey : 6/11/2008 12:01:02 PM

AMEX Airline Index (XAL.X) 17.88 -3.35% ... probes 52-week lows.

Jeff Bailey : 6/11/2008 11:49:58 AM

FXY $93.51 +0.66% ...

Linda Piazza : 6/11/2008 11:42:08 AM

The USDJPY was knocked waay back from its test of its 200-sma today. However, it's now reached potential support on 15-minute closes: Link

Jeff Bailey : 6/11/2008 11:37:45 AM

FXE $155.86 +0.73% ...

Linda Piazza : 6/11/2008 11:35:38 AM

The RVX, the RUT's volatility index, also did not move higher today than yesterday and Monday. So, we have two out of the three volatility indices I've checked so far creating lower highs today when equity prices created lower lows, so showing bullish divergences.

So far, it's not making any difference, but it should keep bears on their toes because this is not the usual way it works.

Jeff Bailey : 6/11/2008 11:35:02 AM

Swing trade long alert! ... for 1/4 position in the US Oil Fund (USO) at the offer of $110.10.

Stop $98. Target $119.50

Jeff Bailey : 6/11/2008 11:32:44 AM

VXN.X 27.31 +2.74% ...

Jeff Bailey : 6/11/2008 11:32:29 AM

VIX.X 23.76 +2.50% ...

Jeff Bailey : 6/11/2008 11:32:16 AM

Swing trade put alert! ... for one (1) of the Panera Bread Co. PNRA Aug $45 Puts (UPA-TI) at the offer of $2.95.

PNRA $48.48 -1.74% ...

Linda Piazza : 6/11/2008 11:32:16 AM

The VIX never did create a higher high than yesterday's or Friday's today, so the bullish divergence (for equity bulls) persists so far. Neither has it yet created a lower low than yesterday's, but unless my charts are sticking, it's certainly not bouncing significantly wih this new drop in equity prices. It's 23.79 as I type, bouncing a bit from presumed support on 15-minute closes at about 23.50, but not bouncing much and not near either today's high nor the others from this week. Something is up here, and bears should be aware that this isn't supporting their positions. The VXO, however, based on OEX options, did create a new high earlier today although, it, too, isn't bouncing much.

Keene Little : 6/11/2008 11:31:18 AM

If the little bounce is finished and SPX heads for a new low from here, the 5th wave in the move down from yesterday's high will equal the 1st wave near 1336 so we're getting good correlation with that 1337 level. A 50% retracement of the decline from yesterday, assuming it finds support around 1336, will be back up to 1351 so decide what your risk tolerance is if short and also look at the potential for a day trade on the long side.

Linda Piazza : 6/11/2008 11:28:54 AM

Potential OEX support on 15-minute closes at 611.60.

Linda Piazza : 6/11/2008 11:23:24 AM

FOMC member Donald Kohn will speak in Massachusetts at 11:30 am ET, with this speech titled "Lessons for Central Bankers." I don't know if there will be a Q&A session. FOMC member Randall Kroszner follows shortly, this time in Cleveland. He will be speaking about consumer credit markets and is slated to begin at 12:15 pm ET, I believe. In last night's Wrap, Jim mentioned other Fed speakers on tap today, but I haven't been able to find a schedule for them. Then, of course, we have the Beige Book at 2:00 pm ET, so I just wanted to remind subscribers once again that we're entering a period when the whole short-term trading landscape can change, and I don't know which way it might change.

Linda Piazza : 6/11/2008 11:18:19 AM

The OEX's 15-minute 9-ema is now at 614.60; the SPX's, 1348.41.

Keene Little : 6/11/2008 11:17:20 AM

The SPX 60-min chart now shows the key level to the upside is yesterday's high near 1367. If that breaks then it negates the bearish wave count. Until that happens this remains a bearish market. Link

Linda Piazza : 6/11/2008 11:06:51 AM

Those hoping for a steadying (hard to say "bulls" in this environment) want to see the OEX maintain consistent 15-minute closes above the breakdown benchmark now at 611.82, now that the OEX has punched above it.

Keene Little : 6/11/2008 11:05:55 AM

With SPX bouncing here, if it consolidates for a bit and then drops to a new low it will finish a 5-wave decline from yesterday's high. If at the same time it looks like it will find support near 1337 it will be a good time for bears to get defensive and bulls to nibble on a long. At that level, as mentioned before, the move down from May 19th will have two equal legs and SPX will be at the bottom of a parallel down-channel from the May high. Daily chart: Link

If we're in a large rising wedge pattern from the January low then it needs another choppy messy rally leg that could take SPX back up to the 1460 area by July/Aug (shown in pink). But if 1337 gives way and price drops out the bottom of the little parallel down-channel then a continuation down to, and eventually below, the March low is likely.

For either scenario though, another drop down from the current bounce would set up another larger bounce to correct the decline from yesterday's high. It's just a matter of where that bounce will lead us--new highs above May 19th or just a bounce and then head lower.

Jeff Bailey : 6/11/2008 10:56:49 AM

USO $108.70 83 +1.69% ... tests this morning's gap open.

Linda Piazza : 6/11/2008 10:54:35 AM

The OEX has been closing 15-minute periods below its breakdown benchmark, but not far enough below for us to be sure it's truly lost that support and not just overrun it a bit. Bulls really need to see those consistent 15-minute closes above the benchmark, now at 612.04. On the 30-minute chart, it's 613.21.

Linda Piazza : 6/11/2008 10:52:10 AM

The A/D line approached but hasn't quite touched potential support in the -1740 to -1910 level. Until and unless it can close 15-minute periods above about -1250, it looks vulnerable to those lower levels, but I would caution some skepticism about the lower target right now. It may never be tested. On a 15-minute chart, there's now a potential reversal signal attempting to form and the A/D line did approach possible support, if it didn't quite hit it.

Linda Piazza : 6/11/2008 10:45:26 AM

Not much of a bounce yet in the TRAN. It's in breakdown mode across several chart intervals. It will remain so on the 15-minute chart until and unless it can maintain 15-minute closes above a level now at 5179.20. The TRAN is now 5080.87.

On a traditional daily chart, it's been clear for some time, as I and perhaps others have mentioned, that the TRAN has been in a broadening formation since late April. As I type, it's hitting the support of that broadening formation. The problem with broadening formations is that . . . they broaden. So, traders trading a supposed breakout find out that prices were just establishing the new and wider boundary. Standard technical analysis texts consider these bearish formations, but I've seen them break both ways.

Jeff Bailey : 6/11/2008 10:42:38 AM

UGA $63.34 +2.07% ...

Jeff Bailey : 6/11/2008 10:42:21 AM

USO $110.14 +2.98% ...

Jeff Bailey : 6/11/2008 10:42:05 AM

EIA: US refineries capacity utilization at 88.6%. Down from 89.7% week ago.

Jeff Bailey : 6/11/2008 10:41:25 AM

EIA: US distillate stockpiles +2.277M barrels.

Linda Piazza : 6/11/2008 10:41:40 AM

Here's the VIX daily Keltner chart I've been showing the last few days, showing the resistance the VIX has been testing and the so-far results: Link Although it's tentative evidence at best, bears should be aware that the VIX has not printed a high above yesterday's and Monday's while indices were printing lower lows. That's tentative bullish (for equities) divergence, but the VIX could erase that any moment.

Jeff Bailey : 6/11/2008 10:40:48 AM

EIA: US gasoline stockpiles +0.998M Bbls.

Jeff Bailey : 6/11/2008 10:39:40 AM

EIA: Crude oil stockpiles plunge 4.56M barrels.

Jeff Bailey : 6/11/2008 10:39:09 AM

Agrium (AGU) $100.24 +8.64% ... target raised $125 from $90 at BMO.

Linda Piazza : 6/11/2008 10:38:28 AM

Those hoping for the OEX to steady want to see it forming consistent 15-minute closes above 612.20 and consistent 30-minute closes above 613.23. Otherwise, it's confirming breakdown status. The OEX is 612.72 as I type.

Jeff Bailey : 6/11/2008 10:37:32 AM

Hope Trichet is listening to that.

Jeff Bailey : 6/11/2008 10:37:18 AM

Draghi saying Central Banks must consider M3, Credit, not just CPI.

Linda Piazza : 6/11/2008 10:36:52 AM

The TED spread is currently 0.85, up 0.074 from yesterday's close and at its high of the day. So far, though, it's just mostly chopping around within this week's range.

Jeff Bailey : 6/11/2008 10:35:17 AM

The follows with ... "Things could still get worse" in financial markets.

Linda Piazza : 6/11/2008 10:35:23 AM

Lower lows are of course possible today, but please remember that we've been contemplating the fact that the OEX might dip toward a test 112.40 on a daily close as part of the whole consolidation/chopping-around process, with next support in the 608-610 range. So, this isn't particularly surprising in the scheme of things and still unfortunately fits that possible scenario of chopping around until we know next direction. Bears have an easy task, though. Just follow the OEX lower with your stops and make sure that you absolutely do not let a profit turn into a loss. If you've doubled the worth of multiple options, consider closing out half, so that you know you won't go home with a loss, no matter what. Decide before the Fed speak starts in earnest around noon and before the Beige Book release if you want to lock in at least some of your profits.

Jeff Bailey : 6/11/2008 10:34:41 AM

ECB's Draghi saying, "Anxiusly optimistic" financial market crisis near end.

Linda Piazza : 6/11/2008 10:30:50 AM

The OEX also has potential support on 15-minute closes at 612.50. The OEX may indeed close this 15-minute period below that, creating a breakdown mode on that chart, but it's not much below it in Keltner terms, and may in fact be clinging to the support. Bears need to be aware that, although some might consider the OEX just breaking down, it may in fact be testing strong support.

Linda Piazza : 6/11/2008 10:28:16 AM

Here's where the OEX is on its daily Keltner chart: Link Bears should be readjusting their profit-protecting plans here, as this could be strong support on daily and/or weekly closes.

Jeff Bailey : 6/11/2008 10:28:07 AM

EIA due out in 10 minutes.

USO $109.71 +2.51% ... getting a bounce.

Jeff Bailey : 6/11/2008 10:27:11 AM

Sector Losers ... Dow Transports -3.49%, Regional Banks -2.62%, Money Center Banks -2.45%, Semiconductors -2.43%, HMOs -2.46%

Jeff Bailey : 6/11/2008 10:25:20 AM

Sector Winners ... Gold Bugs +0.69%, CBOE Oil +0.36%, Software +0.19%, Utilities +0.01%, Treasuries and various commodities.

Jeff Bailey : 6/11/2008 10:18:01 AM

10:00 Internals found at this Link

Keene Little : 6/11/2008 10:11:17 AM

The TRAN is dropping hard this morning, as Linda commented, and is now approaching its May 23rd low at 5121. A break of that level should have it heading for its uptrend line from January and 100-dma, both near 4910. There are no bullish divergences to suggest the 5121 level will hold. Link

Jeff Bailey : 6/11/2008 10:00:28 AM

Dow breadth very negative ... 3:27

Keene Little : 6/11/2008 9:59:31 AM

LEH and MER are also breaking down this morning.

Keene Little : 6/11/2008 9:58:45 AM

The DOW is also about to test yesterday's low. Interestingly the RUT has broken yesterday's low so the stronger index is now leading to the downside. That's not a good sign for the bulls.

Linda Piazza : 6/11/2008 9:58:40 AM

The OEX has potential support at about 615.44, but it's sliding-lower support, so I'm not sure it's going to hold. If the OEX can't snap back above about 616.74 by the close of this 15-minute period, it has a potential downside target of 612.83-613.80, but be leery of trusting these targets too much this morning ahead of Fed speak and the Beige Book, while the OEX trades within a chop zone.

Keene Little : 6/11/2008 9:57:29 AM

For a little bit there it looked like SPX might just do a little dip below the bottom of its bear flag and then recover but now it's firmly broken below it and looks to be heading for at least a retest of yesterday's low. If it finds support near 1350 and turns back up it will leave a large bullish divergence on the 30 and 60-min charts. If it doesn't hold I wouldn't be looking to buy the dips as the 1337 level could be calling.

Linda Piazza : 6/11/2008 9:50:46 AM

The TRAN is doing that thing it sometimes does on the day of crude inventory releases: it's moving big. This time, it's moving to the downside. As I type, it's slightly violating potentially strong support on 15-minute closes at 5195, with the TRAN at 5177. The TRAN is also testing potential support on daily closes at about 5180.

The thing about the TRAN is that a big pre-inventories move can be reversed after the inventories release. Since the TRAN sometimes leads the OEX, SPX and Dow, be aware of this as the inventories number is released. We have this big move perhaps helping to drive other indices lower, but with potential daily and short-term support and the sometimes-seen result of the TRAN reversing an early move after the inventories release. Oh, and just to make it interesting, the TRAN sometimes intensifies an early move after the crude inventories are released. For now, though, consider that the TRAN is testing potentially strong support and that may limit losses, although that's not a given, of course.

Jeff Bailey : 6/11/2008 9:45:58 AM

iShares HongKong (EWH) $18.30 -0.54% ... #5 most active. Don't see this very often.

Linda Piazza : 6/11/2008 9:39:36 AM

Keltner outlook on the A/D line: The A/D line opened in the bullish or upper half of its Keltner channels on the 15-minute chart, but it opened right under presumed strong resistance on 15-minute closes at -144 and started dropping from there. It's about to hit potential support on 15-minute closes at about -605, with the A/D line now at -603. Next potential support is about -850, but bears should realize that there's a possibility the current support may hold on this 15-minute close.

Jeff Bailey : 6/11/2008 9:37:39 AM

EWJ $13.11 +0.30% ... there was a sizeable +6 million share block printed in this morning's pre-market here at $13.11.

Jeff Bailey : 6/11/2008 9:34:53 AM

Purchases Index of 376.2 has my 4-week avg. still slipping to 353.8. My 12-week avg. edges up to 363.9.

Jeff Bailey : 6/11/2008 9:31:16 AM

MBA's Weekly Application Survey at this Link

Linda Piazza : 6/11/2008 9:30:11 AM

We've had two days of consolidation now, days that didn't surprise me. Basing on what I was seeing on the charts and also a comparison with the 2/05 period, I had thought we could have up to a four days of consolidation before a next direction was decided.

Now, we have several developments capable of breaking through that consolidation. Those comprise today's crude inventories and Beige Book release, a number of Fed speakers going into the Beige Book release and even the Bank of Japan's two-day meeting that begins tonight. Last night showed Japan's inflation rising, but most market watchers believe that Japan's central bankers face the same quandary ours do: what to do about rising inflation when the economy is weakening. In Japan's case, the consensus is that the Bank of Japan will likely not raise rates.

I like to watch the USDJPY because it sometimes leads or at least corroborates U.S. equity moves. The USDJPY has finally broken out above the trendline from last year's high, after U.S. indices did. It's shot higher, continuing its climb until about 2:00 am ET this morning, but it's been trending down since then. It's currently at 107.12, potential support on 15-minute closes. It faces its 200-sma and -ema's, at 108.31 and 107.84, having hit an overnight high of 107.73, and I warned yesterday that it might soon have gains capped as those important moving averages were tested. Equity bulls want to see it continue to push at that likely resistance or at least not retreat far. Equity bears want it knocked back strongly. Keep a watch, particularly with this Bank of Japan meeting. Since it's currently assumed we'll raise rates--although that could still change and some don't agree--and currently assumed Japan won't, the USDJPY may remain fairly stable, but keep a watch on this.

So, what about our markets? The thing about consolidation is that it proves that bulls and bears are temporarily matched. Indicators get scrambled and prove less helpful than is usual. The OEX approached strong supposed support in the 612-612.60 region (weekly 200-sma and daily Keltner). The OEX still has a potential downside target of 612.26, but has intervening support on daily closes at 615.17, so it's not clear that the downside target will be reached. Do factor in continued vulnerability to that level however, a vulnerability that could be part of the choppy consolidation. If the OEX approaches 612-613, however, bears need to be vigilant about protecting profits. The OEX could break through, but that may still be strong enough support to bounce it again, of course.

On a short-term basis, the OEX closed the day looking about as likely to drop to 613.09-614.11 as to climb to 624-624.50. No particular preference was indicated on the chart, although there was a slight edge toward the bearish choice, although only slight. Watch for first support or resistance at those levels, but beyond that, but beyond that, there's not much to predict from these charts.

Keene Little : 6/11/2008 9:22:54 AM

The overnight session for equity futures looks a lot like yesterday's session but at least it was generally positive until the quick drop back down right after 8:00 AM. As long as yesterday's low holds we could get another leg up in the bounce (ideally starting right away for the bulls). Otherwise a continuation of the decline today has the potential to pick up speed if support breaks.

Jane Fox : 6/11/2008 8:56:55 AM

Here are your overnight charts and unfortunately they are not telling you much. I suspect the AD line will open neutral (between +500 and -500). Link

Jane Fox : 6/11/2008 8:48:44 AM

CHICAGO (MarketWatch) -- Mortgage applications filed in the week ended June 6 rose 10.9% on a seasonally adjusted basis compared to the final week of May, the Mortgage Bankers Association said Wednesday.

The increased filings for both mortgages to buy homes and refinancings of existing mortgages coincided with higher interest rates on fixed- and adjustable-rate mortgages, the Washington-based MBA's data showed.

Total application volumes were down an unadjusted 16.5% compared with the same week in 2007.

Refinancing applications increased 8.4% on a week-to-week basis, with filings for mortgages to purchase homes rose a seasonally adjusted 12.8%, the MBA said.

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