Option Investor
Printer friendly version
Jeff Bailey : 6/27/2008 2:51:39 AM

Time Calibration 02:49:29

Jeff Bailey : 6/27/2008 1:33:31 AM

Bearish swing trade long raise stop alert! ... for the remaining ProShares UltraShort Russell 2000 (TWM) $77.20 +4.47% ... to $75.50.

Jeff Bailey : 6/27/2008 1:32:50 AM

There was a great conversation this evening among traders regarding "government intervention" in the energy markets. That is, trying to come up with "regulation" of speculating in the oil markets.

From what I can tell, the SPECULATION looks to be for LOWER OIL PRICES, not HIGHER. Maybe there's HUGE LONG open interest overseas, but I don't see it in U.S. markets.

What really continues to bother me, and most "free market-types" is what took place last week in China.

See, a COMMUNIST country attempted "price controls" (and still does, but to a lesser extent) by putting a ceiling on gasoline, diesel and electricity, and by doing so, created an "artificial market" with the thought that government intervention could tell the market what to do. Or what PRICE value to place on various products.

Instead, it helped, I stress HELPED, create some of what is going on with oil.

Think of it. You're driving down the street and the gas station on one corner, say Valero is advertising regular unleaded at $4.00/gallon. On the corner across the street, say Communismo, gasoline is advertised for $2.00/gallon.

Where are you going to go to fill the tank? Maybe a milk jug or two? Maybe some Tupperware? Maybe the empty coffee cup on the floor in the back of the truck bed?

What kind of gas lines are going to be at Communismo?

How long do you think Communismo will have gasoline for sale in their tanks?

If Communismo is buying oil at $125/barrel, are they making money selling regular unleaded for $2.00/gallon?

See ... that's depression-like symptoms. Jim mentions poor, or deteriorating infrastructure for many foreign-based oil fields. Now you know why.

China is starting to figure things out. Sometimes I wonder about Russia.

In a world that has turned largely to capitalism, communism, and socialism to a degree just don't "work."

Sure, a lot of companies want "in" to China, but price fixing, or mass government involvement usually hurts things more than it helps. And if/when your INPUT price increases and your OUTPUT price has a cieling on it, then when INPUT prices rise more than the price you can sell for, you LOSE MONEY. With China a net importer of oil, the cielings on refined products have done nothing to change consumer behavior.

Hey, any politician that tell me, or you that he/she will lower oil, or gasoline prices with some type of regulation, you should ask some serious questions as to where we're going. Capitalism? No. Socialism? Yes. Communism? Yes.

What gets me more is some of our friends in Washington DC, that actually seem to be bending toward the socialist philosophy. Heck, we've got a few here in Colorado that must have gotten degrees from Socialist University.

Last night I came out of King Soopers, or Kroger (KR) $28.61 -2.52%. There's a guy with about 5 clipboards getting signatures for several "bills" that were all energy related.

He presented one of the clipboards to me and wanted me to sign the form.

"What do you want me to sign" I asked?

This here is for the state to remove the "highway tax" and have "Big Oil" pay the tax instead.

"What would that do" I asked?

He said "It'll bring down gasoline prices at the pump!"

"No it won't" I said. With oil at $130/barrel, bringing down gasoline prices by $0.50 may only increase the demand for gasoline, thus increase the demand for oil, which will only increase the price of oil.

"Well, it should lower the prices at the pump" he insisted.

Needless to say, that one didn't get signed.

He had another one too.

"What's this one," I asked.

"This one is amend the Colorado Constitution, where homebuilders will be mandated to only build green homes that are highly energy efficient" he said.

"Oh, and why would I sign that? If people want to buy green-only homes, then wouldn't a free-market consumer show such great demand that a homebuilder would end up only building green homes, and those refusing to meet that demand go out of business?"

He thought on that one for about 10-seconds, then said, "well, we need to start somewhere, and this is a way to push things in the right direction."

I didn't sign that one either.

When you look at all of your various commodities, you certainly see the "influence" of higher oil prices. There's no denying it.

But there's basically three (3) ways around "energy independence" for the U.S. as I see it.

1) Become a socialist, or communist national economy. Fix prices, and all deficits added to national debt. Raise taxes, and really see what inflation is about.
2) Drill/mine/grow our own (U.S.) resources.
3) Promote alternative energy sources, but they need not be government subsidized unless it is seen as being VITAL to national security. If we're never going to see $60/barrel oil again, then at some point, wind, solar, even nuclear will be deemed cost-effective and the free-market economy will embrace the alternatives.

True story tonight.

My front lawn is looking brown, and I'm not getting the water penetration I need, so I go to Ace Hardware that is two blocks away. Yep, I could drive two miles to Wal-Mart that's four miles away, but the price of diesel these days.

I know what I want anyway. I'm looking for Revive, and it worked great last year. Had the 2nd-greenest lawn on the block. I swear the couple three-doors down waters their lawn 7-times a week.

Anyhow, I find myself walking from the front display of their liquid based product, to the back isle and granular product. I'm comparing price. I'm comparing price/square foot.

Good gravy! As a consumer, I'm actually contemplating of buying the SMALLER bottle that will cover my front lawn for one treatment, yet also seeing greater value $/square foot if I buy the BIG bag of granular fertilizer.

See? Now I didn't check to see who makes Revive, but just the past few days I posted here in the MM that Dow Chemical and DuPont have raised prices for their products, where oil is the largest cost component.

What will likely happen in a free-market economy is this.

Ok, Ok, I bought the BIG bag and it was the most expensive, but I got more coverage for the $, and I won't need to buy anymore until the summer of 2010. Unless I want to fertilize again this summer, but I don't really need to have the greenest grass on the block. I'll just use less water than the Jones' down the steet.

But consumer's, like myself, will become price sensitive. Heck, they might buy the "King Soopers" brand of weed-n-feed for 1/2 the price of Revive.

What will happen is fertilizer demand will likely fall off. Some may need to make a decision between feeding the kids, or having a green lawn.

At some point, DOW, or DD's gross sales will fall, but MARGINS will likely WIDEN due to their end-product price increases.

But as demand for their product falls off, then so may the DEMAND for oil, and oil's price retreat.

But that's if EVERYONE is free-market.

If Social-Value, or Commu-Value is PRICE capping fertilizer at $10.00/bag, while True-Value is at $19.00/bag, then the laws of supply/demand can get skewed.

And that's when the efficiencies of a GLOBAL economy get out of balance.

Jeff Bailey : 6/26/2008 11:38:02 PM

What continues to puzzle me is the "depession" couple with 100% rise in oil prices due to global demand, plus "depression-ers" shorting gold and oil.

The chatter I heard today was devaluation of the dollar vs. the euro.

Jeff Bailey : 6/26/2008 11:35:58 PM

Closing U.S. Market Watch found at this Link

Keene Little : 6/26/2008 10:59:08 PM

Friday's pivot tables: Link and Link

A news headline flashed across my news feed stating "US stocks tumble, sending DOW to worst June since Depression". Have you noticed how many references there have been made in the past few months (whether it's housing, credit crisis or stock market) to the Great Depression? Makes one wonder what's coming.

Thursday's decline has the making of a more severe selloff but only if it keeps heading south on Friday. There is the possibility that a tradeable low was put in on Thursday but that's obviously difficult to say right now. The indices either dropped right to support or it's not far away.

SPX could drop a little further to potetential support near 1273: Link , while the DOW looks like it might have found support at the close on Thursday: Link . The daily charts of NDX and RUT both show the potential to drop a little further before finding firmer support (near 1840 and 689, resp.): Link and Link

Jeff Bailey : 6/26/2008 10:59:47 PM

Closing Internals found at this Link

Now we're starting to see some volume at the big board.

OI Technical Staff : 6/26/2008 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.

James Brown : 6/26/2008 6:38:42 PM

.... crude oil starting to pull back from the $140/bbl level in the after hours now...

Jeff Bailey : 6/26/2008 5:17:36 PM

Talking about technicals and PSYCHOLOGY of not wanting "winners turn into losers."

Jeff Bailey : 6/26/2008 5:16:29 PM

Excellent, excellent education from CNBC guest trader.

Jeff Bailey : 6/26/2008 5:03:50 PM

FXY's conventional $1 and $2 (above 100) box Link

And $0.25 to match futures Link

Jeff Bailey : 6/26/2008 4:58:32 PM

FXE's was $158.07 +0.61% ...

FXY's was $93.58 +1.09% ...

FXB's was $199.47 +0.67% ...

Jeff Bailey : 6/26/2008 4:57:02 PM

DXY's 04:00 tick was 72.466

Jeff Bailey : 6/26/2008 4:30:47 PM

OK ... Traders than can look at charts intra-day, I'd STRONGLY suggest you look at the DIA and begin applying your TESTS for the 01/18/08 intra-day volume spike and today's.

Jeff Bailey : 6/26/2008 4:24:14 PM

Fitch's move comes after both said they would terminate contracts with the agency and said they were denying the rating agency access to nonpublic portfolio information over the last few months and week.

Jeff Bailey : 6/26/2008 4:21:27 PM

Alert! ... Fitch Accepts Request To Withdraw Ratings on MBIA, Ambac

James Brown : 6/26/2008 4:11:28 PM

Found it... Reuters article:

PARIS (Reuters) - Crude oil prices could rise to as high as $170 per barrel in the coming months but are unlikely to hit $200 and should ease towards the end of the year, OPEC President Chakib Khelil said in an interview on Thursday.

"I forecast prices probably between $150-170 during this summer. That will perhaps ease towards the end of the year," he told France 24 television, according to a text of the interview released by the station. Full article: Link

James Brown : 6/26/2008 4:08:24 PM

When did that OPEC news come out? The news snippet about the OPEC President forecasting $170 oil.

Jeff Bailey : 6/26/2008 4:05:11 PM

NYSE volume was running 2.784 billion. Might go "off the chart"

Keene Little : 6/26/2008 4:04:19 PM

The DOW is now tagging the bottom of its channel (it actually dropped slightly below it into the close) so it's possible we'll see a bounce start first thing tomorrow morning. But with the bearish wave count in play here it's not uncommon to see a big gap down right in the middle of a hard selloff. That's why I've been putting on my charts that we're in the crash zone here.

Some surprise overseas (and surprises are likely to be to the downside here) could spark a nasty selloff tomorrow. Today was controlled selling but in a crash it's not nearly as controlled. Again, betting on a crash is an extremely low-odds probability play. But for the first time in a very long time we have an EW count that is set up for it. Therefore stay prepared and don't get yourself into trouble on the long side here.

James Brown : 6/26/2008 4:02:34 PM

The fact that the VIX volatility index is still only at 26 is rather ominous....

Normally for a real capitulation it spikes to north of 30.

James Brown : 6/26/2008 3:59:02 PM

Amazing... the coal stocks are extending their gains....

Keene Little : 6/26/2008 3:59:00 PM

We've been seeing some low volume on down days, including today's, which prompts me to remind people that low volume during a decline is not necessarily bullish. Normally you like to see volume confirm a move but high volume in a decline is often an ending move (think capitulation). Selling can happen day after day after day on low volume so be careful how you interpret today's low volume.

Jeff Bailey : 6/26/2008 3:58:40 PM

TWM $77.01 +4.20% ... CBOE's out of the game now ... $0.01 and 999.99

CINN was crossing earlier (see MM observations). CINN now $76.72 and $79.18.

Linda Piazza : 6/26/2008 3:58:22 PM

There's the OEX, exactly at the bottom boundary of the broadening formation seen on its 30-minute chart forming since last Friday, displayed several times today, with that boundary now just below 584.

James Brown : 6/26/2008 3:58:00 PM

Oil refiners sinking fast...

Valero (VLO), an oil refiner and an OI strangle play, is down 5.6% to $41.30.

Tesoro (TSO) is down 6.3% and testing the $20.00 level again.

Holly Corp. (HOC) is down 4.5% and under the $38.00 level toward a new low...

Jeff Bailey : 6/26/2008 3:56:33 PM

RUT's NH/NL yesterday was 9/78. When I saw that last night, I told myself we'd have to take some profit off the table today.

True story: I had actually typed "close at market open" for today, but something told me not to. Oil, oil, oil. What if it broke higher?

Erased the post and decided to wait things out.

Linda Piazza : 6/26/2008 3:54:20 PM

Today has obviously been a bad day, and I sincerely hope that most of our subscribers have profited and not lost money. However, it's time to think about tomorrow. As you know, big-range days are often followed by small range days, and that could happen tomorrow, too. Those small-range days sometimes include an initial continuation of the trend and then some jostling around, so that the body of the candle might be small, but there might be long upper and/or lower shadows.

Of course, if the tenor is bad enough, there will just be a continuation lower, but I have to factor in one other possibility. The OEX is ending the day at the broadening formation's lower support. Although other indices have violated their March intraday lows, these generals as represented by the OEX's 100 component stocks have not . . . if that doesn't happen by the end of the day. So, I think we have to factor in the possibility of another bounce up to the 10-sma, too, perhaps after a few days steadying or perhaps right away.

James Brown : 6/26/2008 3:53:51 PM

Exit Alert: Tyco Intl (TYC) strangle play ... TYC is now down 5.2% and testing the $40.00 region.

The Put side of our strangle was the July $42.50 puts. We wanted to sell if either side of the strangle hit $1.95. These puts are trading at $2.40bid/$2.50ask.

Jeff Bailey : 6/26/2008 3:53:50 PM

Look how light the volume is today.

Jeff Bailey : 6/26/2008 3:53:35 PM

Still hang'n round the 150-day SMA.

Jeff Bailey : 6/26/2008 3:52:31 PM

TWM $76.54 +3.58% ...

Jeff Bailey : 6/26/2008 3:51:28 PM

Are they HIGHER or LOWER from exits? Good test to see if we're making some good decisions on short-term basis.

Jeff Bailey : 6/26/2008 3:50:35 PM

Looks like a good decision from 03:40:44 benchmark comparison James!

James Brown : 6/26/2008 3:50:13 PM

...and I'm still thinking it would be a good idea to take some profits on our AAPL put play. Today's jump in volatility should really pump up those put options!

Jeff Bailey : 6/26/2008 3:49:30 PM

What did you think of DFS's earnings Linda?

DFS $13.31 -7.04% ...

James Brown : 6/26/2008 3:48:59 PM

FYI... MMM did actually tag our target at $70.25 today. I reiterate the exit alert on it!

Keene Little : 6/26/2008 3:46:45 PM

So Linda, is "nubs of green" a new technical term?

Linda Piazza : 6/26/2008 3:43:11 PM

Still only tiny little nubs of green candles on the A/D line's 15-minute chart. The A/D line is, however, like the OEX and some other indices, testing its 15-minute 9-ema, now at -2175 and with the A/D line, at -2171. More resistance lies ahead at the -1980 zone, too.

Jeff Bailey : 6/26/2008 3:43:02 PM

How I haven't a clue ... will see what China thinks as they wake up for tomorrow.

HBC $78.05 -1.94% ...

Jeff Bailey : 6/26/2008 3:40:44 PM

Into the final 1/2-hour of trade ...

TWM $76.59 +3.65%

PTR $129.11 -4.67%

FXY $93.55 +1.05% ...

DE $71.74 -2.10% ...

MMM $70.67 -2.61% ...

Linda Piazza : 6/26/2008 3:41:00 PM

I'm just musing here, so don't take me too seriously. However, what if the TED spread is saying something that we don't yet know about some default risk that's out there, festering, perhaps rising over the last two weeks as the TED spread did? First of all, that's a risky premise because people who know more than I do say this is a risky time to be using the TED spread and it may not be the best indicator of rising default risk that there is. Work with me, though. Here's what worries me. If there's that risk, then what we've been seeing might be the sell-the-rumor effect. What if we wake up one morning with our Fed or the ECB or maybe the globe's central banks working in concert, making some announcement that makes big money decide the risk is lessened and it's time to cover? Anyway, it's just a scenario. It could be that this time, we'll be less likely to believe anything central banks say about managing the risk and everyone will just bail. However, as I've said too may times, please be sure you're comfortable with the risk you're taking home with you tonight. Please be comfortable with the amount of bearish profit you're leaving on the table, too.

Linda Piazza : 6/26/2008 3:33:19 PM

What's happening tonight or tomorrow that could impact your trades? Tonight, Japan gets a number of reports, including the Tokyo and National Core CPI at 7:30 pm ET, and Industrial Production and Retail Sales at 7:50.

Tomorrow morning, Germany gets preliminary CPI, although I don't have a time for that, and the Eurozone has its Consumer Confidence at 5:00 am ET. We have Personal Spending and Income at 8:30, definitely potentially market moving numbers, followed by the Revised Michigan Sentiment at 9:55, with that also being a potential market mover. ECB President Trichet speaks, but that will be about midday. KB Homes reports before the market open.

Linda Piazza : 6/26/2008 3:27:12 PM

The TRIN just reached a new afternoon low, punching below 1.77, and it's now at 1.75, but its action still isn't anything for bulls to write home about. It is, however, trending down from the 12:30 high. A greater acceleration in the downtrend is needed and a push below 1.5 at least and 1.23 preferably before those hoping for a steadying feel too cheered. Bears, just be aware that TRIN reached extreme levels and is now finding resistance where earlier it found support and trending down.

Keene Little : 6/26/2008 3:25:38 PM

The bottom of the parallel down-channel for the DOW for price action since the May 19th high is near 11470 by the close. That would make for a good place to try a bounce. Link

Jeff Bailey : 6/26/2008 3:23:19 PM

Oh my! Goodyear Tire (GT) $18.05 -11.99% ... looked at it yesterday with alert to put at $22.00. Didn't happen.

Linda Piazza : 6/26/2008 3:23:01 PM

That last punch up in the OEX was another 15-minute 9-ema test, with that 9-ema now at 587.42, and with the OEX knocked back from the test again. Again I emphasize that it's getting very close to the broadening formation's potential support, so be careful in case that's the place some bears decide to take profit and cover ahead of tomorrow.

Jeff Bailey : 6/26/2008 3:15:24 PM

Do I go long Petroleo Brasiliero (PBR) $68.21 -0.90% here, or be cautious some type of global selloff tomorrow morning, get it cheaper at the bearish vertical count of $56.00.

Remembering PMD-DE from 03/5/08.

Jeff Bailey : 6/26/2008 3:12:24 PM

SLB $104.97 -0.23% ...

Jeff Bailey : 6/26/2008 3:12:11 PM

Occi Pet (OXY) $84.98 +0.14% ... now its the only "energy" based equity in my watch list that's green.

Linda Piazza : 6/26/2008 3:11:38 PM

The BIX is rising again from its test of the previous low of the day. The BIX printed a slightly lower low but produced marked potential bullish price/RSI divergence as it did so. The BIX needs to jump above the peak between today's two troughs, however, before that bullish divergence is confirmed. That peak is 182.38, and the BIX is currently 180.14, with potential resistance just ahead at 181.44 on 15-minute closes.

Linda Piazza : 6/26/2008 3:09:24 PM

Again, the A/D line is not signaling anything bullish or even semi-bullish. The only green candles it's printing so far are an occasional small-bodied one as the A/D line does its sideways/down movement. Watch for something bigger, particularly a move above -1980 that's sustained, as a sign that the A/D line is showing any improvement at all. The A/D line is currently -2256.

Linda Piazza : 6/26/2008 3:07:24 PM

I didn't think the TRIN would likely get all the way up to test Keltner resistance and it hasn't. Instead, it found resistance at that historical level I mentioned and has now turned down. It's only turned down to 1.90, however. It needs to sustain 15-minute closes beneath 1.99 as a first sign of any change at all in tenor and then needs to drop through a swing low of 1.77 from this afternoon, and then keep dropping before it signals any real change in tenor. Keep dropping, like a stone. This does, however, give us some guidelines to watch as we move into this last hour of trading.

Jeff Bailey : 6/26/2008 3:03:45 PM

Disclosure: I currently hold bullish position in FXY

Jeff Bailey : 6/26/2008 3:02:23 PM

Swing trade call alert! ... for one (1) of the Yen CurrencyShares FXY Aug $93 Calls (FXY-HO) at the offer of $2.00.

FXY $93.55 +1.05% ...

Linda Piazza : 6/26/2008 3:00:52 PM

Another potential turning point approaches in a few minutes with the closing of the bond market. Such turning points don't necessarily mean a reversal in the prior tenor, although they can. They can also usher in an acceleration of the prior trend. Be prepared for whichever occurs.

Jeff Bailey : 6/26/2008 2:58:23 PM

02:00 Internals at this Link

Linda Piazza : 6/26/2008 2:53:28 PM

The OEX slightly violated potential support on a 15-minute close at that last 15-minute period, the first time it's done so all day. Obviously, there's been no change in tenor at all yet. Be aware of the potential broadening formation's support, with the OEX quickly approaching that 584.50-585 level. No warnings have been needed all day for those in bearish positions, but there's still no harm in keeping those plans updated.

Keene Little : 6/26/2008 2:53:07 PM

The same setup that I showed for gold this morning exists for the euro. It has been consolidating in a sideways triangle since its April high. It's either a bullish triangle, in which case it should get another leg down within the triangle before heading to a new high, or it's a bearish triangle which should be finishing very close to today's high. Daily chart: Link

The top of the triangle is near 1.5700 and there's a Fib projection at 1.5750 which would create a small throw-over above the top of the triangle pattern (it might not get there). The stop needs to be just above the June 9th high at 1.5763 and this makes for a very tight stop. So if you like playing the currencies (either forex or futures), this is a good setup to short the euro against the US dollar.

Jeff Bailey : 6/26/2008 2:51:54 PM

USO $113.50 ... with note to see 06/16/08 Market Wrap.

Jane Fox : 6/26/2008 2:51:52 PM

Crude got stuck at 140.05 but has now broken through and up to 140.28

Linda Piazza : 6/26/2008 2:44:49 PM

TRIN shooting back higher from that support it hit and tested a few minutes ago. It's now at 2.18, near potential historical resistance. If it climbs again into the higher outer-channel Keltner resistance that stopped it twice today so far on 15-minute closes, that's at 2.46 currently. If this were an equity, I would say that it's unlikely to climb that high again after being knocked back so soundly twice before, but this isn't an equity.

Jeff Bailey : 6/26/2008 2:39:20 PM

USO $112.97 +4.11% ...

Jeff Bailey : 6/26/2008 2:39:04 PM

FXE rings the bell at $158.00

Jeff Bailey : 6/26/2008 2:38:43 PM

We'll leave our TWM stop at $74.50 for now.

Jeff Bailey : 6/26/2008 2:37:31 PM

OK ... now watch the DIA. EVERYONE has seen the volume spike, and undercut of DIA is "sure thing" of more selling.

DIA should go WKLY S2 and 114.62. If there's a "bear trap" type of move, the DIA would whip back higher and take out $116 to the upside.

James Brown : 6/26/2008 2:35:05 PM

The GLD gold ETF is hitting its highs for the day near $90.30 and testing its simple 100-dma, which could be short-term overhead resistance.

Jeff Bailey : 6/26/2008 2:33:13 PM

Rogue trader test on USO would be 06/11/08. See if USO holds $113.00 for more than 20-minutes, or reverses sharply.

James Brown : 6/26/2008 2:33:08 PM

Apple Inc. (AAPL) is down about $8.50 or 4.8% under $169.00. If it even gets close to our target at $166.00 I would exit the OI put play.

Linda Piazza : 6/26/2008 2:31:56 PM

Now we have a failed test of the OEX 15-minute 9-ema to use as a barometer for when things have changed. Earlier, the OEX hadn't even been able to bounce up to that moving average as it was falling too steeply to do so. That moving average is now 589.02, with potential support on 15-minute closes now at 587.15. The OEX presses ever close to the bottom boundary of its broadening formation, so bears need to keep adjusting their profit-protecting plans. There's no guarantee that the support will hold as it's done for almost a week, and, even if it does, there could be a small throw-under first. These broadening formations complicate the determination of when there's been a breakdown and when there's just been a . . . broadening.

Jeff Bailey : 6/26/2008 2:31:02 PM

USO $113.04 +4.18% ...

Jeff Bailey : 6/26/2008 2:30:40 PM

TWM $77.22 +4.50% ...

Jeff Bailey : 6/26/2008 2:29:43 PM

NASDAQ Comp 2,329 -3.00% ... trades 19.1% conventional 10/31/07 high to 01/23/08 relative low.

James Brown : 6/26/2008 2:29:33 PM

I'm happy to finally see a breakout, one way or the other, in crude oil.

We added a strangle on the USO on June 22nd, which gave us a few days to open positions. I would not open new strangle positions at this time.

Jane Fox : 6/26/2008 2:28:13 PM

Crude has just made a high of $140.05 and retreated.

Keene Little : 6/26/2008 2:24:40 PM

No follow-through buying and the sellers stepped right back in. It looks like a weak market from price action but there's not a lot of strength behind the selling (bullish divergences at new lows persist). It seems more a buyers' boycott than strong selling.

Jane Fox : 6/26/2008 2:20:29 PM

It looks like CL is going to have to take a few runs at $140 before it breaks but I suspect once it does it will not take long to get to $150.00

Linda Piazza : 6/26/2008 2:19:52 PM

The OEX didn't even make it up to 591 before it began pulling back. Those who want the markets to steady don't want to see it pull back much more than its current 588.70, but if it does, it's got potential support on 15-minute closes at 587.22.

Jane Fox : 6/26/2008 2:18:56 PM

I will be entering a new USO position once Crude hits 141.07 with a target at 152.17 and stop at 129.97.

Jeff Bailey : 6/26/2008 2:18:31 PM

FXE $157.78 +0.42% ...

Jeff Bailey : 6/26/2008 2:17:06 PM

SPY $129.17 -2.00% ...

Jeff Bailey : 6/26/2008 2:16:45 PM

Short Squeeze! USO $112.86 +4.02% ...

Jane Fox : 6/26/2008 2:16:44 PM

Crude has just hit 139.95 and new all time high.

Keene Little : 6/26/2008 2:16:27 PM

If this bounce is an attempt to find out if there's any buying interest (as Linda often talks about when she mentions the stop-running time of day) and there is no follow through buying then there is the potential to see the selling accelerate into the close.

Linda Piazza : 6/26/2008 2:16:01 PM

Here's an update of the TRIN chart I showed earlier today, in my 1:37:37 post. The annotations are original from that time, so the Keltner lines have changed a bit, with the lines referenced at being 1.70-1.78 now being higher, with the TRIN now testing them. Link

Jeff Bailey : 6/26/2008 2:15:21 PM

5-year auction found 3.440%; 83.47% at high. Bid-to-cover was 2.48. Coupon was 3.38%.

Jeff Bailey : 6/26/2008 2:14:22 PM

5-year auction results posted.

Linda Piazza : 6/26/2008 2:12:18 PM

The OEX's 15-minute 9-ema is now 589.73 with the OEX above it for the first time since the 3:15 candle yesterday afternoon. It closed the last 15-minute period right at that 9-ema. Here's what's showing up on charts: a possibility that the OEX could charge up to 591.20-591.50 or maybe even 593, and then pull back from there. If that happens, those hoping we've seen the bottom for the day (and for a while, but we have to wait for that) want to see any pullbacks find support on 15-minute closes at that 15-minute 9-ema or at least in the 588.80 region.

Jeff Bailey : 6/26/2008 2:11:50 PM

Using that for a client Q2 update regarding FOMC policy.

Keene Little : 6/26/2008 2:11:48 PM

We're getting a bigger bounce than any of the day's previous bounces and it has some impulsive qualities to it. This could be the sign we've seen a low for the day so protect profits if you've been short.

Jeff Bailey : 6/26/2008 2:11:15 PM

Sector Bell Curve I took the other night on a FOMC-FOMC meeting basis Link

Jeff Bailey : 6/26/2008 2:08:46 PM

SLB $105.24 +0.05% ... inches green. First "energy" stock in my watch list to do so.

Linda Piazza : 6/26/2008 2:06:10 PM

The BIX's 30-minute 9-ema is now at 181.28; the BKX's, 61.20. I'm watching both indices to see if they can break above these averages as a sign of a change in tenor since they started diving just ahead of the FOMC announcement yesterday. As I type, the BIX is 180.78, and the BKX, 61.10.

Linda Piazza : 6/26/2008 2:02:45 PM

Just a bare nub of a green candle on the A/D line so far, but it's the first green candle on that 15-minute chart in a while. If the OEX is going to avoid falling all the way to the bottom of its broadening formation--or farther--it needs some help from an improving A/D line. The bottom of that broadening formation is now at about 585 and bears need to reassess their profit-protecting plans now that it's been so closely approached. This does not guarantee a bounce, but it's produced one for almost a week, each time it was touched, and each swing up has been higher than the last.

Jeff Bailey : 6/26/2008 1:57:49 PM

USO $111.72 +2.96% ...

Jeff Bailey : 6/26/2008 1:57:14 PM

Buy Program premium ... SPY $129.46

Jeff Bailey : 6/26/2008 1:56:57 PM

10-year traded WKLY S2 between 01:30 and 01:35 PM EDT.

Jeff Bailey : 6/26/2008 1:56:04 PM

Great reminder from CNBC guest. Yes indeed ... 10-year Yield tapped WKLY S2.

Heck, that looks to match time of DIA volume spike.

Linda Piazza : 6/26/2008 1:55:11 PM

The TRIN just punched down toward the support shown in the chart on my 1:37:37 post and bounced from it. It's now 2.01. Keep a watch, though, as the TRIN threatens to fall to test that support again.

Jeff Bailey : 6/26/2008 1:54:36 PM

TRIN 1.90 +97.91% ... did "prarie dog" WKLY R1. "Pullback" stopped dead at 1.75

Jeff Bailey : 6/26/2008 1:53:18 PM

USO $111.75 +2.99% ...

Jeff Bailey : 6/26/2008 1:53:07 PM

TWM $77.00 +4.20% ...

Jeff Bailey : 6/26/2008 1:48:56 PM

Dow 30 Components shortly after volume spike Link

James Brown : 6/26/2008 1:48:54 PM

I definitely agree with Jeff. If you have bearish positions then readers should be taking profits on this weakness...

Jeff Bailey : 6/26/2008 1:45:41 PM

USO $111.82 +3.05% ...

Jeff Bailey : 6/26/2008 1:44:52 PM

Biiiig volume equates to major disagreement. For every buyer there's a seller.

Could be a "I can't take it no more" from a bull. Could be a "enough is enough from bear" as he/she buys the weakness.

So far, James and I have been taking some profits on the weakness.

Jeff Bailey : 6/26/2008 1:42:48 PM

Trader saying "volume proceeds price action" ... be alert!

Jeff Bailey : 6/26/2008 1:42:25 PM

DIA, SPY, IWM, QQQQ Montage ... 10-minute intervals with your conventional and QCharts' WEEKLY Pivot levels turned on. Noting volume in DIA Link

Linda Piazza : 6/26/2008 1:37:37 PM

Some interesting things I'm watching on my 15-minute Keltner chart of the TRIN: Link

Jeff Bailey : 6/26/2008 1:37:03 PM

HUUUUUUUUUUGE volume spike in the DIA here. $115.38

Linda Piazza : 6/26/2008 1:32:43 PM

No new low on the BIX or BKX yet, although they perhaps will get dragged lower, too, if there's not a quick bounce. Neither is far off its low of the day. Both are still above Tuesday's lows, too.

Keene Little : 6/26/2008 1:30:19 PM

NDX has dropped down to its 100-dma at 1871 for potential support but it's breaking as I type. There's not much support before 1840.88 where it would close its gap from April 17th.

Jeff Bailey : 6/26/2008 1:30:17 PM

GLD $89.96 +2.90% ... was in the top 5 pre-market. Now #26 most active.

Action suggests BIG in at the open. Market participants wanted expsure in very bullish way.

Linda Piazza : 6/26/2008 1:29:26 PM

We're approaching a stop-running time of day that sometimes occurs from about 1:35-1:55 pm ET. If there's going to be any change in tenor, either an acceleration to the downside or a bounce, this might be one of the times it occurs. Be aware, though, that a test, such as this current punch lower, doesn't guarantee that you know the next direction, because if the test results in dip-buyers stepping in, if there are any still out there, then the result could be a bounce instead of a further acceleration lower.

Jeff Bailey : 6/26/2008 1:28:41 PM

#23 most active is FITB $10.34 +1.77% ... first name I come to as I click down through the most actives that was green.

Jeff Bailey : 6/26/2008 1:26:08 PM

Most Actives ... QQQQ $46.08 -3.13%, IWM $69.96 -2.15%, BAC $25.41 -4.50%, XLF $21.14 -2.49%, ORCL $21.80 -3.32%

Linda Piazza : 6/26/2008 1:25:30 PM

Potential support for the OEX on 15-minute closes is now at 587.32 and 588.02, but that support is sliding lower, just like the broadening formation's support. Keep updating your bearish profit-protecting plans as that broadening formation's support is approached. One way of doing that is to do what Jeff has done with a profitable trade, and step out of partial positions, locking in profit and allowing yourself to benefit from any further downturn. If there is a big bounce, too, the benefit is that you've locked in part of your profit and can think more clearly about the rest of the position. I can't tell you how many times I've seen bears with big unrealized profits get caught by a bounce that starts out small and manageable. Then, they suddenly get caught when that small bounce turns into a giant one and they're paralyzed, unable to think what to do next. Don't ever let a profit turn into a loss if you can help it. Today, so far, we've barely had small bounces so it's been easy to manage positions, but that doesn't mean that you don't have to stay on top of it.

Jeff Bailey : 6/26/2008 1:22:10 PM

Check out your 5-minute interval chart with 21, 50-pd SMA's. MACD nearing 0.00. Stochs threatening a turn from "oversold"

Jeff Bailey : 6/26/2008 1:21:02 PM

Good gravy! ... USO $111.58 +2.83% ... after kiss-back of MONTHLY R1 ($111.32).

Jeff Bailey : 6/26/2008 1:16:12 PM

Dynamic Materials (BOOM) $33.85 +2.70% ...

Jeff Bailey : 6/26/2008 1:15:15 PM

Six Flags (SIX) $1.46 -10.97% ... probes January 22nd low.

Jeff Bailey : 6/26/2008 1:14:12 PM

Great tidbit James ... wonder what they'd spend if they get hit with a windfall profit tax?

Linda Piazza : 6/26/2008 1:12:24 PM

No improvement in the A/D line so far. It's been trending sideways down since about 10:45. It's at -2190 as I type. Sustained 15-minute closes above about -2030 would be needed to even begin to signal any improvement at all.

Jeff Bailey : 6/26/2008 1:08:26 PM

Per my and perhaps James' thoughts regarding VIX.X, the PRIMARY reason I close out the PTR-SD today is that this is/was our BIGGEST RISK position with oil potentially getting squeezed.

Buy it back for $0.80/contract loss while premiums (VIX.X) still relatively low. IF oil surges then PTR likely lower. If it gaps, even bigger problems.

Leg out of partial TWM for greater profit than the PTR-SD loss. Hold rest of TWM with stop at $74.50.

Keene Little : 6/26/2008 1:03:59 PM

SPX has dropped below the bottom of its parallel down-channel from the May high and whenever you see price dropping out the bottom of a down-channel or out the top of an up-channel you know the move is starting to acclerate. I've drawn in another parallel down-channel for price action since the June 5th high, the bottom of which is currently near 1280: Link . If SPX can't soon recover back above 1301 I think it's headed to at least 1280 (or the March 10th close near 1273) before bouncing back up. But if it can get back above 1301 for today's close then today's drop will look like just a head-fake throw-under.

James Brown : 6/26/2008 1:04:08 PM

Interesting tidbit...

Chevron spends... $63 million every 24 hours in exploration "capital expenditures" to find new energy resources.

Linda Piazza : 6/26/2008 1:03:05 PM

After Jeff asked about the TED spread, I remembered that today is also the day when the Fed issues its weekly report on outstanding corporate paper, another measure of how things are going in the credit-crunch environment. Last week had seen a big decrease in outstanding corporate paper, an ominous sign if the trend continues. It had mostly reversed a gain from the week before, so I was interested in what it would do this week. This week, there's been a modest increase in outstanding corporate paper, an increase of $1.1 billion. Gains were seen in almost all the seasonally adjusted components, including those measuring financial and non-financial companies, domestic and foreign. A small decrease was seen in the foreign financials and a larger one where we don't want to see it, in asset-backed paper.

Jeff Bailey : 6/26/2008 1:01:26 PM

I was thinking same thing on the call side, while VIX.X at 23.45 and premiums still rather "cheap."

If we were to see one of the "spike low" and quick reversal days tomorrow, then I'd have to think VIX.X could be 30-40, premiums jacked to the hilt.

Jeff Bailey : 6/26/2008 12:58:58 PM

DE $70.63 -3.61% ... has achieved its bearish vertical count of $72.00. Dorsey classifies DE as MACHinery & Tools.

Jeff Bailey : 6/26/2008 12:57:42 PM

Dorsey classifies MMM as "CHEMical

Linda Piazza : 6/26/2008 12:57:25 PM

I'm a relative newbie at looking at the TED spread, as I've been noting, and others in the financial community question its reliability. Some reference other spreads or swaps as being more important or reliable, especially in an environment in which the FED is NOT lowering rates or in which financials are reporting. I just know that markets have tended to be cranky when it's rising, and particularly when it rises from descending channel support up through 1.00.

James Brown : 6/26/2008 12:57:48 PM

Jeff, it does look like most of my put plays are hitting their targets today.

Unfortunately, I think the market has farther to fall.

I was actually looking at the VIX and contemplating a call option position. If we are nearing some sort of capitulation sell-off then the VIX "should" spike to above 30.00. Right now the VIX is only 23.50.

Traders could buy some lottery-ticket calls on the VIX. If there is a sell-off there would be a big pay off. If there isn't, well then you throw your ticket away.

Options on the VIX
July 25.00 calls... ask about $1.65
July 27.50 calls...................$1.00
July 30.00 calls...................$0.60

Jeff Bailey : 6/26/2008 12:56:42 PM

MMM's bearish vertical count is $68.00. Lower end of 10-week trading band also at $68.00.

Linda Piazza : 6/26/2008 12:55:50 PM

TED is pretty sick today, Jeff. I had noted earlier that the TED spread had jumped to 1.05 and now it's 1.08.

Linda Piazza : 6/26/2008 12:54:58 PM

The OEX closely approaches its potential support on 15-minute closes now at 587.61. Without a bounce soon, however, it will have confirmed a breakdown tenor on its 30-minute chart, so it would be dubious distinction to hold to 15-minute support but be in breakdown mode on the 30-minute one. Do be aware of that approaching potential support from the broadening formation, too, with that now at about 585 and a little higher with the best-fit version. At least use this to spiff up your bearish profit-protecting plans.

Jeff Bailey : 6/26/2008 12:53:22 PM

James ... You dumping entire put positions?

Linda Piazza : 6/26/2008 12:52:26 PM

The BKX is behaving much like the BIX. The BKX also has bounced off its low of the day, which was also above Tuesday's low. It, like the BIX, has retreated from the little swing high reached about an hour ago and may be forming a bear flag. However, if it could maintain 30-minute closes above the 30-minute 9-ema, now at 61.43, such a feat would help change its tenor and perhaps that of other indices such as the OEX, Dow and SPX, since an improvement in tenor with the financials would at least be a sentiment booster. The BKX is now 60.85, with potential support on 30-minute closes at 60.34.

Jeff Bailey : 6/26/2008 12:51:46 PM

How's TED doing today Linda?

Jeff Bailey : 6/26/2008 12:50:09 PM

Not a lot of put buying/call selling versus call selling/put buying on relative basis. Not yet.

Not even a WKLY R1 at this point. Check out your daily intervals with 200-day and 150-day SMA's.

Linda Piazza : 6/26/2008 12:48:59 PM

The BIX bounced off its 10:45 low of 178.91. It's turning back from resistance now, but is still above the low of the day, which is in turn above Tuesday's low. The form in which the BIX has been climbing off its low this morning looks a little bear flaggish, but if the BIX could mount a bigger bounce, say at least sustaining values above its 30-minute 9-ema, now at 182.21, that would show a change in tenor over the short-term, anyway, and a turnaround in some of the financials could improve the tenor of the SPX, OEX and Dow. The BIX hasn't sustained 30-minute closes above that 30-minute 9-ema since about 1:00 yesterday afternoon when it started diving prior to the Fed announcement. The BIX is 180.07 as I type, with potential support on 30-minute cloes at 178.40.

James Brown : 6/26/2008 12:48:08 PM

Exit Alert: 3M Co. (MMM) ... I would go ahead and exit the OI put play in MMM... either now or by the end of the day. Shares are trading under $70.50. Our target was $70.25.

Jeff Bailey : 6/26/2008 12:46:53 PM

AMR Corp. (AMR) $5.50 -2.82% ... AMR-GA $0.95 x $1.05.

VIX.X 23.49 +11.11% ...

USO $111.71 +2.95% ...

James Brown : 6/26/2008 12:45:42 PM

E*Trade Financial (ETFC) is trading under our OI put play first target at $3.25 again.

James Brown : 6/26/2008 12:44:26 PM

Exit Alert Deere Co (DE) is down 3.88% and trading to an intraday low of $70.33. Our OI put play target was $70.50.

James Brown : 6/26/2008 12:43:23 PM

AAPL is extending its losses... -4.5% and falling under the $170 level. Our target is $166.00.

Jeff Bailey : 6/26/2008 12:42:59 PM

USO $111.85 +3.08% ...

James Brown : 6/26/2008 12:42:14 PM

Some of the worst performers....

DJUSCA casinos............ -4.6%
DJUSHB homebuilders... -4.2%
XAL airlines index........-4.39%

Jeff Bailey : 6/26/2008 12:42:12 PM

Hold the rest and see what happens! Pay yourself even as it looks as if the darkest days are upon us.

Jeff Bailey : 6/26/2008 12:41:16 PM

Swing trade sell 1/2 alert! ... Let's take 1/2 of our ProShares UltraShort Russell 2000 (TWM) off the table here.

Exit at the bid of $76.95.

James Brown : 6/26/2008 12:40:34 PM

Tech stocks are getting hammered...
DDX disk drive index ... -3.7%
INX internet index.... -3.0%
NWX networking index... -3.6%
SOX semiconductors.... -4.07%

Linda Piazza : 6/26/2008 12:39:39 PM

I'll repeat what I said in my first post this morning about broadening formations. I've read mixed information about them when they occur at the bottom of a decline. Some view them as a potentially bullish formation, and some think they're valid formations only when seen at the top of climbs, at which time they're considered potentially bearish. What we do know for sure is that they're indicative of emotion-based trading. Aren't you feeling some emotion now, with the particular emotion based on what type of play you've got going? We also know that it's hard to say when support or resistance has been broken because both are broadening. Support is descending and resistance is climbing.

Jeff Bailey : 6/26/2008 12:39:32 PM

RUT.X 698.66 -2.46% ... undercuts "psychological" 700.00

Jeff Bailey : 6/26/2008 12:38:38 PM

Panera Bread (PNRA) $46.95 -2.26% ... did say they were partial hedged.

Jeff Bailey : 6/26/2008 12:37:55 PM

Kellogg (K) $49.05 -1.52% ... don't know if they're hedged.

Jeff Bailey : 6/26/2008 12:37:24 PM

July Mini-Wheat 946 +4.90% ... retraces 38.2% of recent decline.

Jeff Bailey : 6/26/2008 12:36:00 PM

USO $112.00 +3.22% ...

Linda Piazza : 6/26/2008 12:36:13 PM

The OEX's potential support on 30-minute closes is now 589.86. Up until now, that's been mostly holding on 30-minute closes, but it didn't hold into the last 30-minute period. Next potential target, as predicted by the OEX's 15-minute chart, is 587.90, but that 30-minute close was only barely below the support on that chart, so I'm not sure how much credence to give that next downside target. The OEX is more closely approaching the bottom of the broadening formation as shown in the chart linked to my 11:04:18 post, so I'd be cautious about any close approaches to it, using approaches to that trendline as a place to readjust bearish profit-protecting plans. The trendline is now from about 587.50 down to 587, depending on how it's drawn.

Jeff Bailey : 6/26/2008 12:34:13 PM

TWM 150-day SMA alert! $76.73

Jeff Bailey : 6/26/2008 12:30:17 PM

12:00 Internals at this Link

Jeff Bailey : 6/26/2008 12:27:06 PM

USO $111.67 +2.92% ...

Jeff Bailey : 6/26/2008 12:26:42 PM

When will sellers "kick it in?" USO $113?

Jeff Bailey : 6/26/2008 12:25:57 PM

New lows surprisingly "few" at this point.

James Brown : 6/26/2008 12:25:01 PM

Checking the CurrencyShares Japanese Yen (FXY) it is bouncing from support near $92.00 and its 200-dma.

It might be tempting to buy this bounce (1st chart).. BUT... check out the middle chart for the bearish channel. It's certainly possible the FXY could breakout but it may just rally high enough to test broken support on the weekly chart and roll over again.

Jeff Bailey : 6/26/2008 12:23:55 PM

Where will buyers kick it in? Will they kick it in. Where's the level?

Jeff Bailey : 6/26/2008 12:23:27 PM

Ooooooeeee! Volume anemic at the NASDAQ today.

Jeff Bailey : 6/26/2008 12:21:14 PM

See how institutional computers are managing the TWM in the DAILY's today? Fascinating ... always fascinating to me. Even though we've seen it for years.

Linda Piazza : 6/26/2008 12:20:26 PM

The VIX is still nowhere near its early June swing highs, not even yet above the 6/20 intraday high although it's closely approaching that now. I'm not sure what to make of that. I'm not sure whether its a worrisome sign because there's still too much complacency in the markets, meaning there are still a whole lot more weak-hand bulls left to capitulate, or whether it's a bullish divergence that we should watch carefully. I would just urge that you watch carefully as the 6/20 high of 23.70 is approached and especially if 24.30-25.02 is approached, as they might be significant resistance on a daily close. VIX at 23.31 as I type.

Jeff Bailey : 6/26/2008 12:19:20 PM

While I don't think the TWM can trade it today, I do see CBOE sitting way off the offer at $84.37.

Look at your daily interval bar chart of the TWM and understand such moves at inflection points.

Keene Little : 6/26/2008 12:18:12 PM

Each bounce is a 3-wave correction, such as the last one before this new low, so the downtrend remains intact. Once I see a 5-wave bounce then I'll know we might have seen the bottom for the day. Until then, stay on the short side of the market. But bears can't get complacent here--some bullish divergences are showing up on the short-term charts.

Jeff Bailey : 6/26/2008 12:18:04 PM

TWM $76.55 +3.59% ...

Jeff Bailey : 6/26/2008 12:17:31 PM

SPX 1,294.66 -2.06% ... getting near the european percentage declines. WKLY S2 1,281.

James Brown : 6/26/2008 12:15:29 PM

Looks like the CurrencyShares EURO (FXE) could be launching into another leg higher. It has broken its two-month trendline of lower highs. chart: Link

Jeff Bailey : 6/26/2008 12:12:46 PM

All we've done with TWM is play "follow the leaders" ...

Linda Piazza : 6/26/2008 12:12:41 PM

Inverse H&S invalidated on the OEX although maybe not yet on the RUT. The OEX is now retesting its potential support on 30-minute closes, now at about 589.86 with the OEX now at 589.83 and lots of minutes to go in this 30-minute period.

Jeff Bailey : 6/26/2008 12:11:50 PM

That's your QRTLY 38.2% and WKLY S1 overlap in the SPX at 1,299. DAILY S2 is the "trigger" at 1,303.

Jeff Bailey : 6/26/2008 12:10:08 PM

If were going to see a trend day lower, the SPX should NOT get back above 1,304.

Linda Piazza : 6/26/2008 12:08:27 PM

Little potential inverse H&S's are showing up on five-minute charts for many indices: RUT, OEX, etc. If the OEX drops much further than its current 590.54, however, it's going to invalidate its version and that means bears have won again.

Linda Piazza : 6/26/2008 12:05:59 PM

OEX potential support on 30-minute closes at 589.99; resistance at 591.94. The OEX really needs to bump above that resistance and maintain values above it into 30-minute closes or this is just consolidation at the bottom of the drop, perhaps in preparation for another drop.

James Brown : 6/26/2008 12:05:48 PM

Exit Alert: ERTS -3.2%... hitting our OU put play target at $44.50.

James Brown : 6/26/2008 12:03:54 PM

GOOG -3.4% continues to sink... now under the May and June lows... aiming for the late April low (top of the gap)...

Jeff Bailey : 6/26/2008 12:00:59 PM

Sell program premium ... SPY $129.75

Keene Little : 6/26/2008 11:54:47 AM

The DOW has also broken below the bottom of a parallel down-channel that supported price since the beginning of June: Link . The bottom of a slightly larger down-channel, where the parallel line is attached to the May 23rd low (the first low following the May 19th high), is currently near 11490 and would likely produce at least a bounce back up to the bottom of the narrower channel. In fact watch for potential resistance (kiss goodbye) if the DOW bounces back up to it now, currently near 11625.

Jeff Bailey : 6/26/2008 11:54:18 AM

USO $111.54 +2.80% ... You can play the bulls and bears against each other can't you? Nobody's giving in.

Jeff Bailey : 6/26/2008 11:52:51 AM

OK ... SPY $129.87 -1.47% ... WKLY S1 looks to be the key "support."

Linda Piazza : 6/26/2008 11:48:40 AM

There's been a first OEX 5-minute close above the 9-ema on that chart for today, with that five-minute 9-ema now at 590.80. Again, that's not proof of anything, but only the first change of any kind in the tenor for the day. If the OEX is going to steady, it needs to sustain 30-minute closes above the Keltner line currently at 592.02 and then, eventually maintain closes above its 30-minute 9-ema, now at 595.42 but still sharply descending. The OEX is 591.14 as I type.

Jeff Bailey : 6/26/2008 11:46:36 AM

These "Asian stocks" can be very gappy in upward and downward trending environment.

Jeff Bailey : 6/26/2008 11:44:26 AM

HSBC (HBC) $78.21 -1.78% ... undercuts Tuesday's lows. WKLY S1 $77.69.

Jeff Bailey : 6/26/2008 11:41:03 AM

USO $111.78 +3.02% ...

Jeff Bailey : 6/26/2008 11:40:12 AM

FXE $157.76 +0.41% ... pressing those May and early June relative highs.

Jeff Bailey : 6/26/2008 11:36:58 AM

done crossing ... TWM $76.44 +3.45% ...

Keene Little : 6/26/2008 11:35:27 AM

SPX 1295-1298 is potential price level support where the first pullback in March, after the March low, stopped. Other than that there's not a whole lot of support available before its March 10th close near 1273 or its March 17th intraday low near 1257.

But the March and January lows did nothing for the DOW. But it's the close that counts and we'll have to see if the DOW can close back above its January low (11635). Ideally of course, for the bulls, would be a close back above its March 10th closing low of 11740. We've seen plenty of 160-point rallies off the lows before so the bears should never say never. I can see that possibility if we're completing a 5-wave move down from yesterday's high--a 50% retracement would be at 11747.

Jeff Bailey : 6/26/2008 11:34:51 AM

BIIIIIIG cross taking place in TWM as I type.

Jeff Bailey : 6/26/2008 11:34:26 AM

SPY $129.67 -1.63% ... may have a way to go.

Jeff Bailey : 6/26/2008 11:33:59 AM

European Markets Link

Jeff Bailey : 6/26/2008 11:33:28 AM

Asian Markets Link

Linda Piazza : 6/26/2008 11:31:43 AM

It looks as if the OEX may close this 30-minute period right at that potential support on 30-minute closes, now at about 590.15, with a doji at that potential support. Again, no guarantee of anything, but just a sign that this support is essentially holding for this 30-minute period anyway. The OEX would first need to maintain 30-minute closes above 592.07 and then, eventually above its descending 9-ema, before there's any real change in tenor. Still, remain watchful.

Jeff Bailey : 6/26/2008 11:30:51 AM

USO $111.82 +3.05% ...

Linda Piazza : 6/26/2008 11:27:57 AM

OEX bears, for a very short-term guide to when tenor might have changed, you can use the sharply descending five-minute 9-ema. So far, all five-minute closes have been beneath that today, and it's been closely tested several times. It's now at about 590.80. This would not, of course, be a definitive signal that the bottom is in, but if you're nervous about protecting those profits, continued five-minute closes beneath this would reassure you. Sustained five-minute closes above it would warn you to pay close attention. The OEX is 590.09 as I type.

Jeff Bailey : 6/26/2008 11:24:47 AM

Or bear targets ...

Keene Little : 6/26/2008 11:24:43 AM

So far this is showing the potential to be a steady slow bleed kind of day. We're only seeing very small bounces and not much interest on the buy side.

Jeff Bailey : 6/26/2008 11:24:35 AM

INDU 11,584 -1.92% ... WKLY S2 12,053 and QRTLY S1 11,512 are next support levels.

Jeff Bailey : 6/26/2008 11:16:44 AM

Swing trade NAKED Put buy back alert! ... the PetroChina PTR July $120 Puts (PTR-SD) at the offer of $1.80.

PTR $129.43 -4.43% ...

Linda Piazza : 6/26/2008 11:14:05 AM

The OEX has hit potentially strong support on 30-minute closes, now at 590.13. The OEX is now 590.68 as I type, up only slightly from its 589.95 low, but attempting to steady. There are no guarantees that this attempt will be any more successful than any others this morning, but it's just good account- and trade-management practice to update your profit-protecting plans when potential support has been hit. So, bears should be doing that at each of these stages.

Jeff Bailey : 6/26/2008 11:10:18 AM

USO $111.90 +3.13% ...

Jeff Bailey : 6/26/2008 11:09:14 AM

DIA, SPY, IWM, QQQQ Montage (daily intervals) Link

Keene Little : 6/26/2008 11:08:57 AM

Gold could be setting up a short trade soon. The sideways triangle that it's been in since the late-March low should be a continuation pattern for another leg down (to match the one from the March high). Within the triangle pattern the current rally should be the last one (wave-e in an a-b-c-d-e count) and it has a Fib target at GLD 90.91, about 70 cents higher. This would also create a small throw-over above the top of the triangle: Link

The stop would need to be just above 93.71 as that would negate the bearish interpretation of the triangle pattern. A tighter stop would be just above the May high at 92.11. Assuming we'll see gold drop down from this triangle, the projection for two equal legs down from March is at 75.22 and interestingly that matches the uptrend line from July 2005 right where a 15 to 18-week cycle low occurs (around the 1st or 2nd week of July).

James Brown : 6/26/2008 11:04:58 AM

Readers can prepare to exit on Electronic Arts (ERTS) . The stock is an OI put play. Shares just broke down under the $45.50-45.00 region of short-term support. The stock is -2% to $44.85. Our target is the $44.50 mark.

Linda Piazza : 6/26/2008 11:04:18 AM

It could get ugly fast if there's not some steadying soon. I wanted to note that there's a big broadening formation now showing up on the OEX's 30-minute chart, with the bottom support now somewhere between 588.50 and 587.50, depending on how the bottom trendline is drawn. Typically, when we see these develop at the top of a climb, they're considered bearish, but I've read mixed things about whether they're considered bullish at the bottom of a decline. What is certain is that they're indicate of emotion-based trading, and that they make it extremely difficult to judge when prices have broken out or broken down. Just when bulls think there's been an upside breakout and buy it, prices hit the upper broadening channel and reverse. Just when bears think they've caught the breakdown, prices hit the lower one and reverse. So, here's the chart: Link This chart should not be used to convince oneself to hold on if stops have been hit but rather just as a "make your what-if plans" warning for bears, just in case there's a reversal again somewhere through here, just when you think you've caught the best trade ever. Of course, as was proven when prices dropped through support just after I'd posted my 7-minute chart a few minutes ago, no supposed support is going to hold back a plunging market if that's what's going to happen today.

James Brown : 6/26/2008 11:02:44 AM

Exit Alert! QQQQ has hit our target at $46.10.

This ETF on the NDX index is testing support at $46.00 and its 100-dma.

Jeff Bailey : 6/26/2008 11:02:41 AM

Just 30 stocks, but will weigh heavily on sentiment. Bug guns though.

Jeff Bailey : 6/26/2008 11:01:50 AM

Dow Diamonds (DIA) alert! 115.89 -1.71% ... probes 01/22/08 low. 0% conventional.

Jeff Bailey : 6/26/2008 10:59:10 AM

USO $111.86 +3.09% ...

Jeff Bailey : 6/26/2008 10:58:53 AM

Wilshire 5000 (DWC) 13,279 -1.68% ... trades 19.1% conventional. 10/11/07 high to 03/17/08 low.

Support needs to hold

Jeff Bailey : 6/26/2008 10:56:46 AM

There was "modest" sign of demand easing in yesterday's EIA data. Tensions build, but record short interest in USO has bulls more confident. The MARKET will decide.

James Brown : 6/26/2008 10:54:51 AM

Just a thought.... what happens IF oil sees a prolonged correction longer than six weeks (maybe 3 months) or so. The media will hype it as the bubble bursting and the threat being over.

Consumers might be tempted to return to the larger SUVs and trucks since the oil storm has passed. I think that would be a HUGE mistake.

Don't let your friends or family buy any big vehicles like that unless they are truly willing to pay the cost over the life of that automobile. Ask if they're willing to drive it when gas hits $6.00 or $8.00 a gallon?

Jeff Bailey : 6/26/2008 10:54:08 AM

USO 30-minute interval chart ... QRTLY Pivot retracement (GREEN), MONTHLY Pivot retracement (PINK), QCharts' WKLY Pivot levels and of course the stacked "Bailey Wave" Link

Linda Piazza : 6/26/2008 10:49:26 AM

The OEX has potential support on 30-minute closes at 592.20 and then at 590.28. The OEX is at 592.26 as I type.

Jeff Bailey : 6/26/2008 10:48:09 AM

CNBC "support needs to hold" ... USO $111.78 +3.02% ... I say "MNTHly 80.9% and WKLY R1 needs to hold"

Linda Piazza : 6/26/2008 10:47:56 AM

The A/D line has not followed prices to a new low, at least not yet, but it doesn't have to do so. As I mentioned early this morning, it just has to trail around somewhere near the low of the day and not bounce too big. If should bounce back above that former ascending trendline now at about -1480, however, that would be a signal that something bigger might get start, a first slight and very tentative sign of a change in tenor. So far, it's finding resistance at that trendline, however. The A/D line is at -1751 as I type, with potential support on 15-minute closes at about -1950.

Linda Piazza : 6/26/2008 10:44:39 AM

Tuesday's OEX low was 592.27, and the OEX has just exceeded it. OEX at 592.06 as I type.

James Brown : 6/26/2008 10:42:23 AM

Guest on CNBC predicting that SUV and Truck sales, which were 60% of new car sales, will fall to less than 30% in a couple of years.

I don't think it will take that long!

Linda Piazza : 6/26/2008 10:42:22 AM

I've mentioned before that I often watch the OEX's 7-minute Keltner chart. I don't talk about it a whole lot because I know it's not a popular interval to watch and that not all subscribers even have the ability to watch it. However, here's a 7-minute chart on which I've omitted all but the important outer Keltner channel lines and main bullish/benchmark one. I think it's apparent why I watch it: Link This chart often shows me when the OEX has reached extreme levels in a short-term move as it did yesterday just before 11:00 am and again post FOMC decision . . . and as it is doing now. Nothing on a 7-minute or even 30-minute chart is going to prove that prices action will stop at a certain place, especially in this climate, but I still have to caution that bears should be careful here, at least for short-term bounce potential.

James Brown : 6/26/2008 10:41:06 AM

Research In Motion (RIMM) is down 11.6% ($16.60) to $125.50 following its earnings report last night.

A couple of days ago I was talking about how RIMM tends to move big on its earnings. Yet the options were so expensive that this decline (thus far) is not enough to make any straddle or strangle profitable yet.

Jeff Bailey : 6/26/2008 10:40:37 AM

UNG $60.25 +0.09% ... lurches green.

Jeff Bailey : 6/26/2008 10:39:00 AM

UNG $60.08 -0.18% ...

Jeff Bailey : 6/26/2008 10:38:36 AM

EIA: Weekly Nat. Gas Storage Table ... at this Link ... build of 90 Bcf

Jeff Bailey : 6/26/2008 10:35:37 AM

Shanghai ($SSEC) Link

Jeff Bailey : 6/26/2008 10:34:39 AM

Shanghai was at important trend too!

James Brown : 6/26/2008 10:34:37 AM

Hmmmm.... It is interesting that the Coal Stocks are NOT participating in this market sell-off.

PCX... +3.5%
BTU... +2.9%
ACI ... +2.7%
FDG... +2.6%
ANR ... +2.8%
WLT ... +1.7%
ARLP ... +1.2%
CNX... +0.7%
MEE ... -0.4%

Jeff Bailey : 6/26/2008 10:33:33 AM

At 06/25/08 Closes Link ... something "had to give" today with euro and oil/gold

Linda Piazza : 6/26/2008 10:32:44 AM

Here's where the OEX is on the daily chart: Link It feels dangerous out there and it is, but the OEX is still essentially testing that trendline and historical support, so we're still unfortunately waiting out the outcome. Try to keep an open mind either way because another 10-sma test, even as soon as today, isn't impossible. Unfortunately, neither is a rollover and a quick test of the March lows.

Jeff Bailey : 6/26/2008 10:30:55 AM

CNBC guest was right though ... not many are.

James Brown : 6/26/2008 10:30:34 AM

Thanks, Linda

James Brown : 6/26/2008 10:30:21 AM

Keep an eye on Tyco Intl. (TYC). The stock is breaking down under its 200-dma. The put side of our strangle is using the July 42.50 puts.

Jeff Bailey : 6/26/2008 10:30:05 AM

Oh ... I'm monitoring Japan's Nikkei-225. (see Monday's Wrap).

Linda Piazza : 6/26/2008 10:27:59 AM

Congratulations on the put play on the Q's, James. Wish I'd been in it.

Keene Little : 6/26/2008 10:33:29 AM

Strange price action here as SPX breaks Tuesday's low 1304.42 but only marginally and neither the bulls nor the bears can get it to rally or sell off. The choppy decline looks like it has the potential to be an ending pattern to the downside and a rally will follow. The flip side is that it's getting ready to drop hard. Tough call right here.

Jeff Bailey : 6/26/2008 10:27:32 AM

VIX.X 22.58 +6.81% ... has reclaimed its WKLY Pivot (see 10:00 internals).

James Brown : 6/26/2008 10:26:55 AM

Readers can prepare to exit OI's put play in the QQQQ. The Qs hit an intraday low of $46.30. It's currently at $46.42. Our target is the $46.10 mark.

Jeff Bailey : 6/26/2008 10:26:45 AM

PTR $130.38 -3.73% ... PTR-SD are $1.50 x $1.75

Jeff Bailey : 6/26/2008 10:25:38 AM

AMR $5.47 -3.35% ... WKLY S1 here.

Jeff Bailey : 6/26/2008 10:25:06 AM

USO $111.87 +3.10% ... WKLY R1 held resistance.

James Brown : 6/26/2008 10:24:08 AM

Toy-maker Mattel (MAT) now has a bigger market cap than GM.

Jeff Bailey : 6/26/2008 10:23:45 AM

TWM $75.10 +1.63% ...

James Brown : 6/26/2008 10:22:45 AM

Ford Motor Co. (F) is down 4.5% and testing its March 2008 lows near $5.00.

Jeff Bailey : 6/26/2008 10:22:00 AM

RUT.X 706.14 -1.41% ... probes WKLY S2. First equity-based index I follow in pivot matrix to do so.

Linda Piazza : 6/26/2008 10:21:26 AM

At 179.59 as I type, the BIX is dropping toward potential Keltner support on 30-minute closes now at about 178.60. This is support that held for the BIX on Monday and Tuesday both on 30-minute closes, although of course this Keltner line was at different levels those days. Those who want markets to steady want to see the financials steady, and this would be one place for those in the BIX, at least, to do so.

James Brown : 6/26/2008 10:20:55 AM

Correction to my earlier comments on GM... the stock is trading at its lowest levels since March 1955. That's a 53-year low.

Jeff Bailey : 6/26/2008 10:18:58 AM

Short squeeze alert! ... USO $112.11 +3.32% ...

James Brown : 6/26/2008 10:18:50 AM

Exiting home sales numbers...up 2% in May to 4.99 million units.
Sales are down 15.9% year-over-year.
Supply is still high at 10.8 month supply.

Median price of a house is now $208,600, down 6.3% from a year ago.
That's actually an improvement from April's 8.8% decline.

The west saw price declines of 16%.

Linda Piazza : 6/26/2008 10:18:25 AM

Potential OEX support on 15-minute closes still at 592.57. Next potential support just beneath 590.

Jeff Bailey : 6/26/2008 10:18:24 AM

TNX.X down 4.9 bp at 4.066%. Has broken below its WKLY S1 (4.081)

Jeff Bailey : 6/26/2008 10:17:33 AM

DXY 72.69 -0.32% (30-minute delayed) ... did tap its WKLY S1 (72.59).

Linda Piazza : 6/26/2008 10:17:32 AM

I agree with Keene that we could be on the cusp of something very bad. We could also be on the cusp of a bounce, so both bears and bulls need to prepare their plans for dealing with either contingency. I've got charts printed up with notes on them, right in front of my monitors, so that I know what to do exactly when with each of my open trades. Set stops for if-the-world-turns-over type of occurrences, at the least, if you don't trust yourself to act on your plans before such dire things occur.

Jeff Bailey : 6/26/2008 10:15:06 AM

10:00 Internals found at this Link

Linda Piazza : 6/26/2008 10:13:03 AM

A/D line at -1638. It did rise up to test the underside of the trendline I had mentioned and has pulled back a little from that trendline test, but it hasn't pulled back far. Although still very tentative, the A/D line is at least so far maintaining a slight bounce off the low and bears need to be wary if it gets too high.

Keene Little : 6/26/2008 10:12:08 AM

Bear in mind that from an EW perspective today has the potential to be very brutal to bulls. If you're holding long positions and hoping for a bounce to recover (to get out), you might not get it. I don't like to bet on a breakdown (crash) but that's the potential. SPX needs to hold 1300, although the DOW has already broken its equivalent level by breaking below 11700.

The DOW should find at least some kind of support at its January low near 11630, only 20 points lower. If that breaks I'm sure there are a lot of stops sitting just below it. Many many fund managers have been buying under the premise that the January lows would be the lows for the year.

Linda Piazza : 6/26/2008 10:11:07 AM

No OEX bounce and instead a new low. Nearest potential support on 30-minute closes is now 592.47.

Linda Piazza : 6/26/2008 10:10:13 AM

TRIN 1.26. It dipped down to 1.14, but is bouncing from potential support now at 1.13 on 15-minute closes. Bulls need to see it first sustain values beneath 1.13 and preferably 1.08 and then 0.93. So, it's generally still trending down from its day's high but certainly not breaking through any important support yet as those who hope for a steadying in the markets want it to do. For newbies, equity prices on the NYSE stocks generally move in opposition to the TRIN although it's not an exact market-timing tool.

James Brown : 6/26/2008 10:09:59 AM

Google (GOOG) gapped down this morning and is now down 2.4% to $537.00. Shares are nearing support in the $535-536 zone. It looks like GOOG might also have some support near $525, which was the top of the gap from April 18th. A breakdown there would suggest a possible "fill the gap" move back to the $455 level.

The Point & Figure chart is negative and points to a $484 target. Link

Tab Gilles : 6/26/2008 10:07:30 AM

Apple (AAPL) $173 -$4.45 (2.53%)

From its February low/ May High a 38.2% retracement would put it at $163 or its 200-ma. Note, the 100-ema has provided support in recent declines. Link

Linda Piazza : 6/26/2008 10:05:17 AM

The just-completed 15-minute candle on the OEX's chart was a small-bodied candle with a lower shadow springing up from support, a potential reversal signal. As Keene noted earlier, we need to see some follow through on such signals and not just a bit of sideways action. As the home sales figure is released, the OEX is attempting to bounce, but will face potential resistance on 15-minute closes at 596.84 if it can get that high. Bulls would of course like a 15-minute close above that and bears want any bounce, if one occurs, to fail there on 15-minute closes.

James Brown : 6/26/2008 10:04:40 AM

Goldman Sach's downgrade of Citigroup (C) to its "conviction sell" list has pushed C to a 5% loss and a new multi-year low... under the March 2008 lows.

Keene Little : 6/26/2008 10:02:17 AM

With the DOW breaking Tuesday's low (11727) that could now be resistance if it bounces back up to it this morning.

Jeff Bailey : 6/26/2008 10:02:16 AM

USO $111.62 +2.87% ... sitting on MONTHLY S1.

James Brown : 6/26/2008 10:01:38 AM

CNBC talking about the new multi-year lows in General Motors (GM).

The stock is down almost 11% following Goldman Sachs cutting the stock from "neutral" to a "sell".

GM has not been this low since 1974.
GM's marketcap is down to $6 billion, less than H&R Block, less than Garmin (GRMN),

Keene Little : 6/26/2008 10:01:00 AM

SPX is trying to find support at Tuesday's low which is also the bottom of its parallel down-channel for price action since the May high (Tuesday's quick spike down at the open was a break below the bottom of the channel but then it recovered back up inside).

Linda Piazza : 6/26/2008 9:58:18 AM

A/D line now -1659, still very negative and it's bounce still very tentative, but bouncing. It's going to hit that former ascending trendline at about -1520 or so now, and want-to-be bulls will want to see it back above it, maintaining values above it.

James Brown : 6/26/2008 9:56:15 AM

3M Co. (MMM) is down more than 1.5% at $71.50 and breaking through its January 2008 lows near $72.00. Readers should plan to exit this OI put play soon.

James Brown : 6/26/2008 9:54:07 AM

Readers may want to start taking some profits in Deere Co (DE), an OI put play. The stock is down another 2.2% at $71.70. Shares are down almost $6.80 for us thus far.

Linda Piazza : 6/26/2008 9:53:05 AM

First slight edge of green on an A/D line candle with the A/D line having nearly touched potential Keltner support on 15-minute closes, now at -1897. This is just a sign of an attempt to steady and no guarantee of success, but bears need to keep updating their profit-protecting plans. A/D line at -1762.

Keene Little : 6/26/2008 9:51:18 AM

If the market merely consolidates a bit at its initial morning lows we will likely see a continuation lower.

Linda Piazza : 6/26/2008 9:51:11 AM

TRIN 1.28. Stillin bearish territory, still trending down.

James Brown : 6/26/2008 9:50:57 AM

Exit Alert! Caterpillar (CAT) is an OI put play. The stock gapped open lower at $75.01 and dipped to $73.90. Our target was $75.25.

Linda Piazza : 6/26/2008 9:50:30 AM

The Dow is of course below Tuesday's low. It's only now, however, approaching the Keltner channel on which it found support early Tuesday morning. Today that channel line is at 11,663, with potential support there on 15-minute closes. However, the Dow needs to bounce and move above about 11,715 by the close of the first 30-minute period or it will have violated the potential support there. Dow at 11,677.40 as I type, and actually looking better on a Keltner basis (in that it hasn't yet pierced the 15-minute support or even touched it) than it did early Tuesday morning. This is potential Keltner-style bullish divergence. It means about what all such divergences mean: to be watchful for price action to confirm what's being seen, but not to guarantee that prices will bounce. We sometimes see bullish divergences set up over and over with no resultant price action.

James Brown : 6/26/2008 9:49:27 AM

Apple Inc. (AAPL) gapped down this morning and is plunging toward this week's lows under $172. Currently -2.6% at $172.65.

Jeff Bailey : 6/26/2008 9:48:52 AM

Most Actives ... QQQQ $46.60 -2.03%, ORCL $21.98 -2.52%, SPY $130.55 -0.94%, RIMM $126.99 -10.78%, C $17.98 -4.61%, XLF $21.39 -1.33%, CSCO $24.36 -1.37%, INTC $22.35 -1.28%, RIO $36.32 -0.98%, WM $5.42 -2.16%

Linda Piazza : 6/26/2008 9:46:34 AM

I see no answer yet to whether the OEX will steady at or near its Tuesday morning low. The A/D line still moves down but is approaching potentially significant support that I mentioned earlier. TRIN is trending down but is still above the bearish/bullish benchmark, so still in bearish territory despite the trend so far not being bearish. So, markets could attempt to steady, but there's no guarantee of that nor of the ability to sustain any bounce attempt if it occurs.

James Brown : 6/26/2008 9:46:04 AM

Asian markets...
Shanghai Composite.... -0.1%
Hong Kong Hang Seng ... -0.8%
Japan's NIKKEI 225 index.. -0.5%

European markets....
French CAC 40 ........ -1.7%
German DAX ......... -1.68%
English FTSE ........... -1.4%

Brazilian Bovespa is down 1.7%

Linda Piazza : 6/26/2008 9:44:32 AM

TRIN is 1.42, down sharply from its 2.29 high, an extreme level by the actual number and by the fact that it pierced upper Keltner resistance, something that it doesn't often do. The last time was early Friday morning, but Friday the TRIN managed to stay above the bullish/bearish benchmark all day, and bears want it to stay above it today, too. That's currently at 0.91 on the 15-minute Keltner charts, although sustained 15-minute closes beneath 1.06 would warn bears to be careful and particularly watchful.

James Brown : 6/26/2008 9:41:44 AM

Crude Oil is rising +2.51 to over $137.00.

The USO is trading back toward the top of its three-week trading range.

Linda Piazza : 6/26/2008 9:40:47 AM

Keltner outlook on the A/D line: The A/D line prints values in the lower or bearish (for equities, too) half of its Keltner channels, as expected. It's piercing potential trendline support, with that trendline drawn off Friday's low and now at about -1540, and approaching potential Keltner support with that at about -1900. The A/D line is now -1642, so bears want to be on guard for a sharp bounce. A sideways movement near the lows won't do much damage to the bearish tenor they want, but a sharp bounce would question it.

Linda Piazza : 6/26/2008 9:35:50 AM

The OEX is of course driving below the potential Keltner support now near 597, as we expected it to do first thing. It's dropping toward the further and more important support that will now be at about 592.50 on the 30-minute chart by the time it's tested, if it is. OEX at 593.95 as I type. Those who want the markets to steady want to see the OEX steady soon now, and indeed, to bounce hard. Remember the possibility that futures have performed the equal-low test for us. Reserve judgment, but also reserve your trading account and act according to your trading plan no matter what you think you know will happen.

Linda Piazza : 6/26/2008 9:32:27 AM

Here we go. Take a deep breath.

Jeff Bailey : 6/26/2008 9:27:42 AM

Bearish swing trade long raise stop alert! ... for the ProShares UltraShort Russell 2000 (TWM) to $74.50.

TWM $75.22 pre-market.

Linda Piazza : 6/26/2008 9:30:21 AM

As I type, the S&P e-minis have tested their Tuesday low. Will this turn out to be the equal-low test for the current move? There's no proof of that at all, but keep it on the back burner as a possibility. We'll look for signs that it could serve as the equal-low test, but for now, futures action is nasty.

If we extrapolate the current S&P e-minis' distance from fair values and decide where the OEX might go, I get a value of about 592.90. Tuesday's early-morning low was of course 592.27, so if the cash market follows futures' action, which I must warn that it does not always do, it looks as if we'll get an equal-low test on the OEX, too.

I'll talk about where potential support is showing up on the OEX's intraday charts, but please remember that if we're going to have a nasty day, none of these support levels will matter. With that caveat, if the OEX blasts through the rising trendline off Tuesday's low just a little below yesterday's close, as it seems destined to do, I'm showing potential support on 15-minute closes that will be at about 597.20 by the time it's tested. If there's any follow through on premarket weakness, that will be lost, too, but keep in mind the possibility that the OEX could then bounce back above it by the conclusion of the first 5-minute period, showing that the support had held.

If there's more weakness, though, the next targets and potential support are found on the 30-minute chart, and they'll be at about 593 and 590 by the time they're tested. One, of course, will be part of an equal low test. So, if the OEX barrels down to 592-593 or perhaps even 590 and then attempts to steady, we're going to have to reserve judgment. Unless sell volume just totally overwhelms bulls, I think we can expect a de rigueur buy-the-equal-low attempt, but we won't know whether or not it's going to hold. Hence, the reserved judgment. If prices barrel right through those levels and don't bounce quickly back, we could have a bad day on our hands.

If, instead, the pre-market test is the only test we get and the indices behave much better than it looks as if they should after the cash open, climbing again, we know our spots to watch for rollover potential. They're at about 603-603.20 and then 605.50-606.60, with those being potential resistance zones on 30-minute closes. If shorts get surprised by a better-than-expected performance after the open, though, they could help fuel higher prices.

In the underpinnings of the market, I see cross currents right now. I've talked about my concern about the rising TED spread, now well above 1.00 this morning, at 1.05, but my further study has suggested that there's some concern about interpreting it in the current climate, particularly with financials reporting or due to report. The USDJPY is lower this morning, but it's really not much lower and it's still in a choppy zone just under the 200-sma and -ema's. It's been challenging those for two weeks without pulling back far, so far. So, what we have there is consolidation, natural and expected consolidation, near the highs, which is normally considered a bullish sign. Lately, the USDJPY hasn't been a good predictor of what happens with U.S. equities, as it once was, but still, it's worth watching.

Keene Little : 6/26/2008 9:12:28 AM

The bullish scenario that was looking for a 2nd leg up this morning is not looking so good. Equity futures are near their lows for the overnight session and down hard, especially the techs (thanks partly to RIMM's disappointing earnings last night). DOW futures are pointing to the DOW easily breaking its March low and not far from its January low (DOW 11630). S&P 500 futures are testing Tuesday morning's low but there's a hint of it holding, at least as we approach the opening bell.

Jane Fox : 6/26/2008 8:46:03 AM

WASHINGTON (MarketWatch) -- The price of retail gasoline could fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy-futures markets, four energy analysts told Congress on Monday.

Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.

Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters' assessment at a hearing on proposed legislation to limit speculation in futures markets.

Krapels said that it wouldn't even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets.

"Record oil prices are inflated by speculation and not justified by market fundamentals," according to Gheit. "Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel."

Futures trading in London has not been a major factor in rising oil prices, testified Sir Bob Reid, chairman of the Chairman of London-based ICE Futures Europe. Rising prices are largely a function of fundamental supply and demand, not manipulation or speculation, he said.

"Energy speculation has become a growth industry and it is time for the government to intervene," said Rep. John Dingell, D-Mich., chairman of the full committee. "We need to consider a full range of options to counter this rapacious speculation." It was Dingell's strongest statement yet on the role of speculators.

Jane Fox : 6/26/2008 8:43:24 AM

WASHINGTON (MarketWatch) -- The U.S. economy grew at a slightly faster pace in the first quarter while inflation also was stronger than estimated, the Commerce Department said Thursday in its final revision to gross domestic product estimates.

The nation's real gross domestic product was revised up a tenth of a percentage point to a 1.0% annual rate in the first three months of the year. The revision was slightly below the consensus expectation of economists surveyed by MarketWatch.

The mildly stronger-than-expected report is not expected to have much impact on financial markets.

Economists have turned their attention to growth in this quarter, which is tracking at a 0.8% growth rate, suggesting the first half of the year should show sluggish, but positive, growth.

The economy has grown 2.5% in the past year

Market Monitor Archives