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Jeff Bailey : 7/1/2008 2:42:44 AM

Dow Diamonds (DIA) end of month and quarter's close looks to have been $113.42, not $113.55.

Keene Little : 6/30/2008 11:18:31 PM

Tuesday's pivot tables (new monthly numbers for July): Link and Link

SPX remains one of the better indexes for me to watch since it's splitting the differences I'm seeing in the DOW and NDX/RUT. The 60-min chart shows the potential for another rally leg Tuesday morning (it can't waste any time Tuesday morning in order for the bulls to hold on here--it must rally right away). The top of the bear flag shown on the chart crosses 1297 (two equal legs up off Friday's low) just after lunch on Tuesday: Link

If price drops below Friday's low, whether from here or after another bounce, it will be very bearish as the sharp decline in June would likely accelerate lower. The form of the bounce off Friday's low is clearly a correction (3-wave move up to Monday's high) so I fully expect the decline to continue. But first I want to see if the market can get another leg up, as depicted in dark red, which will be a good setup to try a short play, especially if it looks like SPX will stall around 1297.

OI Technical Staff : 6/30/2008 9:59:59 PM

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Jeff Bailey : 6/30/2008 6:22:06 PM

DXY's official 05:00 PM EDT tick was 72.500

Jeff Bailey : 6/30/2008 5:29:49 PM

Closing Internals found at this Link

Jeff Bailey : 6/30/2008 4:51:19 PM

Closing U.S. Market Watch found at this Link

Linda Piazza : 6/30/2008 4:08:46 PM

The TED spread is now 1.05. It's had a high of 1.12 and a low of 1.00 today, so it's produced a sharp pullback from the high with a bit of a lower shadow and a bit of an upper one. We'll see what happens tomorrow.

Keene Little : 6/30/2008 4:00:19 PM

Two equal legs down from this morning's high for SPX is near 1278 so ideally for another leg up scenario that level will hold and we'll see an immediate rally start tomorrow morning. But the bulls won't be able to dilly dally tomorrow morning--they'll need to get this rallying immediately or else it could start to turn bearish sooner rather than later.

Linda Piazza : 6/30/2008 4:00:57 PM

As I mentioned earlier, the problem with all this sideways stuff is that it allowed the benchmark breakout potential support to sink lower, too. That's now at 579.79 on 30-minute closes with further potential support at about 579.27.

On the 15-minute chart, the support is at 576.87-578.67. This action isn't changing the outlook as far as the daily candle produced, though: that's still a second day of consolidation.

Keene Little : 6/30/2008 3:57:51 PM

Best chance for the bulls now is to see this afternoon's drop finishing a 3-wave pullback from this morning's high and then followed by another rally leg starting early tomorrow (or a continuation sideways. The look of the pullback supports that view (vs. immediately heading for new lows from here).

Linda Piazza : 6/30/2008 3:47:32 PM

Jeff has already mentioned some of what could impact your trades tonight: Japan's important Tankan Index. That will be released at 7:50 pm ET. Tomorrow morning, Germany's retail sales and the U.K.'s Nationwide Home Prices will both be released at 2:00 am. This, and Germany's unemployment number at 3:55, the Eurozone's revised Manufacturing PMI at 4:00, and the Eurozone's unemployment number at 5:00 can all impact the tenor in overnight trading. Those all happen before the markets open tomorrow, of course. Shortly after our open, at 10:00, we'll get the important and often market-moving ISM take on manufacturing. Construction spending will be released at the same time.

Whatever your trade, there's lots of risk of the markets going either direction tomorrow. Or no direction, if the OEX is going to continue a bit further in its typical 2-5 days of consolidation before making another move. Barring a big move into the end of the day, today will mark the second day of consolidation near the bottom of the range.

Linda Piazza : 6/30/2008 3:40:35 PM

You know, I'm noticing again that we had a big-range week last week. Is it possible that we'll have a small-range (or at least small-bodied) candle for the week this week? I think it's far too early to be sure, but it must be considered a possibility at least.

When I look at the OEX in relationship to its weekly 10-sma or 9-ema, which is my preference to watch, I note that it's dropped far below that moving average. It looks to me as if it's about time for either some sideways consolidation until that weekly 9-ema, now at 608.59, cycles down closer to the current action or else a pop up to retest it. Either way, the oversold conditions can be worked off.

Of course, as Keene and all of us have warned, deep drops can come out of oversold conditions, so what is typical and normal to happen on the weekly charts or daily or even intraday ones doesn't have to happen.

Linda Piazza : 6/30/2008 3:28:02 PM

The OEX now has potentially strong resistance in the 586.12-589.05 zone, with that showing up on both 15- and 30-minute charts. This is lower than the earlier 588-590 zone, having moved lower as prices moved sideways. So, you need to adjust your profit-protecting plans accordingly, knowing what you'll do if you're in bullish trades and that is tested.

Linda Piazza : 6/30/2008 3:09:12 PM

I'm tapping my monitors, making sure that prices are still updating. The OEX is moving sideways, of course. While it's good that it's maintaining 30-minute closes above the breakdown benchmark on that chart, this sideways movement is actually allowing that support to sink lower. It's now at 580.00-580.24. On the 15-minute chart, the breakdown benchmark is now 579.13.

The OEX confirmed its little inverse H&S this morning, and it moved up almost to the upside target that would have been predicted from that, but it wasn't able to make any further progress. From this, I would conclude that bulls are holding their own, but only barely.

Keene Little : 6/30/2008 2:44:24 PM

If SPX can hold inside a potential bear flag (uptrend line from Friday is currently near 1280) we could see another push higher tomorrow. If at any time today's bounce is followed by new lows below this morning's, or certainly Friday's, it would suggest we'll be into the next leg down. 60-min chart: Link

Keene Little : 6/30/2008 2:36:29 PM

The pullback in the market is more than I had expected before getting another push higher to set up a short play. Unless this is very bearish (as in the bounce is over and now we'll head for new lows) it's looking like we could be in the middle of a larger correction. That would mean we could get another leg up, probably tomorrow, which could have SPX approaching 1300 or so. Or, as shown on the DOW's 60-min chart this morning, we might just chop sideways for another day before heading lower again (dark red depiction on chart): Link

Jeff Bailey : 6/30/2008 2:16:13 PM

02:00 Internals found at this Link

Linda Piazza : 6/30/2008 2:09:30 PM

The OEX's breakdown benchmark on the 30-minute chart was shoved down to 580.28-580.84 on 30-minute closes, so the OEX's last 30-minute close at 581.52 did manage to hold above that benchmark, at least. We really need to see a higher high for the day on the OEX, though, or this is going to be just the second day of consolidation after a steep fall.

Remember when the OEX was trending higher, relentlessly, over months? It had a certain pattern then. It would zoom higher, then consolidate sideways for 2-5 days while the 10-sma rose beneath it. Then, when it was close, the OEX would dip down to test that moving average and bounce back from it, starting the whole process over again. Now it's got the opposite pattern going. It falls steeply, consolidates for about 2-5 days while the 10-sma falls down close to the consolidation zone. Then it zooms up to retest it and is knocked back. The whole process repeats. Sooner or later, it's going to be time for a bounce to a higher resistance level, perhaps to the 30-sma, but for now, we're just worried about that pattern that's begun seeing up again since about the middle of May. So, after a strong decline and then a potential reversal type candle on Friday, those hoping for a steadying don't really want to see just another consolidation-type candle today.

Linda Piazza : 6/30/2008 1:58:15 PM

The OEX not only dropped to but also slightly through the other side of the smallest Keltner channel. See my 1:02:52 post for the prediction that it might test it and the significance. The testing of the support is a rather natural thing during the lunchtime lull, but if the OEX starts closing 30-minute periods much below about 581, that's a bit more serious. Those hoping for a steadying in the markets would prefer that the OEX bounce above 581.52 by the close of this 15-minute period and would prefer an even stronger bounce than that.

Jeff Bailey : 6/30/2008 1:47:35 PM

Berkshire Hathaway (BRK.A) $120,050.00 -0.45% ... Threatens to close at lowest level of '08.

Jeff Bailey : 6/30/2008 1:45:50 PM

American Intl. Group (AIG) $26.59 -4.18% ... threatens to close at another multi-year low for a sixth-straight session.

Jeff Bailey : 6/30/2008 1:40:04 PM

Lehman Brothers (LEH) $20.50 -7.86% ... after probe of 03/17/08 low ($20.25).

Jeff Bailey : 6/30/2008 1:37:53 PM

Most Actives ... SPY $128.43 +0.70%, QQQQ $45.50 -0.32%, F $4.77 -4.21%, WM $5.01 +4.37%, MSFT $27.79 +0.57%, QID $44.45 +1.34%, SIRI $1.97 -6.19%, INTC $21.50 +0.04%, CSCO $23.31 -1.31%, WFC $23.98 -0.29%

Jeff Bailey : 6/30/2008 1:33:31 PM

Corn "limit down" after latest U.S. Department of Agriculture (USDA) figures showed farmers had planted more than a million more acres of corn than had been expected back in March.

The USDA said farmers expect to harvest 78.9 million acres of corn, down 8.7% from the 86.5 million harvested last year. The 8.7% decline includes the damage to corn crops caused by flooding in the Midwest.

Jeff Bailey : 6/30/2008 1:28:51 PM

The Bank for International Settlements (BIS), often seen as the "central banks' banker" releasing its annual report.

The Basel, Switzerland-based bank saying that with inflation rising and continued strong economic trends in the euro zone, Japan and major emerging markets, a global bias toward higher interest rates is probably appropriate.

The bank warned against a cookie-cutter approach to interest rates from country to country, and warned that an excessive tightening exacerbated the credit contraction caused by the crisis over mortgage-backed securities could worsen any downturn.

"Unfolding developments at the core of the global financial system have, however also created great uncertainty about the future economic prospects," the bank said. "Banks in several advanced industrial economies have been tightening lending standards, and thus a generalized squeeze in the availability of credit remains a distinct possibility."

The BIS board of directors has 20 members and is currently chaired by Jean-Pierre Roth of the Swiss National Bank. Six non official directors are the central bank governors of Belgium, France, Germany, Italy and the United Kingdom as well as the chairman of the Board of Governors of the U.S. Federal Reserve System.

Linda Piazza : 6/30/2008 1:25:20 PM

TRIN is now 0.86, in territory that's considered bullish for equities but doing a bit more testing of resistance than is perhaps most comfortable for equity bulls. They would like to see a pullback to 0.71 or even 0.57 potential support on 15-minute closes.

Keene Little : 6/30/2008 1:21:51 PM

The little sideways move in the market over the past 90 minutes, especially if it can hold above the pullback low at 11:45 AM, is looking a bit bullish. I'll continue to watch to see if SPX fails at the 1294-1295 area (assuming it will get there) but with the pattern looking a little more bullish here we could see it push much higher. And again, above 1300 would have me backing away from thinking about the short side for a few days.

Linda Piazza : 6/30/2008 1:11:21 PM

TED spread now 1.01, continuing to drop. For those who haven't been reading the posts over the last few weeks, the TED spread is a measure of default risk. A rising TED spread usually accompanies fears of increasing risks of defaults, and equities often turn down as the TED spread rises. I was particularly worried about a month ago when I noticed the TED spread had reached potential support, worried that it might again rise through 1.00, which it did last week. I'd like to see it dive further, although it's still well below its typical pre-credit-woes range of 0.10-0.50.

With Friday's 1.13 level, I wondered if we might wake up this morning with another Bear Stearns type event on our hands, wondering if there was something brewing under the markets. I, for one, am glad that didn't happen.

Linda Piazza : 6/30/2008 1:03:22 PM

The OEX is so far maintaining 15-minute closes above its 15-minute 9-ema, but its failure to reach a new high has led to a flattening of that moving average. When that happens, often around the lunchtime lull, the OEX sometimes moves all the way to the other side of its smallest Keltner channel, with that now at 581.77. If that should happen, it's not the end of the world or the end of hopes for steadying, but those who hope for a steadying would want to see 30-minute closes at or above 581.45-582.08, and want to then see a bounce from that support. They would rather the pullback not be needed at all.

Keene Little : 6/30/2008 12:42:54 PM

If SPX and DOW break down below their pullback lows near 11:45 AM then additional upside will be questionable.

Keene Little : 6/30/2008 12:41:16 PM

The Fib projection at DOW 11455 that I mentioned this morning still looks like a good upside target as well.

Keene Little : 6/30/2008 12:40:01 PM

Looking at the bounce off Friday's low, the 2nd leg up (today's rally) would achieve 162% of the 1st leg up (Friday afternoon's bounce) at 1294. This is very close to the 1295 I had projected and is at the bottom of the parallel down-channel that SPX dropped out of last Thursday. That's the level I'll be watching for the bounce to fail as a shorting opportunity. Whether it gets there (or stops there) is now the question.

Linda Piazza : 6/30/2008 12:31:21 PM

The OEX is consolidating above what was resistance and now is potential support on 30-minute closes, now at 581.81-582.51. For a shorter-term outlook, it's also finding support on 15-minute closes at the turning-higher 15-minute 9-ema, now at 583.53. It needs to bounce up to a new high to keep it turning higher.

Both charts show potential resistance in the 588.05-590.40 zone, so bulls should know ahead of time how they'll treat a test of that zone, if it should occur. I would expect some selling to begin as that zone is approached. If bears get surprised by a higher-than-expected move, they could fuel a further rise, perhaps up toward 593-594, but there's no assurance that such action will occur, and the OEX might be pushed back instead. In this environment, it's far better to collect profits too soon and mourn the profits you coulda-woulda-shoulda made than to let profits turn to losses.

Linda Piazza : 6/30/2008 12:24:38 PM

I mentioned in an earlier post this morning that I think I vote for something else (other than a refinery) in my back yard. In fact, I am voting, with my money. Within a couple of weeks, we plan to have a geothermal system installed. The contract is signed, down payment is paid, equipment ordered, and we'll soon have 1500 running feet of tubes installed 5-6 feet below the ground surface and a ground-to-air heat pump working, too.

Why do I mention this in the Market Monitor? I wonder how many other baby boomers such as my husband and I are taking steps like this? I already know that Austin, our nearest city, is one of the greenest in the U.S., and the solar PV, solar hot water and other green companies are doing all the business they can handle. (We know, because we've literally waited months for call backs or quotes from such companies, and have been told that waiting times for contracted jobs are 3-6 months.) Yet, I hear that margins are thin and Austin's hefty rebates are soon to end, with national rebates due to expire this year, too. Plus, my research is turning up lots of stories about alternatives to the PV panels now being used. This morning, the Nikkei Net published an article saying that, together with "others," Showa Denko KK will begin mass-producing dye-sensitized solar cells. I've been reading rumors about these by Showa Denko, (no silicon) thin-film CIGSSe by Johanna Solar, and other supposedly cheaper alternatives to current PV technology on the forums for months, without much way to evaluate if the rumors will result in the hoped-for cheap mass-produced cells. As we personally move toward reducing our energy consumption in preparation for some kind of solar technology, I've wondered if we should wait to buy current technology for our home and wait to invest in current solar-related companies, too. Rumors don't always turn out to be fact, but, if true, they could change the landscape for some companies in the near future.

Jeff Bailey : 6/30/2008 12:16:16 PM

12:00 Internals found at this Link

Jeff Bailey : 6/30/2008 12:10:17 PM

Tyson Foods (TSN) $15.07 +2.93% ...

Jeff Bailey : 6/30/2008 12:09:40 PM

Corn futures "limit down" ... yc08n down 30.50, or -4.04% at 724.25

Linda Piazza : 6/30/2008 11:55:22 AM

TED spread now 1.02, down steeply from the day's high of 1.12 and down 9.74% from Friday's close.

Linda Piazza : 6/30/2008 11:54:17 AM

Now that the OEX is above the breakdown benchmark on the 30-minute chart, let's use that one as a needs-to-close-above zone that's more reliable than the 15-minute version. So, the OEX needs to close 30-minute periods above that benchmark, now at 582.11, although bulls would prefer 30-minute closes to also be above 582.90, slightly higher potential support on 30-minute closes.

A lot can happen in 30-minute periods, though, so let's look at a shorter-term guide on the 15-minute chart. Bulls would like to see 15-minute close above 582.75, the 15-minute 9-ema, and then would like to see the OEX bounce from that into a new high to keep that 15-minute 9-ema rising higher.

Those in bullish trades should be particularly watchful of potential resistance in the 588.20-599.60 zone, showing up as potentially strong resistance on both the 15- and 30-minute charts.

Jeff Bailey : 6/30/2008 11:53:57 AM

UGA $65.51 -0.38% ...

Jeff Bailey : 6/30/2008 11:53:42 AM

USO $113.58 -0.14% ...

Jeff Bailey : 6/30/2008 11:51:34 AM

US April distillate use lowest any month since July'07.

Jeff Bailey : 6/30/2008 11:51:02 AM

US April distillate use -2.5% versus year ago at 4.108M b/d.

Jeff Bailey : 6/30/2008 11:50:27 AM

US April gasoline use lowest since April'03.

Jeff Bailey : 6/30/2008 11:49:58 AM

US April gasoline use -1.25% on year at 9.117M b/d

Jeff Bailey : 6/30/2008 11:49:12 AM

US April oil use +36,000 B/D vs. March.

Jeff Bailey : 6/30/2008 11:48:38 AM

US April oil use lowest since 2002.

Jeff Bailey : 6/30/2008 11:47:12 AM

Crude oil has reversed earlier gains as the EIA updates April demand figures.

EIA revising April US oil usage to -3.9% versus year ago at 19.768M B/D.

Jeff Bailey : 6/30/2008 11:44:24 AM

Most Active ... QQQQ $45.70 +0.10%, SPY $128.59 +0.83%, CSCO $23.63 +0.08%, UYG $20.52 -0.72%, INTC $21.82 +1.53%, AAPL $168.60 -0.87%, LVLT $2.99 -4.16%, MSFT $27.87 +0.86%, ORCL $21.30 +0.04%, RIMM $118.03 -2.43%

Linda Piazza : 6/30/2008 11:32:57 AM

Tab just mentioned the VIX, and I always like to read Tab's comments. As I mentioned last week, I'm on the fence about whether the VIX's failure to move to a new relative high while the indices dove was a type of bullish (for equities) divergence or just a sign that there's lots more downside for equities around the corner. As I mentioned last week, I caught a late-night discussion on CNBC Europe, too, debating the same thing, without any agreement among the debaters. Some took it as a good sign; some, an ominous one. So, here's what I'm watching, as seen on a daily Keltner chart: Link To me, the chart doesn't say that the VIX must break out right now, and suggests that it could just as easily turn down toward 22.00-21.60. However, a move above the line currently at 25.20, whether or not accompanied by a daily close above that level, would likely be accompanied by some dire actions on the equities.

Oh, and in case I haven't clarified it enough lately, I was always in the it-must-retest camp, having gone to cash in October in all but my trading accounts, and the whole point of a retest is to see if support holds or not. So, I'm not arguing with the premise that equities could still have a lot of downside. If I were convinced that this were "the" bottom, I'd be investing some of that money I want to put back to work. I'm just not sure that the capitulation will come right now.

Linda Piazza : 6/30/2008 11:18:18 AM

So far, so good, but those in bullish trades should be aware of the tentative nature of the markets and keep their stops updated.

Jeff Bailey : 6/30/2008 11:18:02 AM

Bearish swing trade long raise stop alert! ... for the ProShares UltraShort Russell 2000 (TWM) $76.78 -0.20% ... to $76.00 (from $75.50).

Tab Gilles : 6/30/2008 11:16:30 AM

$SPX/$VIX Could capitulation take the SPX down to 1200? I'm watching Trichet and the ECB on July 3rd, if they raise rates (many believe they will) it will perhaps be the catalyst for a capitulation in the markets. Also on the economic calendar we have the June Employment Report on the same day, as we go into the 3-day holiday weekend. Link

Linda Piazza : 6/30/2008 11:08:18 AM

TED spread now 1.03, the low of the day. The high was 1.12.

Jeff Bailey : 6/30/2008 11:03:42 AM

Yen CurrencyShares (YEN) $94.10 +0.12% ... are fractionally higher ahead of this evening's Q2 Tankan Large Manufacturers Index. Economists look for further deterioration of growth in this difusion index to 3 from 11 as manufacturer's confidence weakens due to rising energy and basic materials costs. The Tankan survey polls more than 10,000 companies across a range of industries and paints a detailed picture of how they see business conditions over a three to six month period.

Linda Piazza : 6/30/2008 11:00:01 AM

OEX bulls or just those who want to see a steadying next want to see an OEX 30-minute close above 582.66 and would prefer it above 583.40 as the next sign of stabilization.

Jeff Bailey : 6/30/2008 10:51:09 AM

U.S. economic data released this morning at 09:42 AM EDT was regional and had the Chicago PMI, a barometer for business activity in the midwest, rising to 49.6 in June, up from the 49.1 reading in May. Economists had forecasted a drop to 48.0. Measures above 50 signal expansion, and a reading below 50 is viewed as a sign of business contraction.

The purchasers group said the prices paid index fell to 85.5 in June from 87.5, while the new orders index fell to 52.0 from 56.1.

Linda Piazza : 6/30/2008 10:50:57 AM

The OEX is just barely clinging to the support of its breakdown benchmark on 15-minute closes. This is tentative improvement after the first 15-minute close above it but very tentative so far. It needs to build on that support. As I mentioned a couple of times this morning, though, immediately after breaking through this benchmark, it was going to face an analogous one on the 30-minute chart, so it was likely going to pullback or stall. At least so far we're getting the stall version, but this is no proof yet that everything is okay. It's just better than not finding support on that benchmark.

Linda Piazza : 6/30/2008 10:47:56 AM

TRIN 1.07. It's above the 1.00 benchmark most use as marking a point at which it registers a bearish tenor for equities, but it's just testing a 1.12 benchmark for today on the Keltner channels. Sustained closes above it would signal a more bearish tenor for equities, so bears want to see that. Bulls or simply those who want a steadying want to see sustained 15-minute closes below 0.99 and then a sharper downturn. Even levels that have supposedly been bullish for equities haven't resulted in bullish action, but those have usually been accomplished when the TRIN was testing support and likely to bounce.

Jeff Bailey : 6/30/2008 10:45:55 AM

Canada's gross domestic product (GDP) rose 0.4% month-over-month in June, which was slightly stronger than economists' forecast for a 0.3% gain. The increase comes after March's 0.6% rise, April's 0.2% decline and a matching 0.2% decline in May.

Keene Little : 6/30/2008 10:43:55 AM

Based on the type of bounce pattern for the DOW I expect the current leg up this morning to reach a Fib projection at 11455, or about another 90 points higher. If it instead chops up and down and goes sideways between 11300 and 11400 then we'll have our setup for another short entry perhaps as early as this afternoon.

Keene Little : 6/30/2008 10:41:29 AM

After a slight undercut of Friday's low the DOW did manage to successfully retest it. Now after the bounce back up the bulls do not want to see another test since it would then be a high probability that we'll see the market continue to sell off. For now the bounce scenario looks good and I'll be watching to see what form it takes and hopefully get some clues as to high it might get. For day traders, trading the long side is counter trend but I don't think it's a good time to be short. Sit back and relax awhile and let the bounce develop a bit more.

Jeff Bailey : 6/30/2008 10:39:50 AM

Euro CurrencyShares (FXE) $158.09 -0.08% ... Digesting last weeks gains. Economic data out of euro zone showed consumer prices jumped 4% year-over-year in June, hitting a new record high. Economists had forecasted a 3.9% rise.

Linda Piazza : 6/30/2008 10:35:53 AM

A first 15-minute close for the OEX above the breakdown benchmark since Thursday afternoon. Now the OEX needs to maintain 15-minute closes above this benchmark, with support now from 581-581.23. This is important because the OEX is soon going to hit the same benchmark on the 30-minute chart, with resistance there from 582.77-583.54. If it's stalled there, those who want to see some improvement in the equity markets want the pullbacks to be shallow, and hopefully finding support in that 581 level. This wouldn't be proof that the bottom is in, of course, but it would be a first tentative sign of improvement in the very short-term outlook.

Jeff Bailey : 6/30/2008 10:35:08 AM

In a mixed tape, investors saying "Mmmm, mmm, good" after Campbell Soup (CPB) $33.95 +5.50% warned that earnings for the fiscal year ending in July will come in at upper end of its 5% to 7% forecast, and announces plans to repurchase up to an additional 10% of its shares outstanding.

Linda Piazza : 6/30/2008 10:33:13 AM

The prices-paid component of the Chicago PMI dropped but so did the new orders index.

Jeff Bailey : 6/30/2008 10:32:25 AM

MBIA, Inc. (MBI) $3.71 -11.03% ... Bond insurer weak on news that it is selling municipal bonds to raise cash as it moves to make billions of dollars in payments that were triggered by its recent rating downgrade by Moody's.

Linda Piazza : 6/30/2008 10:31:06 AM

Good news, perhaps, for those who want a steadying in the market: The A/D line's 15-minute 9-ema has now risen right to the day's lows. There's potential support now from -460 to -510. This did not happen this way Friday. Now the A/D line is climbing although it's still climbing within the early range it established and hasn't broken to a new high. It's at -57 as I type. Those who want markets to steady want continued 15-minute support at or above that support level and those who want a bounce need a new A/D high of the day, at the least.

Jeff Bailey : 6/30/2008 10:30:18 AM

The Mortgage Insurance Companies of America saying that largest mortgage insurers saw defaults drop to 67,967 in May, compared with 73,880 in April, when one major lender changed its default-reporting practice.

Jeff Bailey : 6/30/2008 10:24:45 AM

Overnigth Libor fixings jumped as banks scrambled to borrow funds at the end of the quarter.

Linda Piazza : 6/30/2008 10:22:50 AM

A couple of weeks ago, I mentioned that one of my charts showed a potential downside target for the BIX of about 172. That target is now 167.93, so as the BIX now approaches that target--also potential support on daily closes--keep it on your radar screen for a stronger bounce. Well, let's say for any bounce because there certainly hasn't been much of one since the beginning of May. The BIX is 170.84 as I type.

Linda Piazza : 6/30/2008 10:19:31 AM

The BIX has dropped below last week's lows this morning. It's at 171.31 as I type. The BKS has done the same. It's at 57.93.

Jeff Bailey : 6/30/2008 10:18:41 AM

10:00 Internals at this Link

Linda Piazza : 6/30/2008 10:17:53 AM

The OEX did find support on 15-minute closes at the Keltner support mentioned earlier. It needs to maintain 15-minute close above that breakdown benchmark now at 581.51, however, to see any change in tenor. OEX at 579.78 as I type. Remember the resistance near 583-584 on 30-minute closes, too, though.

Tab Gilles : 6/30/2008 10:11:47 AM

Crude oil and gasoline demand are high in part to growing global demand, from China and India. We are no longer alone as more and more cars hit the road. News of gasoline lines in China remind me of the '70s gas shortage.

Well India isn't sitting still, Reliance Industries is building the world's biggest refinery and increasing crude oil imports from Saudi Arabia as it seeks to secure supplies because of rising demand for fuels in India and the rest of Asia. Link Link

Linda Piazza : 6/30/2008 10:11:18 AM

TED spread now 1.08. It's creeping up again although still below the high today of 1.12 and Friday's 1.13 level, too.

Linda Piazza : 6/30/2008 10:10:09 AM

For those who didn't hear it, the Chicago PMI was actually 49.6, well above expectations of 48-48.2 and also well above the prior 49.1. Fifty is the contraction/expansion benchmark. So, why did markets weaken? I'm not sure yet as I've been too busy studying charts to examine it in depth, but I know that I was reading this morning before the open that some think the auto makers are still too optimistic and that they'll weigh more heavily on the whole Midwest's economy than people think so far. So, perhaps the number isn't trusted?

Keene Little : 6/30/2008 10:09:56 AM

Late Friday SPX found support at the broken downtrend line along the highs from mid day Thursday. If it drops a little further this morning watch for potential support at it again, currently near 1274. 10-min chart: Link

Linda Piazza : 6/30/2008 10:07:22 AM

Here's the OEX's test of potential support on 15-minute closes at 577.55-578.15. The OEX is 578.15 as I type.

Linda Piazza : 6/30/2008 10:06:23 AM

TRIN now 1.02. It did bounce from that support. The Keltner setup says that the bullish/bearish benchmark is now 1.12-1.20 on 15-minute closes, although the equity action on Friday was fairly bearish, wasn't it, while the TRIN never maintained 15-minute closes above Friday's level and didn't even get above 1.00, the level most people use as a benchmark, until about 1:15 pm. Sometimes it's the trend of the TRIN that does it. Those who want markets to steady want it to be knocked back. Equity bears want it to keep climbing.

Linda Piazza : 6/30/2008 10:03:12 AM

The A/D line is now -327. It has indeed spent the first 30 minutes establishing a range, although not as wide a one as I would have expected, and without that range touching either strong support or strong resistance. It could still go either way. Potential support is now about -580 and then ranges down to -900. Potential resistance is now about +400 (historical) and then +825 (Keltner).

Keene Little : 6/30/2008 9:59:58 AM

The DOW is the closest to potentially retesting Friday's low but so far the pullback from Friday's late-afternoon bounce looks like a correction. It should mean we'll see another leg up. I think the retest will hold if it gets there, even if it slightly undercuts the low. Obviously if the selling picks up speed to the downside and blasts through the low then I'll change my opinion on that.

Linda Piazza : 6/30/2008 9:59:14 AM

A reversal in the early move after the 9:45 release wasn't unexpected. Now we see how far it goes. As I said, the previous 15-minute close was at that breakdown benchmark for the OEX, not above it, and so we had to wait until the conclusion of this 15-minute period to see if it held. We still have some minutes to wait and there's no conclusion at all. Potential support on 15-minute closes is now 577.97-578.54, and that breakdown benchmark is now 581.75. The OEX needs to steady and then climb and break through that benchmark, probably within the next 15-30 minutes or that potential inverse H&S on its 15-minute chart is invalidated, I'd say. OEX at 580.11 as It ype.

Linda Piazza : 6/30/2008 9:55:02 AM

CNBC is talking about how many Americans now respond that they aren't afraid to have a refinery in their back yards. I know I've mentioned this before, but I grew up in a refinery town and I'm afraid to have a refinery in my back yard. The county in which I lived once had the highest per capita cancer rate in the U.S. My next door neighbor was killed before he hit 20 in a refinery explosion. My husband (when still my boyfriend) came to college classes without any shoes one day because his family had been evacuated from their home in the night by (a different refinery's) fire. My brother, my father and my brother-in-law have all run for their lives from explosions, with the incident with my brother-in-law occurring just within the last couple of years. Back in the day when women still wore hose, I had them melted off my legs when the sulphur in the humid air formed a light acid. I think I vote for something else in my back yard.

Linda Piazza : 6/30/2008 9:50:19 AM

The OEX closed that last 15-minute period at the breakdown benchmark rather than above it. It's above it now but we don't know if it will remain there into the end of this 15-minute period. That benchmark is now 581.98 with the OEX at 582.10. For now, there's a tentative improvement, but the 15-minute close left us with some uncertainty.

Tab Gilles : 6/30/2008 9:50:04 AM

JP Morgan/Chase (JPM) $34.86 Many investors wonder if the banks have bottomed? Looking at JPM, $32 looks like nearterm support. Link

JPM rallied in March on the Bear Stearns news, but has since given all that back. Link

Linda Piazza : 6/30/2008 9:48:47 AM

TRIN is 0.74, but, unfortunately, just as was true early Friday morning, it's testing potential support on 15-minute closes now at 0.72. This support bounced the TRIN on Friday, and the bounce certainly didn't help equity performance. Although the TRIN never got above the bullish/bearish benchmark Friday, equities were turning down as it was bouncing. Therefore, if there's any bounce, those who want the SPX and OEX to continue this early bounce don't want the TRIN to bounce. I'm letting you know, however, that it's testing that same potential support so you can keep it on your radar screen.

Linda Piazza : 6/30/2008 9:42:17 AM

The OEX is now testing that breakdown benchmark, now at 581.96 on 15-minute closes. Remember this benchmark is valid on 15-minute closes, and also remember that whatever happens at the end of this 15-minute period could be either undone or accelerated by the release of the Chicago PMI.

Linda Piazza : 6/30/2008 9:36:30 AM

Keltner outlook on the A/D line: The A/D line opened in the upper or bullish half of the 15-minute 9-ema, but well away from either next support or next resistance, with those at about -700 to -1000 for potential support and -775 for potential resistance. When this happens, the A/D line sometimes spends the first 30 minutes or so establishing a range by either climbing toward resistance or dropping toward support, and then spends some time chopping around before breaking out of that range. This time, it's the drop-toward-support version so far. The A/D line is -289 as I type.

Linda Piazza : 6/30/2008 9:33:49 AM

The OEX opened the day just above potential support on 15-minute closes now at 578.17-578.95. The SPX's version of this potential support is lower, at 1274.40.

Linda Piazza : 6/30/2008 9:27:49 AM

As I noted in my 8:07:39 post this morning, traders should make early trading decisions iwth the Chicago PMI in mind. That will be released at 9:45 am ET, just after markets have had their initial reactions after the open. That release can and may change the tenor of early trading.

Something else to keep in mind? The TED spread. While still well above 1.00, last night the TED spread began contracting, falling all the way to just below 1.05 from 1.12. About 8:00 am ET, it popped up almost to 1.11, but has retreated again and is now 1.06 or was as of 8:51 am ET. That's still way too high, but its direction is the right direction for those who want markets to steady. The TED spread ended last week at 1.13.

Equity futures are a little this side and a little that side of fair values, so they could do almost anything in the first few minutes of trading, before the Chicago PMI is released. The OEX could dip down toward potential support on 15-minute closes from 578.01-578.92 and sit there, waiting for the post-release reaction. It could climb up to test potential resistance on 15-minute closes at 582.07 and wait there. That resistance level is in fact the breakdown benchmark that the OEX traded beneath since late Thursday. It doesn't usually stay there for more than a day without at least some breaks above that level, so it should be getting time for at least a brief pop higher, but there's nothing usual about these market conditions. Watch the breakdown benchmark, particularly as there's another of the little potential inverse H&S's that's been forming at the bottom of the decline with a neckline along that benchmark. These potential formations have been setting up often as the market declines, with their formations serving only to show us when the bulls have failed in yet another attempt to steady markets. At some time, they're going to be steadied, if only temporarily, so keep a watch on this.

I wouldn't be surprised by almost anything today, including a steadying or bounce or a caving in. I think we have to wait it out. Would-be bulls should be aware that even if the OEX scrambles above that breakdown benchmark on the 15-minute chart, it's got another to face on the 30-minute chart, with that resistance at 583.61-584.61. So, if the OEX should pop above 582 and charge up toward 583.61-584.61, would be bulls would like their first sign of steadying to be that the 582 level starts serving as support on pullbacks. Bears need to be aware that markets are stretched to the downside on shorter-term charts and rebounds, even if brief, can be powerful in such conditions.

Keene Little : 6/30/2008 9:20:13 AM

Equity futures sank right after the European markets opened and made their lows around 5:40 AM. They've worked their way higher with SPX looking to open at the flat line. The others are weaker and look like they'll open slightly in the red this morning.

Keene Little : 6/30/2008 8:59:15 AM

I had shown in last night's SPX 60-min chart the possibility for a bounce up to 1295 before heading lower again. If it can get above 1295, and especially above 1300, we could be at the start of a larger correction of the May-June decline. A typical retracement of that decline would be a little less than 50% in price and take about 62% of the time it took for the decline. That would take SPX back up to the 1350 area by July 22nd, the Tuesday following opex Friday.

I of course have no idea if that will happen but it will be something to watch for if the bounce develops some legs (and a push above 1300 would elevate its probability). That scenario is shown in pink on the daily chart: Link

The alternative to this short term bullish possibility is a continuation lower as per the dark red wave count. This one calls for only small bounces and stair-stepping lower into the end of July or August. Using Fib relationships between the moves and past support levels I see the possibility for SPX to bottom around 1075 before making a meaningful rally into October to correct the decline from May.

Linda Piazza : 6/30/2008 8:21:05 AM

This morning, Moody's Investors Service has upgraded its rating on Japanese government bonds to Aa3 from A1.

Linda Piazza : 6/30/2008 8:08:01 AM

The first thing to keep in mind this morning is that the National Association of Purchasing Managers (NAPM Chicago Purchasing Manager's Index (PMI) will be released at 9:45 am ET this morning, so a few minutes after the open. Anything below 50 indicates a contraction, and the previous number was 49.1. Some sources forecast that this one will be 48.0-48.2. A Thomson Financial article yesterday speculated that the weakness in Detroit will "provide a continuing deadweight on economic activity in the Upper Midwest for some time to come."

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