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Jeff Bailey : 7/3/2008 1:06:56 AM

So true, so true.

Like trying to pick the top with another oil short, picking bottoms just as difficult.

SPX resting once again at YRLY S2.

August Crude (cl08q) settles at record $143.57 and Morgan Stanley's "$150 by 4th of July" looks in play.

Keene Little : 7/2/2008 10:06:55 PM

Thursday's pivot tables: Link and Link

One of these days the oversold conditions are going to result in something more than an afternoon or morning rally but so far that's all the bulls have been getting. But we're nearing some levels that I think could provide some support so a little more selling Thursday could have the market probing for a tradable bottom. But picking the bottom is a dangerous thing to do (usually get cut from all the falling knives).

NDX is approaching the gap from April 16th. It closed at the top of the gap today (1817.75) and could close it tomorrow at 1794.95. In this same location is the bottom of its down-channel from the June high and the uptrend line from October 2002, all located in the 1785-1795 area. It makes for a good spot to watch for a counter trend long play (or at least take some profits off the table if short). One other downside target would be the April 15th low near 1776. Daily chart: Link

I see the potential for SPX to find support tomorrow around 1253, the bottom of its parallel down-channel from May. It could be good for a bounce back up to 1273 and the mid line of its channel early next week before tipping back over again. If the bounce turns into a rally and can get back above 1292 then there would be a good chance we'll be into a multi-week rally to correct the decline from May (pink). Daily chart: Link

OI Technical Staff : 7/2/2008 9:59:59 PM

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Jeff Bailey : 7/2/2008 9:53:05 PM

RUT NH/NL 19:205

Yesterday's 13:268

Jeff Bailey : 7/2/2008 9:52:34 PM

SPX NH/NL 10:43

Yesterday's 4:97

Jeff Bailey : 7/2/2008 9:44:11 PM

Dorsey/Wright's BPALL edged down 0.95% to 31.30%. January's inflection low was 18% and March's was 24%.

Jeff Bailey : 7/2/2008 9:30:29 PM

Closing Internals found at this Link

Linda Piazza : 7/2/2008 4:40:52 PM

I wasn't surprised when I looked at the TED spread a few minutes ago and saw that the 4:00 pm ET number was 0.98, the high of the day. I don't know whether it's moving in response to what happened in the markets or if they are in response to specter of rising default risks, but I'd certainly rather have seen this move down than up. Whatever your trades, you would, too, because we don't want another Bear-Stearns or Northern Rock type event.

Tab Gilles : 7/2/2008 4:11:03 PM

Sell into the rallies appears evident today. With the ECB and Trechet decision on interest rates tomorrow along with Jobs Report here...plus a 3-day weekend. Those with profits will most likely go to cash and start fresh Monday.

Linda Piazza : 7/2/2008 4:04:24 PM

This has not been a fun close, has it? Yesterday, I questioned whether that candle was a potential reversal signal or whether it was just part of the 2-5 days of consolidation that the OEX typically sees before it decides on next direction after a big move. We got our answer today, but it was also an answer that produced a near test of the 9-ema, with that average now at 588.39. Since there's been a near test, the potential for the next move to be a downside one increases, but the slim hope for bulls is that the OEX is still basically just chopping around within that consolidation zone it's been building and that the SPX is retesting its low from yesterday.

Keene Little : 7/2/2008 3:45:45 PM

The way the pattern is now set up, look for SPX to consolidate near yesterday's low (just below 1261) into tomorrow morning and then continue lower. It looks like it has 1257 in its sights, possibly a little lower, before another bounce attempt. 60-min chart: Link

Linda Piazza : 7/2/2008 3:45:38 PM

Today's ADP didn't promise good things for tomorrow's nonfarm payrolls, and there may be some selling ahead of that release. There's an ECB press conference tomorrow morning at 8:30 am ET, too, at the same time as our nonfarm payrolls is released. We have the services ISM, too, tomorrow at 10:00. Whatever your trades, assess how much risk you want to carry home tonight.

Jeff Bailey : 7/2/2008 3:44:17 PM

NASDAQ a/d 799/2086

Jeff Bailey : 7/2/2008 3:44:06 PM

NYSE a/d 894/2,250

Jeff Bailey : 7/2/2008 3:43:40 PM

I'd say equity bears have been in control all day.

Jeff Bailey : 7/2/2008 3:43:14 PM

UGA $66.38 +1.09% ...

XNG.X 738.21 -2.50% ...

Linda Piazza : 7/2/2008 3:43:11 PM

The SPX's current potential downside target and potential support on 15-minute closes has been hit. That's at 1264.97. Needless to say, a short-term chart like this is not going to show support that's going to hold up past an avalanche of selling.

Jeff Bailey : 7/2/2008 3:42:32 PM

USO $116.41 +1.58%

OIX.X 931.06 -3.3% ...

Linda Piazza : 7/2/2008 3:41:42 PM

The OEX's current potential downside target and potential support on 15-minute closes is 575.49, but other charts show potential support from 575-576.24.

Jeff Bailey : 7/2/2008 3:41:04 PM

CDE $2.73 -2.84% ...

Jeff Bailey : 7/2/2008 3:40:46 PM

GLD $93.19 +0.57% ...

SLV $181.72 +1.51%

and ... HUI.X 444.18 -3.15% ...

James Brown : 7/2/2008 3:34:59 PM

I heard some comments yesterday that GM might have hit bottom following yesterday's huge volume but that obviously wasn't the case.

James Brown : 7/2/2008 3:33:37 PM

GM down almost 15% to $10.02 New 50+ year lows...

Tab Gilles : 7/2/2008 3:32:41 PM

Weekly EIA Report Link Link

Jane Fox : 7/2/2008 3:30:34 PM

And Crude tags $144.15 for the daily high. Not what the stock market wanted.

James Brown : 7/2/2008 3:28:43 PM

It looks like the QQQQ has failed at its 100-dma just over $46.00. I'm going to guess that another drop toward the bottom of the Q's three-week bearish channel would put it near $44.00.

Linda Piazza : 7/2/2008 3:28:57 PM

I've mentioned several times this week the possibility that the OEX might form a doji or other consolidation-type weekly candle at the potential Keltner support on weekly closes. I thought I'd show you the chart so you could visualize it so far. Here's the OEX's weekly Keltner chart: Link A small-bodied candle at this support could still allow for some zigzagging the rest of the day and tomorrow morning, but this has been a scenario I've mentioned and it so far remains a possibility. I mention it again because if it does play out, we might not see much action that's trade-worthy into tomorrow.

James Brown : 7/2/2008 3:21:03 PM

Yesterday's rebounds in both AAPL and RIMM are both failing...

Jeff Bailey : 7/2/2008 3:17:18 PM

That was a "bad tick" in USO $116.60 +1.75% ... to $120.01.

Keene Little : 7/2/2008 3:16:56 PM

SPX 1273 has now given way and that adds to the bearishness of the price pattern. Obviously the next test is yesterday's low if the decline continues. There remains the potential that this afternoon's pullback is still just that and we'll see another rally leg tomorrow. It takes a rally back above 1285 to support that possibility.

Linda Piazza : 7/2/2008 3:15:13 PM

At 579.10 as I begin this post, the OEX is approaching potential support again, this from the possible bull flag pullback from today's high. This flag shape is a bit wide in relationship to the rise that preceded it, and the OEX has now retraced almost 61.8% of the rise off yesterday's low, so if the OEX is going to turn around before hitting the 575-576 zone, it needs to do so soon. Note: OEX at 580.06 as I finished typing.

Jeff Bailey : 7/2/2008 3:13:48 PM

Starbucks (SBUX) $15.61 -0.06% ... slips back under WKLY S1.

Linda Piazza : 7/2/2008 2:59:02 PM

Where does time go when you're having so much fun? The closing of the bond market is just a few minutes away. That sometimes changes the tenor of the trading, either accelerating a prior trend or reversing it.

Jeff Bailey : 7/2/2008 2:57:06 PM

Wilshire 5000 (DWC) off 138 points, or -1.05% at 12,969

Jeff Bailey : 7/2/2008 2:55:38 PM

NASDAQ a/d 913/1939

Jeff Bailey : 7/2/2008 2:55:19 PM

NYSE a/d 1,063/2,071

Linda Piazza : 7/2/2008 2:52:39 PM

You know, neither the bulls nor the bears are fully winning the battle yet. There's a large potential inverse H&S on the OEX's 15- and 30-minute charts, forming since Thursday afternoon. This chopping around, as long as it doesn't get much lower than 577.50-578, is part of a potential right-shoulder-building exercise. That right shoulder, however, is composed of a potential regular H&S that bears haven't quite been able to confirm just yet. The right shoulder of the bearish and shorter-term one is now taking a bit too long to form, so that formation is nearly invalidated now. Bears aren't quite winning this round, even though the OEX threatens to give way. Whenever a right shoulder strings out too long, it's always a sign that the strength that produced that formation is waning, so the bearish strength is, a bit, on a short-term basis. However, the presence of both the bullish and the bearish version on the same chart is a visual representation of the battle going on, a battle that as yet has no resolution. So, we have to factor in vulnerability to a potential downside target and support on 15-minute closes at 575.70. As well, we must factor in the possibility that the OEX can break up through resistance, now from 584.97-587.18. As yet, that resistance looks strong, but the OEX isn't backing down far from it yet.

Jeff Bailey : 7/2/2008 2:53:14 PM

Education stocks strong today.

DV $57.78 +10.52% Link
ESI $86.22 +5.73% Link
APOL $55.34 +19.62% Link

Keene Little : 7/2/2008 2:48:34 PM

We've now got a sharp little impulsive move down from the high near 2:00 PM and that suggests we'll get a small bounce now and then a continuation lower. I'd look to short the next bounce.

Jane Fox : 7/2/2008 2:46:33 PM

And Crude decides to stop at $143.91.

Jeff Bailey : 7/2/2008 2:45:17 PM

Disk Drive Index (DDX) 109.78 +1.91% Link ... today's top sector performer.

Jeff Bailey : 7/2/2008 2:44:03 PM

SanDisk (SNDK) $18.95 +7.54% Link ... edges off of yesterday's multi-year low on research note that NAND flash memory prices might show stability after Apple's order for 50 million chips from Samsung helped cut inventory.

Jeff Bailey : 7/2/2008 2:39:27 PM

General Motors (GM) $10.37 -11.74% ... short covering rally from yesterday looks to have ended.

Linda Piazza : 7/2/2008 2:35:37 PM

James, the problem with all this solar stuff is that we're always reading about some cheap technology, a lot of it from overseas, and it so far hasn't materialized. It's hard to know how much credence to give such articles, even in legitimate news sources, because it's always just "plans."

Jane Fox : 7/2/2008 2:33:52 PM

Crude now at 143.86, new all time high.

Linda Piazza : 7/2/2008 2:32:43 PM

That resistance showing up on the OEX's 15-minute chart, now from 584.07-587.22, is again knocking the OEX lower, back toward short-term historical support near 580-582. The 30-minute chart shows potential support on 30-minute closes near 580.13, and the 15-minute version shows it near 580.74. Those who want the OEX to avoid a quick trip toward a potential downside target of 575.40 want to see that support hold up.

Keene Little : 7/2/2008 2:32:06 PM

The rally idea is not looking so good here. Based on the sharp drop from the bounce I'm guessing we've got another leg down coming. Either that or we're just going to whip back and forth and go nowhere but sideways.

Linda Piazza : 7/2/2008 2:30:04 PM

A subscriber who has a TD Ameritrade account says that he can no longer get quotes for TRIN. Does anyone know of a free source for real-time TRIN quotes?

Jeff Bailey : 7/2/2008 2:26:37 PM

May Mfg. Orders Link

Jane Fox : 7/2/2008 2:26:31 PM

Crude's all time high is $143.67 and it now trading at 143.00. Will it make a new all time high again today?

Jeff Bailey : 7/2/2008 2:18:24 PM

Jane may have posted.

Jeff Bailey : 7/2/2008 2:18:10 PM

Autos, heavy machinery and steel were weakest.

Jeff Bailey : 7/2/2008 2:17:29 PM

James! Might want to review today's Factory Orders report.

Jeff Bailey : 7/2/2008 2:16:27 PM

Most Active ... SPY $128.23 -0.11%, QQQQ $45.50 -0.67%, IWM $67.93 -1.69%, XLF $20.52 +0.98%, MSFT $26.48 -1.45%, YHOO $21.55 +6.68%, CSCO $23.01 -0.60%, INTC $21.28 -1.34%, GE $26.88 -0.88%, DELL $23.08 +4.05%

James Brown : 7/2/2008 2:11:21 PM

That is interesting, Linda. We posted some figures, I thought it was this week, that showed solar energy was the laggard in the alternative energy group when it came to amount of dollars being invested. Making the technology cheaper always helps.

I also thought the recent spotlight on National Semiconductor (NSM) and their new solar-magic product was really interesting. here is a link to an article on their new product: Link

Jeff Bailey : 7/2/2008 2:10:54 PM

02:00 Internals found at this Link

Keene Little : 7/2/2008 2:06:14 PM

The bounce off the mid-day low for SPX has now achieved a 50% retracement of the drop from this morning's high. It's a 3-wave move so far. If this morning's leg down was the start of a larger decline, we should be topping out in the bounce now and then head lower at a faster pace. So pull your stop up to at least breakeven. Back below SPX 1280 now would not be good for the bulls.

If instead we're starting another rally leg that will take us into tomorrow we should see a small consolidation here and then continue higher.

Linda Piazza : 7/2/2008 2:06:03 PM

James, over the last two days, Showa Shell has announced that it will build the world's largest plant for the manufacture of solar panels. It's announced new technology, too, supposedly making the technology cheaper. I haven't been able to find out a lot of information, but Reuters had this article: Link

Monday, in the MM, I had noted that the Nikkei Net (English version) had published an article saying that Showa Denko KK would begin mass-producing dye-sensitized solar cells.

I haven't even been able to confirm whether Showa Shell and Showa Denko are part of a single corporate family or entirely separate companies, however, but there does seem to be a lot of news surfacing in the solar arena.

James Brown : 7/2/2008 2:03:58 PM

Some interesting numbers on CNBC...

Total value of 2,805 companies on the NYSE is $16.9 Trillion.

Based on current crude oil prices...
Total value of "proven" oil reserves in Saudi Arabia is $36.4 Trillion.
of course we would argue how proven those reserves are...

Linda Piazza : 7/2/2008 1:57:16 PM

Now that the minimal time the OEX needed for consolidation (see my 1:39:51 post) has passed and we're in the stop-running time of day, the OEX is attempting to use. I've noted potential resistance in my 1:52:27 post. Remember that these stop-running times of day are tests, as big money tests the waters to see if a bounce will be hit with renewed selling, or, sometimes, if a decline will be met with dip-buying. It gives us some sense of what comes next, but remember that it's the response that gives us that sense, not the actual test. Therefore, OEX bulls would like to see the OEX respond well to this test and not get knocked back soundly. They'd like to see the OEX break to a new high and then maintain 15-minute closes above the Keltner level now at 587.22.

If that happens, though, be sure to update your profit-protecting plans for a test of next resistance, potentially strong resistance on 30-minute closes, now at 589.65-590.20.

James Brown : 7/2/2008 1:57:41 PM

SOLAR stocks fading today as well....

First Solar (FSLR) ... -4.8% failing at the 50-dma and dropping toward its trendline of support and its 100-dma.

LDK Solar (LDK) ... -6.3% breaking under its 100-dma.

Akeena Solar (AKNS) ... -9.1%
Canadian Solar (CSIQ) ... -5.9%
SolarFun Power (SOLF) ... -5.4%
Ascent Solar (ASTI) ... -5.2%... trading under $10.00 today
SunPower (SPWR) ... -4.1%
China Sunergy (CSUN) ... -3.9%
Evergreen Solar (ESLR) ... -3.5%.. holding support near $9.00
Energy Conv. (ENER) ... -3.0%.. down 6 out of last 7 days.
MEMC Elec. (WFR) ... -3.0%... bounce is failing near $60
JA Solar (JASO) .... -2.9%

only bright spot in the sector...
Trina Solar (TSL) ... +0.27% to $29.41.... TSL tested yesterday's lows and is bouncing.

Linda Piazza : 7/2/2008 1:52:27 PM

For the OEX, there's potential resistance on 15-minute closes at 584.77 and then 587.12; for the SPX, 1284.50-1287.10 and 1291.15.

Jeff Bailey : 7/2/2008 1:45:29 PM

PDP -1.97%, 5-day -1.90%, 20-day -3.36%, 52-week -4.38%

James Brown : 7/2/2008 1:43:41 PM

No one is buying the bounce in Priceline.com (PCLN) . Yesterday the stock dipped under its rising 200-dma and bounced. That bounce has failed sharply with a 5.5% drop today. I didn't see any news that might explain the relative weakness.

Jeff Bailey : 7/2/2008 1:43:22 PM

Dorsey/Wright Technical Leader (PDP) $25.25 -2.09%

Jeff Bailey : 7/2/2008 1:41:45 PM

I should mention ... we will see "follow the strength" too.

Jane Fox : 7/2/2008 1:40:06 PM

WASHINGTON (MarketWatch) -- A top Federal Reserve official suggested Wednesday that the outlook for U.S. economic growth remains worse than the inflation forecast, raising the possibility that the central bank might be in no mood to hike interest rates to combat higher commodity prices.

In a speech in Israel, Fed governor Frederic Mishkin said that it will take some time for the financial system to get back on its feet and accordingly, will continue to depress growth. Mishkin characterized the likely pace of recovery in financial markets as "slow."

This "suggests the U.S. economy will be subject to substantial headwinds for some time," he said.

While conceding that growth "could continue to be quite weak," Mishkin said "I hope it would pick up next year."

The official Fed forecast now expects the economy to recover over the second half of this year and into 2009.

If such a recovery has been downgraded to a "hope," then expectations for rate hikes by the end of the year may be premature.

James Brown : 7/2/2008 1:39:29 PM

Railroad stocks are also being sold....

CSX ... -4.6% ... breaking under 100-dma
KSU ... -4.3% ... breaking under 100-dma, nearing possible support $40
NSC ... -3.5% ... breaking under $60, testing 100-dma
BNI ... -3.3%... new relative lows, testing 200-ema
UNP .... -3.2% ... new relative lows
CNI ... -3.1% ... new five month lows
CP ... -1.8% ... new relative lows

Jeff Bailey : 7/2/2008 1:39:18 PM

In Monday's wrap, mentioned the "follow the weakness" trade we see so often over the years.

That's what James is noting today.

Mutual funds loaded the boat into the quarter and show their holders how smart they were in Q2.

Quarter's over.

Linda Piazza : 7/2/2008 1:39:51 PM

The OEX still chops around. In my 1:03:22 post, I noted that some chart characteristics suggested the possibility that the OEX could chop around near its then-current 582.56 for up to several hours. It's been an hour and a half, and what I would call the minimum suggested time that the OEX would spend chopping around has been fulfilled. It's possible that we could see some kind of breakout attempt either direction as we approach what's sometimes a stop-running time of day from 1:35-1:55 pm ET. I still see the possibility of more chop, but I thought I'd mention that the sort of minimum time requirement had been fulfilled.

Jeff Bailey : 7/2/2008 1:34:28 PM

Dorsey/Wright classifies the bulk of the COAL stocks as belonging to the OIL sector bullish %.

James Brown : 7/2/2008 1:33:00 PM

SHIPPING stocks are also being unloaded today...

DryShips Inc. (DRYS) .... -5.9% ... breaking under 200-ema
Excel Maritime (EXM) ... -7.7% ... new relative lows under $35.00
Frontline Ltd. (FRO) .... -5.5% ... testing support at 30-dma
TBS Intl. Ltd. (TBSI) ... -5.5% ... breaking under trendline of support
Navios Maritime (NM) ... -6.9% ... bearish engulfing candle
Diana Shipping (DSX) ... -5.2% ... under 200-ema, new relative lows
Genco Shipping (GNK) ... -8.9%... big bearish engulfing candle, under 200-dma

ULTR ... -6.3%
FREE ... -2.6%
PRGN ... -3.6%

Jeff Bailey : 7/2/2008 1:26:35 PM

DWC -0.71%, 5-day -3.60%, 20-day -6.49%

RUT.X -1.80% , 5-day -2.69%, 20-day -5.65%

SPX.X -0.48%, 5-day +0.01%, 20-day -4.97%

NDX -1.07%, 5-day -0.70%, 20-day -4.24%

INDU -0.36%, 5-day -4.00%, 20-day -7.11%

Jeff Bailey : 7/2/2008 1:22:24 PM

Sector Bell Curve Bullish % (06/24 to 07/01) at this Link

Per some of today's wonderment.

James Brown : 7/2/2008 1:17:14 PM

COAL stocks , another high-flying group in the 2nd quarter, are getting pummeled today.

Arch Coal (ACI) ............ -14.2%... collapsing under 50-dma
James River Coal (JRCC) .. -13.0%... testing $50.00
Cons Energy (CNX) .......... -11.2%... testing 50-dma and $100
Massey Energy (MEE) ...... -12.5%... testing $80
Walter Inds. Inc. (WLT) .... -12.11%... huge bearish engulfing
Alpha Nat. Res. (ANR) .... -10.4%... bouncing from $90
Patriot Coal (PCX) ......... -8.6%... breaking under $140
Fording Coal (FDG) ....... -9.7%...
Peabody Energy (BTU) .... -7.6%... breaking under $80
Alliance Res. (ARLP) ........ -6.9%... testing $50 level

Jeff Bailey : 7/2/2008 1:16:53 PM

Steel stocks fall from overbought bought levels.

James Brown : 7/2/2008 1:10:58 PM

Not seeing ANY news to explain the weakness in steel/metal or the ag stocks... both were previously strong sectors... so it could be profit taking and window undressing ahead of the long weekend.

Linda Piazza : 7/2/2008 1:10:05 PM

The TED spread was at 0.95 as of 1:00 pm ET. It's mostly been chopping between 0.935 and 0.95 today.

James Brown : 7/2/2008 1:09:01 PM

The Fertilizer/Agriculture stocks getting mowed down today!

Terra Ind. (TRA) ....... -7.2%... failing at its 10-dma...
CF Ind. (CF) ............- 4.3% ...bearish engulfing candle...
Mosaic (MOS) ......... -4.5%... testing the 50-dma...
Monsanto (MON) ..... -2.8%... failing at 50-dma, bearish engulfing candle
Potash (POT) ........ -2.9%... failing at 10-dma, bearish engulfing candle
Intrepid (IPI) ........ -6.7%... breaking round-number support at $60
Sociedad Chile (SQM) ... -6.5%... falling toward round-number support at $40
Agrium Inc. (AGU) .......-2.8%... failure at 10-dma, bearish engulfing candle
Terra Nit. (TNH)....... -4.6%... breaking down under 200-dma

Keene Little : 7/2/2008 1:08:14 PM

If you're trying a long play I'd want my stop at a new daily low for now. Keep it tight in case it lets go to the downside. If it drops lower then watch SPX 1273 to see if it holds.

Linda Piazza : 7/2/2008 1:03:22 PM

Some intraday chart setups now suggest the possibility that the OEX could now chop around near the current 582.56 level for up to several hours. That's not a given but is a possibility.

James Brown : 7/2/2008 1:02:35 PM

Not seeing any news in the steel sector...

That strangle on NUE yesterday looks a lot better today.

James Brown : 7/2/2008 1:01:07 PM

Ouch!

What happened to steel?
The STEEL and METAL stocks are just getting crushed today.

X......... -8.5% to $160.50
MT.......-8.2% to $85.50
NUE.......-9.7% to $65.25
RS........-10.5% to $69.85
SCHN......-12.3% to $100.71
CLF.......-11.88% to $101.65
CMC.......-7.2% to $34.32
TCK.....-5.3% to $44.55
AAUK ...-6.5% to $32.00
AKS .....-7.9% to $60.35
GSI......-11.0% to $13.50
ZEUS....-9.2% to $64.00

GNA .... -5.0% to $17.65
GGB....-4.9% to $22.90 (Brazilian stock)
SID.....-4.6% to $40.75 (Brazilian stock)

Jeff Bailey : 7/2/2008 12:58:29 PM

06/24/08 World Bullish % Bell Curve Link

Jeff Bailey : 7/2/2008 12:56:54 PM

Asian Markets Link

India's Bombay +5.42% Link gets a bit of an oversold bounce.

James Brown : 7/2/2008 12:53:01 PM

Here's something you may have heard yesterday....from S&P statistics... In the typical bear market... the S&P 500 drops 34% and the bear market tends to last 20 months.

James Brown : 7/2/2008 12:47:27 PM

Loved the 11:56 comments, Linda!

Jeff Bailey : 7/2/2008 12:44:47 PM

USO 10-minute interval chart with T&S Link ... some size.

Jeff Bailey : 7/2/2008 12:40:17 PM

Trades in USO to $117.94 look accurate.

Linda Piazza : 7/2/2008 12:39:34 PM

The SPX has potential support (trendline and 30-minute Keltner chart) on 30-minute closes at about 1275.00-1275.50, but if that doesn't hold up, the 15-minute chart is predicting a possible trip down to 1265.13. Evidence is mixed, not offering predictions as to what happens next.

Jane Fox : 7/2/2008 12:39:14 PM

Definition of bearish internals; the VIX making new daily highs and the AD volume confirming with new daily lows. Then the additional AD ratio confirming the bearishness is just icing on the cake (the AD ratio does not always confirm) Link

Keene Little : 7/2/2008 12:39:01 PM

If SPX 1276 doesn't hold then watch to see how it does around 1273.

Keene Little : 7/2/2008 12:37:24 PM

We should see support come in not much lower. The 50% retracement at SPX 1276 looks like a good possibility here. Today's pullback could be the right shoulder of an inverse H&S pattern created since Friday's low (the left shoulder). A rally back up to a new daily high would confirm the pattern and the price objective out of it would be about 1324. That would make for a nice rally leg to trade. Whether we get it or not is another story but that's the potential.

Linda Piazza : 7/2/2008 12:35:10 PM

There's potential support for the OEX now near 580.50 (trendline and Kelner), but if that doesn't hold up, a trip down to 575.10 looks like a possibility. Indicators are somewhat scrambled, so there's not a lot predicting what happens next.

Jeff Bailey : 7/2/2008 12:32:32 PM

12:00 Internals found at this Link

Jeff Bailey : 7/2/2008 12:28:43 PM

RIO $33.01 -4.31% ... no defense.

Jeff Bailey : 7/2/2008 12:27:43 PM

September Copper (hg08u) 3.96 +1.27% ... threatens contract settlement high of 04/09/08.

Linda Piazza : 7/2/2008 12:25:05 PM

OEX bulls would like to see the OEX climb above and maintain values back above the 15-minute 9-ema, now at 583.81 and then the potential resistance on 15-minute closes now at 585.17. That would go a long way toward erasing the question mark now brought about by the way the OEX pulled back and the timing of that pullback. Then, of course, they'd like a new high of the day, with sustained 15-minute closes above 587.07. There was never any guarantee, however, that this resistance band could be breached, so bulls should keep their profit-protecting plans updated. OEX at 582.91 as I type.

Jane Fox : 7/2/2008 12:18:16 PM

The VIx and the S&P futures are trading hand in hand today so watch for divergences to give you a clue as to direction.

Ad line has made a low of -959 but has improved to now -850. It doesn't look like a bottom is in quite yet. Link

Jeff Bailey : 7/2/2008 12:17:19 PM

I "think" that was a bad tick in USO. Hasn't been corrected at this point.

Jeff Bailey : 7/2/2008 12:15:55 PM

RUT.X 678.99 -1.82% ... back to test yesterday's lows and WKLY S2.

Linda Piazza : 7/2/2008 12:08:38 PM

The OEX did need that pullback that I'd suggested might be needed. The chart actually would have looked a little better and a little more bullish if the pullback had occurred earlier, maybe within the first 30 minutes of trading. But, so far at least, the potential support on 15-minute closes now at 582.27 is holding as support on 15-minute closes, at least on the first tests. The setup now looks, however, as if 585.20 might be particularly strong resistance on 15-minute closes, so the picture isn't quite as rosy as it might have been if the OEX had pulled back immediately this morning, if that makes sense. We now have to consider the possibility of a drop toward 580 potential support, and, if that doesn't hold, toward 575. That further drop isn't yet a probability but now is a bit more of a possibility.

Jeff Bailey : 7/2/2008 12:01:14 PM

Swing trade put alert! ... for three (3) of the Starbucks Link SBUX Oct. $15 Puts (SQX-VC) at the offer of $1.12.

SBUX $15.68 +0.38% ...

Jeff Bailey : 7/2/2008 11:57:21 AM

"Bad tick" in USO to $117.94. ... USO $115.56 +0.90%

Linda Piazza : 7/2/2008 11:56:37 AM

Remember that whole decoupling theory thing that we were hearing from the financial presses last year? Remember how the emerging markets were going to save the global economies, including us, by propping up our sagging economy? We're not hearing too much about that lately, are we? Here's the EEM, the iShares MSCI Emerging Markets Index, and this chart might show why we're not hearing too much about decoupling any longer: Link Although I'm beginning to rank among the "codger" side of the age brackets, I pretty much bought into the new paradigm stuff in the Internet era. I'm a quick learner, though, and I quickly learned that I wanted to listen to the old codgers such as Art Cashin, people who had experienced a lot on the markets. So, I had learned my lesson when the next paradigm was that manufacturers were able to avoid building up too much inventory by producing to order, on a quick basis, something that we writers were seeing espoused especially in the book-publishing field. By the time I heard the decoupling stuff, I was so jaded that anything that smacked of a new paradigm made me immediately suspicious. I didn't believe it, and you shouldn't believe everything you hear, either.

Jeff Bailey : 7/2/2008 11:54:01 AM

Sohu.com (SOHU) $72.91 -2.61% ... Daily interval bar chart with the head/shoulder top pattern mentioned yesterday. Link

"Head" placed conservative at $90.00.

Keene Little : 7/2/2008 11:53:04 AM

A potential support level is the pullback low near 3:15 PM yesterday (the 4th wave in the leg up from yesterday's low). This is a common support level for a correction to an impulsive move (the rally leg). For SPX that's at 1278.25 so keep an eye there to see if the bulls step back in. The setup is a good one for another rally leg into tomorrow but trade light and maintain good stop discipline. If the market instead lets go to the downside from here it could get nasty.

Jeff Bailey : 7/2/2008 11:45:46 AM

BIDU $320.84 +0.99% ... hovering above correlative 150-day and 200-day SMAs.

Keene Little : 7/2/2008 11:37:49 AM

After failing a quick retest at this morning's high, we're now starting down in earnest. Now we watch to see if it will drop into the potential support zone of 1273-1276 (50%-62% retracement of the rally from yesterday's low). If it finds support at 1280 (38%) that would be a sign of bullishness and a rally back up to a new daily high from there would be a good sign for the bulls, at least for a ride up to the 1310 area.

Jeff Bailey : 7/2/2008 11:38:06 AM

Swing trade put alert! ... for one (1) of the Sohu.com Link SOHU Aug $70 Puts (UZK-TN) at the offer of $6.20.

SOHU $72.97 -2.53% ...

Jeff Bailey : 7/2/2008 11:33:34 AM

Compania Vale Do Rio Doce (RIO) $33.19 -3.79% ... takes out yesterday's lows. 150-day SMA and 200-day SMA's getting some near-term traction.

Jeff Bailey : 7/2/2008 11:30:38 AM

According to the Central Bank, Colombia's foreign debt fell to 21.8% of GDP in March.

Jeff Bailey : 7/2/2008 11:29:09 AM

Chesapeake Energy (CHK) $71.46 +6.14% Link ... Nat. gas producer said today that it is selling 20% of its Haynesville stake to Plains (PXP) $72.14 -1.50% Link

Linda Piazza : 7/2/2008 11:29:33 AM

The OEX is still consolidating sideways, of course. Potential support/resistance on 15-minute closes is from 585.30-586.95, with the OEX spending most of the morning chopping around in that zone. If the OEX can make it past this resistance and sustain values above it, the 30-minute chart currently projects a potential upside target of 590.03-590.74. If the OEX instead needs to fall back further to regroup, still a possibility, bulls want 15-minute closes at or above 582.26.

Bulls should have a profit-protecting plan in place for a test of 590-592, if it should occur. That will amount to a retest of the 10-sma. We don't know what's going to happen there but since May, previous tests have resulted in another downturn, even in the one or two instances when the OEX managed a daily close at or above those moving averages.

Jeff Bailey : 7/2/2008 11:00:11 AM

SPR added 977,000 barrels to SPR. Most since 996,000 for week ended 06/10/05.

Jeff Bailey : 7/2/2008 10:56:18 AM

US Weekly Kerosene-Type Jet Fuel stockpiles fell by 867,000 barrels to 39.63M barrels.

Keene Little : 7/2/2008 10:53:01 AM

DOW pushing to new highs so that makes it questionable as to what the market will do this morning. We've either got a larger corrective leg up from yesterday or it's going to turn quite bullish. But the short term bearish divergences do not support the more bullish possibility, at least not yet. I suspect lower volume than normal will make it more difficult to trade because of the potential whipsaws as larger traders try to move the market in their favor, often just enough to tag your stops.

Linda Piazza : 7/2/2008 10:49:51 AM

So far, OEX bulls are getting their wishes fulfilled. When the OEX stalled right where expected, it moved sideways rather than dropping hard. The 15-minute 9-ema has now risen just underneath strong potential Keltner support on 15-minute closes at 585.33. A dip down to next support at 581.95-582.83 remains a possibility, but so far, the consolidation near the high has been just what the bulls ordered. Do not look away from markets, however, and do not relax your profit-protecting stance.

Jeff Bailey : 7/2/2008 10:45:58 AM

Crude Oil Inputs into refineries rose by 155,000 B/D to 15.4M B/D.

Jane Fox : 7/2/2008 10:43:12 AM

U.S. crude supply down 2 mln brls last week: Energy Dept.

U.S. distillate supply up 1.3 mln brls: Energy Dept.

U.S. gasoline supply up 2.1 mln brls: Energy Dept.

Jeff Bailey : 7/2/2008 10:42:04 AM

AMR $4.95 +2.06% ...

Jeff Bailey : 7/2/2008 10:40:36 AM

UGA $65.37 -0.44% ...

Jeff Bailey : 7/2/2008 10:40:23 AM

USO $114.04 -0.47%

Jeff Bailey : 7/2/2008 10:39:55 AM

Oil Congress: Petrobras may buy 4 MCM/D of Venezuelan LNG.

Jeff Bailey : 7/2/2008 10:38:43 AM

EIA: US distillate stockpiles +1.264M barrels.

Jeff Bailey : 7/2/2008 10:38:14 AM

EIA: US gasoline stockpiles +2.1M barrels.

Jeff Bailey : 7/2/2008 10:37:47 AM

EIA: US crude oil stockpiles -1.982M barrels.

Keene Little : 7/2/2008 10:37:16 AM

I'm back. With the market popping higher this morning we now have a completed 5-wave move up from yesterday's low. That makes it likely we'll now get the pullback to correct that move. Short against this morning's high should be a good play and then we can see what kind of form the decline takes (assuming it will decline).

Jeff Bailey : 7/2/2008 10:35:47 AM

UGA $65.37 -0.44% ...

Jeff Bailey : 7/2/2008 10:35:34 AM

USO $114.30 -0.25% ...

Linda Piazza : 7/2/2008 10:30:56 AM

The OEX consolidates sideways, so far, but a trip down to test the rising 9-ema's potential support on 15-minute closes can't be precluded. That moving average is at 584.09 as I type, with further potential support at 581.35.

Jeff Bailey : 7/2/2008 10:30:51 AM

My 12-week SMA for purchases slipped 0.56% to 355.10.

Jeff Bailey : 7/2/2008 10:29:13 AM

MBA's Weekly Application Survey at this Link

Jane Fox : 7/2/2008 10:25:27 AM

WASHINGTON (MarketWatch) -- Delinquency rates for home-equity lines of credit and bank cards rose during the first quarter, the American Bankers Association reported Wednesday, citing ongoing stress in the nation's housing market as well as general economic weakness.

On a seasonally adjusted basis, the percentage of HELOC accounts more than 30 days past due rose to 1.1%, up 0.14 of a percentage point, reaching the highest rate recorded since the ABA started the series in 1987.

Delinquencies for bank cards -- credit cards provided by a bank -- rose 0.13 point to 4.51% in the first quarter, compared with the five-year average delinquency rate of 4.40%.

Higher prices for food and energy, combined with weak growth in personal incomes and declining home-equity and stock values, are making it difficult for a greater number of consumers to meet their obligations, said James Chessen, ABA's chief economist. The group defines delinquency as late payments that are 30 days or more overdue.

Jane Fox : 7/2/2008 10:23:40 AM

Crude Report due out at 10:35 so if you are trading Crude please keep this in mind.

Linda Piazza : 7/2/2008 10:22:12 AM

TED spread at 0.94 this morning. I'd like to see it continue moving down more than this.

Jeff Bailey : 7/2/2008 10:20:51 AM

Most Active ... QQQQ $45.86 +0.06%, YHOO $21.79 +7.87%, SPY $128.84 +0.34%, LEH $20.97 +0.04%, MSFT $26.76 -0.40%, IWM $68.52 -0.89%, CSCO $22.94 -0.90%, AAPL $174.70 +0.04%, FITB $11.42 +7.63%, INTC $21.50 -0.32%

Jeff Bailey : 7/2/2008 10:16:30 AM

10:00 Internals found at this Link

Linda Piazza : 7/2/2008 10:15:03 AM

Current potential resistance on 15-minute closes for the SPX is at about 1291.50. If there's a pullback, bulls would prefer that potential support on 15-minute closes at 1288.45 hold. If not that, they'd like support at the rising 9-ema, now at 1284.56, to provide support on 15-minute closes.

Linda Piazza : 7/2/2008 10:13:21 AM

Potential resistance on 15-minute closes for the OEX is now 586.71 with the OEX currently above it, at 587.12 but with some minutes left in this 15-minute period. If there's a pullback, bulls would prefer support found at 585.29 on 15-minute closes or at the 9-ema, now at 583.87.

Linda Piazza : 7/2/2008 9:52:59 AM

Remember factory orders in a few minutes.

Linda Piazza : 7/2/2008 9:49:44 AM

The SPX's potential resistance on 15-minute closes from 1288.40-1291.35 held on the first 15-minute close. Those hoping for the most bullish performance now want a sideways consolidation along that resistance band prior to a pop higher. However, one chart suggests the possibility that the SPX might need to pull back to test potential support on 15-minute closes at 1283.06 or perhaps even that from 1276.30-1279.07. Those with bullish hopes want that support to hold if it's tested.

Linda Piazza : 7/2/2008 9:46:48 AM

It looks as if the OEX's resistance band now from 585.25-586.60 is holding on the first 15-minute close. Those hoping for immediate further gains want to see the OEX consolidate sideways now, perhaps along the lower end of that band. However, one chart suggests the possibility that the OEX could drop back to a support (on 15-minute closes) band now from 580.84-582.20.

Linda Piazza : 7/2/2008 9:42:56 AM

The OEX's daily 9-ema has now dropped to 590.50. The 10-sma is at 591.62. Those in bullish positions should definitely assess how they'll manage a test of either of these if one should occur today. In the OEX's long slide down from the May highs, all tests of these moving averages have eventually resulted in prices being pushed back again, even with the few times the OEX managed a daily close slightly above them. The time is going to come when the OEX needs to pop a bit higher, to test higher resistance, but is this the time? No one knows that for certain, so make what-if plans for such a test.

Linda Piazza : 7/2/2008 9:39:13 AM

The A/D line's first prints are between potentially strong resistance on 15-minute closes at about +990 and potentially strong support at -19. The A/D line is now +380, with a drop to support or a sideways move looking the most likely at this time. That's not a given, but RSI is 86.

Linda Piazza : 7/2/2008 9:36:43 AM

Remember that we have factory orders at 10:00 am ET, crude inventories at 10:35, Treasury Secretary Paulson at 11:00, and Fed Governor Mishkin at nooon.

Linda Piazza : 7/2/2008 9:34:19 AM

Potential resistance on the OEX on 15-minute closes is now up to 586.57.

Linda Piazza : 7/2/2008 9:24:47 AM

As I type, futures are above fair value but well below their earlier levels. They were knocked back after the release of the ADP Nonfarm Employment number this morning, with that number being far weaker than anticipated. One source predicted a drop of 20,000 jobs but instead there was a loss of 79,000. That's not good news and not a predictor of good things to come from tomorrow's numbers.

If the OEX climbs in accordance with what we can extrapolate from the ES contract's distance above fair value for the SPX, then we can expect it to test potential Keltner resistance from 585.30-586.42 on 15-minute closes. I've been thinking it's about time toward the end of this week for the OEX to pop up and retest its descending 9-ema (or 10-sma, although I prefer the other), with that now at 591.66. That's still descending and perhaps will be nearer 588-590 before it could be tested. However, we would have to see how the OEX behaves with that first level of resistance before we pin too many hopes on that higher test. One short-term chart suggests that the OEX might need to pull back toward 580-581 and spend some time there after the resistance test this morning: another, that the OEX could break through that resistance. Of course, there's the possibility that this latest round of consolidation after a sharp decline could result in an immediate fall without a 9-ema test first.

Jane Fox : 7/2/2008 9:06:15 AM

If you compare SPX's March 17th low to the Jan 23rd low you will see it was a lower low and it was looking ominous, however, the Macd was making a higher low, a bullish divergence. The result was a 2 month rally.

Now SPX has now revisited the March 17th lows but this time the MACD is making a new lower low. The divergence is not as glaring as the bullish divergence earlier but it is certainly not comforting to the bulls. Link

Keene Little : 7/2/2008 8:58:27 AM

Equities had a nice little rally going into the high at 7:30 AM but then got hit with some selling following the ADP report (showing payrolls dropping 79K). I had mentioned last night that I'm hoping we'll see a pop higher this morning but that should then set up a pullback, perhaps down to the SPX 1273 area.

One caution, if and when the pullback happens, is that the spike up off yesterday's low might have finished a slightly larger correction off last Friday's low. It just means that buying the dips in this environment, since we're in a downtrend, needs to be done very cautiously and with only small positions.

I'll be away from the market for about the first hour. See you about 10:30 AM.

Jane Fox : 7/2/2008 8:48:47 AM

All American equity future markets broke their respective previous day highs overnight but were not able to retain those highs. The DOW (YM) has even slipped back into its previous day range. Link

Jane Fox : 7/2/2008 8:43:02 AM

WASHINGTON (MarketWatch) -- Heavy cost-cutting in the financial services pushed corporate-layoff announcements up 21% in the first half of 2008 compared with last year, according to a tally released Wednesday by outplacement firm Challenger Gray & Christmas.

Announced layoffs totaled 81,755 last month, up 47% compared with the previous June. For the second quarter, layoffs rose to 275,292, the most since late 2005.

So far this year, announced job cuts have risen to 475,948, compared with 393,499 in the first six months of 2007.

Financial companies announced 19,227 layoffs in June, bringing the sector's total for 2008 to 85,258, Challenger Gray said. Of these, fully 91% were related to the collapse of the mortgage market

Layoffs have risen in the computer, transportation, telecommunications and automotive industries, in part because of skyrocketing energy costs, Challenger Gray said. "Remarkably, job cuts have not spread as widely as we might expect in this weakening economy," said CEO John Challenger. "Companies were more cautious when it came to hiring after the dot-com collapse."

Jane Fox : 7/2/2008 8:39:38 AM

WASHINGTON (MarketWatch) - Private-sector firms in the United States lost 79,000 jobs in June, the biggest loss since November 2002, according to the ADP employment index released Wednesday.

Employment in the services sector fell by 3,000, the first decline since November 2002.

Job gains in May were revised lower to 25,000 from 40,000 earlier. Read the full report.

The ADP has been much stronger than the government's payroll numbers in recent months.

According to the Bureau of Labor Statistics, payrolls have fallen by 324,000 so far this year through May. ADP says 142,000 net jobs were created through May.

After adding in some 20,000 government jobs that are created in a typical month but not included in ADP's index, the ADP number suggests that 60,000 nonfarm payroll jobs were lost in June.

Economists surveyed by MarketWatch now expect 40,000 net payroll jobs were lost in June, following a loss of 49,000 in May

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