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Jeff Bailey : 7/9/2008 3:08:25 AM

SPX Components (Weighting as of 07/08/08 Close) (see also 01:58:24) at this Link

With "energy" prices at the top. Probably the primary focus is oil=USO and Nat. Gas=UNG.

Our primary benchmark here remains SPX/SPY.

Some quick observation that you might also want to do over time.

What I'm doing is "focusing" a bit on the energy and banking/financial components. Under "Title" I type in BLUE the percentage weighting of energy components. In PINK I type the percentage weighting of financial components.

Do you see/understand how/why that "financials" lost their MOST heavily weighted status over the past year? (YrNet%).

Now, in the 5DyNet% (about a second in time for institutions) I use some colors.

BLUE = "Market Perform", GREEN= "Market Outperform" and RED= "Market Underperform". This could be thought of a RELATIVE STRENGTH on short-term, intermediate-term and longer-term.

Yes, XOM though -2.15% last 20DyNet% is "outperforming" the SPX's -4.79%.

You, or I can add up an approximate "weighting" of energy components down to Devon (DVN). Again, not all 500 components viewed, and I'm limited by horizontal display as to how much I can actually show you. There's probably some action from DVN on down. Still I come up with ENERGY= 9.18% down to DVN. I come up with FINANCIAL= 4.91%, excluding GE. Maybe toss on 0.50% for GE Capital? Let's call it FINANCIAL= 5.50%.

Note: Down to DVN, the total composition weighting show at 07/08/08 close is 48.35%.

So, there are a lot of other places STRENGTH, or WEAKNESS can come from, but you can really see the ENERGY and FINANCIAL disparity.

I don't want to get too political, but HEALTHCARE may have some MAJOR IMPLICATIONS already factored into this year's Presidential Election outcome.

Energy too if the "flip-flopping" ever stops. Politicians ...

Look at other stocks and their sector representation.

Shoot! USB down their by DVN. they have 0.44% weighting.

So add to FINANCIAL = 6.00%.

Jeff Bailey : 7/9/2008 1:58:24 AM

Subscriber Question: ... Ask Keene and the gang how SPX can rally if BIX won't rally and oil-gas is falling?

Jeff's Response: Great question and one I got from traders last Friday with Keene mentioning "bullish" SPX.

What a trader/investor needs to comprehend is the "news" that is in the market, the psychological impact, and the implications of that news as it may impact energy price and "banks."

Equally important is the COMPOSITION of the INDEX!

What "confused" traders on Friday was the implication of falling oil ("as expected") and the "long-held belief of financial crisis for banks." Dollar implications and global economy also a factor as many of the SPX components derive business from overseas markets.

So, here's what I've STRONGLY suggested Keene and other traders do over the years.

You don't need to track ALL 500 stocks of the SPX (nor 100 of OEX, nor 100 of NDX/QQQQ). That's why INDU/DIA "easier" as it is just 30-stocks.

REMEMBER! SPX is MARKET CAP WEIGHTED!

REMEMBER! SPX is a MARKET, and that MARKET is made up of SECTORS that each STOCK is part of. MARKET, SECTOR, STOCK. MARKET, SECTOR, STOCK. MARKET, SECTOR, STOCK.

Here was the SPX "top weighted" components at Monday's close. I had put this together for a couple of clients that were "confused" by some of Friday's comments and Monday's action.

KNOW WHAT IS INSIDE before you begin operating.

SPX "top weighted" at 07/03/08 close Link where at the far left, I'm utilizing QCharts' "Market Capitalization" to simply grasp market cap.

I should NOTE! The order as of 07/07/08 close comes from a client of mine and their data is MUCH cleaner, or accurate as to actual SPX weighting (even though WMT looks out of place, it was #12 weighted. At tonight's close, WMT has moved up to #10 weight.

See, we're not talking "bank" or "energy," so here's one possible answer to subscriber's question.

Now, in the above table, those stocks from XOM down to BAC represented 1/3 of the SPX weighting. From C down to MDT and even more below, would be 1/2, or 50% of SPX weighting

Now, throw in you 5DyNet%, 20DyNet% and YrNet% for some "what's moving" and relative strength observations.

What those IMPORTANT measures do is give you the OBSERVATION of what has been impacting SPX price action on short-term, near-term and LONG term periods.

Today was just one day. And a BULLISH day for the SPX indeed.

Go back and check some of Tuesday's posts as to "sector winners and losers" and various parts of the day. The "most actives."

See the changes, feel the changes.

Three (3) times during the day I almost "pulled the plug" on the UWM trade, but intra-day checks of the "weaker" SPX started to show a little more green of each component, and the "bigger red" of the energy components even got smaller.

I don't think you HAVE to re-sort your SPX component list each and every day, just have some idea of an index makeup.

Here's your top 10 at tonight's close and their % Weight in the SPX. (XOM 4.09%, GE 2.52%, MSFT 1.86%, CVX 1.78%, T 1.76%, PG 1.75%, JNJ 1.68%, IBM 1.53%, AAPL 1.42% and WMT 1.24%). That about 19.64% of SPX weighting.

Jeff Bailey : 7/9/2008 1:25:06 AM

RUT.X's NH/NL finished 10:145. Again, I only get these data after the close.

Table I keep at this Link

We should NOT equate internal strength/weakness with price, however the two tend to work together.

In column BA and BB I've simply benchmarked recent trade profiles of a "like" security. On 6/18/08 I profiled a 1/4 position long ($2,500 for $10K account) in the TWM at $71.14. Exited a portion (so 1/8 position) on 6/25 at $76.95. Exited rest (so 1/8 position) on 7/01 at $79.00. Then on 07/07 profiled one (1) option for the UWM at $42.71.

Column AX is equivalent to what we track in the intra-day internals, but only RUT in the above table and its 5-day NH/NL ratio. We chart this also with the Point and Figure system and 3-box reversal. It would take a closing session measure of 12.0% to get a 3-box reversal. It would currently take a 32.0% measure to generate a 5-day NH/NL ratio "buy signal" (above 6/19/08 inflection high of 30.2%).

Column AY is your 10-day NH/NL ratio. We chart it too using the PnF system and 3-box reversal technique. Would currently take a 14.0% closing measure to get a 3-box reversal higher. Would currently need a measure of 54.00% (above 5/21 and 5/22 inflection highs).

Again, chart on 2%, or 2-point box chart.

"Field" is 0% to 100%.

Jeff Bailey : 7/9/2008 12:30:55 AM

Closing Internals at this Link

Jeff Bailey : 7/9/2008 12:29:57 AM

Closing U.S. Market Watch Link

August Crude Oil (cl08q) settled down $5.33, or -3.77% at $136.04. Looks like largest single day PRICE decline since I've been keeping daily records since December 2004.

Keene Little : 7/8/2008 10:15:36 PM

Wednesday's pivot tables: Link and Link

As mentioned at the end of trading on Tuesday, SPX is nearing potential resistance where we should find out early if the bulls can do some more work here (if it rallies a little more on Wednesday) or if instead Tuesday's rally was just short covering. The March 10th closing low at 1273.37 and March 17th intraday low at 1256.98 have been acting as support and resistance since the end of June. 60-min chart: Link

SPX closed Tuesday at 1273.70. Slightly higher near 1278 is the broken trend line along the lows since May 23rd (red) and that may act as resistance again. It takes a rally above 1292 to confirm we've got a break of the downtrend and would be a confirmation of a likely rally into the end of the month, shown in pink on the daily chart: Link

If the bounce fails at another lower high then the chances are good we'll see a continuation of the decline into the end of the month (dark red). The RUT is showing a clean pattern in its decline and suggests the current bounce should be a relatively small correction before heading lower again. I've depicted a sideways triangle playing out into next week before heading lower. That's obviously just a guess here but it would fit the wave count of the decline from June 5th. It takes a rally above 695 to suggest something more bullish into the end of the month instead. Daily chart: Link

OI Technical Staff : 7/8/2008 9:59:59 PM

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

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Tab Gilles : 7/8/2008 4:41:59 PM

Volatility Index ($VIX) Although it hasn't spike as it did earlier in the year...I'm still alittle leary on this rally. Todays close is at the 20 ma within the Bolinger Bands and the $SPX at the 1274 support/resistance level. Link Link

$NDX/$VXN The Big Cap tech index has held up better than the $SPX. Link Link

Jeff Bailey : 7/8/2008 4:28:23 PM

I have to leave for a meeting.

Still nothing out of Alcoa (AA) $32.33 -3.17% ... ticking $32.50 extended.

Jeff Bailey : 7/8/2008 4:16:28 PM

Swing trade call cancel order alert! ... for the UWM-HS.

$3.70 x $4.10 (last $2.75)

Keene Little : 7/8/2008 4:08:27 PM

SPX is nearing the level where the 2nd leg up in today's bounce off the low will achieve 162% of the 1st leg up (1275.44). It's of course also back up for a test of the March 10th closing level of 1273.37 which is where it was rejected on Monday's bounce and where it closed. Slightly higher is the trend line along the lows since May 23rd (red trend line inside the down-channel shown on my 60-min chart, 2:48 PM), currently just under 1278 (which rejected the bounce on July 2nd).

That's why I'd like to see the bulls drive this higher than 1278 to make a bullish statement. Until that happens this could simply be the conclusion of the bounce before heading lower again. We should know relatively early tomorrow.

Jeff Bailey : 7/8/2008 4:06:19 PM

Arris Group (ARRS) $8.90 +2.65% ... halted for trade.

Jeff Bailey : 7/8/2008 4:05:44 PM

Mattson Tech (MTSN) $4.92 +1.65% ... halted for trade.

Jeff Bailey : 7/8/2008 4:03:59 PM

NYSE NH/NL into the close 13:446

NASDAQ NH/NL 36:333

Tab Gilles : 7/8/2008 4:01:34 PM

In reference to the JP Morgan post, these LEAPS calls look interesting. January 2010 $35 WJPAG, $40 WJPAH & $45 WJPAI.

Jeff Bailey : 7/8/2008 4:01:30 PM

RUT 682.12 +3.62% ...

Jeff Bailey : 7/8/2008 4:00:45 PM

Swing trade call stick'em out there alert! ... with AA and USO still in the balance, let's place a LIMIT order to sell long the ProShares Ultra Russell 2000 UWM Aug. $45 Calls (UWM-HS) for a LIMT of $3.90. ($3.50 x $4.00).

UWM $46.06 +7.64% ...

Linda Piazza : 7/8/2008 3:58:52 PM

See you tomorrow morning first thing, where we'll start over with the commentary.

Linda Piazza : 7/8/2008 3:57:52 PM

The OEX is streaking past the finish line, the tape across its chest but not yet broken. That daily 9-ema has been nudged higher, to about 582.80. The OEX is 582.50 as I type, ten cents below yesterday's high after popping above it a few minutes ago.

Linda Piazza : 7/8/2008 3:47:23 PM

What about tomorrow? The OEX's daily candle is a bullish one that has engulfed the body of yesterday's candle. It would be a better potential reversal signal, perhaps, if it had engulfed all of yesterday's range but we still have a potential reversal signal on the daily chart.

This one is complicated by several things. First, we've taught ourselves not to trust potential reversal signals in this downdraft. Second, the OEX looks as if it could end the day jammed underneath the daily 9-ema, with that at about yesterday's high of 582.60. That tends to confirm the importance of that resistance, if that happens. The 30-minute chart also shows potential resistance on 30-minute closes at 582.58.

There's the possibility then of a reversal, although such possibilities haven't been realized lately, but with possible resistance on daily closes near 582.60, even if the OEX bounces above that level tomorrow morning or on a late-day surge this afternoon. So, if there is a bounce tomorrow, bulls first need to see the OEX maintaining values above yesterday's high. One place where a surge higher might be stopped in its tracks is about 587-588. If the OEX should get past all that this week and approach 593-594, bulls should make sure their profit-protecting plans are updated as that level is approached, as it could be significant resistance.

Tab Gilles : 7/8/2008 3:44:33 PM

JP Morgan/Chase (JPM) $35.80 +$1.76 (5.17%)

As posted on 6/30/2008 9:50:04 AM, I'd highlighted that $32 was major support for JPM. With it's CEO Jamie Dimon speaking to a mortgage lending forum sponsored by the Federal Deposit Insurance Corp in Washington and Secretary Paulson addressing housing and covered bonds...JPM has rallied today. Link Link

Jane Fox : 7/8/2008 3:42:46 PM

Mirror images of each other. Link

Jane Fox : 7/8/2008 3:42:03 PM

Here is the way the internals should look when bullish. AD line making new daily highs, AD ratio making new daily highs and VIX making new daily lows.

Looks like Crude falling is making a difference in the market. Link

Linda Piazza : 7/8/2008 3:32:50 PM

Yesterday's OEX high was 582.60. The OEX is 581.47 as I type.

Linda Piazza : 7/8/2008 3:30:58 PM

The body of the BIX's daily candle has very nearly matched the body of yesterday's candle, only going the opposite direction. This, of course, is a potential reversal signal. A similar setup on 6/23 and 6/24 did result in a punch higher the next day, but that punch was not sustained, with the BIX closing back cents below the previous day's close. So, consider the possibility that the BIX could bounce tomorrow, but don't consider it a done deal that it will maintain any gains if it does. It will be facing that daily 9-ema that I showed earlier, with that now at 172.72 and with that serving as resistance on daily closes with one minor exception of one day since 5/06. It can be presumed to be strong resistance on daily closes, then. It has to break some time and maybe tomorrow will be the time it does, but that's not a given.

Jeff Bailey : 7/8/2008 3:28:22 PM

SOHU $68.44 -3.21% ... UZK-TN are now $7.50 x $7.50.

VXN.X 28.70 -5.52% and VIX.X 23.45 -9.03% ... feel/observation of declining premiums.

Jeff Bailey : 7/8/2008 3:24:40 PM

Most Actives ... SPY 126.78 +1.39%, QQQQ $45.72 +1.82%, XLF $20.09 +4.20%, EMC $13.65 -9.84%, IWM $67.31 +2.46%, BAC $22.95 +6.59%, FNM $16.88 +7.24%, MSFT $25.67 -1.38%, INTC $20.89 +0.86%, F $4.88 +8.94%

Linda Piazza : 7/8/2008 3:21:52 PM

Barring a surge higher--and we're way overdue for that, so I don't entirely "bar" it--the OEX looks due for a pullback. Those with bullish hopes want the pullback to be a minimal one, finding support on 15-minute closes at 577.95-578.72. The OEX is 580.95 as I type, dealing with Keltner and other resistance at 581.20.

Jeff Bailey : 7/8/2008 3:21:22 PM

Sector Losers ... Gold Bugs -1.84%, AMEX Nat. Gas -1.39%, CBOE Oil -1.25%, Oil Service -1.18%, Software -0.20% and Utilities -0.19%.

Jeff Bailey : 7/8/2008 3:19:56 PM

Sector Winners ... Airlines +9.46%, Regional Banks +6.22%, Money Center Banks +6.07%, Transports +3.95%, Biotech +3.22%, Home Construction +3.15%, Broker/Dealer +3.10%, Insurance +2.99%, Pharma +2.99%, NASDAQ Telecom +2.47% ... and many more.

Linda Piazza : 7/8/2008 3:20:09 PM

What could happen to impact your trades overnight? Japan has core machinery orders at 7:50 pm ET, with that number sometimes impacting their markets, and, therefore, currencies. Tomorrow morning, the biggest influence from across the globe might be ECB President Jean-Claude Trichet's presentation of the ECB's 2007 Annual Report. That's due at 3:00 am ET. I don't see much for the U.S. other than our crude inventories at 10:35. Perhaps, with all the information coming out, the MBAA's weekly report on mortgage activity might have some slight impact?

Jeff Bailey : 7/8/2008 3:12:52 PM

Good gravy ... TWM $81.75 ... not even close to being back to last 1/4 position exit. Left some profit opportunity on the table here. Easily surpassed our h/s bottom objective.

Linda Piazza : 7/8/2008 3:04:14 PM

Now OEX bulls want to see the OEX maintain 15-minute closes above about 578.75 if there are pullbacks. There may well be pullbacks, as the OEX is charging up, approaching potential Keltner resistance on 15-minute closes now at 581.36 and yesterday's high of the day at 582.60.

Keene Little : 7/8/2008 3:04:08 PM

Two equal legs up for ES is at 1267.75 which was missed by a tick so far. Same thing--bulls need to keep this going now otherwise down we go again.

Keene Little : 7/8/2008 3:02:16 PM

Two equal legs up from this morning's low is at SPX 1265.48. If this is to become something more than just a 3-wave bounce as part of a correction then the bulls will need to drive it higher than that. Otherwise watch for price to stall out near there for a shorting opportunity.

Jeff Bailey : 7/8/2008 2:59:43 PM

USO $110.23 -4.10% ... hasn't even tested the 06/10/08 close and the important July futures contract expiration benchmark.

Jeff Bailey : 7/8/2008 2:58:50 PM

AMR $5.31 +9.25% ... AMR-GA currently $0.65 x $0.70

Option expiration is next Friday!

Jeff Bailey : 7/8/2008 2:57:33 PM

TRAN alert! 4,842 +3.34% ... probes 150-day SMA from underneath.

Linda Piazza : 7/8/2008 2:50:42 PM

BIX is zooming, but it's testing potentially significant resistance on 15-minute closes, so it could pull back below that resistance by the close of this just-started 15-minute period. That resistance is now at 167.67, with the BIX at 168.32 as I type.

Keene Little : 7/8/2008 2:48:52 PM

Updating last night's SPX chart continues to point to the possibility for a rally up to the 1273-1278 level before heading lower again. A rally above 1280 would be potentially bullish while a rally above 1292 would be confirmed bullish (for a possible rally into the end of the month to the 1340 area). Link

Jeff Bailey : 7/8/2008 2:45:21 PM

TRAN alert! ... 4,826 +3.00% ... probes 200-day SMA from underneath.

Is "modest economic growth" back in play?

Jeff Bailey : 7/8/2008 2:43:45 PM

SPX 1,256.91 +0.44% ... way too much capital for a long. Especially with oil and financials in the balance.

Underperfoms to upside other alternatives.

Jeff Bailey : 7/8/2008 2:42:22 PM

UWM-HS are $2.60 x $3.10

VIX.X 24.48 -5.04% ... works against an "out-the-money," but had to assess risk of capital in many stocks.

Keene Little : 7/8/2008 2:41:27 PM

What would turn the price pattern bearish for the RUT and NDX is a drop below this afternoon's lows. The bulls need to maintain this afternoon's rally otherwise the whole bounce off yesterday's low will look like a correction instead of something more bullish. That would then support a breakdown from the sideways triangle pattern on SPX.

Linda Piazza : 7/8/2008 2:41:10 PM

The OEX is testing the top of its triangle formation, akin to the ones that Keene has been mentioning. I think we need to see sustained 15-minute closes above 578.61 before we begin to believe too strongly that it's broken through the topside. If that happens, we have to start watching for potential resistance just a little higher, at 581.36 on 15-minute closes. OEX at 576.43 as I type.

Jeff Bailey : 7/8/2008 2:40:47 PM

UWM $44.25 +3.41% ...

Jeff Bailey : 7/8/2008 2:40:12 PM

Moment of truth ... RUT.X probes yesterday's 10:35 AM option tick.

Keene Little : 7/8/2008 2:39:43 PM

Countering the bearish view of this consolidation is what I see happening with the RUT and NDX--both are looking bullish. It may help explain the little tug of war going on today. If the small caps and techs can lead to the upside then we should see the blue chips follow.

Jeff Bailey : 7/8/2008 2:39:30 PM

Bull and bear!

Jeff Bailey : 7/8/2008 2:39:11 PM

Implications ...

Jeff Bailey : 7/8/2008 2:39:02 PM

RUT.X 667.23 +1.36% ... major index gainer. Understand components.

Jeff Bailey : 7/8/2008 2:38:23 PM

BIX.X 165.92 +3.57% ... takes a peek at session high.

Linda Piazza : 7/8/2008 2:38:08 PM

BIX at a new high for the day. The 15-minute chart shows that it's testing potentially significant resistance on 15-minute closes that stretches up to 167.64. We know from the daily Keltner chart that I posted earlier that it's also testing potentially strong resistance on a daily close in the 165-166 zone. BIX at 165.95 as I type.

Keene Little : 7/8/2008 2:37:27 PM

The triangle consolidation pattern since yesterday's low, which you can see easily enough on the 10 and 30-min charts, is a bearish pattern. The current bounce could be the last leg up within the triangle and unless yesterday afternoon's high near 1263 can be exceeded I would be leaning short now. The 1220-1225 area continues to be a good downside target if it breaks down.

Linda Piazza : 7/8/2008 2:36:31 PM

Thanks, Tab. I knew about Sir John Templeton's death today, but I didn't know he was responsible for that phrase.

Linda Piazza : 7/8/2008 2:33:45 PM

To reiterate my own personal views, I'm not so sure that the bottom is in, either for the move down from May or for the long term. I'm not ready to put my own funds back to work in the stock market, at least, other than my trades. However, I'm afraid to place any credit spreads above the market right now because everything is so oversold, and I'm about a week later than I usually am placing bear call spreads for the next cycle, which is AUG for me. You can almost hear the pinging of strings of the market, strung way too tight and ready to break. The deeper the markets go, the more afraid I am of the rebound, and those of you with experience adjusting credit spreads that you put too close to the action know what I mean. If you've been reading my commentary, you know that I actually have been on the lookout for a bounce for almost three weeks now without one coming, and it's possible that none will come now, either. We may see that high VIX everyone expects and a waterfall capitulation day. I just don't think it's any more guaranteed than is an explosive relief bounce.

Tab Gilles : 7/8/2008 2:36:41 PM

Sir John Templeton, an investor and mutual fund pioneer who established a foundation to encourage scientific and social research, has died. He was 95.

One of his most notable quotes was--- The four most dangerous words in investing are 'This time it's different.'?

Years ago, as teenager one of my first investments was in a Templeton fund...investing globally.

Linda Piazza : 7/8/2008 2:25:49 PM

All this maddening chopping around has created a triangle on the OEX's intraday charts, with the triangle's top line beginning to form yesterday morning and the bottom rising up from yesterday's low. If this triangle is going to be a valid formation, either support or resistance needs to be broken soon because the OEX is moving into the apex of the formation. Usually the triangle is broken about 2/3 of the way through and the OEX is already a little further than that. So, if the triangle is going to have any validity, the OEX needs to zoom above about 576.30 and then confirm by producing 15-minute closes above resistance up to 578.80 or else drop below 572.90, confirming with 15-minute closes beneath that.

Jeff Bailey : 7/8/2008 2:21:00 PM

I don't know about you subscribers, but with energy prices lower today, I'm not all that impressed with the number of new lows at the big board.

Lack of new highs "understandable," but short not overly eager to buy the weakness in other areas.

Linda Piazza : 7/8/2008 2:19:53 PM

Actually, I'm doing more than watching the financials. I've got a little 2-contract double calendar on WFC, but I hope to be out of that before WFC reports next week, so I'm certainly not banking on a bounce post-report. I'm just warning that it's a possibility.

Jeff Bailey : 7/8/2008 2:18:45 PM

02:00 Internals found at this Link

Linda Piazza : 7/8/2008 2:17:26 PM

Another point of caution about financials: a number of them start reporting next week. If there's any likelihood of a "sell the rumor, buy the fact" type of reaction, we could get a relief bounce in those. Again, I have no idea what they're going to report and how markets will react, but I'm watching.

Linda Piazza : 7/8/2008 2:15:43 PM

Also in reference to my 2:13:01 post and Keene's 1:50:03: this concern about the "bounceability" of markets when the financials are so pressured is another reason I've been watching the TED spread so closely and was so glad to see it dip, even if temporarily, to 0.92. I'd like to see it dip back to that level and far below. I don't think we're going to see financials showing much strength while default risk is rising or perceived to be rising.

Linda Piazza : 7/8/2008 2:13:01 PM

I've been watching the BIX closely this week, too, as have almost all of us. (See Keene's 1:50:03 post.) The BIX has been doing quite well since yesterday afternoon's low, and I thought yesterday it might even have a possibility of closing the day above the potential support on daily closes that's now at about 165. It didn't of course, but it's been testing that level again. The BIX is so oversold and has been for so long that it's time for either a strong bounce or a total collapse. I don't pretend to know which is going to happen, but if the BIX is going to bounce big, I want to know because I'm waiting to swing some AUG bear call spreads above some indices and I want to do it after markets have bounced and not just before.

Here's a daily chart in which I've hidden everything but the smallest Keltner channel and its central basis line (9-ema) and the black channel, where strong resistance converges with the smallest channel's resistance: Link A few things jump out from a study of that chart. First, other than a one-day close minimally above the 9-ema back in early May, the BIX has not closed above that moving average since 5/06. It has not retested the top of its smallest channel since 5/02. In Keltner terms, such a test is long overdue. So, I'm watching for a potential BIX daily close above that thin red 9-ema one of these days, and maybe soon, as the first sign of a potential short-term change in tenor. You can bet I'll be watching for rollover potential, however, when it reaches the converging resistance lines. Those are cycling down strongly, so will likely be lower than their current values when touched.

Jeff Bailey : 7/8/2008 2:02:24 PM

SPX top 10 (market cap) ... XOM, GE, MSFT, CVX, T, PG, JNJ, IBM, AAPL, COP

Jeff Bailey : 7/8/2008 1:57:59 PM

USO $110.80 -3.61% ...

Jeff Bailey : 7/8/2008 1:57:41 PM

VIX.X 24.96 -3.18% ...

Jeff Bailey : 7/8/2008 1:57:29 PM

SPX 1,250.31 -0.15% ...

Jeff Bailey : 7/8/2008 1:57:09 PM

Russia threatens military reaction if US missile shield built nearby.

Jeff Bailey : 7/8/2008 1:56:28 PM

QID $44.98 -0.94% ...

QQQQ $45.17 +0.60% ...

Linda Piazza : 7/8/2008 1:54:54 PM

The TED spread is back to 0.94, still down 0.043 or 4.373% for the day. Neither the TED spread nor the markets were happy with what the SEC had to say about the discovered problems with the rating agencies this afternoon. I'm not sure whether CNBC was carrying the speech about 20 minutes ago, but Bloomberg was. I watched indices head down while Chairman Cox spoke.

Keene Little : 7/8/2008 1:50:03 PM

ask keene and gang how spx can rally if bix wont rally and oil-gas is falling?

There's always a wise guy in the crowd (wink). Um, with difficulty. That was my comment yesterday--if banks are sinking and then energy stocks start sinking (as the charts were pointing to) then I wondered too how SPX can rally. As we're seeing, it really can't. Today the banks are getting an oversold bounce (BIX +2.1%) but energy stocks are down (OIX -2.6%). Those two are obviously not the only influence but with the equal tugs in opposite directions it's helping keep SPX at the flat line today.

Linda Piazza : 7/8/2008 1:43:36 PM

I posted a chart this morning that showed the resistance the VIX was testing on the daily Keltner chart. Now, here's a chart showing the potentially strong support it's currently testing on the 15-minute one: Link As should be obvious from the tests of the resistance seen on this chart, the VIX sometimes overruns support and resistance levels on this chart, so that support should be considered in a zone around the black and aqua-colored lines, not exactly at them. Those with bullish hopes for the day want the VIX to tumble below this support or at least not close 15-minute periods back above 25.27. Those with bearish hopes want the VIX to bounce hard and maintain 15-minute closes above 25.27. This is a short-term look, balanced against the VIX's ongoing test of resistance on the daily chart. I'm not one who thinks the VIX has to break out into the 30's before markets can bounce, as on a Keltner chart, it's showing some Keltner-style divergences each time it's punched higher in the last year. I'm not promising that it won't, but I'm just holding out the possibility markets could bounce, at least for a few days, without the necessity that the VIX first hit the 30's.

Keene Little : 7/8/2008 1:40:22 PM

Today's price action definitely has me thinking consolidation. If it's a 4th wave consolidation then you don't want to think about trading it unless you like quick day trades--get in and get out (hopefully with some profits for your efforts).

Linda Piazza : 7/8/2008 1:29:45 PM

The OEX's resistance band now from 578.80 to 578.94 (on 15-minute closes) has been so strong that the OEX hasn't been able to closely approach it yet. The OEX has been knocked back and is now slightly below the potential support on 15-minute closes of the 9-ema, now at 575.65. If the OEX can't maintain or nearly maintain this support into 15-minute closes, it's more vulnerable to a test of support. Potential support exists near 573.43 and then near 572, the site of the rising trendline off yesterday's low. The OEX is at 575.36 as I type.

Jeff Bailey : 7/8/2008 1:29:33 PM

Bertha Weakens To Category 2 ... First hurricane of the season being downgraded to Cat2 with maximum sustained winds of 105 mph. Continues to track northeast at 10 mph. Link

Linda Piazza : 7/8/2008 1:00:44 PM

Bulls want to see the OEX hold support on 15-minute closes at 575.30.

Keene Little : 7/8/2008 12:52:22 PM

One thought occurred to me as far as upside potential here--if we're going to remain in a sideways consolidation for another day or two, then 3-wave moves up and down will be expected. In that case a 3-wave move up from this morning's low would have two equal legs up at SPX 1263.16, and that would essentially be a retest of yesterday's high. If price stalls there then I'd say the chances are very good we'll remain trapped between yesterday's low and late-afternoon high (1241-1263).

Linda Piazza : 7/8/2008 12:39:38 PM

The OEX is approaching that potential resistance zone. Those hoping that a bigger relief rally will get started, perhaps one that will last for more than an hour or two, want to see the OEX shoot above and maintain 15-minute closes above potentially strong resistance at 579.12. Yesterday afternoon's swing high is just below that, at 578.80, so at 577.45 as I type, the OEX is closely approaching a resistance test. If the OEX should get above this resistance, then there's further potential resistance now at 582.32, just above yesterday's 582.60 high, so that would be the next hurdle.

Jeff Bailey : 7/8/2008 12:35:44 PM

SPX 1,258.06 +0.45% ...

Jeff Bailey : 7/8/2008 12:35:25 PM

UWM $44.07 +2.99% ...

Jeff Bailey : 7/8/2008 12:32:56 PM

RUY-SP OI at last night's close fell to 13,740.

So, I'd have to think that was a "sell to close" transaction.

Jeff Bailey : 7/8/2008 12:30:46 PM

The RUY-SP downtick took place at roughly 10:35 AM EDT as RUT.X was trading 668.

Jeff Bailey : 7/8/2008 12:28:02 PM

Today's DAILY R1 for the RUT.X could get some action. Some VERY BIG ACTION.

Yesterday's RUT.X option montage Link

Keene Little : 7/8/2008 12:26:01 PM

SPX is struggling near its March 17th low but if it can press above 1257 now we should see a quick rally higher (above yesterday's high).

Jeff Bailey : 7/8/2008 12:23:45 PM

Sector Losers ... AMEX Nat. Gas -2.95%, Gold Bugs -2.76%, Oil Service -2.59%, CBOE Oil -2.31%

Jeff Bailey : 7/8/2008 12:22:36 PM

Sector Winners ... Airlines +7.02%, Pharmaceuticals +2.56%, Money Center Banks +2.51%, Transports +2.03%, Biotech +1.93%, Regional Banks +1.84%, HMOs +1.46%, Home Construction +1.44%

Linda Piazza : 7/8/2008 12:22:15 PM

Will the OEX break through the resistance this time? That's at the 15-minute 45-ema, now at 575.60, with 45-ema having been resistance on 15-minute closes on all 15-minute periods today. If the OEX should make it past this resistance on 15-minute closes, the next important potential Keltner resistance is at 579.12. This has now dipped toward yesterday afternoon's last swing high of 578.80. That makes that zone from 578.80-579.12 potentially strong resistance on 15-minute closes. Bulls should plan what they'll do to protect profits if that zone should be hit.

Jeff Bailey : 7/8/2008 12:20:19 PM

Most Actives ... XLF $19.53 +1.29%, IWM $66.25 +0.85%, FNM $15.40 -2.16%, SPY $125.50 +0.38%, BRCL $0.03 -93.47%, INTC $20.74 +0.14%, LEH $20.31 -2.54%, PFE $17.91 +2.99%, MSFT $25.97 -0.23%, CSCO $22.70 +0.57%

Jeff Bailey : 7/8/2008 12:17:28 PM

12:00 Internals found at this Link

Jane Fox : 7/8/2008 12:11:31 PM

Natural Gas has fallen below its upward channel that has been in place since March 20th. This is quite a move. Link

Jeff Bailey : 7/8/2008 11:58:10 AM

DXY 73.01 +0.46% (30-min. delayed) ... back above MONTHLY Pivot. Set to re-test WKLY R1.

Keene Little : 7/8/2008 11:52:46 AM

Using the gold futures emini (YG, August), this daily chart shows what I'm thinking could set up for another rally leg (shown in pink). We could see gold press up to 965 before it's ready to roll over: Link . This is by no means a given which is why I want to remain short and give it some leeway but a move above 925 (this morning's high) would suggest we might be starting another rally leg. Above 936 would likely confirm it and I'll step out of the way there (might even reverse long for a short term trade).

I don't have it labeled but the move up from the June 12th low would be a 5-wave move up if the pink scenario plays out. The 5th wave would equal the 1st wave at 965, right on top of the 62% retracement. That would be a nice completion of a 3-wave move up from May 2nd. So if my short play doesn't work out here I think the next opportunity will be a very good setup.

Keene Little : 7/8/2008 11:37:20 AM

For those who might be following my gold short play, I've lowered my stop from 940 to 936, to have it just above last night's overnight high at 935.30. The pattern of its decline is not clear enough for me to get comfortable with being short gold (not that one should ever be comfortable with one's position).

I'm tempted to lower my stop to 925, right above this morning's high, since a rally above that level could see a much larger bounce, if not a new rally leg start. If you're short gold from the 940 level where I suggested the play and want to protect profits then consider lowering your stop to 925. I'm trying to make this a position play rather than trade it so I'll leave the "official" stop at 936 for now. If gold continues lower I've got a downside target near 908 where I'll evaluate it again.

Linda Piazza : 7/8/2008 11:36:45 AM

So far, the SPX has not been able to break above or even closely again approach its 15-minute 45-ema, now at 1257.23. The SPX has potential support on 15-minute closes at its 15-minute 9-ema, now at 1251.64. As I said with my OEX-related post a few minutes ago, we've seen an illustration this morning of how tentative that support can be, however. The SPX is at 1253.03 as I type.

Linda Piazza : 7/8/2008 11:35:03 AM

So far, the OEX has not been able to sustain 15-minute closes above its 15-minute 45-ema, now at 575.61. Potential support is at the 15-minute 9-ema, now at 574.01, but that's tentative support, as we have been made well aware this morning. OEX at 574.66 as I type.

Jeff Bailey : 7/8/2008 11:33:00 AM

Conoco/Phillips (COP) $88.85 -1.67% ... Saying refining margins rose 43% from the first quarter to $14.19/barrel, though that is still down 49% from a year earlier, as company still isn't able to fully push cost hikes through to customers.

Jeff Bailey : 7/8/2008 11:24:31 AM

NASDAQ a/d 1,477/1,184

Jeff Bailey : 7/8/2008 11:23:08 AM

BIDU $330.08 +0.66% ... refuses to break back under 150 and 200-day SMAs.

Jeff Bailey : 7/8/2008 11:22:19 AM

VXN.X 30.41 +0.09% ...

Jeff Bailey : 7/8/2008 11:22:04 AM

VIX.X 25.16 -2.40% ...

Jeff Bailey : 7/8/2008 11:20:06 AM

Swing trade put exit alert! ... for the Sohu.com SOHU Aug. $70 Puts (UZK-TN) at the bid of $7.80.

SOHU $68.39 -3.28% ...

Linda Piazza : 7/8/2008 11:19:07 AM

Watch for potential resistance on 15-minute closes at 575.60 for the OEX. Next potential resistance on 15-minute closes is from 577.51-579.39, with that being potentially strong resistance. OEX at 574.36 as I type.

Jeff Bailey : 7/8/2008 11:15:37 AM

EU finance ministers agree to start publishing regional oil stockpile data on a weekly basis.

Tab Gilles : 7/8/2008 11:10:39 AM

The Volatility Index for the Nasdaq $VXN has entered oversold levels. Link

However the $VIX has more to go. Link

Looking at the weekly charts using the 10-ema, the Nasdaq New Highs & New Lows, reversed direction on mid March amd in early May...will they retest the March levels? Link Link Same goes for the NYSE $NYLOW & $NYHGH. Link Link

On the Summation Index;

$NASI Link $NYSI Link

Jane Fox : 7/8/2008 11:06:17 AM

The VIX is supporting each and every move the S&P futures (ES) make. ES's lower low was made at the same time as the VIX's higher high. Link

Keene Little : 7/8/2008 11:03:00 AM

If the little bounce we're getting now fails below this morning's highs and then turns back down to a new daily low I don't think SPX 1240 will hold. So bulls need to keep this bounce alive otherwise they'll be in trouble.

Linda Piazza : 7/8/2008 11:01:24 AM

The 15-minute 9-ema's for the OEX and SPX are 573.15 and 1249.78, respectively. Those who want markets to steady want sustained 15-minute closes above those levels; bears want to see the OEX and SPX knocked back from their 15-minute 9-ema tests.

Keene Little : 7/8/2008 11:01:18 AM

The indices need to get back above this morning's highs in order to break the bearish price pattern, at least for the short term. It might be only good for a sideways consolidation but it would at least suggest the downside will be limited today.

Linda Piazza : 7/8/2008 10:59:29 AM

Everything is so tentative, no conclusion trustworthy. The OEX and SPX are so far holding onto support at 15-minute closes, at 569.38-569.90 for the OEX and about 1242.80 for the SPX, so it looks as if they might attempt a bounce up to their 15-minute 9-ema's, at least, but then earlier, they were holding to the 15-minute 9-ema support and that didn't last!

Jeff Bailey : 7/8/2008 10:53:55 AM

Sector Losers ... AMEX Nat. Gas -4.61%, Oil Service -3.83%, CBOE Oil -3.45%, Gold Bugs -2.09%, Home Construction -2.03%, Disk Drive -1.63%, Broker/Dealer -1.34%, Cyclicals -1.28%

Jeff Bailey : 7/8/2008 10:51:53 AM

Sector Winners ... Airline +3.89%, Pharmaceutical +2.03%, HMOs +1.36%

Linda Piazza : 7/8/2008 10:50:57 AM

Jeff, this morning, T. Boone Pickens said he's been approached by staff members of both presumed presidential candidates, but he wants to meet with them together and not separately, so that the outcome of the discussion is about energy and not a partisan one.

Jeff Bailey : 7/8/2008 10:50:27 AM

Most Actives ... SPY $124.26 -0.60%, FNM $15.19 -3.49%, INTC $20.69 -0.09%, XLF $19.25 -0.15%, QQQQ $44.91 +0.02%, MSFT $25.91 -0.46%, FRE $11.86 -0.41%, LEH $19.85 -4.75%, CSCO $22.52 -0.22%, PFE $17.72 +1.89%

Linda Piazza : 7/8/2008 10:48:57 AM

The VIX has broken out of its triangle shape from yesterday afternoon, to the upside, of course. We could look at equity action and know that before even looking at this chart. However, the VIX is jammed up against that Keltner resistance on daily closes again. Although the VIX has punched above this resistance, nudging the resistance ever higher, and even once inched just above that resistance on a daily close, the resistance been essentially holding on daily closes. It could again. If that resistance continues to hold on daily closes, the VIX will eventually need a retreat to its daily 9-ema to retest that support. That's at 24.56. Here's the daily VIX chart with the annotations from the last couple of weeks: Link

Jeff Bailey : 7/8/2008 10:45:35 AM

T. Boone Pickens commenting: "Won't see oil below $100/Bbl again."
$15B renewable energy tax credit needed to include wind capacity.
Has not met either Presidential candidate to discuss energy.

Keene Little : 7/8/2008 10:44:33 AM

Two equal legs down from yesterday afternoon's late-day high is near SPX 1240. A drop to there, which could essentially be a retest of yesterday's low, might be followed by a stronger rally (above yesterday afternoon's high) if we're in the middle of a larger consolidation. Otherwise a break below 1240 would likely mean we'll see the decline continue, with a downside target of 1220-1225.

Linda Piazza : 7/8/2008 10:42:41 AM

No resistance test, but instead a support test. The OEX is testing potential trendline support at about 571 with potential Keltner support on 15-minute closes at 569.41-569.88. Bears need to be aware of the potential for this support to hold, and so should keep their profit-protecting plans updated. We will get some kind of relief rally going at some time, and it could be explosive, even if it turns out to be brief.

Bulls should be aware that no chart setups are working in their favor so far, and so should not count on support to hold. If you're testing the waters with bullish trades, govern the risk you take on and manage those trades to the best of your ability to capture profit or minimize risks.

Linda Piazza : 7/8/2008 10:22:40 AM

The VIX has been forming a triangle on intraday charts since about 3:15 pm ET yesterday afternoon. No direction predicted there, either.

Jeff Bailey : 7/8/2008 10:18:50 AM

10:00 Internals found at this Link

Jane Fox : 7/8/2008 10:14:45 AM

NEW YORK (MarketWatch) -- U.S. stocks shifted in mixed action early Tuesday after a leading indicator of existing home sales fell in May, signaling the housing market may soften further. The Dow Jones Industrial Average was up 13.35 points at 11,245.31. The S&P 500 was off 1.85 points to 1,250.46, while the Nasdaq Composite gained 7.51 points to 2,250.83.

Jane Fox : 7/8/2008 10:13:47 AM

NEW YORK (MarketWatch) -- The dollar firmed against major currencies on Tuesday, boosted by comments from Federal Reserve Chairman Ben Bernanke, who said the Fed may extend its lending facilities for troubled financial institutions into next year.

"The talk has apparently assuaged credit concerns slightly," analysts at Action Economics said in a note.

The dollar index , which measures the U.S. unit against a basket of major currencies, recently stood at 72.91, compared with 72.67 ahead of Bernanke's speech.

The euro eased to $1.5676, from $1.5696 after the speech. The dollar also rose to 107.38 against the yen, compared with 106.76 yen in midday European trade.

In his speech Tuesday, Bernanke said the Fed should have additional powers to prevent and limit financial market turmoil.

"We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end," Bernanke said.

Linda Piazza : 7/8/2008 10:13:21 AM

If these were normal markets, I'd be looking at the support at or above the 15-minute 9-ema's and say that we'd probably get a resistance test. However, I can't emphasize this enough that these are not normal markets and you can't apply normal assumptions. So, the OEX currently looks like to at least test 576.22 potential resistance (15-minute) and maybe even 577.20-578.40 potential resistance (30-minute), but that doesn't mean it won't just keel over and test support instead.

Jane Fox : 7/8/2008 10:11:38 AM

U.S. May pending home sales index down 4.7%: NAR

Linda Piazza : 7/8/2008 10:10:31 AM

The BIX is maintaining 15-minute closes above its 15-minute 9-ema, now at 160.42, and also above lower potential support now converging near 158.27-159.44. Now the BIX needs to capitalize on this stabilization and climb.

Jane Fox : 7/8/2008 10:04:29 AM

Crude has broken its support at $140.00 but the equity markets are not all that impressed. Link

Keene Little : 7/8/2008 10:03:52 AM

After a down opening (minor) and a quick spurt of buying, the market has quickly found security at the flat line. Now we wait for direction.

Linda Piazza : 7/8/2008 10:00:00 AM

We have chop and not a real direction yet. That means that anything can still happen.

Linda Piazza : 7/8/2008 9:50:17 AM

Both the OEX and the SPX punched back above their 15-minute 9-ema's by the end of that first 15-minute period. Both are now coming back to retest them. They're at 573.94 and 1252.84, respectively, for the OEX and SPX, and those hoping for gains want to see them hold as support on this 15-minute close, too. Watch for potentially strong resistance on 15-minute closes at 576.30-576.88 for the OEX and 1259.60 for the SPX.

Linda Piazza : 7/8/2008 9:46:11 AM

Yippee! TED spread at 0.92. We want to see it keep dropping. Those currently in bearish positions might not, but even the most most bearish don't want to see our financial system in chaos. We want to see the TED spread maintain values below 0.92 as a hint of stablization and decrease in default risk, not as a promise that the worst is over.

Linda Piazza : 7/8/2008 9:43:50 AM

The BIX was our canary in the mine yesterday. As I type, it's testing potential support on 15-minute closes at 159.15, with the BIX now at 160.02 after punching down to 158.41. Those hoping for a steadying want to see it bounce higher or at least hold this level, as it's now back to a higher potential support level. Holding this level suggests the possibility of a punch up toward 163.97.

Linda Piazza : 7/8/2008 9:41:02 AM

The A/D line hit that potential support mentioned in my 9:35:51 post, dropping to a low of -813 and hitting the top of that potential support zone and now bouncing strongly. It's at -85, still in the upper (or bullish for equities) half of its Keltner channels. Do be aware that it's quickly approaching what could be significant resistance, now at +133.

Linda Piazza : 7/8/2008 9:38:37 AM

The SPX has potential support on 15-minute closes at 1245.30 and then at 1241.02. Those hoping for a steadying would of course like to see the SPX produce 15-minute closes above the higher of the two. In fact, they'd like to see the SPX bounce and close this 15-minute period back above its 15-minute 9-ema now at 1250.91, but the A/D line would have to bounce to have that happen.

Jane Fox : 7/8/2008 9:37:54 AM

AD line opens at -717 well into bear country.

Linda Piazza : 7/8/2008 9:35:51 AM

Keltner outlook on the A/D line: The A/D line made its first prints between Keltner support and resistance, with support at -803 to -1130 and with resistance at +90. It's currently dropping toward support and is at -474.

Jane Fox : 7/8/2008 9:35:51 AM

Here are your overnight charts. All markets broke through their respective overnight lows except NQ, the NDX futures. Link

Linda Piazza : 7/8/2008 9:34:03 AM

OEX at 573.57, testing the 15-minute 9-ema. I didn't mention this in my earlier post referencing the OEX, but if it should climb toward 578-580, those in bullish positions should have profit-protecting plans ready. If it should drop toward 570-571.80, bears should stay on their toes with their profit-protecting plans. Between those levels, we don't know much about next direction.

Linda Piazza : 7/8/2008 9:31:37 AM

The TED spread is 0.94, down 0.043 or 4.373%. We'd really like to see it below 0.92. Well, actually, we'd really like to see it back in its normal 0.10-0.50 range, but a drop below 0.92 that's sustained might allow at least a relief bounce in equities.

Linda Piazza : 7/8/2008 9:28:21 AM

As I type, ES (S&P e-minis) are slightly below fair values, but they've been all over the place during overnight action, including to a new recent low. As I said yesterday, we shouldn't give this current spot pricing near fair values too much credence.

That's all the guidance we have right now, however. If we extrapolate where the OEX might be based on the futures' relationship to fair values, we might see further testing of the 15-minute 9-ema, now at about 573.50. The 30-minute version is just above at about 573.80. Those hoping for a stabilization and climb would like to see these averages serve as support on the first 15- and 30-minute closes and for the OEX to bounce to test resistance now from 576.43-580.30, with several types of resistance (trendline), Keltner) grouping in that zone. If the OEX drops lower instead, first support can be found from 570.29-571.90. Support below that is at about 567.80 and then 565.44. We'll have to see how things set up this morning to get any further information.

Keene Little : 7/8/2008 9:21:57 AM

After steadily dropping during overnight trading, equity futures then climbed back up from their lows just past 4:00 AM. It's looking like they might be able to open near the flat line if they can push a little higher into the open. Of course we now have the overnight lows that could be tested. That would mean a "dip" in the DOW of nearly 120 points. It continues to be a very weak market, but very oversold, and that makes trading both directions difficult.

Jane Fox : 7/8/2008 8:50:19 AM

WASHINGTON (MarketWatch) -- Federal Reserve chairman Ben Bernanke stuck his toe into the shark-infested waters of Washington regulatory battles and cautiously suggested that the Fed be given new powers to oversee financial markets. In a speech at a FDIC conference, Bernanke said Congress would have to give the Fed new powers if it wanted to give the central bank the job to limit the impact of financial market turmoil on the economy. Bernanke bent over backwards to suggest rather than demand any new powers from Congress. In a major development on another topic, Bernanke said the Fed was considering extending its emergency loans to broker-dealers beyond 2008 to help stabilize the market. The Fed's emergency primary dealer credit facility is now set to expire in mid-September.

Linda Piazza : 7/8/2008 8:37:23 AM

T. Boone Pickens was on CNBC this morning talking about his plan for dealing with the energy crisis found here: Link

When complimented about the validity of his prediction of $150 crude, he was asked what his prediction was into the end of the year. He said that he was sticking with $150 as he believed there would be some demand destruction at this price level. At the time S&P futures were down about 8 points and they immediately began climbing off that level. Federal Reserve Chairman Ben Bernanke was speaking at the same time, so I can't say with any certainty that Pickens' statement impacted futures action, of course.

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