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Keene Little : 7/9/2008 10:11:01 PM

Thursday's pivot tables: Link and Link

Just before the close on Wednesday I had mentioned a Fib projection at SPX 1244 for a possible end to the leg down from the mid-day high. It closed slightly above it so it will be interesting to see if we get a bounce started right away on Thursday. Wednesday's decline looks impulsive (5-wave move down) and that suggests we'll see the selling continue once we get a correction of Wednesday's decline.

The Fib retracement zone of 1257-1265 gives us our upside target zone (assuming we'll get a bounce) and of course we have the March low at 1257 as well. As shown on the 60-min chart (dark red) that would be a good setup for a short play and I hope to be able to zero in on the level to watch as the bounce progresses (again, assuming we'll get a bounce): Link . As for the sideways consolidation possibility, until SPX breaks below 1241 that possibility remains (shown in pink).

Updating the daily chart shows the likelihood for a continuation lower before a possible bounce off the 1220 level (early 2005 highs/2006 lows), which would take SPX back above 1300 before selling off again in the fall (shown in pink). The dark red wave count shows a bounce (from 1220 or slightly lower) and then final low below 1200 by the end of the month before setting up the larger rally into August. Link

The DOW's daily chart shows a similar setup as SPX with the possibility for an eventual low around 10300-10400 by the end of the month. But a larger rally off the 10700 support level could set up next week. Link

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

The Market Monitor has been archived.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

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Jeff Bailey : 7/9/2008 9:11:20 PM

New Five Dollar Bill ... Link

I think U.S. gasoline prices are starting to impact sentiment.

Jeff Bailey : 7/9/2008 9:00:13 PM

SPX's NH/NL finished 1:32

Jeff Bailey : 7/9/2008 8:59:01 PM

RUT.X's NH/NL finished 10:98

Enough to keep the bullish side of me interested for one more day.

Jeff Bailey : 7/9/2008 8:56:24 PM

Closing Internals found at this Link

Jeff Bailey : 7/9/2008 8:42:11 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 7/9/2008 5:21:16 PM

As RUT.X bull near-term, don't want to see much more than 100 new lows among the RUT. Eyeballing NYSE and NASDAQ NL's.

Bears want as many as they can get and more than the 268 from 07/01 and 07/07.

Jeff Bailey : 7/9/2008 4:48:07 PM

Today's sector winner ... Utilities +1.13%. Only equity-based index in Market Watch to finish green.

According to Dorsey/Wright ... yesterday saw one (1) Electric utility trade 52-week high and four (4) trade 52-week lows. There were zero (0) Gas utility new highs and ten (10) new lows.

07/08/08 recap Link

Jeff Bailey : 7/9/2008 4:39:21 PM

FXE 157.53 +0.56%
FXY 93.36 +0.63%
FXB 198.42 +0.72%

Jeff Bailey : 7/9/2008 4:38:00 PM

DXY's 04:00 tick 72.602

Jeff Bailey : 7/9/2008 4:34:08 PM

SHLD $72.55 -4.62% Link ... no follow through.
GENZ $75.57 -1.70% Link ... no action.
AMZN $70.48 -6.07% Link ...
AAPL $174.27 -2.94% Link ... managed an X at $180, but almost a 3-box reversal back lower by the close.

Jeff Bailey : 7/9/2008 4:17:12 PM

August Unleaded (rb08q) settled up $0.0177, or +0.53% at $3.3808.

August and September "crack spread" impoves modestly for 3rd-straight session.

TSO $17.35 -12.01% ... continues to get garage saled.

VLO $34.39 -5.83% ... monitored VLO-GG into close. Couldn't pull the trigger at an offer of $0.87.

Jeff Bailey : 7/9/2008 4:11:56 PM

August Crude Oil (cl08q) settled up a penny at $136.05. Held its 06/20/08 July expiration settlement benchmark.

Linda Piazza : 7/9/2008 4:06:26 PM

This is the lowest close we've seen in this decline, but not the lowest low. Small comfort, but remember the tendency for big-range days to be followed by small-range ones. Keep that in mind as a possibility tomorrow, but I always like to change that expectation by saying that small-bodied candles sometimes follow such days. The range might not be that small. We could see a downdraft that's reversed or a bounce that is, and both could produce small-bodied candles with long lower or upper shadows.

Keene Little : 7/9/2008 4:03:44 PM

With CME dropping below 382.84 (two equal legs down from its June high) it looks like it should continue lower as well. The Fib projection near 253 and the bottom of its parallel down-channel for price action since its December high looks like a good downside price target. Daily chart: Link

Keene Little : 7/9/2008 3:58:41 PM

SPX 1244 Fibs out well for a completion of the leg down from today's high. Then a 38%-62% retracement tomorrow gives us a target zone of 1257-1265 to watch. Assuming we'll get the bounce I should be able to zero in a little closer on a good upside target to watch for the short play to set up.

Keene Little : 7/9/2008 3:54:17 PM

As Linda mentioned, it's certainly looking like we're headed for at least a test of Monday's low. The leg down from today's high looks near complete (5-wave move). That should set up a bounce tomorrow morning to correct the decline but I think we've now got our first clue about what's next.

Because of the impulsiveness of today's decline (vs. seeing another 3-wave pullback which is what we'd see if we were to remain in a sideways consolidation), tomorrow's bounce will be a good setup for a short play since the next move after that will very likely be for new lows (SPX 1220-1225 target).

Linda Piazza : 7/9/2008 3:53:07 PM

That is one ugly 30-minute candle on the OEX's chart. That suggests a potential target of 568.25, although RSI on that chart has already reached levels that usually suggest that bears be watchful for bounce potential.

Jane Fox : 7/9/2008 3:52:16 PM

Here is the VIX and the S&P futures (ES). As you can see they have both mirrored each other today. Link

Linda Piazza : 7/9/2008 3:47:54 PM

Yesterday's daily OEX candle was a bullish engulfing one, a potential reversal signal. Late yesterday, though, I noted that the interpretation was complicated by the fact that prices ended the day jammed under the daily 9-ema, with that having long served as resistance on daily closes. In my 9:29:21 post, I also reiterated the fact that these are not normal times and that we had to keep the climate in mind when deciding how much credence to give such potential reversal signals. I had thought it possible at that time that the OEX might pierce its 9-ema but then close the day at or below it.

I didn't expect it to close the day as far below it as it is now, however. So, as I type, with the OEX at 570.82 and dropping fast, we have more chopping around within a chop zone that's been building since 6/27. Daily closes have been at or below 584.36 and at or above 573.76, a closing level that could well be threatened as I type. Some intraday highs and lows have pierced those levels, but many highs or lows have been within that zone, too.

What can we conclude? Not a lot. The daily chart suggests that as long as the OEX is producing daily closes beneath the 9-ema, now at 581.77, it's vulnerable to about 546.20. But will the OEX bounce back above that moving average? Is this consolidation one prior to another decline or one prior to a bounce? Last week's weekly candle was also a potential reversal signal.

As I type, it still looks possible that the OEX could chop around another day or two mostly between Monday's low (or perhaps about 567.20-568.45) and about 583-586 before a final direction is decided. That could change by the close, however.

Linda Piazza : 7/9/2008 3:31:16 PM

Tomorrow morning at 4:00 am ET, the ECB releases its monthly bulletin or report. This report details the information that the ECB used when making its latest rate decision.

Then, at 7:00 am ET, the Bank of England makes it rate decision. Most market watchers expect the Bank of England to keep rates steady. Then we start with U.S. reports, which Jane usually covers at the end of the day. I did want to mention that we have both Fed Chairman Bernanke and ECB President Trichet speaking after the market opens tomorrow, with our Fed head at 10:00 am ET and with the ECB's at 1:45 pm ET.

Fed Chairman Bernanke will be joined by Treasury Secretary Henry Paulson tomorrow morning with both speaking about financial regulation to the House of Representatives' Committee on Financial Services. That can produce some fireworks in the markets. The ECB's Trichet will be speaking the 10-year anniversary of the euro, in Germany.

Linda Piazza : 7/9/2008 3:24:52 PM

The OEX downside target and potential support on 15-minute closes is now at 573.05. If you're bearish, don't think that a potential target means you're necessarily going to get exactly there. The OEX has already closely approached it, so spiff up your profit-protecting plan just in case.

Linda Piazza : 7/9/2008 3:21:16 PM

I don't know about the rest of you, but I'm getting tired of this market action. While my own belief has long been that we'll likely get some sort of test of lows or new lows after the summer, I'm getting tired of this particular round of tests!

Anyway, market action like this points to the continued shakiness of markets. It's one reason that I urged fellow credit spread traders to see if they could use this morning's bounce to exit some of their JUL bull put spreads ahead of opex week next week. I don't know what's going to happen next week. The jittery markets tell us that all are worried ahead of earnings reports next week, especially from financials. However, I know I don't want to go into that week with any more risk on my plate than I have to carry with me. This is the first opex cycle in a long, long while when I've had any front-month credit spreads so close to opex, and I'm not liking it even though the only credit spreads I have left for JUL are 12 contracts of SPX 1210/1200 bull put spreads.

Jeff Bailey : 7/9/2008 3:20:18 PM

Cisco Systems (CSCO) $21.60 -5.59% ... notable 52-weeker at the NASDAQ.

Linda Piazza : 7/9/2008 3:15:52 PM

The VIX has retraced almost half its decline from Monday's high into this morning's early low. That 50% mark is near 24.72, and the VIX has hit a day's high of 24.62. It's at 24.56 as I type, far above the optimal level that equity bulls wanted to see hold as resistance. Some of that resistance was on a daily close, though, so we have to wait to see if there's a pullback to or below about 23.80-23.90 at the close to see if that resistance held on a daily close.

Jeff Bailey : 7/9/2008 3:14:13 PM

Merrill Lynch (MER) $30.26 -7.65% ... gives back all of yesterday's gains. Earlier today ratings agency Fitch said the company is at imminent risk of a downgrade because of additional write-downs, the amount of debt due to mature in the next year and diminishing expectations for a sustainable level of core profitability.

Jeff Bailey : 7/9/2008 3:11:47 PM

Sector Losers ... Regional Banks -4.94%, Broker/Dealer -4.84%, Airlines -4.13%, Money Center Banks -3.97%, Home Construction -3.4%, Semiconductor -3.32% and many more.

Jeff Bailey : 7/9/2008 3:09:02 PM

Sector Winners ... Utilities +1.39%, Gold Bugs +0.42% and Pharma +0.22%.

Jeff Bailey : 7/9/2008 3:07:49 PM

American Airlines (AMR) $5.42 -1.27% ... saying it has started sending out letters notifying employee groups and workers at its hubs and secondary cities that job cuts are coming, perhaps as early as September. AMR wants to reduce its full-time equivalent work force by roughly 8%.

Linda Piazza : 7/9/2008 3:07:48 PM

The TRIN just charges higher, showing continued differences in yesterday afternoon's behavior. It has a potential upside target of 2.30, but the TRIN seldom reaches those upside targets, so bears need to be aware that it's getting into nosebleed territory and start watching for bounce attempts in equities. That doesn't mean that they'll come, but you need to be watchful anyway.

Linda Piazza : 7/9/2008 3:05:55 PM

The OEX's potential target and potential support on 15-minute closes is now 572.85. OEX at 574.16.

Keene Little : 7/9/2008 3:02:52 PM

The sideways triangle idea is shown on this SPX 60-min chart (in pink): Link . A drop below 1241 would say the market is headed directly lower and the 1220-1225 area would be the target for support for another bounce (which will be a larger degree 4th wave correction). But if the market chops sideways in the trading range between 1240 and 1275 it will then be a good setup for another short play into the end of the month.

Linda Piazza : 7/9/2008 2:57:20 PM

Jane, I like reading your input on the internals, and I imagine that readers do, too. Your information was valid. We're all watching the same things.

Jane Fox : 7/9/2008 2:56:45 PM

I see that Linda just mentioned the TRIN - sorry Linda.

Linda Piazza : 7/9/2008 2:56:36 PM

At just over 165 (about 165.10), the BIX will have retraced half its gain off Wednesday's low. The BIX is 164.99. The 50% level sometimes provides support, but no support is going to hold if bulls are too disappointed again and throw up their hands and throw in their long positions..

Jane Fox : 7/9/2008 2:56:14 PM

Things are getting very bearish now, TRIN up to 1.94. There are many who consider a TRIN at 2.00 a buy signal although I am not one of them.

Linda Piazza : 7/9/2008 2:53:33 PM

Potential target and next support for the OEX on 15-minute closes at 572.86. Remember to watch the SPX, too, though, with the SPX currently testing the rising trendline (best-fit) off Monday's high.

Linda Piazza : 7/9/2008 2:49:41 PM

The TRIN is testing the level that held as resistance yesterday during the 2:00 candle, and the TRIN pullback from that resistance came at the same time as the equities began bouncing. Bulls and bears alike will want to watch for similarities or differences in the TRIN's action this afternoon as it tests the same area: Link

Keene Little : 7/9/2008 2:46:54 PM

One thing I should add about the bearishness of this market is that it's possible we'll see a 1 to 2-day pullback and then another rally leg above today's highs before it drops to new lows again. The wave pattern for the decline from May calls for a 4th wave correction and they're the worst to try to figure out. The best case, as far as figuring out what the next good tradable move will be, will be a sideways triangle into the end of the week.

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

Altria (MO) $21.23 +0.85% ...

Linda Piazza : 7/9/2008 2:44:27 PM

Is the SPX's action responsible for the OEX not falling more sharply once it broke out of its rising channel? The SPX is only now approaching its rising trendline (best-fit version) off Monday's low. I had mentioned earlier, while Keene was gone, that the SPX's version was lower and not yet approached at the time. This best-fit version is now about 1260-1261. Whichever of these two you're trading, watch the other. An SPX bounce from its trendline test could certainly impact the OEX.

Jeff Bailey : 7/9/2008 8:37:52 PM

Philip Morris (PM) $54.34 +1.06% ... nearing spin-off high.

Keene Little : 7/9/2008 2:41:00 PM

With a continuation lower, assuming it will continue to drop below SPX 1260, it leaves the bounce off Monday's low as just a corrective 3-wave move. That means the bounce is either over and we'll head directly lower from here or we'll consolidate in a wide trading range for a week before heading lower. The common thread here is that it will trade lower. We have not seen the bottom yet for the decline from May.

Linda Piazza : 7/9/2008 2:40:56 PM

Those trading the OEX now have to factor in possible vulnerability to deeper support now at 572.65, potential support on 15-minute closes. The OEX isn't falling steeply away toward that support, though, after breaking through that rising channel, something that it likely would have done any other time over the last few weeks. I would suggest factoring in vulnerability to that level but if I were a bear, I wouldn't necessarily count on it being hit and hold out for every penny of that drop despite evidence that your trade wasn't working.

Linda Piazza : 7/9/2008 2:38:34 PM

Here's the VIX daily Keltner chart that I've been showing for the last couple of weeks. After falling away from the Keltner resistance that was being tested and which had held in early June, too, the VIX has today bounced back up to retest the daily 9-ema, the thin red line. As I type, it's actually a little above it, but equity bulls would like to see this hold as resistance into the daily close: Link I forgot to change the annotations on the chart, but that's okay because it gives you a good way to test the efficacy of these Keltner charts to point out potential support or resistance.

Keene Little : 7/9/2008 2:31:30 PM

Back just in time to see SPX making it down to the 1262-1263 Fib projection level for today's consolidation. Again, any lower than 1260 will be bearish.

Linda Piazza : 7/9/2008 2:27:12 PM

The OEX threatens to break down out of the channel in which it has been rising since Monday's low. As I mentioned earlier (1:31:24 post), that might bring it back toward a potential support line then at 571.65 and now risen to 572.53. I don't think, however, that we can yet quite conclude that support is broken and not just being tested. The OEX needs to produce 15-minute closes above about 579.60 soon, however, or that's exactly what we'll have to conclude. Right now, it's still just testing.

Jeff Bailey : 7/9/2008 2:19:31 PM

02:00 Internals found at this Link

Linda Piazza : 7/9/2008 2:17:19 PM

Those hoping for a bounce also want to see the VIX producing sustained 30-minute closes back below 23.57. VIX is 23.80 as I type.

Linda Piazza : 7/9/2008 2:16:08 PM

As just the first step in showing that the OEX is making any progress at all in bouncing from that rising trendline off Monday's low, we need to see sustained 15-minut closes above 580. That's just the first step. OEX at 579.24 as I type.

Linda Piazza : 7/9/2008 2:09:08 PM

I've hidden all my Keltner lines so you can see where the OEX is with respect to that rising price channel off Monday's low: Link

Jane Fox : 7/9/2008 2:07:30 PM

Now the internals are talking to us and telling us the bears are in control. Link

Jeff Bailey : 7/9/2008 2:07:48 PM

OEX will have a little different composition. Would be useful tool for OEX-only traders I would think. Could zero in on some of the heavy-weight "Max Pains" for straddles, spreads, etc.?

Jeff Bailey : 7/9/2008 2:02:20 PM

SPX "Heavyweights" Link

Jeff Bailey : 7/9/2008 1:56:25 PM

Question is ... is market so darned "oversold" that a rising tide will lift all boats?

McDonald's and Dunkin's coffee pretty good tasting.

Jeff Bailey : 7/9/2008 1:53:32 PM

Starbucks (SBUX) $14.91 -2.80% Link ... hanging around Monday's close. Monday's trade at $15.00 generated the "bearish catapult" pattern.

Jeff Bailey : 7/9/2008 1:44:00 PM

That also reminds me. Yesterday I opened up mail from my old Mobil Oil credit union (Pegasus, Dallas, TX) and their newsletter reported record checking account deposits.

That suggests to me that there may be a whopping amount of money on the sidelines.

Linda Piazza : 7/9/2008 1:41:58 PM

The OEX's bounce attempt is tepid so far. Unless it gains steam soon, signified by sustained 15-minute closes above 580.28, I would think it probably needs to go back and retest that ascending trendline, now at about 578.10, if I'm eyeballing it correctly. OEX at 579.42.

Jeff Bailey : 7/9/2008 1:41:01 PM

Indymac (IMB) $0.41 -6.81% ... Not sure if Jim mentioned in last night's wrap, but yesterday, company said it was starting to see "run on the banks" accounts. That is, customers were withdrawing funds and above-normal rate.

Jeff Bailey : 7/9/2008 1:39:20 PM

Ambac (ABK) $2.41 +13.67% ... shuffled up to #4 most active.

Jeff Bailey : 7/9/2008 1:35:29 PM

NASDAQ a/d 1,185/1,606

Jeff Bailey : 7/9/2008 1:35:16 PM

NYSE a/d 1,555/1,556

Jeff Bailey : 7/9/2008 1:35:03 PM

Disclosure: I currently hold bearish position in F5. Traders might be able to work the option.

Linda Piazza : 7/9/2008 1:31:24 PM

That OEX rising trendline off Monday's low has now risen to about 578.05. It's possible that the OEX will dip to meet it or just sit near its current level until it catches up (the more bullish of the possibilities). Bears need to be aware that a potential bounce zone is being closely approached, but we just don't know whether that bounce will come or the OEX will just crater and drop through support, perhaps back toward 571.65.

Jeff Bailey : 7/9/2008 1:31:43 PM

F5's profile Link

Long-time subscribers have traded with me over the years. CSCO's news today might bring weakness. Didn't see any "warnings" from F5, but after the dirty-deed from NVDA, maybe CEOs aren't saying much these days?

Jeff Bailey : 7/9/2008 1:29:21 PM

Swing trade put alert! ... for one (1) of the F5 Networks FFIV Aug $30 Puts (FLK-TF) at the offer of $2.40 ($2.25 x $2.40).

FFIV $31.01 -1.39% Link ... Earnings slated for 07/23/08.

Jeff Bailey : 7/9/2008 1:18:29 PM

Might be "too good to be true," ... but ...

Jeff Bailey : 7/9/2008 1:17:13 PM

M, m, m ...

Linda Piazza : 7/9/2008 1:15:43 PM

The SPX's rising trendline off Monday's low is well below current prices. A best-fit version is now at about 1258.60 and of course equity bulls don't want to see the SPX drop so far. They'd like to see it bounce back above 1268.04 by the end of this 15-minute period, showing that support held, but that might be a stretch. They'd then like to see it hold support on 15-minute closes at 1265.15.

Linda Piazza : 7/9/2008 1:11:27 PM

There's a potential setup now for the OEX to bounce from support now at about 577.80 but still climbing toward 578 and for the VIX and TRIN to turn down from the resistance they're testing. But will that happen? Sorry, but that's the whole point. Lately, we've had these setups and just normal retesting of support and then prices just give way as selling gains strength, so we have to see what happens. The possibility of a bounce soon exists, but it's not a probability in this environment.

Linda Piazza : 7/9/2008 1:09:21 PM

The VIX is rushing up toward the top of the resistance zone we were watching, with that now extending up to 23.93 on 30-minute closes and about that on daily closes. Equity bulls would have preferred that the lower edge of the potential resistance zone hold as resistance. The VIX is 23.72 as I type.

TRIN is 1.36 but closely approaching potential resistance on 15-minute closes at 1.41-1.49 with its day's high a few minutes ago of 1.39.

Linda Piazza : 7/9/2008 1:04:51 PM

Those in bearish OEX positions need to be aware of rising trendline support just under 578. I of course don't know if that's going to hold--I don't like what's happening with the VIX, for example--but it's held as support on two previous retests since Monday's low began establishing the support line.

Jeff Bailey : 7/9/2008 1:04:02 PM

Sector Losers ... Airlines -2.75%, Broker/Dealer -2.33%, Semiconductors -2.31%, NASDAQ Telecom -2.06%, Networking -1.56%, Regional Banks -1.56%, Retail -1.21% and others.

Jeff Bailey : 7/9/2008 1:01:29 PM

Sector Winners ... Gold Bugs +2.15%, Utilities +1.39%, Pharma +0.80%, Oil Service +0.46%, HMOs +0.41% and Biotech +0.14%

Jeff Bailey : 7/9/2008 12:59:16 PM

USO $111.11 +1.08% ...

Jeff Bailey : 7/9/2008 12:58:15 PM

BIX.X 170.55 -1.39% ... below WKLY Pivot. Has been either side. DAILY Pivot (168.43) has held some buyers at morning low.

Overlap WKLY S1 and DAILY S1 at 163.50-ish.

Linda Piazza : 7/9/2008 12:57:10 PM

What could happen now is that the OEX might trend mostly sideways until the rising trendline off Monday's low rises just beneath its then-current level. It could then punch down to test it and then . . . then, we'll see. The most bullish case is a bounce that hits a new high. The least is a breakdown through that rising trendline and a swift decline. That trendline is now just under 578 but still rising, of course.

Jeff Bailey : 7/9/2008 12:55:48 PM

QQQQ $45.62 -0.76% .... above WKLY Pivot.

Jeff Bailey : 7/9/2008 12:55:27 PM

RUT.X 677.92 -0.70% ... above WKLY Pivot.

Jeff Bailey : 7/9/2008 12:55:01 PM

DIA $113.33 -0.37% ... above WKLY Pivot.

Jeff Bailey : 7/9/2008 12:54:36 PM

OEX 579.93 -0.48% ... sitting on WKLY Pivot.

Jeff Bailey : 7/9/2008 12:54:00 PM

SPY $126.80 -0.34% ... juuuuuust undercutting WKLY Pivot.

Linda Piazza : 7/9/2008 12:39:04 PM

The OEX is headed down toward potentially strong support on 15-minute closes at 579-579.70. In a normal market environment, that support looks so strong that I wouldn't even be sure it would be touched but rather just approached before there was a bounce attempt. These aren't normal market conditions, so all I can say is that equity bulls want to see that support hold on 15-minute closes.

Jeff Bailey : 7/9/2008 12:37:15 PM

SOHU $71.76 +5.40% ...

BIDU $339.24 +1.39% ...

Keene Little : 7/9/2008 12:22:31 PM

We might stay trapped inside today's trading range and could even form a sideways triangle. If so it should resolve to the upside this afternoon.

I've got to step away for about 2 hours and should be back a little after 2:00 PM. Watch out for the chop.

Jane Fox : 7/9/2008 12:19:01 PM

Natural Gas has taken another big drop today, the 3rd one in a row yet it is not even to the 38.2% percentile of rally from March 20th. Link

Jeff Bailey : 7/9/2008 12:16:25 PM

12:00 Internals found at this Link

Jane Fox : 7/9/2008 12:14:05 PM

Some days the internals will talk to you and tell you who is winning the race, the bears or the bulls. Unfortunately today is not one of those days. The internals are about as non committal as they get. Link

Linda Piazza : 7/9/2008 12:13:59 PM

The VIX is attempting to break above the 15-minute 9-ema for the first time today. That moving average is currently at 23.16 and the VIX is currently above it, at 23.27, but with several minutes left in this 15-minute period. This is a slight change in tenor, but the VIX has further potential resistance on 15-minute closes at 23.55-23.60 and then on daily closes at 23.86. Equity bulls would like these higher levels to hold as resistance and to knock the VIX back, if it does close this 15-minute period above its 9-ema.

Linda Piazza : 7/9/2008 12:09:18 PM

The OEX did drop to the 30-minute 9-ema, as I thought it probably would if it couldn't punch up through a resistance line now at 583.73 within the next few minutes. Currently, at the beginning of this 30-minute period, the OEX is slightly below that 30-minute 9-ema, now at 581.17, but is essentially still testing it. Bulls would like that support to hold and to bounce the OEX, but the OEX is also now vulnerable to a drop to about 578.82-579.67.

Linda Piazza : 7/9/2008 12:06:09 PM

For those of you credit spread traders who got the scare of your lives this last few weeks and who still have open JUL bull put spreads, you might consider using this bounce to close some of those. I just closed 12 OEX 535/525's for $0.15, which is more profit than some of you want to give up, I know. Still, if you feel that you've got too much risk on the table, it might be worth it to use this bounce to reduce risk. If any of you were trading on opex Thursday last August, you can imagine how much better that day would have been if you'd gone into it with less risk on the table.

Another possibility is to use the bounce to put some debit spreads in front of some of your credit spreads. For example, instead of closing out those 535/525's for a $0.15 debit, I perhaps could have put on a 530/540 debit spread in front of it (buying the 540 and selling the 530) for about $0.25. Talk to your broker about the pros and cons of such an action, but if I'd thought that the OEX was likely headed down to 535, the sold strike in my original credit spread, but no further, then I would have benefited from such a downturn. Me? In this climate, I just wanted to remove risk and not get too fancy.

Jeff Bailey : 7/9/2008 12:00:08 PM

My 4-week average for purchases fell from 353.2 to 350.6.

My 12-week average for purchases rose from 355.1 to 357.1.

Keene Little : 7/9/2008 11:59:07 AM

So far the consolidation near the day's highs can be considered bullish. The pattern could tolerate a sharp drop down to SPX 1263 without necessarily being bearish. But below 1260 would be bearish.

Jeff Bailey : 7/9/2008 11:56:53 AM

MBA's Weekly Application Survey (earlier this morning) Link

Jeff Bailey : 7/9/2008 11:53:08 AM

SPX "heavyweight" losers ... CSCO -3.84% Link , INTC -2.62% Link , MMM -2.08% Link

Linda Piazza : 7/9/2008 11:51:27 AM

The TED spread is now 0.96, going the wrong way.

Jeff Bailey : 7/9/2008 11:50:55 AM

Looks like MON gets a reversing higher PnF buy signal.

At end of day, will get all 500 reading from your BPSPX.

Jeff Bailey : 7/9/2008 11:50:21 AM

SPX "heavy weight" gainers ... MON +4.17% Link SLB +3.22% Link , AMGN +2.14% Link , JPM +2.04% Link

Linda Piazza : 7/9/2008 11:49:12 AM

It's soon going to be do-or-die time for the OEX's ongoing test of the potential resistance on 30-minute closes, now at about 583.85. The OEX will either need to punch through this or retreat to retest the 30-minute 9-ema again, with that at 581.33. There's further potential support near 578.80, and that could get tested, too.

Jeff Bailey : 7/9/2008 11:46:45 AM

These would be METAls in you sector bull %.

Jeff Bailey : 7/9/2008 11:45:49 AM

BHP Billiton (BHP) $75.67 +0.49% Link ... some copper production. Hovering around correlative 150-day and 200-day SMAs.

Nasty looking h/s top on bar chart.

Jeff Bailey : 7/9/2008 11:43:16 AM

Freeport McMoran (FCX) $105.80 +0.57% Link ...

Jeff Bailey : 7/9/2008 11:42:17 AM

Companhia Vale do Rio Doce (RIO) $31.50 -1.34% Link

Jeff Bailey : 7/9/2008 11:41:29 AM

September Copper (hg08u) down 3-cents at $3.67

Jeff Bailey : 7/9/2008 11:40:45 AM

Networking (NWX.X) 206.96 -0.24% Link ... might have been "bad tick" yesterday to 178.37 (180 on chart). Not sure.

EMC $13.51 +0.89% Link ... got whacked yesterday.

Linda Piazza : 7/9/2008 11:38:27 AM

So far, the VIX is still finding resistance on 15-minute closes at the descending 15-minute 9-ema, now at 23.13. Equity bulls want to see that continue, but they should be aware of potentially strong support near 22.20-22.40 if the VIX should drop that far. The VIX is 22.92 as I type.

Jeff Bailey : 7/9/2008 11:37:48 AM

Most Actives ... QQQQ $45.97 (unch), CSCO $22.15 -3.19%, SPY $127.62 +0.29%, MSFT $25.73 -0.46%, XLF $20.52 -0.04%, FNM $17.23 -2.21%, ORCL $21.44 -0.64%, AAPL $180.50 +0.52%, ARRS $7.67 -13.82% (see yesterday's MM, earnings warning- See CSCO), YHOO $24.38 -1.01%

Jeff Bailey : 7/9/2008 11:32:32 AM

Chesapeake Energy (CHK) $59.60 -3.08% Link ...

Jeff Bailey : 7/9/2008 11:32:13 AM

Devon (DVN) $106.69 -1.44% Link ...

Jeff Bailey : 7/9/2008 11:28:19 AM

USO $110.09 +0.15% ...

Jeff Bailey : 7/9/2008 11:28:06 AM

US Nat. Gas Fund (UNG) 57.27 -0.84% ... slips below its rising 50-day SMA.

Keene Little : 7/9/2008 11:13:12 AM

In addition to retesting the July 2 high near 1875, NDX is also running into the downtrend line off June 19th and 25th highs. Even though I have a key level at the 1875 level, the one caution will be if it makes it up to a Fib projection at 1892.55 which would also be at the top of a parallel down-channel created off the trend line along the lows since June 12th, shown on this 60-min chart: Link

On the daily chart I showed the possibility for a week-long consolidation (dark red) before heading lower again but today's rally could be finishing the correction a lot sooner than that. The short term pattern from yesterday supports another push higher and if it does then I'll be watching carefully if it reaches 1892 to see how it does.

Jeff Bailey : 7/9/2008 11:09:14 AM

FXY's July "Max Pain Theory" tabulation still $90.

August's is $93.00

Jeff Bailey : 7/9/2008 11:07:53 AM

VIX.X 22.91 -1.03% ...

Jeff Bailey : 7/9/2008 11:07:43 AM

Yen CurrencyShares (FXY) 93.07 +0.32% ... FXY-HO are $1.30 x $1.45

Jeff Bailey : 7/9/2008 11:06:32 AM

USO $110.24 +0.29% ...

Jeff Bailey : 7/9/2008 11:06:11 AM

Euro Currency Shares (FXE) 157.36 +0.45% ....

Keene Little : 7/9/2008 11:03:15 AM

I'm re-posting this since I saw an email message blocked part of my chart on my last posting.

One thing I forgot to mention with the SPX daily chart posted last night is the downtrend line on RSI. Trend lines on RSI will very often give you a heads up that the trend is about to change. It hasn't broken yet and today it looks like it will be tested. Link

Linda Piazza : 7/9/2008 11:01:41 AM

OEX prices continue to hold support on 15-minute closes at the 15-minute 9-ema, now at 581.52. That's the good news. They continue to find resistance on 30-minute closes beneath the central basis line for the Keltner channels (120-ema) at 583.85. We knew this would be strong resistance and it's good that so far the OEX has just consolidated beneath it rather than pulled back sharply, but if bulls can't push above this within the next hour to couple of hours, I would expect another pullback to the 30-minute 9-ema. That's now at 580.34 but it's still rising sharply and so would likely be higher by the time it's tested, if it is.

Keene Little : 7/9/2008 11:01:15 AM

Looking at the NDX daily chart gives us a little different and more bullish picture by what RSI is doing. It suggests we may have seen a bottom for now and is the reason I'm continuing to use 1875 as a key level to the upside: Link . If that breaks we could see a rally into the end of the month. But we could also get another drop to a minor new price low while RSI drops back down for a retest of its broken downtrend line or makes a higher low (which would give us bullish divergence).

The dark red price path is showing something more bearish for this month and a break below 1780 would confirm we'll likely see another leg down and a Fib projection would mean down to the March low. In the meantime stay aware that we might get a choppy consolidation this week.

Jeff Bailey : 7/9/2008 11:00:27 AM

USO's July "Max Pain Theory" tabulation as of last night was still $109.00.

Jeff Bailey : 7/9/2008 10:50:17 AM

SPR added additional 133K barrels to 705.95M barrels.

Linda Piazza : 7/9/2008 10:49:50 AM

The VIX is back to 23.28, testing that potential resistance now from 23.35-23.80. Equity bulls want it to pull back again or at least for it not to maintain values above those.

Jeff Bailey : 7/9/2008 10:49:11 AM

EIA: Weekly ULS Diesel (<15ppm Sulfer) up 2.18M barrels.

Jeff Bailey : 7/9/2008 10:48:16 AM

EIA: Weekly heating oil (>500ppm Sulfer) up 990K barrels.

Linda Piazza : 7/9/2008 10:48:03 AM

The TRAN pulled back sharply after the crude inventories was announced, but it's so far maintaining support on 15-minute closes at or above its 15-minute 9-ema, now at 4880.16 with further potential support at 4862.99. The TRAN's chart hints at a triangle forming at top of its climb off Monday's low, though, so next direction is difficult to determine. If the TRAN bounces, watch for potential resistance on 15-minute closes at yesterday's high of 4924.79 and then at potential Keltner resistance now at 4959.50.

Jeff Bailey : 7/9/2008 10:47:21 AM

EIA: Weekly Kerosene-Type jet fuel down 869K barrels.

Linda Piazza : 7/9/2008 10:43:54 AM

The OEX's 15-minute 9-ema is now at 581.18, and those with bullish hopes would like to see the OEX maintain support there on 15-minute closes. If not, they'd like to see 578.82-579.25 hold as support on those closes.

Jeff Bailey : 7/9/2008 10:39:50 AM

UGA $63.63 +2.13% ...

Jeff Bailey : 7/9/2008 10:39:37 AM

USO $110.70 +0.70% ...

Jeff Bailey : 7/9/2008 10:38:49 AM

EIA: Weekly distillate stockpiles up 1.8 million barrels.

Jeff Bailey : 7/9/2008 10:38:20 AM

EIA: Weekly gasoline stockpiles up 909K barrels.

Jeff Bailey : 7/9/2008 10:37:45 AM

EIA: Weekly crude oil stockpiles down 5.84M barrels.

Jeff Bailey : 7/9/2008 10:37:09 AM

USO $110.84 +0.83% ... gap open was $110.99.

Jeff Bailey : 7/9/2008 10:35:35 AM

10:00 Internals at this Link

Linda Piazza : 7/9/2008 10:33:59 AM

Next potential resistance for the OEX is at 583.82, with this being potential resistance on 30-minute closes. This is of course also near the daily 9-ema, potential resistance on daily closes, so it could be tough. Bulls would like to see values above this maintained, but it's time to update your profit-protecting plans in case something more bearish than consolidation beneath it occurs.

Linda Piazza : 7/9/2008 10:28:54 AM

VIX is 22.98, down from its test of resistance near 23.50-23.80.

Linda Piazza : 7/9/2008 10:27:24 AM

The OEX is testing but not yet maintaining values above about 582.50, so I don't think it's quite invalidated that little potential H&S on its three-minute chart yet. However, that H&S is getting a little out of shape.

Linda Piazza : 7/9/2008 10:17:41 AM

The TED spread is currently 0.95, rising with lots of news about financials today and leading into next week, when some financials begin reporting. Whether we're bullish or bearish, I think most of us would like to see this spread, which measures default risk, declining.

Keene Little : 7/9/2008 10:15:43 AM

SPX stalled right at the 1277 level so now I'm watching to see if price consolidates near the high. If it does then we'll likely get another push higher. It should stay above 1265 in that case. But a drop below 1260 would likely confirm that we'll at least stay in a large trading range.

Linda Piazza : 7/9/2008 10:15:14 AM

The OEX's three-minute chart shows a small potential H&S at the top of the OEX's climb. While I don't trust these much any longer, they do give us insight into sentiment, at least, and the current bullish vs. bearish strength. Bulls want to see this formation invalidated by sustained values above about 582.45. Bears want to see it confirmed by sustained values below about 579.80. However, there might be relatively strong support in the 578.20 region even if the formation is confirmed. The OEX is at 581.06 as I type.

Linda Piazza : 7/9/2008 10:05:47 AM

VIX now 23.38, more closely approaching first potential resistance, now at 23.53 on 15-minute closes. Equity bulls would like to see this or the more important potential resistance on a daily close now at about 23.80 hold.

Jane Fox : 7/9/2008 10:05:21 AM

The S&P and DOW usually trade hand in hand and to a lesser degree the Russell and NDX trade hand in hand however today it is the S&P the strongest and the DOW and Russell the weakest.

Jane Fox : 7/9/2008 10:04:07 AM

Here are your overnight charts. Quickly which market do you think is the strongest today and which is the weakest. Link

Linda Piazza : 7/9/2008 10:04:04 AM

The BIX has dropped back to test its 15-minute 9-ema this morning, with that average at about 169.60 and with the BIX currently at 169.45. Further potential support that looks relatively strong exists from 167.40-168.20. Those with bullish hopes for the OEX, SPX and Dow would like to see one of those support levels hold in 15-minute closes and prompt a bounce.

Jane Fox : 7/9/2008 10:02:36 AM

AD line is downright non commital today. It opened at +70 but has now fallen to -292. Not telling us much at all. However, the VIX is making new daily highs supporting ES's new daily lows.

Linda Piazza : 7/9/2008 10:00:18 AM

VIX now 23.25, bouncing from that support detailed earlier. As noted earlier, those with bullish hopes don't want to see it maintain values above 23.50-23.80.

Linda Piazza : 7/9/2008 9:52:49 AM

The VIX dropped further this morning, but when it did, it closely approached potential support on 15-minute closes at 22.46. More importantly, it's closely approaching potentially strong support on daily closes near 22.00-22.25. If it bounces, as is possible, bulls would prefer that it not maintain levels above 23.50-23.80.

Linda Piazza : 7/9/2008 9:50:04 AM

The A/D line just tagged that potential support that was near -200, with the A/D line low at -194. The A/D line is currently +132, but the resistance near +350 has strengthened, so we could see some chopping around by the A/D line before a final direction is decided.

Linda Piazza : 7/9/2008 9:44:47 AM

So, we do get the quick pullback from early highs in the OEX and some other indices. As noted earlier although the levels have changed slightly with early market action, those with bullish hopes want sustained 15-minute OEX closes above 581.76. If that doesn't hold, they want to see potential support on 15-minute closes at 580.20 or 579.07 hold. OEX at 582.35 as I type.

Linda Piazza : 7/9/2008 9:38:53 AM

Keltner outlook on the A/D line: The A/D line prints its first values in the upper or bullish half of its Keltner chanels, but jammed up against potential resistance on 15-minute closes at about +350 to +400. There's the possibility of a pullback to test deeper support, perhaps near about +20 and then -200. If the A/D line breaks out above resistance and maintains the breakout, the chart sets an ultimate upside target of about +1300, but things are looking iffy right now with no prediction either way. A/D line now at +294.

Keene Little : 7/9/2008 9:36:38 AM

I had mentioned late yesterday that SPX 1275.44 was the Fib level where the 2nd leg of the bounce off yesterday morning's low would be equal to 162% of the 1st leg up (the initial bounce before pulling back into the low near 2:00 PM). It's now there. Only slightly higher now is the potential resistance at the trend line along the lows since May 23rd, near 1277 this morning.

Linda Piazza : 7/9/2008 9:35:34 AM

After trading open, the OEX's daily 9-ema is measuring a little higher than it did yesterday, but at 584.04, the OEX has still temporarily exceeded it. Be aware that the OEX is testing what could be important resistance, at least on a daily close, as it is also doing on a 30-minute close.

Linda Piazza : 7/9/2008 9:30:32 AM

Yesterday's OEX daily candle was an almost classic bullish engulfing candle at the bottom of a decline, so in normal times would indicate a potential reversal. As I've said so many times lately, these are not normal times. A similar setup in late June did produce a bounce the next day, but that bounce's highs did not hold, producing a close that was actually a few cents below that of the previous day. So, bullish engulfing candle or not, we must keep the climate in mind to avoid pinning too high of expectations on the reaction to such a potential reversal signal.

Factor into this background last week's weekly candle--a potential reversal signal of its own. So, we have potential reversal, but one balanced against a negative and skittish market tenor. As Jim Brown said last night in his Wrap, you need to keep on your toes if you're in bullish trades and always expect a rollover, so that you'll guard those accrued profits.

On a short-term basis, the OEX ended the day just below the daily 9-ema, at about 583.50. This has been resistance on daily closes for a month, so the possibility exists that even if the OEX punches above it today, it will close at or below it. Anything different signals a slight change in tenor, but still not one to be entirely trusted.

Even shorter term, the OEX ended at potential resistance on 30-minute closes at 582.75 and slightly above potential resistance on 15-minute closes at 581.64. The end-of-day move might have just overrun that 15-minute resistance. So, there's a possibility that an early pop might see some pullback to more thoroughly test this resistance. If there is a pullback, either first thing or after an early pop higher, bulls would prefer to see potential support at 581.64 hold or, if not, that at 580.20 or 578.91. If that lower level doesn't hold, there's a possibility of a downturn to test the rising trendline off Monday's low, with that trendline currently at about 574.80.

If the OEX instead continues climbing, one place to watch for rollover potential is at 587-588.

Jane Fox : 7/9/2008 9:21:38 AM

ANNANDALE, Va. (MarketWatch) -- One of the most bearish signals that corporate insiders can send to investors is to sell their companies' shares into a declining market.

So those who pay attention to what the insiders are doing have been waiting with bated breath to see what the June data reveal about their behavior last month.

Well, those data are now in, and the news is good: Insiders significantly cut back on their selling in June.

Corporate insiders, of course, are a company's officers, directors, and largest shareholders. They are required to report to the SEC any transaction they undertake involving shares of their companies' stock. Many research organizations gather that data and analyze them. One such organization is Argus Research, which publishes its findings in a weekly newsletter called the Vickers Weekly Insider Report.

According to their latest issue, which was published on Monday, the average insider last week sold 1.39 of his company's shares for each one that he bought.

Linda Piazza : 7/9/2008 9:16:53 AM

Germany's Trade Balance came in well below expectations this morning. Since Germany's economy has been the engine powering the Eurozone for the most part, this heightens concerns that the Eurozone may be in for a slowdown of its own. Countries such as Spain and Italy have already been producing numbers indicative of a slowdown but some feel that the ECB has been too strongly focused on Germany. Last night, France's trade deficit widened more than expected.

ECB President Jean-Claude Trichet, however, did not lighten up on the inflation fight when speaking before the European Parliament this morning. He did believe that the ECB's recent rate hike would work with the monetary policy stance currently employed to stablize prices and anchor inflation expectations.

Keene Little : 7/9/2008 9:09:39 AM

Equity futures dropped during overnight trading, making their lows just after 3:00 AM, retested the lows just before 7:00 AM and then bolted higher since then. It makes me wonder "are we playing those games again?" In the past these spikes to the upside in the pre-market hours has been a way for some to sell into the buying at the cash market open and then the market drops down for at least a retest of the overnight lows.

In this particular case we're not talking a lot of points so it's no big deal but I think it warrants caution at the open--be careful about an initial pop higher. I want to see if we get follow through to the upside today since the larger wave pattern suggests we could see a pullback today as we establish a trading range for the next week. Trading may be more successful if you get in and out quickly rather than hold for any big moves this week.

Jane Fox : 7/9/2008 9:05:37 AM

Surprisingly Crude has not reacted to the news out of Iran as much as I thought it would. Link

Jane Fox : 7/9/2008 8:52:16 AM

All markets have broken through their respective previous day highs, albeit not by much. Since the markets closed so strong and at daily highs the fact that they broke through those highs is not saying much other than they didn't sell off overnight. Link

Jane Fox : 7/9/2008 8:50:10 AM

DUBAI -- Iran said it test-fired a series of long- and medium-range missiles Wednesday, a move that significantly ratchets up the saber-rattling between Iran and the West over Tehran's nuclear program.

Iran is currently conducting war games in the oil-rich Persian Gulf, and U.S. forces just completed their own exercises there. The test firings come amid a string of recent comments by Iranian officials that they would retaliate forcefully against any military attack aimed at crippling what they say is a peaceful, civilian nuclear-energy program.

Jeff Bailey : 7/9/2008 4:58:50 AM

MR down $1.10 at 681.80. Overnight low/high has been 679.50/683.70.

Jeff Bailey : 7/9/2008 4:55:28 AM

YM holding a 7-point gain at 11,382.

Overnight low/high so far 11,350/11,398

Jeff Bailey : 7/9/2008 4:54:23 AM

August Crude (cl08q) up $1.91 at $137.95.

Jeff Bailey : 7/9/2008 4:53:45 AM

Iran Nuclear Missile Test ... BBC Story Link

Jeff Bailey : 7/9/2008 4:44:02 AM

M, m, m ... Google (GOOG) $4-box (via dorsey/wright) Link

StockCharts default is $5-box Link

Jeff Bailey : 7/9/2008 4:42:18 AM

Shanghai ($SSEC) gained 105, or 3.75% to finish 2,920. Link

Session high (since already in a column of X) was 2,920. Ugh! Chart X's in same column to 2,900. Session low was 2,839.

Monitor SOHU Link (closed out puts on Monday) and BIDU Link for "pulse" if $SSEC can get the triple top buy signal.

Jeff Bailey : 7/9/2008 4:36:52 AM

Hang Seng ($HSI) gained 617, or +2.91% to finish 21,827. 100-point box chart Link . Session low was 21,532. Session high was 21,954. So, chart X's to 21,900.

Jeff Bailey : 7/9/2008 4:33:27 AM

Nikkei-225 ($NIKK) reversed earlier gains on Iran missile test. Finished up just 19 points, or +0.15% at 13,052. Link

Session low was 13,039. High was 13,284.

Would chart X's up to 13,250.

Jeff Bailey : 7/9/2008 4:27:54 AM

According to Dorsey/Wright's data base ...

Reversing higher PnF "buy signals" were
SHLD Link
GENZ Link
AMZN Link
M, m, m ... and AAPL Link

Jeff Bailey : 7/9/2008 4:21:11 AM

StockChart.com's equivalents ...

NYSE Bull % Link
NASDAQ Comp. Bull % Link
S&P 500 Bull % Link
S&P 100 Bull % Link
NASDAQ-100 Bull % Link
Dow Indu Bull % Link

Jeff Bailey : 7/9/2008 4:14:45 AM

And now the most fascinating ...

The Sector Bell Curve from 06/24 to 7/01 Link

And now Sector Bell Curve from 7/03 to 7/08 as the narrow BPNDX reverses back up to "bear correction" status at 40%. Link

Jeff Bailey : 7/9/2008 3:37:24 AM

Russell 2000 Index Composition

Financial Services ~21.4%
Industrial Materials ~14.9%
Healthcare ~12.4%
Business Services ~10.6%
Hardware ~9.9%
Consumer Services ~9.0%
Consumer Goods ~5.3%
Software ~4.9%
Energy ~4.8%
Utilities ~3.0%

Market Monitor Archives