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Jeff Bailey : 7/11/2008 1:00:59 AM

RUT.X traders ... also suggest looking at daily interval charts as shown Thursday regarding trend from 10/11/07 high to 12/26/07 high (new entries). Extension, or projection of trend serving support Wednesday and Thursday. Link

RUT.X NH/NL Thursday was 8:154.

5-day NH/NL ratio now 4.8%. 10-day NH/NL ratio now 5.7%.

Very weak, very "oversold."

Jeff Bailey : 7/11/2008 12:26:48 AM

es08u alert! 1,259.50 +0.40% ... breaks above Thursday's high.

If short from Thursday's 03:37:23 mentioning @ 1,245.00.

Jeff Bailey : 7/11/2008 12:08:41 AM

Closing Internals found at this Link

Keene Little : 7/10/2008 10:05:54 PM

Friday's pivot tables: Link and Link

Thursday's end-of-day setup was for a down day on Friday but it needs to start down immediately. Any further rally would likely mean a move above Thursday's highs and that would open up the possibility for a higher bounce into next week. So the 60-min charts show an expectation for an immediate move lower (dark red) while a move above Thursday's highs will have me watching trend line resistance not far above:
SPX: Link
DOW: Link
NDX: Link

The daily chart of the RUT shows it to be in a similar down-channel from May as the others so stick with the short side until the downtrend is broken: Link

OI Technical Staff : 7/10/2008 9:59:59 PM

The Market Monitor has been archived.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

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Linda Piazza : 7/10/2008 5:52:35 PM

Some may know that INTC reports next week, on July 15. A former writer, Marc Eckleberry, gave me a heads up this afternoon about a Bloomberg story in which INTC's Chief Executive Office Paul Otellini disputed Merrill Lynch analyst Srini Pajjuri's assertion yesterday that INTC may see demand for its chips decline in the second half. The Bloomberg article can be found at Link .

Today, INTC spiked higher, reversing nearly all yesterday's losses and did so on strong volume. INTC's sports a doji on the daily chart. It ended the day, however, at potentially strong resistance on daily closes. That resistance could be tough, so no assumptions should be made until it is breached. The daily and 30-minute charts suggest that, if INTC can leap above that resistance and sustain values above it at least on 30-minute closes and then on daily closes, it will erase its current potential downside target (19.63 on the 30-minute chart, but a lower 17.07 on the daily one) and set up the potential for further gains. The 30-minute chart suggests a potential upside target of 22.56 but that target is dynamic and will change as price does.

Jeff Bailey : 7/10/2008 4:26:41 PM

Good gravy Linda! ... LEH goes out at $17.30 -12.36%.

LYH-SC finish $1.53 x $1.60 after $0.39/$2.06 session.

Good LIVE education for our 10-lotters?

Jeff Bailey : 7/10/2008 4:21:31 PM

SPX heavyweights at the cash (04:00) close and SPY's (04:15) close Link

Jeff Bailey : 7/10/2008 4:14:44 PM

SPX heavyweights into the close at (03:42:25) Link

Jeff Bailey : 7/10/2008 4:11:33 PM

I agree Linda! ... Also like your "double bottom" test. Lines up very nice with pivots.

Linda Piazza : 7/10/2008 4:09:29 PM

I just had time to review the Federal Reserve's weekly figures on outstanding corporate paper, another measure of how tight credit is these days. Unfortunately, the seasonally adjusted outstanding paper fell $20.6 billion, with the biggest declines in financials and among asset-backed paper. These figures have been jumping around quite a bit lately, though, not trending any one direction, but being up by a whopping amount one week ($27.1 billion last week) and down by a whopping value the next. Previously, we were seeing the amounts of outstanding corporate paper trend consistently lower.

Linda Piazza : 7/10/2008 4:04:56 PM

Good thing I said that if my feet were held to the fire, I'd vote for a climb first, up into that potential resistance on 30-minute closes now at 574.85-576.25 because the OEX started climbing there right away, rather than waiting until tomorrow morning. The candlestick is no longer a doji, but it is still a small-bodied (in relationship to the candles that preceded it) candle with a spring off support. So, it's still a potential reversal signal. The OEX did not, however, confirm its potential double-bottom formation, which would have required a new high of the day.

Keene Little : 7/10/2008 4:03:31 PM

If today's bounce is going to turn into a larger 3-wave bounce, with this afternoon's rally being the 3rd wave (wave-c of an a-b-c bounce off this morning's low), the Fib projection for it is SPX 1270 so that's the upside risk for a short play (and why I'd want to be out of it if today's high is exceeded).

Jeff Bailey : 7/10/2008 4:03:05 PM

"Surpisingly" strong breadth among your SPX heavyweights.

Jeff Bailey : 7/10/2008 4:02:10 PM

With all the "bad news" even.

Jeff Bailey : 7/10/2008 4:01:53 PM

SPX into the close ... 15-minute chart with QCharts weekly pivot levels and my MONTHLY/QUARTERLY Link

Keene Little : 7/10/2008 3:59:48 PM

Short against today's high is the recommended play into tomorrow. Whether you want to hold overnight is a different question. That's always a bit risky.

Linda Piazza : 7/10/2008 3:56:44 PM

TED spread 1.14.

Linda Piazza : 7/10/2008 3:54:44 PM

It's time to make end-of-day decisions. I'm almost embarrassed to type this, but the expected small-bodied candle is being produced at the low of the decline and that's . . . you guessed it: a potential reversal signal. We have had one after another of these produced with none yet following through with the hinted-at reversal. At some point, markets will reverse at least for a few days, but these potential reversal signals have so far served as nothing more than reminders to bears to keep updating their profit-protecting plans.

Bears do still need to keep updating, however, and to keep assessing how much risk they have on the table. That risk can be in the form of unrealized profits, profits that will evaporate particularly quickly if they're in JUL puts and the OEX and other markets bounce while volatility drops. Bulls, of course, have to assess risk, too, but I don't think they need any reminders right now of what can happen to their profits. The market has given plenty.

On the 30-minute chart, the OEX looks about as likely to climb toward 574.76-575.71 as it does to decline toward 565.31-566.12. Only a slight preference is given to the upside move, and, in this climate, a slight preference is not enough of a preference. If my feet were held to the fire, I'd vote for the upside test first, but I couldn't give a prognosis for what happens as a result of that test. Today's doji-type candle says others are just as in the dark.

Linda Piazza : 7/10/2008 3:47:38 PM

TRIN 1.04. It's below the Keltner resistance, but it's nothing for bulls to write home about.

Linda Piazza : 7/10/2008 3:47:00 PM

The OEX does hold the support of its 15-minute 9-ema, now at 570.64 into the close of this 15-minute period. OEX at 571.31 as I type.

Jeff Bailey : 7/10/2008 3:42:18 PM

Back in about 10-minutes.

Linda Piazza : 7/10/2008 3:42:15 PM

Tomorrow morning at 12:30 and then 1:00, Japan's Industrial Production and Household Confidence numbers will be released. At 2:00, Germany's Wholesale Price Index (WPI) will be released, with that number perhaps garnering special attention because of the gathering evidence that Germany's economy may be slowing down at the same time that inflation is still ruffling the hawkish feathers of the ECB. Then, we have important numbers beginning at 8:30 am ET, but Jane usually covers those.

Jeff Bailey : 7/10/2008 3:42:09 PM

PHF $7.94 ... up $0.09. Can't forget these junk bonds with the LEH action.

Jeff Bailey : 7/10/2008 3:40:42 PM

Not the 03:00 market, but as I leave you ...

NYSE a/d 1,626:1,753 and NH:NL 25:439

NASDAQ a/d 1,523:1,339 and NH:NL 28:309

Linda Piazza : 7/10/2008 3:39:06 PM

Potential reversal signal is seen on the OEX's 15-minute chart. Reversals have been brutal when they're to the downside and not forthcoming when they're to the upside, so let's see what happens here. OEX traders should be aware, though, of the possibility for a quick trip back to test the lows. It's not a given but is a possibility. Bulls would rather that potential support on 15-minute closes at 570.29 prompt the OEX to steady and not get too far below it.

Jeff Bailey : 7/10/2008 3:38:40 PM

Shutting down ... get these darned charts working, chains, tables and positions working.

Keene Little : 7/10/2008 3:37:23 PM

SPX just retraced 62% of this afternoon's drop (1249.71). It's a good place to short the bounce. Stop needs to be at a new daily high.

Jeff Bailey : 7/10/2008 3:37:10 PM

Memory goes blank at three (3)

Jeff Bailey : 7/10/2008 3:35:41 PM

Going from memory here ...

IBM $122.75 ... up $2.39
CVX $94.38 ... +0.52
XOM $85.02 ... up $0.70 ...

Jeff Bailey : 7/10/2008 3:33:14 PM

DIA $111.88 ... up $0.22.

Jeff Bailey : 7/10/2008 3:32:51 PM

QQQQ $45.02 ... up $0.27

Jeff Bailey : 7/10/2008 3:32:21 PM

IWM $66.75 ... up $0.53.

Jeff Bailey : 7/10/2008 3:32:01 PM

SPY 124.78 (unch)

Linda Piazza : 7/10/2008 3:29:23 PM

Potential resistance on 30-minute closes for the OEX is now at 575.98-575.63, near the previous high of the day at 575.38. The OEX needs to sustain values above that previous high of the day and that potential Keltner resistance to confirm a double-bottom formation and suggest a new upside target near 579.56.

Jeff Bailey : 7/10/2008 3:28:54 PM

RIO $31.55 .. up $0.86. Brazil doing OK.

$34.00 and that head/shoulder top objective weighs resistance for me. How about you?

Jeff Bailey : 7/10/2008 3:27:03 PM

How are "Heavyweights" doing?

Linda Piazza : 7/10/2008 3:26:53 PM

The potential resistance for the TRIN on 15-minute closes that I was noting earlier (2:47:55 post) did hold on 15-minute closes. The TRIN is now 0.99, so it's not yet dropping far away from that potential resistance, now up to 1.20, but it is below it and now vulnerable to a decline toward 0.79.

Jeff Bailey : 7/10/2008 3:26:38 PM

SPY $124.67 ... -$0.12 ... hanging in there.

Jeff Bailey : 7/10/2008 3:25:57 PM

UVM $44.22 ... up $0.54. Looks to be holding ok.

C'mon QCharts ... boot up

Jeff Bailey : 7/10/2008 3:23:27 PM

Could look at August ...

Jeff Bailey : 7/10/2008 3:22:35 PM

See $13.88 and $13.78? Still not worth the SELLING of out the money puts at $14 strike in my opion.

6-days of "opportunity" risk.

Heck, can close out 1/3, or 2/3 of the position if overly concerned.

Jeff Bailey : 7/10/2008 3:21:04 PM

SBUX July $14 puts ... $0.22 x $0.23.

Does this make sense?

Opportunity loss would be below $13.80.

14 - $0.22 = $13.78.

Jeff Bailey : 7/10/2008 3:18:07 PM

Right? Starting point is ... $15.00 (strike) - $1.12 (Price of PUT option) = $13.88.

Jeff Bailey : 7/10/2008 3:16:27 PM

SBUX July $12.50 puts (SQX-ST) are $0.02 x $0.03.

If long three (3) of the SQX-VC at $1.12/contract (roughly 1/2 position as defined by MM discipline), it does not makes sense to sell these covered.

Jeff Bailey : 7/10/2008 3:11:52 PM

ALWAYS plan for the worse.

Jeff Bailey : 7/10/2008 3:11:04 PM

Both side ... MUST think both sides of the trade.

Jeff Bailey : 7/10/2008 3:10:32 PM

MUST assess RISK! And the "what if it does" and "what if it DOESN'T"

Jeff Bailey : 7/10/2008 3:09:54 PM

A RUMOR of a "run on a bank" is much different than a "run on the coffee house."

Jeff Bailey : 7/10/2008 3:08:26 PM

Whare are SBUX $14.41 -2.10% ... out the money $12.50's going for?

Jeff Bailey : 7/10/2008 3:07:56 PM

There are "other options too" Linda.

Depending on news/reasoning analysis, a LONG PUT holder and also SELL OUT THE MONEY puts if PREMIUMS seen "out of this world"

Linda Piazza : 7/10/2008 3:07:54 PM

Double bottom? Technical analysis says that you have to see sustained values above the peak between the two troughs before you have a confirmed double bottom, so don't count on a double bottom as a done deal. Don't count it out, either. The peak for the OEX is at 575.38. OEX at 569.59 as I type.

Linda Piazza : 7/10/2008 3:04:20 PM

Jeff, I like that risk-free practice, taking half off when you have a double in an option trade. It's a tactic that would help some traders. Not only does it guarantee that traders can't lose on a trade, but it also guarantees that traders will think more sanely about their remaining options or stock positions. Emotions aren't as tied up in the trade because there's no possibility of loss.

Jeff Bailey : 7/10/2008 3:04:11 PM

DAX-like ... EWG $28.90 is off $0.12 ... low/high session $28.78/$29.14

Jeff Bailey : 7/10/2008 3:02:48 PM

SPY ... off $0.92 now. I've got low of session as $123.58

Linda Piazza : 7/10/2008 3:02:18 PM

Here's the OEX's 30-minute chart I've been referencing today: Link

Jeff Bailey : 7/10/2008 3:02:01 PM

UK-like EWU ... $19.86 down $0.20. Looks low of session ($19.83)

Keene Little : 7/10/2008 3:01:25 PM

If this morning's low holds on this afternoon's test, it will be accompanied by bullish divergence. It could be good for another leg up in the bounce off this morning's low (with a higher high than this afternoon's high). But if we get a bounce followed by new lows then the short side is the winning side and we should see SPX head on down to the 1220-1225 area sooner rather than later.

Jeff Bailey : 7/10/2008 3:00:34 PM

Browser working ... here's iShares page ... go to "international" Link

Jeff Bailey : 7/10/2008 2:56:03 PM

If you take 1/2 off, then the rest are "risk free" from $1.00.

Right? Right!

Jeff Bailey : 7/10/2008 2:55:31 PM

10-lotters in the LYH-SC $2.01 x $2.07 migh take some profit off the table. Just never know.

Hold some "just in case" there is a BSC-like "run on the bank."

Linda Piazza : 7/10/2008 2:55:27 PM

OEX potential support on 30-minute closes has now dropped to 565.25. OEX at 566.31, with the previous low of the day not holding.

Linda Piazza : 7/10/2008 2:54:29 PM

I was just reading that the high cost of fuel and food are cutting into programs such as Meals on Wheels. Volunteers are dropping out because of the high cost of delivering the food, and food costs are rising. According to AARP, some programs have stretched daily runs to the elderly and other shut-ins to weekly ones.

Jeff Bailey : 7/10/2008 2:54:27 PM

LEH $15.80 ... down 3.80 somethings ... "fast market" here.

Jeff Bailey : 7/10/2008 2:53:02 PM

C'mon QCharts ... boot up.

Jeff Bailey : 7/10/2008 2:52:49 PM

Silver as depicted by SLV up $1.75 at $181.28.

Jeff Bailey : 7/10/2008 2:52:12 PM

Gold as depcited by GLD ... up $1.80 at $93.29

Linda Piazza : 7/10/2008 2:51:42 PM

TRIN 1.08 with that potential resistance on 15-minute closes holding for the time being.

Jeff Bailey : 7/10/2008 2:51:36 PM

May explain USO surge.

Jeff Bailey : 7/10/2008 2:51:13 PM

Alert! ... US Defense official now saying it DOES appear IRAN fire one (1) missile today.

Linda Piazza : 7/10/2008 2:50:53 PM

Previous low of the day for the OEX was 566.65. The OEX just hit a low of 566.87. Now we see what happens. OEX at 568.16 as I type, not far yet off that low, so no bounce to cheer about as yet.

Jeff Bailey : 7/10/2008 2:48:49 PM

FRE $8.05 ... off $2.21/share.

Linda Piazza : 7/10/2008 2:48:35 PM

TRIN 1.16.

Jeff Bailey : 7/10/2008 2:48:16 PM

FRE

Jeff Bailey : 7/10/2008 2:48:10 PM

Seeing headline "Freddie plunges; raising costs of common share offer"

Linda Piazza : 7/10/2008 2:47:55 PM

TRIN is just now rising into another test of resistance that's been strong this afternoon, with that resistance up to 1.15 on 15-minute cloes. It looks strong enough to repel the TRIN lower again this time, too, but those are famous last words at times like these, when bears can suddenly overwhelm bulls. For now, though, the resistance looks as if it could hold, without any promises in this climate that it will. TRIN is currently 1.23, pushing up through and testing it as it did about 30 minutes ago before retreating.

Jeff Bailey : 7/10/2008 2:46:21 PM

HBC $74.57 ... off $0.79, so just more than -1%. Again ... Ameritrade Level II

Jeff Bailey : 7/10/2008 2:45:37 PM

LEH $15.88 ... from my AMERITRADE LevelII

Linda Piazza : 7/10/2008 2:45:22 PM

The VIX is currently 26.19, with potential resistance on daily closes now at 26.93. This persistent testing of resistance has nudged the resistence line, turning it up.

Jeff Bailey : 7/10/2008 2:44:54 PM

HSBC (HBC) ... now QCharts "locked up"

Jeff Bailey : 7/10/2008 2:44:25 PM

Asia at least suggest "flat"

Jeff Bailey : 7/10/2008 2:44:07 PM

BIDU 332.07 -0.22% ...

Jeff Bailey : 7/10/2008 2:43:54 PM

SOHU $71.21 -0.69% ...

Jeff Bailey : 7/10/2008 2:43:28 PM

Don't know other foreign ETF's off top of my head.

Jeff Bailey : 7/10/2008 2:42:56 PM

Computer locked up!

Jeff Bailey : 7/10/2008 2:41:12 PM

Japan iShares (EWJ) $12.11 +0.58% ...

Jeff Bailey : 7/10/2008 2:40:32 PM

Pretty much same "sort order" of CBOE volume in the previously shown LEH option chain.

Linda Piazza : 7/10/2008 2:40:04 PM

Yesterday, I spoke of the possibility of a small-bodied candle for today's daily candle, with or without upper or lower shadows. I warned that early moves could get reversed. I think Keene mentioned something similar about a small-range day. Right now, with about 80 minutes to go in the trading day, that small-bodied candle is exactly what we have, but there's still the possibility for a move either direction. If bears aren't able to drive the OEX to a new low, bulls could gain confidence. If the potential support on 30-minute closes at 565.47 doesn't hold, it could get ugly.

Jeff Bailey : 7/10/2008 2:39:18 PM

LEH $16.46 -16.61% ... holding on.

Jeff Bailey : 7/10/2008 2:36:29 PM

Volume 24,956

Jeff Bailey : 7/10/2008 2:36:16 PM

LYH-SC $1.57 x $1.60

Jeff Bailey : 7/10/2008 2:35:53 PM

LEH $16.44 ... probes session low.

Jeff Bailey : 7/10/2008 2:35:21 PM

IWM in "no man's land" ... session high has been, been, been ... $67.45 . QCharts' WKLY Pivot (67.44)

Keene Little : 7/10/2008 2:34:18 PM

I doubt we will get a bounce back up to today's broken uptrend lines but if we do, short it. That would be near DOW 12200 and SPX 1251.

Jeff Bailey : 7/10/2008 2:34:05 PM

SPY $124.57 -0.20% ... battles at WKLY S1.

Jeff Bailey : 7/10/2008 2:33:37 PM

DIA $111.60 -0.05% ... battles at WKLY S1.

Jeff Bailey : 7/10/2008 2:32:49 PM

USO's July "Max Pain" theory was $108.00 at last night's close.

Linda Piazza : 7/10/2008 2:32:15 PM

That potential support on 30-minute closes is now at 565.54, not 566.54, as I had previously typed. I've corrected the previous post.

Keene Little : 7/10/2008 2:31:51 PM

So much for another leg up. We now have a decisive break of today's uptrend and indicates the correction is over. We'll either stay trapped in a larger correction or more likely head for new lows. Watch for a bounce off this morning's low and then a break of it later this afternoon.

Linda Piazza : 7/10/2008 2:31:38 PM

And, once again, a normal test of support, this time of the rising price channel in which the OEX had been climbing, results in prices giving way. The OEX is now testing and a little below potential support on 15-minute closes at 569.19. If it closes anywhere above 568.60, I'd say that support essentially held, because this price action is going to nudge it a little lower. The OEX is 568.60 as I type. The day's low, also potential support, is 565.65, with the 30-minute chart's support, tested this morning, now having dropped to 566.54.

Jeff Bailey : 7/10/2008 2:30:03 PM

02:00 Internals at this Link

Jeff Bailey : 7/10/2008 2:29:19 PM

USO $114.11 +4.08% ... fills Tuesday's gap lower.

Jeff Bailey : 7/10/2008 2:28:26 PM

Could short an airline if long a call or two that is VERY near the money. Use the call as possible protection.

Jeff Bailey : 7/10/2008 2:24:25 PM

USO gets a bid at "rogue trader" benchmark of $112

Jeff Bailey : 7/10/2008 2:23:34 PM

If not, then likely see "fade lower" in U.S. majors toward the close.

02:00 internals on their way.

Linda Piazza : 7/10/2008 2:22:48 PM

The OEX has slipped beneath the rising trendline off the day's low. This is not what bulls want to see. There's potential support on 15-minute closes now at 569.42, and bulls would like to see that hold and then for the OEX to push to a new high.

Jeff Bailey : 7/10/2008 2:22:43 PM

European Markets (closed earlier) Link

Traders may want to check ETF's of the major's to see if there is any recovery based on modest U.S. market rise.

Keene Little : 7/10/2008 2:21:23 PM

The DOW is testing today's uptrend line again, here at 11187. The pattern would look best with one more rally leg and the upside target of 11284-11287 looks good if it manages another push higher.

Jeff Bailey : 7/10/2008 2:18:50 PM

5-year YIELDs intra-day high has found yield resistance at WKLY S2 3.134%.

With 13-week plunging lower, 2-year (don't have QCharts 2-year) and 5-year next in line.

Linda Piazza : 7/10/2008 2:21:41 PM

Jeff, 1569 volume, 3460 OI for that OEX 575 option. I don't watch particular options unless I'm trading them and trying to decide where the volatilities are in a historical perspective, so I don't know what the OI was previously, so can't make any judgments about whether the 1569 volume was to close or open new positions. That option is not showing up on screens as having unusual activity. You and I watch different things so I can't speak sagely to any unusual activity, but the OI, at least, is not all that out of whack from the progression from the OI's for other nearby puts.

Jeff Bailey : 7/10/2008 2:15:55 PM

LEH $17.35 -12.10% ...

Jeff Bailey : 7/10/2008 2:11:07 PM

VXO.X 26.95 -1.20% ... "funky" last few minutes.

Jeff Bailey : 7/10/2008 2:10:20 PM

Linda! Any action in the OEX 575 put?

Jeff Bailey : 7/10/2008 2:08:13 PM

QQQQ $45.22 +1.05% ...

Jeff Bailey : 7/10/2008 2:07:39 PM

RUT.X's session high has been, been, been ... 675.67.

Linda Piazza : 7/10/2008 2:07:40 PM

The problem lately, of course, is that normal and natural pullbacks suddenly give way. No matter how many steps the OEX might climb toward a better tenor, that giving way tends to occur over and over, destroying trust.

We haven't seen a sudden giving way yet this morning, but the zigzagging higher shape of the bounce doesn't inspire a lot of confidence as yet, and this current pullback is occurring from the test of the 50% retracement of the decline off yesterday's high, a natural resistance level. Whatever your trade, keep your plan updated. One of these days, those improvements are going to suddenly result in a full-out short-covering rally, but whether that's today or not is impossible to ascertain.

Jeff Bailey : 7/10/2008 2:05:22 PM

LEH inflection low now $17.55 ... DAILY S1 $17.52 and WKLY S2 $17.39 are next lines of "support."

Jeff Bailey : 7/10/2008 2:02:55 PM

Day trade stopped alert! ... LEH $17.75

Jeff Bailey : 7/10/2008 1:59:26 PM

LEH Day trader's chart updated with trend(s) Link

Linda Piazza : 7/10/2008 1:58:53 PM

The next step in the OEX's improvement in tenor would be a 30-minute close above about 576. If that doesn't happen, bulls want to see the concurrent 15-minute close above 574.26 or at least 572.78.

Keene Little : 7/10/2008 1:56:53 PM

For the DOW, two equal legs up today is at 11295 which again is very close to the 62% retracement at 11289.

Keene Little : 7/10/2008 1:55:43 PM

SPX is struggling at the 1257 level but it looks like it will press a little higher. Two equal legs up from this morning's low is at 1262.35 (ES 1263.25) and that's right on top of the 62% retracement at 1261.95. That's good correlation for a short play setup at 1262 if price gets there and stalls.

Jeff Bailey : 7/10/2008 1:54:52 PM

Volume looks to be easing in LEH.

Jeff Bailey : 7/10/2008 1:54:18 PM

LEH $18.00 -8.81% ...

Jeff Bailey : 7/10/2008 1:53:53 PM

BKX.X 56.75 +1.35% ... probe session highs. DAILY Pivot at 57.33.

Jeff Bailey : 7/10/2008 1:47:40 PM

LEH 18.06 ... sellers persist at 50% of day's range.

Jeff Bailey : 7/10/2008 1:38:35 PM

LEH 18.25

Jeff Bailey : 7/10/2008 1:37:40 PM

LEH $18.36 ...

Linda Piazza : 7/10/2008 1:36:39 PM

The OEX has produced a first 30-minute close above the 30-minute 9-ema, now at 572.21. It rises to test its 573.87 previous high of the day (pushed above it as I typed) as well as potential resistance on 15-minute closes at 574.21. The 30-minute and 15-minute charts show layers of potential resistance, so it's still dangerous for bulls, but at least the OEX has climbed the second step toward an improvement in tenor. If it can close this 15-minute period above 574.21, there's a potential upside target of 576.84, but I would watch for the potential for it to get stalled or pushed back from there.

Jeff Bailey : 7/10/2008 1:35:43 PM

Lehman Bros. (LEH) 5-minute interval day trader's chart Link

market the day's range with retracement. QCharts' WKLY and DAILY Pivot levels.

Linda Piazza : 7/10/2008 1:33:14 PM

TED spread down slightly, to 1.11. That's not enough, of course, to bring much cheer, but it's better than further gains.

Jeff Bailey : 7/10/2008 1:31:31 PM

This is DAY ONLY. Will NOT, I repeat will NOT hold overnight. LYH-SC offers little near-term PRICE protection.

Jane Fox : 7/10/2008 1:31:31 PM

Here is a look at the internals from my perspective. The way I read this is the buyers have overcome the sellers at least for now. Link

Jeff Bailey : 7/10/2008 1:30:09 PM

Day trade long alert! ... for 100 shares of Lehman Bros. (LEH) at the offer of $18.12.

Stop $17.75. Target $19.00.

Jeff Bailey : 7/10/2008 1:25:13 PM

QCharts TERRIBLE option charts ... do see 108 contracts of LYH-SC at 10:55-11:00 interval from $1.16-$1.20

Jeff Bailey : 7/10/2008 1:23:23 PM

You're welcome Linda ... Sounds like RUMOR only. Not sure when RUMOR first surfaced.

Will check "most active" options and see when the put action began.

Most likely, RUMOR began, perhaps in pit if a trader, that may be LINKED with running PIMCO trades became active?

Jeff Bailey : 7/10/2008 1:17:53 PM

UWM $44.53 +1.94% ...

Jeff Bailey : 7/10/2008 1:16:15 PM

RUT.X 671.11 +1.10% ...

Jeff Bailey : 7/10/2008 1:16:00 PM

SPX 1,250 +0.41% ...

Jeff Bailey : 7/10/2008 1:15:42 PM

LEH $17.87 -9.42% ...

Jeff Bailey : 7/10/2008 1:15:27 PM

CNBC interview with Mr. Gross has ended.

Jeff Bailey : 7/10/2008 1:15:09 PM

Mr. Gross saying he believes more requlation of investment banks, hedge funds needed.

Jeff Bailey : 7/10/2008 1:14:18 PM

Mr. Gross saying he believes LEH's share price fluctuation is due to company's business model, NOT PIMCO.

Linda Piazza : 7/10/2008 1:12:53 PM

Thanks for the update, Jeff, on the interview with on CNBC with Mr. Gross of Pimco. Good information.

Jeff Bailey : 7/10/2008 1:12:36 PM

Clarification alert! ... Based on my (Jeff Bailey's) current PROFILED trades, I am HOLDING UWM-HS. Should be PROTECTED with bull and bear profiles.

Jeff Bailey : 7/10/2008 1:10:29 PM

LEH $17.98 -8.91% ...

Jeff Bailey : 7/10/2008 1:09:39 PM

Mr. Gross saying PIMCO still accepting Lehman as counterparty at this time.

Keene Little : 7/10/2008 1:09:02 PM

The DOW held its uptrend line from this morning. It too has only retraced a little more than 38% of the decline from yesterday so if it can push a little higher again, watch the 50% at 11253 and 62% at 11289.

Jeff Bailey : 7/10/2008 1:08:55 PM

CNN - Reporting that US Military source denies that Iran has run a 2nd day's test of missiles.

Jeff Bailey : 7/10/2008 1:07:52 PM

Mr. Gross saying there is no question about Lehman's solvency.

Jeff Bailey : 7/10/2008 1:07:08 PM

VIX.X 25.58 +1.38% ...

Jeff Bailey : 7/10/2008 1:06:47 PM

Bill Gross being interviewed on CNBC.

Jeff Bailey : 7/10/2008 1:06:27 PM

IWM $66.87 +0.93% ...

RUT.X 670.21 +0.97% ...

Jeff Bailey : 7/10/2008 1:05:50 PM

UWM $44.42 +1.69% ... UWM-HS $2.70 x $3.20.

Jeff Bailey : 7/10/2008 1:05:03 PM

IF UWM-HS were your ONLY position at this point, or UWM itself, I would have to suggest EXITING the position. Alert!

Jeff Bailey : 7/10/2008 1:03:12 PM

NYSE NH/NL 20:360

NASDAQ NH/NL 25:255

Linda Piazza : 7/10/2008 1:02:27 PM

The OEX is back below its 15-minute 9-ema, now at 571.08 and is testing converging potential support, now at about 570.52. The OEX is 570.48 as I type.

Jeff Bailey : 7/10/2008 1:02:25 PM

NYSE a/d 1,491:1,576

NASDAQ a/d 1,580:1,217

Jeff Bailey : 7/10/2008 12:58:00 PM

Lehman Option Chain (sorted by CBOE Volume) Link

Keene Little : 7/10/2008 12:57:31 PM

SPX just broke its uptrend line from this morning so either the bounce is already finished or we'll get another rally leg once the current pullback finishes. If the market remains very bearish then a 38% retracement may be all we get. The bounce still looks a little small and I'd prefer to see another leg up but the market usually doesn't care much for what I'd like to see.

Jeff Bailey : 7/10/2008 12:52:04 PM

Lehman Bros. Link

Jeff Bailey : 7/10/2008 12:51:20 PM

CNBC saying that PIMCO has denied that they are withdrawing assets from Lehman Bros.

Keene Little : 7/10/2008 12:48:56 PM

The uptrend line from this morning's low is still holding and price remains inside the up-channel. The overlapping highs and lows within the bounce is indicative of a correction and not something more bullish. So far the bounce achieved a 38% retracement at SPX 1252.42. If it can push higher, the 50% is at 1257.18. In another hour it will also have achieved the typical time for a correction (62% of the decline).

Jeff Bailey : 7/10/2008 12:48:50 PM

Swing trade SPECULATIVE PUT alert! ... for one (1) of the Lehman Brothers LEH July $15 Puts (LYH-SC) at the offer of $0.95.

LEH $18.06 -8.51% ...

Linda Piazza : 7/10/2008 12:48:26 PM

The OEX's chart setup looks as if a 15-minute close above the 45-ema, now at 574.45 but still descending, could be an important improvement in tenor. It suggests a climb toward 577.13. The problem with this interpretation? The 30-minute chart suggests that the OEX could run into trouble at about 575.70-576.

Jeff Bailey : 7/10/2008 12:36:38 PM

12:00 Internals found at this Link

Linda Piazza : 7/10/2008 12:34:35 PM

Once again, the OEX could not manage a 30-minute close above the resistance now at about 571.75, although it's pushing slightly above it again as I type. It is, however, so far holding support above the 15-minute version, now at 571.30. So, it's a stalemate for now. OEX at 571.84.

Jeff Bailey : 7/10/2008 12:29:47 PM

CNBC reporting the PIMCO may be pulling money/holdings our of Lehman Brothers (LEH) $18.00 -8.71% ... so far, no confirmation that this is true.

Linda Piazza : 7/10/2008 12:24:13 PM

The OEX's 15-minute 9-ema is now 571.34. OEX bulls would like to see the OEX find support on that moving average on any pullbacks. Then they'd like to see the OEX bounce hard enough to keep that moving average turning higher. OEX at 572.53 as I type.

Linda Piazza : 7/10/2008 12:23:01 PM

TED spread 1.13, equal to the 6/27 recent high. Last time, the TED spread turned down from here, but bounced from 0.92 near-term support. This time, almost everyone except the most rabid bears would like to see it turn down and drop through 0.92 again over the next few days.

Jeff Bailey : 7/10/2008 12:19:49 PM

RUT.X 673.33 +1.44% ... conventional retracement traders ... take a "nested" retracement from 6/05 relative high to 07/07 relative low. 19.1% right here.

Jeff Bailey : 7/10/2008 12:16:51 PM

BIX.X 158.62 -1.68% ... AT WKLY S2. Session low has been 153.63. Juuuuust above MONTHLY S1 by about 1.0 point. Maybe some HUMAN intervention there.

Jeff Bailey : 7/10/2008 12:14:34 PM

INDU 11,203 +0.05% ... about 95-points below WKLY Pivot.

Jeff Bailey : 7/10/2008 12:13:54 PM

SPX.X 1,251.73 +0.56% ... below WKLY Pivot.

Linda Piazza : 7/10/2008 12:13:44 PM

The OEX is now above next resistance on both the 15- and 30-minute charts. Those hoping for a steadying or further bounces would like to see the OEX sustain 15-minute closes above 571 and then 30-minute closes above 572.04. OEX at 572.48 as I type.

Jeff Bailey : 7/10/2008 12:13:07 PM

RUT.X 672.67 +1.35% ... still juuust below its WKLY Pivot.

Jeff Bailey : 7/10/2008 12:12:20 PM

QQQQ $45.28 +1.18% ... tries to make a move ABOVE its WKLY Pivot.

Keene Little : 7/10/2008 12:06:21 PM

On the 5-min chart you can draw in a parallel up-channel for this morning's bounce. Use it to guide your trade setups (day trading).

Jeff Bailey : 7/10/2008 12:01:12 PM

Cisco Systems (CSCO) $21.93 +1.62% ...

Linda Piazza : 7/10/2008 12:00:58 PM

OEX potential resistance on 15-minute closes at 570.71. The OEX has pierced it but so far, not been able to close a 15-minute period above it. It did, however, close its first 15-minute period above the 9-ema, just a bit lower, at about 570.20. We need to see a 15-minute close above that other level, however, and then a 30-minute close above the 9-ema there, now at 571.73.

Jeff Bailey : 7/10/2008 12:00:17 PM

F5 Networks (FFIV) $32.01 +1.87% Link ... today's trade at $32.00 has "X getting the square."

Jeff Bailey : 7/10/2008 11:57:33 AM

XLF $19.44 +0.41% Link ... more encompassing of broader "financial" sectors.

Jeff Bailey : 7/10/2008 11:55:24 AM

BKX.X 56.32 +0.58% ... inches green. These are/were LARGER cap money center, or super-regional banks.

Keene Little : 7/10/2008 11:54:41 AM

We've got a good start to a bounce and it's looking like it's the beginning of the correction of the decline from yesterday (potentially something more but we can't know that yet). Two equal legs up from this morning's low is at SPX 1253.60 (ES 1254). If it makes it up to there and reverses it may only pull back a little before pressing higher again.

A more typical correction will make it up to at least 1257 and take another two hours before it's finished. Those are just Fib price and time guidelines but right now the correction looks too small. That's clearly subjective but it's part of wave analysis.

Jane Fox : 7/10/2008 11:52:05 AM

VIX is not making any new daily highs and the AD volume is not making any new daily lows so the selling has abated for now. It is kind of scary how the VIX (bottom chart) and the AD volume mirror each other isn't it? Link

Linda Piazza : 7/10/2008 11:45:03 AM

The OEX has pushed above the potential resistance on 15-minute closes that now extends up to 570.77. If it can maintain this level into the close of this 15-minute period, this will be a small change in tenor, but only a small and tentative one. The OEX also has potential resistance on 30-minute closes at the 30-minute 9-ema, now at 571.95. The OEX is at 571.51 as I type.

Jeff Bailey : 7/10/2008 11:45:32 AM

Tyson Foods (TSN) $15.48 +3.61% ... (see 06/09/08 to 6/18/08 MM) ... surging corn prices due to floods had me exiting TSN-JC as TSN traded $13.45. ENTRY was 06/09/08, the day of massive floods, which I was not aware of. Didn't see the news until it was too late.

Has something changed?

As of last night, wheat harvest in North Central, Northwest Kansas has been rated "good" with dryland running about 40 bushel/acre.

Farmers say conditions rather "dry" and "need some rain" for dryland corn, milo and sunflower.

Jeff Bailey : 7/10/2008 11:39:52 AM

As I've tried to teach traders and investors over the many years at OI and PI and seminars, the Pivot levels offer additional levels of institutional computer support/resistance, when conventional retracement levels of 0% and 100% are violation to downside/upside, and when historical price levels more than 1-year become less valid.

When an index is "freefall" or "surging higher" as support violated, or overhead supply nonexistant, the pivot levels are there to help define targets of potential support/resistance.

Linda Piazza : 7/10/2008 11:39:13 AM

It looks as if Keene and I were both looking at the BIX at about the same time. I didn't intend to step on his toes just as Jane didn't on mine, yesterday, but it goes to show you how important the BIX is and how closely it's being watched, by everyone.

Linda Piazza : 7/10/2008 11:36:53 AM

The BIX is testing its 15-minute 9-ema for the first time today. That's at about 158.18 with the BIX at 159.02. The BIX did manage to mostly hold onto support on its 15-minute chart and avoid creating a breakdown mode. A couple of 15-minute closes were just below the breakdown benchmark, then higher but now at 154.42, but only minimally below it and not enough to classify it as being in full-out breakdown mode. If the BIX should hold above the 15-minute 9-ema into the close of this 15-minute period, that will the first time it's done so since about 12:15 yesterday and will mark a slight change in tenor.

Jeff Bailey : 7/10/2008 11:34:55 AM

Weekly, Monthly, Quarterly Index Pivot Matrix posted MONDAY at this Link

BIX's WKLY S2 right in here.

Next risk level MONTHLY S1.

Keene Little : 7/10/2008 11:33:52 AM

With the banks (BIX) in freefall, and now well below the 2000 low, it becomes difficult to figure out where support might come in. Picking a bottom in the banks has been as difficult as picking a top in last year's stock market and there have been several major attempts by big players doing just that (Bank of America buying Countrywide, Sovereign Wealth Funds buying banks like Citigroup, etc.).

Looking at the monthly chart of BIX I'm showing the Fib downside projections based on the 2000-2007 rally. It's very common to see support come in at the 127% level (157.08) followed by the 138% (134.79) and 162% (86.97). I suspect before all is said and done we'll see the lowest level achieved. But they're due a bounce so somewhere in the 135-157 area should be support (today's low so far is 153.68). Link

Jeff Bailey : 7/10/2008 11:26:55 AM

As I've tried to teach traders and investors over the many years at OI and PI and seminars, you MUST think both sides of the trade.

Bears currently have little motivation to COVER position in DIA after break $120.86 (I traded long above, but stopped below in DIA call). And have less motivation below $115.89 (unless they see strength elsewhere).

SPY bears also have little motivation to cover, so why try to catch this "falling knife?".

IWM bears have some pressure at "old downward" trend. Perhaps a Pivot level?

QQQQ bears have greatest reason currently to either get squared up if short below $44.00, or take profits if short above $48 and $47.

Linda Piazza : 7/10/2008 11:23:58 AM

The A/D line isn't helping much today. It's mostly staying above the bullish/bearish (for equities as well as the A/D line) benchmark, but while it's doing so, it's carved out a wide range and now is chopping around in a narrowing pattern. So, we have indecision typified there. As I type, the A/D line again tests that bullish/bearish benchmark, now at about -370 with the A/D line now at -359. This mostly holding to this benchmark is better than not doing so if you want to see improvement in the tenor, but such benchmarks begin to lose their relevance as candles chop back and forth across them. So, I'd call this action neutral.

Linda Piazza : 7/10/2008 11:20:20 AM

Potential OEX support on 30-minute closes has been pushed down to 566.97 and is still descending. The OEX is 568.31 as I type.

Jeff Bailey : 7/10/2008 11:20:18 AM

QQQQ, IWM, SPY, DIA daily interval montage I've been showing. CLOCWISE "strongest" to "weakest" on technical PRICE action Link

Linda Piazza : 7/10/2008 11:16:46 AM

TED spread now 1.09. I feel like chanting that old football cheer: "Push it back, push it back, waaay back!" I hope I got that right. I'm not exactly a sports fan, although one daughter's marching band experience and the other's as a varsity cheerleader had me sitting at lots of games.

Linda Piazza : 7/10/2008 11:13:23 AM

So far, the OEX still can't crack that potential resistance on 15-minute closes that now extends up to 571.11. So far, it maintains support on 30-minute closes that's now at 567, but still sinking a bit. It's doing what it usually does lately when it tests this particular Keltner support on 30-minute closes: chopping around for a few 30-minute candles before it decides on next direction. Lately (6/27, 7/1, 7/3, and 7/7 with some minor violations), that direction has been to bounce from this particular support after that period of consolidation, but we just don't know for sure that it will be the same this time. Bears need to be aware of the possibility but bulls shouldn't count on it.

Jeff Bailey : 7/10/2008 11:07:08 AM

European Markets ... finishing/trading lower Link

Jeff Bailey : 7/10/2008 11:06:14 AM

Asian Markets (closed) Link ... finished mixed-to-flat

Keene Little : 7/10/2008 11:06:02 AM

We got a little bounce and now a pullback. If the pullback is followed by a push higher again then I think it will look good for a bottom for now. It could be a choppy ride higher if it's only going to be a correction of the decline from yesterday so stay aware that the long side is clearly the risky side right now. But I think the short side right here is also risky.

Jeff Bailey : 7/10/2008 11:04:28 AM

RUT.X 667.88 +0.62% ...

Jeff Bailey : 7/10/2008 11:04:10 AM

UWM $44.23 +1.25% ... UWM-HS $2.65 x $3.10

Jeff Bailey : 7/10/2008 11:03:12 AM

NYSE NH/NL 16:290

NASDAQ NH/NL 18:199

Jeff Bailey : 7/10/2008 11:02:19 AM

NYSE a/d 1,404:1,557

NASDAQ a/d 1,495:1,102

Linda Piazza : 7/10/2008 11:00:06 AM

On a short-term Keltner basis, the TRAN is behaving better than the OEX and SPX. On the 15-minute chart, it's above the bullish/bearish benchmark and potential support on 15-minute closes now at 4820. However, those gazing at this chart can't fail to notice the potential H&S with the head at yesterday's high. Sustained 15-minute closes beneath about 4780 would confirm that potential formation. Those with bullish OEX, SPX and Dow hopes would like to see the TRAN instead invalidate that formation with a sustained climb while bears would like to see it confirmed. The TRAN is 4846.74 as I type.

Linda Piazza : 7/10/2008 10:55:48 AM

Potential OEX support on 30-minute closes is now at 567.31, with the OEX perhaps engaging in its typical pattern of testing such support through 3-5 thirty-minute candles before a next direction is decided. The OEX is 569.09 as I type, between that support and the resistance on 15-minute closes now at 571.46.

Jeff Bailey : 7/10/2008 10:52:05 AM

RUT.X 671.62 +1.18% ... daily interval bar chart. Same conventional retracement we've been using since 01/22/08 low, add PINK retracement at 03/10/08 low. Trend and MONTHLY S2 and S1. Link

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

Remember that we need to see sustained 15-minute closes above the potential Keltner resistance now up to 571.59 before there's been even a slight change in tenor. The OEX is now testing that resistance. A failure here could sent it back down toward 567.34 again. Those who hope to see the OEX steady would prefer that, if it can't break above this level, it consolidate sideways for a while without pulling all the way back to the day's low. Markets are so jittery these days that any pullback is subject to sudden collapse through support even if it looks like a regular old retest going on.

Keene Little : 7/10/2008 10:45:25 AM

We've got some minor bullish divergences at the new lows but nothing to write home about. The trend is clearly down but the wave count for the move down from yesterday says bears need to be cautious now. This should be be getting close to a reversal to correct the decline from yesterday.

More bullishly, with the impulsive decline from yesterday, it's possible we're now putting in a stronger low. It's possible to count the move down from May 19th as complete. It's not my preferred wave count and it hasn't even achieved the minimum downside price object that I expect to see (SPX 1220-1225) but the reason I'm even entertaining the idea is because of opex.

The Thursday prior to opex has been famous for its head-fake moves. Is this morning's decline a setup for a rally into opex? One can only guess that's what's happening but based on historical patterns I don't discount the possibility.

Linda Piazza : 7/10/2008 10:44:49 AM

Once the OEX hits the potential support line that it hit on the 30-minute chart, it often spends about 3-5 candles testing it before it reverses, if it does, so it could be another hour to two hours before we know the outcome of this test. If we someday get one of those surprise relief rallies started, it might not take that long, of course, but I want you to be prepared in case it does.

Linda Piazza : 7/10/2008 10:36:19 AM

The OEX held onto support on 30-minute closes now at 567.46, but it's not far above it. A first step in improvement in tenor would have to be sustained 15-minute closes above the descending 15-minute 9-ema, converging with other potential resistance from 571.01-571.75. Until we see that, there's been no proof of even a slight improvement in tenor.

Jeff Bailey : 7/10/2008 10:36:16 AM

At 10:00 this morning, the RUT.X was trading very similar PRICE level and morning direction (trending lower) as was found at approx. 12:00 PM EDT on Monday.

Jeff Bailey : 7/10/2008 10:35:05 AM

10:00 Internals found at this Link

Monday's Internals Link

Linda Piazza : 7/10/2008 10:28:11 AM

The A/D line drops deeper into potential support. At -697, it's testing potential support on 15-minute closes now from -750 down to -1025. Those who want to see it showing more upside strength need to see sustained 15-minute closes above about -175. Those who want a total collapse want to see it sustain values below yesterday's -1125.

Jeff Bailey : 7/10/2008 10:23:04 AM

13-week Yield ($IRX.X) down 9.0 bp at 1.700% ... may be factoring in 25 bp rate cut.

Rather bearish in my opinion.

Linda Piazza : 7/10/2008 10:21:37 AM

At 154.82 as I type, the BIX is below Monday's 155.49 low. It just completed the last 15-minute period at potential support on 15-minute closes at 155.58, but it needs to bounce soon or it risks creating a breakdown scenario on this chart. As I've noted before, Keltner channels were first designed to determine when breakouts were in progress. They can be particularly profitable trades, but the problem is that those who trade them are frequently whipsawed and have a long run of drawdowns between profitable trades. Therefore, it is important to realize that once a breakdown mode is created, it shows that momentum is strong in the direction of the trade, and one shouldn't jump in front of that speeding train intending to go the other direction. However, if traders are already on that speeding train, they need to keep their seatbelts buckled tight and know where the emergency exits are, because a crazy person is running that train, and it can come to a screeching halt at any time.

Jane Fox : 7/10/2008 10:15:39 AM

Internals are bearish. AD Ratio (top chart) is making new daily lows, AD volume (middle chart) is making new daily lows and the VIX (bottom chart) is making new daily highs. Oh by the way the TRIN is a very bearish 1.53. Link

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

TED spread 1.04.

Linda Piazza : 7/10/2008 10:11:53 AM

The A/D line is again testing potential support on 15-minute closes that begins at about -170 and extends down to -905, but looks strongest near about -380. The A/D line is -196 as I type.

Linda Piazza : 7/10/2008 10:07:00 AM

The OEX now tests approaches potential support on 30-minute closes that's now at 576.79.

Keene Little : 7/10/2008 10:05:40 AM

The first 30 minutes of trading hasn't brought us much yet. If we're to get a bounce this morning it could be a very choppy one and this price action could be part of that. If price heads for new lows (happening as I type) then I'll be watching for evidence of bottoming (of the leg down from yesterday) to see where a counter-trend long play might set up.

Linda Piazza : 7/10/2008 9:56:22 AM

I wanted to note that if I suddenly disappear from the Monitor today or tomorrow, it won't be by choice. Heavy equipment will be rolling onto our property today and the process will begin to dig trenches for our new geothermal system. Supposedly, all digging will occur well away from any electrical or cable lines, but you know how that goes, don't you? So, I'm just saying . . .

Linda Piazza : 7/10/2008 9:54:41 AM

The OEX's 15-minute 9-ema is now at 573.77. To have even a first tentative sign of a change in tenor, the OEX needs to sustain 15-minute closes above that level.

Linda Piazza : 7/10/2008 9:52:08 AM

The TED spread is 1.03. All this worry about financials ahead of some of their reports may be impacting that spread, but this is not the direction that those hoping for an equity bounce want it to go.

Linda Piazza : 7/10/2008 9:49:43 AM

A/D line has bounced strongly from that grouped support and has reached a new high of the day. The next test is going to be how it reacts to potential resistance on 15-minute closes now at about +740. That resistance line stopped it twice yesterday. Barring a strong surge higher--and I don't completely bar it--the A/D line is likely to stall for while at that line or else get knocked back. Bulls hope for either the surge or the stall, and they want any stall to be a short one. A/D line at 375 as I type, down from its 507 high.

Linda Piazza : 7/10/2008 9:43:53 AM

Potentially strong support for the OEX on 30-minute closes is now at 568.06. The A/D line is -276 as it dips into that potential support band. Watch closely, as it's possible that support could kick in at any time. I'm not promising but I am promising that one of these days, the strength of a relief bounce is going to surprise some, so I want our subscribers in bearish positions to stay on their toes.

Linda Piazza : 7/10/2008 9:40:34 AM

Remember that Chairman Ben Bernanke, together with Treasury Secretary Henry Paulson, begin testimony before the House's Committee on Financial Services at 10:00 am ET.

Linda Piazza : 7/10/2008 9:38:34 AM

Keltner outlook on the A/D Line: The A/D line opened in the upper or bullish half of its Keltner channels and is so far climbing. It is, however, climbing toward potentially strong resistance now at about +700. This is the same resistance line, now at a slightly different level, that stopped the A/D line yesterday, so if it's approached, bulls need to be cautious and watchful. If the A/D line drops, it has support that looks strong, even if looks can be deceiving sometimes, from -770 up to -150, in a broad band of converging potential support. If the A/D line should drop, that's where bears should be particularly watchful as the support could bounce the A/D line again. A/D line at +203 as I type.

Linda Piazza : 7/10/2008 9:31:20 AM

Futures are down as I type, but near fair values. My 9:23:58 post details a potential reversal pattern (I know--yet another) on the daily chart, and, as Jane, on the Market Monitor, and Robert Ogilvie (in last night's Wrap) both noted, the TRIN reached levels yesterday that some believe indicate a potential reversal, too.

But as I've noted, no such reversal signals have resulted in reversals. We must keep the tenor of the markets in mind when deciding how much credence to put in them. This morning, then, bears should be aware of the potential for reversal, and not grow too complacent just because yesterday was a big down day. That big down day was part of a potential reversal signal, so profit-protecting plans should certainly be updated. Bulls, however, should not give too much credence to the idea of reversal without evidence that one is underway.

As noted late yesterday, sometimes big-range days are followed by days in which a small-bodied candle is produced, with or without long upper or lower shadows. Be aware, then, of the possibility that early moves might get reversed.

If the OEX heads down right away, it has potential support on 30-minute closes at 568.25. If it heads up right away, it has potential resistance on 15-minute closes at 572.65-573.51.

Keene Little : 7/10/2008 9:27:14 AM

ES made a pre-market high of 1259.25 so if that's to be retested some time today that would have SPX just above 1257. As mentioned last night that could be a good upside target for a short play setup (38% retracement and the March 17th low). I'm not comfortable with the downside this morning until I can at least see what kind of bounce we get.

Linda Piazza : 7/10/2008 9:23:58 AM

At the end of the day yesterday, something about the three-candle combination of daily candles for this week kept nagging at me. I'd seen that combination. It meant something and I was thinking it meant something potentially bullish, but how could it?

Last night I went searching through a candlestick glossary offered by Lit Wick. I found what I'd been remembering: a moderately reliable three-candle potential bullish reversal signal known as a stick sandwich. In this three-candle pattern, the first day is a down day, a black or red candle, depending on your charting service. The second day is a green or white candle, also depending on your charting service, with that day seeing a high above the previous day's close. The third and last day produces another black or red day, with its high above the high of the previous day but with a close near that of the first day. Here's an example from Lit Wick: Link

As I noted yesterday, none of these potential reversal signals through this current decline are producing reversals, so I'm not promising one this morning, either. My reason for this post is different: to warn those who have too much bearish risk on the table that not all down days promise more bearish action or suggest that they can let up on their profit-protecting plans.

Keene Little : 7/10/2008 9:18:17 AM

After spiking up from 7:00 to 7:30 AM equity futures took a dive to new lows, especially following the 8:30 reports, but have since bounce back up a little. The volatility continues and it's looking like we'll open up near the flat line, leaving us guessing a bit as to which way the market will head. I'm hoping for a bounce this morning to see if a good short play sets up.

My gold short from 940 got stopped out this morning at 936 as it spiked up when equity futures spiked down. The bounce in gold off the broken downtrend line from April looks bullish and there's a good possibility we'll see a new high (965 target) before it's ready for the next decline (shown in pink on the daily chart). But the pattern is not clear enough for me to feel confident of a new high to want to be long gold. So I'll just watch for a bit to see what sets up next. Link

Jane Fox : 7/10/2008 9:00:11 AM

Obviously Crude traders were not freaked yesterday by the news out of Iran, I would have suspected that would have sent the price to crude to new all time highs but I guess the world realizes it is just a lot of saber rattling, at least we all hope it is. Link

Jane Fox : 7/10/2008 8:58:04 AM

A series of higher highs and lows tells you the buyers were stronger overnight than the sellers. This is not saying much considering the sellers were so strong intraday yesterday. Link

Jane Fox : 7/10/2008 8:53:43 AM

WASHINGTON (MarketWatch) -- U.S. initial jobless claims hit their lowest level since April in the latest week, but continuing unemployment claims reached a level not seen since December 2003, the Labor Department said Thursday.

Initial claims fell by 58,000 to 346,000 for the week ended July 5, their lowest mark since April 19. The prior week's claims were unrevised at 404,000, only the second time in the current cycle when claims had risen above the 400,000 mark.

The first two weeks of July usually show large increases as automobile and other manufacturers temporarily lay workers off to retool production, a Labor Department spokesman said.

The four-week average of initial claims was 379,250, a decrease of 10,000 from the previous week.

More ominous, the latest continuing claims numbers suggest that jobs are increasingly difficult to find.

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