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Jeff Bailey : 7/11/2008 10:37:30 PM

General Electric (GE) $27.66 +0.07% ... Pre-market Earnings Press Release Link

OI Technical Staff : 7/11/2008 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The Market Monitor has been archived.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.

Jeff Bailey : 7/11/2008 9:35:48 PM

S&P 500 Heavyweights at this Link

GE +2.78% (see earnings), JNJ +1.75%, IBM +2.15%, AAPL +1.44%, PFE +0.33%, PM +3.69%, ABT +3.06%, ORCL +1.10%, QCOM +7.28%, MCD +0.22%, WYE +2.78%, MDT +2.54%, EXC +0.09%, CMCSA +0.87%, CVS +0.38%, AMGN +0.35%, GILD +5.10% post gains for week.

**Dow Indu. Components

Jeff Bailey : 7/11/2008 9:22:54 PM

Closing U.S. Market Watch at this Link

Silver, gold, oil, "junk bond" PHF, 10-year, 30-year, Gold Bugs, Utilities, Transports, Healthcare, Pharmaceuticals, N. Amer. Telecom, Biotechnology and Small Caps post gains for week.

Jeff Bailey : 7/11/2008 5:29:19 PM

Closing Internals found at this Link

Jeff Bailey : 7/11/2008 5:17:49 PM

NSYE volume very, very heavy today at just over 6.7 billion. 791 new lows exceed the 641 from 3/17/08.

Keene Little : 7/11/2008 5:07:07 PM

My gold short is still alive but hanging on by the skin of its teeth. After pulling back from the morning high gold rallied back up for what looks like a potential retest of the high. The reason I say retest is because of the bearish divergences on multiple time frames, including between this morning's and afternoon's highs.

The risk for shorts is a quick pop higher on Monday and then an immediate reversal to the downside. Honor your stops but if that happens you may want to jump right back in. I'll have a better feel for that possibility on Monday. Today's candle on GLD is a hanging man doji so a down day on Monday would be a confirmed revesal signal.

Keene Little : 7/11/2008 5:01:33 PM

I see I missed the afternoon excitement with the flurry of short covering that took SPX right back up to Thursday's high and then pulled sharply back into the close. It's been a wild and volatile week and it leaves both sides scratching their heads wondering what it means for next week.

After today's price action there are two problems that I see for the bulls: one, the bounce off today's low into the high near 3:00 PM is just a 3-wave move and that means it's probably just another short-covering rally and nothing more; two, the decline to today's low looks unfinished--there's no clean 5-wave move down to suggest we've seen the low. That raises the risk of more downside to come on Monday. Combine the two factors and I would be uncomfortable being long on Monday morning.

However, as Linda observed, SPX found support today at the trend line along the January and March lows and it also tagged the support level at 1220-1225 (early 2005 highs/2006 lows) which I've had as a downside target for a while now. I would think this would be good for at least a decent bounce into next week.

The daily chart shows the two possibilities and while it takes a rally above 1292 to confirm the more bullish potential into the end of the month (shown in pink), a rally above Wednesday's high near 1277 would be a heads up that the bigger rally has probably started. In the meantime a continuation lower to 1200 remains a good possibility (dark red). Link

Jeff Bailey : 7/11/2008 4:46:50 PM

Fannie Mae (FNM) $10.25 -22.34% alert! ... whips higher at $10.32 extended. Company saying capital level just fine.

Jeff Bailey : 7/11/2008 4:45:04 PM

FXE 159.44 +0.91% ...
FXY 93.74 +0.63% ...
FXB 199.05 +0.54% ...

Jeff Bailey : 7/11/2008 4:43:50 PM

DXY's 04:00 tick was 71.968.

Jeff Bailey : 7/11/2008 4:36:21 PM

Rumors have stocks, commodities volatile ... Bulls and bears have evidently decided to take the gloves off, each starting rumors that have yet to be founded.

As always, I strongly suggest traders utilize OPTIONS to help control risk.

Linda Piazza : 7/11/2008 4:29:04 PM

Just noticed that both the OEX and SPX bounced today from a descending trendline off the 1/22 lows.

Jeff Bailey : 7/11/2008 4:28:06 PM

FNM $10.25 -22.34% ... down-ticks at bid to $9.85 extended.

Jeff Bailey : 7/11/2008 4:27:17 PM

FRE $7.75 -3.12% ... slips to $7.55 extended.

Jeff Bailey : 7/11/2008 4:26:27 PM

Bank of America (BAC) $21.67 -3.08% .... steady and ticks higher at $21.70 extended.

Jeff Bailey : 7/11/2008 4:24:04 PM

yg08q ... up 24.8, or +2.63% at $966.70.

Jeff Bailey : 7/11/2008 4:20:45 PM

Alert! ... Fed Spokeswoman saying there have been NO TALKS with GSEs on discount window access.

Linda Piazza : 7/11/2008 4:20:03 PM

I hope everyone has a good weekend. Schedule some time to worry, if you must, maybe countering that time with some time spent listening to webinars on CBOE (a lot on technique, including Dan Sheridan's) and CBOT (a lot on controlling emotions when trading) or on your broker's site, if you broker offers those. The rest of the time, do something enjoyable and restful. Remind yourselves there's a life away from the markets.

Me? They're trenching for the lines for our new geothermal system, looking as if an army of subterranean animals has been crawling across our entire one acre, digging holes. I think I'm going to go pick up a shovel and help them repack the soil in the trenches, burning off the adrenalin built up from trying to steady these markets all day! I don't need too many reminders of what is important. I spent part of the day printing up the newest procedures my daughter had sent to me, explaining metabolic disorders for medical personnel, in case my granddaughter ever has a crisis while visiting us. I hate losing money, and I've lost a little this month, but there are more important things to gain or lose in this life.

Linda Piazza : 7/11/2008 4:13:42 PM

Here's where the VIX ended the day: Link As I said earlier, that piercing of daily resistance and close back below it or at it is no guarantee that the worst is over, but it's certainly better than closing well above it, and setting an upside target of 38.10. On August 1, 6 and 9th last year, the VIX behaved similarly, but it did eventually break out, leading to the results we all remember, or at least those trading last August's opex remember. Some of those days, particularly August 1 and 6, were followed by a day or two of strong gains, with the SPX climbing from its August 6 low of 1427.39 into a high of 1503.89 by August 8 before it rolled over again. That's a five percent gain over those few days. Only the August 16 action was followed by a gain that held, though.

We've seen many possible bounce points and none of them have materialized, but I wanted to comment on that chart.

Jeff Bailey : 7/11/2008 4:11:59 PM

TWM finished $81.43 -1.26% ...

UWM finished $45.15 +1.34% ...

Jeff Bailey : 7/11/2008 4:09:34 PM

DIA $111.13 -0.97% ...

Jeff Bailey : 7/11/2008 4:09:14 PM

SPY $124.00 -1.03% ... eight (8) minutes until close.

Linda Piazza : 7/11/2008 4:03:39 PM

The TED spread was last 1.21.

Jeff Bailey : 7/11/2008 4:03:14 PM

GLD $95.21 +1.79% ... Assuming day's high of $95.48 not violated ... WKLY Pivot Levels for next week would be approx. $93.76, 94.49, Piv= 94.98, 95.71, 96.20.

Jeff Bailey : 7/11/2008 3:52:18 PM

QQQQ ... Twin "Floyd Little's" it here at $44.44.

Jeff Bailey : 7/11/2008 3:51:00 PM

IWM $66.99 +0.13% ... 5-days until option expiration.

Jeff Bailey : 7/11/2008 3:50:11 PM

RUT.X 671.87 +0.21% ... inches green.

Jane Fox : 7/11/2008 3:49:10 PM

Gold has held on to most of its gains today. Link

Jeff Bailey : 7/11/2008 3:48:54 PM

StreetTracks Gold (GLD) $95.25 +1.83% ... trades 80.9% of day-trader's dynamic.

13.5 minutes until close.

Jane Fox : 7/11/2008 3:46:19 PM

Internals showing the huge rally we had earlier. ES moved from a low of 1225 to a high of 1258 in less than 2 hours. Link

Linda Piazza : 7/11/2008 3:44:19 PM

Usually at this time of day, I start giving an update on how the daily and weekly OEX candles look. However, markets are volatile enough now that it's risky to give such an update. Here's one thing: barring a rise to around 574-575 by the end of the day, a possibility in this market but certainly not a probability, the potential reversal signal from last week's candle will have been proven wrong, as all such signals have been lately. That was a doji at support for the OEX's weekly candle last week. If there were a bounce even up to 569.50-572.50 by the close, the daily chart will have presented a spring up from support with a small-bodied candle. Do we trust such candles to tell us a reversal is in the making? Of course not. Do we use their presence, especially in light of potential news coming out of the meeting going on this afternoon with Federal Chairman Ben Bernanke, to consider whether we need to lighten risk ahead of the weekend? Absolutely. The OEX is 565.17 as I type.

Jeff Bailey : 7/11/2008 3:41:04 PM

Oh my! ... RUT.X 670.28 -0.02% ...

Jeff Bailey : 7/11/2008 3:40:38 PM

NASDAQ a/d 1,174:1,678 now.

COMPX 2,233.32 -1.08% ...

Jeff Bailey : 7/11/2008 3:40:01 PM

NYSE a/d 894:2261 now. Wild, wild action at the big board. NYSE Comp now 8,333.13 -1.21%

Jeff Bailey : 7/11/2008 3:38:56 PM

Sector Winners ... to the close ... Gold Bugs +4.39% and AMEX Nat Gas +0.17% ...

Linda Piazza : 7/11/2008 3:38:12 PM

The VIX is 27.46, testing potential resistance on the 30-minute chart from 27.60-27.90, testing S/R on daily closes at 26.98. There's a whole lot of shaking going on . . . or chopping, let's say. It's impossible to say how it's going to shake out.

Jeff Bailey : 7/11/2008 3:37:40 PM

FXI 159.59 +1.01% ...

FXY 93.82 +0.71% ... not sure my/your FXY-HO call will hedge a GLD short.

FXB $199.17 +0.60% ...

Jeff Bailey : 7/11/2008 3:35:31 PM

StreetTracks Gold (GLD) $95.20 +1.78% ... 27 minutes until close.

Linda Piazza : 7/11/2008 3:35:07 PM

The TEd spread is 1.20, down slightly from the high of 1.22.

Linda Piazza : 7/11/2008 3:33:38 PM

It looks possible to me, although not yet probable, that the OEX will again rise toward potential resistance on 15-minute closes now at 570.92-572.37. Unfortunately, it also looks possible, although not yet probable, that it could drop toward 560. The VIX is jumping around everywhere, although the VXo doesn't appear to be quite so volatile. The A/D line is testing resistance itself and looking a lot like the OEX's chart, so it's not predicting anything either direction.

Jeff Bailey : 7/11/2008 3:26:26 PM

Equity futures traders should be prepared for 100-point YM swings in matter of minutes.

Jeff Bailey : 7/11/2008 3:25:38 PM

Good gravy ... PREM.X 21.21 to -5.27 last 15-minutes. Incredible amount of institutional computer activity and arbitrage.

Linda Piazza : 7/11/2008 3:23:58 PM

Here's where the VIX is, having pierced the resistance on daily closes and then dropped back to it: Link Such action doesn't guarantee that the worst is over. Early last August, for example, we were seeing this kind of action in the VIX before the big breakouts occurred. However, it's certainly better than not pulling back if you hope for a steadying in equity markets.

Jeff Bailey : 7/11/2008 3:21:28 PM

NYSE Comp. -0.95% ...

Jeff Bailey : 7/11/2008 3:18:59 PM

VIX.X 26.96 +5.35% ... reclaims QRTRLY 80.9% (26.84).

Linda Piazza : 7/11/2008 3:16:19 PM

The OEX is showing some volatility as it challenges that potential resistance on 15-minute closes at 572.50 and then 576.27. The outcome still isn't clear, so both bulls and bears should be solidifying their profit-protecting plans, if they haven't done so already. For the first time in a long time, however, a potentially bullish formation (falling wedge) has resulted in the expected climb, and that's at least a bit of a relief, but it's not proof that the worst is over. As I type, the VIX is rising up to retest resistance on the daily chart, but from underneath this time. OEX at 568.91.

Jeff Bailey : 7/11/2008 3:15:55 PM

IWM alert! $67.35 +0.67% ... did trade above yesterday's high. Per some of Thursday's MM mentionings.

Jeff Bailey : 7/11/2008 3:14:53 PM

Sector Winners ... Gold Bugs +4.58%, Semiconductors +0.88%, AMEX Nat Gas +0.86%, Oil Service +0.64%

Market Winner RUT.X +0.77%

Jeff Bailey : 7/11/2008 3:12:53 PM

Dow Transports (TRAN) 4,837 +0.43% ... inch green. Collard currently by 200-day and 150-day SMA.

Jeff Bailey : 7/11/2008 3:10:41 PM

TWM 1/8 position showing loss of $62.64.

UWM-HS showing gain of $100.00

Jeff Bailey : 7/11/2008 3:08:57 PM

VIX.X 26.56 +3.79% ... after near-kiss of DAILY Pivot.

Jeff Bailey : 7/11/2008 3:07:52 PM

Biiiiiig buy program premium underway.

Jeff Bailey : 7/11/2008 3:07:18 PM

Modest roar of applause from traders at the floor of the big board as NYSE Comp gets green.

Jeff Bailey : 7/11/2008 3:03:59 PM

Internals see repair quickly ...

Linda Piazza : 7/11/2008 3:03:36 PM

Potential resistance for the OEX on 15-minute closes at 572.52 and then at 576.02. For the SPX, that's 1251.54 and then 1258.31. Bulls need to be careful here, but so do bears. Remember my note earlier that both in January and March, when the VIX punched above daily resistance, it ended the day at or below it and indices had bounced well above their daily lows by the close.

Jeff Bailey : 7/11/2008 3:02:25 PM

DJ reporting LIVE! ... that Dr. Bernanke told GSE head that Freddie and Fannie eligible for discount window.

Linda Piazza : 7/11/2008 3:01:48 PM

VIX at 26.99, below the potential resistance on daily closes as well as the breakout benchmarks on both the 15- and 30-minute charts. If it stays here, it will have pierced the resistance and then drawn back sharply, a potential reversal signal.

Jeff Bailey : 7/11/2008 3:01:12 PM

SMH $28.27 +0.07% ... inches green.

Linda Piazza : 7/11/2008 3:00:46 PM

Wow. That didn't take long for the OEX and SPX to punch up those levels (2:46:40 post), did it? I had been warning bulls all afternoon that they needed to know ahead of time how they'd treat a test of these levels and this is an example why. The punch resulted in the OEX and SPX being immediately knocked backward. What next? I wouldn't be surprised if these indices didn't try again, but, just as I noted erlier, I don't know what the ultimate result will be if they do, so bulls need to know how they'll react if those levels are retested again. In this climate, there's no predicting whether those retests will occur, but they just wouldn't surprise me.

Jeff Bailey : 7/11/2008 3:00:04 PM

Three (3) sectors in the green. Gold bugs, Nat. Gas and Oil Service.

Jeff Bailey : 7/11/2008 2:59:32 PM

RUT.X 671.40 +0.14% ... oh my!

Jeff Bailey : 7/11/2008 2:58:43 PM

F5 Networks (FFIV) $33.40 +3.40% ... alert!

Jeff Bailey : 7/11/2008 2:57:05 PM

GLD Option Montage at this Link

I urge traders to note where the OI is at relative to GLD's gap higher trade today. Op-Ex is next Friday.

Jeff Bailey : 7/11/2008 2:52:39 PM

For those that don't know, or those that want to implement some RISK management to their trading, the StreetTracks Gold (GLD) does offer options.

Linda Piazza : 7/11/2008 2:46:40 PM

Those hoping the OEX gets back up to 570-573, to retest resistance there, need to see a new high above the 567.63 high of about 40 minutes ago. Similarly, those hoping the SPX will rise to challenge 1247-1252 need to see a new high above the 1240.56 high made about 40 minutes ago. As I type, the OEX is 564.23, and SPX, 1233.63.

Jane Fox : 7/11/2008 2:44:45 PM

A bounce could get the DOW back to about 12065. Link

Linda Piazza : 7/11/2008 2:44:01 PM

The VIX is so far finding resistance now on 30-minute closes at its 30-minute 9-ema, now at 28.24 and is remaining below the breakout benchmark, now at 28.53. Remember, though, that there was also potential resistance on a daily close that was breached, and that could now be providing support. That S/R zone is now at 27.00. The VIX doesn't always adhere exactly to these S/R levels, so consider it a zone more than a specific number. However, there's the possibility for support still underneath the VIX, support that those who are tired of this market action want to see breached again by the close. The VIX is currently 28.13.

Jane Fox : 7/11/2008 2:43:34 PM

At some point the selling will have to let up and when it does the reactionary bounce could be violent. Using a Fib retracement tool with brackets at the high made on 1440 and lows at 1225 the 50% level comes in at about 1330 so a bounce all the way back to here is not out of line. Link

Jeff Bailey : 7/11/2008 2:45:30 PM

StreetTracks Gold (GLD) $95.04 +1.61% Link (40-cent box to match futures) ... just more than 1 hour left in today's session.

Jeff Bailey : 7/11/2008 2:42:20 PM

Euro CurrencyShares (FXE) $159.13 +0.72% ... trade 80.9% conventional (04/22 high to my "on the alert" 06/13/08 low).

Will this time be different?

Sir John would warn against it if he were here.

Linda Piazza : 7/11/2008 2:39:52 PM

TED spread 1.21.

Jeff Bailey : 7/11/2008 2:39:42 PM

iShares Silver (SLV) $185.60 +2.42% ... its WKLY R1 ($184.59) served morning "pullback" support. WKLY R2 $189.20 and conventional 61.8% ($188.62) just ahead.

Jeff Bailey : 7/11/2008 2:35:54 PM

StreetTracks Gold (GLD) $95.04 +1.61% ... buyers look to leverage WKLY R2 ($94.79) into the close.

Jeff Bailey : 7/11/2008 2:30:07 PM

Nat. Gas as depicted by UNG $55.61 -4.56% under some pressure. Not unline Aug futures, still holding Wednesday's low.

Jeff Bailey : 7/11/2008 2:27:16 PM

S&P 500 Heavyweights (SPX) @ 02:23 PM EDT Link

Linda Piazza : 7/11/2008 2:26:55 PM

Downturns to retest the 15-minute 9-ema's. We know what's happened lately in these "just normal" retests of potential support, so bulls should be prepared in case prices cave in again, as they've tended to do lately. The OEX's 15-minute 9-ema is at about 564.52; the SPX's, about 1233.60. Both indices are currently at or slightly below those moving averages, but with several minutes left in this 15-minute period.

Linda Piazza : 7/11/2008 2:24:02 PM

TED spread 1.19. The last time it was this level was the early May period. Then, however, it was on its way down from its 4/23 level of 1.71. If it keeps climbing, there's potential resistance beginning about 1.30, up to 1.70, the site of the descending trendline off last August's high. Let's hope 1.30 holds. No, let's hope it isn't tested. One note: by the time that top trendline has been retested, equity markets are often already beginning their recoveries. Not always, of course.

Jeff Bailey : 7/11/2008 2:20:45 PM

02:00 Internals found at this Link

Jeff Bailey : 7/11/2008 2:15:36 PM

Freddie (FRE) $8.00 (unch) ... backfills morning gap. That's a double from morning low of $4.00.

Jeff Bailey : 7/11/2008 2:14:13 PM

Lehman "prarie dogs" morning high. $15.36 -11.56% ...

Jeff Bailey : 7/11/2008 2:13:05 PM

DJUSHB 245.08 +0.23% ... inches green.

Jeff Bailey : 7/11/2008 2:08:21 PM

SPX 1,237 -1.30% ...

Jeff Bailey : 7/11/2008 2:07:57 PM

Still a couple hours left in the session.

Jeff Bailey : 7/11/2008 2:07:47 PM

Refused, refused to trade QUARTERLY R2.

Jeff Bailey : 7/11/2008 2:07:25 PM

VIX.X 28.29 alert! ... back to test MONTHLY R2 from above.

Jeff Bailey : 7/11/2008 2:06:36 PM

Sector Winners HUI.X +5.05%, XNG.X 687.63 +0.11% inches green.

Linda Piazza : 7/11/2008 2:06:08 PM

As I thought it might, the VIX is at least temporarily pausing its pullback at the breakout benchmark on its 30-minute chart, with that at about 28.40 and with the VIX currently at 28.53. This potential S/R zone held as support on the last 30-minute close. Those trying bullish positions should be aware that it could bounce from this zone, although that's of course not a given.

Jeff Bailey : 7/11/2008 2:05:49 PM

RUT.X 666.78 -0.54% ... probes session highs.

Jeff Bailey : 7/11/2008 2:05:22 PM

13-week down 11 bp at 1.52% ... refuses, refuses to give up WKLY S2 at 1.50%.

Jeff Bailey : 7/11/2008 1:58:03 PM

Most Actives ... XLF $18.58 -3.32%, QQQQ $44.25 -2.27%, BAC $21.36 -4.47%, FNM $10.10 -23.4%, FRE $6.96 -13.00%, SPY $123.28 -1.16%, GE $27.67 +0.14%, LEH $14.61 -15.26%, MSFT $25.11 -1.33%, INTC $20.41 -1.01%

Linda Piazza : 7/11/2008 1:53:04 PM

As of 12:50 pm ET, the TED spread was 1.16.

Linda Piazza : 7/11/2008 1:48:38 PM

Again, if the OEX should climb to 571.20-571.80, the current site of the top trendline of a descending price channel in place for a couple of days, watch for the potential for the OEX to stall or be knocked back. The same potential exists at 573.05, potential resistance on 15-minute closes. Those brave enough to try bullish positions should know how they'll treat a test of that region, if the OEX should climb that far.

For the SPX, the analogous trendline is at about 1250 currently, with potentially strong resistance on 15-minute closes at 1248 and again at 1253.38. Those trying bullish positions should plan how they'll react if the SPX should approach that level.

Linda Piazza : 7/11/2008 1:40:28 PM

Another potential reversal signal on the VIX's 30-minute chart has at least resulted in a small pullback. It's not big. The VIX has potential support on 30-minute closes at its breakout benchmark, now at 28.41, so there's the possibility that it will steady there and bounce again. Those hoping this is it for the declines on the SPX, at least for now, want to see the VIX drop below that benchmark and stay below it as a first step in the right direction. The VIX is 28.88 as I type.

Jeff Bailey : 7/11/2008 1:37:03 PM

UWM $43.65 -2.02% ...

TWM $84.01 +1.87% ...

Jeff Bailey : 7/11/2008 1:36:02 PM

FFIV $32.57 +0.83% ...

Linda Piazza : 7/11/2008 1:33:54 PM

The SPX did close that 15-minute period above one version of the falling wedge's top trendline, but it did not confirm by a 15-minute close above the 9-ema, now at about 1231. The OEX's action was similar. It's now retesting the 15-minute 9-ema, now at about 563.75.

Linda Piazza : 7/11/2008 1:23:58 PM

Bears, be aware that, depending on how one draws the trendlines on the SPX's version of the (supposedly bullish) falling wedge that's been setting up today, the SPX is currently pushing just above the top of that wedge, with the wedge's top at about 1229 currently and with the SPX at 1230.48 as I type. An attempt to push over the top of a wedge doesn't mean that the attempt will be successful, of course. Those hoping it means something need to see sustained 15-minute closes above the 15-minute 9-ema, now at about 1231.20, at the very least.

Linda Piazza : 7/11/2008 1:19:50 PM

The BIX has continued to trade sideways after first punching down and then settling into a triangle pattern. It's traded sideways out of that triangle, so that shape has lost its relevance. Soon, it's going to move sideways right into potentially significant resistance that's now grouping from 147.29-148.70, however, and so it's either going to have to attempt to push up through it or be driven down below it. BIX at 147.10 currently. You might watch, as this could be an important test for this index and perhaps for the OEX, SPX and Dow, too.

Linda Piazza : 7/11/2008 1:09:15 PM

Small comfort to those who might be hurting in their positions, but the OEX did hold above potential support on 10-minute closes now at 560.96 on that last 10-minute close. The SPX did the same, holding to support on 10-minute closes at 1225.60. Again, I do not mention this to encourage bulls to step in front of a train unless your evidence shows you that it's drawn to a stop, nor to encourage those who should be stepping out of positions and taking losses not to do so, but rather to let bears know what's going on and whether evidence builds of a potential bounce. The formation in which these indices trade is now a falling wedge, and those are typically considered bullish. In 2003, we saw the bearish counterpart, the rising wedge, not result in the expected reaction, a breakdown below wedge support, but rather result in a further climb that would go parabolic. Therefore, you can't count on such potentially bullish formations predicting a bounce, as it's possible that prices will just fall out of the wedge. However, bears just need to be aware that they're there and watch carefully.

Jeff Bailey : 7/11/2008 1:00:20 PM

SPX.X 1,226.59 -2.13% ...

Jeff Bailey : 7/11/2008 12:59:50 PM

UWM alert! $43.00 ... UWM-HS $2.15 x $2.55

Linda Piazza : 7/11/2008 12:59:00 PM

The previous low of the day for the SPX was 1227.02, with potential support on 10-minute close at 1225.91. As I typed, the SPX dropped to a new low as is currently 1226.08. Bears should be aware of the declining wedge shape of the decline and the potential for support to hold, as it did earlier.

Jeff Bailey : 7/11/2008 12:58:53 PM

Discosure(s) ... I currently hold bullish and bearish positions in RUT.X-like index securities.

Jeff Bailey : 7/11/2008 12:58:16 PM

IWM $65.80 -1.64% ...

Jeff Bailey : 7/11/2008 12:58:01 PM

RUT.X 660.51 -1.48% ...

Jeff Bailey : 7/11/2008 12:57:42 PM

RVX.X 33.55 +11.68% ...

Linda Piazza : 7/11/2008 12:57:37 PM

The previous low for the day for the OEX was 561.87, with the OEX at 561.97 as I type and with potential support on 10-minute closes lower, at 561.10.

Jeff Bailey : 7/11/2008 12:57:27 PM

VIX.X 29.31 +14.53% ....

Jeff Bailey : 7/11/2008 12:57:09 PM

Swing trade bearish long triggered alert! ... for the 1/8 position in the TWM $85.20 +3.30% ...

Linda Piazza : 7/11/2008 12:56:00 PM

As of 12:50 pm ET, the TED spread was 1.16.

Jeff Bailey : 7/11/2008 12:55:28 PM

FFIV $32.15 -0.46% ...

Jeff Bailey : 7/11/2008 12:54:50 PM

UWM $43.35 -2.69% ...

Jeff Bailey : 7/11/2008 12:54:28 PM

Swing trade call cancel stop order alert! ... Please cancel the order to sell long the UWM-HS should the UWM trade $43.00.

Jeff Bailey : 7/11/2008 12:50:55 PM

RUT.X 661.40 -1.34% ...

Jeff Bailey : 7/11/2008 12:50:19 PM

Swing trade bearish long setup alert! ... for 1/8 position in the ProShares UltraShort Russ 2000 (TWM) $84.84 +2.91% ...

Should it trade EITHER .... $84.00, or $85.20.

Linda Piazza : 7/11/2008 12:46:36 PM

VIX currently 29.15, just off its new 29.21 high of the day. Somewhere between that high and about 29.99, its advance off the Wednesday morning low will nicely fit a Fib bracket anchored at that low and that zone for the highs. We can hope, can't we?

Linda Piazza : 7/11/2008 12:38:36 PM

Potential support for the OEX on 10-minute closes is 561.95 and then 561.27. OEX at 563.10, testing it again.

Keene Little : 7/11/2008 12:37:45 PM

A couple of issues came up that I need to deal with and unfortunately it's going to take me away from the market probably for the rest of the afternoon. I apologize for my absence and will provide a little end-of-day wrap when I get back.

The bounce is not progressing like it should if the last low marked the end of the little descending wedge idea. The price action continues to look bearish and suggests we might see a lot more selling this afternoon. Just keep trailing your stop lower. Good luck and have a great weekend.

Tab Gilles : 7/11/2008 12:31:52 PM

On a follow-up to Tuesdays post: 7/8/2008 4:41:59 PM $VIX/ $NYLOW/ $NYSI Link Link Link

$VXN/ $NALOW/ $NASI Link Link Link Link

Linda Piazza : 7/11/2008 12:29:44 PM

In reference to my 12:24:28 post in which I said I was afraid of encouraging wanna-be bulls: I want a bounce to start. I'm not going to be hurt big if it doesn't because I shifted the bulk of our money to cash in October. I am at the point now where I'm taking losses on my few remaining JUL positions and not just eating away at my credit that I took in, but I've got ten months of straight profits behind me. I'm actually glad that my exit strategies are keeping losses within acceptable parameters because it reaffirms my efforts to control risk. However, I don't want major institutions to fail, our economy to tank and our subscribers and loved ones to suffer. And, I like being a happy and optimistic person. So, I want a bounce. I'm not encouraging stepping in front of any trains, though.

Jane Fox : 7/11/2008 12:27:12 PM

TRIN at 1.08 supports the oh hum AD ratio.

Jane Fox : 7/11/2008 12:27:38 PM

Internals are bearish but not as bearish as they can get. I would not be long with the AD volume and VIX in sync (the two bottom charts) but the AD ratio (top chart) is not supporting the bullish. This is not a big deal, really bearish would AD ratio making new daily lows as well. Link

Jeff Bailey : 7/11/2008 12:26:34 PM

Starbucks (SBUX) $13.85 -3.61% Link ... continues to exhibit weakness.

Will show bar chart with conventional retracement from $40.01 to the current bearish vertical count of $3.00.

Also regression channel from that 11/16/06 high with anchor at today's action.

Still looking to sell some OUT-THE-MONEY COVERED puts. Probably $10 strike.

Linda Piazza : 7/11/2008 12:24:28 PM

The A/D line's shape this morning is beginning to assume something of the look of a falling wedge, a potentially bullish formation. I hesitate to mention such things as I'm fearful that wanna-be bulls will be jumping into plays, thinking that I'm encouraging them to do so. While a bounce could get started any time, it could have done so any time over the last three weeks, and it hasn't done so. What I'm doing is offering warnings to bears of things they might watch to protect their profits.

Jeff Bailey : 7/11/2008 12:18:14 PM

12:00 Internals found at this Link

Linda Piazza : 7/11/2008 12:15:35 PM

The OEX is testing potential support on 10-minute closes now at 563.26 and then again at 561.43.

Oh, and that doji at the top of the VIX's 30-minute chart? The VIX is climbing again, although not yet to a new high. No reversal yet.

Linda Piazza : 7/11/2008 12:14:07 PM

Arthur Levitt, former chairman of the SEC, is being interviewed on Bloomberg TV. When asked what he thought was going to happen to Fannie Mae and Freddie Mac, his exact words were that he thought they "are going to be failed out by the U.S. government and are going to be run by the U.S. government." He said that bondholders would be okay, but that shareholders wouldn't.

Linda Piazza : 7/11/2008 12:09:30 PM

This bounce isn't getting far yet, and those who want to see a rally or at least a steadying would like to see it not pausing at first resistance, which for the OEX is at the 10-minute 9-ema, now at 565.14. The OEX is 564.43 as I type, currently pulling back from the resistance test. Potential support on 10-minute closes is 563.12 and then 561.54.

Jeff Bailey : 7/11/2008 12:09:18 PM

RUT.X ... juuuuuust under MONTHLY S1.

Keene Little : 7/11/2008 12:08:49 PM

The reason I want to lower the stop on the gold short play so quickly is because it was a setup to short against the completion of a 5-wave move up from June 12th at a Fib projection and weekly R2. If gold reverses back up and heads higher then the setup failed. I want out of the way if that happens and will simply step aside and reevaluate (which is much easier from a flat position vs. having a position under water and all the emotional reactions surrounding that).

Jeff Bailey : 7/11/2008 12:06:37 PM

5-year has come to WKLY S1.

Jeff Bailey : 7/11/2008 12:05:19 PM

QQQQ $44.53 -1.65% ...

Jeff Bailey : 7/11/2008 12:04:48 PM

RUT.X 665.00 -0.81% ...

Jeff Bailey : 7/11/2008 12:04:28 PM

SPX 1,233.28 -1.60% ...

Jeff Bailey : 7/11/2008 12:04:15 PM

13-week now unch at 1.630

Linda Piazza : 7/11/2008 12:03:34 PM

The VIX's last 30-minute candle was a potential reversal signal. Now, we know how much trust to put in potential reversal signals, but it should still be noted. Currently, the VIX is 28.65.

Keene Little : 7/11/2008 11:58:01 AM

Lower stop on GLD short. With the pullback in gold now I would lower my stop on a put play on GLD to a new daily high (lowering it from 97 to 95.50).

Linda Piazza : 7/11/2008 11:58:39 AM

I'm switching to the 10-minute chart for the OEX, too, as price patterns have fit its support/resistance levels better for the last day or two. We'll roll back up to the 15-minute chart again when some of this zooming around has stopped.

The OEX has potential support on 10-minute closes at 563.15 and then at 561.71, with the lower line being that the OEX closely approached a few minutes ago at the low, when that line was a bit higher than it is now. The OEX tapped that and then bounced back above the higher of the two by the 10-minute close, so that higher level remains potential support, too. Unfortunately (or fortunately, if you're in bearish trades) the OEX ran up to the 10-minute 9-ema and tagged it and was knocked back, at least temporarily. That moving average is now at 565, so the first task in any improvement is a 10-minute close above that. Right now, it looks as if another support test is coming. OEX at 563.72 as I type.

Jeff Bailey : 7/11/2008 11:55:00 AM

Sector Winners ... Gold Bugs +4.03% ... only equity-based sector in U.S. Market Watch that is green.

Not looking good for many equity bulls.

Keene Little : 7/11/2008 11:53:56 AM

The thing to remember for stocks is that they remain in a strong downtrend and therefore any long play in stocks is clearly counter trend. Just the opposite for gold--it's clearly in an uptrend so my short recommendation there is clearly counter trend. In that case I'm obviously trying to pick a top and playing a reversal.

Jeff Bailey : 7/11/2008 11:52:55 AM

Yen CurrencyShares (FXY) $94.05 +0.96% ... once again probes its 150-day SMA (94.36) and now correlative 50-day SMA (94.32).

No opportunity today to sell Aug. $96 or higher as only contract offered at this point is Aug $95.

Would like to sell some COVERED and "jacked" out the money.

Keene Little : 7/11/2008 11:51:51 AM

The quick drop in gold is the other signal that has me thinking a bottom for stocks today (or least wary of further downside).

Keene Little : 7/11/2008 11:50:29 AM

It's early and small but this little bounce we're getting has the potential to be the reversal signal. A move above the highs near 11:00 AM would be confirmation of the end of the descending wedge patterns. These patterns are typically retraced quickly so a move back to yesterday's close should happen quickly if we've seen the low. Short covering can be an amazing thing to watch, especially heading into a weekend and just before opex week. Don't get caught short if this starts to rally.

But if we get another lower high and then another daily low it could be lights out for a while for the bulls. Keep your stop just above each bounce high and follow it lower. Let the market prove to you that a bottom is in (rather than try to pick one). Picking a bottom (your seat) is only done in theaters.

Linda Piazza : 7/11/2008 11:49:39 AM

If the OEX continues climbing, of course not a given, I would be particularly watchful for rollover potential near 572.80 and then, on 15-minute closes, at about 574.30. It seems impossible that the OEX could get there, but it could. This is not an invitation for bulls to pile into trades expecting a rush up toward that level, but a warning to those who might have entered long positions to know ahead of time how they would treat a test of that zone, because we've seen prices crater quickly lately. OEX at 564.78.

Jeff Bailey : 7/11/2008 11:44:27 AM

I should also note that for the "bull trap" the pattern has the "triple top" buy signal should ONLY go 1-box above, then quick 3-box reversal back lower.

2-boxes, or more than 3-boxes and something's "wrong" from the bear's perspective.

Linda Piazza : 7/11/2008 11:42:54 AM

The OEX did steady (so far) at the 561.80 zone, hitting a low of 561.87, and it is bouncing strongly (my 11:33:57 post), but it's so far bounced only to and not above the potential support on 30-minute closes at about 564.30. It's at 563.88 as I type, so it's testing that. To recap, then, we've had a single 30-minute close a little below that potential support and an immediate bounce back to it, so there's the possibility that the OEX can regain that support by the close of this 30-minute period.

Jane Fox : 7/11/2008 11:40:25 AM

Crude is selling off nicely here, currently at $143.60

Jeff Bailey : 7/11/2008 11:39:43 AM

Take it easy .... and don't go "all in" at once.

Jeff Bailey : 7/11/2008 11:39:26 AM

BAC $21.04 -5.90% ... after trade at $21.00 and new multi-year low.

Here too, be cognizant that there may likely be some "retail" stop ... as in ... (long, stop under recent lows).

Think BOTH sides.

Jeff Bailey : 7/11/2008 11:36:42 AM

FFIV's session high as been $32.98.

Keene Little : 7/11/2008 11:35:55 AM

It looks like the "gusto" option is going to play out unless the market is doing a throw-under finish of the little descending wedge in which case it must reverse now and start a rally. If SPX breaks below 1225 then a quick move down to 1213 can be expected.

Jeff Bailey : 7/11/2008 11:35:37 AM

MM subscribers might want to equate this with last night's forced stop of ES traders, where the very "retail" setting of a stop loss above the previous days high is a dirty trick.

Linda Piazza : 7/11/2008 11:33:57 AM

The OEX closed that last 30-minute period below potential support on 30-minute closes, now at 564.45, but only a little below it. It needs to steady near about 561.80, however, and bounce back quickly, or it will be creating a breakdown status and the potential to drop toward 559.

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

There will likely be some shorts with stops set at $33.00 in FFIV.

Holding a PUT option, and with some of the major market bullish % in "Bear" phase, I would not want to close out the PUT on a trade at $33.00.

Understand the possibility of the "bull trap" PnF pattern.

Bull Trap = Triple top buy signal in "bear" phase bullish % conditions.

Linda Piazza : 7/11/2008 11:32:24 AM

The BIX is coiling beneath its breakdown benchmark. While it hasn't been able to erase its breakdown benchmark, now at 149.24 on 15-minute closes, it has not followed other indices to new lows. It's at 147.13 as I type.

Jeff Bailey : 7/11/2008 11:31:17 AM

F5 Networks (FFIV) $32.75 +1.39% ... NOT seeing the "pulled lower"

Jeff Bailey : 7/11/2008 11:30:47 AM

Then again ...

Jeff Bailey : 7/11/2008 11:29:16 AM

BAC $21.28 -4.83% ... trades gap lower open. Still holding 7/7 low.

Linda Piazza : 7/11/2008 11:28:44 AM

The OEX is testing potential support on 15- and 30-minute closes, being slightly below the most significant levels of support for both charts. For the 30-minute chart, that's at about 564.45, with the OEX at 564.38 as I type.

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

Seeing some "pulled lower" action still.

Jeff Bailey : 7/11/2008 11:27:21 AM

HSBC Holdings (HBC) $72.92 -3.62% ... retraces 80.9% of its Feb-May rebound.

Keene Little : 7/11/2008 11:27:09 AM

If you look at a 10-min chart of SPX you can see what looks like a small descending wedge for price action since yesterday morning's high. This is why I said before it looks like we could be in an ending pattern to the downside here. Keep pulling your stop lower above the bounce highs in case this suddenly takes off to the upside. The flip side of this choppy decline from yesterday is that it's about to let go to the downside with gusto.

Linda Piazza : 7/11/2008 11:26:49 AM

In his Wrap this week, Robert Ogilvie mentioned an article about the VIX by McMillan. I had read the article, too. McMillan's thesis was that the VIX was in denial, a thesis that Keene on our site and others have echoed. I wasn't sure that the VIX had to spike back into the January and March levels. Earlier this week, the resistance on daily closes began softening a bit, though, something I think I mentioned yesterday. I still wasn't sure that the VIX had to spike into the 30's and whether it might not just test that daily resistance. It's doing so today, so we have to consider the possibility that by the end of the day, it could be back below that potential resistance on daily closes, now at 26.95, but if it keeps climbing any further, we'll certainly have our answer as to whether it had to spike into the 30's. It's at 28.53 as I type.

Jeff Bailey : 7/11/2008 11:25:52 AM

S&P 500 Heavyweights ... same sort order as of 07/08/08 close Link

With option premiums getting "jacked," my strategy as exhibited today is to take a profit in July options, roll to another "troubled stock" like BAC in the "weaker" index for August. Assess option price as to RISK/REWARD.

Linda Piazza : 7/11/2008 11:20:40 AM

TED spread now 1.14. For it to support the idea of steadying markets, we need to see it first sustaining values below 1.12, and then we need to eventually see it drop over the next week or so below 0.92 and stay there. Waaay below 0.92.

Linda Piazza : 7/11/2008 11:18:50 AM

In my 11:16:08 post, I was mistakenly looking at a 10-minute and not a 15-minute chart. The post has been corrected, but the information about that chart is still correct. It looks as if potential support could be firming, but we know that anything seen on such a short-term chart will not hold back a waterfall of selling. These comments are meant to update bears about places to look for potential support to hold and not to encourage bulls to pile into positions. On the 15-minute chart, support still slants lower and so is still somewhat weak, but is now at 563.64-564.16 on 15-minute closes. OEX at 565.42.

Jeff Bailey : 7/11/2008 11:15:36 AM

SPX 1,234.92 -1.47% ... sitting on MONTHLY S1.

Jane Fox : 7/11/2008 11:14:15 AM

Actually I was surprised by the volume level of the NDX futures contract (NQ). It is one I must admit I do not watch as much as the others and didn't even have it on my quotes window.

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

VIX.X 28.22 +10.27% ... above Quartlery R1.

Put buyers/call sellers outnumbering put sellers/call buyers by more meaningful degree than April-June period.

Nearing MONTHLY R2, so much greater amount than June.

Jane Fox : 7/11/2008 11:12:45 AM

Trade volume on the CL (Crude Oil) futures contract so far today is 151,900. Here are the volume levels for the other futures contracts I watch:

Dow 110,000
Russell 2000 120,000
NDX 187,000
S&P 1,225,000

Linda Piazza : 7/11/2008 11:16:08 AM

The OEX's potential support on 10-minute closes has now dropped to 563.38. The good news is that it's now converging with stronger potential support near 562, if there can be any good news in this continual lowering of potential support. It means, though, FWIW, that support appears to be firming a bit more than it has so far this morning.

Linda Piazza : 7/11/2008 11:11:05 AM

If the A/D line can't bounce soon and sustain values above about -1340, then it might drop through that 10-minute Keltner support it's been testing all morning and drop toward -2500 instead. A/D line now at -1725, still testing that potential 10-minute support now near -1800 or perhaps as low at -1945.

Jeff Bailey : 7/11/2008 11:08:28 AM

NASDAQ a/d 735:1902

Jeff Bailey : 7/11/2008 11:08:17 AM

NYSE a/d 651:2362

Jeff Bailey : 7/11/2008 11:07:42 AM

10:00 Internals at this Link

Jane Fox : 7/11/2008 11:07:03 AM

I read the VIX a little differently than Linda and for those of you who are new to the Monitor I will do a quick recap of how I use it. It is really extremely simple. I chart the VIX against the S&P futures (ES). As you have been seeing for the last few days when I have posted charts of these two, they usually are mirror images of each other, when one goes down the other goes up and vice versa. The way I use them is I look for divergences. If the VIX is pressing up against its daily highs, like it is doing now, but ES is not pressing its daily lows then one or the other needs to come into line and get in sync. It is usually ES that follows the VIX and it is here you can set up trades.

Currently the VIX is pressing daily highs but ES has bounced off its daily lows and you may be asking yourself, "Is this rally a change of trend or only a dead cat bounce." The VIX is telling me it is a dead cat bounce and this may be a good spot to get short. Link

Linda Piazza : 7/11/2008 11:03:38 AM

I see the OEX keep holding to support on 30-minute closes (now from 563.44-564.63) and even mostly to support on 15-minute ones. That 15-minute support, in particular, is sliding down so holding to it and sliding lower is not particularly consoling to bulls as yet. The A/D line is holding support on 10-minute closes (most applicable for it over the last few days). VIX is testing resistance on everything from the 30-minute to the daily chart, although in breakout mode on the 15-minute one.

So, the possibility of a steadying and bounce exists, but these are just slender threads of efforts that can be easily snapped. So, once again, I must warn bears to keep their profit-protecting plans updated, but I can't give bulls assurance that the indices will keep up these efforts at steadying and bounce. We've seen all kinds of efforts at reversals and one of those is going to catch one of these days, maybe even today, when news about financials has been terrible, but some are due to report next week. There's just no telling when a relief bounce will hit, as my example proves. I've been fearing a relief bounce on the behalf of our subscribers for three weeks now, and none has materialized yet.

Jeff Bailey : 7/11/2008 11:00:52 AM

CNBC reporting Pentagon denies reports the Israeli jets performing exercises, landing in Iraq for attack on Iran.

Linda Piazza : 7/11/2008 10:57:39 AM

TED spread 1.16211, not far off its 1.17233 high of the day. The TED spread has been chopping between that high and a 1.2124 low since about 6:00 am ET this morning.

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

13-week down 3.0 bp at 1.600%

Jeff Bailey : 7/11/2008 10:55:12 AM

Actually seeing some selling in the 5, 10, and 30-year maturities.

Linda Piazza : 7/11/2008 10:54:59 AM

TRIN is 1.02. It popped above the bullish/bearish benchmark now at 1.08 with the last downward push in equities, but it's right back to test it again. No prediction from this chart.

Linda Piazza : 7/11/2008 10:53:22 AM

The VIX is now testing potential resistance on 30-minute closes at about 28.15. It's in breakout territory on the 15-minute chart, and sustained 15-minute closes beneath 27.70 will be needed to erase that breakout status. VIX at 28.02 as I type.

Linda Piazza : 7/11/2008 10:51:45 AM

No lower low on the A/D line to match OEX and SPX lower lows . . . yet.

Jeff Bailey : 7/11/2008 10:51:25 AM

Gold as depcited by GLD $95.32 +1.91% ... ~$953.20.

Gap higher open at $95.02, ~950.20.

Linda Piazza : 7/11/2008 10:48:48 AM

Now we turn to the OEX's potential support on 30-minute closes. That's now at about 564.55. The OEX is 564.91 as I type.

Jeff Bailey : 7/11/2008 10:48:39 AM

FRE $4.78 -40.25% ... see today's news.

Jeff Bailey : 7/11/2008 10:48:23 AM

FNM $8.14 -38.33% ... see today's news.

Jeff Bailey : 7/11/2008 10:47:40 AM

LEH $13.78 -20.34% ... breaks to session low.

Linda Piazza : 7/11/2008 10:45:23 AM

Testing, testing, testing. The OEX is still testing potential support on 15-minute close now from about 564.36-565. The OEX is 564.80 as I type.

Jeff Bailey : 7/11/2008 10:44:08 AM

Disclosure: I currently hold bearish position in BAC.

Linda Piazza : 7/11/2008 10:43:41 AM

The A/D line is still holding to potential support on 10-minute closes, although it's also still testing that support. As noted earlier, the A/D line often retests support. There are times when such retests, when accompanied by bullish value/RSI divergences, signal that a bounce attempt comes next. Since the value is higher than the previous test (so far), the higher RSI value doesn't signal any divergence yet. Here's the chart, so you can visualize what I'm watching: Link

Jeff Bailey : 7/11/2008 10:43:19 AM

VIX.X 28.01 +9.45% ...

Jeff Bailey : 7/11/2008 10:43:00 AM

Swing trade put alert! ... for one (1) of the Bank of America BAC Aug. $20 Puts (BAC-TD) at the offer of $1.64.

BAC $21.28 -4.83% ...

Linda Piazza : 7/11/2008 10:39:18 AM

The VIX has now climbed up to its potential resistance on 30-minute closes now at just over 28, with the VIX's day's high at 27.95. There is tentative bearish value/RSI divergence, but we know not to count on the action these divergences show as a possibility but rather to use the divergences only as warnings to spiff up profit-protecting plans. The VIX is 27.86 as I type.

You should recognize, too, that the VIX doesn't always serve well as a market-timing tool, although as Jane often points out, sometimes it serves spectacularly.

Keene Little : 7/11/2008 10:38:06 AM

The news that's coming out today about the possible takeover of Fannie Mae and/or Freddie Mac by the government (the country appreciates the taxpayer's willingness to double the national debt and take these companies onto the national books) could result in a weekend announcement of another rescue.

That would likely cause a huge relief rally on Monday and gold could take quite a spill. That's all speculation of course but if you're long gold I'd think about buying some put insurance to hold over the weekend. If there's no announcement and you still like your long position simply sell the puts.

Linda Piazza : 7/11/2008 10:35:44 AM

The OEX again maintained support on the last 15-minute close at the potential support now from 564.45-565.12. It's still testing that support, with the OEX at 565.86 and with this current 15-minute period still with many minutes to go. I don't have to tell you that things are still very iffy.

Keene Little : 7/11/2008 10:39:05 AM

Set stop on gold short at new daily high. Gold (YG) did in fact jump up a little higher this morning and tagged its weekly R2 at 967.90 (this morning's high was 968.80). If you bought some puts on GLD this morning, keep 97 as your stop for now (high so far is 95.48). I'm still watching and waiting to see if I want to try a short on YG. Short term bearish divergences are showing up but not on the 30 or 60-min charts so it's a bit risky yet. But if short YG, use a new daily high as your stop.

If the stock market has a bad day today there could be added buying pressure in gold as a place of security. The US dollar has also broken its uptrend line from March again and that has me a bit concerned about shorting gold. If the dollar heads for new lows then we should see gold head for new highs.

Linda Piazza : 7/11/2008 10:31:05 AM

I mentioned earlier today that the A/D line often comes back and retests, and it's doing so as I type. The low of the day was -1912, and the A/D line is currently -1749. There's potential support on 10-minute closes at about -1820. If that fails for more than a few minutes, the 15-minute chart projects a potential downside target near -2500.

Linda Piazza : 7/11/2008 10:29:18 AM

Potential support for the OEX on 15-minute closes is now at 565-565.65; on 30-minute closes, at 564.70-564.83. OEX at 566.41 as I type.

Keene Little : 7/11/2008 10:23:33 AM

They're trying to bounce the market off the initial low but at this point it doesn't look like it will any more success than yesterday afternoon's bounce. It's not much but if entered a short play yesterday afternoon I'd lower the stop to just above yesterday's close. If this rolls back over and makes a new daily low, lower your stop to just above this morning's bounce.

It's possible we're seeing a choppy decline from yesterday's high as an ending pattern to the downside and therefore I want to pull the stop down closer and take as much from the short play as I can and yet give it room to breathe.

Linda Piazza : 7/11/2008 10:16:58 AM

As of 10:00 am ET, the TED spread was 1.13.

Linda Piazza : 7/11/2008 10:16:22 AM

There's really not much to say about the OEX until and unless it sustains 15-minute closes above a Keltner line now at 575.39 or until and unless it sustains (not just pops down to and immediately back up from) values below about 565 or maybe 566. Until then, it's just chopping around in a chop zone that it's been caring out the last couple of days.

Linda Piazza : 7/11/2008 10:14:21 AM

A/D line is -1179. It might be time for some sideways consolidation or a pullback now, but those hoping for a market steadying would like to see it hold above about -1200 to -1250 now.

Jeff Bailey : 7/11/2008 10:13:02 AM

RVX.X 31.45 +4.69%

Jeff Bailey : 7/11/2008 10:12:31 AM

IWM $66.77 -0.19% ...

Jeff Bailey : 7/11/2008 10:12:15 AM

RUT.X 668.79 -0.24% ...

Linda Piazza : 7/11/2008 10:12:08 AM

BIX has dropped back to 150.57, still testing that potential Keltner resistance on 15-minute closes.

Jeff Bailey : 7/11/2008 10:11:56 AM

Swing trade call establish stop alert! ... for the ProShares Ultra Russ 2000 UWM Aug $45 Call (UWM-HS) at $43.00 in the underlying.

UWM $44.24 -0.69% ...

Linda Piazza : 7/11/2008 10:11:43 AM

BIX is 151.32. It hasn't held a 15-minute close above that breakdown benchmark, but it's above it as I type.

Yesterday, I mentioned that Keltner channels were originally created to identify breakout plays, as were Donchian channels, by the way. Over time, those can be financially lucrative trades, but I mentioned yesterday that the problem was that traders who employed such tactics often were subjected to whipsaws and sometimes to long periods of drawdowns. This is an example. A trader who trades breakouts has to have the requisite account size and requisite personality to endure such whipsaws and long periods of drawdowns. For those of you who might be struggling with the emotional aftermath of losses this month, you know already how difficult it is to endure losses and maintain confidence. You start questioning the methodology and your abilities both. Jane and I spent some time yesterday talking about emotions in trading. It's a more important aspect of trading than new traders believe it to be.

Jeff Bailey : 7/11/2008 10:09:06 AM

USO $118.41 +3.55% ...

Jeff Bailey : 7/11/2008 10:08:53 AM

VIX.X 27.10 +5.90% ...

Jeff Bailey : 7/11/2008 10:08:33 AM

Swing trade call exit alert! ... for the two (2) AMR Corp. AMR July $5 Calls (AMR-GA) at the bid of $0.30.

AMR $4.68 -4.29% ...

Jeff Bailey : 7/11/2008 10:04:50 AM

VIX.X 27.27 +6.56% ...

Jeff Bailey : 7/11/2008 10:04:08 AM

Swing trade put exit alert! ... for the one (1) Lehman Bros. LEH July $15 Put (LYH-SC) at the bid of $2.62.

LEH $14.69 -15.00% ...

Linda Piazza : 7/11/2008 10:03:06 AM

BIX is 150.08, having risen to retest that potential Keltner resistance on 15-minute closes near 150.50. OEX, SPX and Dow bulls want to see it just bounce right on through it, while bears want it to be pushed back strongly.

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

Don't get complacent yet. The A/D line's support on 10-minute closes did hold, and the A/D line just completed a second ten-minute period with that support, now at about -1790, holding. The A/D line is -1645 as I type, having bounced a little. The A/D line often comes back and retests, though, so that possibility must be kept in mind.

The VIX is 27.18, however, still testing resistance on the daily chart and approaching potential resistance on the 30-minute chart. It needs to sustain levels below about 26.81 to even begin to show that the resistance is holding.

TRIN is 0.92, having fallen well off its 1.41 early high, but it keeps trying to bounce back up and retest potential resistance on 15-minute closes at 1.08 and it hasn't sustained values below 0.82, yesterday's low, so it might be finding support for another try.

Linda Piazza : 7/11/2008 9:51:19 AM

The BIX created a breakdown mode on the first 15-minute close and would need to sustain 15-minute closes above about 150.52 to erase that. I would consider that 150.52 to be potentially strong resitance on 15-minute closes and would watch carefully to see if the BIX could either punch through it or was subject to another rollover from it to give you some idea how this indicator index is doing. It's at 147.45 as I type.

Linda Piazza : 7/11/2008 9:48:15 AM

As this first 15-minute period draws to a close, it appears that the OEX may hold onto potential support on 15-minute closes from 565.09-566.70. The battle may or may not be over, so don't discount any possibility at this point. I would say that the OEX has to produce sustained 15-minute closes above 575.45 before this particular support test, ongoing since yesterday morning, is even temporarily successfully completed.

Linda Piazza : 7/11/2008 9:45:47 AM

Obviously, since Jane and I uploaded posts about the A/D line within seconds of each other, we were both looking at it at the same time. We use different tools. I learn from Jane's posts and I think both perspectives are useful for subscribers, so it shouldn't seem as if we're disputing each other.

Linda Piazza : 7/11/2008 9:44:08 AM

Keltner outlook on the A/D line: The A/D line has tended to adhere better to S/R on the 10-minute chart this week, so I'm switching to that. The A/D line is currently testing potentially strong support on 10-minute close near about -1800 with the A/D line at -1814 as I type. The A/D line overruns support and resistance a bit, especially since the numbers are so big and the changes so quick. So give, it a little leeway when deciding whether it's violating that support or not. It did not on the first 10-minute close, but is of course below that support currently. If it continues to drop, rolling up to the 15-minute chart gives us a potential downside target of about -2500, but on both charts, RSI has reached a level that sometimes precedes attempts to steady, if not actual bounces.

Jane Fox : 7/11/2008 9:43:56 AM

Needless to say the AD line opens very bearish at -1910

Keene Little : 7/11/2008 9:42:07 AM

Understandably the banks (BIX) are getting slammed this morning--currently down -7.5%. Home builders are down also, -7.2%.

Linda Piazza : 7/11/2008 9:38:41 AM

The VIX has risen to test Monday's 26.86 high, stretching a little above it, to a high of 27.16, but currently at 27.05. It's testing postential resistance on 30-minute closes at 26.80 and potential resistance on daily closes about there, too. It verges, then, on either turning back from resistance or breaking out through it.

Linda Piazza : 7/11/2008 9:36:33 AM

Potential support on the OEX's 30-minute chart hasn't yet sunk as low as I thought it would with the early action. That's at about 564.90 on 30-minute closes. The OEX is 565.25 as I type.

Linda Piazza : 7/11/2008 9:34:08 AM

Here we go. The OEX is heading down toward first potential support on 15-minute closes, now at 565.60-566.90. This of course, will not hold the flood back if we're going to have a cascading lower day. OEX at 568.02 as I type.

Jane Fox : 7/11/2008 9:32:42 AM

Crude just broke $147.00 - high of $147.20, $147.25 and moving on up.

Linda Piazza : 7/11/2008 9:25:37 AM

TED spread down to 1.12.

Jane Fox : 7/11/2008 9:20:55 AM

WASHINGTON (MarketWatch) -- Despite a record increase in the price of crude oil, U.S. exports increased at a much faster rate than imports did in May, pushing the trade deficit down unexpectedly to a seasonally adjusted $59.8 billion, the Commerce Department reported Friday.

Exports increased 0.9% to a record $157.5 billion in May, led by record exports to Canada, the European Union and South America. Exports to Japan were the second highest on record and the most in 12 years.

Imports rose 0.3% to a record $217.3 billion.

The value of imported petroleum rose 6.5% to $31.2 billion, as the average price of a barrel of crude oil increased by a record $9.47 to a record $106.28. The volume of crude oil imported fell 6.1% to 9.5 million barrels a day, the second lowest total in a year.

The trade deficit with the oil-exporting countries was a record $23 billion in May. The decline in the trade gap in May was unexpected, as economists surveyed by MarketWatch were forecasting an increase to $62.5 billion from a revised $60.5 billion in April

Linda Piazza : 7/11/2008 9:14:24 AM

As I type, worries about Fannie Mae and Freddie Mac's viability and rising crude costs have driven the ES contract to 1238.70, just above this week's lows of 1236.50 (7/8) and 1237.00 (7/10), as well as this morning's earlier low of 1237. With this news, I was surprised to see the TED spread at 1.14, equal to the last level I noted yesterday of 1.14 and down from this morning's 1.17 high. The rise in the TED spread was probably anticipating or corroborating rising default concerns with the financials and financial services companies, masked a bit by the difficulty interpreting it ahead of earnings by financials. We'd like to see those default fears subside, although I'm not certain of the mechanism that will prompt that. Some commentators are beginning to warn bears to be watchful for potential government action today or over the weekend. I'm personally not so sure how reassured investors would be to see our government take on more risk, however.

Whatever happens, we are clearly currently seeing a retest of the week's lows. Will the third time be a charm? What is the "charm" would of course depend on whether one was bearish and hoping for further downturns or bullish and hoping for a bounce.

The OEX keeps printing potential reversal signals, in single-candle and multiple-candle combinations, on daily and weekly charts. We haven't seen the reversal, of course. Those candles keep prompting me to warn bears to keep updating their profit-protecting plans, but those warnings carried on for three weeks begin to seem silly. I don't care. I'm going to keep issuing them. It's just wise to keep updating your profit-protecting plans, and especially wise to be wary of any kind of "sell the rumor, buy the fact, especially if the government is intervening or if global banks are finally driven to work in concert kind of reaction." I don't know that such action would ultimately be successful in preventing further declines, and I doubt they would, but they could perhaps prompt a bounce now. Many financials report next week, and those with massive bearish profits in financials might fear that any good news next week or at least not-as-bad news would erase those profits.

The possibility is that today will be the day when the VIX will spike--although I'm not in the camp that says it has to spike--and prices will drop through support tentatively established. If so, where might prices go? Short-term charts show potential support for the OEX on 15-minute and 30-minute closes down to 565.56, but that will be driven lower by early declines, so about 564-564.50, I would think. If that fails, the short-term charts show that the OEX could head down into the 557.50-560 zone. Of course, they could head anywhere, and the daily Keltner chart shows a possibility that the OEX could drop eventually to 546. If we do see a sharp downturn this morning through that 564-564.50 support, traders should remain aware that both in January and in March, each day that produced the new relative lows was a day that closed well off those lows. Bears should be vigilant at all times, and I would suggest that if multiple positions are held, bears consider stepping out of partial positions at key points, locking in some profit and letting the other positions run with lowered stops.

The possibility that this week's lows could hold exists, too, although the tenor seems so dire at the moment. Don't discount any possibility in an environment like this. I'm not suggesting that bulls step in front of a train roaring down bearish tracks with automatic entries near the week's lows. I am suggesting that bears keep in mind any possibility as they protect their gains.

Jane Fox : 7/11/2008 9:12:54 AM

Here are your overnight charts. Things were looking pretty good until the Freddie Mac and Fannie Mae news was released. Then of course you have the news out of Israel and the result was no hope for equities. Link

Jane Fox : 7/11/2008 9:02:27 AM

Here's your chart of Gold.. Link

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

Egads I don't think I need to make too much of a comment on this chart. Link

Jane Fox : 7/11/2008 8:57:22 AM

Exciting night but my charts are still loading so I don't know where the overnight trading has been or where the markets currently are. I am long Oil, Gold and a few currencies paires.

Jane Fox : 7/11/2008 8:56:05 AM

With a report that Israeli planes made test flights out of Iraq for a possible attack on Iran's nuclear facilities, crude futures surged nearly $5 a barrel, trading at over $146.62 a barrel.

The oil surge sent the dollar sharply lower against the Japanese yen.

Keene Little : 7/11/2008 8:53:44 AM

Weekly R2 for gold (YG) is at 967.90 so it's possible we'll see that get tagged this morning. Since the spike up to the high at the 8:20 AM open it appears to be doing a small consolidation so there could be another minor push higher. There is of course the possibility that gold will just take off to the moon but after a 5-wave move up from June 12th it should be ready for at least a pullback anyway.

Jane Fox : 7/11/2008 8:53:15 AM

BOSTON (MarketWatch) -- Shares of mortgage giants Fannie Mae and Freddie Mac were down sharply once again in premarket trading Friday after a report the government is considering a possible takeover of the beleaguered companies. Freddie shares lost more than 32% at last check in preopen dealings, while Fannie slipped 28%.

Senior Bush administration officials are weighing a plan that would see the government take over one or both of the companies if a recent deluge of problems worsen, the New York Times reported Friday.

Citing unnamed people who have been briefed on the plan, the report said the plan would place the companies in a conservatorship, under which the shares of Fannie and Freddie would be worth little or nothing. Any losses on mortgages owned or guaranteed by the two government-sponsored enterprises would be paid by taxpayers.

A 1992 law would allow Fannie or Freddie be put into a conservatorship if their top regulator finds either one is "critically undercapitalized," the Times said.

The companies have lost $11 billion in recent months. And shares of both mortgage buyers plunged for the third time in four days Thursday as fears about their viability rose.

Jane Fox : 7/11/2008 8:51:07 AM

Dateline WSJ - Shares in of Fannie Mae and Freddie Mac kept plunging Friday morning despite federal officials' attempts to reassure investors about the financial health of the two mortgage giants.

In premarket trading, Freddie shares were down 25% at $6 while Fannie slid 23% to $10.11.

Pressure is mounting on Fannie and Freddie to raise fresh capital to offset the tumbling values of home loans they hold. Shares in the two stockholder-owned, government-sponsored companies declined sharply yet again Thursday. Freddie shares dropped 22% to $8 in 4 p.m. composite trading on the New York Stock Exchange. Fannie fell 14% to $13.20.

Keene Little : 7/11/2008 8:46:04 AM

Gold short play: Gold futures just tagged 965, pennies shy of the 62% retracement of the March-April decline. 964.30 is the Fib target for the end of a 5-wave move up from June's low and therefore gold should be a good short here. I admit it's a little nerve wracking to try to short it here after a strong rally in the overnight session (and since Tuesday's low).

Since shorting gold with futures is a risky play I'd recommend some put options on GLD which should be trading near its target of 94.71 after the open (and put option premiums should be deflated). If I see a reversal with an impulsive decline I'll then recommend a short with futures (YG). I want to give it some time to work and go OTM so the Sep 88 puts (GLDUJ) should work well (since the downside target is just below 80). The stop on the option play will be at 97 so control your risk accordingly.

Keene Little : 7/11/2008 8:01:38 AM

Last night's price action in equity futures shows why it's difficult (and risky) to hold a futures position overnight. I had recommended a short play on SPX towards the end of the day with a stop against yesterday's high. As Jeff kindly reminded us last night of my recommendation, if you had played that short with futures (ES) you would have been stopped out with last night's spike up to 1261.75 (just past midnight) as it was 3 points above yesterday's high.

Since that spike up futures have dropped significantly lower (ES currently trading 1240 as I type) and unless something happens between now and the open it looks like we've got quite a negative open facing us. Had you played my recommendation with options (one of the better ways to hold plays overnight) you'll be in great shape this morning. Continue to use yesterday's high (cash) as your stop.

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