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Jeff Bailey : 8/21/2008 1:25:08 AM

Auction-rate probe focuses on 3 banks ... AP Story Link

BAC $29.29

GS $158.25

DB $84.26

Jeff Bailey : 8/20/2008 10:54:39 PM

Invesco Ltd. (IVZ) $25.25 +1.24% ... will note large block of 3,906,566 crossed in this evening's extended (17:33:48 PM EDT) at $24.94. Ended #8 most active. Link

Keene Little : 8/20/2008 10:34:35 PM

Thursday's pivot table: Link

The DOW and SPX are just different enough in their price patterns for the decline from last Friday to make it difficult to figure out whether there's a higher probability for a turn back down on Thursday or more to the bounce from Wednesday before heading lower again.

As long as the DOW's bounce stays below 11454, the low on August 13th, and drops to a new low its decline from August 11th could be viewed as a 5-wave move (dark red wave count) and that would set up a larger bounce (a 50% retracement would target the 11600 area): Link

The pink wave count calls for a little higher bounce on Thursday morning to finish a smaller degree 2nd wave correction, perhaps up to about 11500, before heading much lower in a strong selloff into next week. The SPX 60-min chart has already overlapped the low on August 13th (1274) and therefore is more closely aligned with the pink wave count on the DOW chart. For SPX I'm showing a little higher, either to about 1280 (dark red) or 1285 (pink) before turning back down into some hard selling: Link

The more bullish possibility is for another rally leg up to match the one up from July 15th to August 11th, which would take us into September (green on the SPX chart). A break above SPX 1292 (DOW 11650) would be a heads up for that possibility (and a stop for those of us who are short and looking for the big decline).

OI Technical Staff : 8/20/2008 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The Market Monitor has been archived.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.

Tab Gilles : 8/20/2008 6:30:12 PM

For those looking at Nat Gas but with a yield....these 2 stocks look attractive.

Pengrowth Energy Trust (PGH) $17.48 +$0.44 (2.58%); yield 15.14% Link

Penn West Energy Trust (PWE) $28.82 +$1.24 (4.5%); yield 13.87% Link

Tab Gilles : 8/20/2008 5:42:17 PM

Chesapeake Energy (CHK) $48.62 +$1.70 (3.62%)

3 minute chart: Link Daily: Link PnF: Link

Sugggested January 2009 call options mentioned yesterday:

$50 CHK-AJ Bid $5.70/ Ask $5.90 +$0.60

$55 CHK-AK Bid $3.80/ Ask $4.00 +$0.50

$60 CHK-AL Bid $2.55/ Ask $2.65 +$0.45

$65 CHK-AM Bid $1.70/ Ask $1.80 +$0.15

$NATGAS $8.14 +$0.06 Link Link

Linda Piazza : 8/20/2008 4:00:20 PM

That's obviously no longer a doji on the 30-sma for the OEX as it didn't close the day near the level it was when I last posted. This is of course a stronger candle, but the OEX will now face potential resistance near 589.20 and extending up to 594 in a broad band of resistance levels first thing tomorrow. It could be just part of a bigger consolidation pattern setting up.

Keene Little : 8/20/2008 3:51:31 PM

We got a 3-wave pullback from today's high and now so far a 3-wave bounce off the afternoon low. It's all corrective price action and while the bounce can certainly make it higher it's an indication that lower lows are coming. A rally tomorrow up to the SPX 1280-1285 area still looks like it would be a very good setup for a short play. We'll just have to see if it happens tomorrow morning.

Linda Piazza : 8/20/2008 3:36:05 PM

It's time to begin thinking about end-of-day decisions, if you haven't already. If the OEX ends the day anywhere within a few points of its current 584.82, it will have created a doji with a real body sitting right on top of its daily 30-sma and with candle shadows above and below it. That's a sign of indecision, with indecision indicated as likely at yesterday's close and by chart setups all day long. You've heard various writers voice it today with those writers using different methodologies.

So, what's next? The doji says that's not yet decided. I say the same thing I said yesterday afternoon: a drop toward 575-579 or a climb toward 592-594 both look possible. The 15-minute chart is beginning to suggest that resistance will be strong now lower than the 592-594 zone, however, at about 588.83-589.32.

Whatever your views about the market, please factor in the possibility that the OEX is consolidating prior to another decline. That's not a given as the paragraph above should suggest, but traders tend to be hurt more harshly when markets give way. Don't take on too much risk.

Linda Piazza : 8/20/2008 3:28:22 PM

What are the scheduled events on foreign bourses tonight? Japan's Trade Balance will be revealed at 7:50 PM ET. In the Eurozone, a number of countries and the Eurozone itself will be releasing PPI numbers from 3:00-4:00 am ET. Retail sales will be released in the U.K. at 4:30 am ET.

Linda Piazza : 8/20/2008 3:10:42 PM

Now it's time to watch for the potential for resistance to kick in. The OEX is currently testing potential resistance on 15-minute closes near 586.75, but there's a possibility of a retest of the day's high and potential resistance on 15-minute closes at 588.93-589.47. Just remember the action so far today has been difficult to predict from the first moment of trading. Actually, I noted yesterday near the close that a drop toward 575-579 looked almost as likely as a climb toward 590-593. Then this morning, charts set up for hours worth of chop, which I mentioned this morning to readers. The trading environment is not one conducive to making predictions.

Keene Little : 8/20/2008 2:55:03 PM

The price pattern of this afternoon's decline is not clear enough to suggest it's heading lower or higher. We're getting a lot of choppy price action up and down and that leaves several possibilities open as to where it's headed next. I don't see any good trade setups here.

Linda Piazza : 8/20/2008 2:37:22 PM

As it did about an hour and a half ago, the OEX closed that last 30-minute period just below the potential support on 30-minute closes now at 583.44. It's below it now, too, at 582.99 as I type. However, the last 30-minute candle had a spring up from its low, and there's potential light support at 582.15. The 15-minute chart suggest potentially strong support on 15-minute close at 581.64 and then at 580.27. Its setup is such that the higher of the two could hold. However, if you trust anything in this market, you haven't been paying attention lately.

To sum up, we have seen a choppy decline, but that's not the same as just chop. The OEX is weaker than bulls hoping for a steadying would have wanted to see. It's not, however, yet giving bears a whole lot of cheer because of the choppy decline, either. I would definitely watch for the possibility now that support could kick in around 581.64. If that's lost on 15-minute closes, then I'd again be looking at vulnerability to 579, but that's not a done deal yet.

Jeff Bailey : 8/20/2008 2:33:47 PM

Swing trade long stop alert! ... VLO $34.76

Jeff Bailey : 8/20/2008 2:33:08 PM

Swing trade long raise stop alert! ... on the entire Valero Energy (VLO) position to $34.76.

VLO $34.80 +4.12% ...

Linda Piazza : 8/20/2008 2:08:44 PM

Potential support for the OEX on 30-minute closes now at 583.73. OEX at 584.09 as I type. Still just chop without a strong signal as to the next direction. The OEX needs to maintain 15- and 30-minute closes above their respective 9-ema's (currently 584.70 on the 15-minute chart and 584.88 on the 30-minute chart) fairly soon, however, or it risks undoing the choppy prediction and looking a bit weaker than just chop. So far, though, it's just chop.

Keene Little : 8/20/2008 2:03:48 PM

The bounce off the mid-day pullback is looking like a correction and is pointing lower. At this point it's looking like we'll be making lower daily lows this afternoon. But a rally to new daily highs could mean we'll see SPX 1285 by tomorrow to set up a better short play.

Linda Piazza : 8/20/2008 1:50:30 PM

The OEX hasn't yet been able to maintain even 15-minute closes above the 15- and 30-minute versions of its 9-ema. The 15-minute version is at about 584.80, and the OEX is so far just printing 15-minute candles along it. It's not, however, so far falling back this time. There's potential support on 30-minute closes now near 584 if it should fall back. This is so far just chop, but if the OEX could scramble back above the 15- and 30-minute 9-ema's, then back above about 586.20, it has a chance of making another attempt on the early morning high, at least. If you've attempted a bullish trade, I would certainly be updating my profit-protecting plans to decide ahead of time what I was going to do if the previous high of the day was reached.

Linda Piazza : 8/20/2008 1:34:35 PM

It looks as if the OEX has done a better job sustaining a 30-minute close above the potential support now at 584.11 than it's done the previous two 30-minute periods. The OEX still has to get through the 15-minute and 30-minute versions of the 9-ema, both near 584.80-585, on 15-minute and 30-minute closes, before it's cleared next resistance. However, if it does that, it has a chance of moving up toward 588.85-590, although charts suggest that this move would still be part of a choppy move before we know next real direction.

Jeff Bailey : 8/20/2008 1:25:15 PM

Shanghai catches a bigger bid yesterday. +7.63% to finish 2,523. +3.15% since last Wednesday. -7.8% Q3 to date. -52.04% YTD.

Jeff Bailey : 8/20/2008 1:22:05 PM

TELEphone 52-week lows notable from yesterday. Here too largely foreign-based names.

CHA, CNTF, CTC, GILT, INFO, LTON, PT, SKM, SRTI, TBH, TI, TKAGY, TSU, VOD

Jeff Bailey : 8/20/2008 1:12:52 PM

Freddie Mac (FRE) $3.35 -19.66% ... new 52-weeker today. Off lows of $2.95. #6 most active.

Jeff Bailey : 8/20/2008 1:11:49 PM

Fannie Mae (FNM) $5.05 -15.97% ... new 52-weeker again today. Off lows of $4.74. #1 most active.

Jeff Bailey : 8/20/2008 1:08:01 PM

DJUSHB 274.29 +0.29% Link ...

Jeff Bailey : 8/20/2008 1:04:41 PM

MBA's Weekly Application Survey at this Link

1-year ARM at lowest since week ended 06/06/08 (6.87%). Maybe some "relief" for those with older ARMs about to reset.

Little change anywhere else I can see.

My 12-week SMA Purchases falls to 335.1 from last week's 341.4.

Linda Piazza : 8/20/2008 1:00:04 PM

When reading Jane's 12:53:36 post and my 11:14 and subsequent posts about chop, keep in mind that although we often look at the same charts, we look at them using different tools and indicators. We're both seeing the possibility for chop, which tells me that there are lots of signs that bulls and bears are still battling it out. Actually, this doesn't feel like a battle: it feels like punch-drunk bulls and bears stumbling around while we wait to see which group recovers its sense first.

Jane Fox : 8/20/2008 12:57:39 PM

MACD is telling me though the bulls are not in control of this market. Notice how the MACD is making lower lows but price is not. This means the bears are stronger than the bulls but I would like to have the internals agreeing before I say there is clear direction. Link

Linda Piazza : 8/20/2008 12:56:48 PM

While traders should still remain aware of the possibility for chop, which would mean that any move that appears to get started doesn't necessarily have follow through, the OEX now has the potential to drop to 580.57-581.72 before it finds next support on 15-minute closes. The 30-minute chart has a downside target of 578.97, where next support might be on 30-minute closes, but with light potential support at 581. I'm just not particularly trusting anything I see on the charts today so far, and suggest that you maintain enough skepticism to keep you out of too much risk and to keep you actively managing it if you do elect or already have elected to enter trades.

Jane Fox : 8/20/2008 12:53:36 PM

The internals I watch are not talking to me today so I would not be surprised to see a very choppy hard to trade kind of day. Link

Jeff Bailey : 8/20/2008 12:43:49 PM

Unionbancal (UB) $73.36 +0.01% ... Only "bank" to see a 52-week high yesterday. Mitsubishi UFJ trying to buy.

Linda Piazza : 8/20/2008 12:39:39 PM

The OEX ends the 30-minute period right on the potential support on 30-minute closes, shoved down now to 584.54. Bulls are attempting to bounce the OEX from that support. If they're successful and can push the OEX above 586.50 and maintain values above that, then the 590 test might be more likely. For now, it still looks possible that the OEX could chop around mostly between a new value of 584.50 and 590, although a breakdown of that scenario will occur if the OEX can't manage to hold onto levels above about 583.75. Potential support is now strengthening on the 15-minute chart from 580.80-581.80, although the 30-minute one still gives that same old potential target of 579 if the support currently being tested is lost on 30-minute closes.

As has always been true, then, these charts aren't giving much of a prediction. The likely choppy period has mostly turned into a descent from the high although the possibility of more chop still exists. A push up toward 588-590 still exists, but so does a fall toward 579-582.

Jeff Bailey : 8/20/2008 12:38:43 PM

BANKS that traded 52-week lows ... ADRs: ANZBY (Australia/New Zealand), BBV (Spain), BCA (Chile), BKEAF (E. Asia), ISNPY (Italy), MTU (Japan/Intl.), NABZY (Asia), SCBFF , SMFJY, UNCFF

IBNK (Indiana, Kentucky, Illinois, Ohio), ITYC (Pink sheet), LNBB (Ohio), SSBX (Nevada, Arizona), SUPR (Alabama, Florida), TBHS (Nevada), WAUW/WSBF (Wisconsin), WBNK (N. Carolina)

Linda Piazza : 8/20/2008 12:27:55 PM

Too much lower and the OEX undoes the whole "chop around for a couple of hours" scenario. It will have effectively shortened its choppy period to about an hour rather than a few hours. However, even as I type, the OEX is attempting a bounce back above potential Keltner support on 30-minute closes and may end up above that support again by this period's close, so don't rule out that choppy period just yet. So far, all the OEX has done is punched down a little lower than expected intra-30-minute-period. OEX at 584.81 as I type.

Keene Little : 8/20/2008 12:24:36 PM

If this morning's rally was the completion of a 3-wave bounce off yesterday morning's low we should see another low coming. This SPX 60-min chart is updated with the expectation that a new low wil be followed by another larger bounce into the end of the week or early next week, perhaps back up to the 1280 area if support is found around 1260. The pink wave count calls for another leg up sooner but is essentially the same wave count that calls for much lower lows after the bigger bounce. Link

Jeff Bailey : 8/20/2008 12:17:52 PM

Yesterday's 52-week lows at the big board largely closed end funds (mutual-fund like securities that trade as stocks on the NYSE).

AGC, APB, APF, AVK, BBF, BHL, CAF, CEE, CHN, DHG, EBI, EEA, EMF, EVT, FDI, FEZ, FHY, GCH, GRR, HCF, HSM, IQT, IRR, JEQ, JFP, KF, MAY, MEN, MGU, MSF, NPG, NQP, PIM, RAF, RAP, RMH, RNE, SGF, SNF, TWN.

Several Asia-like names as well as emerging markets.

Linda Piazza : 8/20/2008 12:14:48 PM

Potential support for the OEX on 30-minute closes has sunk to 584.70. If there are sustained 30-minute closes beneath that, then you have to start factoring in that possibility of a retreat to 579 again. However, my thought that the OEX could chop around mostly between 585-590 was based on that potential support on 30-minute closes, so the "mostly" now has to include testing that support. OEX at 584.73 as I type, testing.

Linda Piazza : 8/20/2008 12:03:33 PM

I'm here and watching, but I don't see any change in my outlook since my 11:14:50 post. I still see the potential but not the promise, of course, in this environment, of a few hours of OEX chop mostly between 585 and 590.

Keene Little : 8/20/2008 11:37:44 AM

Another push higher from here would give us a 5-wave advance off this morning's low. That would be followed by a deeper pullback to correct this morning's rally. It's possible this morning's rally will finish an upward correction that started from yesterday morning's low and that would mean a new low will follow this rally so day-trading this until the bigger picture clears up some is the recommendation.

Keene Little : 8/20/2008 11:31:53 AM

The RUT could find resistance at or below 740 where it would retest its broken uptrend line from July 15th. 60-min chart: Link

Tab Gilles : 8/20/2008 11:24:21 AM

Well...the EIA report showing a huge build in crude took the wind out of the sails for energy stocks....at least for now.

I still see crude gravitating towards $110 and even possibly $100. This build in crude now more than ever has me believing that OPEC will cut production. Goldman Sachs reiterating its $149 price target for crude by year-end supports my longerterm view to be long energy.

CHK $46.95 up 3 cents

Linda Piazza : 8/20/2008 11:14:50 AM

The bounce has now lessened OEX vulnerability to 579, but sustained 30-minute closes beneath about 585.24 will reinstate that vulnerability. For now, I wouldn't be surprised to see some choppy trading begin, perhaps after a test of potential resistance near 589.72, perhaps between about 585-590. I wouldn't be surprised to see that occupy a few hours of time. The caveat to that, of course, is the crazy way this market has been acting lately. It's possible that, now that a bounce has begun, OEX will eschew the whole consolidation thing and just send the OEX higher. If so, I'd be careful about rollover potential near 590.55-592.86. If a support test occurs and the support fails, then that vulnerability to 579 is reinstated.

Jane Fox : 8/20/2008 10:57:55 AM

SAN FRANCISCO (MarketWatch) -- Crude supplies rose by 9.4 million barrels to 305.9 million for the week ended August 15, according to the Energy Department Wednesday. Motor gasoline supplies fell by 6.2 million barrels to 196.6 million barrels. Distillate stocks were up 500,000 barrels at 132.1 million barrels. Refinery utilization was at 85.7% compared with 85.9% of capacity a week earlier. Following the news, September crude was up $1.35 at $115.88 a barrel on Globex.

Jane Fox : 8/20/2008 10:56:44 AM

Crude able to trade over $117.00 but the sellers were there waiting and it is not back to almost $115.00.

Linda Piazza : 8/20/2008 10:55:08 AM

The VIX confirmed a head-and-shoulders formation on its 15-minute chart today. It looks as if the downside target might be in the 20.56 range, which would bring it back to test the neckline of an inverse head-and-shoulders that was confirmed just Monday before the VIX zoomed higher. At 20.68 as I type, the VIX approaches potential support and is already testing the intra-15-minute-period highs as the other, inverse head-and-shoulders was tested. Keltner charts suggest, however, that, barring a turnaround that takes it above about 20.95, it could still go lower.

Keene Little : 8/20/2008 10:52:25 AM

I'm back and see that the market is trying to put in a little bounce after making a marginal new low. The spike up could be the completion of a small correction to the decline (small 4th wave) which says it will get reversed and another low (5th wave of the move down from last Friday) is coming. The new low today looks more like a part of the correction rather than a finish to the leg down from Friday.

Jane Fox : 8/20/2008 10:42:25 AM

U.S. gasoline supply down 6.2 mln brls: Energy Dept.

U.S. distillate supply up 500,000 brls: Energy Dept.

U.S. crude supply up 9.4 mln brls last week: Energy Dept

Linda Piazza : 8/20/2008 10:37:26 AM

The SPX's chart is similar to the OEX's. The SPX still hasn't been able to produce a 30-minute close above the 30-minute 9-ema but the 15-minute chart shows some improvement in tenor. Vulnerability, now to 1255, must continue to be factored into the trading plan, but a pop at least toward 1270-1272 and maybe 1280-1283 are perhaps doable, too. Charts don't give much preference to one or the other, so make trading decisions accordingly.

Linda Piazza : 8/20/2008 10:34:56 AM

No change for the OEX, at least so far. The 30-minute 9-ema is still providing resistance on 30-minute closes, but the OEX looks better when viewed on the 15-minute chart. As far as I'm concerned, it's still a "could climb toward 591-593 as easily as drop toward 575-579" kind of day. Trade accordingly . . . or don't trade accordingly.

Jane Fox : 8/20/2008 10:32:44 AM

Crude is spiking up and down. I'm not sure if the report was released early or if this is just in anticipation of the report.

Jeff Bailey : 8/20/2008 10:31:02 AM

WACHOVIA UNLOADS TROUBLED LOANS

DJ- A venture headed by LandCap is buying $40 million of Wachovia's troubled land and construction loans, allowing the bank to move the troubled assets off its books and raise capital. About 9.4% of Wachovia's $24 billion in construction and land loans were delinquent in the 2Q.

WB $14.34 +0.27% ... WB-UR $0.95 x $1.00

Jane Fox : 8/20/2008 10:24:48 AM

Remember the Crude Oil Inventories out at 10:35ET.

Linda Piazza : 8/20/2008 10:23:18 AM

The OEX is testing potentially significant resistance on 30-minute closes at 584.32. The OEX hasn't closed a 30-minute period above that since first thing Monday morning. If it can get past that level, I would watch for next potential resistance on 30-minute closes at 585.80 and, on 15-minute ones, at 586.69. That suggests that the OEX, if it can make it past this resistance, might pop up toward 586.69 but then get pushed right back below 585.80. That's just a scenario, and, for now, one that might not come to fruition because the OEX still has trouble with that first resistance near 584.32. As of this moment, it still remains vulnerable to a drop toward 579. OEX at 584.14 as I type.

Linda Piazza : 8/20/2008 10:08:07 AM

The SPX ended that last 15-minute period above potential support on 15-minute closes that's now at about 1263, but it's testing it right now, with the SPX at 1262.43 as I type. As with the OEX, there's potential bullish price/RSI divergence and we can't say that the support has been broken yet, but must still, due to this action, factor in vulnerability to 1256. There's just not much definitive evidence one way or the other here. Trade accordingly, managing risk.

Tab Gilles : 8/20/2008 10:07:46 AM

followup to yesterdays 3:04pm post

Cheasapeake Energy (CHK) $48.25 +$1.33 (2.81%)

CHK crossed over its 200-ma this morning, next resistance will be $51 (August high). Link

PnF has a $59 Price Objective, with a Double-Top Breakout. Link

I'd mentioned several call options I found attractive:

January 2009 $50 CHK-AJ Bid $5.70/Ask $5.90 +$0.70 (13.75)

Jan $55 CHK-AK $3.90/$4.10 +$0.40 (11.7%)

Jan $60 CHK-AL $2.60/$2.75 +$0.25 (11%)

Jan $65 CHK-AM $1.75/$1.90 +$0.25 (16.3%)

Linda Piazza : 8/20/2008 10:04:53 AM

The OEX ended that last 15-minute period slightly below potential support on 15-minute closes now at 582.35, but not far below it. That, coupled with continued potential bullish price/RSI divergence, questions the break. Nevertheless, we must still factor in vulnerability to 579 due to that close below the support. It's still anything goes.

Linda Piazza : 8/20/2008 9:50:57 AM

The OEX has dropped again to slightly below potential support on 15-minute closes that's now at 582.41. Remember that it's possible that the OEX will steady before the end of this just-begun 15-minute period but begin to factor in the possibility of a drop toward 579, too. There's vulnerability to that test. Similarly, begin to factor in SPX vulnerability to 1256, although remember that it's possible that the SPX will steady at its nearby support, too. So, we know about what we knew before the markets opened: not much.

Linda Piazza : 8/20/2008 9:48:57 AM

Keltner outlook on the A/D line: The A/D line as seen on Keltner bands on the 15-minute chart currently isn't telling us a lot. The A/D line's first prints were in the upper or bullish half of its Keltner channels, but far away from either support or resistance. That left it a bit directionless and as likely to fall toward support as to rise toward resistance. It's taken the path of falling toward support and is dropping quickly. That support, both trendline and Keltner, looks strongest near -743 to -856. However, sometimes when the A/D line is between support and resistance like this, it just sets up a big trading range the first thirty minutes or so and then spends a period of time chopping within that range over the next hour or two before deciding on next direction. A/D line currently at -323.

Jane Fox : 8/20/2008 9:46:04 AM

AD line is -274 so not telling us much.

Linda Piazza : 8/20/2008 9:41:35 AM

I've mentioned the support and resistance levels shown for the OEX on 15-minute and 30-minute charts. For the SPX, support on 15-minute closes currently looks fairly firm from 1263.61-1264.55. First resistance on 30-minute closes is near 1268, with the SPX currently above that but with plenty of time left in this 30-minute period. Significant potential resistance on 30-minute closes appears at 1271.89, with the 15-minute chart extending that up to 1273.16. Next potentially significant resistance appears at about 1279.13-1281.80, this on 15- and 30-minute closes. If, instead of bouncing, the SPX loses the support mentioned on 15-minute closes, a test of 1255.50 looks possible. I urge caution in this type of chart setup because it looks like an anything-goes setup with only a slight preference for a rise and we're already in an anything-goes trading environment.

Linda Piazza : 8/20/2008 9:36:36 AM

Last week, I mentioned that the TED spread, a measure of default risk or at least of perceived default risk, had been approaching potentially significant support near 0.92-0.94. I do not typically use this as a trade signal but rather as a barometer of what's going on in the markets. Generally, equities don't react well to a rising TED spread--unless it's approaching significant resistance, at which time equities are sometimes already rebounding--and prefer a declining TED spread. Here's what's been happening with the TED spread over the last trading week, after the TED spread approached that support near 0.92, with the chart courtesy of Bloomberg: Link My delayed feed shows a current value of 1.07.

Linda Piazza : 8/20/2008 9:11:44 AM

For about a week, I've been mentioning that if the OEX should break down out of its rising wedge shape, bears should temper their excitement. It was possible that support would catch hold near the daily 30-sma, and that the OEX would be doing nothing more than widening its bearish rising wedge shape into a regular old rising price channel. Here's where the OEX ended the day yesterday, with the black moving average being the 30-sma: Link

So, what's next? As of late yesterday, the 15-minute chart showed bulls attempting to steady the OEX near that 30-sma, with potential support on 15-minute closes now at 582.65 but at slightly different levels throughout the day having held for all but one 15-minute period. On the last afternoon dip, bullish price/RSI divergence showed up. The support appeared to be strengthening, with potential support on 15-minute closes now at 583.12 also just below the OEX. If the OEX can steady there and bounce this morning past potential resistance now at 584.56 on 30-minute closes, intraday charts suggest that it will encounter next resistance on 15- and 30-minute closes at 586.55-587.25 and then, more significantly, at 591.36-593.44.

However, there's a caveat. The 30-minute chart setup shows that the OEX currently looks as likely to dip toward 579.73 as it does to climb toward that first resistance. The daily chart suggests, too, that the OEX is almost as likely to fall toward 575-579 as it is to climb toward 593-594. As I type, futures are near the flat-line level and not giving many clues. Therefore, I urge caution to all traders because I don't believe the setup is giving us strong clues about next direction, and we're already in an anything-goes market environment.

Jane Fox : 8/20/2008 9:11:58 AM

Crude was bullish overnight - sort of. It is still in a consolidation type mode but I still think Crude will hit $120 before it breaks $110. Link

Jane Fox : 8/20/2008 9:00:52 AM

Here are the overnight charts and as you can see the bulls had a slight advantage but it was mostly a non-directional session. Link

Jane Fox : 8/20/2008 8:59:11 AM

The only thing I see on economic report front is the Crude Oil Report out at 10:30. This doesn't usually affect the stock market too much but if you trade crude then you need to be very aware when this report is due.

Keene Little : 8/20/2008 7:48:55 AM

I will be away from the market for about the first hour of trading. See you around 10:30 AM.

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