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Jeff Bailey : 8/28/2008 3:02:08 AM

NYSE and NASDAQ internals ... Volumes, a/d (their 5 and 10-day ratios), New Highs, New lows. At bottom, the 5-day, 10-day, 21-day and 50-day averages of each.

Last Wednesday as an example, the NYSE a/d 5-day ratio was 45% (read= over the last 5-days the average advance/decline line each day was negative at roughly 45:55). Tonight, the NYSE a/d 5-day ratio is 56% (read= over the last 5-days the average advance/decline line each day was positive at roughly 56:44).

Repeat observation(s) for NYSE 10-day a/d ratio, and NASDAQ.

At very bottom, I see quite a bit of 47%, 48%, 49% and 50%.

Having tracked both the 5-day and 10-day ratio measures (NH/NL too, but not shown), I find the 5-day ratio almost "too fast" moving, but the closer to 70% (overbought for a bullish % like indicator) or to 30% (oversold for a bullish % like indicator) they sure tend to trigger "profit taking" or "bargain hunting" inflection points. The 10-day's do what you might think they'd do ... smooth things out a bit.

See the GREEN 50% highlighted in YELLOW for today under the NYSE A/D 10-day Ratio?

This would be a 3-box reversal UP (so I color GREEN) after this measure fell to 44% on Monday.

Again, we can chart these on a piece of graph paper from 0% to 100%, where each box is 2%, just like the bullish % charts you're learning, or accustom to using.

Over on the NASDAQ side, see the RED 44% that is highlighted in YELLOW? That may be an "inflection low," but we don't see a 3-box reversal (44 + 2 + 2 + 2 = 50 at this point. The NSDQ a/d 5-day Ratio (which will move rather fast, or chop around) and the BLACK 50% at tonight's close would suggest some "near-term" strength. The 10-day can't move a direction, without the 5-day leading in the direction. Link

In tonight's wrap, I do mention "sustained" moves.

Just what the heck is "sustained?" For some, it is 2-days, for other's it is 2-weeks, for other's it is 2-months.

Do you see the "inflection" points just from the 10-day a/d ratios? Your looking at 28 sessions of data, or just about 6-weeks.

The 10-day a/d ratio for the NYSE has "inflected" 4 times! Yep ... a lot of energy stocks and financial stocks provide the "chop."

Now the NASDAQ during same period of observation, only one (1) inflection point (8/11/08).

As you know, I like to try, whenever possible, to put things in a QUANTITATIVE perspective. That is, not "skew" my comments with "what I want the market, or internals to say," but instead, look at the RAW numbers and try to formulate the OPINION then.

We might know that the NASDAQ a/d ratios are showing a little more "sustained" direction, while the NYSE are more "choppy."

The question as it pertains to my LONG SUC-IJ and COVERD CALL (SSO-IN) as I set to leave the office tomorrow afternoon, is what I now see in the NYSE internals.

These are some FACTS as I currently know them.

Of course, we got several VARIABLES headed our way. HURRICANE is one (potential negative), RNC is another (potential positive) and all that is between.

I KNOW that the SUC-IJ and SSO-IN can't lose too much capital in the account should the SPX/SPY/SSO move HIGHER while I'm gone. I could lose OPPORTUNITY if a sharp move higher is found.

I knew going in with the SUC-IJ the MOST I/we could lose at the $3.10/contract ($310 as profiled) on 08/08/08, and on 08/22/08 decided to SELL COVERED the SSO-IN for $0.80 ($80.00 as profiled) ahead of this week's DNC (figured the news flows, and MARKET psychology might be a bit more negative).

That's not to "bash" Democrats. Gosh darn it, if you want the Presidency and the other party has had it for 8 years, you HAVE to tell everyone how terrible things are!

I'll say I think the Democrats didn't do enough "sky is falling!"

Next week, the Republicans aren't going to be able to stand there and tell us how "wonderful" things are. They'd better not, or I'll turn in my card!

No, they'd better ADDRESS/IDENTIFY the problem(s), the OUTLINE how the heck they plan on SOLVING the problem(s).

Each President/VP candidate has been MORE THAN WILLING in my opinion to show/confess weaknesses. That's not all that bad, as only when you confess a weakness, can you seek help/advisor(s).

But as it pertains to WALL STREET, I currently have concern that there is not ONE "business-oriented" candidate to chose from.

I should confess, and I think I did during the primary, that I thought Mr. Romney was "best for the economy" as he's been there, and done that with success. From an ECONOMY standpoint, Senator McCain came out as my #4 choice among Republican candidates. I was "shocked" that he ended up winning the nomination.

I will say this, and it is true, even if Mr. Romney were a Democrat, and had the same platform as he presented during the primary election, in the confines of this year's election booth, I'd have pulled the lever for him.

I do believe that there could be MASSIVE amounts of capital waiting to make a move near-term. It is as if "we're waiting on something" to trigger the move. This year's election is one MAJOR event I think will be the trigger.

Jeff Bailey : 8/28/2008 1:11:00 AM

Wednesday's SPX NH/NL was 2:2

RUT.X's was 18:18.

How did they do that?

Keene Little : 8/27/2008 10:06:30 PM

Thursday's pivot table: Link

Wednesday's rally stopped just short of the downtrend line from May through the August 11th high. Rallies since August 11th have been stopping at or just short of this downtrend line so it's an important line to watch. Thursday morning it's near SPX 1285.40, just above Wednesday's high. The pullback pattern in the afternoon can be interpreted as bullish so bears need to be careful if we see a rally above 1286.

The key levels haven't changed in the past 3 days--1293 to the upside and 1261 to the downside. A break of either will be a signal to follow the market in that direction for a good trade. Updates to 60-min chart: Link and daily chart: Link

NDX has a similar setup in that the key level to the upside is 1938, just above its August 22nd high. The key level to the downside is near 1856, which is the uptrend line from July 15th. It's possible we'll get another leg down as part of a larger pullback from August 15th before setting up a rally leg, shown in pink on the daily chart: Link

But a break below the uptrend line would be a signal that the bounce off the July 15th low has completed. A heads up in that respect is the fact that RSI just broke its uptrend line which is typically done first before price does.

OI Technical Staff : 8/27/2008 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 : 8/27/2008 5:41:14 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 8/27/2008 5:18:00 PM

Closing Internals found at this Link

Jeff Bailey : 8/27/2008 4:49:56 PM

This will be the "Chart of the Week" ... 5-point box to introduce some noise, but find the levels. Link

Be ready to close out (buy back) the SSO-IN tomorrow.

SSO $61.21 +1.62% ... SSO-IN $0.35 x $0.50 and did eventually see a trade at $0.40 ($0.45 most of the day).

Jeff Bailey : 8/27/2008 4:40:41 PM

FXE $147.64 +0.54% ...

Oil and gold traders may want to study 07/25 and 07/28 bars.

That was last durable goods report.

Jeff Bailey : 8/27/2008 4:39:08 PM

DXY's 04:00 tick was 77.017

Jeff Bailey : 8/27/2008 4:10:31 PM

Today's Global Economic Calendar Link

Jane Fox : 8/27/2008 4:04:39 PM

Here are your economic reports for tomorrow:

8:30a.m. Initial Jobless Claims For Aug 23 Week:

8:30a.m. 2Q GDP, Prelim: Expected: +2.7%. Previous: +1.9%.

8:30a.m. 2Q Corporate Profits, Prelim:

Keene Little : 8/27/2008 4:01:44 PM

They're hanging on into the close. That leaves a big question mark for tomorrow morning. If we see a continuation of the rally above 1289 it will be bullish. If it starts down immediately tomorrow morning it will be bearish. I'm tempted to say just trade the initial direction tomorrow morning.

Keene Little : 8/27/2008 3:54:47 PM

The updated SPX 60-min chart shows the downtrend line from May is still holding and the bearish wave count is now mega bearish. It says we're going to see a quick decline below 1260 where I'm sure a Lot of stops are located. If that happens get short and hang on for a wild ride to the downside. For that reason the bulls need to hold today's mid-day lows, a break of which would be a bearish heads up that the market is breaking down. Link

Keene Little : 8/27/2008 3:50:11 PM

The steeper drop, especially in the techs, is not what the bulls wanted to see. But things are still OK as long as the mid-day lows hold. A drop below SPX 1273/NDX 1890 would be a bearish signal.

Linda Piazza : 8/27/2008 3:27:19 PM

The OEX did punch down toward but not quite to the potential support on 15-minute closes now at 588.59. Bulls want to see that hold, if tested. If not the OEX risks falling to the daily 30-sma, now at 588.28. Bulls do not want a daily close at or below that after it was pierced today, because that reinforces its resistance on daily closes.

It's time for me to leave. Unfortunately, almost anything can happen in these last few minutes, so it's somewhat difficult to say what might happen based on a daily candle that may change by the end of the day. Keene will be providing SPX updates and I urge you to watch those to get an outlook on how the markets are setting up.

Linda Piazza : 8/27/2008 3:20:17 PM

Next potential support for the OEX is being tested, at 589.25 on 30-minute closes. It looks possible, however, that the OEX could easily punch down toward 588.60, where it would find support on 15-minute closes.

Linda Piazza : 8/27/2008 3:15:34 PM

As you're making your end-of-day decisions, please remember our preliminary GDP tomorrow morning at 8:30.

Linda Piazza : 8/27/2008 3:15:06 PM

I will be away from my office for the last 40 minutes of the trading day today. I wanted to provide the overnight scheduled economic releases and events early, before I leave. Those include the U.K.'s Nationwide HPI at 2:00 am, Germany's Unemployment Change at 3:55 am, and the Eurozone's M3 Money Supply at 4:00 am.

Linda Piazza : 8/27/2008 3:10:24 PM

I agree with Keene's 3:01:31 post. I've been noting all day the possibility that the OEX could close the day at or below its 30-sma, something that still remains possible although no more predictable than it was earlier. I've wanted bulls to be aware that it could happen, however. The bounce got higher than I thought it was likely to go before pausing, as I thought the 589.50-ish zone would likely stall it if a lower one didn't. However, until that A/D line drops below the breakout benchmark now at 1491 and stays there, with the A/D line now at 1627, I'm not going to be writing off an end-of-day bounce possibility, either, as I'm sure no one else would in this market environment where anything goes. A healthy dose of skepticism goes a long way toward protecting a trading account in this environment, prompting traders to stay out, trade smaller or else guard their stops.

Linda Piazza : 8/27/2008 3:05:16 PM

TRIN 0.90, having zoomed right up into the next resistance zone. It's been climbing ever since my 1:05 post, when I noted that the way it was sliding down the supporting Keltner line and not breaking through it suggested that bulls should be watchful of a TRIN bounce, which would be adverse to their trade. While it's been climbing, the OEX and other indices have been stalling. Bulls don't want to see it push above about 1.02 and sustain levels above that, particularly on 15-minute closes.

Keene Little : 8/27/2008 3:01:31 PM

The one thing bulls do Not want to see today is a return of today's gains before the close. That would create a bearish shooting star at resistance at the downtrend line. The EW pattern, set up the way it is, would be very bearish with that kind of setup.

Jane Fox : 8/27/2008 3:01:30 PM

VIX and the S&P futures are in sync today, one moving up and the other moving down. Ya gotta love these two. Link

Jeff Bailey : 8/27/2008 2:53:45 PM

I think options traders should stay IN-THE-MONEY on nat-gas related futures/tracker options.

On potential hurricane "hits," can sell OUT-THE-MONEY. Buy some time to allow for this.

Jane Fox : 8/27/2008 2:52:35 PM

Do you all remember my prediction last week? I predicted SPX would reach 1320. Then when it was obvious that it would not happen last week I widened my scope and said OK this week. HMMMM well it looks like I may have to widen my scope once again and say next week (I still do think it will hit 1320, it is just taking a lot longer than I thought).

The thing is SPX has to break the 1292 resistance before it gets to 1320 and that may not be as easy as it looks. Link

Jeff Bailey : 8/27/2008 2:51:06 PM

Discosure: I currently hold bullish position in UNG

Linda Piazza : 8/27/2008 2:50:45 PM

VIX just dropped to a new low, supporting the move down, but the VXO did not, so there's divergence here. It's the VXO that's calculated using OEX options.

Jeff Bailey : 8/27/2008 2:50:16 PM

Swing trade call alert! ... for one (1) of the US Natural Gas fund UNG Jan'09 $36 Calls (UNE-AJ) at the offer ($6.60 x $6.80) of $6.80.

UNG $39.50 +2.75% ...

Keene Little : 8/27/2008 2:49:22 PM

The downtrend line from May, through the high on August 11th, is now just above 1286. If we see a small throw-over above it (to catch some stops that are too close) followed by a reversal back below it would be a decent sell signal.

Linda Piazza : 8/27/2008 2:49:19 PM

A/D line did not fall beneath the breakout benchmark, now at 1453, and has instead broken to a new high, bouncing from that support. TRIN has pulled back to retest the 15-minute 9-ema, so we see if it holds as support this time or if the TRIN retreats far below it. That 9-ema, now at 0.80, held into the just-concluded 15-minute period, but TRIN is now at 0.78. Just be aware that if this support holds into the close of this period, it's possible that the TRIN will be driven up toward resistance now from 0.94-1.04 again, to test it.

Keene Little : 8/27/2008 2:48:14 PM

Today's price pattern supports the idea that we'll see another push higher and it's possible we'll see the day close near its highs. But it would be a setup for a reversal tomorrow as long as SPX doesn't climb above 1289 which I think would be a bullish heads up that we'll see 1293 broken to the upside. That would be especially bullish. The closer we get to 1290 the smaller your risk for an attempt to short the next high.

Jeff Bailey : 8/27/2008 2:40:28 PM

Why I think we should do this today ... with VIX.X 19.63 -4.19% ...

Jeff Bailey : 8/27/2008 2:39:47 PM

Art Cashin mentioning historical trade for tomorrow. (see 10:30:10 AM post)

Linda Piazza : 8/27/2008 2:34:45 PM

The OEX closed that last 15-minute period at (slightly above) the potential resistance on 15-minute closes now at 590.88, after having pierced it. For that last 15-minute period, then, the former support did hold as resistance. The OEX isn't dropping far below it, but I wouldn't be surprised to see a pullback to potential support now at 589.35-589.70 or even 588.49. OEX at 590.71 as I type.

Jeff Bailey : 8/27/2008 2:27:30 PM

02:00 Internals found at this Link

Linda Piazza : 8/27/2008 2:22:58 PM

If you wonder what's happening to my typing lately, I haven't gone suddenly senile. I'm taking violin lessons. In my non-writing times, I'm spending a lot of time trying to get some tricky-for-neophytes finger placement down. Both my typing and my violin playing are suffering from tired hands. If you think the typos are sounding an odd note now and then, you ought to hear me on the violin! Smile.

Linda Piazza : 8/27/2008 2:20:47 PM

The OEX just finished a 15-minute period below the support that is now at 590.65, perhaps converting that now to resistance on 15-minute closes. The possibility of a drop toward 589.60 or perhaps even 588.44 exists, with potential support on 15- and 30-minute closes at the top of those two. I personally would not be surprised tos ee the lower band tested, but the chart setup isn't predicting that yet.

Jeff Bailey : 8/27/2008 2:17:14 PM

YM 11,499 ... after near-back test of DAILY R2.

Jane Fox : 8/27/2008 2:13:23 PM

Internals have been bullish all day, although they are tapering off a tad now. Link

Jeff Bailey : 8/27/2008 2:12:24 PM

5-year Treasury reversing morning PRICE losses ... Yield ($FVX.X) now down 1.6 bp at 3.032% and session low. WKLY S1 to be tested again at 3.022%.

Linda Piazza : 8/27/2008 2:09:02 PM

It's early in this 15-minute period, but the OEX is threatening to lose the support near 590.73 on 15-minute closes. If it heads down during this 15-minute period, next potential support on 15-minute closes appears to be near 589.25 and then near 588.40. OEX at 590.53 as I type. TRIN at 0.86, rising toward next resistance. A/D line at 1531, sinking through a first level of potential support but still above the 1440-ish breakout benchmark.

Linda Piazza : 8/27/2008 1:59:46 PM

TRIN is 0.84. It hasn't yet closed a 15-minute period above its 15-minute 9-ema, now at 0.73, but it's threatening to do so this 15-minute period. That wouldn't be proof positive that the bounce is over, but it would put traders on al-rt that something is changing on the short-term and in a tentative way. That change could be nothing more than something to do with a lunchtime stop-running test, but I noted earlier that the outlook from the Keltner channel suggested that the TRIN could bounce.

Linda Piazza : 8/27/2008 1:47:20 PM

So far, the OEX has maintained support on 15-minute closes above the important support level down to about 590.55. The OEX is 591.42. TRIN keeps testing resistance, though, now at 0.71, so remain on watch for a change in trend.

Linda Piazza : 8/27/2008 1:43:37 PM

This thrashing around can cause agony to many trades, sometimes including condors. During the AUG opex cycle, I believe, I had sold contracts threatened (deltas approaching 0.22-0.25) on both the downside and the upside, sometimes within days of each other. This SEP opex cycle, though, it's provided opportunities for those like me who want to capture a chunk of the original premium taken in but who are willing to give up a portion to be out of trades weeks ahead of opex. That frees maintenance dollars and avoids those terrible opex-week moves we sometimes get. Avoiding opex drama is always a goal for me! As of yesterday, I'm out of all 87 of my SEP condors (25 SPX, 25 XEO, 25 RUT, 10 OIH and two more ATM XEO condors I was in for a short period.) It's a different way of managing condors than many of you prefer, but I like reducing risk whenever I can. The only kind of combination trade I've got open for SEP is a 4-contract SEP/OCT GLD 80 bullish calendar, and I hope to get an opportunity to exit that for a profit soon. Start getting in the habit of looking at the separate credit spreads each day, and you might find that you have more opportunities than you expected to exit these ahead of time. You could do what Mike Parnos sometimes suggests, putting out GTC orders to close them for a pittance, whatever you consider a pittance. Particularly on the electronic-traded RUT, I sometimes get unexpected fills early in the morning, for example, although they're often only partial fills.

Keene Little : 8/27/2008 1:42:49 PM

So far it's only very small degree stuff but the pullback looks more like a 3-wave pullback which supports the idea that we have not seen the day's highs yet.

Jeff Bailey : 8/27/2008 1:32:15 PM

Today's "progression" of trade within the WKLY Pivots has the bearish side of me concerned.

The more sustainable rallies, or "waves" of bullishness have come when the larger caps are first to trade their WKLY's.

Traders will remember the INDU/DIA were the first to trade WKLYs, MNTHLY pivot to the downside back in May.

The major market bullish % still weigh on bearish observations too.

Linda Piazza : 8/27/2008 1:29:04 PM

The A/D line remains in breakout mode on the 15-minute chart, but the tentative bearish price/RSI divergence remains. Sustained 15-minute closes beneath 1324 would be needed to show that something significant had changed. The A/D line is at 1574 as I type.

Linda Piazza : 8/27/2008 1:25:29 PM

The OEX's 15-minute 9-ema is now near 590.35, with further potential support on 15-minute closes converging near there, at 590.38. As I said earlier, this is support that bulls want to see hold on 15-minute closes. Otherwise, there's the chance of a deeper pullback, at least toward 589.30 and maybe about a point deeper. Until that break of support happens, remain aware that there's bounce potential from that 15-minute 9-ema.

Keene Little : 8/27/2008 1:25:18 PM

Ten more minutes for the completion of the next 60-min candle on SPX and so far it's a bearish shooting star at resistance (even though it did not quite touch its dowtrend line from May). I'm watching the form of the pullback to see if it becomes only a 3-wave correction to today's rally or instead turns into more of an impulsive decline. Jury's still out on that.

Jeff Bailey : 8/27/2008 1:23:29 PM

SSO $61.30 +1.77% ...
SUC-IJ $1.90 x $2.05
SSO-IN $0.40 x $0.50

VIX.X 19.70 -3.85% ...

Jeff Bailey : 8/27/2008 1:22:12 PM

SPX 1,283.20 +0.91%

SPY $128.62 +0.96% ...

Jeff Bailey : 8/27/2008 1:21:46 PM

FXE $147.32 +0.32% ...

Jeff Bailey : 8/27/2008 1:21:09 PM

USO $94.60 +0.74% ... checks back at QRTRLY 38.2% ... (see Wednesday's Wrap)

Jeff Bailey : 8/27/2008 1:06:50 PM

VIX.X 19.63 -4.19% ...

Jeff Bailey : 8/27/2008 1:06:13 PM

OEX 591.51 +0.85% ... did tick just above its WKLY Pivot (592.45) too.

Linda Piazza : 8/27/2008 1:05:07 PM

Over the last 90 minutes, the TRIN has been sliding down along potential support on 15-minute closes that's now at 0.59. Both the TRIN's level and the sliding lower action have supported the bulls, but the TRIN isn't breaking through that support and is instead only nudging it lower. There's always the chance then, as I have noted over the last week with similar action with equities, that the support will kick in and bounce the TRIN higher. This is a kind of warning offered by the TRIN's action that might or might not be needed. Sustained 15-minute closes above the 9-ema, now at 0.73, would be a bull's signal that something was changing and that stops needed to be watched closely. The TRIN is 0.64 as I type.

Jeff Bailey : 8/27/2008 12:54:51 PM

SPY alert! $128.82 +1.12% ... trades WKLY Pivot. 3rd equity-based index tracked in pivot matrix to do so.

Linda Piazza : 8/27/2008 12:54:01 PM

Please just maintain enough skepticism to keep updating your stops on bullish trades. Now that the OEX has closed two days below the daily 30-sma, the possibility remains that it could be resistance on daily closes, and that means the possibility exists that the OEX could pull back to that moving average by the close. That's not a given, but neither is it an impossibility.

Jeff Bailey : 8/27/2008 12:52:14 PM

DIA Alert! $115.37 +1.13% ... trades WKLY Pivot.

2nd equity based index tracked in pivot matrix to do so.

Keene Little : 8/27/2008 12:53:36 PM

The downtrend line from May for SPX, where it stopped on Friday, is currently near 1287 so that's the potential resistance if it makes up to there.

Linda Piazza : 8/27/2008 12:51:36 PM

If the OEX pulls back, watch for potential support on 15-minute closes from 589.76-590.24. Bulls want to see that hold on pullbacks and would prefer that higher but possibly lighter support now at 591 hold on 15-minute closes. OEX at 592.47 as I type. The A/D line remains in breakout mode on the 15-minute chart.

Linda Piazza : 8/27/2008 12:49:09 PM

If the OEX keeps climbing, it will face a descending trendline (best-fit version cutting of the first day's upper candle) off the 8/11 high, with that trendline at about 594.50-594.70. There's potential resistance there on 30-minute closes, too, so that's another point at which to watch for potential resistance and spiff up your just-in-case profit-protecting plans.

Linda Piazza : 8/27/2008 12:40:43 PM

The A/D line completed a 15-minute close above potential resistance, so is officially in breakout status. However, bulls need to be aware how often such big-momentum moves are reversed and just keep adjusting their just-in-case profit-protecting plans. Fifteen-minute closes back below about 1468 warns bulls to pay careful attention; 15-minute closes below the 15-minute 9-ema, now at 1260, tells them that there's been a first tentative, short-term change in tenor; and 15-minute closes beneath the line currently at 1088 confirms a tentative and short-term change in tenor. Until then, I would watch for potential support on pullbacks to any of those areas. The A/D line is currently 1590.

Jeff Bailey : 8/27/2008 12:38:19 PM

I should note: ... the "shocker" part was the 2.6% rise when excluding aircraft. Economists on average were looking for -0.1%.

Jeff Bailey : 8/27/2008 12:34:13 PM

Jane covers economic data ...

Jeff Bailey : 8/27/2008 12:32:24 PM

Majors should go out at/near highs of session ... too much of a "shocker" from durables.

Jeff Bailey : 8/27/2008 12:31:07 PM

VIX.X 19.83 -3.22% ...

Jeff Bailey : 8/27/2008 12:30:53 PM

SSO $61.25 +1.69% ...
SUC-IJ $1.85 x $1.90
SSO-IN $0.45 x $0.50

Linda Piazza : 8/27/2008 12:29:16 PM

Once again, my take on what might happen has been proven wrong this morning. Barring some big pullback toward 588 in the next few minutes, this is not consolidation with a long upper and/or lower candle shadow. The possibility of hours-long consolidation was showing up on charts, but it was a possibility that wasn't realized.

I wasn't all wrong. The A/D line did bounce, as I suggested it could do in my 11:41:49 post, and it's bounced right up to test that same potential resistance line that turned it back yesterday and then earlier today. It has in fact slightly exceeded it, although you have to give the A/D line a little leeway because the numbers are big and change quickly. That potential resistance is at about 1470 with the A/D line currently at 1558. There is potential bearish price/RSI divergence, when compared to both this morning's earlier test and yesterday's, but it won't be confirmed until and unless the A/D line sustains 15-minute closes below about 1012. Just be aware that the A/D line is again testing resistance that has held over the last few days, keeping open the possibility that a breakout situation will be created.

Jeff Bailey : 8/27/2008 12:27:51 PM

BIX.X alert! ... 176.82 +2.45% ... takes a look above WKLY Pivot.

1st equity-based index tracked in Pivot Matrix to do so this week.

Keene Little : 8/27/2008 12:26:15 PM

If SPX keeps heading higher than 1282 I see the potential for a rally to at least 1285 if not 1290. Of course higher than 1293 would be a lot more bullish (for a run higher into September). But we're reaching the level now for the first test of the bounce to see if it fails near 1282.

Jeff Bailey : 8/27/2008 12:21:30 PM

DXY 77.17 (30-min delayed) ... set to backfill overnight gap lower. (trades pretty much 24 hours, but day technical)

Jeff Bailey : 8/27/2008 12:20:05 PM

12:00 Internals at this

Jeff Bailey : 8/27/2008 12:17:09 PM

RUT.X 730.65 +0.98% ... "ditto"

Jeff Bailey : 8/27/2008 12:15:44 PM

IWM $72.99 +1.13% ... back to test 2nd (dashed red) downward trend (10/11/07 high to recent 06/05/08 relative high).

Linda Piazza : 8/27/2008 12:13:25 PM

Next potential resistance for the OEX on 15-minute closes is currently 589.82 with potential trendline resistance now up to about 591.20. The OEX is 589.46 as I type.

Jeff Bailey : 8/27/2008 11:59:45 AM

US Energy (USEG) $3.19 +1.26% ... has been backtesting trending lower 150-day SMA. Tested 200-day SMA ($3.48) last week.

Jeff Bailey : 8/27/2008 11:57:19 AM

Manpower (MAN) $50.16 +2.05% ... need mass cleanup efforts.

Jeff Bailey : 8/27/2008 11:56:07 AM

Google Inc. (GOOG) $465.70 -1.79% ... can search "hurricane gustav" for latest updates.

Jeff Bailey : 8/27/2008 11:53:41 AM

Capstone Turbine (CPST) $2.53 +4.11% ... (see 08/21/08 MM)

Linda Piazza : 8/27/2008 11:51:25 AM

On my delayed feed, the TED spread, measuring default risk, is back to its week high of 1.14. It would have to sustain values above 1.16 before I would consider it as doing anything other than chopping around in a S/R zone between about 0.92-1.16, but it's not a good thing that it's climbing again toward the top of that zone.

Keene Little : 8/27/2008 11:49:50 AM

If SPX drops below 1270, the first pullback low right after this morning's open, it will be bearish.

Jeff Bailey : 8/27/2008 11:53:18 AM

General Cable (BGC) $50.20 +2.51% ... (see 08/21/08 MM @ 07:04:18 PM) Link

Recent channel checks do show some spool "pile up" at utilities here in U.S.

Linda Piazza : 8/27/2008 11:48:15 AM

Why would you have to guard against sideways movement, as I suggested in my 11:46:13 post? What if you were considering entering a new trade? You'd want to factor in the possibility that the OEX could mostly trend sideways. Also, this weird sideways stuff lately has often been accompanied by long upper and/or lower candle shadows, too, so it's possible to be whipsawed out of both bullish and bearish trades while the OEX essentially goes nowhere during a period of several hours.

Jeff Bailey : 8/27/2008 11:46:56 AM

Cell Genesys (CEGE) $0.77 -72.50% ... #17 most active.

Linda Piazza : 8/27/2008 11:46:13 AM

Once again, the OEX's chart presents the possibility of some sideways movement, either from the current level or, perhaps slightly more likely, from slightly lower, nearer 586.75 or maybe even 585.60. When I say "sideways movement" now, however, that has to be clarified. The OEX has often lately produced sideways movement by having small-bodied 30-minute candles that have long upper and/or lower shadows. That means that there can be zooming all over the place during the 30-minute period, but with most 30-minute open and closes stringing along in a line. I'm thinking that line might be near 585.60-586.75, but this is just a possible scenario to be guarded against and not a promise.

Jeff Bailey : 8/27/2008 11:46:12 AM

Amylin Pharma (AMLN) $21.20 -22.24% ... #8 most active.

BTK.X 818.80 -2.34%

BBH $198.61 -1.00% ... know your weightings.

Jeff Bailey : 8/27/2008 11:43:31 AM

Various Energy Futures @ 11:00 AM EDT Link

Oct. "Crack Sread" observations (gasoline and heating oil). Remember! Sep Nat Gas terminates today. (major reason for yesterday and today's bid) Hurricane headlines some extra.

Linda Piazza : 8/27/2008 11:41:49 AM

And here's the follow-up A/D chart to the one I posted in my 10:55:21 post, when I noted that the A/D line was up against resistance and the OEX might stall: Link Not until that black-channel support has been broken on sustained 15-minute closes has the tenor changed. Until then, there's the possibility of another A/D line bounce.

Linda Piazza : 8/27/2008 11:33:44 AM

A subscriber has asked for the chart setup for the A/D line that I used in my 10:55:21 post. It's been a while since I reviewed those, so I thought I'd post it for all viewers, in case others are interested. Each charting service has a different symbol for the A/D line, so I can't tell you what your service might use. Mine uses JINT.Z, which makes little sense to me, but that's what's used. Then, I use layers of Keltner bands: one based on a 9-ema, with an offset or multiple (different charting services list it differently) of 1.4; one based on a 45-ema, with an offset or multiple of 3; one based on a 120-ema, with an offset or multiple of 7.2. Not all charting services allow for multiple Keltner channels or bands on one chart and not all allow one to change the preset offsets or multiples. I have to caution, too, that I've been using Keltner channels or bands for years, and they do require some interpretation. Basically, with the A/D line, you're looking for tests of support and/or resistance that are backed up by or diverging from RSI action. The best-case scenario is to have the A/D line test support or resistance, pull back, and then come back to test again with divergence by the RSI. At the same time, you want to see the index you're watching (OEX, Dow or SPX when watching the NYSE version of the A/D line, for example) up against support or resistance. That gives you a stronger sense that the resistance or support being tested might hold and that those who have been trading in that direction might want to take at least partial profits or otherwise beef up their profit-protecting plans. Sometimes, that evidence gives one a good fade-the-move entry, but those taking those entries need to set careful stops in case the evidence is wrong.

Jeff Bailey : 8/27/2008 11:31:31 AM

Dec. Corn softening up a bit after strong rebound last week.

WNR $8.65 +9.21% ... one of the larger ethanol players.

Linda Piazza : 8/27/2008 11:24:36 AM

The OEX did stall, as I thought might happen when I made my 10:42:49 post, but it hasn't pulled back far. It's so far finding support on 15-minute closes at a support line now at 588.02. If the OEX rises again to test resistance, that potential resistance on 15-minute closes is now 589.77, with possible trendline resistance a bit higher, at about 590.80. So, the OEX is between support and resistance, and we don't yet know which will break. OEX at 588.76 as I type.

Jeff Bailey : 8/27/2008 11:23:44 AM

DJ- Noble Corp. begins pulling workers off US Gulf drilling rigs.

NBL $75.34 +0.81% ...

Tab Gilles : 8/27/2008 11:23:23 AM

Chesapeake Energy (CHK) $50.50 +$1.05(2.12%)

Hurricane Gustav threat to the Texas/Louisianna coast might bring damage equal to that of Rita and Katrina.

Daily Link PnF Link

United States Natural Gas Fund (UNG)$39.89 Link

Natural Gas -Continous Contract ($NATGAS)$8.54 Link Link

CHK Jan '09 Calls Bid: CHK-AJ $6.60; CHK-AK $4.60; CHK-AL $3.30; CHK-AM $2.15

Keene Little : 8/27/2008 11:15:34 AM

The reason I say we'll ideally get another push higher is that it would then complete a 5-wave move up from yesterday afternoon which would fit well for completing an a-b-c bounce off Tuesday morning's low. The Fib projection for the c-wave is at 1281.49 and the 62% retracement is at 1281.96 so good correlation there for the end of the bounce and a short play setup. 15-min chart: Link

Tab Gilles : 8/27/2008 11:14:59 AM

Clean Energy Fuels (CLNE) $16.20 +$0.55 (3.4%)

T. Boone Picken's CLNE continues to climb as I highlighted this stock yesterday at 4:46PM. PnF has P/O of $19.50. Link Link

Keene Little : 8/27/2008 11:07:18 AM

The current pullback from this morning's high will ideally be followed by another push higher to a minor new high. A 62% retracement of the decline from Friday is at SPX 1282 which is where I'd look it over carefully for a short play to set up.

Jeff Bailey : 8/27/2008 11:06:05 AM

MBA's Weekly Application Survey Link

Jane Fox : 8/27/2008 11:04:39 AM

Natural Gas retraced back to its February lows, a 100% retracement and has now turned around and almost reached the 23.60% of that retracement. 23.60% is not much of a retracement and many times is considered just a bounce. It will have to get to at least a 38.2% retracement before I will start thinking the bottom is in. And then i would be looking for a reverse Head and Shoulders or a MACD bullish divergence. So far neither of those have appeared. Link

Jane Fox : 8/27/2008 10:58:29 AM

SAN FRANCISCO (MarketWatch) -- Crude supplies fell by 100,000 barrels to 305.8 million for the week ended August 22, the Energy Department reported Wednesday. Motor gasoline supplies fell by 1.2 million barrels to 195.4 million barrels. Distillate stocks were unchanged at 132.1 million barrels. Refinery utilization was at 87.3% compared with 85.7% of capacity a week earlier. Following the news, October crude was up $2.48 at $118.75 a barrel on Globex.

Jane Fox : 8/27/2008 10:57:56 AM

U.S. crude supply down 100,000 brls last week: Energy Dept.

U.S. distillate supply unchanged for the week: Energy Dept.

U.S. gasoline supply down 1.2 mln brls: Energy Dept.

Jeff Bailey : 8/27/2008 10:57:45 AM

Next step if trend of producers/refiners is to continue will be for COP to sell refinery operations.

Jeff Bailey : 8/27/2008 10:55:50 AM

PetroSun to Acquire ConocoPhillips U.S. Retail Marketing Assets ... Press Release Link

Linda Piazza : 8/27/2008 10:55:21 AM

If the stall doesn't happen as I thought it might in my 10:42:49 post, then it likely won't happen because the A/D line will have created a breakout status on its 15-minute Keltner chart, and that means that upward momentum is strong enough that it will be difficult to predict when a turnaround could occur. Breakout status provides proof of strong momentum, warning bears against attempting to fade the move just yet, but it also shifts the onus onto bulls to be particularly protective of their profits because breakout moves are subject to many whipsaws. As I type, the A/D line is pulling back from the potential resistance that I saw. Here's the chart: Link

Jeff Bailey : 8/27/2008 10:47:23 AM

UNG $40.14 +4.23% ... tried to pick up at the open for $39.01, but not even close.

Jeff Bailey : 8/27/2008 10:46:39 AM

Nat. Gas "on fire" for 2nd-straight session.

Jeff Bailey : 8/27/2008 10:42:32 AM

VLO $35.29 +5.02% ...

TSO $18.45 +11.28%

FTO $18.83 +8.71%

WNR $8.40 +6.06%

Linda Piazza : 8/27/2008 10:42:49 AM

I would not be surprised to see the OEX stall and perhaps pull back a bit either from its current high or after a punch a bit higher, say to about 590.80. Of course, I've been wrong once before today, so take that impression with a grain of salt. It is, however, backed up by the fact that the A/D line has now hit potentially strong resistance, that same resistance line (although at a different level) that knocked it back yesterday.

Jeff Bailey : 8/27/2008 10:41:05 AM

EIA: US refineries ran at 87.3% Vs. 85.7% week ago

Jeff Bailey : 8/27/2008 10:40:18 AM

EIA: US Distillate stockpiles +0.057 M Barrels at 132.125 M Bbl

Linda Piazza : 8/27/2008 10:40:17 AM

The OEX ended that last 15-minute period at potential resistance rather than strongly above it, but prices continued to climb. OEX traders don't want this current 15-minute period to close back below 588, as that would show that the resistance again held despite being pierced during the 15-minute period. So far, that doesn't appear to be happening, but just keep it on the radar screen. Stronger resistance is at 589.56 on 15-minute closes and 589.25 on 30-minute ones. I see some potential trendline resistance at about 590.20, too. This resistance band appears to be the strongest resistance faced so far today, but this kind of market climate doesn't allow a reliable prediction of what happens next, in my opinion. Bulls need to keep updating their profit-protecting plans as each of these possible resistance levels is tested, but bears should be wary of testing the waters as long as the strong upward momentum remains. OEX at 589.48 as I type.

Jeff Bailey : 8/27/2008 10:39:33 AM

EIA: US Total Gasoline stockpiles -1.179M barrels at 195.441 M Bbl

Jeff Bailey : 8/27/2008 10:38:46 AM

EIA: US Crude Oil Stockpiles -0.177M barrels at 305.76 M Bbl

Jeff Bailey : 8/27/2008 10:35:13 AM

DJ- US Thrift Industry Posts $5.4B 2Q Loss, 2nd Largest On Record

The U.S. thrift industry posted a $5.4 billion loss in the second quarter, the second largest on record, as institutions continued to grapple with mounting mortgage defaults, the Office of Thrift Supervision said Wednesday. The OTS said thrifts set aside a record $14 billion to cover loan losses during the quarter, the most ever. Meanwhile, the agency said its list of "problem" thrifts grew to 17 in the second quarter, up from 12 at the end of March. Those 17 thrifts are included in the 117 "problem" banks the Federal Deposit Insurance Corporation reported on Tuesday. The industry's net loss was the largest since thrifts lost $8.8 billion in the fourth quarter of 2007. "Solid capital and sizable reserves for potential loan losses show once again that thrift managers are responding appropriately to the challenges they face," OTS Director John Reich said.

Jane Fox : 8/27/2008 10:33:55 AM

Remember Crude Inventories are out at 10:35 today.

Jeff Bailey : 8/27/2008 10:32:44 AM

Oct. "Crack Spread" from futures improving markedly today (futures)

Jeff Bailey : 8/27/2008 10:32:03 AM

UGA $56.21 +2.70% ...

Jeff Bailey : 8/27/2008 10:31:35 AM

USO $95.46 +1.66% ...

Jeff Bailey : 8/27/2008 10:30:58 AM

UAUA $10.05 -9.77% ...

Jeff Bailey : 8/27/2008 10:30:10 AM

Those were good ticks on the TRINQ this morning. Should be a very bullish day for stocks today. Tomorrow historically weak.

Jeff Bailey : 8/27/2008 10:28:52 AM

10:00 Internals at this Link

Linda Piazza : 8/27/2008 10:28:01 AM

There's nothing like this current market for making a mockery of your observations: see my 10:01:11 post. The OEX instead zoomed up to test next potential resistance on 15-minute closes, now at about 587.92 and on 30-minute closes, at 587.54, as well as yesterday's high of 588.61. The OEX is currently 588.27 with the next resistance band near 589.20-589.60. Before we count on a test of the next resistance band, however, we have to see sustained 15-minute closes above this one.

Jeff Bailey : 8/27/2008 10:26:14 AM

Germany / EU: Harmonized Aug CPI -0.4% on Month, +3.3% on Year

Jeff Bailey : 8/27/2008 10:23:23 AM

Germany: Preliminary Aug CPI -0.3% on Month, +3.1% on Year

Keene Little : 8/27/2008 10:10:50 AM

The pullback from this morning's high looks corrective enough to suggest we're going to see the market push higher. But at this point any break below yesterday afternoon's low would be a sell signal.

Linda Piazza : 8/27/2008 10:01:29 AM

Potential support on 30-minute closes for the OEX is now about 585.10, but if the OEX ends this 30-minute period near its current 585.27 level, it's come close enough to reversing the last 30-minute candle from yesterday that traders should consider the possibility that it's creating a possible reversal signal and that deeper support might be eventually tested or at least that support would go on being tested. That wouldn't be a given, but it would be a strong possibility. Watch for potential support near 583.60 if the OEX continues dropping.

Linda Piazza : 8/27/2008 9:51:35 AM

Keltner outlook on the A/D line: There's not much of an outlook predicted by the Keltner chart. The A/D line did open in the upper or bullish half of its 15-minute Keltner chart and will remain there as long as it maintains 15-minute closes above potential support currently at about -165. The A/D line rose after leaping above that particular S/R line and also above the one at +53. However, it's currently acting as if what should be light resistance on 15-minute closes, currently near +650, is stronger resistance than it should be if this were going to be a gung-ho bullish morning. My conclusion so far is that we just don't have much evidence about what happens next. Its bullishness will be in question if it drops swiftly and holds below about +200, however, and there are already some cracks in the bullish facade due to the way it's acting with regard to that light resistance. A/D line at +486 as I type, down from the +813 high.

Jane Fox : 8/27/2008 9:50:31 AM

The Russell 2000 futures have broken their overnight highs but so far the only market to do so.

Linda Piazza : 8/27/2008 9:45:19 AM

In my 9:14 post, I mentioned that the OEX had ended the day testing resistance and mentioned the next higher resistance band as one to be watched for rollover potential. The OEX hasn't yet risen into the next resistance band, instead continuing to test the one it was testing at the close yesterday, with that potential resistance now near 586.40 on 15-minute closes. Next potential resistance on 30-minute closes is 587.53, and, on 15-minute ones, at 588.06. Yesterday's swing high was 588.61. As has been happening lately, resistance lines are layered throughout a zone without converging more closely, making it difficult to make judgments about whether support or resistance is strongest and to rate one layer of resistance or of support as the one that's likely to be hard to get through. So, for now, I still suggest that you watch for rollover potential if the OEX should rise to test the resistance grouped above, from about 587.50-588.61. Now, I'd have to add that the rollover could come from the current resistance test, so below that next resistance zone.

In this climate, it's not a given that there will be a rollover, but this is certainly a point at which I'd be spiffing up my profit-protecting plans if I bought the bounce yesterday.

Jane Fox : 8/27/2008 9:38:32 AM

AD line opens at +27 giving us very little to work with.

Linda Piazza : 8/27/2008 9:14:35 AM

Yesterday, the OEX produced the typical small-bodied candle often seen after a large-range day. Because of the recent patterns or, rather, lack of patterns in price action, I couldn't make any predictions about whether we'd get that typical pattern. I did mention it as a possibility. The small body of the candle formed beneath the daily 30-sma, an average that three times last week provided support on daily closes. We must now, therefore, consider the possibility that the 30-sma will be resistance on daily closes. That moving average was, as of yesterday's close, at 587.68.

If we extrapolate where the OEX might go this morning if it bounces in accordance with the ES contract's distance from SPX fair values, we'll likely get a test of that moving average this morning. The intraday charts show that, at yesterday's close, the OEX was testing potential resistance and approaching stronger potential resistance on 30-minute closes, at 587.57, and on 15-minute closes, at 588.13. Given the possible resistance on daily closes at the daily 30-sma, I would watch for rollover potential in that area. Next potential resistance is near 589.50-590.

If the OEX should surprise us and drop immediately, watch for first potential support near 584.80-585.10.

The most typical reaction after a small-bodied day is either another consolidation-type candle or a bounce attempt, but I would emphasize "attempt." This failure yesterday under the daily 30-sma doesn't make me feel encouraged about the possibility of sustained gains as yet and I'm still keeping the possibility of a drop to 575-578 sometime this week on my personal radar screen anyway. In this kind of climate anything can happen, and I'm not taking the lazy route as a writer or someone looking at charts by dashing off that "anything can happen" clause. It's the truth, and it's a warning that should be heeded because markets have thrashed first one direction and then the other since July. In one opex cycle, I've had bear call spreads and bull put spreads threatened at various times during a single cycle, and I don't remember that happening at any other time in the last several years. It may have, but I just don't remember it, and I usually have my spreads thrown far enough away from the action that it would be unlikely for both to be challenged. When Cashin and others say that this is the most challenging market they've seen in 30 years, I believe them.

Jane Fox : 8/27/2008 8:59:52 AM

Gold is once again testing its support turned resistance. Link

Jane Fox : 8/27/2008 8:58:54 AM

You may have noticed that the stock market is up even though Crude is up as well.

Jane Fox : 8/27/2008 8:57:18 AM

Crude is climbing because of worries Tropical Storm Gustav.may damage oil infrastructures in the Gulf. Link

Jane Fox : 8/27/2008 8:54:39 AM

Overnight markets really liked the Durable Goods report out at 8:30. Link

Jane Fox : 8/27/2008 8:51:05 AM

WASHINGTON (MarketWatch) -- The president of the Federal Reserve Bank of Atlanta came down squarely Wednesday on the side of Fed chief Ben Bernanke, who has argued that inflationary pressures should ease in coming months.

"Although recent measures of inflation are higher than I would like to see, I would say that recent price increases are more likely to be transitory than persistent," Dennis Lockhart said in a speech at Georgia State University's business school. "I expect that CPI inflation will peak near the July level of 5.6%."

CPI refers to the consumer price index, a gauge for tracking inflation at the retail level.

While some Fed officials remain concerned that the high rate of inflation this year may prove "sticky" and that the U.S. central bank should reverse some of its dramatic easing in monetary policy soon, Bernanke and the majority of Fed officials believe that benchmark interest rates can stay at 2% until the economic outlook improves.

Jane Fox : 8/27/2008 8:50:01 AM

WASHINGTON (MarketWatch) -- Orders for U.S.-made durable goods surged in July, rising 1.3% on strong transportation equipment demand, the Commerce Department reported Wednesday. Economists surveyed by MarketWatch were looking for a gain in orders of 0.2%. Excluding transportation goods, orders rose 0.7%. New orders for durable goods in June were revised to a gain of 1.3% from a prior estimate of 0.8%. For July, shipments of manufactured goods rose 2.5%, following a gain of 0.9% in the prior month. Both inventories and unfilled orders in July rose 0.8%.

Keene Little : 8/27/2008 8:44:28 AM

Equity futures sold off during the early hours that the European markets were open and made their lows just after 5:30 AM, but not as low as yesterday's. The all-hours chart of the S&P 500 futures looks good for another rally leg this morning and in fact it's looking like we'll get after the positive reaction to the durable goods report at 8:30 AM. Whether it will make it up to 1280 is the question.

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