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Keene Little : 9/4/2008 10:06:09 PM

Friday's pivot table: Link

The higher-probability move for Friday looks like more downside. That's not a guarantee but instead looks like the the most likely direction. We might see a rally (reaction to economic reports?), one that could even see SPX 1250 before it's finished, that then gets sold into. Potential support I see for SPX is 1220-1225 and then 1190-ish. For NDX I see 1740 and then near 1680.
SPX daily chart: Link
NDX daily chart: Link

OI Technical Staff : 9/4/2008 9:59:59 PM

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Tab Gilles : 9/4/2008 7:11:58 PM

Everyone has focused on the S&P500 ($SPX) retesting it's July 15th low, yet the NYSE Composite ($NYA) has already broken below its July lows. With a PnF PO of 7,850. Link

SPX has a PnF PO of 11170 Link

Tab Gilles : 9/4/2008 7:04:53 PM

Taking a look at the Swiss Franc/ Japanese Yen trade, with the dollar's strength and Trichet's dovish comments, BOE and Canadian interest moves.

This charts is showing the same action it saw in July of last year. That was a buying opportunity for the commodity sector, XLB, or more specifically Freeport McMoran (FCX). Link Link

Tab Gilles : 9/4/2008 6:30:46 PM

Weekly EIA Report: Link

Keene Little : 9/4/2008 4:12:39 PM

One caution about tomorrow, if you're holding short overnight, is that we've often see a strong reversal of the previous day when the day closes at its high or low (mini capitulation into the close and no follow through the next day).

Linda Piazza : 9/4/2008 4:01:53 PM

I haven't mentioned the TED spread today. On my delayed feed, it's 1.14. Minus today's action, here's what it's been doing for a week, with the chart courtesy of Bloomberg: Link For the last few weeks, it's been churning in an area in which it churned in late July and early August, with that defined by top resistance at 1.163. Equities don't like rising default risks, at least not typically, so equity bulls don't want to see this break up above that 1.163 level and sustain values above it.

Linda Piazza : 9/4/2008 3:57:43 PM

Here's what's happening on the OEX as the day closes: Link Whatever you think might happen, remember we have market-moving numbers tomorrow before the open.

Keene Little : 9/4/2008 3:55:21 PM

The bounce off this afternoon's low continues to look like a consolidation so lower lows tomorrow should be expected. But it's possible we'll see a quick rally in the morning (jobs number reaction?) followed by selling into the rally. Bottom line is that it looks like we've got lower to go before finding a tradeable bottom. First downside target I'll be watching in that case is SPX 1225 and then 1190-ish.

Jane Fox : 9/4/2008 3:33:55 PM

The DOW hit a high today of 11532 and a low of 11189. That is a 343 point swing. That's a huge swing.

Linda Piazza : 9/4/2008 3:28:49 PM

The OEX did finally rise up to test the top of its smallest Keltner channel or band on the 10-minute chart, as mentioned as a possibility in my 2:34:41 and one earlier post. It has so far turned back from that test, but we're entering a sort of anything-goes period prior to tomorrow's important employment numbers.

Some bears will not want to hold overnight with those employment numbers coming tomorrow morning, in case there's some kind of upside surprise, so it's possible but not yet predictable that there could be a short-covering rally into the close. So far today, rallies haven't gotten far, but it's been a long, long time since the 30-minute 9-ema has been tested to see if it still holds as resistance on 30-minute closes, and that's up at 576.54. So, it's just an anything-goes period when we wait to see who is most afraid of tomorrow's numbers, bulls or bears.

Linda Piazza : 9/4/2008 3:17:41 PM

Decide soon if you think you're going to hold your bearish position overnight. Whether you intend to do so or not could impact where you set your stops. If you don't intend to hold overnight, you don't want to weather a last minute short-covering bounce but instead would probably prefer a tighter stop that takes you out near what is then the bottom. Of course, there's the chance that any bounce would be followed by another rollover and a sharp decline into the close, so that you could have made more money, but oh, well! I mean that seriously. You're not always going to pick the top and the bottom, wringing out every cent of possible profit. It's far better to set appropriate stops. You could do that by trailing your stops X points above the current level or you could decide that you'll allow for a test of the 30-minute 9-ema at 576.79 to see if that holds as resistance on 30-minute closes, or something that's appropriate for your trade.

If you're in a longer-term trade, particularly if you've been in it for weeks, maybe since the 8/11 or even last week's high, you might have a different take on setting a stop. You might have more profit under your belt and might want to widen stops a bit to allow for a higher resistance test.

Linda Piazza : 9/4/2008 3:13:01 PM

What foreign economic events or releases are scheduled for tonight and tomorrow morning? At 7:50 pm ET, Japan releases its moderately important capital spending number. Tomorrow morning at 2:50 am ET, the ECB's President Jean-Claude Trichet will speak in Frankfurt, and we know from today's experience how much President Trichet's discussion can impact currencies and, to some degree, equity performance, too, both in the eurozone and in the U.S. Various countries release their trade balances, and Germany releases its moderately important industrial production at 6:00 am ET. Germany's industrial production is made more important because Germany's economy has been the engine powering the eurozone's, to a large extent. That's it for the most important announcements until Canada announces its unemployment number at 7:00 am ET, followed shortly by ours at 8:30 am ET.

Keene Little : 9/4/2008 3:01:52 PM

So far the bounce off this afternoon's low continues to look like a correction to the decline. We might see a bit of capitulation into today's close if we make new lows now.

Linda Piazza : 9/4/2008 3:01:22 PM

The daily Keltner charts are saying that until and unless the OEX can maintain daily closes above the daily 9-ema, now at 587.34, it has vulnerability to 553.20. That doesn't mean that the OEX won't soon, maybe over the next week, rise up to test that daily 9-ema. We won't know what happens as a result of that test until it does occur, either. But for now, that's the "if/then" statement (if the OEX can't maintain those closes, then it maintains that potential downside target) the Keltner channels is setting up. This is one of the many reasons that I love Keltner channels or bands. I can set up these if/then tests.

If you're in bearish trades, particularly SEP puts, am I telling you to hold on through any bounce, no matter what happens, for a target of 553? No way! I'm absolutely, 100% telling you that if you have profits that you not let any bounce turn that profit into a loss, so I'm certainly not telling you to wait out a test of 587.34 resistance if the OEX should decide to head up there and test that level. Not all targets are maintained until hit. Some are erased by subsequent action. What I am telling you is that you should keep this on the radar screen. If you're tempted to trade the long side if a bounce should get started, the Keltner channels suggest that is a countertrend trade.

Tab Gilles : 9/4/2008 2:47:12 PM

Equity markets have no leadership, even with a positive catalyst oflower energy, it is focused on the Job market along with weakening global economies and an ongoing financial problem. $SPX; Link $COMPQ; Link $RUT; Link

Linda Piazza : 9/4/2008 2:34:41 PM

The OEX's 10-minute 9-ema is now 574.80, with that perhaps offering resistance on 10-minute closes as it's done all day long. It should be about time for the OEX to pop up toward the top of the smallest Keltner channel on that chart, now at 576.32, so factor that in as a possibility. Strongest resistance on 10-minute closes on this chart is at 578.87. The OEX is 573.74. Decide which of these resistance tests you're willing to weather if you've been in a bearish trade today.

Jane Fox : 9/4/2008 2:33:06 PM

TRIN is getting ridiculously high at 2.54 and does not seem to be letting up.

Tab Gilles : 9/4/2008 2:31:39 PM

Apple (AAPL) $162.00 -$5.00

Apple is close to selling four million iPhone 3G's, investors should focus on the company's new holiday product lineup, expected to be revealed on Sept. 9th. including updated iPod Nano, Macbook and Macbook Pro product line, and updated iTunes software from apps. Remember now that the 3G revenue wasn't really included in the last quarterly report, plus they now have back-to-school sales and upcoming holiday sales. I would use the weakness to add or take a longterm position. Link

Research In Motion (RIMM)$108.56 -$6.22 Link

Linda Piazza : 9/4/2008 2:14:10 PM

Here is the OEX chart from this morning, with updated annotations: Link The end of the day could tell us much about what to expect tomorrow. If the OEX were to end the day rather near the current level, for example, a small-bodied candle--NOT necessarily a small-range candle because it could have long upper and lower shadows--might result, for example. Be aware now, however, that when the OEX is climbing, it often pauses a few days, producing small-bodied candles, before it resumes the original direction. That could happen now, too, with the descent. Any pause at the descending channel's support could be just a pause before a breakdown out of that channel. A strong spring off today's low by the close might suggest a bounce attempt up toward the 10-sma again, although the emphasis would have to be on "attempt." A continued drop the rest of the day could swiftly bring the OEX down toward that 578 region, although it seems difficult to contemplate that the OEX could fall too much further in a single day.

Linda Piazza : 9/4/2008 2:04:54 PM

The OEX's 10-minute 9-ema is now at 576.26, and that's been pressuring the OEX lower all day. It should be time soon for a pop up to the top of the smallest Keltner channel, with that currently at 577.25 on that chart, but so far that hasn't happened all day, with further potentially strong resistance up to 579.64 (on 10-minute closes, not 15-minute). The OEX is 575.35 as I type.

Keene Little : 9/4/2008 1:59:05 PM

I had mentioned earlier the possibility that the decline from August 11th could be a 3-wave pullback against the July-August rally. Two equal legs down for the DOW for that kind of a-b-c pullback is at 11211. Today's low so far is 11236. Again, I wouldn't want to bet a long play based on this but it remains a potential and it means a strong rally over the next couple of weeks. Daily chart: Link

A larger A-B-C bounce off the July low, with two equal legs up, gives us an upside target of 12275 which is near the 62% retracement and probably at the 200-dma by the end of September. It's something to consider and why I say don't get complacent about the short side. We all know what short covering can do to this market, and there are a lot of people short right now.

Keene Little : 9/4/2008 1:48:01 PM

SPX 1239 remains a good downside target for today's decline although the minimum requirements have now been met for a 5-wave completion so lower your stops if trading the short side and you want to protect profits.

Jane Fox : 9/4/2008 1:36:25 PM

Egads the TRIN is up to 2.62. I would not be trying a short here.

Linda Piazza : 9/4/2008 1:29:53 PM

Just keep following the OEX lower with your stops. If you automatically took partial profits as the OEX moved into the 574-576 zone and, if the OEX keeps heading lower, try not to do the woulda-coulda-shoulda thing but instead pat yourselves on the back for sound account-management practices. For those in single contracts and unable to take partial profits or those disinclined to do so, just make sure that you don't let profits turn into losses if a big bounce begins.

Tab Gilles : 9/4/2008 1:30:00 PM

MACD has indicated for several days now that Volatility would rise.

$VIX: Link

$VXN: Link

$RVX: Link

$OVX (Oil Volatility Index) Link

Th OVX launced just this past mid-July thus far seems to have a positive correlation to oil, as opposed to the other above mentioned Vol indexes which hae a negative correlation to their underlying indexes. Though being relatively new, I'm going to need more time to get a better understanding of its effectiveness and use.

Linda Piazza : 9/4/2008 1:13:54 PM

Potential OEX target on the 30-minute chart, also potential support on 30-minute closes, is now at 575.70. For the SPX, the analogous level was 1248.43, however, and the SPX has already produced one 30-minute close beneath it. Therefore, watch for possible OEX support there at that target, but be aware that potential support is just that: potential and not ironclad. Still, I would be considering how I wanted to update my profit-protecting plan if in bearish trades as the OEX approaches this target. Sooner or later, it's going to be time for a harder bounce, even if the OEX is doomed to turn down after that harder bounce, something we don't know yet. I've turned to the 10-minute chart because the OEX is following the 10-minute chart's trajectory a bit better, and one bounce possibility would be up to 578.01 and then, if the OEX can get past that, up to about 579.00-580.44, to retest resistance there.

Jane Fox : 9/4/2008 12:58:05 PM

Well so much for my prediction the SPX would hit 1320. It still may but that may not be in my lifetime. :) Link

Jane Fox : 9/4/2008 12:55:39 PM

The VIX is without a doubt my favorite internal. When I trade the Equity futures, I never trade against the VIX. Link

Jane Fox : 9/4/2008 12:52:43 PM

The internals were mixed this morning but no longer, they are all bearish now. I usually don?t watch the TRIN too much but when it gets extreme like it is now or if it is moving opposite to the VIX I take note.

VIX and TRIN are moving in the same direction and the AD volume is making new daily lows as the ratio flatlines. Link

Linda Piazza : 9/4/2008 12:51:26 PM

I keep thinking the OEX is going to pop up toward 579.75 at least, if not to test higher resistance, but it hasn't done it yet. I wouldn't totally discount the possibility of the OEX rising up to test the band that now stretches up to about 580.90, though, especially with the 30-minute 9-ema now at 581.06 and untested since early this morning. The current downside target is 575.75, with potentially strong support there on 30-minute closes, if it's touched. The OEX could as easily fall straight there as pop up to test resistance, and it appears to be starting lower again as I type. If you haven't already, it's time to decide how you're going to treat a test of the 574-576 region. Will you take partial profits or just lower stops?

Linda Piazza : 9/4/2008 12:35:50 PM

Potentially strong resistance for the OEX is now from 579.66-580.95. The OEX so far has not been able to closely approach this resistance band, and the resistance band is sinking lower to meet the OEX while the OEX essentially moves sideways in a tight band. This is so far leaning toward a bearish interpretation, but keep in mind how many times both bears and bulls have been surprised by this market and keep adjusting your what-if, profit-protecting plans.

Keene Little : 9/4/2008 12:25:55 PM

The consolidation in SPX near today's low looks better as the 4th wave correction in the decline from yesterday's close. That suggests another leg down today and right now the downside projection is 1239 where the 5th wave would equal the 1st wave (which was the initial drop this morning).

Tab Gilles : 9/4/2008 12:15:08 PM

The European Central Bank and Bank of England left rates steady at 4.25% and 5%. Link Link

However, Tricet sees the EU weakening... Link

Looking at the US Dollar ($USD), Canadian Dollar ($CDW) and the Australian Dollar ($XAD) and Crude Oil ($WTIC). Link

Keene Little : 9/4/2008 12:01:40 PM

We've got a 5-wave move down from yesterday's close so unless it extends lower (pretty bearish so it could) we should get a bounce now to at least correct this morning's decline. It also remains possible the leg down this week completes an a-b-c pullback from August 11th which would set up a big rally into September. I'm not willing to bet that way but don't get complacent if you're short the market.

Linda Piazza : 9/4/2008 12:01:24 PM

The OEX's 15-minute 9-ema is now 579.84, with stronger potential resistance on 15-minute closes now at 581.43. The OEX is 578.74 as I type.

Tab Gilles : 9/4/2008 11:46:00 AM

Tech Glance ...

Philly Semi Inex ($SOX) New 52 week low. Link

Hardware Index ($GHA) Link Software Index ($GSO) Link

Linda Piazza : 9/4/2008 11:41:18 AM

The OEX just sinks lower without even approaching its 15-minute 9-ema again. That's now at 580.41 with further potentially strong resistance on 15-minute closes now up to 581.73. The 30-minute 9-ema is now 581.78.

If you're in bearish trades, just keep adjusting your stops lower. There's the possibility of a pop up to 581-583 to test resistance, so you have to decide whether you're going to be willing to weather such a test, if it occurs, or if you want a lower stop, based perhaps on some point-distance from the current OEX price. The current potential target and potential support on 30-minute closes is 575.78, but there's no written guarantee that it will be reached.

Keene Little : 9/4/2008 11:20:00 AM

The pattern of today's drop looks like it needs a small consolidation near the lows followed by a 5th wave down to complete the leg down from yesterday's close. That would have SPX breaking firmly below its 1251 level and would add to the confirmation of the breakdown in the market. The techs have been leading the way lower so I'll continue to watch to see if NDX can get back above its longer-term uptrend line from 2002, near 1816.

Jane Fox : 9/4/2008 11:03:55 AM

Summary of Weekly Petroleum Data for the Week Ending August 29, 2008

U.S. crude oil refinery inputs averaged nearly 15.3 million barrels per day during the week ending August 29, up 147 thousand barrels per day from the previous week's average. Refineries operated at 88.7 percent of their operable capacity last week. Gasoline production rose last week, averaging 9.4 million barrels per day. Distillate fuel production increased last week, averaging 4.5 million barrels per day.

Jane Fox : 9/4/2008 11:02:19 AM

Crude really spiking now.

Linda Piazza : 9/4/2008 10:58:08 AM

The OEX now has potentially strong resistance on 15-minute closes from 581.63-582.33. The OEX is 579.57 as I type.

Keene Little : 9/4/2008 10:55:13 AM

One other potential support level for SPX that I mentioned yesterday does bear watching. Two equal legs down from the August 11th high is at 1251. The pattern of the move down from August 11th could be an a-b-c pullback with the sharp decline from Tuesday's high being the c-wave. If that's the correct pattern then we'll start another rally leg from this decline. That's only a potential pattern and not one I'd trust yet for a long play.

Linda Piazza : 9/4/2008 10:54:37 AM

I wanted to correct my 10:52:55 statement. I originally said that I personally had not entered any September bull put spreads, but I meant to write October. I did enter full condors for September, but I'm out of them all now. I was extra cautious with that cycle, too, closing out any spread, bullish or bearish, once I had captured 60% of the profit.

And, on that note, this is a good day to look again at your SEP bear call spreads and see if any can be closed out for a pittance. If you've got OCT ones, look at those, too.

Jane Fox : 9/4/2008 10:53:23 AM

Crude volume has spiked over the last 1/2 hour but the report is still due at 11:00.

Keene Little : 9/4/2008 10:52:08 AM

We're in breakdown mode. Short the rallies (if we get them) from here.

Linda Piazza : 9/4/2008 10:52:55 AM

If you're in a bearish trade and if the OEX approaches the 574-576 zone, remember the possibility that that OEX is trading down through a descending price channel from the 8/11 high, a price channel with a lower boundary now near 574-576. While it's possible now that the OEX could just tumble much lower, start deciding now what you're going to do to protect your bearish profits because a bounce could start, too, as the OEX nears the lower trendline of that channel. You can bet I'm not the only person who can draw a channel or trendline and I won't be the only person to have noticed that possibility.

I personally think there's risk of a much deeper drawdown than we've seen yet, and I personally have not yet entered any bull put spreads for October nor have I reinvested our other funds as I wait it out to see what happens. However, even though I believe there could be another deep plunge and am being extra cautious this month because of it, there's no guarantee that I'm right or that there might not be a lot of big bounces along the way to that deeper plunge. This market has proven that anything can happen.

So, the lesson is that you should always, always make sure that a profit doesn't turn into a loss. Be proactive. Think ahead. Be willing to take partial profits along the way because having at least some of the profits locked in enables you to make sounder and less emotion-bound decisions on the rest.

Jane Fox : 9/4/2008 10:43:39 AM

CHICAGO (MarketWatch) -- Mortgage rates moved lower this week after indications that consumer spending could slow, Freddie Mac's chief economist said on Thursday.

The 30-year fixed-rate mortgage averaged 6.35% for the week ending Sept. 4, down from 6.40% last week and 6.46% a year ago, according to Freddie Mac's weekly survey. Fifteen-year fixed-rate mortgages averaged 5.90% this week, down from 5.93% a week ago and 6.15% a year ago.

Adjustable-rate mortgages also drifted downward this week, with 5-year Treasury-indexed hybrid adjustable-rate mortgages averaging 5.97%, down from 6.03% last week and 6.32% a year ago. One-year Treasury-indexed ARMs averaged 5.15% this week, down from 5.33% last week and 5.74% a year ago.

Linda Piazza : 9/4/2008 10:43:06 AM

Unless the OEX can bounce back above 581.80 by the end of this 15-minute period, it has officially set that potential downside target I've been mentioning as a vulnerability for two days. That's currently at 575.82. Remember that this is still only a "potential" target and that it's not even officially set. Obviously, however, continue to factor in vulnerability to that level in your trading plans.

Jane Fox : 9/4/2008 10:40:10 AM

I am only seeing only Natural Gas Report out.

Jane Fox : 9/4/2008 10:38:57 AM

Crude is spiking so the report must have just been released.

Jane Fox : 9/4/2008 10:37:56 AM

I jsut notice that FOMC Member Fisher speaks at 1:40ET.

Jane Fox : 9/4/2008 10:32:28 AM

Crude Inventories are out this morning. Forexfactory.com says 11:00 but I would be thinking about exiting all Crude trades right about now just to be sure.

Jane Fox : 9/4/2008 10:30:48 AM

WASHINGTON (MarketWatch) -- Economic activity in the nonmanufacturing sectors of the U.S. economy expanded slightly in August, the Institute for Supply Management reported Thursday. The ISM nonmanufacturing index rose to 50.6% in August from 49.5% in July. Economists surveyed by MarketWatch were looking for a result of 49.3%. Readings over 50% indicate more firms were growing than contracting. The new-orders index rose to 49.7% from 47.9%. Meanwhile, the employment index declined to 45.4% from 47.1%. The production index rose to 51.6% from 49.6%. Ten of 18 industries reported growth in August.

Linda Piazza : 9/4/2008 10:30:25 AM

The OEX is chopping back and forth after hitting the morning's low. The climb off that low so far looks bear flag-like to me, but I'm not sure that the flag has completed yet. Let's be honest: in this environment, I'm not sure that the flag-like look means anything at all. The OEX could shoot higher any moment. However, for now, it looks as if potential resistance on 15- and 30-minute closes now at 586.03 and 586.58 could hold, if tested. It's possible, too, that the OEX will just break down and slide toward 583.15 or even 582.09 without ever hitting that 30-minute version.

Keene Little : 9/4/2008 10:28:02 AM

So far each bounce is getting sold into and that is of course bearish. Until we see an impulsive bounce off the low this remains a bearish price pattern. The only thing we don't have is a firm break of support, which I identify as SPX 1261, DOW 11400 and NDX 1816 (where they're broken and not recovered).

Linda Piazza : 9/4/2008 10:17:31 AM

The OEX's 15-minute 9-ema did not move up but down. It's at 586.13, potential resistance on 15-minute closes. The 30-minute version is 586.45.

Linda Piazza : 9/4/2008 10:09:32 AM

The OEX's 15-minute 9-ema is now 586.40, but will move a few cents higher as the OEX climbs. It's normal, even in downdrafts to have retests of that moving average. As long as the 15-minute 9-ema's serve as resistance on 15-minute closes and the OEX bounces down hard enough again from retests to keep it turning lower, the level now at 582.21 remains a target. However, I have to say that yesterday, all these moving averages that are typically useful benchmarks weren't at all. Targets were set, erased, reset, erased, met and . . . you get the gist.

Linda Piazza : 9/4/2008 9:56:26 AM

The OEX is, of course, below yesterday's low, and testing potential support on 15-minute closes now at just under 584. There's stronger potential support on 15-minute closes at 582.29. It's also not far above the 8/16 low of 582.56 or the 8/21 one of 582.99. Therefore, it should be obvious that the OEX is approaching potentially strong Keltner and historical support. Bulls really need to get it in gear here or that 574-576 target could be hit. For now, though, consider that vulnerability to 574-576 and not a specific target there yet, with this support just below the current level. Bears need to be especially protective of their profits because the last two times the OEX tested this current level, it bounced big, up to at least 596. Bulls should keep that 574-576 vulnerability in mind, and if evidence that a bullish trade might be worth it is shown, a nearby and logical stop needs to be set to avoid following the OEX down to 574-576 if it should go there. I don't see evidence yet of a bounce to encourage wanta-be bulls, but I sure do see evidence that the OEX is at a level that bears need to protect their profits.

Keene Little : 9/4/2008 9:55:40 AM

Make or break here. SPX and DOW have reached down as far as they dare and still maintain a bullish potential to rally out of this. NDX has dropped down to its long-term uptrend line from October 2002 (1816). This is the line in the sand for the bulls. NDX daily chart: Link

Jane Fox : 9/4/2008 9:52:00 AM

The VIX is making new daily highs. I don?t care what the other internals are telling me as long as the VIX is making new daily highs I will never be long.

Linda Piazza : 9/4/2008 9:51:15 AM

A/D line still headed down and still supporting the bearish case. Be aware, however, that it's now in breakdown territory, and, with both equities and indicators, we often see whipsaws from this area. The A/D line doesn't have to stay at its current -1519 level to remain bearish, but now equity bears would like for 15-minute closes to stay at or below about -1075.

Jane Fox : 9/4/2008 9:50:00 AM

NEW YORK (MarketWatch) -- Boeing's biggest labor group has voted to strike, hinting that the company's proposed wage increases and higher monthly payments to its pension plan wasn't enough to abate workers' fears that their jobs may being shipped overseas.

The walkout was delayed, however, after the Chicago-based manufacturer reopened negotiations with union leaders. The International Machinists and Aerospace Workers said it has agreed to give the company until Friday evening to provide an "exceptional contract offer" under the guidance of a federal mediator.

Jane Fox : 9/4/2008 9:47:43 AM

Bears beware the TRIN is 0.81 and falling, moving opposite to the VIX. It should be moving in the same direction as the VIX. Also the AD ratio is climbing, moving opposite to the AD Volume. This is telling me the bears have a tenuous hold on the ball.

Jane Fox : 9/4/2008 9:42:49 AM

My goodness I suspected the AD line to open below 0 but not as low as it did, -1219.

Linda Piazza : 9/4/2008 9:41:01 AM

Keltner outlook on the A/D line: The A/D line has driven below what may be potential support on 15-minute closes at about -1050, with the A/D line at -1190 as I type, a bit off its low of the day. The A/D line hit that particular support first thing yesterday morning and bounced from it, so this is a bearish divergence in that this time it's pierced it. However, the A/D line can still bounce by the end of the first 15-minute period, showing that support essentially held. All bears want now is for the A/D line not to bounce too big, and preferably to stay somewhere near about -1050. That would be enough to support the bearish case, while a big bounce, particularly one that sustains 15-minute closes above about -750 would not be so supportive of the bearish case.

Linda Piazza : 9/4/2008 9:34:33 AM

For reference, yesterday's OEX low was 584.62, and the 15-minute chart shows potential support on 15-minute closes at about 584.20. The OEX is 584.87 as I type.

Jane Fox : 9/4/2008 9:32:57 AM

This daily chart of Crude goes back as far as the @CL contract will allow me, late 2003. Notice the MACD has fallen this week to a low never seen before on the chart. Of course, you have to consider earlier this year the MACD also got to a high never seen before. Link

Keene Little : 9/4/2008 9:31:03 AM

Equity futures struggled all night and didn't even get the usual lift following the 4:00 AM lows. Following the 8:30 AM economic reports there's been a test of yesterday's lows while the tech futures (NQ) broke to a minor new low (staying slightly weaker than the blue chips). It looks like a negative start to the day again and the bulls can't tolerate much lower than yesterday's low without turning the price patterns significantly more bearish.

Jane Fox : 9/4/2008 9:24:09 AM

WE now have the 10:00 August ISM to navigate through.

Jane Fox : 9/4/2008 9:21:19 AM

WASHINGTON (MarketWatch) -- The productivity of U.S. nonfarm businesses was revised higher in the second quarter than previously estimated, the Labor Department reported Thursday. Productivity, which is defined as output per hour worked, rose at a 4.3% annual rate in the quarter, revised from 2.2% in the earlier estimate a month ago. Unit labor costs -- a key inflation gauge - fell 0.5%, revised down from a gain of 1.3%, the biggest decrease since the third quarter of 2007. For the last year, productivity increased to 3.4% from the previously reported 2.8%. This is the fastest annual increase in productivity in four years. Unit labor costs rose 0.6% year-over-year, compared with the previous estimate of 1.5%. Low unit labor costs should dampen concern about wage growth pressure from high oil and commodity prices.

Jane Fox : 9/4/2008 9:20:47 AM

WASHINGTON (MarketWatch) - First-time claims for state unemployment benefits had their biggest jump in five weeks, the Labor Department reported Thursday. The number of initial claims in the week ending August 20 rose 15,000 to 444,000. It's the highest level since the week ended August 9. The rise surprised analysts. The consensus forecast of Wall Street economists was for claims to fall to 420,000. Claims in the previous week were revised to a decrease of 6,000 to 429,000 compared with the initial estimate of a fall of 10,000 to 425,000. The four-week average of initial claims fell 3,250 to 438,000. Meanwhile, the number of Americans receiving state jobless benefits held steady rose 6,000 to 3.44 million in the week ending August 23.This is the highest level since November 2003. The four-week moving average of continuing claims rose 33,250 to 3.4 million. This is also the highest level since November 2003.

Jane Fox : 9/4/2008 9:19:30 AM

Here are your overnight charts. The S&P (ES) and the NDX (NQ) futures tested their previous day lows but the Russell 2000 (ER2) and DOW (YM) so far have not.

The series of lower lows and highs though should be telling you the trend is down and I suspect the AD line will open below 0. Link

Jane Fox : 9/4/2008 9:06:57 AM

WASHINGTON (MarketWatch) -- U.S. private-sector employment fell 33,000 in August, according to the ADP employment index released Thursday. Analysts surveyed by MarketWatch were looking for a drop of 25,000.

Adding in some 20,000 government workers typically hired in a given month, the ADP index suggests U.S. nonfarm payrolls fell about 13,000 in August. The government will release its payrolls report on Friday, with economists expecting a loss of 75,000.

In recent months, the ADP report has overstated job growth compared with the government data, and some view the monthly reports skeptically.

The ADP sample is taken during the same week of the month as the government survey, using similar techniques based on anonymous data from about 400,000 businesses covering about 24 million workers. Automatic Data Processing, based in Roseland, N.J., provides payroll and human-resources services to about one of every six U.S. workers, at more than 500,000 companies.

Linda Piazza : 9/4/2008 8:53:49 AM

Here's what I see on the OEX's daily chart: Link A last-minute save was responsible for bouncing the OEX back up to those converging 10- and 30-sma's, but futures suggest that the OEX will turn right back down again. If the cash markets should defy the futures' predictions, the OEX has potentially strong resistance on 15 and 30-minute closes up to about 591 and beginning at the OEX's closing value yesterday. A sustained break through 591 that holds through 30-minute closes would set a potential upside target of 595, where I would again look for rollover potential. Currently, however, futures don't peg a bounce as the most likely first action.

If the OEX does decline, where would next support be? An obvious example is to look for potential support at yesterday's low, at the triangle's support line, but there's higher support to watch, too, at the 15- and 30-minute 9-ema's. Those are currently at 587.67 and 587.78, respectively, but they'll be driven lower by lower price action. Watch, then, for first potential support on 15- and 30-minute closes just above 587, then near 585.70-586.10. Until we see how strong the bears are, we must watch for the possibility that support could kick in at one of these levels, but sustained values below yesterday's low suggests that we could see a 582.40 test and maybe even a 576 one if the higher test fails to bounce the OEX. I absolutely would not expect a 576 test if in bearish trades, refusing to take profits along the way when appropriate because you think you're going to get a better price, but if I were considering hopping into a bullish trade, I absolutely would keep that lower level in mind, making sure I had a reason for entering a bullish trade and having a logical and close-by stop so I didn't follow the OEX all the way down to 576 if it should go there.

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