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Keene Little : 9/8/2008 10:41:21 PM

Tuesday's pivot table: Link

Monday's rally saw strength in the blue chips but not the techs. The DOW was up 290 points (+2.6%) for the day while NDX was down 5.3 points (-.3%). That's not a healthy sign when the market is that bifurcated. But it leaves us guessing which index will hold sway over the market for the next few days. For a while now it's been the techs that have led the way and right now that would mean more selling. The 120-min chart shows the potential stair-stepping lower scenario is still alive for NDX: Link

Key support for NDX, if it drops lower, will be near the March low at 1679. This is where the decline from June will have two equal legs down and it will be at the bottom of a parallel down-channel for price action since June, shown on the daily chart: Link

SPX is clearly more bullish looking after Monday's rally but it will need to keep the rally going on Tuesday. The rally stopped at the downtrend line from May, drawn through the August 11th high, which at 1270 is also the 62% retracement level of the decline from last Tuesday, September 2nd. A turn back down below 1253 would be bearish and could usher in some strong selling if we're about to see several degrees of 3rd waves start to unfold to the downside. 120-min chart: Link

But if the bulls can keep the rally alive and get SPX above 1285 then I think the chances are good we'll see a rally at least up to 1330 (two equal legs up from July). That would be especially true if the techs at least grudgingly follow along. The daily chart shows the confluence of trend lines that SPX is currently fighting to get back above: Link

Tab Gilles : 9/8/2008 10:23:41 PM

The dollar gathered strength, hitting an 11-month high on the euro, as news of a US government takeover of ailing mortgage giants Fannie Mae and Freddie Mac. The Euro fell at one point to 1.4053 dollars, its lowest reading since last October.

On the eve of OPECs meeting, Kuwait's oil minister said Monday that there is no need for OPEC to cut production, despite crude prices that have fallen nearly 30 percent since July. Mohammed Abdullah Al-Aleem is part of an OPEC committee whose recommendations could play in OPEC's final decision on what to do about output.

I'd posted this chart 3 weeks ago.... Link

$100 will more than likely be tested soon...PnF has a Price Objective of $96. Link Link Link

Euro ($XEU) PnF PO is $122> Link

Jeff Bailey : 9/8/2008 10:19:16 PM

Dorsey/Wright Major Market Bullish % at this Link

The very broad BPALL reversed back LOWER to "bull correction" on Friday at 34.00%. It would take a reversing higher measure of 40.00% for "bull confirmed" and would currently take a lower measure of 24.00% for "bear confirmed."

BPNYSE and BPOTC remain in "bull confirmed" status.

BPSPX remains in "bull alert" status.

BPOEX achieved "bull confirmed" status at 48.00% on 8/29/08, but then reversed back lower to "bull correction" status at 42.00% on 09/04/08. A measure of 38.00% or lower would be "bear confirmed," while a reversing higher measure of 46.00% is needed to once again achieve "bull confirmed" status.

BPNDX reversed back lower to "bull correction" status on 8/19/08 at 46.00%. A measure of 30.00% would be "bear confirmed," while a reversing higher measure of 42.00% is needed for "bull confirmed."

The very narrow, and rarely utilized BPDJIA (just 30 stocks) did achieve "bear confirmed" status on 09/04/08 at 28.00%. Today's action and reversal back higher to 30.00% (on 2% box chart) is "bull alert."

OI Technical Staff : 9/8/2008 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 : 9/8/2008 9:57:06 PM

Incredible action in Dorsey/Wright's major market bullish % while I've been away.

Jeff Bailey : 9/8/2008 8:39:29 PM

Major Global Indexes, Currencies, USO, GLD, HUI.X, OIX.X and XLF Link

Yen showing some sign of stability. INDU, OEX, SPX showing some stability.

Jeff Bailey : 9/8/2008 5:22:13 PM

NYSE churned over 7.3 billion today!

FNM accounts for 429.9 million.

FRE 350.1 million

Jeff Bailey : 9/8/2008 4:46:19 PM

UNG $34.94 +1.95% ...

Jeff Bailey : 9/8/2008 4:45:44 PM

USO $85.93 -0.15% ...

Jeff Bailey : 9/8/2008 4:45:10 PM

DXY's 04:00 tick was 79.42 ... up 0.60% from Friday's 04:00 tick

Tab Gilles : 9/8/2008 4:17:40 PM

Lets breakdown the tech sector....

$GTSI Comp ($GTC) Link Link

Semis ($GSM) Link Link

Hardware ($GHA) Link Link

Software ($GSO) Link Link

Internet ($GIN) Link Link

Service ($GSV) Link Link

Jeff Bailey : 9/8/2008 4:07:49 PM

Note "plunge" in refinance last couple of weeks ... Tie with this weekend's news regarding FNM and FRE.

Linda Piazza : 9/8/2008 4:04:36 PM

The OEX will close the day above the 584.28 level but not above the 590-592 level mentioned in my 8:55:36 post as benchmarks above which the OEX might need to close in order to lessen vulnerability to 553. It looks to be ending the day at important resistance on 30-minute up to daily charts, too, so we're left in a bit of limbo as to next direction.

Jeff Bailey : 9/8/2008 4:04:21 PM

Last week's jump in the Purchases Index +10.5% ... has my 4-week SMA rising to 323.5 from 315.1. 12-week SMA rises from potential "trough low" of 330.7 to 332.3.

Keene Little : 9/8/2008 4:02:06 PM

Looks like it's going to be a nice parking job at SPX 1270--keep us all guessing about tomorrow.

Tab Gilles : 9/8/2008 4:01:44 PM

Chesapeake Energy (CHK) $42.68 -$1.66 Support @ $42. Link

Jeff Bailey : 9/8/2008 4:01:04 PM

Last Wednesday's MBA Weekly Application Survey at this Link

Jeff Bailey : 9/8/2008 3:58:50 PM

Dow Jones US Home Construction (DJUSHB) 347.70 +10.40% ... threatens highest close since 05/20/08.

Keene Little : 9/8/2008 3:56:07 PM

Nice bounce back up keeps the bullish potential in play here. I added the downtrend line from May through the August 11th high onto the SPX 120-min chart because it seems to have an influence on price action today. This morning's rally was rejected at it and now it's bouncing back up towards it, currently near 1270. I show two upside scenarios on the chart but if it can't back above 1270 and turns back down below the low near 1253 at 3:00 PM it will be bearish So that's the level to watch now. Link

Tab Gilles : 9/8/2008 3:54:03 PM

Apple (AAPL) $157.80 -$2.33 (1.5%)

Nearterm support in the $150 area, if the selloff in tech is severe, Apple could see the March lows ($120's). Link PnF $120 PO: Link

Linda Piazza : 9/8/2008 3:52:50 PM

My delayed quote shows the TED spread at 1.12, an 0.074 rise or 7.110% increase. Those treasury and eurodollars traders decided that these Fannie/Freddie steps didn't do a lot to lessen the default risk.

Linda Piazza : 9/8/2008 3:50:30 PM

With the kind of market action that's happening today, it's a bit foolhardy to speak of where the OEX might end the day. However, I wanted to mention that it is now back up to the converging 10- and 30-sma's on the daily chart as well as the former rising trendline that had formed its triangle support (green on the chart I've linked): Link We don't know what will happen by the end of the day, and surprised bears might even help fuel a push above that trendline and those moving averages. However, do realize that what we're seeing is a kiss-goodbye test and we really don't know yet how it's going to turn out. Make your decisions about how much risk you're going to carry overnight based on that knowledge. Perhaps some of you will decide to take your bullish profits home with you and take another look tomorrow. Perhaps some will decide to lock in at least part of your bullish profits, even if you feel like gambling with the rest that the OEX will rise up toward the descending trendline off the 8/11 high. Decide what you think you're going to want to do and act accordingly.

Tab Gilles : 9/8/2008 3:48:34 PM

Not a good day for tech, most analysts are projecting a steep decline in tech spending....a strong dollar will also hurt Google.

Google (GOOG) $424.00 -$20 (4.54%) Link Link

Jane Fox : 9/8/2008 3:43:18 PM

Considering the bullish overnight session the intraday has been very disappointing. Link

Jane Fox : 9/8/2008 3:40:20 PM

WASHINGTON (MarketWatch) - U.S. consumer debt grew at an annual rate of 2.1% in July, the slowest growth since December, the Federal Reserve reported Monday.

Consumer debt -- including credit cards and auto loans but not including mortgages - increased $4.6 billion to $2.59 trillion, the Fed said. It was the slowest growth in credit since the 1.9% growth rate in December.

June's growth was revised down from 6.7%, or $14.3 billion, to 5.1%, or $11 billion. Growth of credit card debt accelerated to 4.8%, or $3.9 billion, in July from 3.5% in June.

Growth of nonrevolving debt - largely auto loans - slowed to 0.5%, or $678.1 million, the slowest since December

Linda Piazza : 9/8/2008 3:36:38 PM

This is an anything-can-happen area for the OEX. It's testing the same Keltner resistance levels that it was testing earlier this morning, with the OEX forming all 30-minute closes early this morning at or below the resistance currently being tested, while punching up intra-30-minute period to or through the next level, which is currently at 587.37. We've got trendlines on various chart intervals and Fib levels on intraday charts and important moving averages on the daily chart all coming together in this zone, so it represents either rollover potential or the barrier that the bulls may burst through on their way to a bear-market stampede. OEX at 585.56 as I type.

Jane Fox : 9/8/2008 3:35:08 PM

One of the tried and true interrmarket relationships is between Gold and the US$ but even that relationship sometimes takes a break. Gold is usually a mirror image of the US$ but today the $ is up Link and so is Gold (well sort of) Link

Jeff Bailey : 9/8/2008 3:31:11 PM

September "Max Pain" Theory Tabulations ... DIA, SPY, QQQQ, IWM, SMH, XLF, USO and GLD before this morning's open Link

Linda Piazza : 9/8/2008 3:31:36 PM

Bill Gross was interviewed today on Bloomberg TV about the Fannie/Freddie action. He spoke of the continued uncertainties but did admit that the government had opened its wallet even if it hadn't paid anything yet, and that there had been some positive moves. He was asked why spreads hadn't narrowed more. He said that the firm came in at 4:00 am "all dressed up and ready to go," but there was nowhere to go. The markets were illiquid, he said. If you'd like to listen to the podcast, you can find it at Link .

Linda Piazza : 9/8/2008 3:26:03 PM

For the OEX, there's potential resistance on 30-minute closes at 584.37 and then 587.38. The OEX is 583.96 as I type.

Linda Piazza : 9/8/2008 3:21:08 PM

What are some of the important scheduled releases and events on foreign bourses overnight? Of course, the ongoing OPEC meeting is one. Others include the U.K.'s BRC Retail Sales Monitor, RICS House Price Balance and NIER GDP estimate, all tonight at 7:01 pm ET. At 2:00 am ET, Germany's Trade Balance and Japan's Machine Tool Orders will both be released. At 4:30 AM ET, the U.K.'s Manufacturing Production and Industrial Production will both be released. Canada's Housing Starts appears at 8:15 am ET. That's it until our Fed Chairman Ben Bernanke speaks at 9:00 am, with his topic not the economy but education. He'll be appearing before the White House Initiative on Historic Black Colleges and Universities, and I don't see information about whether there will be a Q&A session.

Jeff Bailey : 9/8/2008 3:21:04 PM

Getting caught up on pivot calibrations .... getting caught up on a lot of things ....

Jeff Bailey : 9/8/2008 3:20:37 PM

NYSE and COMPX both above DAILY Pivots ...

Jeff Bailey : 9/8/2008 3:20:04 PM

NASDAQ Comp ($COMPX) 2,256.91 +0.04% ... WKLY Pivot above at 2,295

Jeff Bailey : 9/8/2008 3:19:20 PM

NYSE Comp ($NYA.X) 8,107 +0.91% ... WKLY Pivot right here.

Jeff Bailey : 9/8/2008 3:18:41 PM

NASDAQ a/d 1,605:1,231

Jeff Bailey : 9/8/2008 3:18:25 PM

NYSE a/d 1,649:1,133

Linda Piazza : 9/8/2008 3:02:37 PM

The TED spread is 1.12.

Linda Piazza : 9/8/2008 2:53:30 PM

It looks to me as if sustained A/D levels below about 400 would suggest that something was changing in the tenor and becoming more negative. Watch, though, for possible support at about 160 to -150. The A/D line is currently 676.

Linda Piazza : 9/8/2008 2:50:09 PM

With the locus of the middle-of-the-day chop being the 50% retracement of the slide down from last Tuesday's early high, I'm not sure what to think about what we're seeing. If I look at Keltner setups, the 30-minute chart still tells me to expect some potential resistance in the 584.40 and then 587.25 zones, places that converge with other types of resistance. Those charts suggest that the OEX could turn down again if the OEX should test it. However, remember last week when the OEX was chopping around either side of the 582.44 level, and I was saying that the chop looked like the kind that often formed midway through a move, then saying that it looked possible that the OEX could drop to 573? Well, this could be that same sort of chop that could be occurring midway through a move, too, but this time that would be a move up toward last week's high. For now, I think I'd caution bulls to be particularly careful near that 584.40 zone, for resistance there on 30-minute closes, and again at the 587-589 zone, for potential resistance there, too. Beyond that, we just have to see what happens, and factor in the possibility that the OEX might not even get as high as that first potential resistance. OEX is 582.55 as I type.

Jane Fox : 9/8/2008 2:48:02 PM

These charts are a very good example of how the VIX (bottom chart), the AD volume (middle chart) and the AD ratio work together. The AD charts should move in the same direction but the VIX in an opposite direction. Link

Keene Little : 9/8/2008 2:43:54 PM

The bounce off this morning's low would have two equal legs up at 1260.59. A 62% retracement of the drop from this morning's high is at 1260.62. That's a good level to watch for resistance (plus it's the same 1261 level that had been support for the past month. A turn back down from there to a new daily low would likely be accompanied by some strong selling into the close. A push back above 1265 would likely be bullish.

Linda Piazza : 9/8/2008 2:37:16 PM

For reference again, the OEX's daily 10-sma is now 585.85. The 30-sma is 588.82. The 30-minute chart suggests that if the OEX should rise up again, it has potentially strong resistance on 30-minute closes at 584.39 and then 587.17, but some charts show some remaining doubt about whether the OEX will get up high enough to test that resistance.

Linda Piazza : 9/8/2008 2:19:48 PM

The OEX tested the support near 578, dropping to a low of 577.69 before rebounding again. Now it's driving to the descending trendline off the first two early peaks this morning, with that trendline now crossing at about 582. As it does so, it's testing potential resistance on 15-minute closes at 580.90. In other words, it's just zooming around.

The possibility must be considered that the pullback off the day's high has been a bull flag pullback (accomplished in the form of an inverse H&S with a sharply declining neckline). However, if the OEX does burst up through that, I'd still consider 584.50 and then 587.40 to be potentially strong resistance on 30-minute closes. For now, we're just getting a test. I thought this afternoon was going to be particularly difficult to game, and it has been.

Jeff Bailey : 9/8/2008 2:17:33 PM

NYSE breaches 5 billion shares.

Jeff Bailey : 9/8/2008 2:03:30 PM

SPY $125.26 +0.67% ...

Jeff Bailey : 9/8/2008 2:03:02 PM

TRIN 1.36 ... slips under WKLY Pivot.

Jane Fox : 9/8/2008 2:00:20 PM

Needless to say Freddie Mac Link and Fannie Mae Link have sold off big time today.

Jane Fox : 9/8/2008 1:51:23 PM

Crude has made a lower low again today, $104.70. Link

Jane Fox : 9/8/2008 1:49:59 PM

The VIX has been sporting the bears all day today and is certainly not what the bulls had in mind for trading today. This must be very discouraging to anyone hoping the Freddie Mac and Fannie Mae bailouts would prop up the markets. Link

Linda Piazza : 9/8/2008 1:47:56 PM

The OEX potential target has now lowered from 578.15 to 578.08 and might drop a bit lower if the OEX continues lower, too. Realize that so far the OEX is coiling and so these targets might become less and less useful. If the OEX did sustain levels below 578 and particularly below 577.90, a drop to 576.90 and perhaps even 574.75 is possible. In fact, some charts suggest that even lower targets would then be possible, perhaps down to 571.50-572.40. The Keltner charts have not yet set those as potential targets, however, and a push higher can't yet be ruled out, either.

Linda Piazza : 9/8/2008 1:34:57 PM

The OEX hasn't been able to maintain levels above resistance and now turns down, looking vulnerable to 579.09 or maybe 578.15.

Keene Little : 9/8/2008 1:29:10 PM

I'm watching SPX for some clues as to whether it's going to follow the techs down now or later. If the bounce off this morning's low leads to another daily low then it will be bearish and I suspect gap closure at that point will not hold. As long as the bounce holds it maintains at least some short term bullish potential.

Jeff Bailey : 9/8/2008 1:12:52 PM

iShares Emerging Markets (EEM) $37.17 +0.56% ... rare to see among Top#10 most actives.

Jeff Bailey : 9/8/2008 1:12:06 PM

Most Actives ... FNM $0.90 -87.21%, XLF $22.29 +2.52%, QQQQ $43.09 -0.82%, WM $3.60 -15.69%, BAC $33.95 +5.33%, FRE $0.85 -83.33%, SPY $125.98 +1.25%, WFC $32.47 +4.07%, ORCL $19.51 -2.79%, EEM $37.24 +0.70%

Linda Piazza : 9/8/2008 1:06:18 PM

The OEX has now risen into another potential resistance level, up to 538.50 on 10-minute closes. If the OEX can make it past that, it has potential to rise into potential resistance on 30-minute closes at 584.61 or maybe even 587.56, but I would watch for rollover potential at any time. If this morning was difficult to trade for some--and offered great opportunities for adept scalpers--this afternoon may be even more difficult.

Jeff Bailey : 9/8/2008 12:57:01 PM

SPY $125.97 +1.24% ... buyers and sellers continue battle at 1/22/08 relative low.

Jeff Bailey : 9/8/2008 12:51:02 PM

DJ- Three (3) largest US Gulf deepwater rig operators evacuate.

Jeff Bailey : 9/8/2008 12:49:58 PM

3-month and 6-month Treasury acution results being released.

Jeff Bailey : 9/8/2008 12:49:11 PM

Exxon/Mobil preparing for US Gulf personnel evacuations

XOM $76.46 +1.11% ...

Jeff Bailey : 9/8/2008 12:48:15 PM

ConocoPhillips evacuating non-essential personnel from Gulf due to Ike.

COP $74.42 -1.33% ...

Jeff Bailey : 9/8/2008 12:44:54 PM

US Oil Fund (USO) $84.87 -1.38% .... Was $93.39 at 08/28/08 close. Down 9.12% since.

Jeff Bailey : 9/8/2008 12:43:09 PM

Euro CurrencyShares (FXE) $141.25 -0.84% ... Was $147.40 at 08/28/08 close. Down 4.17% since.

Jeff Bailey : 9/8/2008 12:38:38 PM

INDU 11,405 +1.64% ...

NDX 1,756.79 -0.64% ...

Linda Piazza : 9/8/2008 12:36:32 PM

I've moved back down to the 10-minute chart to watch the OEX today. For almost two hours, the 10-minute 9-ema has been providing resistance on 10-minute closes. That was at 580.50 and is now at 580.75 with the OEX currently pushing above it this 10-minute period. If the OEX can maintain 10-minute closes above it, might push up toward 582.56-583.80 before it finds next resistance. OEX now at 581.97, moving up further as I typed.

Jeff Bailey : 9/8/2008 12:34:49 PM

SSO $58.92 +2.73% ...

Jeff Bailey : 9/8/2008 12:34:34 PM

SPY $126.14 +1.38% ...

Jeff Bailey : 9/8/2008 12:34:11 PM

CAL $17.42 -3.54% ...

Jeff Bailey : 9/8/2008 12:33:59 PM

AMR $10.62 -3.01% ...

Jeff Bailey : 9/8/2008 12:33:43 PM

Dow Transportation Avg. (TRAN) 4,947.21 +1.19% ...

Jeff Bailey : 9/8/2008 12:33:15 PM

QQQQ $43.02 -0.98% ...

Jeff Bailey : 9/8/2008 12:33:01 PM

UAL Corp. (UAUA) $11.63 -5.44% ... released for trade.

Jeff Bailey : 9/8/2008 12:29:04 PM

QQQQ 42.95 -1.15% ...

Keene Little : 9/8/2008 12:27:53 PM

DOW is up 130 (+1.1%) while NDX is down 22 points (-1.2%). This is the picture of intermarket divergence and it's not a healthy sign--read bearish.

Jeff Bailey : 9/8/2008 12:25:21 PM

Dow Transportation Avg. (TRAN) 4,927.72 +0.79% ...

Jeff Bailey : 9/8/2008 12:24:48 PM

UAL Corp. (UAUA) $8.89 -27.72% ... still halted. Resumption quote time @ 12:25:00 PM EDT, Resumption trade time slated for 12:30:00 PM EDT.

Linda Piazza : 9/8/2008 12:18:09 PM

The 578.80-580.50 zone may now be resistance for the OEX.

Jeff Bailey : 9/8/2008 12:02:08 PM

Various FRE and FNM halts from this morning (Part II remainder) at this Link

Linda Piazza : 9/8/2008 12:01:27 PM

Next OEX potential support on 30-minute closes is at 578.45. The day's low has been 577.70. On 15-minute closes, the potential support is 577.06. Bulls obviously don't want a new low of the day and want one of those support levels to hold on 30 or 15-minute closes instead. The intraday charts suggest that there could be a quick drop down to 569.70-574.40 if that support fails. OEX at 578.94 as I type.

Keene Little : 9/8/2008 11:58:52 AM

With the techs diving well below gap closure I'm not sure how we can look at today's huge gap up as anything but a weekend-inspired short-covering event (something the Fed and Treasury seem to take great pleasure in doing). Follow the techs--they're heading lower.

Jeff Bailey : 9/8/2008 11:57:46 AM

TRIN 1.86 ...

Jeff Bailey : 9/8/2008 11:57:31 AM

Various FRE and FNM halts from this morning (partial) Link

Jeff Bailey : 9/8/2008 11:49:39 AM

US Gasoline Fund (UGA) $52.53 +1.98% ...

Jeff Bailey : 9/8/2008 11:48:40 AM

USO $85.67 -0.45% ... slips red. (see Aug-Sep'05 Hurricane archives)

Linda Piazza : 9/8/2008 11:47:17 AM

The OEX is testing potentially strong support and that's about all we can conclude now. That support is down to about 580.60 on 15-minute closes, but another test of the 578 zone can't be precluded.

Jeff Bailey : 9/8/2008 11:45:49 AM

DOE to deliver 250,000 barrels of oil to Marathon (update) ... Reuters Story Link

MRO $43.79 +0.38% ...

Linda Piazza : 9/8/2008 11:45:58 AM

The A/D line has now hit a new low of the day. Without a strong bounce, soon, it's risking vulnerability to 350-450. The A/D line is now 1124.

Linda Piazza : 9/8/2008 11:45:15 AM

The A/D line is not so far off its low of the day. It has finally moved down to test potentially strong support now at 1160, the same potential support level that was formerly at about 1050 near the open this morning. Today's first print was made at 1149, too, so there's gap as well as Keltner support there. To break through that would be troubling for bulls and might suggest an A/D line vulnerability to about 350-450, another big drop. The A/D line is 1220 as I type.

Keene Little : 9/8/2008 11:38:40 AM

The one bearish thing I'll say about SPX here is its inability to hold 1261, the breakdown level after seeing that level act as support the past month. One can only imagine the disappointment (and strong selling) if this morning's rally doesn't hold.

Jane Fox : 9/8/2008 11:35:00 AM

NEW YORK (MarketWatch) -- UAL Corp. shares were halted Monday following rumors that the airline holding company was filing for bankruptcy, a rumor UAL said was completely untrue. An old news item on United Airlines seeking bankruptcy inadvertently resurfaced on a Web site, triggering a sell-off that wiped out 99% of the company's share price, CNBC reported. Shares of UAL last traded at a penny a share, down 99.9%.

Linda Piazza : 9/8/2008 11:34:42 AM

Between a rock and a hard place: the OEX is above potentially strong support on 15-minute closes that extends down to 580.64, support that is being tested again, and resistance on 30-minute closes, at 584.85 and 588.13, resistance that's held all through this morning. Until one or the other of those breaks and the break is sustained, the OEX is just ping-ponging between that proverbial rock and a hard place. I could insert my own bias into the equation here, but that would be less than helpful. I'm concerned at the holding of resistance and concerned in general because this was a futures-engineered pop, in my opinion, but this chop's focus is right at the 50% mark of the decline last week, right where you'd expect it to chop around if it were either eventually heading up to challenge last week's high or going to turn down again. It just doesn't prove anything wih the OEX chopping from the 38.2-61.8% retracements, swinging about equal distance either side of the 50% retracement.

Jeff Bailey : 9/8/2008 11:28:15 AM

SSO $59.25 +3.31% ...

Jeff Bailey : 9/8/2008 11:27:52 AM

SPX 1,261.10 +1.51% ... WKLY Pivot (1,254.14) held buyers.

Jeff Bailey : 9/8/2008 11:26:56 AM

TRIN 2.16 .... testing WKLY R1 (2.16) from above.

Jane Fox : 9/8/2008 11:24:36 AM

UAL says bankruptcy story completely untrue

Jeff Bailey : 9/8/2008 11:20:03 AM

US Nat. Gas Fund (UNG) $35.22 +2.77% ...

Jeff Bailey : 9/8/2008 11:19:22 AM

Anadarko ... Evacuating non-essential US Gulf personnel

Jeff Bailey : 9/8/2008 11:17:47 AM

Continental Airlines (CAL) $17.24 -4.76% ... after trade at $13.60.

Jeff Bailey : 9/8/2008 11:17:18 AM

AMR Corp. (AMR) $10.52 -3.83% ... after trade at $8.00.

Keene Little : 9/8/2008 11:17:06 AM

So far NDX looks more bearish but the pullback in SPX is only a 3-wave move and therefore fits as a correction and is pointing higher still.

Jeff Bailey : 9/8/2008 11:16:56 AM

WILD trade in airline stocks last 15 minutes.

Jeff Bailey : 9/8/2008 11:15:33 AM

UAL ... Saying report/rumor that company has filed for bankruptcy is untrue.

Keene Little : 9/8/2008 11:15:21 AM

I have been following your newsletter for almost two years now....

During the recent months, you have mentioned multiple times to stay out of stock and keep cash flow. However, I would like to ask for your comment regarding holding bonds in general. I am not sure where bond fits, are they more close to the cash category? Just for reference information, I am currently holding VBTIX [Vanguard's Total Bond Index, weekly chart: Link ] and PTRAX [Pimco Funds, both of which look very similar].

Your input would be greatly appreciated.

This is a great question and it's one I know many of us are contemplating. We're so used to having a stock portfolio that it almost seems sinful (well, un-American anyway) not to have an investment in stocks. As I've been stating for a while now, there are good times to be invested in stocks and bad times. We're in a bad time. There will always be good times for some stocks and if you're good at picking individual stocks for their individual stories that's one thing. But generally speaking a bear market is bad for most stocks.

Bonds are a big question mark right now?I could argue equally strongly for a bond market decline (increasing rates) or a bond market rally (declining rates and could coincide with a stock market decline). If you do a relative strength analysis you?ll see that bonds have outperformed stocks during the past 10-year period. During the last bear market (2000-2002) the bond funds did well. As rates dropped bond prices rose. The big question now of course is how much further can rates drop and does that therefore make it riskier to hold bonds?

My personal feeling on this, and it?s just my opinion, is that it?s safer to be in cash--bank CDs (safe banks only, not ones heavily exposed to the mortgage or other consumer loan markets) and savings accounts. Watch your FDIC limitations. The interest rate return on cash is horrible. The negative return on stocks is more horrible. I?ll take the cash.

Bonds could lose their value but your interest rate return will climb so there?s a tradeoff--trade bond funds to take advantage of the rollover to new bonds and their interest rates. Some are buying dividend-paying stocks as they think about the same tradeoff but dividends can be cut without notice. If bond prices dropped below the 2006-2007 lows I?d get out and go 100% cash (I do consider US Treasuries as good as cash, at least for now). Until then you might want to consider 50% cash/50% intermediate-term bonds (3-5 years). Stay away from corporate and municipal bonds, each of which will have a very difficult time with the coming credit crisis and slowing economy (and slowing tax revenue for the municipalities).

Again, JMHO. Good luck.

Jane Fox : 9/8/2008 11:14:47 AM

Shares of UAL halted

Jeff Bailey : 9/8/2008 11:14:40 AM

UAL Corp. (UAUA) $8.89 -27.72% ... Halted for trade.

Linda Piazza : 9/8/2008 11:10:41 AM

The A/D line didn't quite drop to 1050, but it did drop to 1233 and that turned out to be enough to pull the OEX back toward that support level to which it had been looking vulnerable. What made it look vulnerable to that? The sustained 30-minute closes (three in a row now) at or below resistance now from 584.86-588.01. Despite the perhaps "irrational" exuberance, to borrow an adjective from Greenspan, this morning, the OEX was stalling right where chart setups suggested it might. Now, though, we've got another bounce, so we should look again for possible resistance in that same level. As Jane said earlier, it was always likely to be a difficult trading environment this morning.

Linda Piazza : 9/8/2008 11:05:21 AM

And it appears that the OEX was indeed vulnerable to 579-580. The OEX has potentially strong support on 15-minute closes from 580.29-581.49. It's testing that now.

Jeff Bailey : 9/8/2008 10:52:05 AM

Power back on at Alon Krotz Springs refinery late Sunday.

Linda Piazza : 9/8/2008 10:49:53 AM

Potential OEX resistance on 30-minute closes at 588.05. That will get pushed up or down by a few cents during the 30-minute period, depending on whether the OEX bobs up or down. A strong push either direction would change it more than a few cents, but I just wanted to point out that it's a dynamic number, changing a little with price action. OEX at 587.28 as I type.

Jeff Bailey : 9/8/2008 10:48:30 AM

SPR release to supply Marathon's Midwest refineries.

Jeff Bailey : 9/8/2008 10:47:58 AM

US Energy Department to release 250,000 barrels of oil today.

Jeff Bailey : 9/8/2008 10:45:44 AM

ICE futures, OTC trading after glitch earlier this morning.

Jeff Bailey : 9/8/2008 10:38:44 AM

Most Actives ... QQQQ $43.60 +0.34%, BAC $33.95 +5.33%, XLF $22.46 +3.31%, FNM $1.21 -82.81%, SPY $127.22 +2.23%, FRE $1.14 -77.64%, ORCL $19.57 -2.49%, ABK $9.16 +7.51%, INTC $20.95 +1.64%, WM $4.25 -0.46%

Linda Piazza : 9/8/2008 10:32:54 AM

TED spread 1.08, its high of the day. This spread is not narrowing significantly this morning, as would be expected if the global markets thought that default risk was dropping significantly with the Freddie Mac and Fannie Mae action. It is narrower than it was most of last week, but it's still above support from about 0.98-1.00.

Linda Piazza : 9/8/2008 10:29:51 AM

The A/D line is now 1782, pulling back a bit more strongly but not yet toward next support that is now at about 1270 and then 1050. It would probably have to fall back toward that 1050 level before we saw much of a pullback in the OEX, as I mentioned earlier. If there's another OEX 30-minute close below about 584.95, then traders should still factor in possible vulnerability to that decline toward 580.82, but without an A/D decline toward 1050, I'm not so sure that's going to happen, as mentioned earlier. The OEX is currently 586.16 and the A/D line 1774.

Linda Piazza : 9/8/2008 10:07:36 AM

The A/D line isn't really pulling back strongly, so it's not yet supporting the idea of a strong pullback. It did find resistance on the first 30-minute close at the Keltner level near 2000, so it has vulnerability to about 1025, but it's not yet dropping precipitously. Until and unless it does, traders should still consider the possibility that the OEX and SPX might just move sideways for a while. The A/D line is currently 1965. If it drops toward that 1025 level, however, an OEX pullback to the levels mentioned in my 10:04:32 post might be more likely.

Linda Piazza : 9/8/2008 10:04:32 AM

We may not yet know the whole story of how the day or the next days or weeks unfold, but we know one thing: the OEX is finding resistance exactly where it looked as if it might, at the convergence of the former rising triangle support line, the daily 10- and 30-sma's, and the 30-minute resistance, as mentioned in my 8:55:36 post as the logical place to look for resistance. The OEX has just closed its first 30-minute period below that 30-minute version, at 584.92 and 587.89 respectively. The resistance held. We now must consider vulnerability to 580.70 and maybe even 578.85. That's not a given, but factor the possibility of a pullback to those levels into your trading plan.

Jane Fox : 9/8/2008 10:01:44 AM

The TRIN opened the day at 3.77 and is now 2.37. This is certainly into overdone territory and since the VIX is making new daily highs (bearish) I would be careful with long positions right now. The AD line and AD ratio are both still very bullish so I would certainly not be trying any short positions either. Like I said earlier, this will be a tough day for us daytraders.

That is if you trade equities but Crude traders are having a ball. Straight up and now straight down. I call days like today my Yacht days.

Keene Little : 9/8/2008 9:59:39 AM

One of the reasons I mention to keep an eye on the techs, and their relative weakness this morning, is because the NDX price pattern supports a continuation lower after this morning's bounce. It's already looking like it could reverse right back down. If NDX drops back below Friday's later-afternoon low near 1765 it will be bearish (trading near 1776 as I type). The 120-min chart shows the potential to stair-step much lower over the next two weeks: Link

Linda Piazza : 9/8/2008 9:54:44 AM

Be aware that if the OEX closes this first 30-minute period below about 584.95, it risks tumbling all the way back to 580.50 and maybe toward 578.70. That's not a given but a definite possibility. OEX at 585.96.

Jane Fox : 9/8/2008 9:53:16 AM

As Linda has mentioned the AD line is very bullish at +2199.

Jane Fox : 9/8/2008 9:52:10 AM

I do not expect today will be a very good day for trading. When you have a monster move overnight typically the intraday trading is poor because the markets only have so much power one way or the other. Of course, we could get a big selloff today and that would be good for the day traders but certainly not good for the economy however, I do not expect a big selloff and do not expect much more of a rally either.

Jeff Bailey : 9/8/2008 9:51:11 AM

SPX Heavyweights with "financial" weighting notations Link

It would appear some of this weekends news was being built in while I was away last week. (see 5DyNet%) at 09:41:41 post.

Jane Fox : 9/8/2008 9:47:07 AM

Crude hit a high of $109.89 and immediately sold off telling me the $110 mark will not be an easy resistance to break. It is actually quite amazing as to how weak this market has become of late.

I read an article on the weekend about why gas prices are not going down as much as Crude and the answer was that when Crude climbed over 40% gas prices only climbed 25% so the refiners are taking advantage of this windfall. Seems odd because I have also read that the price of Crude is only a small portion of the price of gas with the cost of refining it and the delivery taking up the bulk.

Linda Piazza : 9/8/2008 9:45:04 AM

While testing those 30-minute resistance levels mentioned in my 9:43:08 post, the OEX is also, of course, testing its converging daily 10- and 30-minute sma's. This is one of those levels that should be watched for rollover potential. We don't know what's going to happen yet, but this is definitely a time when bulls should be fine-tuning their just-in-case profit-protecting plans. Don't think it's impossible that the OEX could pull back strongly now. It's not predicted yet, but neither is it impossible.

Linda Piazza : 9/8/2008 9:43:08 AM

The OEX now tests potential resistance on 30-minute closes at 585.01 and 588.50. I know that the OEX is already above one of those levels, but these represent potential resistance on 30-minute closes, and the OEX hasn't closed a 30-minute period above these, so we still have to see if the resistance holds on the 30-minute close. OEX is 588.37 as I type.

Jeff Bailey : 9/8/2008 9:41:41 AM

SPX Heavyweights at today's open Link

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

As could be anticipated, the A/D line is in breakout mode on the 15-minute Keltner charts. It's testing potentially significant resistance on 30-minute closes, however, at just over 2000. Right now, the A/D line doesn't have to move much higher to support the bullish case, but it does need to avoid falling precipitously toward next potential Keltner support, now way down at about 950. Bulls certainly don't want it to begin producing 15-minute closes below that level. Up or sideways is what they want. A/D line now at 2193.

Jeff Bailey : 9/8/2008 9:40:51 AM

Wachovia Bank (WB) $19.52 +16.47% ... surging.

Jeff Bailey : 9/8/2008 9:40:20 AM

SPX 1,274.11 +2.55% ...

Keene Little : 9/8/2008 9:40:08 AM

The broken uptrend line for SPX from July is just above 1279 this first hour. Watch for resistance there.

Jeff Bailey : 9/8/2008 9:39:28 AM

S&P Banks (BIX.X) 202.87 +5.12% ... gets the trade at MNTHLY R1.

Jeff Bailey : 9/8/2008 9:38:05 AM

Swing trade covered call closed alert! ... traders should have closed out the SSO-IN at $0.15 on either Thursday, or Friday of last week. This was a GTC order from 08/25/08 @ 12:36:49 PM EDT.

Selling of the SSO-IN initiated on 08/22/08.

Tab Gilles : 9/8/2008 9:36:32 AM

I was going over some charts this weekend and took a look at the Ted spread chart. *Note the similarity to that of the Volatility Index ($VIX). Link

Keene Little : 9/8/2008 9:32:53 AM

Techs are already giving back a bunce of the pre-market gain so stay cautious here. Techs have been leading the way in this market.

Keene Little : 9/8/2008 9:31:45 AM

If this morning's gap up is followed by a gap closure it would be bearish but not a killer for the bulls. However, a break below gap close would be a strong indication that the short-covedring pop higher was only that and new lows are coming. So for now I'd say we're looking bullish (but watch SPX 1285) and look to buy a dip back down. Back below Friday's close and I'll be back to selling the rallies.

Linda Piazza : 9/8/2008 9:27:48 AM

TED spread back up to 1.07. It's had an 0.08-point range today, which is a bit wide for the typical TED spread movements.

Linda Piazza : 9/8/2008 9:27:06 AM

Jane has already mentioned that there are no economic reports this morning, so there's nothing to dodge on that score at least this morning. We do have the typically hawkish Federal Reserve Bank of Dallas President Richard Fisher speaking in Austin this afternoon at 1:00 pm ET. He is expected to take questions.

Linda Piazza : 9/8/2008 9:24:47 AM

Bloomberg TV was just listing the number of funds that had big exposure to Fannie Mae and Freddie Mac. I didn't happen to have a piece of paper to write down the names, so can't list them, but they included some of the biggest funds, some of which had been net buyers recently of Fannie Mae or Freddie Mac.

Jane Fox : 9/8/2008 9:08:05 AM

Crude has hit a high of $109.89 so far today. I suspect this market will consolidate between $110 and $100 before it makes its next move. Link

Jane Fox : 9/8/2008 9:05:07 AM

There are no economic reports today that we need to navigate around, which is always a good thing for daytraders.

Jane Fox : 9/8/2008 8:58:50 AM

Yes Virginia there is a Santa Clause and his name is Treasury Secretary Paulson. As Keene pointed out earlier, yesterday the US Government decided to take over Fannie Mae and Freddie Mac aimed at preventing a our financial system from imploding.

In July, when Congress gave the administration authority to take over the two mortgage giants, Paulson said he had no plans to use that power. But on Sunday, Paulson said, "there's a number of things that have changed."

First both agencies have a capital deficiency and secondly the markets are becoming increasingly jittery around the world thus the bailout. Link

Linda Piazza : 9/8/2008 8:56:33 AM

As everyone likely knows by now, the government announced its plan yesterday to bail out, take over, or shore up Fannie Mae and Freddie Mac, however one wants to characterize the government action. Futures have responded with exuberation. Will that exuberation last? I'm not so sure. I turned first thing to the TED spread, to see if this measure of default risks was dropping dramatically in response. It isn't. It did drop, but not even beneath the 0.98-1.00 support level and it has since rebounded to 1.04 according to my current feed. Today's values are the lowest since about 8/19, but are not below either historical or trendline potential support near 0.98-1.00.

So, what do you do? You don't fight the upward momentum until you have strong reason to believe that it could be stalling, but you do keep in mind that we've seen exuberance fail and in not too distant a time, either. Think back to last Tuesday morning. Right now, we don't know whether equity markets will show weeks of gains or minutes of them.

What are some obvious levels to watch? When shorts jump in to help fuel a rally, especially when it's coming during a bear market, that could be either far higher than you expect or far sooner than you expect. However, based on what's happening with futures and extrapolating where the OEX might go based on that, I would look for the possibility that the OEX might rise up toward the former supporting trendline off the 8/04, 8/20, 8/26 and 9/03 lows and also toward the converging daily 10- and 30-sma's. If so, it would then begin moving into a potentially strong resistance zone from about 585.30 up to 589, where the 30-sma is likely to be driven by any strong first move this morning. If the OEX should move up into that zone, I would watch for the possibility of strong resistance on a daily close, which may prove to be an important distinction. I'm not predicting that the advance will stop there but instead am only saying that's one logical place to watch.

Logic may have little to do with what happens, though. One sobering thought to bulls is that the daily Keltner setup suggests that until and unless the OEX makes daily closes above a moving average now at 584.28 but likely to be driven higher by any strong early climb and maybe even until the OEX makes daily closes above 590-592, it remains vulnerable to 553.

What about the intraday charts? They're obviously going to be scrambled a bit by any early action. However, as of Friday's close, the 30-minute chart had shown that 578-579 might be important resistance on 30-minute closes, but that's likely to be breached right away this morning unless the rally fizzles right off the bat. That's always a possibility but not looking like a probability right now. The next strong resistance band at 585-587.27, both numbers that also will be driven much higher this morning. However, their close convergence with the numbers and trendline resistance shown on the daily chart possibly urges traders to pay particularly close attention to what happens in that zone and slightly above it, since that zone will be driven higher this morning.

Obvious levels to watch above that are 591-593, 596 and then anything approaching last Tuesday's high at 601.50.

Keene Little : 9/8/2008 8:07:52 AM

Equity futures went flat after the huge gap up last night so they've held their gains. I just want to reiterate one point and that is that the bailout is actually quite bearish for the stock market. Needing to nationalize the home mortgage industry means it's in so much trouble the only thing left was to take over the industry with tax payer money. That's simply not bullish.

Yes the bailout is a great bandaid but that's all it is. The systemic challenges to the financial industry remain and will have to go through more pain before it gets better. The US Treasury will not be able to nationalize the investment banking sector (although they're certainly trying hard with the massive amounts of money loaned to them so far in return for taking on their crappy debt).

Therefore while I think the chances of another rally leg have increased considerably (the pink wave count on last night's charts), it's also possible we're going to see the mother of all gap and craps. SPX 1280-1285 is resistance at the broken uptrend line from July so watch that area carefully. Would it be worth an attempt to short it there? It would be scary but it could work very nicely. It could set up a big pullback and then another rally leg higher so again, be careful of the huge volatility we're likely to see. Above 1285 I'd say run with the bulls.

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