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Jeff Bailey : 9/17/2008 1:37:28 AM

Biofuel provisions in US House energy bill ... Reuters Story Link

Jeff Bailey : 9/17/2008 1:35:21 AM

Oct. Nat Gas up $0.16, or +2.17% at $7.44

Jeff Bailey : 9/17/2008 1:31:58 AM

House passes bill allowing offshore drilling ... Reuters Story Link

Jeff Bailey : 9/17/2008 1:28:51 AM

Oct. Crude Oil +2.78, or +3.04% from Tuesday's settlement.

Jeff Bailey : 9/17/2008 1:28:07 AM

DXY 79.12 (30-min delayed) ... -0.088% from Tuesday's 04:00 tick.

Jeff Bailey : 9/17/2008 1:26:40 AM

YM off 1.00 at 11,044 ... has been all over the place this evening .... extended low/high 10,900/11,143.

Jeff Bailey : 9/17/2008 1:25:28 AM

Lehman, Worker Score Reprieve ... Wall Street Journal Link

Jeff Bailey : 9/17/2008 1:24:13 AM

US Takes Over AIG in $85 Billion Bailout ... Wall Street Journal Link

Jeff Bailey : 9/17/2008 1:22:29 AM

Closing Internals found at this Link

Keene Little : 9/16/2008 10:21:23 PM

Wednesday's pivot table: Link

News about AIG has equity futures jumping around after Tuesday's close but with a promise of an $85B loan it could get the market very excited Wednesday (from relief that a big one didn't fail, yet). Just as an aside, and to give you an idea of what kind of money we're talking about here, $85B would buy the U.S. 8 brand new, latest technology aircraft carriers. The bearish wave pattern can tolerate a rally in the morning but a push higher than SPX 1231 would start to make me question it. A rally above 1255 is needed to negate the bearish wave count shown on the 60-min chart: Link

The series of 1st and 2nd waves in the move down, as labeled on the chart, will lead to a waterfall decline which could make Monday's decline look timid. So the bulls need to do their thing here and rescue this market from the bearish clutches of this wave count. If they can do it and push back above 1255 it actually opens up the possibility that we'll see a big rally leg into early October instead of a market crash. Wouldn't that frustrate the heck out of the bears.

A rally into October would only be a stay of execution for the bulls since the strong 3rd wave down would start from the high in October, rather than the high in August, but it would at least allow more people to get out of their investments (which they probably won't do anyway). The daily chart shows the upside potential to 1351 (shown in pink) if 1255 is exceeded (there's a lot of work to be done to even get back up to 1255): Link

OI Technical Staff : 9/16/2008 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Tab Gilles : 9/16/2008 8:00:44 PM

Markets Positive on AIG news


DJIA: 11,108 +63

S&P: 1,223.10 +6.90

Nasdaq: 1,744.2 +11.2

Tab Gilles : 9/16/2008 7:45:55 PM

Done Deal

AIG to Get $85 Billion Loan, Give Up 80% Stake Link

Tab Gilles : 9/16/2008 7:04:49 PM

-$85 to $90 Fed Bridge-Loan for AIG Very Likely-

Not done yet as reported by CNBC...but very close

Tab Gilles : 9/16/2008 5:28:32 PM

Just got an e-mail from an old friend of mine that works for BP oil, who lives west of Houston Texas- near Jersey Village. He was running his home electrical on a portable generator, which he managed to get yesterday. The damage was minimal, downed trees and power lines. He also told me that the refinery damages were not too bad.

Jeff Bailey : 9/16/2008 5:16:35 PM

At this morning's open, AIG was #30 weight in INDU/DIA/YM. 0.35% of total. Larger economic implications than its weighting.

Jeff Bailey : 9/16/2008 5:13:29 PM

YM settled 11,045 ... 10,930 here.

Jeff Bailey : 9/16/2008 5:11:45 PM

American Intl. Group (AIG) $3.75 -21.21% ... $1.84 extended.

Jeff Bailey : 9/16/2008 5:08:09 PM

S&P Retail Index (RLX.X) 399.41 +0.82% ... tries to hold above trying to round out 150-day SMA (387) and 200-day SMA (392).

Jeff Bailey : 9/16/2008 5:05:47 PM

DJ- ABC/Washington Post: US Consumer confidence up 6 pts latest week

Jeff Bailey : 9/16/2008 5:04:00 PM

DJ- MMS: Lack of helicopter fuel main challenge to assess GOM damage

Jeff Bailey : 9/16/2008 5:03:09 PM

DJ- Lincoln Natl. Held $100M in Lehman debt securities at Aug 31

Lincoln Natl (LNC) $50.57 +2.99% ...

Jeff Bailey : 9/16/2008 5:01:28 PM

DJ- AIG Plunges in after-hours trade, off 49% at $2.44

Jeff Bailey : 9/16/2008 5:00:08 PM

DJ- Columbia Rates: Economists see unchanged @ 10.00%

Jeff Bailey : 9/16/2008 4:59:08 PM

DJ- Boyd Gaming: Delta Downs to reopen Wednesday after Katrina, suffered minimal damage.

Jeff Bailey : 9/16/2008 4:57:24 PM

DJ- MMS: Ike damage SIMILAR in size to Katrina, Rita, but LESS OUTPUT impact expected

Jeff Bailey : 9/16/2008 4:14:44 PM

Morgan Stanley (MS) $28.70 -10.84% ... Earnings Press Release Link

Jeff Bailey : 9/16/2008 4:14:03 PM

Morgan Stanley (MS) $28.70 -10.84% ... $30.50 on headline numbers.

Jeff Bailey : 9/16/2008 4:12:50 PM

ADBE ... at today's open, ADBE was #129 weighting in SPX. 0.19% of total.

Jeff Bailey : 9/16/2008 4:11:47 PM

Adobe Systems (ADBE) ... Earnings Press Release Link

Keene Little : 9/16/2008 4:10:30 PM

The setup into the close looks like we'll see lower tomorrow. The a-b-c bounce off this morning's low looks like it completed and the quick drop followed by consolidation in the final 45 minutes of trading looks like a good start for a move to the downside. This afternoon's high has to hold though in order for the bearish pattern to hold here.

Jeff Bailey : 9/16/2008 4:10:21 PM

Adobe Systems (ADBE) $38.14 +0.15% ... pops to $40.00 on earnings/updated Q4 guidance.

Jeff Bailey : 9/16/2008 4:08:38 PM

DJ- Morgan Stanley to host Q3 Investor Conference Call at 05:00 PM EDT.

Jeff Bailey : 9/16/2008 4:07:41 PM

DJ- CNBC saying Morgan Stanley (MS) $30.16 -6.30% to preannounce earnings. If long/short, just be aware.

Jeff Bailey : 9/16/2008 4:05:35 PM

DJ- DOE: Crude oil imports can fill storm disruption shortgages

Jeff Bailey : 9/16/2008 4:04:49 PM

DJ- DOE: Some refiners will take a "long time" to return to operations

Jeff Bailey : 9/16/2008 4:04:13 PM

S&P Insurance Index ($IUX.X) 227.22 +3.63% ...

Jeff Bailey : 9/16/2008 4:03:49 PM

DJ- Parker Drilling: Reports no damage to GOM barge rig fleet following Ike

Jeff Bailey : 9/16/2008 4:02:51 PM

DJ- MMS: Several platforms reported 'significantly damaged'

Jane Fox : 9/16/2008 4:02:17 PM

THat $50 billion infusion into the markets today was why the TRIN was so low and why it was so low yesterday as well.

Tab Gilles : 9/16/2008 4:02:06 PM

Jeff, I agree Joe Terranova's observations on oil trading in a range of $85 (Saudi support) and $110 resistance. He did an excellent job pointing out also future pricing.

Jeff Bailey : 9/16/2008 4:00:30 PM

Spending more time that the "key reversal" call I made that day. Isn't it?

Jeff Bailey : 9/16/2008 3:59:24 PM

VIX.X 30.72 -3.09% ... anyone notice how "different" action is now compared mid-July at QRTRLY R2?

Linda Piazza : 9/16/2008 3:59:01 PM

There so far has been no pullback on the post-FOMC bounce. The day's candle for the OEX will not be a small-bodied one unless there is a quick pullback in these last few minutes. If there's no such pullback, this suggests that yesterday's small violation of the potential support on daily closes now at 550.66 was an aberration and that this support is essentially holding through the test yesterday and then today. If there is a 4-5 point pullback, creating that small-bodied candle that was always a possibility for today, then all we know is that there's indecision. So far, I see no signs of a pullback, but do note the OEX's closer approach now to the resistance that marks the top of the bear flag in which the OEX has been rising off the day's low. The top of that flag has now risen to about 560.50-561 if the higher version that includes all candle shadows is included. That means that, even if the OEX rises these last few minutes, it will be rising into that potential resistance. OEX at 557.54 as I type. You know how jittery the markets are these days, so decide how much risk you want to carry home with you tonight.

Jane Fox : 9/16/2008 3:55:29 PM

NY Federal Reserve added $50 billion in liquidity to the markets today.

European Central Bank and Bank of Japan each announced unscheduled actions to add liquidity.

Jeff Bailey : 9/16/2008 3:54:47 PM

Right now, oil not really trading on true supply/demand.

Refiners pretty much "shut down" still near Gulf, so a lot of DEMAND not there.

You see unleaded futures falling, yet you see "price at the pump" rising (refiners don't produce, then end supply change does become much more sensitive to supply/demand).

Will check tropical storm developments again, but looked rather calm in the pipe yesterday.

Linda Piazza : 9/16/2008 3:53:26 PM

What are some of the scheduled events tonight on foreign bourses? Japan's rate decision should be announced with a press conference afterwards, but news sources weren't sure when either would happen. Tomorrow morning, the U.K.'s BoE's MPC meeting minutes will be released at 4:30 am ET, along with the unemployment rate and the Claimant Count Change, the change in the number people unemployed and claiming benefits. The eurozone reports on its Trade Balance at 5:00 am ET, and the U.K. has the CBI Industrial Trend's order at 6:00 am ET. Canada's Foreign Securities Purchases is released at the same time as the important U.S. numbers start rolling in tomorrow, at 8:30 am ET.

Jeff Bailey : 9/16/2008 3:52:14 PM

Excellent, excellent observation regarding oil on CNBC. At least we should agree (based on history).

Jeff Bailey : 9/16/2008 3:46:45 PM

Can see from GS's earnings that from the revenue side of things, investment banking really dried up. Some of the competition has been taken out last quarter though.

Jeff Bailey : 9/16/2008 3:44:19 PM

Was looking at the AIL-VA, but $2.90 x $2.95 not much in the way of good risk/reward.

Jeff Bailey : 9/16/2008 3:42:44 PM

Lehman (LEH) $0.19 -9.52% ...

Jeff Bailey : 9/16/2008 3:42:10 PM

AIG $4.05 -14.91% ...

Jeff Bailey : 9/16/2008 3:41:38 PM

Was just thinking ... "I bet some wished they had freed up some capital, sold some muni's to Berk a couple of months ago when Buffett was offering to buy."

Linda Piazza : 9/16/2008 3:41:29 PM

The TED spread is currently 2.08, down from a high of 2.08. The FOMC decision did not change its tenor at all.

Jeff Bailey : 9/16/2008 3:40:38 PM

Berkshire Hathaway (BRK.A) $125,000.00 +4.25% ... set to test its curling lower 150-day SMA.

Linda Piazza : 9/16/2008 3:37:19 PM

There's potential support for the OEX near 552.70 on both the 15-minute and 30-minute charts, one a little over and the other a little under. OEX at 554.78 as I type. Bulls want to see that support hold.

Jane Fox : 9/16/2008 3:36:25 PM

You can obviously see when the internals started to improve and how they all moved together. Link

Jeff Bailey : 9/16/2008 3:34:47 PM

AMEX Comp. (XAX) 1,823.91 -1.23% ...

NYA 7,728.34 +0.62%

COMPX 2,198.20 +0.82% ...

Jeff Bailey : 9/16/2008 3:31:59 PM

SUC-IJ get a trade at $0.10 ... $0.05 x $0.20 ... had been $0.05 x $0.30 bulk of session.

Jeff Bailey : 9/16/2008 3:30:20 PM

Wells Fargo (WFC) $34.84 +12.38% ... trying to "Carry the mail."

Jeff Bailey : 9/16/2008 3:29:44 PM

SPX "heavy heavyweight" breadth 19:4

Linda Piazza : 9/16/2008 3:29:15 PM

Prices are updating now on my two feeds, through DTNIQ and through my brokerage. I would be cautious, though, since two separate feeds stopped updating.

Keene Little : 9/16/2008 3:29:05 PM

NDX banged its head on the downtrend line from Sept 2nd through the Sept 12th high and has pulled back. If it can push through to a new high it could make it up to the top of its parallel down-channel, currently near 1763. 60-min chart: Link

Jeff Bailey : 9/16/2008 3:28:32 PM

AAPL $141.75 +0.99% ...

Jeff Bailey : 9/16/2008 3:26:44 PM

NASDAQ a/d 1,533/1,381 ... ver subtle.

Jeff Bailey : 9/16/2008 3:26:26 PM

NYSE a/d 1,347/1,353

Linda Piazza : 9/16/2008 3:21:24 PM

I'm not seeing any reports that explain the stalled values. Check to make sure your feeds are correct because mine aren't.

Jeff Bailey : 9/16/2008 3:21:23 PM

Do NOT "count on it today," but know about this pattern ...

Jeff Bailey : 9/16/2008 3:19:52 PM

Take some notes if YM 10,800 end of September.

Jeff Bailey : 9/16/2008 3:18:58 PM

Uuuuusually, a new contract low/high that's set "overnight" needs/gets tested on a regular session basis.

Keene Little : 9/16/2008 3:17:48 PM

I'm back. Did that spike up complete the a-b-c bounce off this morning's low? Looks very plausible to me. Or perhaps slightly higher to ES 1214.50 to complete it. Notice today's broken uptrend line is still holding as resistance. ES 10-min chart: Link

Linda Piazza : 9/16/2008 3:17:35 PM

Alert, OEX and other traders. I'm not getting updated feed on the OEX, either through my charting service or through my brokerage. Check your feed.

Jeff Bailey : 9/16/2008 3:16:58 PM

A lot tougher today than yesterday for the YM trade ... kind'a knew that going in to today.

Jeff Bailey : 9/16/2008 3:13:17 PM

XAL.X 27.95 +10.73% ...

TRAN 4,984.07 +0.54% ...

Jeff Bailey : 9/16/2008 3:12:08 PM

Euro CurrencyShares (FXE) 141.64 -1.18% ... per CNBC's Rick Santelli's comments/observation of "euro's improved since rate announcement."

Linda Piazza : 9/16/2008 3:11:10 PM

The top of the bear flag in which the OEX has been climbing off this morning's low can be placed at about 557 if one is using a best-fit version or at about 560 is one is using a version that incorporates all candle shadows, too. Therefore, it's already time to watch for a possible pullback through that flag again, allowing for a further climb to the top version of that rising trendline. I don't give as much credence to short-interval charts such as the 15-minute one on days like this, so take this with a grain of salt.

Tab Gilles : 9/16/2008 3:02:45 PM

Well, the Fed didn't cut as I'd expected. But the case for no cuts [dollar/oil] was as valid as to cut. The question no stands...will AIG be allowed to fail?

What consequences will it have globally to financial markets?

Looking at the volatility index on a weekly and monthly chart...we could see a spike higher into the 40/50 level on any negative news. Link Link Link

The $SPX hit my nearterm downside P/O of 1175 (1169) this morning. Question now is will it hold?

Jeff Bailey : 9/16/2008 3:01:53 PM

RUT.X 701.03 +1.63% ... takes a look at 700 and WKLY S1.

Jeff Bailey : 9/16/2008 3:00:17 PM

NASDAQ a/d 1,331:1,558

Jeff Bailey : 9/16/2008 3:00:05 PM

NYSE a/d 1,207:1,489

Jeff Bailey : 9/16/2008 2:53:09 PM

02:00 Internals found at this Link

Linda Piazza : 9/16/2008 2:51:42 PM

The A/D line is attempting its own improvement in tenor. It needs to sustain 15-minute closes above -1230 and confirm that by maintaining values above the daily high at -917. It's at -985 as I type. Remember to maintain some skepticism today about what's happening: not enough that you'd ignore stops if they're being hit because we ultimately don't know what's going to happen, but certainly enough that you set those stops and protect any profits you might have.

Jeff Bailey : 9/16/2008 2:50:24 PM

NASDAQ NH (11) and NL partial (330) list of names Link

Jeff Bailey : 9/16/2008 2:46:43 PM

Some "banky" looking names still there.

Jeff Bailey : 9/16/2008 2:45:38 PM

Amgen (AMGN) $64.21 +3.24% ... a name most of us will know.

Jeff Bailey : 9/16/2008 2:44:35 PM

Will post NASDAQ NH and partial list of NL. Not "inverse" trackers at the "other" market.

Linda Piazza : 9/16/2008 2:43:37 PM

Support holds and the OEX pushes through potential resistance on a daily close. Remember that it's possible for the OEX to sink back before the close, however, falling and creating that small-bodied candle.

For now, look for potential resistance on 15-minute closes at about 555.60 and, on 30-minute closes, at about 559-561.30. Don't count on anything too strongly as the market sorts out all the information being thrown at it today.

Jane Fox : 9/16/2008 2:42:47 PM

It is all like Ying and Yang.

Jane Fox : 9/16/2008 2:42:32 PM

I like the idea that the FED held pat because is it telling me they feel the market will sort this out on its own and I am a believer in free markets - to an extent. These companies got into trouble because of been overleveraged and most of the time you can get away with it but this time they were caught.

I can remember the conversations we had many many times about the ridiculous profit margins some of these brokerage houses were enjoying and it is now those same houses that are taking the most heat.

Linda Piazza : 9/16/2008 2:39:57 PM

Keene, I think that was Jane who was talking about the message that the Fed might or might not be sending. As for me, I was noting yesterday that the 30-day SEP Fed funds futures were not indicating, as of yesterday, a rate cut. This morning, I was hearing all kinds of predictions about a rate cut and was puzzled, thinking that maybe the futures' prices had changed radically. They were at a high of 98.1725 at one time, which was a little closer to a prediction of a 25 basis points rate cut (100-98.1725 = 1.8275 for a guess of a target FED rate of 1.8275%, below the current 2.00%) but still not quite there. At the futures' low today, they were nowhere near a prediction for any rate cut, so I've been puzzled about all these predictions. I just thought that I might be missing something. As of yesterday, the Cleveland Fed still had a higher prediction of a 2.00% outcome than a 1.75% one and finally at least had an estimate for a 1.5% one, but it was beneath both of those. The estimate for the 2.00% outcome had dropped to about 50% but it was still higher than the prediction for either of the other outcomes.

Keene Little : 9/16/2008 2:34:48 PM

I'm stepping away for about an hour but will be back before the close. Short against the high just before the FOMC announcement (for a tight leash on a short play) is the recommended position. If you want to give it a little more wiggle room use a couple of points above today's high as your stop. The post-FOMC reaction could easily be reversed with a little help in getting some buy programs started. Two equal legs up from this afternoon's low would be ES 1214.50.

Linda Piazza : 9/16/2008 2:27:01 PM

Potentially strong support on daily closes for the OEX is at 537.40, with a long-term descending supporting trendline crossing at about 530-533, if I'm guesstimating it correctly. These are places to watch for potential support if the OEX should continue lower, but the possibility of support on 30-minute closes, now at about 543.80, should be considered, too. It hasn't truly been violated yet and could still kick in.

Keene Little : 9/16/2008 2:25:37 PM

I must admit to being mildly surprised that the Fed is standing pat on rates. As Linda mentioned earlier this morning, it was probably done to provide the message that the Fed believes the system has what it needs to work through the crisis. Me thinks the market doth protest a little.

Jeff Bailey : 9/16/2008 2:24:35 PM

Very good point ... I'll give you the liquidity, but not a cut to subsidize.

Jeff Bailey : 9/16/2008 2:21:02 PM

US Oil Fund (USO) $73.91 -3.14% ...

Keene Little : 9/16/2008 2:20:59 PM

My quotes for SPX stopped but I see ES did a quick spike up and tagged today's broken uptrend line (as it did yesterday) and has since dropped sharply lower from that quick test. So far the fractal pattern from yesterday is playing out and it calls for a decline into the close again. Back above ES 1202.75 would negate the fractal pattern.

Jeff Bailey : 9/16/2008 2:20:28 PM

Pound CurrencyShares (FXB) 178.69 -1.08% ...

Jeff Bailey : 9/16/2008 2:20:03 PM

Yen CurrencyShares (FXY) 94.86 -0.17% ...

Jeff Bailey : 9/16/2008 2:19:36 PM

Euro CurrencyShares (FXE) 140.93 -1.68% ...

Jeff Bailey : 9/16/2008 2:18:32 PM

5-year down 10.9 bp at 2.492% ...

Linda Piazza : 9/16/2008 2:18:27 PM

The decline is what we're getting. (I should note that the MM's time clock seems to be a little behind.) AS I type, the OEX is hitting potentially strong support on 30-minute closes, testing it. The possibility exists that it could hold.

Jeff Bailey : 9/16/2008 2:18:15 PM

30-year down 12 bp at 4.032% ...

Jeff Bailey : 9/16/2008 2:17:52 PM

SPY $118.52 -1.30% ... darts lower.

Jeff Bailey : 9/16/2008 2:17:21 PM

Fed Funds Target ... no change ... 2.00%

Jeff Bailey : 9/16/2008 2:17:05 PM

SPY has been either-side its 07/15/08 low.

Linda Piazza : 9/16/2008 2:17:02 PM

What's the OEX setup going into the decision? The OEX is poised right at potential S/R on daily closes, at about 550.70, ready to break over that or decline beneath it, back toward potential support now at 537.47. On the 30-minute chart, the setup is similar, with candles lining up at or just beneath potential resistance on 30-minute closes, now near 551. The setup there is for a slightly greater chance of a decline toward 544 as toward a climb toward 557, but only slightly.

Jeff Bailey : 9/16/2008 2:16:32 PM

02:06 PM EDT U.S. Market Watch with Fed just ahead Link

Jeff Bailey : 9/16/2008 2:15:08 PM

I should add, that when you begin to review some of this year's Presidential election platforms, you may see some "protectionism" ideals.

Jeff Bailey : 9/16/2008 2:12:17 PM

Having nationalized energy, I'd be. Very little foreign capital wants to go to Venezueala, invest it, then have the government nationalize it.

Jeff Bailey : 9/16/2008 2:11:12 PM

DJ- Chavez: Venezuela not alarmed by decline in oil prices

Jeff Bailey : 9/16/2008 2:10:41 PM

DJ- CME Interest-Rate volumes recover amid Wall Street woes

Jeff Bailey : 9/16/2008 2:05:33 PM

The DXY suggests there and been a HUGE influx of capital into U.S. assets this quarter (see 06/30/08 benchmark)... It's all gone into Treasuries for the most part hasn't it?

Jeff Bailey : 9/16/2008 2:04:06 PM

Institutional money managers will do the same, on a GLOBAL basis. Some will "overweight" an area, while "underweighting" others.

Just as YOU will do as you near retirement. You become more "conservative" and weight toward fixed income so your bond portfolio is kicking off income.

Jeff Bailey : 9/16/2008 2:01:46 PM

At the end of this months (end of Q3), I'll grab a screen capture of the 06/30/08, take its "Value" and then divide by the 17 assets. Bring their "Cost" all back into line.

Jeff Bailey : 9/16/2008 1:59:27 PM

Beetle's Balanced (03/31/08) Link

The "Basis" would have been the 03/31/08 closes of each asset class.

Keene Little : 9/16/2008 1:58:04 PM

SPX has broken its uptrend line from this morning's low, just as it did yesterday. So far the fractal is playing out (calling for a selloff into the close). But anything can happen after the FOMC announcement so it's a tough call for any new trades here.

Jane Fox : 9/16/2008 1:50:41 PM

The TRIN is still really low so the FED must be still pumping money into the market making the AD line and volume ratios almost useable.

Yesterday they pumped 130 million into the market to stabilize it. Just think what would have happened if they had not. Whew!!

Jeff Bailey : 9/16/2008 1:48:26 PM

See, the "Value" differences between the two (2)?

That's what rebalancing can do. No "timing" here as we do it at the end of each calendar quarter.

What rebalancing can do is force a "sell high" and "buy low" as you systematically bring things back into balance.

Just like a fundamental analyst will do.

Linda Piazza : 9/16/2008 1:48:39 PM

If the OEX declines in the next few minutes, it's got converging potential support on 15-minute closes near 546.63 and on 30-minute ones, it has potential support at 544.60. Of course, none of this potential support/resistance stuff on intraday charts matters in the face of an impending decision by the FOMC, so keep that in mind. Still, if this were any other day, I'd say to watch for potential support to kick in there if there's a decline.

Jeff Bailey : 9/16/2008 1:46:16 PM

Beetle's Balanced 12/31/07 benchmark ... this is how we started out with $1,000.00 placed in each asset class of the BBB. At the end of each calendar quarter, we "rebalanced." By end of June (see 01:40:56 post) we had $1,030.79/asset class. Link

Jeff Bailey : 9/16/2008 1:40:56 PM

Into the Fed ... 06/30/08 Beetles Balanced at 01:32 PM EDT Link ... In just 20DyNet%, TLT capital appreciation more that what a 30-year would kick off in 12 months. Incredible amount of capital has come into the longer-dated Treasury complex.

Keene Little : 9/16/2008 1:39:12 PM

Notice the fractal pattern playing out today that looks just like yesterday's consolidation before dropping into the close. Whether we'll see the same drop is the question as we watch price action slow down here. SPX 10-min chart: Link

Linda Piazza : 9/16/2008 1:38:47 PM

Jeff, contrary to opinion about what women like to do, I hate to shop at all, and do as much as I can online. I have never even heard of that retailer.

Jeff Bailey : 9/16/2008 1:33:33 PM

LUV $16.68 +3.92% ... a BIG hedger???? Must be doing a good job.

Jeff Bailey : 9/16/2008 1:32:30 PM

DJ- NYSE NH (22) and NL (partial:1,208) issues Link

Some "short" funds on the NH list. Hmmmm.... how could one account/discount for that?

Can't really

Thus NL observations more important.

Jeff Bailey : 9/16/2008 1:27:37 PM

Jane, Linda ... do either of you shop at The Buckle?

Jeff Bailey : 9/16/2008 1:26:33 PM

How about we look at the 22 NH?

Jeff Bailey : 9/16/2008 1:25:55 PM

Seeing 8-9 pages of NYSE NH and NL from DJ update.

Jeff Bailey : 9/16/2008 1:25:14 PM

Seeing 2-3 pages of AMEX NH and NL from DJ Update.

Jeff Bailey : 9/16/2008 1:24:45 PM

Seeing 2-3 pages of NASDAQ NH and NL from DJ update.

Jeff Bailey : 9/16/2008 1:17:32 PM

PRN- Service restored to more than 700,000 customers in Ohio and W. Pennsylvania

Jane Fox : 9/16/2008 1:15:27 PM

WASHINGTON (MarketWatch) -- U.S. home builders grew more confident about their business in early September, with builder sentiment rising for the first time in seven months, a national industry trade group reported Tuesday.

The builders' sentiment index rose to 18 in September, from a record low 16 in August, the National Association of Home Builders said.

Still, the index shows that barely one in five builders is optimistic. Economists expected the in

dex to rise to 17 in September. See Economic Calendar. The index peaked at 72 in June 2005. It was at 20 a year ago.

Jeff Bailey : 9/16/2008 1:15:14 PM

DJ- Shell: Back-up power at Motiva to move gasoline out of inventory

Linda Piazza : 9/16/2008 1:14:27 PM

The OEX closed that last 30-minute period blow the 30-minute 9-ema, now at about 552.70, but it's peeking back above it again as I type, having done that several times a day. This is so far turning out to be one of those park-it-at-resistance pre-FOMC-decision days when futures would have indicated a park-it-at-support ones. Do note that the A/D line is still facing what may be tough resistance, up to about -1100 on 15-minute closes. It's at -1223 as I type.

Jeff Bailey : 9/16/2008 1:14:16 PM

DJ- Credit Agricole: Credit exposure to Lehman less than EUR20M

Jeff Bailey : 9/16/2008 1:13:09 PM

DJ- Shell: Normal rates at Deer Park, TX, refinery in 5-7 days

Jeff Bailey : 9/16/2008 1:12:06 PM

DJ- Shell: No finished gasoline production at Convent refinery

Jeff Bailey : 9/16/2008 1:11:17 PM

DJ- Shell: Back-up power at Motiva Porth Arthur, TX, refinery

Jeff Bailey : 9/16/2008 1:06:17 PM

Dow Jones Home Construction (DJUSHB) 326.02 +2.30% ...

Jeff Bailey : 9/16/2008 1:05:46 PM

Maybe the near-term contracts not just "roll" related.

Jeff Bailey : 9/16/2008 1:04:14 PM

Can perhaps tie some of this morning's CME with Housing ...

Jeff Bailey : 9/16/2008 1:03:41 PM

DJ- NAHB: Sep Housing Index 18 Vs 16 In Aug

Jeff Bailey : 9/16/2008 1:03:09 PM

DJ- NAHB: US Home Builders Confidence Climbs In September

Jeff Bailey : 9/16/2008 12:59:30 PM

5-year Treasury ($FVX.X) down 6.5 bp at 2.536% ...

Jeff Bailey : 9/16/2008 12:58:56 PM

10-year Treasury ($TNX.X) down 9.1 bp at 3.392% ...

Jeff Bailey : 9/16/2008 12:58:30 PM

30-year Treasury ($TYX.X) down another 12.4 bp at 4.028%

Linda Piazza : 9/16/2008 12:59:38 PM

The TED spread is 2.06, its high of the day. It's now testing and slightly above levels hit in the middle of March. Its December high was 2.21. Above that and it's moving into territory last seen in 1987, when it spiked to about 2.5 or 250 basis points. Before we go there, though, we should realize that it's now testing a resistance zone that held both in March and December.

Jeff Bailey : 9/16/2008 12:57:53 PM

PHF 09/11/08 NAV was $7.95. Link

Has paid $0.075/share/month since Oct'03.

At $7.08 -5.60% ... SEC Yield currently 12.7%

Linda Piazza : 9/16/2008 12:54:03 PM

More about Ike: My daughter just got notice that one granddaughter's school is closed until further notice. Ike blew off part of its roof and all of its playground. The other granddaughter's school won't open until Monday. Again, this is the kind of minor damage being seen all across that broad swath of Texas and Louisiana.

Jeff Bailey : 9/16/2008 12:50:06 PM

Hercules Offshore (HERO) $15.32 -2.97% ... Company Press Release Link

Jeff Bailey : 9/16/2008 12:47:54 PM

Apple Computer (AAPL) $138.67 -1.20% ... removed from Goldman's "conviction buy list."

Jeff Bailey : 9/16/2008 12:46:43 PM

DJ- ECB's Draghi: No sign of credit crunch in Europe

Jeff Bailey : 9/16/2008 12:45:21 PM

All vessels in US Gulf accounted for.

Jeff Bailey : 9/16/2008 12:44:45 PM

Hercules Offshore providing post-hurricane hupdate.

Linda Piazza : 9/16/2008 12:40:08 PM

Here's just one reason why I love Keltner channels: they give me the opportunity to look at potential targets and support/resistance levels. This is an updated version of a chart that I posted earlier this morning, with the three areas pointing to potential targets and support/resistance levels, two of them based on Keltner targets: Link Former potential support, at the black-channel line near 550 may now be resistance on daily closes, while this morning's bounce came at the pushed-lower lower channel line. I wouldn't be surprised to see the OEX close the day somewhere near that channel line, leaving us in suspense about whether the support is truly holding or will be lost. I also wouldn't be surprised to see all kinds of gyrations between now and that close, either, with those gyrations perhaps including a wild ride post-FOMC announcement.

The possibility of a small-bodied candle (NOT small range) today is one I mentioned yesterday afternoon. It's not a prediction. I'd be stupid to make a prediction ahead of the FOMC decision and with markets in such chaos. It's just a possibility that should be factored into trading plans. How will your position be impacted if the OEX ends the day rather near where it is now? How about if there's either a wild bounce up to about 568-569 post-FOMC before the OEX drops back again or a swift drop to about 530 before it climbs? What if it moves to one of those levels and doesn't move back close to the opening level?

Jeff Bailey : 9/16/2008 12:32:26 PM

DJ- Allianz: Max Potential Hit from Lehman EUR400M

Jeff Bailey : 9/16/2008 12:30:46 PM

DJ- Venezuela: Only overproducing OPEC members need to cut production

Linda Piazza : 9/16/2008 12:30:18 PM

Sorry, Jeff. I've been putting together care packages of milk, bread, meat and other staples for my daughter in Houston, as grocery stores have not had those supplies, as well as taking care of her children here until we could deliver children and care packages, too, so it's been all I could do to post and I've missed posts of some others. Speaking of Houston, my daughter lives in Far Northwest Houston. Although they're beginning to get electricity and water service again, some other parts aren't. They're hearing rumors that gasoline trucks will be delivering supplies, but for now, getting gasoline means long waits at the few stations that have electricity and are open and have gas. The office building in which my attorney husband works three days a week was damaged and they don't know when the offices will be opened again. We're hearing about the minor damage that Ike did, and it was minor, relatively speaking, but I can't think that my family was just particularly hard hit. Rather I think this is a story of the "minor" impact that's being repeated all across a broad swath of Texas and Louisiana. We don't even know yet the conditions of some relatives' homes because they were in a harder hit area nearer the coast and they haven't returned. I keep wondering if the economic impact might be bigger than some imagine.

Keene Little : 9/16/2008 12:27:04 PM

If we're to consolidate today we will likely only frustrate ourselves in trying to figure out where each little bounce is heading to. A choppy sideways consolidation is as likely, if not more likely, than anything today. But if the market manages to push to a new high I would then look for two equal legs up off this morning's low. For SPX that would currently be at 1217.32. A 50% and 62% retracement of the drop from Friday afternoon is at 1212.25 and 1222.15, resp. Just some numbers to watch for in case this does shoot higher.

Jeff Bailey : 9/16/2008 12:26:44 PM

ESPECIALLY Lehman Bros. BIIIIG bond house.

Jeff Bailey : 9/16/2008 12:26:17 PM

And probably echoing LEH and possibly AIG impact near-term on liqudity in the credit markets.

Jeff Bailey : 9/16/2008 12:25:22 PM

Pacholder High Yield (PHF) $7.11 -5.20% ... "behaving badly."

Jeff Bailey : 9/16/2008 12:24:31 PM

Yes Linda I did. The homebuilders too.

Jeff Bailey : 9/16/2008 12:23:26 PM

12:00 Internals found at this Link

Linda Piazza : 9/16/2008 12:23:08 PM

Did anyone notice that, relatively speaking, the TRAN didn't behave as badly as other indices yesterday? (I'm sure subscriber A.W. did, as he often writes me about his observations.) I was looking at the various indices last night and noticed that although the TRAN declined, that decline stopped at the 200-ema and above the 200-sma. It stayed within the congestion zone in which it's mostly been moving other than last week's dip, since mid July. On a short-term basis, it's been finding consistent support--both yesterday and today--on 15-minute closes at the Keltner line now at 4910, a far better performance than seen on many indices.

If this relative outperformance keeps up, what does it mean? Not much yet because the TRAN still chops around within that congestion zone and could go almost anywhere. Perhaps this economy- and crude-sensitive sector is just supported a bit by the lower crude prices, with that offsetting lower economic expectations. The daily Keltner chart gives no clues because the TRAN is just chopping either side of the now-flattened benchmark, the 120-ema. That sets up the expectation that the TRAN could as easily rise toward 5183 or even 5439 as drop toward 4712 or even 4600. Keep it on your radar screen, however.

Linda Piazza : 9/16/2008 12:15:18 PM

On the A/D line, sustained 15-minute closes above about -950 and not just a quickly reversed pop above it would be short-term bullish.

Jeff Bailey : 9/16/2008 12:11:33 PM

SPX reported 2:145

RUT.X reported 14:265, and close to its 07/07/08 5:268.

Jeff Bailey : 9/16/2008 12:10:25 PM

That same day, the NASDAQ reported 43 NH and 572 NL

Jeff Bailey : 9/16/2008 12:09:51 PM

On 07/15/08 the NYSE reported 26 NH and 1,161 NL.

Jeff Bailey : 9/16/2008 12:07:49 PM

There's "the build" in NL on the big board.

Linda Piazza : 9/16/2008 11:56:49 AM

The OEX has continued finding resistance on 30-minute closes at the 30-minute 9-ema, now sinking to about 551.80. It has, however, also been finding support on 30-minute closes at a Keltner line now at 545.87. Stalemate.

Jeff Bailey : 9/16/2008 11:55:05 AM

AIG $2.70 -43.06% ... reduced to "penny stock" status, all over the place in percentage terms this morning and still influencing YM and ES action.

Low has been $1.25 with high $4.50.

Keene Little : 9/16/2008 11:51:09 AM

If the pullback from this morning's high is followed by another rally leg to a new daily high it could be quite bullish. What the longer term price pattern might be at that point is questionable but I would not want to be short the market at that point. I'd want to see what develops from the bounce in order to determine what could be next (heading into next week). Therefore short against this morning's high is the recommended position and then either flat or long (be careful on the long side) at a new high.

Jeff Bailey : 9/16/2008 11:37:46 AM

CME Nov'09 to Nov'10 Regional Housing at this Link

Note: Feb'10 were just gridded a couple of weeks ago.

Jeff Bailey : 9/16/2008 11:27:53 AM

Good example coming of in Nov'09 contract of a Composite trade perhaps used to SQUARE UP the regional (Chicago, NY Metro, San Franciso and Miami).

Linda Piazza : 9/16/2008 11:24:27 AM

So far, the OEX's 30-minute 9-ema is still holding as resistance, but there are a number of minutes left in this 30-minute period. That moving average has dropped to just above 553.

Jeff Bailey : 9/16/2008 11:24:00 AM

CME Regional Housing Futures (Feb'08 to Nov'08) at this Link ... Gives a look back at action. Can perhaps see the more BEARISH rolls into Feb'08 expire. May'08 expire, then a slight change to more BULLISH roll Aug'08.

Jeff Bailey : 9/16/2008 11:17:15 AM

CME Regional Housing Futures (Nov'08 to Aug'09) at this Link

Earlier this year I was tracking/benchmarking the contracts (Feb, May, Aug, Nov) every week, but trade so thin and infrequent began every couple of weeks. Contracts expire and investor exposure hedges/bias will "roll," or simply close out prior to, or end of contract.

Italics are price quotes, but usually no trade. Simply the CME PRICE of a prior futures contract. Example would be the Aug'09, where only by 09/15/08 benchmark do we actually see a trade of $149.40 for San Diego. For Las Vegas, sometime between 03/28/08 and 4/11/08 there was a trade at $152.00.

I've found over the years now (this is a very new product by historical standards), we'll see the COMPOSITE find a trade, but usually some type of arbitrage, or a "broad exposure" type of trade to compensate for something taking place in a REGIONAL.

Perhaps not unlike MARKET and SECTOR.

Somewhat encouraging at today's observation is while were probably JUST STARTING to see some decisions made for Aug'09, the PRICES of Aug'09 turning SLIGHTLY more positive than May'09. Perhaps suggesting some type of trough next spring.

Keene Little : 9/16/2008 11:08:09 AM

Nice little recovery this morning with this push into the green. I'm not sure how I could count the move up yet but a rally above SPX 1212 would be bullish, or at least it would negate the short term bearish wave pattern. So if you're short the market use that level as the point where the market is telling us something more bullish for the time being at least.

Linda Piazza : 9/16/2008 11:02:21 AM

The OEX did produce that sharp sudden gain, so the 30-minute 9-ema was pushed higher instead of dropping lower before it was tested. That moving average is now at about 554.20. The OEX is at 552.60, having just touched a daily high of 553.86. The A/D line also tests potentially significant resistance, at about -1235 and then, higher, at about -825. It's at -1234 as I type. So, we have a picture of significant resistance being tested on both. That resistance may or may not hold, but at least the picture is consistent.

Jane Fox : 9/16/2008 11:02:08 AM

Both the VIX and the TRIN are falling and this is bullish. I see the AD volume and ratio both climbing as well but they are still well under 0 and 1.00 respectively.

Keene Little : 9/16/2008 10:53:12 AM

With SPX 1172 being an important Fib level, plus the fact that the 1160-1170 area has been previous price support/resistance (a double top in late 2001/early 2002, early 2004 resistance and 2005 support) I would not be at all surprised to see the market just consolidate today. It would result in another leg down once complete but I think it might be decent support for today.

Linda Piazza : 9/16/2008 10:50:17 AM

The OEX's 30-minute 9-ema is now at about 553.02. Ever since yesterday morning, this served as resistance on 30-minute closes. It's still turning down sharply, so unless the OEX rises sharply right away, it should be lower than its current level before it's tested. It's serving as a benchmark for us right now, as a sign that either nothing has changed if it continues to hold as resistance on 30-minute closes or that something perhaps has changed if it doesn't.

Linda Piazza : 9/16/2008 10:48:11 AM

Bears, now it's time for you to remember that even if the OEX rolls down, it may just be widening its choppy rising formation. Remember the typical tendencies on an FOMC day, one in which we sometimes see indices parked at some level into the decision. So temper your expectations, too.

Keene Little : 9/16/2008 10:42:38 AM

The rally attempt is losing steam and the choppy overlapping price action is indicative of a correction and not something more. It can certainly push higher, especially if it gets a helping hand but the bounce is starting to look like it's ready to curl back over to the downside.

Jeff Bailey : 9/16/2008 10:44:40 AM

Goldman Sachs (GS) $130.11 -3.97% ... Earnings Press Release Link

Consensus was $6.23B and $1.71

Linda Piazza : 9/16/2008 10:34:13 AM

Well, I was wrong about the attempt for a gap fill. This morning's gap looked like a possible breakaway gap and those sometimes aren't immediately filled or tested.

Jeff Bailey : 9/16/2008 10:32:42 AM

10:00 Internals found at this Link

Linda Piazza : 9/16/2008 10:32:27 AM

I'm not sure that the A/D line can get all the way up to -1200 or so before it finds resistance. Start watching for rollover potential nearer about -1450, just in case. The A/D line is currently -1555.

Jane Fox : 9/16/2008 10:24:57 AM

Today the TRIN opened at 1.68 and is now printing a bullish 0.65.

Linda Piazza : 9/16/2008 10:21:32 AM

The OEX has potentially strong resistance on 15-minute closes from 549.45-550.10. Watch for rollover potential here. That's not guaranteed as there are obvious efforts to hold up the markets and, if some key level is hit, shorts may start to cover or bears may start to lock in profits. However, if you tried a bullish trade this morning, not something I had recommended, then it's time to be particularly careful about your profits right now. Do not let any profits turn to losses in this market environment.

Jane Fox : 9/16/2008 10:20:45 AM

TRIN is a bullish 0.69 but remember yesterday it started the day at 0.44 then climbed to 1.07 and closed the day at 0.68. Made no sense whatsoever.

Linda Piazza : 9/16/2008 10:14:58 AM

So far, the A/D line is still holding up far better on a Keltner basis and in the actual number than it was at this time yesterday. This is evidenced by its behavior on a 15-minute chart, however, and we know that nothing seen on a 15-minute chart can withstand a tidal wave of either fear or euphoria. I'll show you what I'm seeing: Link I would watch for rollover potential near -1230, however, if the A/D line should reach that high, and would be watchful for rollover potential in the OEX if it is concurrently testing 549-550.

Keene Little : 9/16/2008 10:12:07 AM

Looks like another attempt to get the market to bounce. Based on the form of the bounce I have my doubts it will hold. Two equal legs up off the opening low would be near SPX 1191 so watch what happens around there if tagged.

Jane Fox : 9/16/2008 9:58:44 AM

Forexfactory show Paulson to speak at 1:30 as well HMMM.

Jane Fox : 9/16/2008 10:12:54 AM

Treasury Secretary Paulson is scheduled to speak at 10:00ET today, in 5 minutes.

Linda Piazza : 9/16/2008 9:55:09 AM

My delayed quote from Bloomberg shows the TED spread at 1.95 this morning, with a high of 2.01.

Jane Fox : 9/16/2008 9:54:34 AM

Also cutting rates now could make the FED look like it is behind the eight ball and putting a bandaid on a gaping wound. If the FED does not cut rates it could be perceived it has the confidence in the system to work out its own problems with little interference from the FED. Of course this has proven to be a very risky stance of late.

Linda Piazza : 9/16/2008 9:53:42 AM

The A/D line held support on 15-minute closes that was then at -1835 and now at -1830, but it's rolling down through it again, and may drop toward potentially stronger support, now at -2202 if it can't catch hold soon. The A/D line is currently -1872.

Keene Little : 9/16/2008 9:49:34 AM

Like yesterday the bump up in ES this morning has retraced slightly less than 62% of the gap down. Usually I like to watch to see how price behaves around the 50% retracement level (1181.50) because a failure there is usually bearish. A push back above 1185 would have a better chance of at least closing this morning's gap and that in turn could get some feeling a little more bullish.

Jane Fox : 9/16/2008 9:49:17 AM

Many think the FED will not cut rates but hold them steady to let the economy recover slowly because it will be better for the US economy in the long run as opposed to a quick recovery fueled by ultra-low interest rates.

Linda Piazza : 9/16/2008 9:49:06 AM

If the OEX keeps bouncing, I would look for rollover potential at potential resistance on 15-minute closes at 550.43 or on 30-minute ones, at about 548.70. OEX at 544.68 as I type.

Linda Piazza : 9/16/2008 9:46:17 AM

Keltner outlook on the A/D line: The A/D line made its first prints in the lower or bearish half of the Keltner channels. It's driving lower, but down toward potential support on 15-minute closes at about -1835 and then -2160. It is not as bearish either in the actual number or in the Keltner setup as it was yesterday morning, so watch for the potential that support could kick in any time, sending indices up in a countertrend bounce, without counting on that happening. The A/D line is -1731, bouncing off the low as I typed. Remember that the A/D line is still in the bearish half of its Keltner channels, so consider the possibility that this bounce attempt could fail, but I wanted you to be prepared for the possibility of the bounce.

Keene Little : 9/16/2008 9:46:10 AM

Looks like we've got the PPT trying to rescue the market again--ES is getting jammed to the upside with nearly a 20-point rise off the low. Now will it hold is the question.

Linda Piazza : 9/16/2008 9:38:24 AM

The OEX is dropping straight to potential support on daily closes, now pushed down to 538. Bears, be careful here, as this could be potential support. For those of you bulls who are looking at this morning's gap and thinking "gap fill," erase that thought. That could be the type of gap that isn't filled, at least not immediately, the kind that signals that the real move is just getting underway, the gap out of a congestion zone.

Jane Fox : 9/16/2008 9:37:49 AM

VIX has spiked up 2 points this morning but is now printing flat.

Jane Fox : 9/16/2008 9:37:20 AM

Well the AD line is not as bearish as it was yesterday morning but that is all I can say about it. Currently a very bearish -1488.

Jane Fox : 9/16/2008 9:35:22 AM

WASHINGTON (MarketWatch) - With energy prices falling sharply, U.S. consumer prices declined 0.1% in August, the first decrease in nearly two years, the Labor Department reported Tuesday. Energy prices dropped 3.1% after seasonal adjustments, the largest decline since October 2006. Food prices rose 0.6%, the smallest rise in three months.The core consumer price index - which excludes food and energy prices - rose 0.2% after rising by 0.3% the previous two months. The figures were exactly as forecast by economists surveyed by MarketWatch.

Jane Fox : 9/16/2008 9:31:42 AM

I am getting a little more detail about the Barclay's/Lehman deal now. Barclay's, the UK 3rd largest bank is in talks with Lehman to buy only the US Broker/Dealer unit but there are hopes the deal could be expanded to include the European arm as well.

Linda Piazza : 9/16/2008 9:30:01 AM

On FOMC days, we often see markets either zoom up to resistance or fall down to support and sit there into the decision. With not all sellers getting out before the close yesterday, it looks as if markets will be dropping this morning, but remember the possibility that prices could be parked somewhere about midmorning today. That doesn't always happen but it happens often enough that traders should keep that possibility on their radar screens this morning.

Where might the OEX go if it heads down in accordance with what we can extrapolate by looking at the ES contract's distance from SPX fair values? Yesterday, I posted a Keltner chart showing possible targets and potential support on daily closes. The OEX looked as if it would steady on the highest into yesterday's close but then fell beneath it at the last moment. If it doesn't steady right away this morning, it has the potential to fall toward the next potential support or perhaps even to the third, not at Keltner support but at a long-term descending trendline. Here's the chart, with the three levels marked by arrows: Link

The 30-minute chart shows that the OEX has potential support on 30-minute closes at 449. That's obviously likely to be violated right after the open, but it's not impossible that the OEX would bounce back above that line, probably driven a bit lower by then, by the close of the first 30-minute period.

What benchmark can we use to tell when something has changed? The 30-minute 9-ema was effective resistance on 30-minute closes all day yesterday, and it was tested many, many times, so the OEX needs to maintain consistent 30-minute closes above that resistance before anything at all has changed. We may have to find a shorter-term interval later today, however, if there's no early bounce. The sharp way that moving average was turning down indicates that the decline could intensify, with prices going into a free fall. In that case, it would take a long time for the 30-minute 9-ema to catch up and provide any kind of meaningful benchmark. We would already know things had changed before it was tested.

If you're in bearish trades today, it's going to be important to keep lowering your stops. Perhaps consider taking partial profits at some point on the way down. Decide ahead of time if you want to hold over the FOMC announcement. I'm worried about the possibility that some announcement or exhaustion of sellers could result in a strong bounce that could get out of hand. Bulls, I would not step in front of this freight train, no matter how "attractive" the price level appears to be unless you plan on using the money you were going to spend on a sky dive. That might mean that you miss hefty gain as some bounce gets started, but oh, well. Better than getting slashed trying to catch falling knives. If we hit an interim bottom and markets start behaving better, you'll have plenty of time, and it's just too risky on an FOMC day in this kind of environment.

Keene Little : 9/16/2008 9:29:06 AM

It looks like the SPX 1172 level is going to get tagged today. This is the 50% retracement of the 2002-2007 bull market rally. It could be good for a bounce but I don't think it will hold. Just stay aware if you're short that we could see a rally attempt from that level. The PPT tried yesterday to save the market but it failed. They may try again today.

Jane Fox : 9/16/2008 9:20:20 AM

Barclays close to deal to buy Lehman U.S. assets for about $2 billion.

Keene Little : 9/16/2008 9:16:03 AM

Equity futures dropped after yesterday's close, rallied back up to the flat line during European market hours but peaked out just before 6:00 AM. It's been all down hill from there and the DOW futures are now down over 200 points. The S&P 500 futures are more negative at 30 points.

Jane Fox : 9/16/2008 9:14:58 AM

Crude hit a low of 90.83 overnight and as Jim Brown states in his Leaps Trader column, "There are rumors that Lehman has over $1 TRILLION in outstanding derivatives. That means the rest of the financial system, funds, hedge funds, banks, etc, are now holding paper that could be worthless" and these financial systems, funds, banks are all selling off the most liquid and profitable assets they have which just happens to be Crude futures. Normally the storms we have had this year would have brought Crude back to $120 or at least put a floor under it at $100 but these are not normal times. Link

Jane Fox : 9/16/2008 9:05:47 AM

The markets had a small recovery overnight but unfortunately it didn't last long and they are all now making new overnight lows. Link

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