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Keene Little : 9/30/2008 2:19:56 AM

There's a big bounce in progress in overnight equity futures but with the size of Monday's decline a very big bounce would look like nothing more than a dead cat bounce. But this cat could bounce a lot of points. I don't see any way to count the move down as an ending pattern which strongly suggests we're going to see the market work its way lower. A larger bounce/consolidation on Tuesday before heading lower again would be typical for where we are in the pattern. Unless you're scalping day trades I would not be looking for a buying opportunity until much lower. Daily chart: Link

Keene Little : 9/30/2008 2:15:45 AM

Tuesday's pivot table: Link

Jeff Bailey : 9/29/2008 11:38:22 PM

iShares S. Korea (EWY) $37.20 -10.96% ... Fact Sheet Link

Korea Bullish % (BPKQ) Link

Jeff Bailey : 9/29/2008 11:30:18 PM

09/29/08 Global Bullish % at this Link

09/24/08 Link

Jeff Bailey : 9/29/2008 11:17:37 PM

Dorsey/Wright Major US Bullish % at this Link

StockCharts.com's equivalents (adjusted for dividends)

$BPNYA Link
$BPCOMPQ Link
$BPSPX Link
$BPOEX Link
$BPINDU Link

Tab Gilles : 9/29/2008 11:01:05 PM

Two weeks ago I posted this chart of the $VIX (monthly), noting we could see the 50 level tested. Link

As you can see from the next chart, the VIX has not been at levels like this since October 2002, almost 6 years ago exactly. Soon after that spike we experienced a tremendous bull run from 2003-2007. I'm not sure if history will repeat itself, even if we get a bill signed, the market still has many problems to deal with. Link

Jeff Bailey : 9/29/2008 10:50:48 PM

BPALL at this Link

Jeff Bailey : 9/29/2008 10:47:27 PM

BPALL ... reverses and falls to "bear confirmed" at 24.24% (26.00% chart) after Friday's closing measure of 35.78%.

Jeff Bailey : 9/29/2008 10:36:53 PM

Asian Markets: Link ... Nikkei-225 off 4.64% at 11,199. Hang Seng lower by 5.47% at 16,902

Jeff Bailey : 9/29/2008 10:35:33 PM

Hong Kong's central banks ready to add liquidity ... Reuters- Hong Kong's central bank said on Tuesday it was ready to inject liquidity into the banking system if necessary or give funds to individual banks to ease credit tightness.

Joseph Yam, chief executive of the Hong Kong Monetary Authority, said Hong Kong's banking system was sound but financial markets would be very volatile after U.S. lawmakers rejected a US$700 billion bailout plan for the financial industry.

'The timing of the U.S. bailout package is uncertain ... This will affect financial markets globally. Hong Kong, as a very open financial centre, will not be excluded. Everyone has to be very cautious,' Yam told reporters.

The stock market plunged 5 percent in early trade, tracking losses in equities globally.

Jeff Bailey : 9/29/2008 10:26:45 PM

Business hits back after Congress bailout vote ... Reuters Story Link

OI Technical Staff : 9/29/2008 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 : 9/29/2008 9:52:57 PM

Asian Markets: Link

Jeff Bailey : 9/29/2008 9:50:52 PM

Great info Jane! The longer this drags on, the greater the risk to the global economy.

Tab Gilles : 9/29/2008 8:38:28 PM

Here is one for the books...

My brother and 9 year old niece just stopped by for a visit. My brother and I were discussing today's market and the vote on the rescue plan. My niece asked me to explain to her why the news has been talking about banks and markets. Well-- I tried my best to make it simple for her to understand... I explained how people have to borrow so they can buy homes, get paid and pay bills...but that the way they do it is broken now. To fix it, they had to vote on a plan and that they voted not to spend alot of money. That made the stock market go down and it went down more than it would of cost to fix the problem.

She responded..."Why did they do that...are they dummies?!"

You gotta love kids...the see things so clearly!

Jane Fox : 9/29/2008 8:24:03 PM

Here is how the parties voted on todays bill

Democratics for the bill 140

Republicans for the bill 65

Democratics against 95

Repubilicans against 133

Tab Gilles : 9/29/2008 6:45:29 PM

September 29, 2008 hp1168

Statement by Secretary Henry M. Paulson, Jr. on Emergency Economic Stabilization Act Vote

Washington, DC-- Secretary Henry M. Paulson, Jr. made the following statement on the Emergency Economic Stabilization Act of 2008 vote in the House:

I'm disappointed in today's vote, but leaders on both sides of the aisle worked hard. I've spoken to them and I know they share my great disappointment.

We have experienced significant turmoil in our financial markets in the last few days, including the collapse of Washington Mutual and Wachovia here and the failure of two major financial institutions in Europe. Markets around the world are under stress, and that reduces the availability of credit that businesses across America depend on to meet payroll and to purchase inventories.

Families, too, feel the credit crunch as it becomes more difficult to get car loans or a student loan.

I and my colleagues at the Fed and the SEC continue to address the market challenges we are facing on a daily basis. I am committed to continuing to work with my fellow regulators to use all the tools available to protect our financial system and our economy.

Our tool kit is substantial but insufficient. Therefore, I will continue to work with Congressional leaders to find a way forward to pass a comprehensive plan to stabilize our financial system and protect the American people by limiting the prospects of further deterioration in our economy.

We've got much work to do. This is much too important to simply let fail.

Tab Gilles : 9/29/2008 6:40:49 PM

Economic Rescue Plan Cost = $700 Billion

Market Losses to Investors Today = $1.1 Trillion

Jeff Bailey : 9/29/2008 5:00:13 PM

Closing U.S. Market Watch at this Link

Nymex Nov. Crude Oil settled down $10.52, or -9.84% at $96.37.
Nymex Oct. Nat. Gas settled down $0.407, or -5.34% at $7.221.

Jeff Bailey : 9/29/2008 4:48:38 PM

Closing Internals found at this Link

Linda Piazza : 9/29/2008 4:46:11 PM

Step away from the computer! Remember those 80's car alarms that warned us to step away from cars in stern male voices? I'm using my motherly voice this evening to say, go spend some time away from the computer and the worries due to the market action. Unless you're trading futures or currencies, there's nothing you can do right now. Take some deep breaths. I know it's tough and I know some of you are suffering losses. I hope it's not many of our subscribers, but these worries weigh on all of us, even if you're not personally losing money. Go remind yourselves that there's life outside the markets. Renew yourselves. Schedule some time to write down your plan for tomorrow, if you haven't already, and then know that you've prepared as much as you're able.

Jeff Bailey : 9/29/2008 4:30:44 PM

Reminder! Tomorrow is Rosh Hashana

Jeff Bailey : 9/29/2008 4:27:01 PM

Retail Gasoline Prices at this Link

Linda Piazza : 9/29/2008 4:19:45 PM

The markets kept dropping after I made that 4:02:30 post, so the bounce up to the bottom of the descending price channel did not hold and the OEX did dive straight to that level that the 30-minute chart had been listing as a potential downside target. Both the SPX and the OEX broke through the support on those big descending channels in which they had been dropping since last fall. We now have to consider the possibility of a cascade lower--the reason I kept saying that I wouldn't go into the close with a lot of bullish risk--but other possibilities exist, too. Those are long-term charts, so I wouldn't consider them violating until there's at least a weekly close beneath them, and, for now, there's the possibility after such a huge (not big, but huge) range day of a small-bodied candle tomorrow. That small-bodied candle could have big upper and lower shadows, and the upper one could be a rise to test the former supporting trendline of that channel.

And, if the pundits are correct, any progress overnight could result in a big bounce, but I'm not counting on it yet.

Keene Little : 9/29/2008 4:18:04 PM

With the confirmation of the breakdown with the drop below the September 18th low we should see prices stair-step lower. SPX will likely get well below 1100 within the next week. 120-min chart update: Link

Jeff Bailey : 9/29/2008 4:13:33 PM

General Motors (GM) $8.51 -12.80% ...

Jeff Bailey : 9/29/2008 4:13:08 PM

dj- General Motors issues 16M Common Shares

Linda Piazza : 9/29/2008 4:02:30 PM

Here's where the OEX is ending the day on a traditional chart, with the horizontal line at the bottom of the chart potential horizontal support: Link Here's how it looks on a Keltner one: Link Any other time, I would warn that bears need to be careful about bounce potential with such strong potential support being tested, and I have to warn about that today, too, but I also have to warn bulls that some of the biggest declines can come out of conditions like these. We just don't know the answer.

Linda Piazza : 9/29/2008 3:59:08 PM

I don't think the regularly scheduled overnight developments on foreign bourses will matter a whit to the trading tenor, but I wanted to give you a quick update anyway. Important releases include a slew of reports from Japan, including manufacturing PMI, household spending, unemployment and industrial production, released from 7:15 through 7:50 pm ET. Tomorrow morning, Japan's Housing Starts are released at 1:00 am ET. Also tomorrow morning, German's Unemployment (3:55 am ET), the U.K.'s Current Account (4:30 am ET) and revised Business Investment (4:30 am) all come before the eurozone's Flash CPI at 5:00 am ET. Canada releases a number of reports at 8:30, and then we begin with HPI at 9:00 am ET, our only report that I see before the open.

Jeff Bailey : 9/29/2008 3:56:50 PM

RUT.X 661.87 -6.08% ...

Jeff Bailey : 9/29/2008 3:56:25 PM

Pacholder High Yield (PHF) alert! $7.62 x $8.02.

Jeff Bailey : 9/29/2008 3:55:51 PM

Swing trade put exit alert! ... for the one (1) iShares Emerging Markets EEM Oct. $35 Put (EEM-VI) at the bid of $5.00.

EEM $31.54 -11.87% ...

Linda Piazza : 9/29/2008 3:49:34 PM

The OEX is testing potentially strong resistance here, but if should maintain a daily close near 530, it will have managed to scramble back to the bottom supporting trendline of the descending channel in which it has been moving down since last fall. It will have done what it did on 9/18 for example. I'm not sure that the result will be the same--a relief bounce--but it certainly could be, but I just wouldn't have a lot of risk on the bullish side overnight, just in case.

Linda Piazza : 9/29/2008 3:45:38 PM

I would not go into tomorrow with a lot of bullish risk in my portfolio.

Linda Piazza : 9/29/2008 3:40:38 PM

If the OEX should mount a last-minute bounce today, watch for potentially strong resistance on 15-minute closes at 592.62, with further potential resistance (Fib, off the decline from Friday's high) at about 530.50. OEX at 522.16 as I type, and it's of course approaching from beneath the 9/18 low of 522.90, testing it. The 30-minute chart shows vulnerability to 515.31, but the SPX is already testing analogous potential support and attempting to steady there.

Linda Piazza : 9/29/2008 3:32:03 PM

And there's the SPX hitting and currently exceeding that potential downside target on the 30-minute chart. That target has been pushed down to about 1115.75 on 30-minute closes, and could be potential support on 30-minute closes, although it's difficult to count on any support holding at this point. If the SPX bounces, it could bring the OEX up with it, too, but you should now watch for potential resistance for the SPX at the 9/18 low. The 10-minute chart shows potential resistance on 10-minute closes at 1132.74.

Jeff Bailey : 9/29/2008 3:29:18 PM

ProShares UltraShort Emerging Markets (EEV) $119.72 +25.88% ... well off its recent 52-week high.

Linda Piazza : 9/29/2008 3:25:54 PM

I've mentioned that the OEX has vulnerability down to 516 according to the 30-minute chart but that vulnerability has now dropped to 515.47. Traders should be aware, however, that the vulnerability for the SPX is to 1116.3, and it's getting close now, at 1121. The OEX has outperformed the SPX all day today on a Keltner basis, so there's the possibility that if the SPX hits that potential downside target and bounces, it could bounce the OEX, too. So, I'm just saying that the markets are approaching another of those zones when bears need to be updating their profit-protecting plans, just in case.

Jeff Bailey : 9/29/2008 3:24:29 PM

iShares Emerging Markets (EEM) $31.24 -12.71% ... probes recent 52-week low.

Jeff Bailey : 9/29/2008 3:21:07 PM

Swing trade put alert! .... for one (1) of the iShares Emerging Markets EEM Oct. 31 puts (EEM-VA) at the offer of $2.34.

EEM $31.40 -12.26% ...

Jeff Bailey : 9/29/2008 3:16:03 PM

EEM $31.50 -11.98% ...

Jeff Bailey : 9/29/2008 3:15:43 PM

dj- S&P Cuts Iceland Transfer, Convertibility Assessment To AA- From AA

Tab Gilles : 9/29/2008 3:08:11 PM

September 29, 2008 HP-1164

Statement by Secretary Paulson on the Sale of Wachovia Bank

Washington - Treasury issued the following statement by Secretary Henry M. Paulson, Jr. on the sale of Wachovia Bank:

"I commend the action taken by Chairman Bair and the FDIC today to facilitate the sale of Wachovia Bank to Citigroup in an orderly fashion to mitigate potential market disruptions. I agree with the FDIC and the Federal Reserve that a failure of Wachovia would have posed a systemic risk. As a result of this transaction, all Wachovia depositors will be protected and Wachovia's senior and subordinated debt will be assumed by Citigroup. The FDIC's actions help to mitigate potential systemic risk to our financial system. As I have said before, in this period of market stress, we are committed to taking all actions necessary to protect our financial system and our economy."

Linda Piazza : 9/29/2008 3:07:21 PM

The SPX is in breakdown mode on the 15-minute chart and will be until and unless it can maintain 15-minute closes above about 1145.60. Until it can maintain those closes above that level, I would consider that potentially strong resistance on 15-minute closes. The 30-minute chart shows potential vulnerability to 1117.24, so I would factor in vulnerability to that level in my trading plans without counting on that level being hit. You just need to know the vulnerability before you decide to jump in with bullish trades. Bears should keep updating their profit-protecting plans and deciding levels at which they might want to step out of partial positions and lock in partial profits, making it easier to update stops on the rest. In fast market conditions, the SPX trades can slow, and you don't want to be caught in a surprise bounce that zooms many points past your stops before you're filled.

Tab Gilles : 9/29/2008 3:06:28 PM

Federal Reserve News Release

September 29, 2008

Richmond Fed Ready to Provide Liquidity in Wachovia Transition

Richmond, VA ? The banking operations of Wachovia Corp., which is headquartered in Charlotte, N.C., are being acquired by Citigroup Inc. The transaction is being facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury.

Citigroup will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia. Wachovia will continue to own AG Edwards and Evergreen.

In support of this transition, the Federal Reserve Bank of Richmond stands ready to provide liquidity as needed.

The Federal Reserve Bank of Richmond is one of 12 District Reserve Banks that together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Richmond Fed serves the Fifth Federal Reserve District, which encompasses the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia.

Jeff Bailey : 9/29/2008 3:03:36 PM

dj- US Treasury: Ready To Use All Tools At Disposal To Protect Markets

Tab Gilles : 9/29/2008 3:00:55 PM

Here's a monthly $VIX chart I'd posted 2 weeks ago. Link

Linda Piazza : 9/29/2008 2:58:08 PM

So far, the OEX has been able to maintain 15-minute closes above potential support on 15-minute closes near 531, but that potential support is being tested again. The action over the last 90 minutes or so has produced a triangle at the bottom of the decline, but a neutral triangle if the slope of the rising line and the declining lines are considered, so try to suspend judgment about which way it will break or even whether it has particular relevance since the OEX has traded pretty much into the apex of that triangle. Until and unless the OEX can maintain 30-minute closes above about 539.80, it maintains a potential downside target of 516, so factor in vulnerability to that level in your trading plans. Of course, we know of potential support above that, at the 9/18 low, too.

Tab Gilles : 9/29/2008 2:56:58 PM

$VIX 46.04 +11.30 (32.44%)

$VXD 40.90 +8 (24.13%)

$VXN 47.28 +10.43 (28.28%)

$RVX 46.14 +7.77 (20.28%)

Jeff Bailey : 9/29/2008 2:48:40 PM

VIX.X 46.09 +32.67% ...

Jeff Bailey : 9/29/2008 2:48:26 PM

Swing trade NAKED Put buy back alert! ... for the one (1) US Nat. Gas Fund UNG Oct. $32 Put (UNE-VF) at the offer of $1.70.

UNG $31.89 -6.26% ...

Linda Piazza : 9/29/2008 2:47:41 PM

TED spread now 3.37, at least on Bloomberg's delayed feed.

Jeff Bailey : 9/29/2008 2:45:51 PM

Berkshire Hathaway (BRK.A) $131,500 -2.59% ...

Jeff Bailey : 9/29/2008 2:44:02 PM

dj- House Republicans: Pelosi Speech "Poisoned" Congress

Jeff Bailey : 9/29/2008 2:39:06 PM

Wachovia Bank (WB) $1.97 -80.10 ... released for trade.

Jeff Bailey : 9/29/2008 2:38:09 PM

YM short stop alert! ... 10,613

Jeff Bailey : 9/29/2008 2:36:22 PM

YM short lower stop alert! ... to even

YM 10,599

Jeff Bailey : 9/29/2008 2:34:27 PM

YM Short alert! here at 10,613. Stop 10,711. Target 10,400

Keene Little : 9/29/2008 2:28:32 PM

From a short term perspective I could argue that the move down from September 19th has now completed a 5-wave move and that would mean a correction of it is coming, possibly back up to th high of today's consolidation. So consider that if you're holding short and looking for more to the downside. This market could get really wild over the next few days.

Keene Little : 9/29/2008 2:25:24 PM

A trading buddy just called and told me the bailout bill did not pass. I can only imagine the number of people calling their representatives who are outraged by the bailout and now they're trying to figure out another way. I for one don't want to see taxpayer money dumped down a black hole (which I firmly believe is all that will happen--this crisis must run its course). How sad (bad) it is that the market thinks the only way it can be saved is with a government bailout.

Jeff Bailey : 9/29/2008 2:24:22 PM

dj- White House: Bush To Meet Economic Team To Determin Next Steps

Jeff Bailey : 9/29/2008 2:22:39 PM

EEM $31.91 -10.84% ...

Jeff Bailey : 9/29/2008 2:22:09 PM

dj- Brazil's Ibovespa Index ; Trading Suspended

Linda Piazza : 9/29/2008 2:20:41 PM

Here's the danger for bears, with this being the OEX's current position: Link

Jane Fox : 9/29/2008 2:18:37 PM

Dateline CNN - $700 billion bailout bill fails in House. Dow down by nearly 600 points

Linda Piazza : 9/29/2008 2:12:58 PM

Potential downside target for the OEX now, as predicted by the 30-minute chart, is 516, so factor in vulnerability to that level, if not counting on it being hit. In other words, don't jump in front with bullish trades thinking that 520-525 is going to hold when there's vulnerability to much lower levels while still updating your profit-protecting plans if in bearish trades. The 15-minute chart gives a different picture, of the possibility of a steadying near 530.

Jeff Bailey : 9/29/2008 2:12:46 PM

dj- US House Package Defeated By Vote of $205 for, 228 Against

Jeff Bailey : 9/29/2008 2:11:52 PM

CNBC - Predicting No Change of Rescue Plan Passage as drawn.

Jeff Bailey : 9/29/2008 2:10:50 PM

dj- MMS: 48% Oil, 47.4% Gas Output Still Off Line In US Gulf

Jeff Bailey : 9/29/2008 2:10:08 PM

dj- MMS: 623,789 B/D Oil, 3,509 MMCF/D Nat. Gas Off Line in US Gulf

Jane Fox : 9/29/2008 2:08:23 PM

Crude sold off at the same time the markets did so it is very obvious Crude traders need this package to pass as well.

Linda Piazza : 9/29/2008 2:08:01 PM

My Bloomberg quote for the TED spread is delayed, but the last value I have is 3.30, which was probably at about the time the news about the vote was beginning to surface.

Linda Piazza : 9/29/2008 2:06:19 PM

Watch for potentially strong resistance on 30-minute closes at 540.93-541.22 on for the OEX.

Jane Fox : 9/29/2008 2:04:56 PM

It is now sitting at -457

Jane Fox : 9/29/2008 2:04:43 PM

Dow made a high of 11139 and a low of 10438, that is a 701 point move. Wow!

Jeff Bailey : 9/29/2008 1:56:57 PM

dj- Rescue Vote is 206 for, 227 against

Jeff Bailey : 9/29/2008 1:56:18 PM

dj- House Vote Remains Open On Rescue Plan

Jeff Bailey : 9/29/2008 1:54:52 PM

dj- Amtrak funding bill clears hurdle in US Senate

Jeff Bailey : 9/29/2008 1:54:18 PM

dj- Nymex Gasoline Plunges $0.25 to $2.4151/gallon

Linda Piazza : 9/29/2008 1:54:26 PM

I've said all day that the kind of consolidation we were seeing at the (then) midday low was the type that's often seen in the middle of the move. You should be aware that if a Fib bracket is anchored at Friday's high and today's low, that consolidation band from the middle of the day is right at the 50% level. That means that the move has reached its downside target. That doesn't mean that the downturn is over. It could still continue, but it means that you should be aware that one target has been met.

Linda Piazza : 9/29/2008 1:52:10 PM

If in bearish positions, keep updating your profit-protecting plans. The OEX has, of course, closely approached the 9/18 low of 522.90, with today's low at 525.71.

Jeff Bailey : 9/29/2008 1:49:24 PM

CNBC - Forecasting No Passage

Keene Little : 9/29/2008 1:49:18 PM

Quick stop in Billings (got a signal here) and I see price has been pretty much been consolidating sideways although I see it's now dropping to the lows of the day. The consolidation looks bearish so stay on the short side. The EW pattern has been set up for a very nasty decline (the recognition wave is upon us) so that's the direction I'd look. But any "positive" news has the ability to hammer the shorts and therefore always stay on your toes and don't be afraid to book profits early and then jump back in if it still looks good for more downside to trade.

Linda Piazza : 9/29/2008 1:47:27 PM

Big downturn. I've been mentioning that vulnerability to 536-537 all morning, but the target has actually dropped to 534.20, where potentially strong support might lie. So, watch for potential support in the currently being tested 536-537 level, but factor in the possibility of a further drop, toward 534 . . . which is occurring as I type.

Jeff Bailey : 9/29/2008 1:45:56 PM

Swing trade put establish stop alert! ... for the one (1) iShares Emerging Markets EEM Oct. $35 Put (EEM-VI) to $33.50 in the underlying.

EEM $32.57 -8.96% ...

Linda Piazza : 9/29/2008 1:44:50 PM

If you were in a bearish position this morning, you're being offered an opportunity to either take your profits or reduce risk by taking partial profits by the current downturn. The formation in which the OEX has been chopping is the kind that sometimes seen in the middle of a move, but it's also occurring along potentially strong support on 30-minute closes, now at 542.50, as well as Fib and other types of support. There's no guarantee that this isn't a bottoming formation instead. Evaluate your risk and make your decision.

Linda Piazza : 9/29/2008 1:42:12 PM

By the way, Hussman's weekly newsletter this week is titled "You Can't Rescue the Financial System if You Can't Read a Balance Sheet": Link

I say this every time I mention Hussman, as I've been doing after a subscriber first pointed me toward his work: Hussman runs two funds. I'm not pushing subscribers toward those funds. I am not currently invested in them although I'm certainly watching their performance and can't guarantee that I won't decide to do so at some point in the future. I trust his advice, though.

Linda Piazza : 9/29/2008 1:38:57 PM

Here's what I mean about the fact that although we've been immersed in what's happening in financial markets and have been offered ample opportunities to adjust our portfolios because have understood the warnings, Main Street is just now figuring it out. I've been cruising blogs on retirement these days, and I've noted increasing alarm among those who previously had adopted the buy-and-hold attitude, the it-will-come-back attitude. Reading those blogs makes me so sad, because people who did everything right, who worked their whole lives and saved and planned, who deferred trips and luxuries so they would be prepared, who followed the rules as they understood them, are now changing life plans, fearing what the future will bring for them. What I wish is that they'd read is John Hussman, who began warning of adverse market conditions in July last year, then, in his November 19, 2007 weekly newsletter, titled "Critical Point," said, "The real issue is that investors tend to overestimate their ability to stick with large (often inappropriate) exposures to equities during significant market downturns. I hope to encourage investors to carefully consider their ability to withstand a standard, run-of-the-mill [Hussman's emphasis] 30% bear market loss (which has historically occurred once every 5 years or so) without deviating from their investment plan. Investors who can't believe that that sort of decline is, in fact, standard and run-of-the-mill are probably arleady in trouble because they haven't bothered to look at the data." He warned we'd experience what we have so far, and that some investors who thought they could be buy-and-holders would discover that they didn't have the aptitude for it instead, and would discover it too late. He was not encouraging buy-and-hold attitudes for those with too much risk, and was in fact warning that some would think they could adopt that attitude but then be forced to bail when they learned their exposures were inappropriate for their risk characteristics.

Jeff Bailey : 9/29/2008 1:33:15 PM

dj- US House Begins Historic Vote On $700B Rescue Plan

Jane Fox : 9/29/2008 1:29:43 PM

Linda I did read that excerpt in your wrap and found it very interesting. I'm not entirely familiar with preferred markets either but when I read warnings like this I become all the more concerned for my future.

My daughter and her husband are saying, "Gee another crisis, just like the last crisis we read about that never affected me." They totally believe the status quo will not change. I hope they are right.

Jeff Bailey : 9/29/2008 1:29:41 PM

dj (earlier) - MORGAN STANLEY, RBC CUT APPLE SHARES

Morgan Stanley cites a string of Macintosh computer and iPhone order cuts and signs of pricing pressure heading into the holiday season.

Jeff Bailey : 9/29/2008 1:28:42 PM

dj (earlier)- FANNIE, FREDDIE SUBJECTS OF FEDERAL PROBE

Fannie Mae and Freddie Mac disclose that they have received grand-jury subpoenas from federal prosecutors seeking information on the companies' accounting, disclosures and corporate-governance matters.

Jeff Bailey : 9/29/2008 1:28:10 PM

dj (earlier)- US CONSUMER SPENDING FLAT; INCOME UP 0.5%

Consumer spending is flat in August, a sign the economy was weakening during the second half of the year, but a key inflation gauge creeps higher. Personal consumption is unchanged compared to the month before.

Jeff Bailey : 9/29/2008 1:27:25 PM

dj (earlier) - THREE MAJOR EUROPEAN FINANCIAL INSTITUTIONS RESCUED

The latest wave in the global banking crisis reaches European shores, as Fortis receives a bailout and Hypo Real Estate. In the U.K., policymakers nationalize mortgage lender Bradford & Bingley, selling its retail deposits to competitor Abbey National.

Jeff Bailey : 9/29/2008 1:26:39 PM

dj (earlier) - LEHMAN SELLS NEUBERGER BERMAN UNIT

Lehman Brothers agrees to sell its Neuberger Berman unit and other money-management units to private equity firms Bain Capital and Hellman & Friedman for $2.15 billion.

Jeff Bailey : 9/29/2008 1:25:01 PM

dj- Senator Reied: Expects Senate Vote On Rescue Plan Package Wednesday

Jane Fox : 9/29/2008 1:24:02 PM

Crude has hit a low of 97.62 so far today. It high was 106.91 so it has made a big move.

Linda Piazza : 9/29/2008 1:21:24 PM

Jane, it's not just the hedge funds, either. You all know my worries about the impact on the options market makers, although they were finally excluded. But there's something else. Last week, a subscriber sent me an article that I excerpted in this weekend's Wrap. This guest writer for RealMoney warned of the impact on the preferred markets. Here's what I excerpted in the Wrap this weekend:

Friday morning, I read two articles, both by learned men. One applauded the firm stance the government had taken in the Freddie/Fannie solution and in letting Lehman sink. The other, Michael Kao, CEO and portfolio manager of Akanthos Capital Management, decried those same actions. Kao, writing as a RealMoney guest commentator, claimed the Fannie/Freddie action "eviscerated the preferred markets." Since I have little experience in the preferred markets, I'll let his words speak. Formerly AA-rated securities dropped to "mere cents on the dollar overnight," he said, adding that, "this market was one of the only capital markets that remained open to financial institutions in the last eight to nine months, and it raised $80 billion during this period from straight and convertible preferred issuance." He warned that allowing Lehman to fail "severely eroded confidence between counterparties."

Kao blamed these actions and others, such as the no-shorts rules, for the "harrowing near-deaths" of Goldman Sachs and Morgan Stanley. We options traders have worried about what that no-shorts rules mean to our options trades, and Kao warns that the convertible bond/preferred market is being adversely impacted "because its main participants are arbitrageurs who require the ability to short out their equity exposures for bona fide hedging purposes."

He echoed a warning that others have increasingly mentioned, that we look to Pakistan's example if we want to see what banning short-selling can do. After Pakistan banned short selling, equity markets experienced a massive short-covering rally, but when that was finished, equity markets quickly dropped 26 percent in the following weeks and month, he says.

I'm not familiar with Kao. I don't know if he's the best or the worst among hedge fund people, but I hadn't previously thought much about what was happening in the preferred markets and how that would hamper recovery, being focused as I was on the options markets.

Jane Fox : 9/29/2008 1:15:56 PM

Short selling is the life blood of hedge funds. They not only use it take a position on a company they think is going down but they use short selling to hedge long positions as well. Since the SEC has banned short selling on now more than 800 companies (and the list is growing daily) this year is set to become one of the worst in the history of hedge funds. The only bright spot they see is the ban is to be lifted on Oct 2, Thursday.

Also hit hard by the ban is some ETFs like the Rydex Inverse 2x S&P Select Sector Financial ETF (RFN) that let investors bet against the financials. Trading in this ETF was temporary banned until the short selling ban is lifted.

Linda Piazza : 9/29/2008 1:12:03 PM

If you're thinking about trading the long side on the hopes that this vote will pass and that markets will react with relief, then you need to be evaluating right now where you'll put your stops because I'm not so sure that any bounce, if it occurs, will last. Markets have had a lot of information to absorb this morning, with news about the U.K. nationalizing a mortgage lender and a number of European central banks working together to rescue Fortis, along with the WaMu news Friday and Wachovia news that surfaced Friday and was finalized this morning. We are immersed in this, but not everyone is, and the realization of what's at stake and how bad the financial markets are may just now be sinking in.

Jeff Bailey : 9/29/2008 1:09:07 PM

SPX Cap-Weighted Heavyweights at this Link

Linda Piazza : 9/29/2008 1:05:27 PM

There's some slight improvement in the OEX on a Keltner basis. A Keltner line that was previously resistance on 15-minute closes just served as support on a 15-minute close. This line is now at about 546.03 currently. This might suggest that it's time for the OEX to climb up toward 549-549.50, but it's not a given that it will do so. OEX at 546.48 as I type.

Linda Piazza : 9/29/2008 12:53:28 PM

TED spread was last 3.18 according to the delayed Bloomberg feed. A while ago, I quoted an advisor I trust who said the downturn won't end until we've heard "free fall" day after day and week after week. Maybe we should add that it won't be over until we start seeing the CNBC crawl including values for the TED spread. (This is not serious advice, of course.) So few resource materials were available for the TED spread when I wrote my first Trader's Corner article on it back in the spring that I had trouble fleshing out the article. Now, all sorts of blogs are including information about the TED spread and following it.

Linda Piazza : 9/29/2008 12:49:39 PM

The House Vote on the EESA is imminent, CNBC is saying. Evaluate where you want your stops to be, if you haven't already, if in bearish positions, but bulls should not assume the huge rally they were promised will materialize. Manage your risk whatever way you're leaning.

Jeff Bailey : 9/29/2008 12:47:24 PM

Dow 30 Price-Weighted Components at this Link

Jane Fox : 9/29/2008 12:41:24 PM

The DOW is off over 300 points so far today and the internals remain bearish. AD volume (middle chart) is falling, the VIX (bottom chart) is climbing and the AD rato (top chart) is flat. Link

Linda Piazza : 9/29/2008 12:40:57 PM

Potentially strong resistance on 10-minute closes for the SPX is now at 1168.84 and then 1173.47. The SPX has now again hit its downside target on the 10-minute chart, producing potential bullish price/RSI divergence as it hit a new low for the day. I would not consider this bullish divergence as a sign to pile into bullish positions, but I would consider it an invitation to again beef up your just-in-case profit-protecting plan if in bearish positions.

Linda Piazza : 9/29/2008 12:38:49 PM

Potential resistance on 15-minute closes for the OEX is now 546.58 and 547.23. If the OEX bounces above that, next resistance is now 549.79. Bears should be aware of potentially strong support on 30-minute closes, though, at 543.

Jane Fox : 9/29/2008 12:25:12 PM

SAN FRANCISCO (MarketWatch) -- Bankrupt Lehman Brothers will sell its Neuberger Berman unit to Bain Capital and Hellman & Friedman for $2.15 billion, the two private equity firms said Monday. As part of the deal, a new investment management company will be created with assets of more than $230 billion as of Aug. 31. The deal includes Lehman Brothers Asset Management's fixed income, commodities, and quantitative portfolio management and Lehman Brothers' private funds investment group and is expected to close in early 2009. George Walker of Lehman Brothers will be chief executive of Neuberger Investment Management and Joe Amato will continue to head Neuberger Berman.

Linda Piazza : 9/29/2008 12:15:16 PM

So far, the OEX still finds resistance on 15-minute closes at potentially strong resistance at about 547.40, with further potentially strong resistance on 15-minute closes at 548.46. However, the OEX also still refuses to stay beneath 546, so it's possible but not yet probable that bulls will attempt a stronger bounce. If that should happen, watch for potentially strong resistance in the 549.50-550 zone.

Jeff Bailey : 9/29/2008 12:10:59 PM

12:00 Internals found at this Link

Linda Piazza : 9/29/2008 12:02:37 PM

Potentially strong resistance on 10-minute closes for the SPX is 1172.53 and then 1176.20. We don't know if this is going to hold, but it has been so far during this consolidation period for the last several hours. Potential downside target now 1164.16.

Linda Piazza : 9/29/2008 12:02:55 PM

Potentially strong resistance on 15-minute closes at about 547.50 for the OEX and then at 548.68. OEX at 574.23 as I type. We don't know if this will this time, but it has been so far during the consolidation over the last several hours.

Jeff Bailey : 9/29/2008 11:49:21 AM

dj- Mexico Reopens Dos Bocas Oil Port; Pajaritos Still Shut

Linda Piazza : 9/29/2008 11:48:39 AM

The VXO, the old VIX computed by using OEX options, is just moving sideways after bouncing this morning. It is so far maintaining 30-minute closes above potential support on 30-minute closes now at 43.88, but not yet bouncing again from that support into a new high. One chart shows potential resistance on 15-minute closes at 44.95 while the other shows a potential upside target of 50.55, with that target maintained as long as the VIX maintains 30-minute closes above that support now at 43.88. Give these volatility indices a little leeway, too. The VXO is currently 44.43.

Jeff Bailey : 9/29/2008 11:35:42 AM

FXY $95.13 +1.25% ...

Jeff Bailey : 9/29/2008 11:35:24 AM

dj- BOJ doubling size of dollar swap facility to $120B

Linda Piazza : 9/29/2008 11:32:16 AM

Impasse. The OEX can't bounce, but it's so far holding above the 546-ish potential support. Potential resistance on 15-minute closes is at 548.51 and then 549.86.

For the SPX, with its steeper decline today, I have to turn to the 10-minute chart to get any relevant numbers. Potential resistance on 10-minute closes is at 1175.31 and then 1179.90. The downside target on that chart is a shorter-term one and is now 1164.41, a number already hit once today but with the SPX still vulnerable to another test of that zone according to this chart.

Linda Piazza : 9/29/2008 11:26:16 AM

The TED spread has droppbed back down to 3.32 from its 3.55 high of the day, but it remains well above the 9/18 closing level of 3.16 as well as well above any historical markers I can find on the charts as far back as I can locate. It's above the levels seen in 1987, for example.

Jeff Bailey : 9/29/2008 11:22:30 AM

Most Actives ... XLF $19.87 -7.10%, FRE $2.16 +8.00%, AAPL $111.11 -13.30%, MSFT $26.82 -2.15%, EEM $33.05 -7.65%, NCC $2.06 -44.47%, SPY $116.60 -3.53%, BAC $34.24 -6.67%, RIMM $66.60 -5.87%, QQQQ $39.08 -4.89%

Keene Little : 9/29/2008 11:13:34 AM

With the break below SPX 1188 it's looking like the bearish scenario (dark red) is in play. A drop down to the September 18th low of 1134 should be next (and will likely break). The little bounce at this morning's low looks corrective and should lead to another drop. 120-min chart update: Link

Linda Piazza : 9/29/2008 11:10:20 AM

The SPX is still trying to steady on potentially strong support on 30-minute closes at about 11.71, but it's not bouncing from that support. Again, if it does, it has potentially strong resistance overhead, now beginning at 1180.10 on 15-minute closes. If it drops, the next Fib level to watch is about 1164.50, near today's 1164.06 low of the day.

Jeff Bailey : 9/29/2008 11:05:59 AM

NASDAQ a/d 515/2,208

Jeff Bailey : 9/29/2008 11:05:47 AM

NYSE a/d 185/2,585

Linda Piazza : 9/29/2008 11:01:52 AM

The OEX is currently steadying above 546-ish Fib support and potentially strong support on 30-minute closes at 543. If it loses the Fib support on 15-minute closes, though, I'd watch closely the potential support at 543, too. If that's lost on 30-minute closes, I think my earlier statement about having to factor in vulnerability to 536-537 should be given strong consideration. That's a potential downside target that's already been set on the 15-minute chart, but there's that other potential support between here and there to consider. So, I don't consider it a given yet that the OEX will drop to 536-537 and I wouldn't advise bears to hold on for every penny of that drop if things start setting up differently, but I would factor in vulnerability to that level if I were thinking about trying a bullish trade. I'm not thinking about that, by the way.

Linda Piazza : 9/29/2008 10:57:57 AM

We're apparently having difficulty with our electric provider today. My battery backup/surge protector saved my connection this time, but if I disappear for a while, you'll know it's not by choice.

Jeff Bailey : 9/29/2008 10:50:26 AM

VIX.X 39.65 +14.13% ...

Jeff Bailey : 9/29/2008 10:50:11 AM

Swing trade puts exit alert! ... for the two (2) National City NCC Oct $3 Puts (NCC-VQ) at the bid of $1.75.

NCC $1.60 -56.87.

Continue to hold the 30-share long from Friday's extended.

Jeff Bailey : 9/29/2008 10:45:17 AM

RVX.X 42.36 +10.39% ...

Jeff Bailey : 9/29/2008 10:45:00 AM

Swing trade call exit alert! ... for the one (1) iShares Russell 2000 IWM Oct. $71 Call (DIW-JS) at the bid of $1.55.

IWM $68.35

Linda Piazza : 9/29/2008 10:43:13 AM

There are no guarantees, but so far, this OEX and SPX steadying looks like consolidation before another tumble, the type that tends to occur about halfway through a move. This conclusion is complicated by the fact that it's occurring at what held as support midweek last week for the OEX but below what held as support midweek last week for the SPX. So, even though it's occurring beneath potential resistance on 15-minute closes now at about 549.90 for the OEX and 1182.50 for the SPX, I wouldn't be surprised to see the OEX move up closer to 553 and the SPX, 1184. Neither would I be surprised to see either keel over again. This is a risky trading environment, so consider your stops well right now while the indices are consolidating.

Linda Piazza : 9/29/2008 10:32:45 AM

First potential resistance now for the OEX is in the 549.20-550.25 zone on 15-minute closes. Fib resistance is nearer 553.30.

Jeff Bailey : 9/29/2008 10:30:27 AM

European Markets: Link

Jeff Bailey : 9/29/2008 10:29:59 AM

Asian Markets: Link

Linda Piazza : 9/29/2008 10:28:17 AM

Today is a day to just follow the indices lower with your stops. The indices are steadying for only a few minutes before cascading lower again. At some point, we may have a sharper bounce so begin deciding how much of a bounce you're willing to endure if in bearish positions. Some, if they have multiple contracts, might consider stepping out of partial positions at certain points, locking in profits on those and making the rest easier to handle. Remember that in fast-market conditions, such as in some kind of surprise big bounce, markets can run right through your stop and the OEX be two points away before you're filled on your stop, even if it was just a plain stop and not a limit stop.

Jeff Bailey : 9/29/2008 10:27:36 AM

10:00 Internals found at this Link

Linda Piazza : 9/29/2008 10:19:04 AM

I think we should now factor in vulnerability to 536-537 on the OEX based on what the SPX has done. OEX 543.63.

Linda Piazza : 9/29/2008 10:18:26 AM

And they just keeled over again, right as I was posting that 10:17:55 post.

Linda Piazza : 9/29/2008 10:17:55 AM

No bounce yet, but the SPX's 30-minute chart does show the SPX attempting to steady on potential support on 30-minute closes near 1171-1172, while the OEX outperforms, steadying above an analogous potential support level at 543. I don't know whether these indices can steady long enough for a bear-flag type bounce, as they're so weak, but if they do, watch for that rollover potential near 551-553.30 for the OEX and 1183-1186 for the SPX. Don't count on the bounce happening, though, as all attempts to steady so far have had the indices just keeling over again.

Jane Fox : 9/29/2008 10:14:53 AM

The Treasury will buy bad loans focusing mostly on mortgages but under certain conditions may take on other loans as well. The bad debt will be purchased through a reverse auction or buy them directly.

Jane Fox : 9/29/2008 10:12:43 AM

The massive financial rescue plan is called the Emergency "Economic Stabilization Act of 2008" and will be introduced to the House this morning and then to the Senate. It is been called a buy in not a bail out so we can turn our economy around. It will authorize $250 billion immediately then another $100 billion upon presidential certification and another $350 billion is subject to congressional approval.

Tab Gilles : 9/29/2008 10:12:33 AM

JPMorgan (JPM) $45.95 -$2.27 (4.8%)

Jan '10 $45 call WJPAI $9.05 Bid / $9.65 Ask

Linda Piazza : 9/29/2008 10:09:25 AM

Because the SPX is so weak comparatively, I would consider OEX 551-553.30 to be potentially strong resistance if the OEX should get that high. While it's easier to send the narrower OEX higher, that profound weakness in the SPX suggests that the OEX might have some difficulty ever breaking up to 555. And, now that I've said that, that's probably exactly where it will go, but I would begin watching for potentially strong resistance at OEX 551-553.30 first. The analogous level for the SPX is 1183-1186, and I'm not sure that either will get to those levels in the near term.

Tab Gilles : 9/29/2008 10:05:26 AM

***FEDERAL RESERVE ALERT***

Press Release Release Date: September 29, 2008

For release at 10:00 a.m. EDT

In response to continued strains in short-term funding markets, central banks today are announcing further coordinated actions to expand significantly the capacity to provide U.S. dollar liquidity. Central banks will continue to work together closely and are prepared to take appropriate steps as needed to address funding pressures.

Federal Reserve Actions The Federal Reserve announced today several initiatives to support financial stability and to maintain a stable flow of credit to the economy during this period of significant strain in global markets.

We will continue to adapt these liquidity facilities as necessary and will keep them in place as long as circumstances require.

Actions by the Federal Reserve include: (1) an increase in the size of the 84-day maturity Term Auction Facility (TAF) auctions to $75 billion per auction from $25 billion beginning with the October 6 auction, (2) two forward TAF auctions totaling $150 billion that will be conducted in November to provide term funding over year-end, and (3) an increase in swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, Danmarks Nationalbank (National Bank of Denmark), European Central Bank (ECB), Norges Bank (Bank of Norway), Reserve Bank of Australia, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank to a total of $620 billion, from $290 billion previously.

These steps are being undertaken to mitigate pressures evident in the term funding markets both in the United States and abroad. By committing to provide a very large quantity of term funding, the Federal Reserve actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk.

84-Day Maturity TAF Auctions The increase to $75 billion per auction will triple the supply of 84-day maturity credit to $225 billion from $75 billion. TAF credit at the 28-day maturity will remain at $75 billion. The total amount of TAF credit available in the 28-day and 84-day auction cycles will double to $300 billion from $150 billion.

Forward TAF Auctions The forward TAF auctions are a new program designed to provide reassurance to market participants that term funding will be available over year-end. The timing and terms of the two forward TAF auctions will be determined after consultations with depository institutions that utilize the TAF program.

It is anticipated that there will be two auctions in November totaling $150 billion. These auctions will provide short-term (one- to two-week term) TAF credit over year-end.

Foreign Exchange Swap Lines The Federal Open Market Committee (FOMC) has authorized a $330 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide funding for U.S. dollar liquidity operations by the other central banks. The FOMC has authorized increases in all of the temporary swap facilities with other central banks. These larger facilities will now support the provision of U.S. dollar liquidity in amounts of up to $30 billion by the Bank of Canada, $80 billion by the Bank of England, $120 billion by the Bank of Japan, $15 billion by Danmarks Nationalbank, $240 billion by the ECB, $15 billion by the Norges Bank, $30 billion by the Reserve Bank of Australia, $30 billion by the Sveriges Riksbank, and $60 billion by the Swiss National Bank. As a result of these actions, the total size of outstanding swap lines is $620 billion.

All of the temporary reciprocal swap facilities have been authorized through April 30, 2009.

Dollar funding rates abroad have been elevated relative to dollar funding rates available in the United States, reflecting a structural dollar funding shortfall outside of the United States. The increase in the amount of foreign exchange swap authorization limits will enable many central banks to increase the amount of dollar funding that they can provide in their home markets. This should help to improve the distribution of dollar liquidity around the globe.

Linda Piazza : 9/29/2008 10:01:20 AM

A/D line hitting potentially strong support now. This is another place to update your just-in-case profit-protecting plans. If the OEX and SPX should bounce now, we know to watch for potentially strong resistance at 553-555 for the OEX but it's a little more difficult to ascertain where that might be for the SPX. The analogous level would be 1197-1200 but there's an intervening 1183-1185 potential resistance zone for the SPX.

Tab Gilles : 9/29/2008 9:59:59 AM

GLD $88.65 +$2.00 (2.3%) USO $81.63 -4.59 (5.255)

Tab Gilles : 9/29/2008 9:58:35 AM

$VIX 38.87 +4.13 Link

$VXD 35.97 +3.07 Link

$VXN 0.80 +3.95 Link

$RVX 42.08 +3.71 Link

Linda Piazza : 9/29/2008 9:58:20 AM

That value that Tab just quoted for the TED spread is above the 3.37 intraday high we saw last week.

Jeff Bailey : 9/29/2008 9:58:08 AM

Mitsubishi UFJ Buys 21% Stake in Morgan Stanley ... AP Story Link

Linda Piazza : 9/29/2008 9:56:11 AM

The SPX is leading the way when the SPX and OEX are compared. The SPX has just gapped below potentially strong support on 15-minute closes that is now at 1186.80, matched by Fib potential support near 1183.70, with neither holding yet. The OEX is trying to hold near the potential support on 15-minute closes now at 551.66, although it, too, is beneath the 50% retracment of the rally off Thursday's low into Friday's high, with that near 553.30. I'm not sure whether the OEX is going to steady the SPX or the SPX is going to crater the OEX, but on a Keltner basis, at least, the OEX is outperforming the SPX . . . but is getting dragged lower as I type. OEX at 549.17 with the 544-546 level perhaps the next target.

Jeff Bailey : 9/29/2008 9:55:56 AM

Citigroup to Buy Wachovia Banking Ops ... AP Story Link

Tab Gilles : 9/29/2008 9:52:52 AM

TED Spread

Value 3.48

Change 0.558

% Change 19.115

High 3.48

Low 2.92

Open 2.92

Jane Fox : 9/29/2008 9:52:33 AM

The NDX futures have broken their overnight lows. Now the S$P as well and the DOW is just about to. I don't have uptodate data for the Russell 2000 but if the NQ has broken its overnight lows then I suspect TF has as well.

Linda Piazza : 9/29/2008 9:50:36 AM

A/D line still falling. It's got potentially strong support now near -2300 to -2400. It's at -2266 as I type, so be careful with your just-in-case profit-protecting stops if in bearish trades. The A/D line can and does break down, creating a breakdown mode. Even just a sideways trend now would be bearish and would support bearish trades, but the A/D line is now extreme and sometimes bounces hard from this very area, too. Just be careful.

Jane Fox : 9/29/2008 9:50:17 AM

AD line is a very ugly -2284 and the VIX is making new daily highs so it is no time for long positions.

Jane Fox : 9/29/2008 9:48:43 AM

The daily chart of Gold has become one of the ugliest charts I have seen in a while. Gold used to trade so smoothly and was one of the most "readable" charts I watched but not anymore. This is of course due to its relationship with the US$ how that market has been pushed and pulled of late. Link

Linda Piazza : 9/29/2008 9:47:00 AM

I mentioned potentially strong support for the OEX on 30-minute closes near 555. The analogous level for the SPX, however, is 1199.45 and the SPX has already well violated that. It's going to take some bounce to get back to 1199.45 by the close of the first 30-minute period. It can occur, but it casts some doubt on the OEX's ability to stabilize near 555, too. I would watch for the next potential support on the OEX, near 551.97 on 15-minute closes if the OEX can't stabilize soon and bounce back toward 555.

Jane Fox : 9/29/2008 9:42:00 AM

I am reading that Crude is down due to worries over the bailout package. It may not be enough to stop the bleeding and global growth will slow and slow the demand for oil. Geesh that is sure a lot of worrying.

Jeff Bailey : 9/29/2008 9:40:01 AM

Weekly, Monthly, Quarterly Index Pivot Matrix found at this Link

Linda Piazza : 9/29/2008 9:38:06 AM

Watch for potentially strong support on the OEX on 30-minute closes near 555. If it steadies there and bounces, watch for potential resistance near 558.75-560.50, especially if the A/D line has bounced up to about -550 and is stalling there. OEX at 555.

Linda Piazza : 9/29/2008 9:36:00 AM

Keltner outlook on the A/D line: The A/D line opens in the lower or bearish half of its Keltner channels, but just above potentially strong support on 15-minute closes near -1150 to -1200. Watch for the possibility the A/D line could steady during this first 15-minute period and bounce toward -550. If it does, not a given by any means, then I would watch for rollover potential in the -550 region. A/D line now at -1315 and still dropping.

Jane Fox : 9/29/2008 9:34:13 AM

The only good thing I can find this morning is Crude is down again and looks like it could fall further. Link

Linda Piazza : 9/29/2008 9:32:49 AM

In my original 9:32 post, I said we could extrapolate that the OEX might go to 562-563, but I meant 552-553.

Jane Fox : 9/29/2008 9:31:55 AM

NEW YORK (MarketWatch) -- Freddie Mac said Monday that it had received a federal grand jury subpoena from the U.S. Attorney's Office for the Southern District of New York, seeking documents relating to accounting, disclosure and corporate governance matters for the period from Jan. 1, 2007, to the present. It also said it had received notice that it is the subject of a probe by the Securities and Exchange Commission, directing it to preserve documents. Freddie Mac said it received both the subpoena and SEC notice Friday, and that it will cooperate fully in the matters.

Linda Piazza : 9/29/2008 9:32:08 AM

Today could be a risky day to be in the markets. I voiced my concern last week both on the Market Monitor and in the weekend's Wrap that the supposed rally after a deal was struck would not play out exactly as hoped. I think it would have been more predictable if it had happened week before last, but we've had FDIC-engineered bank takeovers here, a U.K. nationalization of mortgage lender Bradford & Bingley, and multi-government bailout of Fortis in the interim. There's doubt about the bailout program and sharp evidence of what will happen if it doesn't work. I personally believe that the realization of what's going on is only now sinking in to most investors.

But the truth is that we don't know whether that relief bounce will occur and whether it turns out to be sustainable or not if it does occur. Therefore, bears must be careful to protect profits.

Let's just look at charts. If we were to extrapolate where the OEX might go based on the ES contract's distance from SPX fair values, then we'd be looking at a dip toward 552-553. The 15-minute chart shows potentially strong resistance on 15-minute closes at 552.70, but that's a number that would likely be lower before it's tested. In addition, however, there's a band of potentially strong resistance from 557.95-558.20 on 15- and 30-minute closes. Unless the OEX barrels straight through it, that could be strong enough to provide a steadying until the market watches what happens in Washington and then reacts.

We must be aware of a band of potentially strong S/R on the monthly chart that begins at about 560-562, but must also keep in mind vulnerability to retests of the 541 zone, where potential support might exist on daily closes or even the 527-530 zone, toward the bottom of the steep descending price channel in which the OEX has been sliding off last year's highs. I can't guarantee that the OEX will need to retest the September lows and perhaps even exceed them, but I would certainly keep that vulnerability in mind when planning trades. If I were a bear, I'd also keep in mind the possibility that there could be a huge relief rally somewhere along the way, even if the OEX gets there.

Jane Fox : 9/29/2008 9:27:51 AM

Here are your overnight charts. Not what you would have expected after the bailout package was ratified. Link

Jane Fox : 9/29/2008 9:24:27 AM

SAN FRANCISCO (MarketWatch) -- Freddie Mac said that seven of its board members have resigned this week, according to a Securities and Exchange Commission filing Friday. Freddie said that board members Richard Karl Goeltz and Stephen Ross resigned from the board on Monday; Michelle Engler and William Lewis Jr. on Tuesday; and Geoffrey Boisi, Thomas Johnson and Jerome Kenney on Friday. Freddie also said it fired "without cause" its Chief Financial Officer Anthony Piszel, and that the Federal Housing Finance Agency has determined that "golden parachute" payments for Piszel should not be paid.

Jane Fox : 9/29/2008 9:24:04 AM

Freddie Mac receives SEC inquiry - MarketWatch

Grand jury subpoenas Freddie Mac - MarketWatch

Jane Fox : 9/29/2008 9:18:34 AM

LONDON (MarketWatch) -- The U.K. government said Monday that mortgage bank Bradford & Bingley is being nationalized after investors and lenders lost confidence in the group, leaving it unable to continue funding its operations.

Jane Fox : 9/29/2008 8:54:20 AM

WASHINGTON (MarketWatch) - Despite a big rebound in auto sales, U.S. consumer spending was flat in August, the third consecutive month of weak consumption, the Commerce Department reported Monday.

The weaker-than-expected consumption figures raise the odds that consumer spending declined in the third quarter of the year, which would be the first quarterly decrease in 17 years, economists say. Economists surveyed by MarketWatch were expecting consumption to rise 0.2% in August.

Wage growth accelerated. Personal incomes increased 0.5%, the largest one-month gain in a year, excluding the 1.9% increase in May that stemmed from Washington's tax-rebate checks. Economists expected incomes to rise 0.2%.

After-tax incomes tumbled 0.9% during the month, largely because the tax-rebate program ended, effectively raising taxes.

Jane Fox : 9/29/2008 8:48:45 AM

Wachovia's depositors may be Ok but Wachovia Investors are sure not.

Jane Fox : 9/29/2008 8:46:52 AM

FDIC: Citi to Buy Wachovia's Banking Operations

The FDIC made the following announcement this morning on Citi's purchase of Wachovia?s banking operations.

Citigroup Inc. to Acquire Banking Operations of Wachovia

FDIC, Federal Reserve and Treasury Agree to Provide Open Bank Assistance to Protect Depositors

Citigroup Inc. will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina, in a transaction facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President. All depositors are fully protected and there is expected to be no cost to the Deposit Insurance Fund. Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC.

"For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits." said FDIC Chairman Sheila C. Bair. "There will be no interruption in services and bank customers should expect business as usual."

Keene Little : 9/29/2008 8:16:33 AM

Equity futures are down fairly hard this morning. The DOW futures are up almost 100 points from this morning's low near 4:00 AM but still down 130. S&P futures are even more negative, currently down 18 points, up 10 points from its low. On Friday afternoon I had mentioned it was a very good setup for a short play after the 3-wave bounce into the close, with a stop at a new daily high. Obviously that short play is looking pretty safe this morning and the stop should be at Friday's close.

I'll be on the road today, somewhere in Big Sky country (Montana) and Idaho. It's a beautiful part of the country but doesn't have much in the way of internet signals. I'll update sporadically today as I get a signal and find a place to pull over (for some reason the rest areas are put in the most remote places as far as internet signals).

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