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Keene Little : 10/1/2008 1:25:13 AM

Tuesday's pivot table (new monthly pivots): Link

The big bounce on Tuesday opens up several wave count possibilities and one of them is very bearish calling for a very strong decline from here. Equity futures are back down tonight so who knows what surprises lurk out there. But the other possibility is for a strong rally leg over the next week, potentially up to a Fib projection near 1324. A push above 1188 would be a bullish heads up and above the September 25th high near 1220 would confirm it. But the higher probability price path remains to the downside until proven otherwise. 120-min chart: Link

It was a good short play setup again as we headed into the close on Monday (like Friday's) with a throw-over above Monday's rising wedge pattern. Any drop below SPX 1163 would be back inside the wedge and below 1153 would confirm the failure of the wedge so those are two numbers to watch if the market starts down on Tuesday.

Keene Little : 10/1/2008 12:43:50 AM

With the SEC changing the rule to allow the banks to carry the toxic waste assets at whatever value they think it's worth vs. what the market thinks it's worth will only continue to cause confusion since no one will know what's really sitting on the banks' books.

I have a sinking feeling that the rule change is being done as part of a coordinated effort between government and big money to bail out the banks with as much money as possible. When the government buys the inflated mark-to-whatever-they-think-it's-worth assets they'll be paying top dollar for them. The promise being made that the government will be able to make money on these assets is absurd.

It's a dangerous road we're heading down and big money is trying desperately to get the government to bail them out, at great taxpayer expense. I'm asking everyone to call their representatives to tell them emphatically we don't want these assets on taxpayers' backs. I hope the arm twisting on those who voted no does not work and they continue to vote no. I'm afraid big money is going to win this one, again.

Tab Gilles : 9/30/2008 10:08:46 PM

S.E.C. Move Relaxes Rule on Assets Link

Tab Gilles : 9/30/2008 10:04:35 PM

Senate Is Set to Vote on Bailout Bill

WASHINGTON -- The U.S. Senate is set to vote Wednesday evening on its version of the emergency financial rescue package rejected Monday by the House of Representatives, which will include an increase in the cap to the level of deposits in bank accounts insured by the federal government up to $250,000, a senior senate Democratic aide said Tuesday.

The vote will also include the Senate version of an extension to a series of renewable energy and other business tax credits.

There had been speculation throughout Tuesday that the Senate might move to act on the bailout legislation after a surprise defeat of the bill in the House on Monday.

The hope is that increasing the amount the Federal Deposit Insurance Corporation can insure, the necessary votes can be found in the House to approve the measure. Twelve more votes would be needed in the House to pass the bailout legislation based on Monday's vote result.

The package of tax credits will also include an annual fix to the alternative minimum tax credit so that more than 20 million middle-class Americans aren't inadvertently affected by the tax.

The Senate will also hold a vote on an amendment to the bill sponsored by Independent Sen. Bernard Sanders, of Vermont, who wants to apply a surtax to millionaires to pay for the potential cost of the bailout.

"We're not going to sit around and point fingers, we're going to get the job done, and we're going to get it done this week." said Don Stewart, a spokesman for Republican Senate minority leader Mitch McConnell, of Kentucky.

Sen. Barack Obama's campaign issued a statement Tuesday evening that the senator will return to Washington, D.C., for the vote.

OI Technical Staff : 9/30/2008 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 : 9/30/2008 8:33:46 PM

WKLY, MNTHLY, QRTRLY Index Pivot Matrix at this Link

Jeff Bailey : 9/30/2008 7:55:09 PM

Today's Global Econ. Calendar Link ... Tankan big lowest since June'03

Jeff Bailey : 9/30/2008 7:01:50 PM

Last three (3) QRTRLY Pivot Matrix at this Link

Tab Gilles : 9/30/2008 6:13:33 PM

GLD $85.07 -$4.50 (5.02%) Why hasn't gold rallied above its March highs on the failure of EESA being voted down? If it does get passed along with today's other discussed "fixes", eg. FDIC, mark-to-market, etc, will gold plummet? The Dollar, I believe will continue to gain strength and break over 80 resistance. Link

Jeff Bailey : 9/30/2008 5:29:34 PM

Major Global Equity Indexes, Currencies, Oil, Gold, HUI.X, OIX.X and XLF at this Link

Jeff Bailey : 9/30/2008 5:12:08 PM

Beetle's Balanced from 06/30/08 Rebalance Link

dollar and Treasuries were this quarter's winners. Small caps (IWM) held their own. Silver and oil hit lower.

Will take the "Value" 16,162.31 and rebalance among the 17.

Jeff Bailey : 9/30/2008 5:01:38 PM

Closing Internals at this Link

Tab Gilles : 9/30/2008 4:59:11 PM

News of layoffs at one of the most profitable casinos in the country, is bearish for the already beaten down gaming stocks. Link

LEDYARD, Conn. -- The economic slump has hit Foxwoods.

The Mashantucket Pequot Tribal Nation will cut about 700 jobs at Foxwoods Casino and MGM Grand over the next few weeks.

"As is happening to so many organizations, the economic issues facing our nation and regional consumer economy have negatively impacted our revenue growth. Although it has taken a few months, the recession?s impact can now be clearly seen in our industry," Tribal Council Chairman Michael Thomas said in a release Tuesday. "Unfortunately, the time has arrived when we must face the difficult decision and align our payroll costs with current revenue levels. We will do everything that we can to minimize the effect of this decision on our Team Members and on our customers."

The casino issued a release Tuesday saying it will reduce its workforce by approximately 700 over the next few weeks.

Foxwoods officials said strong business is needed to ensure the security of the nearly 11,000 employees at Foxwoods and MGM Grand.

Senior management submitted the plan and the tribal council approved it.

Jeff Bailey : 9/30/2008 4:55:25 PM

Closing U.S. Market Watch at this Link

Tab Gilles : 9/30/2008 4:43:48 PM

According to CNBC, NASDAQ is investigating erroneous transactions in Google stock at 3:57PM today.

Tab Gilles : 9/30/2008 4:35:22 PM

Google (GOOG) $341.43 -$39.57 (10.39%); After Hours: 406.00 61.57 (18.4%)

Google plummeted in the last few minutes of trading today, haven't seen any specific news to as why?

Tab Gilles : 9/30/2008 4:13:21 PM

SEC Office of the Chief Accountant and FASB Staff Clarifications on Fair Value Accounting


Washington, D.C., Sept. 30, 2008 ? The current environment has made questions surrounding the determination of fair value particularly challenging for preparers, auditors, and users of financial information. The SEC's Office of the Chief Accountant and the staff of the FASB have been engaged in extensive consultations with participants in the capital markets, including investors, preparers, and auditors, on the application of fair value measurements in the current market environment.

There are a number of practice issues where there is a need for immediate additional guidance. The SEC's Office of the Chief Accountant recognizes and supports the productive efforts of the FASB and the IASB on these issues, including the IASB Expert Advisory Panel's Sept. 16, 2008 draft document, the work of the FASB's Valuation Resource Group, and the IASB's upcoming meeting on the credit crisis. To provide additional guidance on these and other issues surrounding fair value measurements, the FASB is preparing to propose additional interpretative guidance on fair value measurement under U.S. GAAP later this week.

While the FASB is preparing to provide additional interpretative guidance, SEC staff and FASB staff are seeking to assist preparers and auditors by providing immediate clarifications. The clarifications SEC staff and FASB staff are jointly providing today, based on the fair value measurement guidance in FASB Statement No. 157, Fair Value Measurements (Statement 157), are intended to help preparers, auditors, and investors address fair value measurement questions that have been cited as most urgent in the current environment.


Jeff Bailey : 9/30/2008 4:10:44 PM

Wachovia to buy $494M of Lehman debt from 3 Evergreen Funds

Evergreen Money Market
Evergreen Institutional MM
Evergreen Prime Cash Mgmnt

Jeff Bailey : 9/30/2008 4:08:06 PM

Most Actives: ... QQQQ $39.17 +3.56%, XLF $19.81 +6.67%, NCC $1.75 +28.67%, WB $3.50 +90.21%, MSFT $26.67 +6.63%, INTC $18.73 +8.45%, SIRI $0.57 -8.06%, C $20.51 +15.54%, UYG $17.50 +7.75%, AIG $3.33 +33.20%

Tab Gilles : 9/30/2008 4:07:59 PM

Dow Jones was down 777 yesterday and is up about 484 today...hmm...62% Fibonacci?!

Tab Gilles : 9/30/2008 4:06:41 PM

Chesapeake Energy (CHK) is on my radar and I'm eyeing some deep out of the money call option LEAPS, into 2010. They are WZYAL $60 call, WZYAM $65 & WZYAN $70. Link

Jeff Bailey : 9/30/2008 4:03:57 PM

Moody's: Downgrades Iceland's Glitner, Puts Country on Watch

Jeff Bailey : 9/30/2008 4:01:57 PM

S&P: Home-loan delinquencies mixed in August

DJ- Standard & Poor's said delinquencies of most home-related loans were mixed in August, with various 2005 and 2007 delinquencies falling.

The agency released last month's results for residential mortgage-backed securities created in 2005 through 2007 from home-equity lines of credit, closed-end second liens, prime jumbo mortgages and subprime loans.

S&P said as of the August distribution date, delinquencies on subprime deals were 38% of current total pool balances for 2005 and 43% and 33% for 2006 and 2007, respectively. Rates for 2006 and 2007 rose 3% and 5%, respectively, compared with July, while the 2005 vintage fell 0.1%.

For jumbo loans - the minimum of which is $417,000 - delinquency rates ranged from 3.11% to 4.57%, with the biggest increase from the 2005 vintage, up 3.6%. Delinquencies declined slightly for the 2007 vintage, down 3.4%.

Deals with closed-end second liens from 2006 and 2007 had delinquency rates up 1%, while 2005 fell 9%. For home-equity loans, the 2005 and 2006 vintages fell 3% and 3.46%, respectively, while 2007 rose 1.56%.

Delinquency rates have been increasing for a host of home-related loans as home prices have fallen - sometimes below the outstanding loan amount - and homeowners have had less incentive to keep up with payments.

Linda Piazza : 9/30/2008 4:00:01 PM

The OEX is back inside that rising channel after attempting to break out. It's ending the day near a 38.2% retracement of the drop from the 9/19 high into yesterday's low, a normal-enough retracement, even if it's just a relief bounce accomplished in the form of a possible bear flag. Even if it will eventually tumble lower, something we can't be sure will happen, will the OEX retrace 50% or 61.8% before doing so? We just don't know.

Jeff Bailey : 9/30/2008 3:59:08 PM

Brazil's real closes at BRL1.904/$

Jeff Bailey : 9/30/2008 3:58:21 PM

dj- Monarch Bank announced $100M of excess FDIC insurance protection through new CDARS(R) program

Linda Piazza : 9/30/2008 3:57:03 PM

Suggesting the possibility of a small-bodied candle for the day's candle seems silly in retrospect, doesn't it? However, it was a possibility and that possibility necessitated careful decisions about stops today, especially in this environment. I did not suggest that shorts pile in at any point, but I did suggest those careful setting of stops and I continue to suggest a careful assessment of how much risk on the long side you feel comfortable taking home tonight. We're in an environment in which we're on the verge of a total freezing of credit, and in which central banks other than ours and governments other than ours are scrambling to decide what to do. I don't know if anyone has mentioned it here today, but Russia's markets were shut down again this morning when stocks dropped 10 percent with seconds of the opening, an NPR report noted this morning. Of course, their problems differ from ours, the report noted, due to their dependence on crude for the economy's driving force.

Jeff Bailey : 9/30/2008 3:57:01 PM

dj- Brazil's real posts 14% loss against dollar for September

Jeff Bailey : 9/30/2008 3:55:53 PM

Toyota Motor (TM) $85.95 +2.86% ...

Jeff Bailey : 9/30/2008 3:55:25 PM

dj- Proposed tax credits for electric cars stall in congress

Tab Gilles : 9/30/2008 3:54:01 PM

JP Morgan (JPM) $47.13 +$6.13 (14.9%) Intraday High

January 2010 $45 call (WJPAI) $9.75 /$10.00

Call is up $1.90 (24.2%) since I suggested it last Thursday.

Tab Gilles : 9/25/2008 11:12:36 AM

For those who want to step into financials, you know I believe JP Morgan to be best of breed. So do you buy prior to the Congress passing a bill or wait? I would say take a partial position here, one long term call option (LEAPS) that I prefer here is January $45 2010 Call, ticker symbol WJPAI. Currently $7.55 Bid/ $7.85 Ask.

Suggest taking a 1/2 position, set stop at $6.00

Linda Piazza : 9/30/2008 3:50:16 PM

The top of the OEX's rising channel has risen, but the OEX is again approaching it, now at about 545. I didn't think the OEX would be likely to burst out of this channel, so watch for potential resistance here, but anything goes in the lst few minutes of trading.

Keene Little : 9/30/2008 3:49:17 PM

I'm going the skeedaddle out of here before the close--got my last 5 hours to go before I get back into Seattle. Looks like they're going to run it up into the close again. Hope, combined with a little government influence, does wonders for getting the shorts out of the market. Just watch for a throw-over finish to today's rally followed by a collapse back down. At least that's the setup again. Take a few puts home with you and if the market doesn't immediately drop tomorrow morning, take a small loss and get out. Enjoy the rest of your day. SPX 10-min chart: Link

Linda Piazza : 9/30/2008 3:46:34 PM

I know this rising channel today, this huge bounce, looks great, but I'm sorry: I have to maintain some skepticism. To me, it looks a whole lot like the one we had after the drop into last Wednesday's low. Can you guarantee this one won't end the say way? I can't, either. Evaluate how much exposure to the long side you feel comfortable taking home.

Tab Gilles : 9/30/2008 3:42:28 PM

Natural Gas relative to Crude oil is cheap! Link

Chesapeake Energy (CHK) Link UNG Link

Linda Piazza : 9/30/2008 3:42:45 PM

Whatever happens, OEX bulls don't want to see a pullback below about 530 this afternoon. Such a pullback would be a pullback back below the bottom of the former descending channel in which the OEX has been moving lower since last October, the channel broken through yesterday. That's a long-term channel, so I would watch for a weekly close below it at least before I believed too strongly that it had been broken, but that doesn't mean that it won't do damage to see that holding up as resistance on a daily close. In the old days, it would seem impossible to think of the OEX dropping 11 points or more into the last few minutes of trading, but it doesn't seem impossible now. I'm not saying that will happen, just saying that it would be a very negative thing if it did. Of course, I'm the one who said you shouldn't have a lot of exposure on the long side overnight yesterday and who thought it possible that we could get a small-bodied candle today, something that's still possible if the OEX should break through about 537.40, so obviously, my crystal ball isn't functioning too well in this kind of market.

Tab Gilles : 9/30/2008 3:37:23 PM

Natural gas may rise 21% Link

Keene Little : 9/30/2008 3:31:27 PM

Heading into the final 30 minutes of trading I have to wonder if today is setting the market up for another gap down day tomorrow (sell the news or some other disappointment), just as the bounce into the close on Friday did. It gets shorts covering into the close and longs buying in earnest, afraid they missed the bottom. We have no idea what tomorrow will bring but recent patterns in this market suggest you not trust a rally into the close.

Linda Piazza : 9/30/2008 3:27:47 PM

For the first time today, it's possible to make a judgment based on an intraday OEX chart about whether support or resistance looks strong. Right now, resistance on 10-minute closes from 541.95 up to 543.42 looks strong. So does potential support near 537.45, too, though. Normally when resistance looks that strong, it can prevent even a near-test from occurring, but the support is mitigating its strength somewhat. Still, the chart gives enough of an edge to the resistance that it looks as if it might be difficult for the OEX to jump out of the top of that rising channel in which it's been climbing, anyway. And, now that the charts have finally set up something that allows for some judgment, the OEX will probably zoom right through the top of that channel and keep on zooming all the last thirty minutes. That's how charts are set up, though, so watch for potential resistance again now up to about 544. OEX at 542.57.

Tab Gilles : 9/30/2008 3:24:40 PM

--Obama calls on Americans to support rescue plan-- Link

Linda Piazza : 9/30/2008 3:23:29 PM

Let's get the what's-scheduled-on-foreign-bourses discussion out of the way. First, China's bourses are closed tonight because of a holiday, I believe.

I'm still not certain that any of these releases matter much because the global focus is elsewhere. However, Japan's important Tankan Index is to be released at 7:50 pm ET tonight, and that number could and often in the past, at least, did move both Japanese and currency markets. Another number, the Average Cash Earnings, will be released at 9:30 pm ET.

Tomorrow morning, Germany's retail sales will be released at 2:00 am ET and Manufacturing numbers for the eurozone and the U.K. will be released at 4:00 am and 4:30 am ET, respectively. At 4:30 am, the U.K.'s Index of Services is released and at 5:00, the eurozone's unemployment rate, important numbers, too, but probably not as important as a scheduled appearance by ECB President Jean-Claude Trichet in Brussels at 5:00 am ET. The topic is not the current credit crisis, but rather deals with wage politics and growth and competiveness, but it takes place during a European Trade Union Conference. I'm not sure if a Q&A session is scheduled, but, if there is, it's possible for something to be said to roil the markets, one direction or the other. That's it until our releases start with two job-related numbers at 7:30 and 8:15 am ET, respectively. Jane usually covers the U.S. releases, so I'll refrain from stepping on her toes!

Tab Gilles : 9/30/2008 3:20:22 PM

Genworth Financial (GNW) $8.30 +$3.30 (66%)

Genworth mulls future of mortgage insurance unit Link

Linda Piazza : 9/30/2008 3:12:26 PM

There's sometimes a change in the tenor of trading after the bond market closes. There hasn't been yet today. The A/D line still climbs. I still caution, though, to watch for a pullback through the rising channel in which the OEX has been climbing. We now have a benchmark to watch, though, to tell us something about the earliest, tentative, and perhaps untrustworthy signs of whether anything has changed. For several hours now, ever since the last test of the rising channel's support today, the OEX has been finding support on 10-minute closes at its 10-minute 9-ema, now at 539.66. Sustained 10-minute closes beneath that might mean that the OEX was more likely to retreat toward the bottom of its rising channel, now at just over 537. OEX at 540.68 as I type.

Keene Little : 9/30/2008 3:12:16 PM

Huge move in bonds today, completely reversing yesterday's move. Treasury yields are higher and the TED spread is remaining high. They may be talking about a new bailout plan for the big financials but rates are telling us nothing is improving. But we are seeing money rotate out of the perceived safety of Treasuries and into stocks so we could see additional upside for stocks this afternoon. Keep an eye on the uptrend lines for today's stock market rally to help guide you.

Tab Gilles : 9/30/2008 3:09:11 PM

FDIC Wants to Boost Deposit Insurance Limit: Source


By ReutersReuters | 30 Sep 2008 | 02:41 PM ET

The chairman of the House Financial Services Committee has told lawmakers that a federal bank regulator will seek authority to increase the deposit insurance limit to a level above its current $100,000, said a source familiar with the chairman's thinking.

Representative Barney Frank, a Massachusetts Democrat, has told lawmakers of his committee that Sheila Bair, chairman of the Federal Deposit Insurance Corporation, will soon request the authority to boost the level of insured deposits, the source said.

Presidential nominees Barack Obama and John McCain both proposed an increase in federal deposit insurance to $250,000 from $100,000 as a way to broaden support for the bank asset bailout bill rejected on Monday by the House of Representatives.

Those efforts come a day after the House rejected a $700 billion Wall Street bailout, sending stock markets plummeting. Link

Jeff Bailey : 9/30/2008 3:09:05 PM

USO $81.66 +5.92% ... battles to reclaim MS2 as we approach the close. New MNTHLY and QRTRLY at today's close.

Linda Piazza : 9/30/2008 3:05:56 PM

Maybe another push up toward 542.37-543.60 for the OEX? I would watch for rollover potential there if it does. SPX at 540.21. The bottom of its rising channel is now at about 537 or a little above that.

Linda Piazza : 9/30/2008 3:00:39 PM

A/D line still climbing. It's at 1751 as I type. That strong dip that looked possible early this morning never materialized, but you don't want it to do so now, either, if you're in bullish positions.

Linda Piazza : 9/30/2008 2:58:18 PM

My Keltner charts are scrambled by the recent market action. Usually, I know to watch fast market action on one chart interval, while balancing it against an intraday chart with a longer interval to get more trustworthy information. Today, I can't do that and I'm having to make subjective decisions about next targets and support levels. But now, I would say that bulls don't want to see the OEX sustain 10-minute closes beneath 535.80, but instead hope to see that provide support instead on 10-minute closes if the OEX should dip that far. The picture is still cloudy with a climb toward 543.62 looking about as likely and maybe even a little more likely than a drop to 535.80. Right now, that potential resistance at 543.62 is looking like the strongest resistance that the OEX faced since early this morning when it was struggling to sustain levels above the 30-minute 9-ema. OEX at 540.72 as I type.

Tab Gilles : 9/30/2008 2:57:36 PM

S&P's Sam Stovall sizes up the Sept. 29 stock market sell-off and offers some insights for nervous investors Link

Jeff Bailey : 9/30/2008 2:53:17 PM

First Federal Bankshares (FFSX) $4.87 -12.78% ... Delays 10-K filing

Keene Little : 9/30/2008 2:51:54 PM

Today's market rally is based on hope that some kind of bailout deal, mark-to-model, pixie dust methodology will make things all better. The huge September 18-19 rally, which has been completely erased, and then some, was based on hope. It's the ol' slippery slope of hope that bear market rallies are made of. And then they realize it doesn't fix the fundamental problem and down she goes. Will it happen again? One can only guess but that's the way I'm betting my money.

NDX is leading the charge back up today but I don't get a bullish feeling from today's rising wedge pattern (unless it breaks out the top), as shown on this 10-min chart: Link

Jeff Bailey : 9/30/2008 2:44:13 PM

Jersey Central Power & Light Files Solar Renewable Energy Financing Proposal

dj (partial)- Jersey Central Power & Light (JCP&L) today filed with the New Jersey Board of Public Utilities (BPU) a proposal designed to help increase the pace of solar project development in the state. Under the proposal, JCP&L would enter into long-term agreements to purchase and sell Solar Renewable Energy Certificates (SREC) to provide a stable basis for financing solar generation projects. An SREC represents the solar renewable energy attributes of one megawatt-hour of generation from a solar generation facility that has been certified by the BPU Office of Clean Energy. The BPU has asked all the state's electric delivery companies to submit SREC-based financing plans with the goal of providing a predictable cash flow for solar generation projects. Under its proposal, JCP&L would solicit SRECs to satisfy approximately 60 percent of the incremental SREC purchases needed in its service territory to meet the Renewable Portfolio Standards (RPS) through the end of 2010. SRECs would equal 50 percent of the incremental purchases to meet the RPS in 2011, and 40 percent in 2012. In total, JCP&L expects the plan to support the phase-in of approximately 30 megawatts of solar projects through May 31, 2012.

Jeff Bailey : 9/30/2008 2:41:46 PM

dj- JDA Software affirms debt financing commitments for I2 buy

Linda Piazza : 9/30/2008 2:41:07 PM

The OEX is now almost to the top of its rising price channel again, the channel in which it's moved higher since the first fifteen minutes of trading today. Once again, begin watching for the possibility that the OEX could pull back through that channel, with the bottom support now rising toward 536.20 or so. There's now quite a bit of potential support in the 539.50-539.60 zone and again near 538.50, however, so it's possible that even if the OEX pulls back, it won't pull back all the way through the channel.

And it's possible that it will, and that this time it will break through the channel's support. Know what you'll do if any of those occasions should arise--a continued climb without pulling back, a dip only partway through the channel or even a breakdown out of the channel. Know where you want your stops to be if you've been trading this on the bullish side. I honestly don't know how the no-shorts rule will impact the kind of end-of-the-day action we used to see on a day like this, when there hadn't been a significant pullback all day. Shorts would have to start covering, but are there enough shorts left out there to fuel an end-of-the-day push? Guard your profits just in case there aren't.

Tab Gilles : 9/30/2008 2:36:39 PM

Market's rally possibly that it likes what its hearing on "alternative" measures to the EESA?

Keene Little : 9/30/2008 2:33:47 PM

In looking at your latest chart of the SPY, are we now in the leg IV or is that coming after the next 3rd leg down?

With the current wave count calling for an "unwinding" of multiple degrees of 3rd waves, we'll see multiple 4th and 5th waves which is the stair stepping I often mention. So I'm not sure which 4th wave you're referring to in your question. As long as SPX stays below 1188 we should see another leg down to the 1070-1080 area before bouncing again (and then lower, etc.). Above 1188 would say we potentially have a much bigger bounce in progress but I'll review the possibilities from there if and when it happens. 120-min chart update: Link

Tab Gilles : 9/30/2008 2:33:00 PM

JPMorgan (JPM) $46.4 +$5.50 (13%)

January 2010 $45 Call (WJPAI) Bid $9.65 / Ask $10.10

Tab Gilles : 9/30/2008 2:29:14 PM

$VIX 39.68 -7.05

$VXD 36.96 -5.90

$VXN 43.33 -6.23

$RVX 41.89 -6.42

Linda Piazza : 9/30/2008 2:29:11 PM

Now there's the matching new high for the OEX, too, with the OEX lagging the SPX a bit in making a new high. The top of the rising price channel is now at about 542.60. OEX at 541.20 as I type. Watch for the possibility that the OEX will retreat back through the channel after challenging the top of that channel again, if it does.

Tab Gilles : 9/30/2008 2:25:58 PM

GLD $84.84 -$4.72 (5.3%)

Linda Piazza : 9/30/2008 2:20:34 PM

The OEX is now doing with the potential resistance on 15-minute closes, now at 539.38, what it did with the earlier potential resistance on 30-minute closes. It's churning either side of it. It's hard to ascertain whether the OEX is more likely to climb toward 542.50 or drop toward 537.73 or maybe even 535.50. OEX at 539.43 as I type, with either possibility still on the table.

Linda Piazza : 9/30/2008 2:18:51 PM

Slight new high for the SPX (with the SPX now having pulled back just a little) but not for the OEX. No new corresponding low for the VIX, though, as Jane has taught us to watch. The VXO chart is so mixed up that it's hard to even read it.

Jane Fox : 9/30/2008 2:18:25 PM

I certainly agree with Keene on his statements about the mark-to market.

Jeff Bailey : 9/30/2008 2:18:03 PM

02:00 Internals found at this Link

Keene Little : 9/30/2008 2:16:09 PM

Interesting proposal by former FDIC Chairman Bill Isaac to suspend mark-to-market on the mortgage-backed assets. This is essentially what they did for the bad Latin American loans back during the S&L banks crisis in the 1980s. It meant the banks carried bad loans for many years, slowly writing them off as income allowed. It meant banks were reporting dismal performance for many years and could not loan more because their capital was tied up instead of being written off. It prolonged the agony of the problem but kept banks from having to declare bankruptcy due to insolvency. If the same thing is done for these bigger banks which are in trouble I would not want to be an investor in them for at least the next 10 years.

Jane Fox : 9/30/2008 2:15:33 PM

Keene and I are looking at the market differently so it just goes to show you how diverse this game can be. I think the market is going higher based on the Internals because they remain very bullish. Link

Keene Little : 9/30/2008 2:05:56 PM

One potential wave count that I'm watching counts the move down from last Thursday as a completed 5-wave move and that the bounce starting today will correct that move. For SPX two equal legs up from yesterday's low would be just under 1175, close to a 62% retracement at 1179. I don't know that we'll see that kind of bounce but it's certainly the potential.

I'm very certain we're going to see lower but from a trading perspective I can't rule out the possibility we'll get a bigger bounce before heading lower again. We're into a very volatile period. Friday's high remains the key upside level, which is a lot to give back if you're holding short but that's as close as I can lower the stop. A bounce above that level is needed to negate the bearish wave count (although above SPX 1200 would be a bullish heads up).

Linda Piazza : 9/30/2008 2:05:03 PM

Another OEX 15-minute close beneath potential resistance at about 539.50. The possibility of a drop down to the 15-minute 9-ema, now at 537.18, or the bottom of the channel, now just above 535, must be factored in as a possibility although neither can be counted on as a probability. The possibility of a rise up to the top of the channel, now at about 542.50, must be considered, too.

Jeff Bailey : 9/30/2008 2:02:16 PM

dj- Accounting firms oppose rescinding mark-to-market

Jeff Bailey : 9/30/2008 2:00:27 PM

dj- SEC, FASB staff mull mark-to-market guidance

Tab Gilles : 9/30/2008 1:59:17 PM

Governments are increasingly moving to guarantee deposits, at least up to a hefty maximum. The Irish government has just moved to do exactly this for the largest six banks in the country. Link Link Link

Will the FDIC do the same here?

Jeff Bailey : 9/30/2008 1:57:21 PM

DXY 79.43 +2.52% (30-minute delayed) ... I can not comment on political happenings taking place, but we can see the "shift"

Linda Piazza : 9/30/2008 1:56:53 PM

The A/D line is still climbing, still maintaining its breakout above the descending trendline off the 9/19 high. That's what bulls want to see. They don't want to see it sustaining 15-minute closes beneath about 1238 and particularly not beneath about 930. A/D line at 1533 as I type.

Jeff Bailey : 9/30/2008 1:55:49 PM

GLD $85.92 -4.07% ...

Jeff Bailey : 9/30/2008 1:55:29 PM

dj- Representative Frank (memo): FDIC to seek higher deposit insurance limits

Linda Piazza : 9/30/2008 1:54:34 PM

If that rising wedge in which the OEX had been climbing since the first fifteen minutes of trading today is redrawn now as a regular rising channel, then the OEX hit or almost hit the top of it at its day's high of 540.64. It then dropped back and, when it did, it closed that 15-minute period beneath the potential resistance on 15-minute closes that's now at about 539.40. It's attempting to drive back above that resistance again as I type, but there's the possibility now that the OEX, either now or after another test of the top of the channel, now at about 541, could drive back toward the bottom of the channel again. The bottom of the rising channel is now at about 535, with some short-term historical S/R now at about 536.30-536.50. OEX at 539.79 as I type.

Jeff Bailey : 9/30/2008 1:52:34 PM

dj- Former FDIC Chairman Rallies Support For Alternative Rescue

DJ- An alternative to the $700 billion financial-rescue package gathered steam on Tuesday, as some of the 228 House lawmakers who bucked their leaders to oppose the legislation began to warm to a plan proposed by former Federal Deposit Insurance Corp. Chairman Bill Isaac. Isaac, who headed the FDIC during the Reagan administration, laid out a four-prong approach to solving the financial crisis to lawmakers on Capitol Hill on Sunday. He is recommending the FDIC recycle an idea used during the U.S. savings and loan crisis by investing in banks deemed capable of weathering the current turmoil if given a dose of fresh capital. He also wants the FDIC to declare that it will insure banks' general creditors against losses, not just its depositors. In addition, he wants the Securities and Exchange Commission to suspend mark-to-market accounting rules for mortgage-backed securities and redouble its efforts to end "naked" short selling. Aspects of his plan were gaining traction on Capitol Hill, but it wasn't clear whether lawmakers intend to supplant the plan proposed by Treasury Secretary Henry Paulson to buy $700 billion in soured mortgage assets from Wall Street. "Offices are discussing changes to the Paulson proposal based on the ideas of Bill Isaac and others," said a congressional aide familiar with the matter. The aide said that both Republican and Democratic offices were involved with the discussions. Isaac said his plan can be implemented without legislation. One of the House conservatives who opposed the bailout plan, Rep. John Shadegg, R-Ariz., introduced legislation on Tuesday to direct the FDIC to issue the so-called "net worth certificates" used to prop up banks during the thrift crisis. Rep. Lloyd Doggett, D-Texas, praised the idea on the House floor on Monday. Meanwhile, Rep. Marcy Kaptur, D-Ohio, has joined calls from House Republicans for the SEC to suspend mark-to-market accounting. Isaac, who said he received standing ovations while presenting his proposals on Capitol Hill, has been emailing with lawmakers in recent days who want more information on his proposals. He said support for his plan is strong: "A very large percentage of the 228 people believe in the four items I described." Isaac, who addressed dozens of lawmakers from both parties on Sunday, said he was disappointed that no party leaders came to hear his proposals. He claims the defeat of the bailout legislation wasn't due to partisan politics but to a fundamental opposition to the proposal. "I think it's a proud day for the Congress that 228 members decided they weren't going to be railroaded into passing a bill that wasn't going to solve the problem," he said.

Jeff Bailey : 9/30/2008 1:45:41 PM

Irish Central Bank to closely monitor financial situationDJ- The Central Bank of Ireland said Tuesday it will continue to "closely monitor" the financial situation here after the Irish government's EUR400 billion guarantee of the Irish banking system earlier Tuesday. "Recent international events have been unprecedented," it said. "These have had a very significant impact on global money markets resulting in serious consequences for financial institutions internationally." The bank said the government's decision "was taken with a view to protecting financial stability while also enabling credit institutions to access funds and to provide credit to companies and households." "This action by the Irish authorities confirms our commitment to the stability of the financial system," it added. "The Central Bank will continue to very closely monitor the situation in the period ahead." The Irish government earlier Tuesday took an unprecedented step to safeguard the Irish banking system for two years, guaranteeing all deposits, covered bonds, senior debt and dated subordinated debt up to EUR400 billion.

Jane Fox : 9/30/2008 1:45:40 PM

Neil Mackinnon, chief economist of ECU Group states, "we face a financial-market and economic meltdown. I think that is not an exaggerated scenario."

Jeff Bailey : 9/30/2008 1:43:37 PM

BBC- UK Govt. to up savings guarantee to GBP50,000

Jane Fox : 9/30/2008 1:43:36 PM

Crude was able to trade to 101.40 but had now fallen back to retest 100 and so far it seems to be holding.

Jeff Bailey : 9/30/2008 1:40:10 PM

dj- Chile Ctrl Bank offers banks $500M in dollar swaps to up liquidity

Linda Piazza : 9/30/2008 1:38:34 PM

Earlier (1:03 post), I mentioned that the next target for the OEX if it could get past that resistance it was then testing was 539.55, a target now being hit. Potential resistance on 15-minute closes is now about 539.07, however, still a possibility of holding as resistance since there are a number of minutes left in this 15-minute period. If the OEX can keep gaining and doesn't fall back by the end of this 15-minute period, then watch for the possibility that it could zoom up to 543.40-545.85. Charts are scrambled and I'm having to use a little subjectivity in deciding on potential targets. I still want to emphasize the importance of following the OEX higher with your stops and my distrust due to certain chart setups. I hope all of you in bullish trades get to say ha-ha to my distrust, but that's okay. I'm still going to be warning you to be careful.

Tab Gilles : 9/30/2008 1:38:10 PM

FASB in talks with SEC on fair value

AccountancyAge.com, Accountancy Age, 30 Sep 2008

FASB is in talks with SEC over the need for more guidance on fair value accounting rules

The Financial Accounting Standards Board is in talks with the USA's Securities and Exchange Commission (SEC) regarding the need for more guidance on fair value accounting rules.

A person familiar with the matter told Reuters additional guidance relating to the accounting rule, known as FAS 157, might or might not result from the discussions.

SEC spokesman John Nester said the agency was 'working closely with US and international regulators and standard setters on the issues related to fair value'.

However, it was unclear whether the SEC and FASB would issue guidance before the end of the third quarter, ending today.

Keene Little : 9/30/2008 1:36:33 PM

Since major media outlets are corporate owned one of the untold stories is how well small banks are doing. They couldn't get into the mortgage market like their bigger cousins and consequently are doing OK today. They're still lending and to a large degree business continues somewhat normally. It's the bigger investment banks and all those banks and insurers who are tied to them, and the greedy ones who got into the fraud and abuse with the mortgage market, who are feeling the pain. It seems our government wants to use scare tactics into making us believe financial armageddon will be upon us if we don't sign the papers (a different form of torture is being used on us). Let the "too big to fail" fail and let's get back to what has worked well for us long before they got too big to fail. And with that I'll now get off my soap box and return you to the regularly scheduled market, which is pushing higher (nice rally today).

Linda Piazza : 9/30/2008 1:32:05 PM

The A/D line is finally attempting to break out above the descending trendline off its 9/19 high. The A/D line previous high today has been 1346 and it's at 1353 as I type, so now bulls just want it stay above about 1220. Just keep following the OEX higher with your stops. There are some not very trustworthy aspects to this climb, including the fact that since the first 15 minutes, the OEX had been climbing in a rising wedge shape. It's just broken above that rising wedge, but it's doing it during a typical stop-running time of day, so just keep following it higher with those stops.

Jeff Bailey : 9/30/2008 1:31:58 PM

VIX.X 39.90 -14.59% ... continues to bounce at WKLY R2

Tab Gilles : 9/30/2008 1:30:37 PM

Barney Frank (MA), Chairman of the Financial Services Committee

The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws

Committee Members Link

So....How did Committee members vote on EESA? Democratic members 24 of the 36 voted for while 12 voted against.

Republican members 7 of the 33 voted for while 26 voted against.

Bottom line 31 for and 38 against. Link

Linda Piazza : 9/30/2008 1:28:49 PM

TED spread was last 3.04 on Bloomberg's delayed feed, so it's coming quite a bit from today's earlier 3.53 high. It has some support on daily closes this week from about 3.01 down to 2.92.

Jeff Bailey : 9/30/2008 1:27:02 PM

IRX.X up 45 bp at 0.90% ...

Jeff Bailey : 9/30/2008 1:21:47 PM

dj- Ohio State Univ. Study: $180B Max Mortgage Losses On US Owner-Occupied Homes

DJ- Homeowners struggling to make payments on their own residences are only a small part of the overall financial crisis gripping the U.S., according to a new study from researchers at Ohio State University. Under a worst-case scenario, the study from economics professors Randall Olsen and Lucia Dunn estimates total losses on first mortgages of owner-occupied homes could climb as high $180 billion. "You're not talking about a number like $700 billion. That's just not right," Olsen said, referring to the price tag of bailout legislation House members rejected in a dramatic 205-228 vote Monday. Owner-occupants have made more conservative financial decisions than larger financial institutions who stand to see their biggest losses on loans for commercial real estate and for houses bought as investments or built on speculation, the study suggests. "While everybody is focusing on foreclosures and what's happening to homeowners, in terms of the amount of money that's about to be lost on owner-occupied mortgages, it's probably much smaller than most people think," Olsen said. According to data from monthly telephone surveys of randomly selected U.S. households conducted by Ohio State's Center for Human Resource Research, 4.4% of U.S. owner-occupants were 60 or more days late on their payments from July 2007 through July 2008. Of homeowners with less than 20% equity in their homes, those considered to be at the highest risk for default, the figure was 8.5%. That data and the spike in late payments in the second quarter of 2008 led Olsen and Dunn to predict mortgage losses on owner-occupied houses would climb no higher than $180 billion. "That's a lot of money, but it is not disastrous in itself," Olsen said. "This suggests much of the problem we're seeing concerning risky investments doesn't involve owner-occupied homes."

Jeff Bailey : 9/30/2008 1:12:53 PM

IRX.X alert! 1.01%

Linda Piazza : 9/30/2008 1:12:28 PM

And here comes the OEX back to test what had been potential resistance on 30-minute closes, near 534.27 currently. The OEX is 534.40. I tell you, I'm not convinced that we're seeing breakouts above this level yet, but instead are just seeing a prolonged churning around it, with any possibility, including a downdraft, still on the table. This is particularly true since the A/D line has all day been churning just beneath a descending trendline off the 9/19 and 9/25 highs, not yet breaking out above that trendline. Neither is the A/D line falling back below about 900, potential support. So, I just don't see a strong prediction either way yet. And OEX move up to about 539 and maybe even 543.40 looks about as equally likely as a drop down to 531 and maybe 526. Higher upside targets and lower downside ones keep getting set and then erased on the 30-minute chart. So, we just have indecision right now.

Keene Little : 9/30/2008 1:10:38 PM

My only comment about the continuing bailout package attempt is that I hope it doesn't pass. I've voiced my strong opinion that throwing taxpayer money at this will be pouring our money down a black hole and there will be nothing to show for it except a huge debt that our kids and grandkids will have to pay off. The credit contraction has to run its course and throwing good money after bad at this point is the worst thing that could be done. As traders we know not to double down (adding to a losing position to reduce the entry cost)--it sometimes works but usually leads to the busting of your trading account. Now the government is trying to double down with our money.

Big money has been in control of our financial markets and our government for far too long and these people are shocked with the financial dislocation in the past year and now shocked that the American people didn't go along with their (Paulson's) plan to bail them out. I'm proud of the Americans calling in in huge numbers and saying NO! I only hope Americans continue calling in to support those who said no (who are being pressured by big money right now to sign up or else) and calling those who said yes so that they can register their extreme disapproval. I'm Keene Little and I approve this message.

Jane Fox : 9/30/2008 1:05:07 PM

The AD ratio (top chart) is a healthy 4.59, the AD volume has a very bullish trajectory and the VIX is hovering at daily lows although not making new daily lows. This is all bullish.

I don't even bother with the TRIN anymore though it did take a huge jump up yesterday once the Economic Stabilization package failed to pass the House vote. Link

Jeff Bailey : 9/30/2008 1:04:44 PM

IRX.X up 35 bp at 0.80% ... session high YIELD was 0.92

Linda Piazza : 9/30/2008 1:03:20 PM

Next potential resistance level for the OEX, if it can maintain this 30-minute close above the Keltner level now at 534.27 better than it did the last one, is at 539.55, potential resistance on 15-minute closes. So far, though, it's just been churning back and forth above and below that Keltner line, so it's hard to give an interpretation of how likely one action or the other might be. Continue to update your profit-protecting plans if in bullish positions.

Jeff Bailey : 9/30/2008 12:56:20 PM

Fox- US Senator McConnell: To complete bailout plan by week's end.

Jeff Bailey : 9/30/2008 12:54:22 PM

dj- Alcoa: Closes 150,000 tons capacity at Rockdale smelter

Jeff Bailey : 9/30/2008 12:51:50 PM

dj- PBR: Informs ANP of oil finds in two blocks

Jeff Bailey : 9/30/2008 12:51:12 PM

RIO $18.53 +10.95% ...

Jeff Bailey : 9/30/2008 12:50:55 PM

PBR $42.44 +7.98% ...

Jeff Bailey : 9/30/2008 12:50:33 PM

dj- Brazil Stocks accelerate rise, track Wall Street

Keene Little : 9/30/2008 12:49:41 PM

The pattern of today's bounce continues to look more like a correction to the decline than the start of something bigger to the upside. The bounce can go higher but so far I don't see anything telling me to get out of my short positions (entered Friday afternoon). NDX 5-min chart: Link

Jeff Bailey : 9/30/2008 12:49:39 PM

EEM vs. EWY relative strength Link

And a $0.50 for some noise Link

Jeff Bailey : 9/30/2008 12:46:29 PM

EEM $33.45 +5.82% ...

EWY $39.10 +5.10% ...

Keene Little : 9/30/2008 12:45:12 PM

Linda, per your 11:47 AM post about the TED spread, I read your Traders Corner article and found the comparison to 1987 very interesting. When you think about where certain measures can go, such as VIX and the TED spread, we really haven't seen nearly the level of fear (or a selloff) that the market has suffered on previous occasions. I don't think we've suffered a market dislocation yet but instead just "normal" strong selling at times.

Jane Fox : 9/30/2008 12:41:46 PM

Crude is bumping up against $100/bl again and doesn't seem to have the gunpowder to blast through. I will keep you'll updated.

Linda Piazza : 9/30/2008 12:39:20 PM

Based on the OEX's actions around the 533-535 resistance zone, I would still consider it vulnerable to another retest of yesterday's low and maybe even the current Keltner target now at 514.95. That target keeps getting set and erased today, so it's not a given that the OEX will drop there. Doing so would certainly fit with the small-bodied candle day scenario, so I'm not ruling it out, either. For now, I think the OEX is just testing, testing that resistance and we just don't know the outcome yet.

Jeff Bailey : 9/30/2008 12:32:05 PM

Reuters- Hong Kong shares end up 0.8%; worst quarter since 2001 Link

Linda Piazza : 9/30/2008 12:29:13 PM

Continue to keep in mind the possibility of a small-bodied (so with the close rather near the open today) candle for today on many indices, with an upper shadow and maybe even a lower one, too, which would mean that at some point the indices would drop below their opening values. That's not a given and never has been today, but it's not negated as a possibility, either. Keeping it in mind, as I noted earlier, will keep you assessing where you want your bullish stops to be if you were in bullish trades today. In this market environment, I wouldn't let any winning trade turn into a losing one, but most especially, I wouldn't let a bullish gain get away from me.

Jeff Bailey : 9/30/2008 12:28:28 PM

FHLB: Able to raise $42 Bln outside discount note auction
Cites lack of demand for notes at auction

Jeff Bailey : 9/30/2008 12:27:37 PM

FHLB: Cancels regularly scheduled short-term note sale

Linda Piazza : 9/30/2008 12:19:48 PM

Bulls want to see the A/D line stay above about 850 on 15-minute closes. It's currently 1126.

Jeff Bailey : 9/30/2008 12:19:08 PM

From what I can see (clicking some index charts) ... all still below DAILY Pivots.

Jeff Bailey : 9/30/2008 12:16:44 PM

12:00 Internals found at this Link

TRIN, TRINQ and VIX.X Daily Pivots correct now

Linda Piazza : 9/30/2008 12:11:23 PM

The OEX turned right back around to retest the resistance that it just broke through. If it holds now as support, that's all okay, but if the OEX falls back below about 533 and maintains levels below that, then the so-called breakout is questionable as I said earlier. OEX is 534.46.

Linda Piazza : 9/30/2008 12:02:40 PM

It looks as if the OEX is closing the last 30-minute period above potentially strong resistance that is now at 534.72. It's not closing much above that, though, so try to reserve judgment. If there's an immediately pullback below that level and especially below 533.70, then the breakout above that resistanceis questionable. OEX at 535.77 as I type.

Jeff Bailey : 9/30/2008 11:57:38 AM

dj- Chile Unemployment 8.2% in Jun-Aug from 8.4% May-July

Jeff Bailey : 9/30/2008 11:55:18 AM

Should have positive impact on psychology.

Jeff Bailey : 9/30/2008 11:54:22 AM

Business Rountable ... issues statement on House Defeat of Emergency Economic Stabilization Act of 2008

Jeff Bailey : 9/30/2008 11:52:35 AM

dj- French PM Fillon: No European Bank Should Go Bankrupt

Linda Piazza : 9/30/2008 11:48:48 AM

The Dow actually dropped 22.6% on Black Monday (October 19) in 1987, not 22%.

Linda Piazza : 9/30/2008 11:47:08 AM

Keene, in reference to your 11:23 post, I don't know if you caught this weekend's Trader's Corner or the instance last week when I included the following TED spread chart but I wanted to give readers a longer-term reference than the aberrant period we've had since last October, too: Link This chart came from an article for Seeking Alpha, written by MIchael Panzer, and it didn't show the recent TED spread soar up to 3.5. (It's 3.32 as I type.) It shows that not only is the TED spread extremely high right now, but it's also far higher than it was in 1987. By now, you've all heard that yesterday was the highest point drop in the Dow, but it's not the highest percentage drop. In one day in 1987, the Dow dropped 22 percent, if I'm remembering correctly. With the Dow at 10,620 as I type, that would be a drop of 2336.40 points in a single day. Kind of dwarfs yesterday, doesn't it? The TED spread being higher doesn't mean that we're going to have a bigger percentage drop one of these days, but it's just showing the extreme disfunction in the financial markets.

Linda Piazza : 9/30/2008 11:36:53 AM

Potential OEX resistance on 30-minute closes now extends up to about 534.90, a little lower than earlier. OEX at 533.57.

Jeff Bailey : 9/30/2008 11:35:31 AM

StreetTracks Gold (GLD) $86.82 -3.07% ... ~868.20/oz

Jeff Bailey : 9/30/2008 11:34:19 AM

iShares Silver (SLV) $12.22 -5.63% ...

Jeff Bailey : 9/30/2008 11:33:46 AM

Euro CurrencyShares (FXE) $141.10 -2.45% Link ... 1-point box Link

Jeff Bailey : 9/30/2008 11:31:57 AM

dj- Euro plunges as European banks' woes trigger dollar demand

Jeff Bailey : 9/30/2008 11:28:16 AM

CME May'08 to Feb'09 Regional Housing Futures (Table) Link

Per 10:52:44 (Note: Date break 10/26/07 to 3/28/08 due to horizontal limits)

Keene Little : 9/30/2008 11:23:49 AM

Linda's been doing a great job keeping us up to date on the TED spread and the fact that it continues to climb is showing us that there's little tolerance for risk in the financial market right now. I've posted the chart of the credit spread shown inversely vs. the S&P 500 (courtesy Elliott Wave International) on both the MM and recently in my newsletter updates. Here's the latest chart (yesterday) from EWI: Link

As I had pointed out in last Thursday's newsletter, the continuing widening of the spread (the curve dropping lower) while the stock market bounced off its September low was giving us a negative divergence. Whenever the spread widened while the stock market tried to bounce, the stock market soon followed the spread (down). It certainly did yesterday! Here's the chart of the TED spread and it's not favorable for stock prices: Link

Linda Piazza : 9/30/2008 11:15:42 AM

A potential reversal signal on the OEX's last 30-minute candle, but so far, that potential isn't being realized. For now, there's potentially strong resistance on 30-minute closes up to 535.07. The A/D line is still just moving sideways in breakout territory, so it's so far, although only moderately high for rally days, still supporting the upside. If it should drop below about 840, however, and stay below that, that support for the rally is questioned. A/D line at 1128 and OEX at 532.67 as I type.

Keene Little : 9/30/2008 11:11:31 AM

In the move down from its June high, NDX almost tagged 1492.48 which is where the 2nd leg down is equal to 162% of the 1st leg down, as shown on the daily chart: Link . It's possible we'll now see a multi-week bounce/consolidation before pressing lower again (shown in pink) but I consider that the lesser probability at this point. I think the higher probability price path, as shown in dark red, is for today's bounce (maybe consolidating into tomorrow) to be followed by another decline, then bounce and then decline some more. Cyclical studies point to November as a likely bottom for the year and both EW counts point in that direction.

Linda Piazza : 9/30/2008 11:00:52 AM

I forgot to add in my 10:28 post that the 23.6% retracement of the OEX's decline from the 9/19 high into yesterday's low is also near 533.50, so that potential resistance should be added to potential resistance on 30-minute closes at the 30-minute 9-ema and slightly higher resistance now at 535.32. Until the OEX can sustain 30-minute closes above that, the Keltner chart suggests that it remains vulnerable to 514.25. That doesn't mean that bears should count on another trip down to that level, but it does mean that bulls should keep that vulnerability in mind when setting stops and assessing how they'll adjust those stops as each of these potential benchmarks is hit. OEX at 532.71 as I type.

Jeff Bailey : 9/30/2008 10:59:05 AM

Flour Corp. (FLR) $51.68 +6.05% ... raised to "buy" from "neutral" at DA Davidson.

Jeff Bailey : 9/30/2008 10:58:17 AM

EIA: US revised July oil use -1.335M B/D vs. Year Ago.

Jeff Bailey : 9/30/2008 10:56:18 AM

Metals News (dj-):

The turmoil in the global financial markets is pushing safe-haven demand for gold, but expectations of a higher dollar next year, a deflationary impact of the credit crisis and the worst of the subprime storm passing will keep prices at an average of about $800 a troy ounce in 2009, UBS metals strategist John Reade said Tuesday.

Gold prices are expected at $958.60 a troy ounce in November next year, the time of the next London Bullion Market Association conference, a poll of delegates showed Tuesday.

New York platinum and palladium futures are sharply lower due to long liquidation and ongoing worries about demand for the metals amid an economic slowdown, traders and analysts said.

Jeff Bailey : 9/30/2008 10:52:44 AM

Continued Record Home Price Declines According to the S&P/Case-Shiller Home Price Indices

DJ (partial)- Data through July 2008, released today by Standard & Poor's for its S&P/Case-Shiller(1) Home Price Indices, the leading measure of U.S. home prices, shows continued record declines and a continuation in the trend of double digit declines across many cities in the prices of existing single family homes across the United States. The 10-City Composite and the 20-City Composite Home Price Indices reached new record annual declines of 17.5% and 16.3%, respectively. The 10-City level marked its 10th consecutive monthly report of a record decline, beginning with data reported for October 2007. As depicted on the chart above, during the 1990-92 cycle the record low was -6.3%. While the annual returns of the two indices continue to reach record lows, the pace of the decline has slowed, particularly over the last three months. For the three months of May thru July, home prices cumulatively fell about 2.2%; whereas for the three months of February thru April, and November 2007 thru January, the cumulative rates of decline were closer to 6.0-6.5%. "There are signs of a slow down in the rate of decline across the metro areas, but no evidence of a bottom," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "Little positive news can be found when cities like Las Vegas and Phoenix report annual declines as large as -29.9% and -29.3%, respectively, and all 20 cities are still in negative territory on a year-over-year basis. The Sunbelt continues to be the story, with the seven cities that basically represent that area reporting annual declines roughly between 20 and 30%. While some cities did show some marginal improvement over last month's data, there is still very little evidence of any particular region experiencing an absolute turnaround." While there are differences across regions, at the national level the housing market peaked around June/July of 2006. As of July 2008, two years later, the 10-City Composite has fallen by a total of 21.1% and the 20-City Composite is down 19.5%. Las Vegas remains the weakest market, reporting an annual decline of 29.9%, followed by Phoenix and Miami at -29.3% and -28.2%, respectively. Atlanta, Dallas, Minneapolis and Tampa showed improvements in their annual and monthly returns, but all four are still too close to their recent lows to determine if the markets have stabilized. While their annual returns are negative, Atlanta, Boston, Dallas, Denver and Minneapolis all reported positive returns for the three months or more.

Keene Little : 9/30/2008 10:51:23 AM

For NDX two equal legs up in its bounce off yesterday's low would be at 1565.34, about 7 points higher. Watch for possible resistance near that level.

Linda Piazza : 9/30/2008 10:45:58 AM

Although there's no proof that it will happen, I still would like subscribers to keep in mind the possibility of a small-bodied candle today with upper and perhaps also lower candle shadows. That's not a given but it's not an unusual occurrence, either after such a big-range day. If you keep it in mind as a possibility, then you're more likely to guard your bullish profits, if you are trading this bounce.

Linda Piazza : 9/30/2008 10:44:29 AM

While other indices such as the OEX and SPX are printing new highs for the day, the TRAN has not. It's performing as well on a Keltner basis, however, as is the OEX and SPX, with all staying above their 15-minute 9-ema's over the last 40 minutes or so. The SPX actually looks like the weakest of the three on a short-term Keltner basis, struggling right now with potential resistance near 1141.45, with both the OEX and the TRAN having already cleared analogous resistance.

Keene Little : 9/30/2008 10:41:40 AM

It's pretty amazing when you see a +270-point rally in the DOW and still think dead cat bounce. A 38% retracement of yesterday's decline is at 10701 (there's that 10700 level again). The same level for SPX is 1151.79.

Jeff Bailey : 9/30/2008 10:41:13 AM

Companhia Vale Do Rio Doce (RIO) $18.37 +10.00% Link ...

Tab Gilles : 9/30/2008 10:41:01 AM

$NYSE New Highs-New Lows Link

$COMPQ New Highs-New Lows Link

Jeff Bailey : 9/30/2008 10:39:16 AM

Steel News: (dj-) Global steel prices fell 9.8% on the month in September compared with August due to weaker demand across most regions, including Europe, North America and Asia, U.K. steel consultancy and price research firm MEPS said Monday.

A Chinese consortium led by steelmaker Shagang has abandoned its attempt to buy Brazilian iron ore miner Nacional Minerios, the Estado de Sao Paulo newspaper reported Tuesday.

Brazilian mining company Companhia Vale do Rio Doce (RIO) Monday reiterated its position that iron ore price talks with Chinese customers were on track.

Nippon Steel Corp. (5401.TO) said Tuesday it will raise its stake in steel product maker Topy Industries Ltd. (7231.TO) to 20% from 7.5% to strengthen their ties and finance part of Topy's plant facility renewal.

Keene Little : 9/30/2008 10:38:18 AM

There are a couple of ways for me to label the decline in the DOW from last October but that's not terribly important right now since the various counts continue to point lower. It's a matter of how it gets there. But it's not surprising to see the DOW finding support in the 10400-10600 area as shown on the weekly chart: Link

There is a trend line along the lows since August 2007 which is where the DOW hit yesterday. There are some Fib projections based on the move down from October pointing to 10440-10580 as potential support. I thought the DOW might support around 10700 where the 2005 highs and 2006 lows are located but yesterday's drop sliced right through that area (it may act as resistance now if it gets up there). It now takes a rally above 11170 to at least negate the bearish pattern from here (dark red).

Jeff Bailey : 9/30/2008 10:36:45 AM

Most Actives ... QQQQ $38.06 +0.66%, WB $2.91 +58.15%, UYG $16.69 +2.83%, INTC $17.87 +3.47%, AAPL $109.54 +4.06%, SPY $113.91 +2.27%, EWJ $10.53 +2.83%, CSCO $21.99 +0.91%, MSFT $25.68 +2.67%, ORCL $19.74 +5.16%

Linda Piazza : 9/30/2008 10:28:52 AM

Okay, let's assess where we are. The OEX is finally testing the 30-minute 9-ema and the further potential resistance on 30-minute closes, now at 535.82. Traders should realize that until and unless the OEX can maintain 30-minute closes above these resistance levels, it remains vulnerable to another downturn toward yesterday's low. Sustained 30-minute closes above that would perhaps target the 542-543 zone and maybe even the 550 one.

Tab Gilles : 9/30/2008 10:23:23 AM

JPMorgan (JPM) $44.94 +$3.93 (9.5%)

January 2010 $45 call (WJPAI) $8.95 Bid / $9.30 Ask

Tab Gilles : 9/30/2008 10:19:47 AM

Tuesday, September 30, 2008 - 9:19 AM EDT

Bailout's failure leaves community banks facing Fannie-Freddie losses

The Business Review (Albany) - by Mavis Scanlon For The Business Review

The rejection by the House of the government's $700 billion rescue plan for troubled financial institutions leaves community and regional banks still facing large losses from their holdings of preferred shares of Fannie Mae and Freddie Mac.

Fannie and Freddie preferred and common stockholders were virtually wiped out in the government takeover of the two troubled mortgage finance companies earlier this month, with the Treasury department eliminating preferred dividends.

But bank lobbyists were successful in inserting a provision in the bailout bill that would have given special tax treatment to banks that had exposure to the Fannie and Freddie shares, lessening the blow. Under current tax rules the preferred share losses should be treated as capital losses. The provision included in the rescue package would have allowed the banks to write off the preferred share losses against ordinary income.

There were roughly 800 banks with preferred share holdings that totaled $16 billion, according to Paul Merski, chief economist with the trade group Independent Community Bankers of America.

Earlier today the House voted 228 to 205 to reject a bailout package that would have allowed the U.S. Treasury to buy troubled assets such as mortgage backed securities and other collateralized debt obligations that have soured, crippling financial institutions that hold them.

While no one can predict what will happen with the rescue bill in the next 48 hours, Merski said the bill had strong bipartisan support.

"If the bill is brought up again in similar fashion I have confidence (the tax relief provision) would be included," he said.

The banking sector was among the biggest losers on Wall Street on a day that saw the largest one-day drop in history for the Dow Jones Industrial Average and the biggest drop in 21 years for the Standard & Poor's 500 Stock Index.

Taking a look at some of those banks...

Hudson City (HCBK) Link

People's Bank (PBCT) Link

Linda Piazza : 9/30/2008 10:15:20 AM

Next potential resistance on the OEX, if it can get past the 15-minute 9-ema now at 530.47 on 15-minute closes is the 30-minute version, now at 533.26, with further potential resistance in the 536 zone. OEX at 531.09 as I type with the outcome of this current test still uncertain.

Tab Gilles : 9/30/2008 10:12:48 AM

The Financials Select SPDR (XLF) has held up since hitting its low in July. Link

Philly Bank Index ($BKX) Link

How are these banks doing since their respective July Lows??

JPMorgan (JPM) up 50%. Link

Wells Fargo (WFC) up 80% Link

Bank Of America (BAC) up 73%. Link

US Bancorp (USB) up 62% Link

Keene Little : 9/30/2008 10:11:35 AM

NYSE made it down to the lower end of a zone of support marked by the area of highs and lows in 2005 and the 50% retracement of the 2002-2007 rally (7278). Yesterday it also hit the bottom of its parallel down-channel from May. As with the Wilshire 5000 I expect to see the NYSE break below its down-channel as we head into October. Daily chart: Link

Jane Fox : 9/30/2008 10:08:19 AM

WASHINGTON (MarketWatch) -- Business activity in the Chicago region expanded at a healthy pace in September, according to a survey of corporate purchasing managers released Tuesday. The Chicago purchasing managers index inched lower to 56.7 in September from 57.9 in August but stayed well above the 53.0% expected by analysts. Readings above 50 indicate overall business expansion. The Chicago PMI has rebounded after hitting a low of 40.5% in February. The Chicago PMI is considered a leading indicator to the national Institute for Supply Management manufacturers' survey to be released on Wednesday. Economists surveyed by MarketWatch expect the ISM factory index to slip to 49.6% from 49.9%.

Jane Fox : 9/30/2008 10:07:12 AM

One of the provisions in the Economic Stabilization package is to suspend Mark to Market accounting. Mark to Market accounting went into affect Nov 15, 2007 and forces a company to put a fair value on its assets or liabilities each quarter. So far this year the rule as wiped out over $100 billion in assets values that are tied to mortgages.

A company has to determine what price those assets would bring in the current marketplace and not what the company hopes to get for them. It was this kind of bookkeeping that brought Wachovia to its knees this week.

Suspending this kind fair value type of bookkeeping is to say the market doesn't know any better and would leave a lot of room for manipulation. I for one think Mark to Market is good.

Linda Piazza : 9/30/2008 10:06:53 AM

A/D line bouncing again, and bulls want it to hold above about 775. It's 974 as I type. Be careful, though, as there's just not much support beneath it, and that's sometimes a setup for a pop-and-drop day. Not always, of course, as it's just showing the same kind of thing a bearish divergence might show, for example, when you would be forewarned to update your profit-protecting plan but not promised a rollover.

Keene Little : 9/30/2008 10:01:40 AM

On the big index, the Wilshire 5000, notice yesterday's decline took it right down to the bottom of a parallel down-channel from May. A bounce was likely off that but I expect price to break below it in October. Daily chart: Link

Linda Piazza : 9/30/2008 9:59:26 AM

A/D line now 647. You have to give the A/D line a little leeway when looking at Keltner levels, but this is near the level at which bulls hope that the A/D line will steady and bounce again, producing 15-minute closes above the actual support level, now near 750. Otherwise there's not much support until horizontal support near 400. Next Keltner support on this chart is way down at -1250.

Keene Little : 9/30/2008 9:58:45 AM

I've redrawn the downside price depiction on the SPX daily chart to better reflect a small 4th wave correction that could play out over the next day or two (4th wave in the leg down from September 19th). October could turn out to be a bit volatile (as if it hasn't been in September?) as the market stair steps lower into November (where I expect to see SPX down near 900). Daily chart: Link

Tab Gilles : 9/30/2008 9:53:13 AM

$VIX 42.86 -3.74

$VXD 40.38 -2.48

$VXN 46.04 -3.52

$RVX 45.71 -2.60

Jane Fox : 9/30/2008 9:49:28 AM

One would have thought that yesterday's fiasco in DC would have been really hard on the 'ld greenback but it held up pretty darn good. Link

Tab Gilles : 9/30/2008 9:49:22 AM

Chicago PMI Sept. 56.7 vs. August 57.9

Linda Piazza : 9/30/2008 9:46:49 AM

Careful: the A/D line is now down from its 1346 high to 1118. This isn't monumental yet, but since we're watching for a pop-and-drop possibility, this should be watched. Don't want to see it below about 700.

Jane Fox : 9/30/2008 9:45:49 AM

The S&P lost over $700 billion yesterday. HMMM I was wondering if Paulson and company could just invest in the S&P and then leak a story about Bin Laden. You know a story something like he was caught or had died or something that would give the market a reason to rally. Heck we could have our bailout package in a few days.

Linda Piazza : 9/30/2008 9:44:14 AM

The OEX is now testing the 15-minute 9-ema, now at about 530.60, with the OEX at 530.52 as I type.

Linda Piazza : 9/30/2008 9:38:09 AM

Keltner outlook on the A/D line: The A/D line's first prints were above outer-band Keltner resistance on 15-minute closes that's now at about 720. In other words, it's in an upside extreme as measured over the short-term. That means that you should be careful of the possibility that this could be a pop-and-drop day, but it doesn't yet prove that's what it will be. You'd need to see the A/D line drop sharply beneath that outer band and stay beneath it to start having even the slightest evidence that the early push would not be sustained. The A/D line is currently 1291 and is still climbing.

Jane Fox : 9/30/2008 9:36:47 AM

AD line opens at a bullish +1242 and the VIX is falling so the bulls have the ball.

Linda Piazza : 9/30/2008 9:35:45 AM

The OEX is zooming right up toward the first level of potentially strong resistance (15-minute up through daily) near 530. The 15-minute 9-ema is now at 530.19 but there's also potentially strong resistance on 15-minute closes near 528.50. Watch for rollover potential here, although don't count on it. We honestly just don't know where this relief rally will go or how long it will last.

Jane Fox : 9/30/2008 9:30:18 AM

WASHINGTON (MarketWatch) -- Home prices in 20 major U.S. cities fell 0.9% in July and were down 16.3% in the past year, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. In the smaller sample of 10 cities, prices fell 1.1% in July and 17.5% in the past year. Prices fell in 13 cities in July, led by a 2.8% drop in Las Vegas and a 2.7% decline in Phoenix. Prices have fallen in all 20 cities in the past year. "There are signs of a slowdown in the rate of decline across the metro areas, but no evidence of a bottom" said David M. Blitzer, chairman of the index committee at S&P.

Jane Fox : 9/30/2008 9:26:29 AM

Case-Shiller home prices down 16.3% in past year

Keene Little : 9/30/2008 9:25:40 AM

Futures were pushed steadily higher during the overnight session to a high near 4:00 AM and then tested again near 6:00 AM. I say pushed because I have no doubt they're being bought through government efforts to support the market and try to get some short covering started this morning. Oh wait, there aren't any shorts in the financials. Bummer. The banks sold off hard yesterday and I wonder who Cox now blames for that. I guess he'll have to change the rule that owners of bank stocks are not allowed to sell.

Speaking of the banks, watch BIX this morning with this bounce to see if the index finds resistance at the key level where it broke down at 173 yesterday. If this is headed lower that level should act as resistance now. BIX daily chart: Link

Jane Fox : 9/30/2008 9:21:13 AM

You all know I really like the MACD and when I took a look at it on the SPX daily chart I was very surprised to see it did not drop to a new low yesterday. As a matter of fact it is only testing the lows made on September 18th. Interesting times. Link

Linda Piazza : 9/30/2008 9:20:58 AM

I'm trying to write my Congressperson from the U.S. House of Representatives. I've gotten a message that because of the "extraordinarily high amount of email traffic," the "Write Your Representative function is therefore intermittantly available." Interesting way of putting it. Right now, it's unavailable. I guess a lot of people had a lot to say about yesterday's vote, one way or the other.

Linda Piazza : 9/30/2008 9:19:00 AM

TED spread on delayed Bloomberg feed is 3.52 this morning. Still way, way too high. There have been times when the indices are already stabilizing by the time the TED spread hits a peak high but there are other times when the decline is just starting. Evidence is mixed once the TED spread bounces and heads north of 0.92, through 0.98-1.00. And it's way north of that right now.

Jane Fox : 9/30/2008 9:15:30 AM

WE have the Chicago PMI release at 9:45 today and then Consumer Confidence at 10:00.

Jane Fox : 9/30/2008 9:10:03 AM

It is not all doom and gloom out there everyone, Crude traded under $100 again yesterday. Link

Jane Fox : 9/30/2008 8:55:17 AM

Here are your overnight charts and as both Keene and Linda have stated we are seeing a relief bounce from yesterday's historic selloff. Please remember the Russell 2000 futures (TF) is on a delay so you are not seeing all the TF overnight data. Link

Linda Piazza : 9/30/2008 7:08:53 AM

Futures are higher this morning. Yesterday, both the OEX and SPX had ended the day at or near potentially strong support on 30-minute closes, at about 514.71 for the OEX and 1114.84 for the SPX, so a bounce attempt would be coming from near the area of that potential support, but that doesn't mean that damage hasn't been done. Both indices broke down out of long-term descending price channels. OEX: Link SPX: Link

If the OEX and SPX should bounce in accordance with the improvement in futures, market participants should watch for potentially strong resistance as they rise to challenge the supporting lines from the long-term channels in which they were moving down from last October, channel lines broken yesterday. Those lines currently cross at about 530 for the OEX and way up at 1148-1150 for the SPX.

But will either index get that far? Both were in breakdown mode on the 15-minute chart yesterday at the close. Watch for first potentially strong resistance on 15-minute closes for the OEX at lines now at 525.36-527.77, but likely to be driven higher by any early bounce, and for the SPX at 1125 and then 1137-1139 but likely to be driven higher by any early bounce. Both indices, then, show the possibility that they might find resistance ahead of the bottoms of their former descending channels, although other Keltner levels not mentioned here corroborate more strongly with the bottoms of those channels.

As Keene has said, a relief bounce can be sharp. They can also fizzle. Quickly. Imagine that after such a big-range day, we were to end this day with a small-bodied candle with both upper and lower shadows, certainly at least one possibility for the day. That would mean that any early rally could fizzle and prices could go to or below yesterday's before ending up rather near the open. Just be careful if you're trading the upside, not something I imagine myself doing today, and be vigilant about your stops if you've been trading the downside. Whatever you do, don't let a winning trade turn into a losing one in this environment.

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