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OI Technical Staff : 10/3/2008 9:59:59 PM

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Jeff Bailey : 10/3/2008 5:05:38 PM

Closing U.S. Market Watch at this Link

01:25 Link

11:40 AM Link

Jeff Bailey : 10/3/2008 4:56:44 PM

Most Actives ... C $18.35 -18.44%, QQQQ $36.16 -1.60%, XLF $18.78 -4.37%, WB $6.83 +74.68%, AIG $3.86 -3.50%, NCC $3.51 +11.78%, UYG $15.95 -7.53%, MSFT $26.33 +0.30%, GE $21.57 -2.61%, FNM $1.34 -14.10%

Jeff Bailey : 10/3/2008 4:39:07 PM

Tab ... I agree ... Jack be nimble and Jack be quick. One of these days something will stick.

Jeff Bailey : 10/3/2008 4:32:34 PM

dj- Fitch rates Boulder County, CO open space sales & use tax bonds 'A+'; Outlook stable

Jeff Bailey : 10/3/2008 4:28:47 PM

iShares Emerging Mkts (EEM) finished $30.72 -2.63% ... there's more than Brazil inside.

Jeff Bailey : 10/3/2008 4:26:33 PM

PBR $36.72 -3.57% ...

RIO $15.77 -0.37% ...

Tab Gilles : 10/3/2008 4:28:13 PM

Jeff...yes best of breed!

But a 25% gain in 1 week is nice too...

I suggested the LEAP prior to the bill passing, I'll let the market digest this legislation for awhile and may get back in.

JPM, AAPL & CHK are my stocks on the radar screen.

Jeff Bailey : 10/3/2008 4:25:46 PM

dj- Brazil Titans Index 22642.69 down 1,046.62 or -4.42%

Jeff Bailey : 10/3/2008 4:24:14 PM

dj- US Bank Business Loans Up $23.8 Bln in latest week

U.S. banks' commercial and industrial loans rose $23.8 billion to about $1.555 trillion in the week ended Sept. 24, the latest week for which data are available, the Federal Reserve said Friday. That followed a $18.0 billion increase the previous week. Jumbo certificates of deposit fell $25.0 billion to about $2.173 trillion in the latest weekly data, after growing $56.8 billion the previous week. Revolving home equity loans rose $3.3 billion to $535 billion after growing $1.6 billion the previous week.

Jeff Bailey : 10/3/2008 4:22:52 PM

Again ... this is a DowJones "source" saying this.

On Wednesday, there were reports that France had proposed a "bailout" plan. Then Germany said it would not support such a plan.

Then France said they never even proposed the plan.

I thought it ironic that Germany wouldn't support a plan, that France said was never even proposed.

Tab Gilles : 10/3/2008 4:22:28 PM

Jeff, I agree with your view on the uptick rule. Some Fed action will be needed, a rate cut perhaps. I'm certain more action is to follow, Bernanke has said he will do whatever is neccessary.

As I stated earlier, the market soldoff today on the news of the house passing the bill. Just imagine how much it would of been if they didn't pass it! 500? 1,000?

Jeff Bailey : 10/3/2008 4:20:38 PM

dj- Source: Saying US Tsy won't make first Asset purchase for four (4) weeks

Jeff Bailey : 10/3/2008 4:18:54 PM

dj- Obama: Next step is to protect taxpayers, homeowners

Democratic presidential candidate Barack Obama vowed to protect taxpayers and homeowners from the fallout of the Wall Street crisis, as he welcomed the passage Friday of the $700 billion financial bailout. "I'm glad to see we finally got this dealt with," Obama told reporters after the House of Representatives gave final approval and President George W. Bush signed the rescue. Obama called on Treasury Secretary Henry Paulson to execute the plan "in a way that protects taxpayers" and helps avert further foreclosures. "I want those plans on tap quick so that we start getting some relief to homeowners out in neighborhoods," Obama said. Obama also said he personally lobbied a number of Democratic lawmakers who first voted against the rescue plan when it first came before the House Monday. The rejection then sent global stock markets plunging. "I think more than anything what they wanted was some assurance...that this was not $700 billion dollars going to a few banks but that in fact that it is designed to ensure that the credit markets are working for Main Street, that we don't have a collapse," he said. Obama said the lawmakers also wanted assurances from him "as potentially the next president" that he would follow through on efforts to prevent foreclosures, "assuring that homeowners are helped and that taxpayers are getting their money back."

Keene Little : 10/3/2008 4:17:56 PM

Jeff, good point about premiums imploding if we get a big rally on Monday and the VIX tanks. That's why I strongly suggest, as you often do, only pay for options what you're willing to lose. I figure OTM puts are safer than ITM puts for over the weekend since a big move against an ITM put, with its higher delta, would be more painful.

Jeff Bailey : 10/3/2008 4:15:53 PM

One of the "next bullets" that I would think (I can't believe it hasn't been done already) is for the SEC to reinstall the Up-tick rule. They could do that, and LIFT the "no short rule list" of stocks.

Keene Little : 10/3/2008 4:14:58 PM

SPX closed below Monday's low but VIX did not spike higher than Monday's high. Where's the fear? Maybe there's still faith that the Fed will save the day on Sunday or Monday. We will likely see the VIX reach unimaginable levels before the market finds at least a tradeable bottom. I strongly suggest you not use sentiment indicators this time around to try and time a bottom.

If you're not comfortable playing the short side then flat is also a great position. Let all the maniacs get in there and fry themselves while you sip on your drink and watch the craziness from the sidelines. It really is relaxing there (unless you're a type-A who just needs to be in there in Some kind of position).

Hope everyone has a great weekend. If this market is frustrating you, take a much needed break away from it and come back refreshed on Monday. Keeping your head clear right now and not incurring losses is absolutely the best thing you can do for yourself and your trading account. If you are incurring losses, keep them small and manageable. As one instructor used to teach, eat the small frog before it becomes a much-harder-to-swallow bull frog.

Jeff Bailey : 10/3/2008 4:13:29 PM

I think options traders neet to stay IN, or AT the money on the put side, and DO NOT overleverage.

Jeff Bailey : 10/3/2008 4:12:22 PM

Keene ... your 03:47:59 ... that would assume volatility doesn't implode, or compress alot.

Count the bullets that the Fed has at its disposal.

Jeff Bailey : 10/3/2008 4:08:12 PM

Tab! Best of breed!

Jeff Bailey : 10/3/2008 4:05:33 PM

VIX.X 45.07 -0.41% ...

SPX 1,099.47 -1.32% ...

Keene Little : 10/3/2008 4:05:18 PM

I'd like to hear some comments from the politicians who were scolding Americans on Tuesday, following the mini-crash in the stock market on Monday, for not understanding the importance of the bailout bill. They said Americans lost $1.5T in the market on Monday and that the $700B is cheap in comparison. The logic of that argument escapes me but what should I expect from a politician.

Now that the market has tanked with a DOW 450-point reversal off the high I can only imagine how they'll try to spin it to say something positive about why they still feel a $800B spending bill is good for us. The epitome of arrogance in our political leadership is astounding and unfortunately for us we've got the most economically illiterate bunch of politicians that we've probably ever had. I know some actually thought they were doing the right thing but they too will learn (at our expense). This is a bad day for our country.

Tab Gilles : 10/3/2008 4:16:04 PM

DJIA closes off 160, SPX 15 & NASDAQ 29. What would it have been if the house vote didn't pass the bill?

Tab Gilles : 10/3/2008 4:00:47 PM

AIG to focus on property, casualty business Link

Tab Gilles : 10/3/2008 3:52:54 PM

Recommend selling to close January 2010 $45 Call, ticker WJPAI

Currently trading $9.80 /$10.20

Suggested on 9/25/08 at $7.85

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

Keene Little : 10/3/2008 3:49:11 PM

Take some OTM October puts home with you this weekend. They'll be cheap and you might only lose half of it with a big gap up on Monday. If it drops as hard as I think it will those OTM puts will be ITM in a hearbeat. Just don't spend any more than you're willing to lose (assume you'll lose it all).

Linda Piazza : 10/3/2008 3:47:59 PM

Here's where the OEX is currently on the weekly chart: Link Clearly the OEX threatens to break down out this descending channel in which it's been moving but there is, so far, still a spring off the low as we head into the last few minutes of trading. Whether that spring survives at all or, conversely, grows larger, is still to be decided by the close today. A strong spring off the low of the week coupled with a close well inside the red channel would provide more hope of a bounce than a close near the week's low, of course. Barring a strong move either direction into the close, it looks to me as if you just have to make your hold-over-the-weekend decisions just not knowing what happens next.

As I've typed, the OEX has moved lower and it's now testing potential support on 15-minute closes near 523.50, so we'll have to see if that bounces it again or if it just craters into the close. If it craters but then bounces on Monday, I would watch for potentially strong resistance near 530.

Jeff Bailey : 10/3/2008 3:47:20 PM

Swing trade put cancel order alert! ... from 02:35:45 and the order to buy EHT-WJ.

Keene Little : 10/3/2008 3:46:57 PM

New lows heading into the close. It's risky holding short over the weekend considering what the Fed could do but in this case I have to go with what the charts are telling me and the wave count is the most bearish I've seen.

Jeff Bailey : 10/3/2008 3:46:04 PM

EEM $30.84 -2.25% ... undercuts recent 52-week low.

Jeff Bailey : 10/3/2008 3:45:17 PM

Speak of the devil ...

Jeff Bailey : 10/3/2008 3:45:06 PM

10-year finished down 0.6 bp at 3.640%.

I would think much of this isn't going to go over very well in Sunday's overseas trade.

Linda Piazza : 10/3/2008 3:39:54 PM

The TED spread was last (ended at?) 3.86, just off the 3.88 high of the day.

Jeff Bailey : 10/3/2008 3:39:56 PM

Now ... equities of MANY kind are out of favor, and perhaps that's why HUI.X couldn't hold the "right shoulder" of the reverse h/s pattern.

But if the "difference" we now observe between HUI.X (remember how they will trade apart, then come together), then I've got to be thinking gold (the commodity) has some pretty sharp decline coming. HUI.X gives up 250 support and they'll sell gold faster than you can create an auction for all those Gold Eagle's on eBay.

Jeff Bailey : 10/3/2008 3:35:31 PM

HUI.X 268.78 +1.15% ...

Jeff Bailey : 10/3/2008 3:34:05 PM

Swing trade put alert! ... for one (1) of the StreetTrack Gold GLD Nov. $82 Puts (GLD-WD) at the offer of $5.20.

GLD $81.94 -0.47% ...

Jeff Bailey : 10/3/2008 3:32:35 PM

Ah heck ...

Linda Piazza : 10/3/2008 3:31:43 PM

I mentioned earlier today that I would be out on Monday. I'm not sure when I'll be back, as I'll be in Houston helping out.

Jeff Bailey : 10/3/2008 3:30:16 PM

Yeah, I looked too, but "should'a-would'a" at $35-ish.

DRC $28.15 +1.07% ... was a "pop on rescue bill" short/put candidate.

Linda Piazza : 10/3/2008 3:29:54 PM

Triple bottom on the NYSE's 30-minute chart? We better hope so. Sure looks like a possible bearish right triangle, unfortunately: Link

Jeff Bailey : 10/3/2008 3:28:59 PM

Yea ... not in a GM truck, but a Dodge ... CMI $37.64 -1.31% .... whack, ck, ck

Jeff Bailey : 10/3/2008 3:28:01 PM

tie 03:21:40 and 03:27:09 together.

Tab Gilles : 10/3/2008 3:27:49 PM

Chesapeake Energy (CHK) $29.67 -$0.40 (1.33%)

Chesapeake buys Exxon Mobil Barnett Shale assets Link

Jeff Bailey : 10/3/2008 3:27:09 PM

dj- GM to close Moraine, Ohio, truck factory on Dec. 23

Jeff Bailey : 10/3/2008 3:26:14 PM

Again ... I'm NOT saying that "mental health" isn't important. But everyone's making sure they get as many worms as they can right now.

Jeff Bailey : 10/3/2008 3:24:07 PM

THINK about where that comes from ... why would a "healthcare" item be placed in a "credit crunch" bill?

Jeff Bailey : 10/3/2008 3:22:33 PM

dj- Financial Rescue legislation broadens mental health coverage

Jeff Bailey : 10/3/2008 3:21:40 PM

dj- GM Plans Overtime at Ohio compact car factory through 2008

Tab Gilles : 10/3/2008 3:21:25 PM

JPM $46.58 -$3.37 (6.65%)

WJPAI $10.60/ $11.15

Keene Little : 10/3/2008 3:16:57 PM

If the market drops lower again to a new low from here, this is about the scariest setup I've seen for a crash scenario. If the Fed doesn't come out with a .5% rate cut this weekend, I foresee bad things for Monday.

Keene Little : 10/3/2008 3:13:38 PM

As we all ponder the idea that we're heading for socialism, here's Jamil's take:

Everybody is now referring to what is taking place as socialism. It is NOT socialism, it is CORRUPT capitalism at its worst.

The Scandinavian governments are socialist. They neither let their markets go to those excesses nor do they bail them out.

The genius of this corrupt system is that it is giving socialism a bad name in the process of covering its own worst shortcomings!!

I think you have a point.

Linda Piazza : 10/3/2008 3:13:24 PM

The OEX's 15-minute 9-ema is now 533.62, and it may now be serving as resistance on 15-minute closes. Potential downside target is now 524-524.63, but that target would be called into question if the OEX could scramble back above that 9-ema and stay above it.

Linda Piazza : 10/3/2008 3:12:25 PM

Once again, we come to a Friday when I'm not sure whether anything regularly scheduled on foreign bourses will mean much of anything with the world's focus so strongly on the credit mess. However, let's look at some of the scheduled events. That Saturday emergency meeting in Europe that Jane mentioned in her 12:31:54 post might be one of the most important events.

Monday at 4:30 am ET, the eurozone's Sentix Investor Confidence will be released. Canada's Building Permits appears at 8:30 am and Ivey PMI at 10:00 am. That's about it for scheduled events.

These days, it's the unscheduled ones that will get us. Remember that Friday after the close is a favored time for the FDIC to announce any bank seizures. Balance that against the rumors that the FOMC might lower rates as soon as Monday morning. I don't know that either of those will occur, but just factor in these types of concerns when you decide how much risk to take home with you overnight.

Keene Little : 10/3/2008 3:03:59 PM

It takes a rally back above the high near 2:15 PM to now negate the immediately bearish price pattern and get us at least back to a neutral market where we might see another leg up to a lower daily high as part of a larger sideways triangle consolidation. The triangle pattern would lead to lower lows but not necessarily right from here.

Keene Little : 10/3/2008 3:00:48 PM

Looking at the 2-min chart you can see a 3-wave bounce off the low near 1:45 PM and now after the low near 2:30 PM we have another 3-wave bounce in progress. I watch these to see if something impulsive starts to the upside. So far it's only corrective and that continues to point us south.

Tab Gilles : 10/3/2008 2:56:50 PM

Apple (AAPL) $98.59 _$1.51 (1.51%) Link

Historically, Apple's (AAPL) trailing P/E is 38, while its forward P/E is 30. Compare that with the beginning of 2003 when Apple's P/E was a whopping 300. It is currently trading under $100 and briefly touching the 2006/2007 resistance level.

2007 earnings were $3.93, earnings estimates for '08, '09 & '10 have been recently lowered by several analysts. Most recent Barclays reduced '09 & '10 by 6%.

Apple currently trades around 19 times '08 earnings and 17xs '09.

Apple?s current valuation is set to expand owing to the increasing profit and cash flow contribution of the iPhone, improving prospects for Mac share gains, and the company?s long-term operating leverage potential.

Valuation at these levels is compelling given about $25 per share in cash and prospects for well over $9 per share in free cash flow in fiscal year 2009.

At it's 2007 low AAPL traded at a 20 PE and at its '07/'08 high of $200 a 50 PE. Taking the historical forward PE of 30 and a $5.60 '09 earnings that would give a price objective of $168....a 71% gain!

Apple is on the radar and I'm currently looking at several 2010 Call LEAPS.

Jeff Bailey : 10/3/2008 2:50:45 PM

02:46 Watch at this Link

Linda Piazza : 10/3/2008 2:50:33 PM

That OEX chart linked in my 2:48:47 post shows the scary potential if that support doesn't hold: a potential downside target near 512-513. I would wait until I saw a 30-minute close beneath about 524.25 before I believed too strongly that the support had been broken, though.

Linda Piazza : 10/3/2008 2:48:47 PM

Potential OEX support on 15-minute closes now at 525.21 has held up so far. We'll see about the rest of the afternoon. I'm actually struck by how well the OEX has reacted to potential black-channel support/resistance lately, despite all the seeming jumping around: Link In normal times--Remember those?--price are usually contained fairly well inside the black channel, although it's of course nudged higher or lower. When did these huge moves become so normal that they're staying within those confines, too?

Jeff Bailey : 10/3/2008 2:44:41 PM

Again ... getting the feel for socialism. Takes some time.

Linda Piazza : 10/3/2008 2:44:46 PM

I was just looking at the OCT 30-Day Fed Funds futures, prompted to do so by all this talk about a surprise Fed rate cut. The CME Group's quote is delayed, but it was last at 98.590 on that delayed quote. Doing a quick-and-dirty calculation by subtracing that from 100, we come up with a 1.41% potential rate, so it seems that these futures traders at least are betting on a cut before the expiration of these futures. (Current is 2.00%.) I've read before on several sources that the FOMC watches and is somewhat guided as to the expectations set up in the market by these futures, but I can't guarantee that's true. If it is, the only question then is when? The OCT futures stop trading on 10/31 and settle on 11/03, so the futures traders are betting that the reduction happens before then, but there's an FOMC meeting October 28-29, so would it come before or after that meeting, if it does come?

Jeff Bailey : 10/3/2008 2:44:14 PM

Excellent, excellent comment regarding Fed/Treasury, you and I, now owners of FRE and FNM and can perhaps "set mortgage rates."

Jeff Bailey : 10/3/2008 2:37:44 PM

SPG $83.89 -4.59% ... SPG-VQ are $4.10 x $4.40.

Jeff Bailey : 10/3/2008 2:37:11 PM

Swing trade put CANCEL target alert! ... for the SPG-VQ at this time.

Linda Piazza : 10/3/2008 2:36:26 PM

The OEX is now fast approaching that target set at 526. Because of the rapid move lower, however, that potential target has now been supshed down to 524.50-525.50, on 30-minute and 15-minute closes. This is sometimes potentially strong support, so bears should now be updating their just-in-case profit-protecting plans.

Jeff Bailey : 10/3/2008 2:36:14 PM

See Wednesday's Market Wrap for EWY

Keene Little : 10/3/2008 2:35:59 PM

I want to reiterate how bearish this market could be set up going into next week. The bearish wave count on NDX 60-min chart (dark red) that I showed earlier (1:19 PM) calls for a very strong selloff into next week. It would likely start with a big gap down on Monday (Black Monday coming?). That's not a guarantee but that's the setup.

But if the Fed pulls one of their infamous bear-fry moves over the weekend and shoots their last bullet by lower the discount rate .5% you can bet we'll see a monster rally on Monday instead. Therefore control your risks here.

Jeff Bailey : 10/3/2008 2:35:45 PM

Swing trade put alert! ... for two (2) of the iShares S. Korea EWY Nov. $36 Puts (EHT-WJ) $1.40 x $3.10 ... at a LIMIT price of $2.00.

EWY $36.28 -0.65% ...

Jeff Bailey : 10/3/2008 2:29:47 PM

SPG $85.25 -3.07% ...

Keene Little : 10/3/2008 2:28:34 PM

During the day SPX was also breaking its downtrend line from September 26th today but is now back below it. I certainly feel more bearish than even short-term bullish here. It needs to push to a new daily high to at least potentially turn the market short-term bullish.

Linda Piazza : 10/3/2008 2:28:31 PM

The OEX's potential resistance on 15-minute closes now at 537.60 so far appears to be holding but the OEX hasn't confirmed that by a new low below the previous afternoon low of 531.53, so that's not confirmed yet. So far, though, continue to factor in possible vulnerability to 526. Well, in all honesty, continue to factor in vulnerability to just about any number, higher or lower!

Jeff Bailey : 10/3/2008 2:24:07 PM

02:00 Internals found at this Link

Keene Little : 10/3/2008 2:22:23 PM

NDX has dropped back down to its broken downtrend line from September 25th, near 1515. If it holds it will be bullish but right now this afternoon's drop is impulsive and the bounce is corrective. A new low this afternoon would be very bearish.

Jeff Bailey : 10/3/2008 2:15:09 PM

DJUSHB $304.51 -2.06% ...

Jeff Bailey : 10/3/2008 2:14:22 PM

As you listen to President Bush, in the institutional trader's mind, he/she is now turning the page. Yes, there is possibility of GAIN for taxpayer, but the institutional trader/investor now begins to factor in this November's election.

The MAJOR difference is LIMIT SPENDING, and ADDITIONAL government programs for the bottom-up approach.

Each hopes to IMPROVE the economy.

I'm not commenting as a FOR or AGAINST McCain, or Obama. I'm TELLING you how traders/investors now need to be looking at things.

Linda Piazza : 10/3/2008 2:11:57 PM

Potentially strong resistance on 30-minute closes for the OEX is now 538.14-539.07. I would now begin watching lower potential resistance, though, on 15-minute closes near 537.70. OEX at 535.06 as I type. The 15-minute chart suggests that if the OEX can't clear that 537.70-ish level on 15-minute closes, then it has a potential downside target of 526, but we can of course all see the congestion zone, potential support, from about 529-533.

Keene Little : 10/3/2008 2:11:07 PM

I'm back. It looks like a bit of a sell-the-news event here. The market sold off on the House rejecting the bill and it sold off on the House approving the bill. At this point many are wondering what will it take to rally this market. Welcome to a bear market where hope springs eternal but reality starts to replace it a little bit at a time.

Jane Fox : 10/3/2008 2:03:10 PM

The SEC now has the authority to suspend mark to market accounting rules if it is in the public interest and consistent with the protection of the investors. Congress is asking the SEC to conduct a study on what impact this rule has had on the balance sheets of financial institutions and a report will be delivered in 90 days. If the rule is suspended it is asking the market to suspend its judgment and give that judgment call to each and every company. HMMM that sounds fair to me doesn?t it you? I would like to buy Google at $10.00 please.

Linda Piazza : 10/3/2008 1:57:48 PM

As per Bloomberg's delayed quote, the TED spread is 3.83, and I assume this was just shortly after the bill was passed. That's very near the day's high of 3.87. So far, no lessening of risk being shown in the credit markets, and I keep wondering about that emergency meeting this weekend in Europe that Jane mentioned, the one that would provide for a closed-door session just in case some big financial should fail. I don't know anything about any big European or U.S. financial about to fail, but remember Friday after the close tends to be the time that the FDIC announces financials being taken over or being acquired in an FDIC-assisted move.

Linda Piazza : 10/3/2008 1:54:09 PM

The OEX now has potentially strong resistance on 30-minute closes from about 537.60 up to 539.40. Or maybe not. In this kind of trading environment, just know where your stops are and adhere to them because you really don't know what the final reaction will be.

Jane Fox : 10/3/2008 1:49:51 PM

Notice how the VIX did not make a new daily low when the S&P futures made a new daily high. This is the kind of divergence I look for throughout the day. Link

Jeff Bailey : 10/3/2008 1:47:53 PM

EEM $31.55 (unch) ...

Jeff Bailey : 10/3/2008 1:47:37 PM

SPG $86.63 -1.47% ...

Jeff Bailey : 10/3/2008 1:43:53 PM

That would be the "crack the whip"

Jeff Bailey : 10/3/2008 1:43:27 PM

Now thinking all "retail" shorts have a stop above today's high. Expect them to get tested, stopped.

Then if we're to see the "sell the news" trade, watch the day's low.

Jeff Bailey : 10/3/2008 1:42:26 PM

IRX.X down 10 bp at 0.49% ... NOT unclogging.

Jeff Bailey : 10/3/2008 1:42:01 PM

BKX.X -2.46%, XAL.X -1.28% and RLX.X -0.11%

Jeff Bailey : 10/3/2008 1:40:52 PM

USO $75.60 -0.20% .... was $75.36 at my 01:37:52

Jeff Bailey : 10/3/2008 1:39:07 PM

EEM $32.10 +1.75% ... (see 01:36)

Jeff Bailey : 10/3/2008 1:38:13 PM

Take the $0.80/contract loss.

Jeff Bailey : 10/3/2008 1:37:52 PM

Swing trade NAKED put close out alert! ... for the one (1) US Oil Fund USO Oct. $72 Put (UNA-VT) at the offer of $2.00.

USO $7.36 -0.60% ...

Linda Piazza : 10/3/2008 1:36:40 PM

We don't know the final reaction today, but this is obviously not what bulls wanted to see. You had time to update your stops and determine what felt comfortable for you, and now it's time to let that play out. Watch for potential support now between 532.70-534. A failure to find support there would look serious.

Jeff Bailey : 10/3/2008 1:36:35 PM

dj- Brazil Stocks trim gains

Jeff Bailey : 10/3/2008 1:36:13 PM

YM 10,600 ... trading DAILY Pivot. Just monitor. But comments regarding SPG have me more bearish bias.

Jeff Bailey : 10/3/2008 1:34:48 PM

SPG $88.45 +0.59% ... WKLY S2 $88.25 is here.

Jeff Bailey : 10/3/2008 1:34:02 PM

dj- US President Bush to make address at 01:55 PM EDT- Fox Business

Jeff Bailey : 10/3/2008 1:33:20 PM

Vote was 263-171

Jeff Bailey : 10/3/2008 1:32:42 PM

YM 10,689 ... near kiss of DAILY Pivot 10,604.

now there's the range. WEEKLY and DAILY Pivot

Linda Piazza : 10/3/2008 1:33:57 PM

Bloomberg's TED spread quote is delayed, so it's not possible yet to get a true read on how it's reacting. However, as per the delayed read, taken probably shortly after the vote began, it's 3.79, well off the 3.87 high of the day, but still sky high. That still higher than it's been, including during the 1987 stock debacle. We need more of a pullback than this. The danger in looking at peaks in the TED spread is that SPX performance is mixed over the last year--an admittedly aberrant period--when the TED spread was hitting highs. Sometimes the SPX was just then really keeling over and sometimes it was already stabilizing.

Jeff Bailey : 10/3/2008 1:29:39 PM

01:25 Watch Link

Linda Piazza : 10/3/2008 1:27:40 PM

Bulls don't want to see the OEX close 15-minute periods beneath 539.45. OEX at 541.63.

Tab Gilles : 10/3/2008 1:26:26 PM

Market is selling off

Jeff Bailey : 10/3/2008 1:25:55 PM

dj- US House Passes Key Majority Threshold On Rescue Vote

Keene Little : 10/3/2008 1:25:47 PM

Not good timing but I have to run off to a meeting that will take about 45 minutes. Be careful this afternoon!

Tab Gilles : 10/3/2008 1:25:28 PM

**Bill Passes House Vote**

Jeff Bailey : 10/3/2008 1:23:34 PM

NCC's WKLY Pivot is right here $3.90

Jeff Bailey : 10/3/2008 1:22:47 PM

If we get a "crazy downside sell" and get the opportunity on NCC anywhere back near $2.00, I say we'll be looking long. Be patient.

Jeff Bailey : 10/3/2008 1:21:38 PM

BKX.X 73.10 -0.39% ... C $20.31 -9.73% ... interesting/notable that MARKET is upset that C didn't get WB.

Me thinks NCC in play.

WB $6.75 +72.63% ...

Jane Fox : 10/3/2008 1:21:35 PM

Dateline NPR.com - California is running out of cash. The Los Angeles Times reports that Gov. Arnold Schwarzenegger sent a letter to Treasury Secretary Henry Paulson informing him that the state might need to borrow $7 billion to keep operating. Evan Halper, who co-authored the story, tells Renee Montagne that California routinely borrows money to even out its cash flow, but this time it's locked out of the credit market.

Tab Gilles : 10/3/2008 1:19:45 PM

Art Cashin on CNBC just said that Fed may cut rates.

Keene Little : 10/3/2008 1:19:34 PM

Looking at the updated NDX 60-min chart now, the upside potential is to either just shy of 1575 or a little more than 1626 (which would be above Tuesday's high and coincide with a test of the top of its parallel down-channel from August), shown in pink: Link

The bearish potential is that the sequence of declines and bounces since September 19th is a series of 1st and 2nd waves which portends a wicked selloff is coming, either from here or a little higher first (potentially up to 1580 for two equal legs up today), shown in dark red.

Tab Gilles : 10/3/2008 1:18:09 PM

TED Spread

Value 3.78

Change 0.167

% Change 4.627

High 3.87

Low 3.51

Open 3.61

Jeff Bailey : 10/3/2008 1:18:01 PM

SPG $89.01 +1.22% ... understand the recent "news" here regarding ability to convert the 6.0% convertible into common stock.

My thoughts are the SPG should get "crushed".

Anyone willing to give up 6.0% to convert to common these days?

The credit crunch damage to payrolls, any new business creation has been done, probably for at least 3 to 6-months. Expecting attrition.

Linda Piazza : 10/3/2008 1:17:42 PM

Cashin warned this morning that what you didn't want to see today was for there to be a bounce and then for the bill to get passed and markets to drop into the close. It's something similar to what Keene has been saying today, too, and what many of us feared last Monday, too.

Jane Fox : 10/3/2008 1:17:07 PM

Vote is looking a lot different this time 'round.

Jeff Bailey : 10/3/2008 1:15:17 PM

If you're long/short over next hour, flip a coin and be willing/able to take 200-point RISK. $1,000.00 on one contract.

Jeff Bailey : 10/3/2008 1:14:18 PM

YM 10,802 with WKLY S1 at 10,802.

Now monitor Daily R1 10,740.

Tab Gilles : 10/3/2008 1:13:49 PM

YEA/ NAY running about 3:1 to pass

Jeff Bailey : 10/3/2008 1:13:30 PM

dj- Belgian Govt: Fortis (update) ... The Belgian government will retain 49.9% of Fortis Bank Belgium, the country's arm of ailing Dutch-Belgian bank Fortis NV (30086.AE), a spokesman for Prime Minister Yves Leterme said Friday. "We sold all that was Dutch to the Netherlands," the spokesman said, explaining that the government will remain in control of the 49.9% stake it has in Fortis's Belgium assets since Monday. The Dutch government announced earlier Friday it was buying all of Fortis' assets in the Netherlands for EUR16.8 billion.

Linda Piazza : 10/3/2008 1:13:29 PM

The OEX is testing potentially strong resistance on 15-minute closes at 545.25, being a little above it as I type, and fast approaching potentially strong resistance on 30-minute ones, at 547.30 and then 550.50. OEX at 545.96 as I type. It's probably not going to be about intraday support and resistance levels here, though. I know some have heard about the massive rally we're going to get, but remember that some might be ready to sell into any rally that occurs, too. We just don't know how it's going to play out, unfortunately, so what you have to do is assess your risk and make sure it's not too high.

Jane Fox : 10/3/2008 1:13:09 PM

I realize some of the deregulation was to help Americas become home owners but little did we foresee people making 46K a year taking on 500K mortgages.

Jeff Bailey : 10/3/2008 1:12:40 PM

dj- 01:07 PM EDT House Starts vote on Financial Rescue Legisltion

Jeff Bailey : 10/3/2008 1:11:43 PM

YM sticks its heady above WKLY S1. DO NOT trade here. 10,813

Jane Fox : 10/3/2008 1:11:14 PM

Jeff Americans are greedy but you know what so is every human being on earth. It is in our DNA to be greedy. The only difference is that America regulators dropped the ball and allowed lobbyists to deregulate just a tad too much. If we had the kind of regulation on mortgages that I see in Canada we would have never gotten here .

Linda Piazza : 10/3/2008 1:10:55 PM

For those at work and unable to watch a television, the vote has begun.

Jeff Bailey : 10/3/2008 1:07:00 PM

So far today, only the Airline Index (XAL.X) in U.S. Market Watch was equity-based index to slip red.

Jeff Bailey : 10/3/2008 1:05:05 PM

I see Jane comments regarding "pork" in the bill.

Knowing some of what goes on in Washington, each knows how "important" there vote for/against bill is, that they were saying ... "I'll vote for it, if you put this in it."

That's how this stuff gets watered down.

Jeff Bailey : 10/3/2008 1:01:45 PM

USO $76.44 +0.81% ... quiet at DAILY Pivot.

Jeff Bailey : 10/3/2008 1:01:11 PM

dj- Russia: US Warship in Black Sea, may port in Georgia

Linda Piazza : 10/3/2008 1:01:12 PM

OEX potential resistance on 15-minute closes is now 545.22. Today of all days, please do not count on all targets, either downside or upside being met, or on any specific support or resistance level being "the" one to hold. I give you these as benchmarks only. Remember, too, that the OEX is also testing an important 543.80-ish Fib level.

Jeff Bailey : 10/3/2008 1:00:14 PM

dj- Bush frees emergency aid for Afghanistan, Pakistan, Georgia

Jeff Bailey : 10/3/2008 12:59:27 PM

dj- Belgian Govt retains 49.93% of Fortis' Belgian Assets ... Yesterday, had somebody tell me how "greedy" Americans are, how all this is America's fault. As some of us know, US Banks, Insurers, investors in general weren't the only ones "hungry" for CDO returns.

Jeff Bailey : 10/3/2008 12:55:49 PM

NASDAQ a/d 1,824/938

Jeff Bailey : 10/3/2008 12:55:36 PM

NYSE a/d 2,371/589

Jeff Bailey : 10/3/2008 12:54:28 PM

I would think the BEST long in the market would be some type of corporate paper, where "bailout/rescue" bill passage would unclog some pipes near-term.


Bailout = Taxpayer gets no benefit.

Rescue = Taxpayer, or Treasury has potential longer-term benefit. Taxpayer may never see benefit even if assets 5-years from now have recovered (see S&L crises, but huge windfall and budget surplus following years).

Jeff Bailey : 10/3/2008 12:49:33 PM

HYG $83.05 +0.49% ...
LQD $89.00 +0.11%
MUB $98.58 -0.17% ...

From "riskiest" to "less risky" ... I would want to see if credit paper firms up.

PHF $6.27 (unch) ... or at least get a pulse from market participants.

Linda Piazza : 10/3/2008 12:48:52 PM

The OEX has bounced from the support on 30-minute closes now converging from about 539-593.30, but has not yet confirmed that bounce by a new high. OEX at 542.49 as I type.

Keene Little : 10/3/2008 12:47:42 PM

This morning's story about Citigroup threatening smaller Wells Fargo and Wachovia with a lawsuit makes me think of Citigroup being a spoiled brat and bully now that someone else is bidding on Wachovia after Citigroup tried to get them for a song. It may not be true since I have no idea about what's behind it but I'm getting the feeling that the big banks, who are surviving and taking over the smaller banks (soon with taxpayer support I fear), can't stand anyone getting in their way of taking over the banking world. Someone needs to go kick sand in Citigroup's face. Isn't anyone worried about monopolies in the banking industry? Apparently it's being supported and abetted by our government now.

Jeff Bailey : 10/3/2008 12:47:13 PM

VIX.X 42.35 ... I would want to see if premiums soften up on passage of bill.

Jane Fox : 10/3/2008 12:44:53 PM

There is also a lot of what is called dirty fuels programs attached to the bill, programs House members have fought off and thought they had killed but it looks like the Oil Industry was able to exploit this crisis and attach the programs that benefit themselves.

Jeff Bailey : 10/3/2008 12:38:08 PM

12:00 Internals found at this Link

Jane Fox : 10/3/2008 12:38:27 PM

All the earmarks attached to the Economic Stabilization Bill add up to $110 billion. Gee $110 billion here a $110 billion there who will notice?

Linda Piazza : 10/3/2008 12:35:59 PM

Considering what the TED spread is doing today and the fact that the three-month LIBOR is part of the computation of that spread, Jane's 12:31 post mentioning a closed-door session "discussing what to do in the event of a major bank collapse" isn't too encouraging, is it? I don't want to be a doom-and-gloomer, but I'm still thinking I'm not going to be taking off the hedge on the one position I have open (25 OCT SPX 1030/1020's). I suggest you be thinking about how much risk--either direction--you want to carry over the weekend.

Keene Little : 10/3/2008 12:34:08 PM

We've now got overlap of the early-morning high and that leaves this morning's bounce as just a 3-wave move. That leaves two possibilities here:
1. The correction is finished and down we go to new lows.
2. The bounce is just wave A of what will become a larger A-B-C bounce (meaning the current pullback is wave B).

There's no good way to tell at this point which scenario will play out. I consider the long side the risky side because it's possible, looking at the DOW and SPX, that we've got a setup for a very strong decline (maybe after passage/no passage of the House bill). But if we get another leg up to match this morning's rally then clearly being short will be short-term painful.

Jane Fox : 10/3/2008 12:31:54 PM

LONDON (MarketWatch) -- An emergency meeting of leaders from the European Union's biggest nations in Paris Saturday isn't expected to produce a U.S.-style bank bailout plan, but may set the stage for significant regulatory changes, while also providing a closed-door forum for discussing what to do in the event of a major bank collapse, experts said.

Linda Piazza : 10/3/2008 12:31:35 PM

The VIX is bouncing strongly off its 41.51 low of the day, with that low a little below the 42-43 potential support zone. So far, though, the bounce is something I would expect leading into the uncertainty of this vote, but bulls would like to see it roll over again below 44.11-44.60, potential resistance on 30-minute closes. What all should realize is that since Monday, the VIX has been churning inside a narrowing triangle with a bottom boundary at about 41 and a top one at about 46.

Linda Piazza : 10/3/2008 12:23:16 PM

For those at work and without access to television, the House vote is apparently "imminent," according to CNBC's ticker. A Reuters article had said the vote could begin as early as 12:15.

Linda Piazza : 10/3/2008 12:12:57 PM

TED spread is currently 3.81.

Linda Piazza : 10/3/2008 12:11:34 PM

So far, the OEX's pullback looks a bit like a bull flag, and that's backed up by an A/D line that's still just chopping around near the day's high. However, in this environment, bulls don't want to grow complacent. Keep updating those just-in-case bullish profit-protecting plans. A 30-minute close below 538.30 would now mark a potentially important change as would an A/D line 15-minute close beneath about 1350. The OEX is 540.41 and the A/D line 1627, as I type.

Jane Fox : 10/3/2008 12:05:57 PM

All markets are trading above their respective overnight ranges. Link

Linda Piazza : 10/3/2008 11:57:39 AM

Bulls want the OEX to hold up on 30-minute closes above 539.09 or at least 537.57, and then bounce from there into a new high. Doing so will keep the 547.50 (and maybe 550.70) upside target a possibility while a failure to do so will erase that upside target. The OEX has been testing the important 543.80-ish Fib level and it's pulling back from that test. OEX at 539.77 as I type.

Jeff Bailey : 10/3/2008 11:53:47 AM

11:40 Market Watch at this Link

Tab Gilles : 10/3/2008 11:34:03 AM

Apple (AAPL) $103.75 +3.65

Apple says report of Jobs heart attack "not true"

NEW YORK (Reuters) - An Internet report claiming that Apple Inc chief executive Steve Jobs has had a heart attack is not true, the company said on Friday.

Responding to a report in "iReport", a citizen journalist web site owned and operated by Time Warner Inc's CNN, Apple spokesman Steve Dowling told Reuters by email: "It is not true."

The report claimed Jobs was rushed to the emergency room after suffering "a major heart attack."

Keene Little : 10/3/2008 11:29:46 AM

If we get a pullback that drops below the initial high near 9:40 AM (NDX 1530.82) it will leave an overlap within the bounce and would tell me that we're not getting an impulsive rally. It doesn't mean we won't go higher again after a pullback but it means it's just a correction. It could also signal the possibility that the bounce has completed and we'll get another leg down. That's why rallying into the House vote would make me a very nervous long right here. The 2nd leg up this morning looks more like an ending pattern to me (NDX 5-min chart): Link

Jane Fox : 10/3/2008 11:29:29 AM

The daily SPX chart is still sporting a bullish MACD divergence but it is not as impressive as it was a few days ago. Link

Jane Fox : 10/3/2008 11:26:40 AM

Crude hit a low of 91.30 overnight but is now trading at 95.25. I still think the lows at $90 will hold. Link

Jane Fox : 10/3/2008 11:16:18 AM

I see Wachovia is now trading under $7.00 so investors are getting worried the merger with Wells Fargo will not happen. Too bad because this deal is a lot better than the $3.51 value the shares were trading at with the Citi/FDIC deal.

Linda Piazza : 10/3/2008 11:15:49 AM

According to the 30-minute chart, the OEX maintains a potential upside target of 547.67 and maybe even 550.78 as long as it maintains 30-minute closes above 539.14 and maybe even 537.41. Be careful about these targets, though. The OEX was setting potential upside targets near 552 based on the same parameters on Wednesday afternoon and it never made it up to that level.

Keene Little : 10/3/2008 11:06:25 AM

Today's bounce would have two equal legs up at NDX 1546.95 so keep an eye on that level for possible failure of the bounce. Both the DOW and SPX have climbed above Wednesday's low and that's bullish but I want to see if NDX can do the same (1547.99).

Linda Piazza : 10/3/2008 10:58:41 AM

VIX now 42.23, closer to the bottom of that potential bounce zone/breakdown zone from 42-43. So far, it's still making lower lows but if you're in bullish trades, remember the potential for a bounce. Another chart has now set up a potential downside target of 41.03, so the bounce certainly isn't a given.

Linda Piazza : 10/3/2008 10:50:52 AM

The OEX is now facing potentially strong resistance on 15-minute closes at 540.72, at the same time testing the descending trendline off the late-day 9/26 high. This could be significant resistance, so update your just-in-case profit-protecting plans if in bullish positions. OEX at 539.72 as I type with a day's high so far of 540.80.

Jane Fox : 10/3/2008 10:50:15 AM

Citiigroup is now threatening to sue Wachovia and demands Wachovia and Wells Fargo terminate their transactions.

Jane Fox : 10/3/2008 10:45:24 AM

The trajectory of the AD line (middle chart) should tell you the bulls have the ball this morning. Do you think they are anticipating the bill will pass the House this morning? Link

Jeff Bailey : 10/3/2008 10:44:37 AM

Most Actives ... NCC $3.95 +25.79%, C $20.23 -10.13%, AAPL $104.16 +4.04%, WB $6.78 +73.40%, MSFT $26.86 +2.32%, SPY $113.94 +1.86%, INTC $17.68 +2.79%, GE $22.46 +1.39%, QQQQ $37.61 +2.34%, CSCO $21.83 +2.87%

Jane Fox : 10/3/2008 10:42:37 AM

WASHINGTON (MarketWatch) -- House Republicans leaders emerged from a closed-door meeting on Friday and said they were cautiously optimistic that they had enough votes to pass Treasury Secretary Henry Paulson's plan to purchase toxic mortgage securities from financial institutions. "We feel good about the direction we're headed," said the House Republican Whip Roy Blunt. A revolt by House Republicans was the key to the surprising failure of the House to pass the Paulson plan on Monday. Republicans said that calls in member's district offices have "evened out" with some more support for the plan. Blunt said Republicans were also pleased with a Securities and Exchange Commission statement on mark-to-market accounting standards, which they described as new policy. Blunt refused to talk about how many more Republicans would vote in favor of the package. On Monday, only 65 Republicans had supported the White House plan while 133 voted against it.

Jane Fox : 10/3/2008 10:41:25 AM

Raising the FDIC levels will do nothing to protect payroll acounts or deposits of small and medium sized businesses.

Linda Piazza : 10/3/2008 10:41:13 AM

The VIX is still dropping but bulls should be aware of potential support in the 42-43 zone, with that support historical (10/1 swing high of 42.38) and Keltner. I don't know that it will hold, but that certainly is a possibility, so the VIX should be watched now that it's dipped to 42.50 and is approaching further potential support. It's 42.58 as I type.

Jane Fox : 10/3/2008 10:39:40 AM

Ok let me talk about the increase in the FDIC levels. This part of the bill will give the average Joe and Jane a feeling that the bill is doing something for them but will do nothing to get credit flowing again. I think raising the level from $100K to $250K makes sense but that does nothing to get at the heart of the problem.

Jeff Bailey : 10/3/2008 10:34:18 AM

10:00 Internals found at this Link

Jane Fox : 10/3/2008 10:32:45 AM

Did you know that one of the earmarks on the Economic Stabilization bill is the tax break for makers of children's wooden arrows? Apparently wooden arrows are taxed and the makers of wooden arrows for childrens' bows want a break. Geesh!!

Jane Fox : 10/3/2008 10:30:38 AM

WASHINGTON (MarketWatch) -- Economic activity in the nonmanufacturing sectors of the U.S. economy expanded slightly in September, the Institute for Supply Management reported Friday.

The ISM nonmanufacturing index hit 50.2% in September, compared with 50.6% in August. Economists surveyed by MarketWatch were looking for a result of 49.9%.

Readings over 50% indicate more firms were growing than contracting. Respondents were positive about lower fuel and commodity costs, but were concerned about overall market conditions and the economy. Of 18 industries, 10 reported growth in September.

The new-orders index rose to 50.8% from 49.7%. Meanwhile, the employment index declined to 44.2% from 45.4%. The production index rose to 52.1% from 51.6%.

Jane Fox : 10/3/2008 10:27:58 AM

VIX is making new daily lows and the AD line is well into bullish territory at +1450.

Keene Little : 10/3/2008 10:27:29 AM

The TED spread is making new highs again, currently 3.6 points. Apparently the banks, who are supposed to be helped by this bailout bill and who will be able to more easily lend money again (cough), are not impressed.

Keene Little : 10/3/2008 10:25:02 AM

With an expected vote in the House on the pork, er I mean bailout, bill sometime mid day I wouldn't be surprised to see the market go on hold for now. A rally into the vote would have me very uncomfortable in a long position. Apparently the bill is now up to about $850B as another $150B in pork has been added to the $700B bailout. I'm sure they can come up with another $150B to make it a cool $1T bill. Just one question--when is enough enough? For the monied the answer seems to be never.

Linda Piazza : 10/3/2008 10:25:15 AM

The A/D line is pulling back from the test of historical resistance levels, but so far, it's not pulling back sharply. It has potential horizontal support in about 200-point increments: at 1200, 100 and 750-800. Equity bulls don't want to see it sustain values below 750-800. So far, it's holding up fairly well, and is at 1583.

Jane Fox : 10/3/2008 10:23:19 AM

The 1980 the Financial Accounting Standards Board (FASB) proposed Corporations should report liabilities these firms had on their balance sheets that were hedged by our pensions. Big business lobbyists fought tooth and nail to stop that change and fortunately they lost. Then investors and pensioners saw just how venerable their pension plans were.

In 1990 the FASB proposed corporations should expense the millions of stock options on their books that had been issued to employees as "perks." Once again, I'm not sure you remember the flack or that one, big business hired big lobbying firms to squash it as best they could. Remember Cisco's John Chambers came to Washington to help lobby against it. Unfortunately they were successful.

Fast forward 10 years and we have Enron and Worldcom come crashing down and the FASB was able to get this rule passed.

Let me assure you big business and all their lobbyist do not have our best interests at heart.

Jane Fox : 10/3/2008 10:09:45 AM

On Wednesday more than 60 lawmakers (read lobbyists) banded together to urge the SEC to suspend Mark to Market bookkeeping, a standard that is being blamed for our current financial crisis. Their argument is (cough cough sputter sputter) that these instruments are too complicated for an average investor to understand so cannot be valued correctly by the marketplace. Before I go off on one of my rampages about this I will take a few calming breaths and comment on it later. But in the meantime, please ask yourself if they are indeed too complicated for the market place how in the Sam Hill did they arrive at a price to buy them in the first place.

Linda Piazza : 10/3/2008 10:05:29 AM

At about 540-541, the OEX will hit a descending trendline off the 9/26 high.

Jane Fox : 10/3/2008 10:02:52 AM

Looks like Wachovia has turned down the advances by Citigroup/FDIC and is now pursuing a new suitor, Wells Fargo. Reports are that Wachovia has agreed to a $15 billion merger. Wells Fargo said it would exchange $0.1991of a share of common stock for each common share of Wachovia a ratio that brings about $7.00. Needless to say WB jumped from its closing price yesterday at 3.91 to 7.03 as I type.

Keene Little : 10/3/2008 10:02:27 AM

Wednesday's low for SPX is near 1141 so that's an important level for that index. Above that would say a bottom could be in for now. There's a more bearish alternative which calls for a very strong selloff following this bounce but I'm not considering that seriously at this point. Although I must admit Art Cashin's comment, reported by Linda (9:34 AM) has me wondering...

Jane Fox : 10/3/2008 9:54:00 AM

Sorry I am late this morning, I got a late start. Looks like we have the ISM at 10:00ET this morning, in about 10 minutes. Then at some point the vote on the Economic Stabilization Bill.

Linda Piazza : 10/3/2008 9:52:32 AM

Ouch! The TED spread is 3.84 this morning. I fall back on what I've said other mornings: either the powers that be believe that the legislation won't pass or that it won't help if it does, or else there's some big financial monster under the bed, ready to jump out at us just as we relax. My only hope is that sometimes when the TED spread is hitting a peak, markets are already beginning to steady. This does not, however, encourage me to remove the hedge from the lone trade I have right now. If you haven't done so already, be thinking about how much risk you want to carry over the weekend.

Jeff Bailey : 10/3/2008 9:49:08 AM

Wells Fargo acquires Wachovia for $15.1 billion ... Reuters Story Link

Keene Little : 10/3/2008 9:47:51 AM

The top of the shorter-term down-channel for NDX is near 1533.40 this morning so watch for potential resistance there. I'm hoping we'll get one more drop to give us a clean finish to the EW count but it's possible it finished at yesterday's low. A rally above 1548, Wednesday's low, would confirm we've got a bottom for now. 60-min chart: Link

Jane Fox : 10/3/2008 9:46:11 AM

WASHINGTON (MarketWatch) - Main Street was really hurting even before Wall Street's latest illness, the government reported Friday. The U.S. economy lost 159,000 jobs in September, the worst since March 2003, the Labor Department reported Friday.

The economy has now lost 760,000 jobs this year, further evidence that the economy was in a recession even before the financial market crisis of the past few weeks. See related story on the recession.

The unemployment rate was steady at 6.1% as expected, the government said. An alternative measure of unemployment that includes discouraged workers rose from 10.7% to 11%, the highest since April 1994. Read the full government report.

Linda Piazza : 10/3/2008 9:43:10 AM

The A/D line is in breakout territory on the 15-minute chart, and for some reason, I can't get target levels on the 30-minute one. I can see, however, that the A/D line is moving into the historical resistance from 9/25 (1778 high) and 9/30 (2002) high. Lately, when the A/D line has produced a breakout mode in the early morning, it's tended to stay in breakout mode all day, but a typical breakout is a bit more risky than that. Typically such breakouts can either result in that kind of action or, sometimes more often, a whipsaw back lower again, in a pop-and-drop type reaction. It's a dangerous period for bulls and bears alike. Bulls just need to be aware that the A/D line is now reaching high enough that it usually tops off somewhere near its current level. All it needs to do now is move sideways to maintain the bullish tenor, but bulls don't want a strong pullback below 800. The A/D line is 1658 as I type.

Linda Piazza : 10/3/2008 9:38:17 AM

The OEX pushed right past all the first potential resistance levels, but we haven't cleared the first 15-minute period, much less the first 30-minute period, so maintain some wariness this morning. Potential resistance on 15-minute closes at 535.55. Next potential resistance on 30-minute closes is 537.94-538.72. OEX at 535.97 as I type.

Linda Piazza : 10/3/2008 9:36:32 AM

We have services PMI at 10:00 am ET this morning. While market participants have been so riveted on what's happening with the EESA bill that these economic releases have been brushed away like knats, we also can't ignore the possibility that one might or might not impact the markets. So, make early trading decisions knowing that's coming. It was 50.6, just above the benchmark 50, in its prior release.

Linda Piazza : 10/3/2008 9:34:33 AM

Art Cashin was on CNBC this morning talking about his worries about a "Monday/Tuesday event" next week. When Cashin talks, I listen. He wasn't predicting it, but was worrying about it, so consider that as you make trading decisions today.

Linda Piazza : 10/3/2008 9:32:22 AM

I am going to try to contribute as much as possible today. My family is moving into a period when my granddaughter's schedule of pre-surgery (reimplantation for cochlear implant and, possibly, a surgery on a malformed kidney) tests and therapies is ramping up, and I will increasingly be away from my home and my office. I have made the decision that I must slow my contributions to the Market Monitor out of fairness to my family and to subscribers. My increasing focus on my granddaughter's health and my need to be available to her older sister and my daughter will draw me away too often.

So, for today. The OEX has been attempting to steady at the bottom of the descending channel in which the OEX has been moving lower since last October: Link It's obviously primed to either bounce from this channel or plummet through it. The blue horizontal lines on that chart are also areas of potential support, so a weekly close beneath about 520 might be significant. On the shorter-term, the OEX all day yesterday found resistance on 30-minute closes at the 30-minute 9-ema, now at 531.18. The OEX would need to sustain 30-minute closes above that 9-ema before anything even began to change, even on the most tentative basis, and then it would need to clear an important Fib level at about 533.80, and that could be tough. If the OEX climbs in accordance with the SPX futures' distance above fair values, a test of that 533.80-ish area could occur this morning, but market participants should be aware of rollover potential there.

On the 30-minute chart, the OEX has actually set a potential downside target at 521 and perhaps even 517, if that higher level doesn't hold. However, this narrower and big-cap index is outperforming other indices such as the NYSE and SPX, who have either broken through their analogous targets (NYSE and TRAN, by the way) or settled on them (SPX). So, an OEX trader might do well to also watch the SPX, as it's met its downside target and might prompt some buy-the-equal-low bounce attempts.

If the OEX can make it through the 531.18 and then 533.80 zones on 30-minute closes, then watch 535 and then 541 for possibly strong resistance.

If this first bounce attempt doesn't materialize, watch for potential support at 521.

Keene Little : 10/3/2008 9:21:02 AM

The nonfarm payrolls drop of 159K, larger than expected, caused a quick spike down in equity futures but then they were jammed higher (little more manipulation perhaps?) and are currently trading at the highs of the overnight session. Watch for more volatility after the open. Here's a chart of payrolls over the past year and it's not a good trend: Link

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