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Keene Little : 10/7/2008 1:21:52 AM

Tuesday's pivot table: Link

As the weekly chart shows ( Link ), SPX bounced off its 1990-2002 long-term uptrend line which is potentially bullish for a bigger bounce over the coming week. I'm only showing a continuation lower into early 2009 which I won't adjust unless we get a bigger bounce from here (back above 1110 for starters). The 60-min chart shows what I'll be watching for tomorrow, to see if the key level to upside at 1077 is broken or not: Link

Another level that I was referring to today is at 1005 which SPX missed by 3 points. This is a Gann level and comes from the Square of Nine chart, sometimes referred to as the Wheel of Time. Our website was down (again) today and many didn't see my posts or the links on this Square of Nine chart so I'll quickly cover it again. The first link shows nearly the whole chart (hard to read the numbers) to get a sense of what it looks like: Link

It starts with 1 in the center and then spirals out as far as you want to go. This chart goes up to 1681 to incorporate the all-time high of 1576 for SPX. The idea is to find numbers that are along the same vectors but one or more levels of the spiral away from the other (a number that's one of more spirals from the other is considered to be square to the other). It's also important to find numbers at 90, 180 and 270 degrees away.

A closer view of just the section incorporating the 2002 low of 768 and 2007 high of 1576 ( Link ) shows they were squared out to each other by 6 levels. One point to also remember is that 540 degrees is important as it essentially measures the combined angles of a cube (6 sides of 90 degrees equals 540 degrees. So each 540 degrees is important and of course that's equal to 1-1/2 times around the wheel (360 +180). Then 4 x 1-1/2 equals 6 which is the separation of 768 and 1576. As I had mentioned earlier, this was one of the reasons I felt so strongly in October 2007 that SPX would top out around this number. So not only are those two numbers squared out to each other, they're related to the important 540 degrees.

This sounds very confusing but essentially this measures the synchronous behavior of the markets (which is really measuring our behavior which is affected by the solar and lunar cycles, etc.). Sounds like a bunch of gobbledygook but it really works. At any rate you can see the highlighted box in the 2nd chart at 1005 which is squared out to both the 2002 low and 2007 high. The fact that this number matched up with the 1990-2002 uptrend line told me it was a very important level and today's bounce proved it to be so. Now the question is how big the bounce will get (or not) and for how long.

One other point on the Square of Nine chart and the weekly chart above is the 1136 level which is half way between the 768 and 1576 on the Gann chart. This is also 2 x 540 degrees, or 1080 degrees from each and therefore another very important level. On September 18th SPX spiked down to 1133.50 before rebounding sharply and rallying to a high of 1265 on September 19th, +132 points. It of course didn't last which is why I'm thinking we might get a big bounce off 1005 (1008) but it too probably won't last. They're important levels but right now just trading levels. If SPX rallies half that +132 points, or 61 points off the 1008 level that gives us 1069, less than the 1077 key upside level. I have no idea what will happen but it's just a thought and level to watch.

Tab Gilles : 10/6/2008 11:38:40 PM

VIX & VXO testing 1987 extremes. Link

Markets are expecting a rate cut...lets see what Chairman Bernanke has to say?

Tab Gilles : 10/6/2008 10:58:08 PM

When you listen to the second prersidential debate Tuesday night and the candidates both discuss the $250,000 tax level and small businesses....

Keep this in mind!

Read these articles... Link Link

OI Technical Staff : 10/6/2008 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 : 10/6/2008 6:20:42 PM

Bank of America (BAC) ... Earnings Press Release Link

Jeff Bailey : 10/6/2008 6:15:52 PM

MM Trabe Blotter of CLOSED and OPEN trades at this Link

Currently have order GTC to buy additional 70 shares (for a $10k account) of NCC at $1.85. RISKING only the PROFITS from the NCC-VQ (see 09/26 to 09/29 MM).

Jeff Bailey : 10/6/2008 6:01:17 PM

Closing Internals found at this Link

Jeff Bailey : 10/6/2008 5:53:05 PM

Dow Indu PRICE Weighted at this morning's open Link

Jeff Bailey : 10/6/2008 5:40:40 PM

SPX Heavyweights at this morning's open Link

Jeff Bailey : 10/6/2008 5:26:23 PM

Retail Gasoline Price Heat Map Link

Jeff Bailey : 10/6/2008 5:21:56 PM

EIA: US Retail Gasoline -14.8c in week, lowest since Apri 14

DJ- The national average retail price of regular gasoline fell 14.8 cents a gallon to $3.484 in the week ended Monday, the Energy Information Administration said. The price is down 15.3%, or 63 cents, from the record high of $4.114 a gallon on July 7. Penny-for-penny, the drop was the biggest since Sept. 19, 2005, after Hurricane Katrina, but on a percentage basis, the 4.1% drop was the biggest since Nov. 21, 2005. Still, prices are 71.4c above a year ago. After hurricanes Gustav and Ike disrupted refinery operations in the Gulf and Midwest last month, along with pipeline shipments to the East Coast, government waivers were issued on clean air regulations to increase the varieties of gasoline that could be sold in some areas to combat shortages. DOE said last week tight supplies in some markets could continue in coming weeks, but low demand, expected rising imports and the return of refineries to operation were expected to push retail prices down. EIA said prices could move to or below $3.50 a gallon by year end, and the last week marks the first break of that level since April 14. Prices fell in all regions, with the biggest decline in the Midwest. AAA Daily Fuel Gauge Report said Monday gasoline prices averaged $3.504 a gallon nationwide, down 2 cents from Sunday.

Jeff Bailey : 10/6/2008 5:20:52 PM

dj- EU's Junker: States must be careful with taxpayer money

Jeff Bailey : 10/6/2008 5:19:32 PM

dj- S&P cuts ratings on $8.16B in CDOs

Jeff Bailey : 10/6/2008 5:18:44 PM

dj- Fed's Lacker: US in recession; but Fed rates well positioned

Jeff Bailey : 10/6/2008 5:17:58 PM

dj- Trichet: Markets may be overestimating risks to financial system

Jeff Bailey : 10/6/2008 5:15:06 PM

Starting to see some attractive valuations ...

Jeff Bailey : 10/6/2008 5:14:18 PM

Petroleo Brasileiro (PBR): ... Crisis affecting strategic plans

Keene Little : 10/6/2008 4:05:58 PM

SPX ran right back up to its broken tren dline along the lows since August (which is where the key level to the downside was this morning, near 1066). Interesting setup for tomorrow since the wave pattern calls for lower. 60-min chart: Link

Back above 1075 would be bullish and above 1100 would say we've got something bigger to the upside going on. Until then I'll be sticking with the short side and looking for short plays to set up.

Keene Little : 10/6/2008 4:02:02 PM

Golf clap for the Boyz--DOW back above 10K.

Jeff Bailey : 10/6/2008 4:01:03 PM

Wells Fargo (WFC) $34.65 +0.26% ... inches green

Jeff Bailey : 10/6/2008 3:59:08 PM

General Electric (GE) $21.80 +1.06% ... inches green

Jeff Bailey : 10/6/2008 3:58:16 PM

StreetTracks Gold (GLD) $84.44 +2.21% ... ~844.40 spot

Jeff Bailey : 10/6/2008 3:57:01 PM

Retail Unleaded Gasoline nears $3/gallon in Midwest

Keene Little : 10/6/2008 3:54:08 PM

Clearly a strong bounce into the close. The DOW might finish down "only" 300 points (an amazing 500-point recovery off the low). Wow. I think SPX 1073 is a key level to the upside. The Fibs at 1073 and 1077 and the bottom of today's gap just above 1074 make this an important region of potential resistance. If it gets through that then we'll likely be in a larger correction of the leg down from last week's high. Otherwise it will be just a large bounce before heading lower sooner rather than later.

Jeff Bailey : 10/6/2008 3:46:04 PM

YM short stop alert! 9,830

Jeff Bailey : 10/6/2008 3:45:19 PM

YM short lower stop alert! ... to 9,830. YM 9,798

Jeff Bailey : 10/6/2008 3:42:46 PM

YM short lower stop alert! ... to even. YM 9,814

Jeff Bailey : 10/6/2008 3:40:11 PM

YM short alert! here at 9,850. Stop 9,860. Target 9,705

Jeff Bailey : 10/6/2008 3:34:30 PM

UNG $30.62 -6.61% ...
EEM $28.26 -8.04%
SPG $81.92 -2.45% ...

Jeff Bailey : 10/6/2008 3:32:24 PM

Or AT the target price !

Jeff Bailey : 10/6/2008 3:31:47 PM

Dow Transports (TRAN) 4,055 -1.91% ... sector "winner"

Jeff Bailey : 10/6/2008 3:30:48 PM

Brazil's Mantega: ... Market losses, nervousness temporary.
Brazil not immune to crisis, will see lower growth as result
Sees US rescue plan implementation easing panic
No problem locally with bank solvency

Keene Little : 10/6/2008 3:26:11 PM

This big bounce shows you why you want to start getting out of your position before the target price. It's better to exit too early. Now that we have the confirmed bigger bounce I will be looking to exit the other half of my October puts. Hopefully we'll see a pullback tomorrow and in fact we could see a sideways consolidation between this morning's bounce high (near 11:30 AM) and today's low before proceeding lower again. But the risk with October puts is that time could now eat up too much time premium. I'll have to see how the wave pattern develops over the next day to help determine where it could be headed next.

Jeff Bailey : 10/6/2008 3:22:25 PM

EEM alert! $27.87 -9.30% ... pay yoursel bears!

Keene Little : 10/6/2008 3:13:13 PM

The shorts are starting to cover and now we'll see what kind of Fed money being pumped in behind it can do in the last 45 minutes of trading.

Jeff Bailey : 10/6/2008 3:06:51 PM

Pricing out some YUM-KE currently $4.30 x $4.50

YUM $27.97 -9.15% ...

VIX 57.85 +28.15% ... with MNTHLY R2/WKLY R2 correlation at 63.28/64.50

Keene Little : 10/6/2008 3:06:44 PM

Was SPX 1008 close enough to 1005? That last little bounce looks like it has potential to be something more.

Jeff Bailey : 10/6/2008 3:00:24 PM

M, M, mmmm ...

Keene Little : 10/6/2008 2:47:04 PM

The 2004 low for NDX was near 1302 and that's still about another 40 points lower. But with SPX 1005 looming up fast, we could see at least a larger bounce take hold soon.

Jeff Bailey : 10/6/2008 2:40:58 PM

Would think we'd start to see some central bank dumping pretty soon.

Jeff Bailey : 10/6/2008 2:40:06 PM

Something's gott'a give.

Jeff Bailey : 10/6/2008 2:39:57 PM

HUI.X 239.53 -10.98% ...

GLD $85.60 +3.62%

Keene Little : 10/6/2008 2:35:43 PM

For those who are curious what I'm doing with my trades, I've got a pretty heavy short position in October puts that I've been legging into for the past 6 weeks and I'm starting to pull some off the table. I'm going to leg out of half of my positions, especially the October puts as the market drops lower here and then watch for a bounce. If we get any kind of larger bounce I'll leg out of the rest of the October positions on the pullback following the larger bounce. If no bounce then I'll still have half my positions to take advantage of the decline.

Keene Little : 10/6/2008 2:28:38 PM

NYSE is now breaking its 62% retracement level by dropping below 6544. But it's the closing price that's important so we'll see what kind of turnaround might happen this afternoon. SPX is now a lot closer to 1005, currently printing 1018.

Jeff Bailey : 10/6/2008 2:28:24 PM

MMS: Oi, gas output continues to rise after hurricanes.

Jeff Bailey : 10/6/2008 2:27:44 PM

MMS: 46.2% Oil; 40.6% gas output still off line in US Gulf

Jeff Bailey : 10/6/2008 2:27:04 PM

MMS: ... 600,679 B/D oil; 3,001 MMCF/D gas off line in US Gulf

Jane Fox : 10/6/2008 2:26:56 PM

Some of the biggest problems with the Paulson plan is we (taxpayers) are now owners of really bad assets. And then how do they price these assets since there is no Market for them. If the government pays too much then the companies win and the taxpayers lose but if they pay too little they will not be bailing out these financial institutions and they may fold anyway.

Jeff Bailey : 10/6/2008 2:25:44 PM

Humana (HUM) $35.52 -9.64% ... plunging now.

Jeff Bailey : 10/6/2008 2:24:56 PM

EEM $26.95 -12.27% ...

Jeff Bailey : 10/6/2008 2:24:34 PM

Swing trade put filled alert! ... for the EEM-VA at the bid of $5.00

Jeff Bailey : 10/6/2008 2:23:52 PM

VIX.X 55.28 +22.46% ...

Jeff Bailey : 10/6/2008 2:23:35 PM

SPG $78.80

Jeff Bailey : 10/6/2008 2:23:20 PM

Swing trade put exit (filled) alert! ... for the one (1) Simon Property Group SPB Oct. $85 Put (SPG-VQ) at the bid of $8.10.

Jeff Bailey : 10/6/2008 2:22:04 PM

On the offer with EEM-VA at $5.00

Jeff Bailey : 10/6/2008 2:21:42 PM

13-week unch at 0.47%

Jane Fox : 10/6/2008 2:21:33 PM

DOw is now down over 645 points. Geesh!!

Jeff Bailey : 10/6/2008 2:20:37 PM

iShares Gold (GLD) $85.42 +3.42% ... ~854.20 spot

Jeff Bailey : 10/6/2008 2:20:04 PM

iShares Silver (SLV) 10.94 -0.45% ...

Jeff Bailey : 10/6/2008 2:19:07 PM

SPX 1,027.27 -6.54% ...

Jane Fox : 10/6/2008 2:18:35 PM

So here we are with $700 billion bailout and the markets are not "buying" it and careening off the cliff.

Jeff Bailey : 10/6/2008 2:13:00 PM

02:00 Internals found at this Link

Jane Fox : 10/6/2008 2:12:48 PM

I have a funny feeling you will some CDS regulation coming down the pipeline any day now.

Jane Fox : 10/6/2008 2:10:08 PM

In 1998 SEC tried to regulate these CDSs but they were told they are too complicated for government to understand and therefore could not regulate them.

Keene Little : 10/6/2008 2:09:40 PM

Today the NYSE sliced right through a support level at 6800 where it had its high in 2000 and again in 2004. It's currently trading at 6566. The 62% retracement of the 2002-2007 rally is at 6544 and its low so far today is 6546. If that doesn't hold then its next support level is close to 6200, the 2004 low and also a support shelf back in 1999-2000.

Jane Fox : 10/6/2008 2:03:39 PM

Well once Lehman went down and this hedge fund had to pay needless to say they were not able to and folded.

Jeff Bailey : 10/6/2008 1:57:57 PM

SPG-VQ $7.10 x $7.80 ... SPG $80.68 -3.92% ...

Jane Fox : 10/6/2008 1:57:56 PM

Say you are $1 million hedge fund and someone comes to you and says I have a $1 billion bond from Lehman Bros bond I want you to insure. OK I'll insure it for 2% each year. 2% of billion is 20 million each year but my hedge fund is only worth 1 million.

Jeff Bailey : 10/6/2008 1:56:12 PM

Swing trade long setup alert! ... for an additional 70 shares of National City (NCC) at $1.85.

NCC $2.29 -34.75% ...

Jeff Bailey : 10/6/2008 1:55:01 PM

NCC $2.27 -35.32% ...

Jeff Bailey : 10/6/2008 1:54:48 PM

Swing trade long cancel order alert! ... for the additional 70 shares in National City (NCC)

Jane Fox : 10/6/2008 1:52:49 PM

To give you an idea as to how pervasive CDSs are the entire bond industry is $ 5 trillion but the CDS market is $60 trillion. And remember this is all unregulated.

Keene Little : 10/6/2008 1:50:29 PM

It's looking like not just the browser version of the Market Monitor is not working but also the links to charts are not working either. It's getting tiring the number of problems RightSide is causing with our website.

Jane Fox : 10/6/2008 1:45:10 PM

Ok here is how a CDS works. You buy a bond from Ford but you are worried about this bond and then you go buy protection. If Ford goes bankrupt you are protected. This is plain Jane insurance right? Well around 2003 or 2004 a CDS stopped been insurance but became a way of speculating. The difference now between insurance and a CDS is that you can buy insurance on a bond that you did not own. Sort of like everyone on your block buying fire insurance on your house and if it burns down the insurance company has to not only pay you but all your neighbors as well.

Keene Little : 10/6/2008 1:39:59 PM

I have been talking about a market that could stair-step lower over the next few weeks because of the mulitple degrees of the EW count that have to "unwind" the 3rd waves to the downside (which means several sets of 4th and 5th waves need to play out). This SPX 60-min chart shows how that might look over the next week or so: Link

I'm showing SPX dropping right through 1005, the potential Gann and trendline support, and that's the message I get from the EW count. But I want to remain cognizant that we could see a larger bounce, in time if not price, from the 1005 area.

Jane Fox : 10/6/2008 1:38:54 PM

Warren Buffet calls the CDS financial weapons of mass destruction. HMMM maybe he is an Oracle.

Jane Fox : 10/6/2008 1:37:51 PM

One more piece to the puzzle is a credit default swap. I always wondered why AIG fell because it was an insurance company and wondered why was it so important. Turns out it insured the mortgage backed securities. This is where I can see the eyes glaze over but these instruments are important if we want to know the whole picture.

Her is Wikipedia definition of a Credit Default Swap (CDS). "A CDS is a contract in which a buyer pays a series of payments to a seller, and in exchange receives the right to a payoff if an associated credit instrument goes into default or on the occurrence of a specified credit event (such as bankruptcy or restructuring)." Sounds like insurance heh? Well that was way it all started out until it became a tool for speculators when the Commodity Futures Modernization Act of 2000 specifically barred regulation of these trades.

Jeff Bailey : 10/6/2008 1:30:03 PM

Disclosure ... I currently hold bullish position in NCC

Jeff Bailey : 10/6/2008 1:29:44 PM

Swing trade long setup alert! ... for an additional 70 shares in National City Corp. (NCC) $2.41 -31.33% ... should they trade $2.25 again.

Jeff Bailey : 10/6/2008 1:26:33 PM

YM 9,859

Jeff Bailey : 10/6/2008 1:26:00 PM

13-week $IRX.X down 9 bp at 0.38%

Jeff Bailey : 10/6/2008 1:25:30 PM

US 3-Month bills auction results posted ... 0.46%; 88.35% at high, bid-to-cover 2.83

Jeff Bailey : 10/6/2008 1:23:54 PM

dj- FDIC's Bair expects Wachovia deal to be resolved Monday

Jane Fox : 10/6/2008 1:22:43 PM

For the banks to start lending money again they have to have the perception the government will do something and lend a hand if they start lending money again and get into trouble. Whether or not this is true is not all that important but there has to be the perception it is true. Right out of Machiavelli's "The Prince."

Jeff Bailey : 10/6/2008 1:20:19 PM

p, pa, pu, put

Jeff Bailey : 10/6/2008 1:19:49 PM

Sohu.com (SOHU) $49.31 -10.41% ... probes last week's (Monday's) low.

Jeff Bailey : 10/6/2008 1:18:26 PM

EEM $27.36 -10.93% ...

EWY $33.30 -8.16% ...

Keene Little : 10/6/2008 1:11:09 PM

The decline from this morning's bounce is looking like it could lead to another bounce. If it does then I'll be looking for two equal legs up from this morning's low. But the risk is still for a continuation of today's decline.

Jeff Bailey : 10/6/2008 1:01:11 PM

VIX.X 53.36 +18.21% ...

Jeff Bailey : 10/6/2008 1:00:52 PM

Swing trade put alert! ... for one (1) of the Humana Inc. HUM Jan. $30 Puts (HUM-MF) at the current offer of $1.55 ($1.30 x $1.55).

HUM $36.82 -6.33% ...

Jeff Bailey : 10/6/2008 12:57:19 PM

Aetna (AET) $31.50 -13.46% .... plunging now.

Jeff Bailey : 10/6/2008 12:53:29 PM

Bank of America in $86 billion settlement over Countrywide loans ... Reuters Story Link

Jane Fox : 10/6/2008 12:44:07 PM

There was a fellow who traded Commercial paper on Wall Street who did not think this bailout was the smartest thing to do UNTIL he saw how the commercial paper market reacted last week and he is now on board and thinks, like many do, that it may not be a panacea but it is something.

Jane Fox : 10/6/2008 12:45:05 PM

Last Thursday over $100 billion left the commercial paper market and flowed into Treasury bills because banks are not willing to lend anymore, they have no idea who will be the next to fold. Eventually the extension of credit will come to a halt, if we did not do anything. This will ultimately affect every single person in the world.

Jeff Bailey : 10/6/2008 12:32:42 PM

Not sure that I heard correctly that Russia's markets were halted intra-day.

Jeff Bailey : 10/6/2008 12:32:09 PM

iShares Emerging Markets (EEM) $27.68 -9.89% ... #7 most active.

Jeff Bailey : 10/6/2008 12:27:58 PM

Iceleand's crown plunges 30% against the euro

Jeff Bailey : 10/6/2008 12:22:33 PM

I'm seeing similar sign develop for Health Insurers that took hold for housing/banking. IF government makes it ILLEGAL for health insurers to deny coverage to those with pre-existing conditions watch out! One primary reason Medicaid is so messed up is pre-existing can get on medicaid. One "plan" to "fix" medicaid in my opinion (a troubled plan at that) is to force private sector to take on pre-existing.

Jeff Bailey : 10/6/2008 12:18:37 PM

One area of this market I would AVOID like the plague until after US election is Health Insurers. Would lean short/put right now, aggressive if current polls play out.

Jeff Bailey : 10/6/2008 12:15:09 PM

12:00 Internals found at this Link

Jeff Bailey : 10/6/2008 12:12:44 PM

Need coordination now.

Jeff Bailey : 10/6/2008 12:12:21 PM

MAKE the banks lend all this liquidity they now have, FORCE them to lend with a cut overseas.

Jeff Bailey : 10/6/2008 12:11:36 PM

I think another "answer" is to get ECB and London Bank to CUT RATES there.

Jeff Bailey : 10/6/2008 12:10:56 PM

Excellent, excellent discussion on CNBC ...

Jeff Bailey : 10/6/2008 12:08:46 PM

TCF Financial (TCB) $17.65 +1.55% ... regiional bank. One stock/bank I think ideal candidate for consolidation.

Keene Little : 10/6/2008 12:07:43 PM

In the past I've sometimes referred to the Gann Wheel of Time and even made up a spreadsheet to show the prices as they go around the wheel. Think of a price spiral starting at 1 in the center and then increasing as the wheel sprirals out. I've squished my chart and am only showing the top half of the one for SPX to give you an idea what it looks like (it goes from 1 in the center to 1680 in the last spiral): Link

Obviously you can't read the numbers in that chart but here's a section of it to show where the 2002 low of 768 and the 2007 high of 1576 fell on the chart (highlighted in yellow): Link . Each time a number is above or below another number along the same vector, or one full spiral on the wheel, it is said to be "squared out" and is a significant number from a Gann perspective. You can see that 1576 was 6 turns from 768. This was one of the reasons I was pounding the table back in October 2007 (along with a completed EW count, top of an up-channel, etc.) that we should be making a bull-market high.

Now notice the bolded frame at 1005. It squares out from both the 2002 low and 2007 high and it matches the 1990-2002 uptrend line that I showed on the weekly chart (11:04 AM). If SPX makes it down there today, tomorrow or this week I would exit short-term short positions and even think about playing the long side for a bounce. At least get out of October put positions. If and when SPX gets down there I hope to have a good sense from the wave pattern and other technical signals to confirm whether or not we should expect a bigger bounce.

Jane Fox : 10/6/2008 11:59:21 AM

This is a time when you have to take note of the TRIN. Holy cow! Link

Jeff Bailey : 10/6/2008 11:56:16 AM

VIX.X 53.42 +18.34% ....

Jeff Bailey : 10/6/2008 11:56:02 AM

GLD-WD (update) ... GLD's low/high so far $84.39/$86.45 with GLD-WD low/high $3.90/$4.30.

GLD $84.44 +2.23% with GLD-WD $4.20 x $4.70

Jeff Bailey : 10/6/2008 11:53:29 AM

SPG-VQ $6.60 x $8.00 ... SPG $80.44

Jeff Bailey : 10/6/2008 11:53:02 AM

SPG-VQ (trade update) ... SPG $8.86 -3.71% ... low/high so far $77.49/$82.68 with SPG-VQ low/high $6.00/$8.00 ... it's been a wild one here, with offers sometimes above $9.00 as SPG probed session low in late morning trade. Bid never really more than $7.60

Jeff Bailey : 10/6/2008 11:50:36 AM

EEM-VA (trade update) ... EEM $27.89 -9.21% ... low/high so far $26.88/$28.88 with EEM-VA low/high so far $3.35/$4.90.

Jeff Bailey : 10/6/2008 11:48:11 AM

Paulson expected to name Neel Kashkari to oversee $700B rescue plan

Keene Little : 10/6/2008 11:47:33 AM

From a short term pattern perspective it looks like the bounce off this morning's low could be a 4th wave correction within the leg down from Friday's high. That calls for a new low to finish that leg down and then another bounce before heading lower again in stair-step fashion.

Jeff Bailey : 10/6/2008 11:47:10 AM

StreetTracks Gold (GLD) $84.77 +2.63% ... has slipped back below WKLY Pivot ($84.99)

Jeff Bailey : 10/6/2008 11:42:35 AM

iShares Silver (SLV) $11.02 +0.27% ... holding on to gain.

Jeff Bailey : 10/6/2008 11:38:49 AM

Fed to boost auctions, pay interest on reserves ... Reuters story Link

Jeff Bailey : 10/6/2008 11:37:38 AM

US to Allies: Fight in Afghanistan or write check ... Reuters Story Link

Jeff Bailey : 10/6/2008 11:36:38 AM

Eli Lilly agrees to buy ImClone for $6.5 billion ... Reuters Story Link

LLY $39.03 -5.51% ...

IMCL $66.66 +2.61% ...

Jeff Bailey : 10/6/2008 11:31:08 AM

dj- Dutch Finance Minister: Likely to take a blow from financial turmoil

Jeff Bailey : 10/6/2008 11:30:35 AM

dj- Initial Freddie Mac subordinated debt settlement at 93.8

Jeff Bailey : 10/6/2008 11:29:44 AM

dj- S&P cuts ratings on $10.7B in CDOs

Jeff Bailey : 10/6/2008 11:22:54 AM

Most Actives ... QQQQ $34.43 -4.91%, IWM $59.20 -5.61%, EEM $28.11 -8.49%, MSFT $25.02 -4.90%, INTC $16.91 -2.31%, CSCO $20.16 -5.03%, SPY $105.08 -4.76%, SIRI $0.50 -13.79%, ORCL $17.84 -8.31%, JPM $43.49 -5.25%

Jeff Bailey : 10/6/2008 11:18:18 AM

dj- UK's Darling: Keep terms of BOE special lending facility under review

Jeff Bailey : 10/6/2008 11:17:38 AM

dj- Slovenia Finance Minister: Will discuss possibility of EU bail out fund

Jeff Bailey : 10/6/2008 11:16:58 AM

dj- Ecuador's Sept. CPI up 0.66% vs. 0.71% in September'07

Jeff Bailey : 10/6/2008 11:16:19 AM

dj- Venezuela Planning Minister: Won't cut social spending program

Jeff Bailey : 10/6/2008 11:15:32 AM

dj- US to sell $25 Bln in reopened 4-week bills Tuesday

Jeff Bailey : 10/6/2008 11:14:57 AM

dj- US to sell $6 Bln in reopened 9-yr 9-month TIPS Wednesday

Jeff Bailey : 10/6/2008 11:14:13 AM

dj- US to sell $30 Bln in reopened 79-day bills Tuesday

Jeff Bailey : 10/6/2008 11:13:41 AM

dj- US to sell $40 Bln in reopened 63-day bills Wednesday

Jeff Bailey : 10/6/2008 11:12:29 AM

dj- Dutch Finance Minister: Doesn't see consensus on EU bank bailout

Keene Little : 10/6/2008 11:04:41 AM

While I expect the longer-term 1990-2002 uptrend line to eventually be broken by SPX, it should act as solid support for at least a decent bounce. It's currently near 1005 which coincides with a Gann support level at the same price. If you're in October puts and SPX gets down to that level I would take my profits and run. Weekly chart: Link

Jeff Bailey : 10/6/2008 11:00:38 AM

Swing trade short cover alert! ... for the entire 1/3 position in the US Natural Gas Fund (UNG) at the offer of $30.66 -6.52% ...

Jane Fox : 10/6/2008 10:57:23 AM

Lehman's Fuld pledges cooperation with Congress

Fuld says he did everything he could to protect Lehman

Fed help for Lehman could have helped markets: Fuld

Naked short selling helped bring Lehman down: Fuld

Jeff Bailey : 10/6/2008 10:57:07 AM

Swing trade put exit alert! ... place an order to sell the one (1) iShares Emerging Markets EEM Oct. $31 Put (EEM-VA) for $5.00.
EEM $27.28 -11.19%
EEM-VA $4.80 x $5.00.

Jane Fox : 10/6/2008 10:54:21 AM

Egads the DOW is down over 500 points.

Keene Little : 10/6/2008 10:50:02 AM

Our market is now down the same amount as the overseas markets were before we opened. While it's certainly possible at this point for us to see a -10%, or more, kind of day, be aware that even a short-term oversold bounce could produce a very sharp rally. If you're short from Friday don't be afraid to peel some profits off the table. Get yourself to breakeven (should be no problem here) and let the rest ride for free.

Keene Little : 10/6/2008 10:45:02 AM

Banks and brokers are down -4.4% and -6.8% respectively. So much for the protection from the no-short rule. They've only made it worse by taking away the buying power of the short players at the bottom. These really are arrogant men who think they can control the sentiment of the market participants. Their actions only make it worse. It's the law of unintended consequences.

Jeff Bailey : 10/6/2008 10:43:17 AM

VIX.X probes WKLY R2.

Jeff Bailey : 10/6/2008 10:42:18 AM

SPG-VQ $7.20 x $8.10 ... SPG $80.01 -4.72% ...

Jeff Bailey : 10/6/2008 10:37:29 AM

VIX 53.60 +18.74%

Jeff Bailey : 10/6/2008 10:37:07 AM

Swing trade put exit alert! ... place an order to sell the one (1) Simon Property Group SPG Oct. $85 Put (SPG-VQ) for a LIMIT price of $8.10 ...

SPG $80.76 -3.83% ...
SPG-VQ $6.90 x $7.50

Keene Little : 10/6/2008 10:32:58 AM

I wonder if our Congress members are feeling even slightly duped at this point. If the stock market shed $1.5T dollars on Monday's market drop, which was used to scare Americans into supporting the handout of $700B, what does the additional drop of $1.5T since the vote mean?

Jeff Bailey : 10/6/2008 10:24:31 AM

Euro CurrencyShares (FXE) $135.35 -1.78%
Yen CurrencyShares (FXY) 99.35 +4.71% ... Biiiig move for the Yen (any currency)
Pound CurrencyShares (FXB) 173.63 -2.19% ...

Jeff Bailey : 10/6/2008 10:22:35 AM

10:00 Internals found at this Link

Jane Fox : 10/6/2008 10:22:24 AM

Breaking the buck was huge. People that have money in a money market account aren't concerned about return ON capital they are concerned about the return OF capital and now the $1.00 you had is worth $0.97. This was when the mortgage crisis hit main street.

Then another mutual fund money market account broke the buck. Then AIG nearly collapsed and the mutual fund managers decided they were not lending anymore money. This was when the TED spread started to skyrocket and was when Paulson and Bernanke knew they needed to get involved.

Keene Little : 10/6/2008 10:20:30 AM

A survey of 48 economists says we'll be out of the recession, that only 2 out of 3 even recognize, by the 2nd quarter of 2009. These are the same economists who did not see this coming and have been late to the party in recognizing. Their analysis is not exactly trustworthy in my book.

Jane Fox : 10/6/2008 10:11:38 AM

You remember when a money market mutual fund "broke the buck"? It is the thing mutual fund managers have nightmares about. The fund that broke the buck was not invested in risky mortgage backed securities or CDO or credit swaps but they were invested in very safe short term commercial paper unfortunately held my Lehman and the day before Lehman had gone out of business and that commercial paper was no longer safe.

Jane Fox : 10/6/2008 10:05:41 AM

WASHINGTON (MarketWatch) -- The U.S. economy will recover from the current recession in the second quarter of next year, assuming the credit squeeze in global financial markets improves gradually, according to a survey of 48 economists released Monday.

The survey by the National Association for Business Economics shows respondents expect virtually no growth in the current quarter, followed by a 1% increase in the first quarter of the year. The economy could return to a healthier rate of growth, pegged at around 2.7%, by the second quarter.

The unemployment rate would rise to 6.4%, the survey says.

Two out of three economists surveyed say the economy is in recession

Jane Fox : 10/6/2008 10:04:24 AM

VIX is now climing so no doubt the bears have control now.

Jane Fox : 10/6/2008 10:02:37 AM

If you have a large company or even a middle sized company you have money flowing in and money flowing out. The inflows and outflows usually do not match and when the outflows (buying supplies, paying bills, meeting payroll) are greater than the inflows (account receivables) you have a problem and need a short term loan. In order to get this loan you go to the commercial paper market and negotiate, "I need $999,000 today and tomorrow I will pay you $1 million tomorrow" and yes it is as simple and arcane as I have just explained. It is so rudimentary that lower paying clerks are usually the ones that carry this out each and every day.

Companies need this short term infusion and the banks are very able and willing to accomodate. This is the oxygen of our financial system the media talks about and a very needed part of our economy. This is the market that froze because, although banks were able to lend the money they were not longer willing. Why? Lehman Brothers.

Keene Little : 10/6/2008 10:01:44 AM

SPX has dropped below potential Fib support at 1077 (62% retracement of the 2002-2007 rally) and 1073 (two equal legs down from May). It's below the bottoms of both parallel down-channels from October and May and just broke the trend line along the lows since August 20th (near 1066). One other possible support zone is 1061-1065 which is the low and closing low on September 8, 2004 but that too is breaking as I type. There's potential support around 1034 and then a long-term uptrend line near 1000.

Jeff Bailey : 10/6/2008 9:52:42 AM

Brazil: Sep Motor Vehicle Sales Up 9.8% Vs. Aug

Jane Fox : 10/6/2008 9:51:56 AM

Some on Wall Street have called last week (actually the week before and last week) equivalent to a typhoon, an earthquake, a monster that no one had control of. But why? Because the commercial paper market ceased up. OK but why is that important and what the heck is the commercial paper market. So at this point I need to explain the commercial paper market (by the way the TED spread that Linda and Tab refer to in the MM is exactly what I am going to try and explain).

Jane Fox : 10/6/2008 9:46:11 AM

First of all this bailout is certainly a Wall Street bailout but it is more, a lot more. It is also the American financial system bailout.

Jane Fox : 10/6/2008 9:43:05 AM

Well at TRIN at 1.55 certainly points to the bears having possession.

Jane Fox : 10/6/2008 9:41:43 AM

AD line is a very bearish -1964 but I see the VIX falling so the I can't say anyone has the ball this morning.

Jane Fox : 10/6/2008 9:39:25 AM

I think I have fairly good idea of how we got to where we are in this financial mess. Well let me rephrase that, I think I have a fairly good "laymen's" idea of how we got here but I don?t have a good idea of what "here" is. I don't have a clear understanding of the mess we are in. I have been told by many that we are indeed in a mess but I don?t see it. My life is exactly the same as it was before so what is everyone so upset about?

In order to answer this question I did some digging on the weekend and will like to tell you my version of where "here" is.

Some of you remember the program I told you about the "Giant Pool of money" that helped me a lot to understand the "how" well there is another one out now that explains the where or what I am calling the "here." So I am going to try and explain it to you and hopefully I will get a better understanding myself because folks it is really complicated.

Tab Gilles : 10/6/2008 9:35:48 AM

A friend of mine e-mailed this to me a British video spoof this weekend. Passing it along to MM. Link

Jane Fox : 10/6/2008 9:23:29 AM

Crude hit a low of 88.69 overnight breaking the $90.00 support however, I am reading that low as a test of $90 support and suspect it will hold. MACD did not make a lower low supporting the contention that this support will hold. Link

Keene Little : 10/6/2008 9:22:35 AM

This morning's headlines are about other world indices being down hard after news about more banks failing. Most of the world markets are down 5% or more while our futures are down 2.0%-2.5%. ES is down 27 points (-2.5%) which is up 9 points from its low. It's not going to be a good morning in the cash market but certainly be careful of the volatility.

Jane Fox : 10/6/2008 9:19:55 AM

NEW YORK (MarketWatch) -- An appellate court Sunday overturned an earlier lower-court decision to block Wells Fargo & Co.'s acquisition of Wachovia Corp.. The earlier ruling had halted the $15 billion transaction by extending an exclusivity agreement that Citigroup , a rival bidder for Wachovia, had for a merger. Wells Fargo issued a statement late Sunday saying: "We are pleased that the unfounded order entered yesterday has been vacated. Wells Fargo will continue working toward the completion of its firm, binding merger agreement with Wachovia."

Jane Fox : 10/6/2008 9:18:41 AM

Bank of America has reached an agreement with nine States Attorneys to work with over 400,000 Countrywide clients to keep their homes. You remember BOA acquired CountryWide last summer and is working with State Attorneys to resolve lawsuits those states have filed against Countrywide.

The plan will reduce interest and principal on mortgages as long as the residences are still in the home and are seriously delinquent. BOA said it will not charge any fees to make the modifications and there will not be any prepayment penalties.

Jane Fox : 10/6/2008 9:09:36 AM

Here are the overnight charts and as you can see all markets are trading under their respective previous day lows. The headlines this morning are saying "Careening off a Cliff" but I don't think I would call this careening. Link

Jane Fox : 10/6/2008 9:03:52 AM

Good morning everyone. I see we have FOMC member Fisher speaking at 1:00ET today but that seems to be the only event we will have to negotiate and will probably not be much to worry about.

Linda Piazza : 10/6/2008 7:57:37 AM

As I noted Friday, I am out of town today and will not be able to contribute. As I type, SPX futures indicate a markedly lower opening, but unfortunately, I'm having difficulty calling up charts at my remote location, in addition to other difficulties. Keltner charts currently show the possibility of an early OEX dip to 510-512 if the OEX follows in accordance with what SPX futures are doing at this early time. At least temporary support might be found there, with emphasis on "temporary" and "might," but don't try stepping in front of any freight trains today based on the possibility of perhaps temporary support holding. Keene usually talks quite a bit about the SPX, and OEX traders might watch those posts for guidance. The OEX has been outperforming the SPX by Keltner and some other measures, but Keene's posts about the SPX and Jane's about market tenor might prove particularly helpful guidance.

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