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Keene Little : 10/14/2008 1:36:28 AM

Tuesday's pivot table: Link

I tweaked the SPX charts to give a better idea where the market could be heading. Starting with the 60-min chart I show upside targets/resistance at previous 4th wave highs (1020 and 1073) and gap fill at 1098. The downtrend line from September 19th is up near 1073 as well. The Fib retracements for the decline from September 19th are also shown on the chart. The 38% (1005) was tagged at Monday's high, then 50% is at 1054.59 is next. Link

As I noted Monday afternoon, the 1005 level is also an important Gann level. The rally in overnight futures suggests that level will break but we'll have to see how it looks at the open on Tuesday. There is some question which degree of the wave count we're in and that determines which of the 3rd waves has completed and how many are yet to be completed. That changes where the final 5th wave will complete the decline (this year or next). But for now it doesn't matter--we have not seen the lows yet because we have not finished the wave count. It's just a matter of how high the bounce will get before it turns back down to a new low.

The daily and weekly charts show just the dark red wave count since the pink and dark red paths shown on the 60-min chart are not that far apart. The wave count calls for the October 2002 low (768) to be tested this month, bounce into November and then drop to another low in late November:
Daily: Link
Weekly: Link

OI Technical Staff : 10/13/2008 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The Market Monitor has been archived.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.

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Jeff Bailey : 10/13/2008 9:29:02 PM

BKX.X Link ... held where it HAD to.

Jeff Bailey : 10/13/2008 9:26:23 PM

Closing Internals found at this Link

Keene Little : 10/13/2008 5:35:11 PM

One other point about where the market stopped today. A few days ago I had mentioned 1005 being a very important Gann level (from the Square of Nine chart). This is the level that is square to both the 1576 high in October 2007 and the 768 low in 2002. I thought it would be support for the market, especially with the long-term uptrend line from 1990 located at the same level, but it turned out to be support for the grand total on one day. Now it might act as resistance. Here's the part of the Square of Nine chart showing 1005 as two cycles from 768 and 4 cycles from 1576: Link

Keene Little : 10/13/2008 5:21:43 PM

This SPX 10-min chart shows a potential wave count for today's bounce off Friday's low: Link . Price data is a little spotty on Friday but the labeling is a double zigzag (a-b-c-x-a-b-c) and as mentioned earlier, fits well with the 2nd a-b-c achieving the Fib target at 1003.97 where the c-wave = 162% wave-a.

NDX made it into a potential resistance zone at the time it completed a similar wave pattern. This NDX 60-min chart shows today's bounce took it up into the area of previous 4th wave highs, a very typical retracement and resistance level (1386-1433 with a closing price of 1420): Link . Slightly higher is its gap down from last Monday, between 1440 and 1469.

So the pieces are in place for a reversal first thing Tuesday morning. In fact if the market does not immediately reverse back down, or only pulls back slightly and then runs higher again then we'll know something more bullish is going on and it will be time to stop shorting the market until pattern becomes clearer again.

Jane Fox : 10/13/2008 4:35:55 PM

I see I posted my 936 points will it break 1000 at 4:12. I guess I am just to used to watching the futures 'til 4:15.

Tab Gilles : 10/13/2008 4:31:54 PM

$NATGAS $6.71

PennWest Energy Trust (PWE) $17.59 +2.82 (19.1%) Yield 22.4%

PenGrowth Energy Trust $10.64 +$2.31 (27.7%) Yield 24.51%

Jeff Bailey : 10/13/2008 4:29:22 PM

dj- Brazil Stocks: Biggest daily percentage gain since 1999!

Jeff Bailey : 10/13/2008 4:26:28 PM

dj- S&P cuts ratings on another $5.92B in 2005 subprime RMBS

Tab Gilles : 10/13/2008 4:19:39 PM

Since Thursday's intraday lows:

INDU +19.1%; SPX +19.4%; NYSE +20%; COMPQ +19.6%; NDX +19.57%; RUT +22%

Jane Fox : 10/13/2008 4:12:02 PM

DOW up 936 points will we break 1000 today?

Jane Fox : 10/13/2008 4:11:13 PM

VIX is supporting each and every move the S&P futures are making. This is quite bullish. Link

Keene Little : 10/13/2008 4:06:50 PM

The rally from Friday's low is so far a 7-wave move which counts so far as a double zigzag correction (two a-b-c's separated by a small pullback so it counts as a-b-c-x-a-b-c). What all that means is that it counts complete for a 4th wave correction (albeit a very sharp correction) and we could see the market start back down first thing tomorrow morning. The 2nd a-b-c has the c-wave hitting 162% of the a-wave at 1003.97 and I'm showing a high of 1006.30 (although my charts show a high of 1001.70. Anyway, caution is advised for tomorrow morning if you're holding long.

Jeff Bailey : 10/13/2008 4:05:00 PM

YM +1,030 at 9,400

Jeff Bailey : 10/13/2008 4:04:34 PM

YM 9,376 ... gets the trade at DAILY R2.

Jeff Bailey : 10/13/2008 4:02:22 PM

YM +940 at 9,310

Keene Little : 10/13/2008 4:02:20 PM

I didn't think I'd see a rally today back up to the broken uptrend line from 1990, at 1000 here. Very impressive. Link

Jeff Bailey : 10/13/2008 4:02:01 PM

Sniffing +1,000

Jeff Bailey : 10/13/2008 3:58:55 PM

YM 9,279 alert! ... GREEN #6.

Keene Little : 10/13/2008 3:56:16 PM

Bulls like a nice strong rally but today is clearly too much too fast. I foresee a hangover tomorrow.

Jane Fox : 10/13/2008 3:55:52 PM

S&P up 91 Geesh!!!

Jeff Bailey : 10/13/2008 3:55:38 PM

dj- Yen sinks vs. dollar, euro as US stocks gain

Jane Fox : 10/13/2008 3:54:07 PM

Holy Cow the DOW up 802!!!!!!!

Jeff Bailey : 10/13/2008 3:50:07 PM

My comment at 03:44:39 pertains to YM DAY trading.

Keene Little : 10/13/2008 3:49:48 PM

Pretty impressive rally and volume looks strong. How much of it is short covering vs. real buying can only be guessed. The answer will come tomorrow when we see whether or not there will be any follow through, especially if the market closes at or near the highs for the day. The wave pattern for today's rally is not clear at the moment and it might be because of some influence/interference in the market. So I'll need to see more price action tomorrow to help determine what exactly this rally leg is. For now I'd suggest both sides be a little more cautious than usual.

Jeff Bailey : 10/13/2008 3:45:02 PM

Majors should go out near their highs from your 03:15 benchmark.

Jeff Bailey : 10/13/2008 3:44:39 PM

GREEN #6 ahead at 9,279 and WKLY 38.2% at 9,326 would be about all a YM bull would be looking for after this morning's gap higher.

Jeff Bailey : 10/13/2008 3:43:32 PM

YM 9,183 ... gets a trade at GREEN #5.

Tab Gilles : 10/13/2008 3:36:44 PM

GLD 82.36 -$0.86 (1.03%)

SLV $10.65 +$0.84 (8.57%)

Yamana Gold (AUY) $5.85 +$0.31 (5.6%)

Jeff Bailey : 10/13/2008 3:36:16 PM

Nice little trade to start the week.

Jeff Bailey : 10/13/2008 3:35:25 PM

YM long stopped alert! 9,145

Tab Gilles : 10/13/2008 3:34:44 PM

$VIX 57.62 -12.33 (17.635)

$VXO 63.13 -22.86 (26.58%)

$VXD 56.26 -3.01 (5.08%)

$VXN 63.62 -7.96 (11.12%)

$RVX 68.89 -1.80 (2.55%)

Jeff Bailey : 10/13/2008 3:31:23 PM

YM long raise stop alert! to 9,145

YM 9,172

Jeff Bailey : 10/13/2008 3:27:44 PM

Green #5 just ahead at 9,183

Jeff Bailey : 10/13/2008 3:27:15 PM

YM long raise stop alert! ... to 9,120.

YM 9,145.

Keene Little : 10/13/2008 3:17:40 PM

SPX is now up into the resistance zone marked by last Wednesday's and Thursday's consolidation (964-986). The volatility continues. Back on September 18th and 19th we saw SPX rally 132 points low to high following one of the previous promises of a Fed/Treasury save (this one in anticipation of passage of the bailout bill by Congress). That was a huge rally back then.

Ho hum, now with the low to high from Friday to today we've got, hmm, another 133-point rally so far. The September 19th rally was followed by the big down day following the passage of the bailout bill. Who knows what news event will trigger the next round of selling. But it will come. This is another one of many bear market rallies built upon the slippery slope of hope (for a Fed/Treasury rescue).

Jeff Bailey : 10/13/2008 3:11:27 PM

YM long raise stop alert! to 9,081. Just under your "5-mrt" green #4.

YM 9,129

Jeff Bailey : 10/13/2008 3:08:27 PM

YM long raise stop alert! ... to even.

YM 9,089

Jeff Bailey : 10/13/2008 3:02:36 PM

YM long trigger alert! ... 9,061 (from MM 02:51:24)

Jeff Bailey : 10/13/2008 2:59:13 PM

dj- ECB's Bini Smaghi: Markets have understood scope of rescue plans

Keene Little : 10/13/2008 2:51:44 PM

Sharp spike back certainly makes it look like we've got new highs coming. Somebody (wonder who) just jammed it higher, trying to save the day from another bout of selling that reverses the day's gains. We'll have to see how the day ends since this kind of price action at the end of the day has almost always led to a gap down the following morning (as though someone knows some bad information is about to come out).

Jeff Bailey : 10/13/2008 2:51:24 PM

YM long setup alert! .... with YM 9,025.

GO LONG a YM trade at 9,061. Stop will go 9,019 to begin. Target 9,275

Keene Little : 10/13/2008 2:46:31 PM

The decline from today's high looks impulsive and should lead to at least another leg down of equal size. Therefore short against today's high is a recommendation. After another leg down (assuming we'll get it) will then be the time to protect profits while waiting to see what kind of bounce develops from there (a sideways consolidation would be bearish whereas a sharp thrust back up would be bullish).

Tab Gilles : 10/13/2008 2:44:02 PM

Julian Robertson, in an interview with Erin Burnett on CNBC has purchased recently Apple, Microsoft, Baidu, Mastercard, RyanAir and Visa and is short Copper.

Jeff Bailey : 10/13/2008 2:43:14 PM

dj- Moody's lowers Trump ratings, cites dreadful September in Atlantic City

Jane Fox : 10/13/2008 2:33:16 PM

Morgan Stanley of course is gaining due to the 21% stack Mitsubishi now owns in the company.

Jane Fox : 10/13/2008 2:29:25 PM

Morgan Stanley shares rise 71%, to $16.59

Jane Fox : 10/13/2008 2:26:08 PM

haha I am seeing a story that says "Oil Futures rally $70 a barrel as crude regains losses." Geesh that would put it back to $140 a barrel wouldn't it?

Jeff Bailey : 10/13/2008 2:22:47 PM

MM Time Calibration ... 02:20:00 PM EDT

Jane Fox : 10/13/2008 2:21:52 PM

SAN FRANCISCO (MarketWatch) -- General Motors and Chrysler LLC reportedly have been in early talks about a merger as two of the largest U.S. automakers look for new ways to cut costs as sales slump.

A sign of the times.

Jeff Bailey : 10/13/2008 2:10:45 PM

02:00 Internals found at this Link

Tab Gilles : 10/13/2008 2:08:30 PM

DJIA 1987: Link DJIA Currently: Link

Keene Little : 10/13/2008 2:03:50 PM

Any overlap now of today's mid-day low would indicate we've probably seen the high for the day. I'll be watching the pattern of the pullback to help get a sense as to whether it will more likely be just a pullback correction or the start of the next leg down. I'm leaning towards the next leg down scenario but I'll let price action tell me which is the higher probability.

Jeff Bailey : 10/13/2008 2:01:11 PM

dj- US Banking Group wants SEC to override FASB on Mark-to-market

Jeff Bailey : 10/13/2008 2:00:36 PM

dj- US Banking Group assails new FASB Mark-to-market

Jeff Bailey : 10/13/2008 1:54:45 PM

RVX.X 70.74 +0.07% ...

RUT.X 551.98 +5.64% ...

Jeff Bailey : 10/13/2008 1:46:48 PM

Oct. 07, 2008 Consumer Credit ... Federal Reserve Link

Jeff Bailey : 10/13/2008 1:39:53 PM

dj- Moody's Cuts Alcoa's Outlook to Negative But Affirms Ratings

Jeff Bailey : 10/13/2008 1:29:29 PM

dj- Iraq Oil Min:
Aims to license 6 oil, 2 gas fields by Jun'09
35% corporate tax rate to be levied on projects
Signature bonuses on licensed fields to start at $10M
Will retain majority stakes in first licensed oil fields.

Keene Little : 10/13/2008 1:22:32 PM

Tab, I completely agree with you on the IRA withdrawal proposal. Unfortunately Americans have shown themselves to be too interested in spending and not in saving. I think too many people would be tempted to take money out of their accounts for non-emergency needs (define "emergency"). The loss of earnings alone on $10K, plus the $10K, could really hurt people come retirement. We really can be our own worst enemy sometimes.

Jane Fox : 10/13/2008 1:10:40 PM

VIX down to 60 from a high last week of 76.94. Link

Jane Fox : 10/13/2008 1:09:38 PM

AD line has hit a high of 2843 so far today.

Jane Fox : 10/13/2008 1:03:18 PM

Tab I agree that some may take out 10K tax free and use it to buy a car, do home renovations, etc but there are many others like myself who would take advantage of it and put the 10K into a Roth and let it grow tax free. It would be windfall for my husband and me.

Jeff Bailey : 10/13/2008 12:52:50 PM

Goldman looks to be coming into agreement with Donald Trump's $54 call.

Jeff Bailey : 10/13/2008 12:52:14 PM

Oil above $81, Goldman cuts price forecasts ... Reuters Story Link

Jane Fox : 10/13/2008 12:48:59 PM

I guess we will never know.

Jane Fox : 10/13/2008 12:48:09 PM

I wonder where we would be if Lehman was given the same bailout that was given to Bear Sterns.

Keene Little : 10/13/2008 12:44:50 PM

For a longer-term perspective on where the EW pattern is pointing to, the SPX weekly chart now shows the bear market leg down from October 2007 ending later in 2009. From there we'd be due another cyclical bull market into 2010 (12-18 months) before starting the next bear market leg down again. I'm using this to help guide others in their decision making about what to do with their retirement accounts. Link

Jeff Bailey : 10/13/2008 12:40:38 PM

Lehman failure caused $300 billion damage: regulator ... Reuters Story Link

Jeff Bailey : 10/13/2008 12:39:08 PM

October Crude's WKLY Pivot at $82.52 (marks today's high). Don't forget! Next Tuesday 10/21/08 is termination.

Jane Fox : 10/13/2008 12:34:30 PM

Obama calls for 90-day foreclosure moratorium, calls for new jobs tax credit and penalty-free IRA, 401(k) withdrawls.

Jane Fox : 10/13/2008 12:33:08 PM

I just saw an article that said Crude is bouncing back. HMMM it is up about 3.41 but I certainly would not call this "bouncing back." Link

Keene Little : 10/13/2008 12:30:50 PM

You can draw trend lines along the highs and lows of today's rally and it makes an ascending wedge pattern. It now has the requisite 5 waves inside the wedge and by that measure the rally should be completing (maybe with a little throw-over above the top of the wedge to about SPX 962-964). But if it keeps going then what was support at 970 on Wednesday and Thursday could turn into resistance.

Jane Fox : 10/13/2008 12:30:24 PM

It's been a while since we have seen the internals quite this bullish. But take a look at the TRIN, 1.46 should be telling you the bears are out in fine form but that certainly does not seem to be the case. Link

Jeff Bailey : 10/13/2008 12:28:35 PM

Jane! ... I heard that too on the King Of Agriculture (KOA) here in Denver. Would be beneficial perhaps for my mom and dad that have to start taking withdrawal in next 6-months. At this point, I'm guiding them to LIQUIDATE treasury holdings if need be. See if corporate bond and equity holdings don't get bounce back.

Jane Fox : 10/13/2008 12:24:53 PM

I heard on the weekend that McCain is proposing a suspension of the regulation that seniors need to get out of their IRAs at 70 years old. This and the proposal Obama is suggesting are the things you look for in leaders.

Jeff Bailey : 10/13/2008 12:25:30 PM

If YOU, or a FAMILY MEMBER, or a FRIEND has cashed out some of their retirement holdings in that last week, perhaps looking to take a LOAN, or WITHDRAW capital from RETIREMENT accounts at TAXABLE rate, LET THEM KNOW about this proposal.

Keene Little : 10/13/2008 12:24:03 PM

I think many of you have seen the following quote, which certainly seems to be ringing true (again):

"I believe that banking institutions are more dangerous than standing armies... if the American people ever allow private banks to control the issue of currency... the banks and corporations that grow up around them will deprive the people of their property until their children wake up homeless on the continent their fathers conquered."
--Thomas Jefferson

Jane Fox : 10/13/2008 12:22:28 PM

Dow hits 9000, 9002, oh gee 9004

Jeff Bailey : 10/13/2008 12:18:54 PM

Alert! dj- Obama to propose Tax-Free $10,000 withdrawals from IRA, 401Ks

Keene Little : 10/13/2008 12:18:03 PM

With the market continuing to push higher the next potential resistance area for SPX surrounds the consolidation range on Thursday, near 975 but running from about 964 to 986.

Jeff Bailey : 10/13/2008 12:12:53 PM

12:00 Internals found at this Link

Linda Piazza : 10/13/2008 12:05:14 PM

A subscriber wrote to point out that I'd inadvertently typed "550" in my 10:37 post rather than 450, so I'm signing on to confirm that I of course did mean 450. For those of you with underwater bull put spreads, I wish we had been talking about OEX 550 because that would have meant your SPX spreads were in better shape, but unfortunately, my fingers just still want to put a "5" in front of anything to do with the OEX rather than "4."

Since I've signed back on, I'll note that the OEX has obviously broken above that resistance at 450. It's not really moving much above it, though, but rather trading along that resistance line, now moved up to about 450.70. The OEX still looks vulnerable to a pullback, this time to about 448 or maybe even 442, but so far, vulnerability to pullbacks has not been realized.

Signing off again.

Jeff Bailey : 10/13/2008 12:01:56 PM

dj- GM CEO:
Can't say when pressure on liquidity will end
Feel awful about stock price going down
Focused on running business as best we can
Trying to be surgical, smart in making cost cuts
Made comments in recorded message to employees Friday
In most scenarios, asset sales can move along
Haven't been able to do as much fundraising as wanted
Ready to raise funds "when the markets move"
Not much we can do near-term about stock price

Keene Little : 10/13/2008 11:59:13 AM

I made a couple of corrections on the SPX daily chart (moved the wave-(iii) and (iv) labels to their correct locations and moved the key level symbol down to 1020). Link

Jeff Bailey : 10/13/2008 11:46:30 AM

That gives traders/investors an "inside look" at how damaged credit markets are/were.

Keene Little : 10/13/2008 11:48:23 AM

Depending on where we are in the EW count as it finishes unwinding its count to the downside will determine how high we can expect the current bounce to get. If for the moment I believe that the current rally is about finished, we should start back down again. One possibility is for a pullback to be followed by another leg up for a larger bounce but that's just a guess for now and is shown in pink on the 120-min chart: Link

A rally above SPX 1020 would say we've got something more bullish going on otherwise, as large as this bounce is, it should be nothing more than just a correction to the decline. The dark red wave count calls for the stair-stepping lower to continue into November. I'm not showing the pink wave count on the daily chart since it gets too crowded. The pattern calls for a low for the year by the end of November (but not a final low yet for the leg down from October 2007). Link

Jeff Bailey : 10/13/2008 11:45:42 AM

PHF's recent NAV Link

Jeff Bailey : 10/13/2008 11:44:00 AM

PHF Announces Monthly Distribution ... Press Release Link

Jeff Bailey : 10/13/2008 11:33:53 AM

Obama has four-point lead on McCain ... Reuters Story Link

Jeff Bailey : 10/13/2008 11:28:18 AM

RVX.X 74.65 +5.60% ...

RUT.X 543.48 +4.01% ...

More call sellers/put buyers than call buyers/put selllers in this market.

Keene Little : 10/13/2008 11:21:06 AM

Tab, interesting data in that chart. All those wild swings are during bear markets. Shows the effect of much higher volatility during the selloffs.

Jeff Bailey : 10/13/2008 11:19:23 AM

Major US Equity Bullish % (Table) that I track at this Link

Jeff Bailey : 10/13/2008 11:07:51 AM

DIA and DDM are equivalent within their WKLY Pivots. Both pressed against their WKLY Pivot as I type. Not sure why Daily% change is the same though.

Tab Gilles : 10/13/2008 11:25:42 AM

US Treasury News: Link Link

We in the United States are also moving forward on actions under the G-7 Action Plan announced Friday to improve availability of funding for our banks.

One area where we will continue our strong work with the international community is to build a new regulatory framework for the future to limit the chances that yesterday's mistakes will be repeated tomorrow. The President's Working Group on Financial Markets has taken important steps to improve market transparency and disclosure, risk awareness and management, capital and regulatory policies, practices regarding the use of credit ratings and market infrastructure for over-the-counter derivatives products. Our work has been undertaken in conjunction with the Financial Stability Forum and the IMF from day one.

The path ahead of us remains arduous. The current difficulties will not end tomorrow and even as confidence is restored, recovery will be slow. But as a student of financial history, I have little doubt that the vigorous actions we are taking and our partnership - so readily symbolized by this gathering -- will overcome the challenges we face and we will in time emerge stronger.

Tab Gilles : 10/13/2008 11:04:45 AM

Interesting DJIA historical data: Link

Linda Piazza : 10/13/2008 11:04:25 AM

Since Keene appears to be up and running again and Jeff is on board, too, to help Jane, I'm going to sign off now. Remember to keep an eye on the A/D line and ensure that the pullbacks are small if you're in bullish trades. Remember also that you don't want to see the VIX sustaining values back above about 66.60 again.

Linda Piazza : 10/13/2008 11:02:19 AM

The OEX is beginning to look to me as if it's ready for a pullback toward 444.60 if not 441, but then nobody has asked me my opinions and it's not pulling back. I would assess vulnerability to such a pullback just in case, though. How would that impact your trade?

Keene Little : 10/13/2008 11:00:49 AM

We might be forming a small ascending wedge this morning. One more minor push higher, with bearish divergences on the charts, could signal an end to this morning's rally so be careful if long--cinch up your stops now.

Jeff Bailey : 10/13/2008 10:59:39 AM

DDM ... no dividend distribution Friday/today. Link

Jeff Bailey : 10/13/2008 10:55:29 AM

THAT makes "no sense" at all. DDM is a 200% product.

Jeff Bailey : 10/13/2008 10:54:30 AM

DDM $35.69 +5.06% ...

DIA $89.04 +6.31% ...

Linda Piazza : 10/13/2008 10:54:22 AM

Potential support for the A/D line on 30-minute closes is now at about 2220. Bulls just don't want to see the A/D line spend too much time below that, especially below about 1900, as that would suggest a deeper pullback toward 1400 or maybe even 1250. The A/D line is now 2612.

Jeff Bailey : 10/13/2008 10:52:36 AM

09/29/08 World Bullish % Link

Friday's Link

10/01/08 Market Wrap Link

Jeff Bailey : 10/13/2008 10:42:54 AM

Jane reminds me ... I will also look to put an EMERGING MARKET given the right price and premium. EEM-VA was closed out on 10/06/08.

Jeff Bailey : 10/13/2008 10:38:17 AM

Governments bail out banks, UK wants new Bretton Woods ... Reuters Story Link

Linda Piazza : 10/13/2008 10:37:39 AM

Potential resistance on 30-minute closes for the OEX has been pushed up to 550, and the OEX is challenging that now. The SPX is above analogous potential resistance on 30-minute closes, now at about 948.00, but of course there are many minutes left in this 30-minute period. I continue to worry a bit about the extreme levels of the A/D line as measured on both the 15- and 30-minute charts, but so far, it's holding up. If you can chart the A/D line, though, on intraday charts, you might take a look at its behavior on 10/3, when it broke out, moved sideways up into the 1:15 pm candle, and then just broke down. That's the kind of behavior that can happen, but this is a new day and a new week and it doesn't have to happen today. Just keep on the lookout for it.

Keene Little : 10/13/2008 10:36:51 AM

A minor new high for the market could be the completion of the 5-wave move up from Friday's low and that would set up at least a pullback to correct the rally or more bearishly it would complete the bounce off Friday morning's low and start the market back down to new lows. Otherwise a continuation of the rally would be bullish and we can expect higher resistance levels to get tagged. Therefore this new high is important--any failure to hold it, followed by a drop back down to a new daily low, would be bearish.

Jane Fox : 10/13/2008 10:36:19 AM

Start slowing our export market down and you will see how the credit crisis starts to affect you, me, everyone.

Jeff Bailey : 10/13/2008 10:36:06 AM

Jane ... to lend to consumer/business.

Jane Fox : 10/13/2008 10:35:10 AM

If banks do not want to lend to each other then why would they take a line of credit?

Jeff Bailey : 10/13/2008 10:35:03 AM

I will be looking to WRITE/SELL an out-the-money covered call on the NCC (very small 100-share position for $10K accounts). (200 for $20K account?) (300 for $30K account?) (1,000 for $100K account?)

Jeff Bailey : 10/13/2008 10:32:09 AM

I will be looking to put SPG again given the RIGHT price and premium

Jane Fox : 10/13/2008 10:37:55 AM

More and more export buyers are seeing deals fall through because the sellers do not trust the financial institutions named in the buyer's LOC. There are all kinds of products being stacked up on docks right now that can't be shipped because LOCs are been denied.

Jeff Bailey : 10/13/2008 10:31:40 AM

I will be looking to put HUM again given the RIGHT price and premium.

Jeff Bailey : 10/13/2008 10:29:02 AM

Most Actives ... IWM $54.48 +3.92%, EEM $26.52 +8.02%, EFA $45.66 +7.79%, QID $75.26 -7.99%, SPY $94.00 +6.16%, EWJ $8.72 +7.78%, EWJ $8.72 +7.78%, GLD $81.58 -1.97%, EWZ $38.34 +11.32%, SSO $31.78 +9.55% ... a real mix this morning. The likes I don't recall having ever seen before.

Jane Fox : 10/13/2008 10:26:47 AM

I have talked before about the Commercial paper and how it is the fuel of economy, the life blood of the business world well another market that I didn?t know about until I read Maudlin's last email is letters of credit (LOC). LOC's are the life blood of the world's global trade

Here is how they work. If you manufacture a product and want to sell it outside your country's borders, you will require a LOC from the buyer before you load your product onto a ship, plane, train, truck. An LOC is proof the buyer can pay for your product and can be used to borrow against to buy more supplies to continue your manufacturing business while the product is in transit. If you are the buyer you will not release any funds until you know the product is at least in transit.

There is evidence that this market is now freezing up just like the commercial paper market.

Jeff Bailey : 10/13/2008 10:24:18 AM

10:00 Internals found at this Link

Note(s): Not getting NYSE NH/NL feed. Bond market closed in observance of Columbus Day.

Linda Piazza : 10/13/2008 10:22:55 AM

What if the OEX and SPX do pull back? What are some possible targets or next support areas. On the 30-minute chart, the OEX has potential support, but light support, near 440.40. Next potential support on 15-minute closes for the OEX is near 434-434.50. For the SPX, there's light potential support on 30-minute closes now near 924.50, with stronger-looking potential support on 15-minute closes from 912.50-916.37.

Linda Piazza : 10/13/2008 10:19:59 AM

So far, the A/D line is moving absolutely sideways at the top of its climb, which is what bulls want to see. Keep it on your radar screen, however. A drop below about 2000-2100 could result in a sharper drop down toward 1100-1200. The A/D line is 2590 as I type.

Linda Piazza : 10/13/2008 10:16:02 AM

It's a little concerning to see the VIX bouncing from potential support on 30-minute closes now at about 66.90. If it continues bouncing, bulls would like to see it find resistance on 30-minute closes at 69.86 or, if not there, at 70.94.

The VXO's action is much different, though, so different that I'm not sure my charting service is correct or that my feed is. While the VIX is still maintaining breakout status on the 30-minute chart, the VXO appears to have dropped well beneath breakout status, which would be at about 86. My charts are giving a 72.70 level currently for the VXO.

Jane Fox : 10/13/2008 10:13:32 AM

As I have stated before I think we were sitting on a tinder box and the match was Lehman and if Bear had been allowed to fail it would have been Bear but that again is a discussion for another time. But so far it looks like the Lehman CDS (credit default swaps) market has sorted itself out with no further failures and we have dodged a bullet here but I think (as does Maudlin) it could have been avoided if we had regulated the CDS market like they tried back in 1998.

Jane Fox : 10/13/2008 10:06:04 AM

As you may know I read John Maudlin's weekly email. Maudlin is very knowledgeable but what I like the best about his weekly emails is that they are not doom and gloom and not pie in the sky optimism. The emails keep a neutral stance on situations, at least from my point of view. He believed we would head into a recession this year but thought it would be mild and we would muddle through it and was totally caught unaware, like most of us were, by just how severe the problems were.

In his last email he described a potential situation that scared me to the core but before we get to that he made a statement that I very much agree with. He stated that Depressions are caused by government making the wrong policy decisions (I would like to add when I say government I am referring to both Republican and Democrat) and one of the main reasons we are in this mess is because the government dropped the ball on regulating the mortgage industry. Then they allowed five large investment banks in 2004 to leverage 30 to 40 times. (I would like to add that this so smacks of lobbyist campaign and doing what was best for the investment banks but not the American people but down Jane another time). And of course they did not have a watchful eye on the rating agencies.

Linda Piazza : 10/13/2008 10:04:43 AM

The A/D line maintains its breakout through this second 30-minute period. OEX and SPX bulls want to see it work off its extreme RSI levels by moving sideways while RSI descends. In the meantime, remain aware of stronger pullback potential if the A/D line should pull back below about 2100. It's at 2641 as I type, with the OEX still challenging potential resistance on 30-minute closes that extends up to 449.79 currently. The analogous level for the SPX is 946.22.

Keene Little : 10/13/2008 9:55:51 AM

NDX jumped marginally above the top of the narrower down-channel I showed on its 60-min chart last night and then dropped right back down inside the channel. We could get another test of this morning's high and if we do it will be important to see what it does from there. The gap n crap scenario is still a real possibility this morning.

Linda Piazza : 10/13/2008 9:53:28 AM

Potentially strong resistance for the OEX up to 450.09 on 30-minutes closes; for the SPX, analogous resistance is at 946.74.

Linda Piazza : 10/13/2008 9:51:14 AM

I'll try to stick around while Keene is having trouble with his data, but my schedule will force me to be away for a while at periods during the day. I've been trying to schedule time away from the MM for a while, but the markets just haven't cooperated as I didn't want to leave subscribers with fewer writers while the markets were acting as they did. My sense of duty calls me back each time.

Jane Fox : 10/13/2008 9:50:56 AM

We all keeping waiting to hear about the next bank that is about to fail and how or who will be bailing it out. Looks like it is the regional bank, Sovereign Bancorp. It will be bought out by Spain's Banco Santander but the WSJ is saying no deal has been reached as yet though.

Linda Piazza : 10/13/2008 9:48:43 AM

As Jane said, so far, so good with the A/D line. It's in an extreme breakout mode, on the 30-minute rather than the 15-minute chart, with extreme RSI levels to match, so you do need to be aware that upward momentum is strong. Unfortunately that does not guarantee that a pop-and-drop day can't occur. Right now, you want to see any A/D line pullbacks be of the sideways variety while support can zoom up underneath to join the potential support now at about 2200 on 30-minute closes. Bulls would like to see the A/D line either find support there or else string candles along that potential support, a little over and a little under, rather than pull back all the way to next support, now at about 1050. The A/D line is 2530 as I type.

Keene Little : 10/13/2008 9:46:38 AM

QCharts seems to be punishing those who are sticking with version 5.1 for now. I can't seem to get a server to get me data this morning--it's either incredibly slow or sits there and won't connect.

Jane Fox : 10/13/2008 9:45:16 AM

The VIX just took a huge jump downwards from 71 to its current level at 64.76.

Jeff Bailey : 10/13/2008 9:44:31 AM

Trade Blotter of CLOSED and currently OPEN trades that I (Jeff Bailey) have profiled here in the MM Link

Jane Fox : 10/13/2008 9:38:35 AM

TRIN is 0.54 but the TRIN has not been too helpful of late because of the infusion of money we have seen over the last few weeks.

Jeff Bailey : 10/13/2008 9:38:27 AM

Weekly, Monthly, Quarterly Index Pivot Matrix Link

Jane Fox : 10/13/2008 9:36:55 AM

The AD line opens at a bullish 1828 so far so good for the bulls today.

Linda Piazza : 10/13/2008 9:36:24 AM

I'm staying on for a few minutes. The OEX has popped right up to the potential resistance zone on the 15-minute chart, with that beginning at about 446 on 30-minute closes and currently extending up to 450.13. The A/D line has jumped up to +1813, above potential resistance on the 15-minute chart and headed up to that on the 30-minute one, at about 2100. What bulls want to see now is for the A/D line to either climb or move sideways, or, if it does pull back, to find support on 15-minute closes at about 975-1000.

Linda Piazza : 10/13/2008 9:28:17 AM

I will be taking a day off today, but I did want to post initial impressions. The first important task for the OEX today will be maintaining 30-minute closes above potentially strong resistance first at about 445-446 and then at about 450-452. (The numbers will change slightly as the OEX bounces in the first few minutes, so I've put up a possible range rather than a specific number.) Remember to watch out for the possibility that the OEX could hit that resistance, maybe even piercing it, and then fall back by the end of the first 30-minute period.

As I mentioned Friday, the OEX's steep and quick drop scrambled the intraday charts, so that possible resistance zones are thickly layered. If the OEX can make it past that first resistance zone another looms from 457-461.

Let's link this a bit to the A/D line. If the A/D line were to pop up first thing this morning about about +920, it will be showing strong upward momentum because it's showing a breakout first thing above strongest Keltner resistance. That kind of early breakout is typical of two kinds of days, unfortunately: pop-and-drop days and days when the momentum is so strong that the OEX zooms all day with maybe a breather about midday. So, if you're in bullish trades and the OEX pops up to 446-450 at the same time that the A/D line pops up right away to above +920, you want to be on guard against the kind of immediate A/D pullbacks (within the first hour) that take the A/D line well below 900 again. Such pullbacks could result in the A/D line dropping all the way back toward -900. Don't assume a pop-and-drop day if the A/D line pops above +920 because there's still the possibility of the strong momentum day, but just be on guard against it.

Keene Little : 10/13/2008 9:22:10 AM

The top of the parallel down-channel for SPX, shown on its 60-min chart for the past week, is near 941 this morning. ES made it up to 948.50 (+57.50) in overnight trading and is currently 941. The test is on this morning.

Jane Fox : 10/13/2008 9:21:42 AM

The US Treasury is going to buy shares in the more solvent financial institutions along with the ones in distress but will be voluntary. The $700 billion Economic Stabilization package will now include purchases of MBS, whole residential mortgages, equity in healthy banks and equity in less healthy banks.

Jane Fox : 10/13/2008 9:16:24 AM

The Russell 2000 and NDX futures are trading higher than Friday's high but the DOW (YM) and S&P (ES) futures are not. Not the kind of reaction one would have thought with the news out of the G7 conference. Link

Jane Fox : 10/13/2008 9:13:11 AM

Well it looks like the IMF and its participants have agreed to a plan to take an equity stake in banks in financial distress and back any loans made in order to unfreeze the financial systems. Many are saying our government wasted 3 weeks with the original plan that has now been changed. Those are the same people that didn?t want any bailout plan at all and now they are complaining because the new bailout plan was not implemented 3 weeks ago. I am so glad I am not Paulson and company.

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