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Jeff Bailey : 10/16/2008 2:08:38 AM

Thursday's Global Econ. Calendar at this Link

Jeff Bailey : 10/16/2008 2:07:31 AM

I will be in and out (mostly out) of the MM on Thursday.

Jeff Bailey : 10/16/2008 2:06:54 AM

Trade Blotter of CLOSED and currently OPEN MM trade profiles that I (Jeff Bailey) have made at this Link

Keene Little : 10/15/2008 11:53:47 PM

I'm finally getting around to trying a different (beta) version of QCharts 6.0 (it's 6.0.3.1366, build date of 9/27/08) after complaining bitterly about the new version's inability to accept my 5.1 workspace. I've also noticed a very obvious slowdown in data feed on 5.1 and now spotty price updates on the indices. It's clear eSignal is trying to force people off 5.1.

For any of you still struggling with this I'm now using a beta version that has accepted my 5.1 workspace with all of my notes, lines, Fibs, etc. I had to clean up the charts and get rid of some things that don't work with 6.0, and even had to change my MACD settings on all my charts to use closing price instead of Avg HLC, but these are minor issues. So far so good.

If you want to try the beta version, here's what they sent to me:
Hey Keene,
Can you try and install 6.0.3 into a different directory for me?

Go here: Link and download the installer. Doubleclick it once it's downloaded and during the install process, when the "Destination Folder" comes up, add 1366 to the path, so it reads - c:\Program Files\QCharts1366\ - that will put this version into a different folder. Also, in the Program Group option that comes up, do the same thing, add 1366 to it - all of this is to keep this install separate.

Once you get it installed - go open your workspace and let me know how it goes. Thanks, Bill B eSignal Support (Contractor)

Be sure to copy your 5.1 workspace into the new 6.0 workspace directory and copy your 5.1 User directory on top of the 6.0 User directory.

Keene Little : 10/15/2008 11:15:37 PM

Thursday's pivot table: Link

We're getting down to the point where the EW pattern is setting up a few alternate possibilities. The sharp move down over the past few weeks (which has been filled with a lot of impulsive moves and therefore easier to call) will be followed by stair-stepping lower that includes larger and choppier bounces (full of whipsaw price action) lasting from days in the beginning to weeks towards the end. It will become a more difficult trading environment so bears now need to be careful (and bulls need to continue being careful). Neither side will win easily from here.

Starting with the NDX daily chart I'm showing what I consider the two most likely scenarios. Both call for a new low on Thursday but I'm not sure if it will be just a quick spike down at the open and then reverse back up or instead be more of a decline into mid day before reversing. But once the market starts back up we should at least see a correction of the leg down from Tuesday before heading back down again, shown in dark red: Link

The dark red scenario calls for the bounce and then a decline into the end of the month with a low near the 1998 and March 2003 lows. But there is the possibility that the leg down from Tuesday will finish the leg down from June which would then set up a much larger bounce, shown in pink. So this is one reason I'm watching for an end to the current decline as an opportunity to test the long side.

Zooming in with the 15-min chart I'm showing a parallel down-channel for the decline from Tuesday: Link . Based on the EW count, Fib projections and trend lines I see potential support first near 1250 (the quick and minor new low in the morning) and if that breaks then down to 1215. I'll be watching for evidence of the kind of bounce we get (assuming of course it will start a bounce) for a better idea how big it could become. This is where I start taking it one leg at a time instead of holding onto a position trade as I've been doing (on the short side). As I said, both sides need to be careful right here as the whipsaw potential should increase.

OI Technical Staff : 10/15/2008 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 : 10/15/2008 5:34:11 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 10/15/2008 5:33:39 PM

Closing Internals found at this Link

Jeff Bailey : 10/15/2008 5:13:51 PM

dj- Dynegy CEO: Hedge fund redemptions driving stock's decline

Jeff Bailey : 10/15/2008 5:12:34 PM

dj- S&P places Hungary, Ukraine ratings on watch for downgrade

Keene Little : 10/15/2008 4:15:23 PM

One other possibility for the wave count is that we're only completing a 3rd wave for the move down from yesterday. That would set up a choppy bounce tomorrow morning to be followed by another drop lower. It will become obvious if we're into a slightly larger 4th wave so I'm not particularly concerned which it will be at this time. I still like the setup for a bounce off gap closure near SPX 905.

Keene Little : 10/15/2008 4:08:12 PM

Be sure to take some profits off the table here. Don't try to squeeze every penny out of the trade--pigs get slaughtered.

Jane Fox : 10/15/2008 4:06:31 PM

The DOW is now down 735 points. S&P down 90. NDX 120

Keene Little : 10/15/2008 4:01:37 PM

Looks like we're going to hit SPX 905 before the bell. Amazing. These 600, 700 and 800-point swings in the DOW are becoming regular daily moves.

Keene Little : 10/15/2008 3:48:33 PM

The risk in holding a short position overnight is that the 5th wave down that I'm expecting could truncate and finish right here. SPX is sitting on top of its Monday gap and if it holds here into the close it could set up an immediate rally tomorrow morning, especially if futures start higher. I plan on taking half my money off the table at the close.

Jane Fox : 10/15/2008 3:48:11 PM

When the internals are in sync like this it means the bulls have totally thrown in the towel. Link

Keene Little : 10/15/2008 3:45:40 PM

If you look at the wave count on the SPX 10-min chart I just posted, the move down yesterday set up the 1-2, 1-2 count and that meant a 3rd of a 3rd wave was due. That's why I was calling for a gap down to start today's trading (typical in a 3rd of a 3rd). Now if we get the 5th wave down into tomorrow morning it will be an excellent time to cover your short position from yesterday and play a front-month (October) call for a day trade.

Keene Little : 10/15/2008 3:31:49 PM

The choppy price action here makes me think of a small 4th wave consolidation and it fits within the pattern for the move down from yesterday as shown on the SPX 10-min chart: Link . This calls for one more leg down to complete a 5-wave move and the 904-906 area makes for a good downside target tomorrow morning.

That kind of decline would then call for a bounce back up to correct the decline, so perhaps a rally back up to the 960 area (who knows, maybe 1000 for opex settlement Friday morning). That rally leg would then be followed by more selling on Friday and into Monday.

Keene Little : 10/15/2008 3:19:02 PM

Right now it's looking like these spikes to the upside are nothing more than attempts to kick shorts out of the ring. Or are the jabs to the downside an effort to get rid of the weaker longs?

Keene Little : 10/15/2008 3:15:41 PM

The one thing that continues to make me nervous about the decline from yesterday is its lack of impulsiveness. It continues to point to the possibility that we're going to get another strong rally leg out of this. So don't hang around short if it climbs back above today's mid-day high.

The other possibility is that we're only in the beginning stages of a big sideways triangle consolidation pattern that will play out for the rest of the month (before heading lower again next month). The triangle pattern would be a good setup for the next short play but not until it's near completion. Trading inside a triangle pattern is one of the hardest times to trade.

Keene Little : 10/15/2008 3:10:50 PM

Getting the other leg up for a larger bounce now. Two larger and equal legs up would be at SPX 948.49.

Keene Little : 10/15/2008 3:06:12 PM

If we get another leg up for this bounce off this afternoon's low it will remain a corrective bounce and not the start of something bigger to the upside. I would again look for where the bigger bounce would have two equal legs up but I'll worry about that if it starts to rally again. In the meantime we should get new lows whether directly from here or after another leg up in this bounce.

Keene Little : 10/15/2008 3:03:52 PM

SPX failed at 942.60. I sure do love them Fibs.

Keene Little : 10/15/2008 2:49:38 PM

Watch for two equal legs up in the current bounce which coincides closely with a 50% retracement of the leg down from the mid-day high and close to the mid-day low. Any higher than that could be the siganl that a higher rally is in progress. For example, SPX would have two equal legs up at 942.56 and the 50% retracement is at 942.12. The mid-day low, before it bounced and then broke down, is at 946.19 which is right on top of a 62% retracement. So above 947 would have me a nervous short.

Jeff Bailey : 10/15/2008 2:33:22 PM

I'm stepping out the remainder of the day. I've got some errands to run.

Jeff Bailey : 10/15/2008 2:28:50 PM

If bulls are going to try and make any type of statement and hold gains for the week, then they've got to be able to hold the WKLY Pivot at each close.

Keene Little : 10/15/2008 2:28:04 PM

The wave count for the move down from yesterday's high is a bit of a challenge to nail down. However, my best guess is we've got a leg down that will take SPX down to about 906. Monday's gap would be closed at 904.63 so there's some good correlation there for support (if it gets there). Thinking it will be support we'd be due at least a bounce to correct the decline from Tuesday and I'll be looking to take profits down there (if not stopped out earlier--stop is still just above today's mid-day high).

Jeff Bailey : 10/15/2008 2:27:06 PM

Will want to monitor the majors, especially the SPX on re-test of WKLY Pivot. Especially on a Wednesday.

Jeff Bailey : 10/15/2008 2:19:46 PM

13-week hasn't moved much either. However, the fact that it is at 0.18% ... well, that says something.

Jeff Bailey : 10/15/2008 2:18:24 PM

HMO.X 1,077.04 -7.56% ... @ 02:00 PM EDT benchmark, was trading 1,086

Jeff Bailey : 10/15/2008 2:14:29 PM

02:00 Internals found at this Link

Keene Little : 10/15/2008 2:10:39 PM

The TED spread hasn't moved much in the past two days--hanging out around 4.38.

Jane Fox : 10/15/2008 2:09:44 PM

Internals very very bearish. Link

Jane Fox : 10/15/2008 2:09:20 PM

It doesn't matter what kind of bullish formation or divergence I see, it gets squashed by the sellers.

Jeff Bailey : 10/15/2008 2:02:33 PM

Disclosure needed: I currently hold bearish position in HUM

Jeff Bailey : 10/15/2008 2:00:32 PM

VIX.X 61.94 +12.35% ...

Jeff Bailey : 10/15/2008 2:00:12 PM

Swing trade put alert! ... for one (1) of the Humana HUM Jan. $30 Puts (HUM-MF) $1.80 x $2.20 at the offer of $2.20.

HUM $36.64 -5.46% ...

Keene Little : 10/15/2008 1:52:09 PM

If I draw the same down-channel for SPX that I showed on the NDX chart price is dropping slightly below the bottom of the channel. This could be a bearish signal since dropping below the bottom of a channel will often lead to an acceleration of the selling.

I'm following this down with my stop now just above the mid-day bounce high. I could get whipped out of my short trade by trailing the stop too close but at this point I'd rather take a profit off the table than hang on through a big correction that could turn into something more.

Jeff Bailey : 10/15/2008 1:42:35 PM

BIX.X 169.97 +0.20% ...

Keene Little : 10/15/2008 1:41:03 PM

Right after my post the NDX broke below the descending wedge I have drawn on the chart. It's looking like more than just a throw-under. So the bottom of the channel would be the downside target for now which at 1263 is just below gap close.

Jeff Bailey : 10/15/2008 1:40:03 PM

30-year now red at 4.25%

Jeff Bailey : 10/15/2008 1:37:38 PM

13-week whips back lower at 0.17% ... NOT bullish

Keene Little : 10/15/2008 1:37:22 PM

Watching the NDX 10-min has me wondering if it's in a parallel down-channel or a bullish descending wedge. Regardless, it's into Monday's gap up and doesn't close it until 1269, another 27 points lower: Link . Unless we see a brief throw-under of the descending wedge followed by a rally--that would be a bullish move.

Jeff Bailey : 10/15/2008 1:37:14 PM

YM long stop alert! 8,853

Jeff Bailey : 10/15/2008 1:33:42 PM

YM long ... stop goes 8,853. Target 8,960

Jeff Bailey : 10/15/2008 1:33:00 PM

YM long alert! here at 8,890

Jeff Bailey : 10/15/2008 1:27:49 PM

YM 8,857 ... Red #5

Jeff Bailey : 10/15/2008 1:19:50 PM

QQQQ $32.13 -4.40% ... slips to session low

Jeff Bailey : 10/15/2008 1:16:55 PM

Dr. Bernanke Q&A ends ... YM 8,955

Jeff Bailey : 10/15/2008 1:15:44 PM

HUI.X 244.43 -5.32% ...

Jeff Bailey : 10/15/2008 1:14:57 PM

GLD $83.08 +1.07% ... still following. Has gravitated back to October's "Max Pain" tabulation and consolidating of late at MONTHLY Pivot.

Jeff Bailey : 10/15/2008 1:09:04 PM

Soros down about 50% on Aug'08 PBR purchase isn't he?

Jeff Bailey : 10/15/2008 1:03:01 PM

Fascinating, simply fascinating "fundamental" comparisons between XOM, CVX and PBR -15.71%

Keene Little : 10/15/2008 1:02:44 PM

One thought that keeps occurring to me, as paranoid as I am being on the short side when I know there are some powerful interests who want to see this market rally, is what will happen between here and opex. I keep thinking this market is going to get jammed higher again. But I can't trade on what I think might happen so I'll stick with the charts. For now the downtrend line from Tuesday needs to hold otherwise I'll pull the plug on my short play.

This SPX 60-min chart shows the idea, shown in pink, for a larger a-b-c bounce off Friday's low. It needs another rally leg and the minimum upside projection, using today's low, is to 1071.50: Link . This is close to the other two Fibs of importance in that area--1073 and 1077 and the downtrend line from September 19th.

This is why I will not stubbornly hang onto a short position here. The upside potential is obviously large (+110 S&P points). But by the same token I'll let the bulls prove to me, with at least a break of the downtrend line from Tuesday, that something more bullish has started.

Jeff Bailey : 10/15/2008 1:01:19 PM

KO +4.98%, JPM +1.67% and INTC +0.75%

Jeff Bailey : 10/15/2008 1:00:51 PM

XOM -6.44% and CVX -5.95% ...

Jeff Bailey : 10/15/2008 12:58:11 PM

YM 9,035

Jeff Bailey : 10/15/2008 12:57:22 PM

YM ... day trader's chart, now with "dynamic" (blue) Link

Note the 5-minute bar closes, but those that have been trading the YM, know the 100-point moves in matter of minutes.

Jeff Bailey : 10/15/2008 12:48:21 PM

YM 8,983 ... Dr. Bernanke's speech ends

Jeff Bailey : 10/15/2008 12:44:37 PM

NCC $3.23 +4.19% ... little bugger is holding tough.

Keene Little : 10/15/2008 12:43:46 PM

The pattern of the decline still has me a little concerned about the short side. While it's relatively steep it does not have a clean impulsive look to it. In today's market the number of points gained or lost on any given day is not necessarily indicative of a trend change so we can't go by that. For now I'm sticking with the new down-channel (using the downtrend line from Tuesday morning as the top of the channel) and I'll let that guide my trading. NDX 10-min chart: Link

Jeff Bailey : 10/15/2008 12:41:25 PM

12:00 Internals found at this Link

Jeff Bailey : 10/15/2008 12:37:13 PM

Seem like some shorts from Monday still hanging out and trying to get squared up.

Jeff Bailey : 10/15/2008 12:35:57 PM

YM short stop alert! 8,950

Jeff Bailey : 10/15/2008 12:30:47 PM

YM short lower stop alert! to 8,950

YM 8,938

Jeff Bailey : 10/15/2008 12:27:31 PM

YM 8,912 ... begin "dragging lower" dynamic

Jeff Bailey : 10/15/2008 12:26:39 PM

YM short lower stop alert! ... to even.

YM 8,939

Jane Fox : 10/15/2008 12:20:44 PM

WASHINGTON (MarketWatch) -- The United States will go through a period of tough economic times, but is in a better position to weather the storm now that the government has tools to strengthen the banking system, Federal Reserve Board Chairman Ben Bernanke said Wednesday. Even if the financial markets stabilize, a "broader economic recovery will not happen right away," Bernanke said in a speech in New York. How long the downturn lasts depends on the health of the banking and credit markets, he said. The Fed is committed to using "all the tools at our disposal" to improve market functioning, reduce stress in credit markets and complement the work of the Bush Administration and foreign governments to strengthen the financial system, he said. Inflation should come down in coming months as prices on imports are decelerating and commodity and oil prices have dropped, Bernanke said. "Although much work remains and more difficulties surely lie ahead, I remain confident that the American economy, with its great intrinsic vitality and aided by measures now available, will emerge from this period with renewed vigor," Bernanke said

Keene Little : 10/15/2008 12:18:06 PM

Still looks like a nice little bear flag--short the next pop up to the top of the flag or a breakdown from it.

Jeff Bailey : 10/15/2008 12:16:57 PM

YM short ... stop goes 9,020. Target 8,860

Jeff Bailey : 10/15/2008 12:15:27 PM

YM short alert! here at 8,977

Keene Little : 10/15/2008 12:06:15 PM

So far the bounce off today's low appears corrective (bear flag). A rally above this morning's bounce high near 10:30 AM would have me thinking something a little more bullish so consider that level for a stop for now. I'm leaving mine near yesterday's close but might lower it some if the bounce starts to look stronger.

Jeff Bailey : 10/15/2008 12:04:39 PM

YM 9,020 ... alert!

Jeff Bailey : 10/15/2008 12:02:13 PM

NYSE a/d 252/2,604

Jeff Bailey : 10/15/2008 12:01:56 PM

YM 8,997 ... "in the zone" still

Jeff Bailey : 10/15/2008 12:01:21 PM

for now ...

Jeff Bailey : 10/15/2008 12:01:11 PM

All other equity-based indexes still red.

Jeff Bailey : 10/15/2008 12:00:47 PM

XAL.X 18.88 +2.05% ...

Jeff Bailey : 10/15/2008 12:00:24 PM

BIX.X 172.95 +1.96% ... session highs.

Jeff Bailey : 10/15/2008 11:59:40 AM

YM 9,017 ...

Jeff Bailey : 10/15/2008 11:59:07 AM

YM short stop alert! ... 9,014

Jeff Bailey : 10/15/2008 11:49:47 AM

Post YM profile high was 9,009. Switch to 2-minute interval and monitor oscillators.

Jeff Bailey : 10/15/2008 11:48:59 AM

YM short lower stop alert! ... to 9,014.

YM 8,975

Jeff Bailey : 10/15/2008 11:40:22 AM

YM 8,990

Jeff Bailey : 10/15/2008 11:39:53 AM

YM day trader's chart Link

Jeff Bailey : 10/15/2008 11:27:34 AM

YM short ... stop goes 9,020 to begin. Targeting 8,820.

Jeff Bailey : 10/15/2008 11:26:40 AM

YM short alert! here at 8,960.

Keene Little : 10/15/2008 11:19:10 AM

The DOW and SPX are both holding right at Monday afternoon's pullback low. I'm now watching the form of the bounce we get off that low to see if it hints of something bigger to the upside (not yet). Otherwise a break of that support level could usher in some stronger selling.

Jeff Bailey : 10/15/2008 11:14:15 AM

XOM $66.60 -8.10% and CVX $62.70 -8.52% getting clobbered. Just clobbered.

Jeff Bailey : 10/15/2008 11:08:27 AM

Today's Global Econ. Calendar Link

Keene Little : 10/15/2008 11:02:42 AM

The price pattern does not look impulsive which at this point could mean either of two things: one, it's a series of small 1st and 2nd waves to the downside and it's about to let go hard or two, it's corrective and is basically forming a relatively steep bull flag. I'm leaning towards the bearish interpretation but I've lowered my stop on my short play to just above yesterday's high just before the close. I may lower it again to this morning's bounce high if it starts to drop harder. We're into the portion of the wave pattern where it's better to start thinking short-term trades rather than holding on for home runs (like the previous drop from September was).

Jane Fox : 10/15/2008 10:57:35 AM

Internals are very bearish and I see little hope for the bulls now. Link

Jane Fox : 10/15/2008 10:54:33 AM

DOW futures are now under 9000 again.

Jane Fox : 10/15/2008 10:54:13 AM

I am seeing all sorts of signs that tell me the selling will end, VIX divergences, MACD divergences but the selling just keeps on coming. This is very bearish.

Jeff Bailey : 10/15/2008 10:46:09 AM

MBA's Weekly Application Survey Link

Jeff Bailey : 10/15/2008 10:41:22 AM

10:00 Internals at this Link

Jane Fox : 10/15/2008 10:20:38 AM

Oh big yawn the DOW is down only 311 points. Just another day in the stock market.

Keene Little : 10/15/2008 10:19:44 AM

NDX has broken below the pullback low on Monday afternoon and that should be confirmation that the rally off Friday's low has completed. The Monday afternoon pullback low for SPX is near 951 and that has not been broken yet. The risk for shorts is that this pullback will only correct the Friday-Tuesday rally leg and will then be followed by another rally leg.

Or to frustrate both sides we could form a large sideways consolidation between Friday's low and yesterday's high (with lots of volatility and chop). Depending on the form of the wave pattern (sharp decline vs. overlapping choppy decline) I should be able to get a sense as to whether we can expect a big consolidation or just head for a new low.

Jane Fox : 10/15/2008 10:19:33 AM

S&P futures are hovering at daily lows but the VIX is not anywhere near its daily highs suggesting the market will make at least a temporary bounce from here. Link

Jane Fox : 10/15/2008 10:10:31 AM

Russia is having a very hard time keeping up with this volatility.

Jane Fox : 10/15/2008 10:10:02 AM

NEW YORK (MarketWatch) -- Russian equities fell sharply Wednesday, forcing the two main stock exchanges in Moscow to suspend trading. Weighed down by oil and financial shares, the RTS index fell 9% in intraday trade. The steep drop forced the RTS stock market to suspend equity trading for one hour at 1:05 p.m. Moscow time. The Micex stock exchange also halted trading for an hour after the main stock index tumbled 9%.

Jane Fox : 10/15/2008 9:38:21 AM

NEW YORK (MarketWatch) -- The Organization of Petroleum Exporting Countries Wednesday revised its forecast for world oil demand growth for 2009, citing the impact of ongoing financial market turmoil. World oil demand growth for next year has been revised down by 100,000 barrels a day to show a growth of 800,000 barrels a day, the OPEC cartel said in its monthly oil market report. "In 2009, reduced economic growth outlook is expected to continue impacting oil demand," OPEC said. "Hence, oil demand in the USA will be lower than initially expected, at least in the first half of the year. The likely spillover to other economies will affect oil demand elsewhere to some degree."

Jane Fox : 10/15/2008 9:37:38 AM

AD line is a bearish -1686.

Keene Little : 10/15/2008 9:27:21 AM

Looks like we've got the expected gap down to start the day. Any rally back above gap closure (not sure we'll even see that much of a bounce) would be bullish. If we had a 1-2, 1-2 wave count to the downside yesterday then this morning's drop will be strong which will be followed by stair-stepping lower (to finish the 4-5, 4-5 wave count). Any change to that picture and I'll let you know.

Jane Fox : 10/15/2008 9:24:27 AM

Tired of all the doom and gloom? Crude hit a low of 74.97 overnight. I have been able to buy gas at $3.29 lately, never thought I would see that price ever again. Link

Jane Fox : 10/15/2008 9:21:47 AM

Linda, I usually do not have CNBC on in the morning but this morning I was thinking about for some reason and now I wish I had. I would have liked to have seem that.

Jane Fox : 10/15/2008 9:19:33 AM

Financial institutions that sell more than $300 million of their toxic assets will be prohibited from entering into any new executive employment contracts that include golden parachutes. Also these firms will not be able to deduct any executive compensation that exceeds $500,000 per executive or golden parachute payments.

Linda Piazza : 10/15/2008 9:18:01 AM

Jane, did you catch the discussion on CNBC this morning about how those cash infusions went down? It was interesting, as comparisons were being drawn to a Godfather (movie) kind of scenario, with the heads of banks being called in and told they were all going to accept those infusions and accept them now, so that none was singled out as being in trouble. I'm not a Godfather aficianada, so I can't identify the scene, but they compared it to a scene in which someone was called in and told either their signature was going on the document or their brains were! (I'm obviously not suggesting that anyone was physically threatened this time, just noting the comparisons that were used.) Gasparino or one of the others on CNBC said, whether true or not, that "the Wells Fargo guy" apparently wasn't too happy about being made to accept the infusion. Some report Wells Fargo as being among the stronger of the big banks. Anyway, it was interesting, and it reminded me of the stories of John Pierpont Morgan in the save of the U.S. economy when he called in bit financiers and asked them to pony up to save the system.

Jane Fox : 10/15/2008 9:14:30 AM

Financial institutions that take part in the government program must agree to a "claw-back" provision which is taking back a previously awarded bonus or other compensation. Betcha the courts will be filled with CEO's suing for their "just" rewards in the next few years.

Linda Piazza : 10/15/2008 9:11:48 AM

Bloomberg's delayed print shows the TED spread at 4.34. Traders are still seeing sky-high default risks. As I've warned several times before, though, over the last year, the performance of the TED spread at its peaks isn't as predictive of SPX bottoms as is the performance of TED spread troughs, predicting SPX highs in that case. Sometimes the TED spread stays high for a while even as the SPX is recovering. Sometimes it starts down while the SPX accelerates its decline. All we can be sure is that credit markets are apparently still in distress. Wild levels of distress.

Jane Fox : 10/15/2008 9:07:05 AM

Nine of our country's biggest banks will get an infusion from the Treasury, affectively nationalizing part or our financial system. Those banks are:

Citigroup
JP Morgan
Wells Fargo
Bank of American
Merril Lynch
Morgan Stanley
Bank of New York
State Street

The preferred shares will pay a annual dividend of 5% for the first 5 years and then the payment will increase to 9%. The shares are callable after 3 years meaning the banks can buy them back after 3 years.

The Treasury will also get warrants to buy common share of these 9 banks up to 15%

The banks will have to adhere to executive compensation guidelines set by the government.

Linda Piazza : 10/15/2008 9:05:48 AM

As I mentioned earlier in the week, I am pulling back from contributions to the Market Monitor due to increasing challenges in my personal life, including a hyped-up testing/therapy schedule for my granddaughter as she's being evaluated for several potential surgeries. I have stayed on longer than I intended because I just couldn't leave subscribers when market conditions worsened and when several other writers sometimes had to be away due to technical difficulties or challenges of their own. However, from this point forward, my contributions will be made only when someone is needed to fill in. I'll still be writing a Trader's Corner article each weekend and will be filling in occasionally for other writers in the Wrap, the lead article in the nightly or weekend newsletter. You can probably count on me to chime in now and then when I see something of particular importance happening on the charts or on the TED spread.

I did want to point out what I'm seeing on charts this morning. On the OEX's daily chart, I see massive resistance gathering from about 493.80-496. Until and unless the OEX can maintain daily closes above that, it looks particularly vulnerable to a rollover. Right now that resistance looks so strong that it looks as if it's either going to take a lot of time chopping around beneath it to soften it or else it's going to take a huge upthrust that pierces it and maintains values above it into the close before it can be broken. So, on any bounces, even those that pierce that level, I would be wary of the potential for a close back below it.

I wish this weren't what I am seeing. I'm not personally impacted but I know many of you have bull put credit spreads that are underwater, and I've been trying so hard to see something different. The possibility of a strong bounce exists--we've certainly seen the example--but if I go by the daily chart alone, that 493.80-496 level looks as if it could hold the OEX back on daily closes.

On a short-term level, futures are obviously lower this morning. The 30-minute chart shows a nicely formed potential inverse head-and-shoulders, the great hope of those wishing for markets to improve and improve quickly. It's forming the right shoulder, with right shoulder support coinciding rather nicely with the 45-ema on the 30-minute chart. That's now at 462.73 but will sink lower if the OEX drops in early trading. It looks as if the OEX could easily go as low as 460 and maybe even 455 without violating that right shoulder and invalidating the formation, but bulls would rather see 461-462 hold on 30-minute closes. This chart suggests that sustained 30-minute closes above 480-481 would confirm the formation, but if I were thinking about trading a confirmation of that inverse H&S, I would certainly want quick further confirmation by values above yesterday's high. The chart doesn't seem to require them, but I would be wary about rollover potential unless that high was exceeded. The chart suggests that sustained 30-minute closes below 461-462 should warn you that the formation might be being invalidated, although symmetry suggests that something a bit lower might occur and the right shoulder still might be okay. Between about 461-480 on 30-minute closes, though, it's chop without much to say about next direction.

Jane Fox : 10/15/2008 9:00:00 AM

Looks like previous day lows have mostly held for now. NQ (NDX futures) have broken its PDL a little and I'm not sure about TF (Russell 2000 futures) because it is on a 20 minute delay. Link

Jane Fox : 10/15/2008 8:57:11 AM

WE have a triple witching of economic data this morning.

Jane Fox : 10/15/2008 8:55:29 AM

WASHINGTON (MarketWatch) - U.S. retail sales fell 1.2% in September, the biggest drop in three years and the third decline in a row, a further sign that the economy has sunk into a recession led by an exhausted consumer. Retail sales were down 1% compared with a year earlier, the Commerce Department reported Wednesday. Sales were weak in almost all kinds of stores. Excluding the 3.8% drop in auto sales, retail sales fell 0.6%. The 1.2% decline was worse than the 0.8% drop forecast by economists surveyed by MarketWatch.

Jane Fox : 10/15/2008 8:54:36 AM

WASHINGTON (MarketWatch) -- Manufacturing activity in the New York area deteriorated sharply in October, the New York Federal Reserve Bank said Wednesday. The bank's Empire State Manufacturing index fell to a record negative 24.6 in October from negative 7.4 in September. The new orders index also fell to a record low, and the indexes for shipments, unfilled orders, and inventories all declined sharply. The Empire State index is of interest to investors and economists primarily because it's seen as an early indicator of what the Institute for Supply Management's October national factory survey due out in two weeks may show. In September, the ISM manufacturing fell from 49.9 to 43.5, a seven-year low.

Jane Fox : 10/15/2008 8:53:12 AM

WASHINGTON (MarketWatch) -- U.S. producer prices fell 0.4% in September - the second consecutive month of declines -- as energy prices dropped and food prices rose, the Labor Department reported Wednesday. Excluding food and energy, core producer prices rose 0.4% last month. Analysts polled by MarketWatch were looking for a decrease of 0.6% in overall PPI, and a 0.2% increase in the core rate. Producer prices are up 8.7% over the past 12 months. Prices for crude core goods fell a record 9.4% in September, compared with the previous record drop of 7.7% in 1974. In August, overall producer prices fell 0.9%, while the core gained 0.2%.

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