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Jeff Bailey : 10/28/2008 9:55:53 PM

yg08z ... $750.00

Jeff Bailey : 10/28/2008 8:09:40 PM

Closing US Market Watch at this Link

Yen's (FXY) weakness sparked BIG gains in Asia after several sharp declines in recent days. Will see if it sticks.

Jeff Bailey : 10/28/2008 8:04:07 PM

Trade blotter of CLOSED and OPEN/active profiles that I (Jeff Bailey) have made at this Link

Today's 1/4 DIA trade was set up as a SWING, but strength was there to the close.

HUM-WE is a COVERED put. COVERED by the HUM-MF.

Jeff Bailey : 10/28/2008 7:57:02 PM

Closing Internals at this Link

Jeff Bailey : 10/28/2008 4:30:45 PM

Thanks Keene! ... Bulls were due today, and this morning's BA news sure didn't hurt.

Jeff Bailey : 10/28/2008 4:08:09 PM

DIA $90.73 +13.05% ... to its close.

Keene Little : 10/28/2008 4:08:03 PM

Jeff, that was a great trade in the DIA today. Congrats.

Jeff Bailey : 10/28/2008 4:07:46 PM

DIA's 19.1% conventional (all-time high to recent low) just ahead at $91.00.

Keene Little : 10/28/2008 4:07:18 PM

Look at that--today's rally beat the October 13th rally (+877 points) with today's +888. Gotta love these short squeezes if you get on the long side in front of them.

Jeff Bailey : 10/28/2008 4:06:23 PM

I was kind'a thinking the same thing Keene (04:02:07) at 03:40:34

Jeff Bailey : 10/28/2008 4:04:07 PM

ZION $37.16 +7.52% ...

Keene Little : 10/28/2008 4:03:13 PM

It's usually not good when the market rallies into a news event such as the FOMC announcement (and rumors of an early announcement). Buy the rumor, sell the news.

Keene Little : 10/28/2008 4:02:07 PM

Quite the squeeze. I'll cover my short positions tomorrow if it doesn't immediately reverse. I've seen too many of these short squeezes with no follow through so I'll see how it looks tomorrow morning. It will be the form of the decline (pullback or otherwise) that will provide some clues in that regard.

Jeff Bailey : 10/28/2008 4:01:47 PM

NCC $2.31 +14.35% ...

Jeff Bailey : 10/28/2008 4:01:23 PM

PNC alert! $64.19 +9.48% ...

Jeff Bailey : 10/28/2008 4:00:52 PM

Dow 9,000 !

Keene Little : 10/28/2008 3:58:51 PM

They're probably going to park SPX right at its downtrend line near 928 for the close--keep everyone guessing about tomorrow.

Jeff Bailey : 10/28/2008 3:57:51 PM

Humana Inc. (HUM) $31.48 +2.24% ... (see 11:56:42 AM)

Jeff Bailey : 10/28/2008 3:55:23 PM

VXN.X 68.02 -14.07% ....

Jeff Bailey : 10/28/2008 3:55:06 PM

QQQQ $31.36 +9.30% ...

Keene Little : 10/28/2008 3:54:23 PM

I think it will be a good short play setup either at the close or more ideally with a small consolidation and minor push higher tomorrow morning. But we've seen countless strong moves into the close (short term capitulation), up and down, get immediately reversed the following day. So that's the risk if you're thinking about holding a long position overnight and/or waiting until tomorrow morning to enter a short. It's a risky spot but as I said before, I like the risk:reward profile.

Tab Gilles : 10/28/2008 3:46:39 PM

Copper/ FCX chart Link

Keene Little : 10/28/2008 3:46:37 PM

Drawing a downtrend line from October 14th through October 21st afternoon high, it's currently at SPX 928 and that's where I think a more appropriate stop should be located. Today's leg up looks like a good potential finish to an expanded flat a-b-c correction from last Friday's low. I'm trying to avoid being whipped out on this short squeeze into the close.

Jeff Bailey : 10/28/2008 3:45:03 PM

FXY $101.83 -4.47% ...

Jeff Bailey : 10/28/2008 3:44:08 PM

OK ... DIA gets the trade at $88.57

Jeff Bailey : 10/28/2008 3:43:35 PM

Yen looked "short enough" last week for the Biiiig squeeze, and it may at LEAST go back to its WKLY Pivot.

Jeff Bailey : 10/28/2008 3:42:09 PM

FXY $101.54 -4.74% ...

Jeff Bailey : 10/28/2008 3:40:34 PM

Ah heck ... Swing trade long exit alert! the 1/4 position in the Dow Diamonds (DIA) at the bid of $88.35

Keene Little : 10/28/2008 3:35:56 PM

Ideally we'll see a consolidation near the high that lasts about an hour or so and then a final push higher tomorrow morning (to create a 5-wave move up from this morning's low). It would be even more ideal if the final push higher finishes near 917 in order to set up a good short play. It's important to remember that one of the possibilities for the market is a very hard selloff into next week (breaking the October 2002 lows) so the risk:reward ratio is favorable for a new trade entry.

Jeff Bailey : 10/28/2008 3:30:04 PM

EWJ $8.45 +8.33% ...

Jane Fox : 10/28/2008 3:29:41 PM

Well the consumer confidence number out has been totally shrugged off and the DOW is now up 576 points!!!

Jeff Bailey : 10/28/2008 3:29:05 PM

FXY Alert! $101.18 -5.08% ...

Jeff Bailey : 10/28/2008 3:26:40 PM

Now, DIA $87.38 +8.87% ... IF long 1/2, would sell half of it, or 1/4. BOOK some gains.

Since MM profiles just 1/4 long, will do this ...

Jeff Bailey : 10/28/2008 3:24:22 PM

DIA $87.31

Jeff Bailey : 10/28/2008 3:23:39 PM

DIA ... 30-minute interval "backs us out" a bit Link

See 02:57:12 PM

Jeff Bailey : 10/28/2008 3:16:25 PM

PBR $21.34 +8.65% ...

RIO $11.35 +12.36% ...

Jeff Bailey : 10/28/2008 3:15:41 PM

dj- Brazil Stocks Extend Gains; Bovespa Index Up 10.5%

Keene Little : 10/28/2008 3:12:49 PM

Backing out a little and looking at the SPX daily chart it's looking more and more like we could see just one more leg down to finish the descending wedge pattern, perhaps with a final low for SPX at or above the Gann level of 824. There remains the risk for a downside flush (dark red) that will drop through the October 2002 low of 768 before the market will get some kind of year-end rally (risk remains through a turn window of mid November or until I see a stronger bounce pattern take hold). SPX daily chart: Link

Jeff Bailey : 10/28/2008 3:02:14 PM

GLD $73.27 +1.51% ...

GG $15.31 +1.66% ... stopped yesterday, but still follow and analyze.

Jeff Bailey : 10/28/2008 2:59:15 PM

DDM $32.89 +13% ...

INDU 8,656 +5.88% ...

Jeff Bailey : 10/28/2008 2:58:14 PM

DIA $86.44 ... GREEN #6

Tab Gilles : 10/28/2008 2:58:02 PM

Euro:Yen/ Gold/ USD ($XEU:$XJY/ GLD/ USD) Link

Euro:Yen/ Baltic Dry Index ($XEU:$XJY/ $BDI) Link

Dollar run up 16 points from it's low. Looking for a retracement nearterm towards the 21-ma/ 82 level. Link

Yen:US Dollar/ GLD weekly Link

Gold EFT (GLD) Link

GLD looks attractive around $70. On the radar;

December 70 put GV-DXR Bid $4.40/ Ask $4.60

December 65 put GV-DXM Bid $2.60/ Ask $2.70

Let's watch GLD tageting $70 to SELL Puts.

Jeff Bailey : 10/28/2008 2:57:12 PM

Swing trade long CANCEL TARGET ALERT! ... for the 1/4 long DIA of $87.40. (see 11:03:23 AM).

Keene Little : 10/28/2008 2:57:12 PM

In the bounce pattern for NDX off last Friday's low, two equal legs up would be at 1247.58 so keep an eye on that level to see if it acts as resistance or not.

Keene Little : 10/28/2008 2:55:41 PM

NDX also followed the pink price path shown on its 60-min chart last night ( Link ) and the setup here is for a reversal back down. But as I've mentioned the past couple of days, we could see NDX rally slightly above its downtrend line from October 14th while SPX rallies up to its downtrend line. Tough call here. But a little throw-over above resistance followed by a turn back down would be bearish. Important setup here. Updated 60-min chart: Link

Jeff Bailey : 10/28/2008 2:55:25 PM

FXE $126.18 +0.63% ...

Jeff Bailey : 10/28/2008 2:54:54 PM

GLD $73.28 +1.52% ... WKLY Pivot ... 2nd test this week.

Jeff Bailey : 10/28/2008 2:53:23 PM

Yesterday's 02:00 Link

Jeff Bailey : 10/28/2008 2:52:33 PM

NYSE a/d 2,058/813

Jeff Bailey : 10/28/2008 2:52:12 PM

Did this yesterday at about 01:50 PM EDT.

Jeff Bailey : 10/28/2008 2:51:27 PM

DIA $85.50 ... back to WKLY Pivot.

Jeff Bailey : 10/28/2008 2:49:22 PM

DIA $85.95 ... GREEN #5

Jeff Bailey : 10/28/2008 2:47:23 PM

Now ... what is a short to do? ... Has been waiting for the "capitulation."

Jeff Bailey : 10/28/2008 2:46:52 PM

DIA $85.50 ... 2nd test of WKLY Pivot this week.

Keene Little : 10/28/2008 2:46:35 PM

Following up on the SPX 60-min chart posted last night ( Link ), it's looking like the pink wave count may have the edge here (calling for a push up to the downtrend line from October 14th, currently near 917). If we get that kind of rally, especially into FOMC, the market will then be set up for a reversal into either a continuation of the choppy decline (pink) or a strong decline into November. It could of course rally higher than 917 but as I mentioned earlier, that's not a setup that I currently would be comfortable calling for (but have my stop at 920 regardless). Updated 60-min chart: Link

Jane Fox : 10/28/2008 2:40:58 PM

Dow cash index is now up 336 points.

Jeff Bailey : 10/28/2008 2:39:12 PM

NASDAQ a/d 1,505/1,312

Jeff Bailey : 10/28/2008 2:39:00 PM

NYSE a/d 1,963/907

Jane Fox : 10/28/2008 2:38:44 PM

This is day trading heaven.

Jane Fox : 10/28/2008 2:38:32 PM

For those of you who do not have a calulator that is a 243 point move in just over 30 minutes.

Jeff Bailey : 10/28/2008 2:38:03 PM

02:33 Market Watch at this Link

Jane Fox : 10/28/2008 2:37:27 PM

At 1:57ET the DOw hit a low of 8276. At 2:34 it hit a high of 8519.

Jeff Bailey : 10/28/2008 2:35:08 PM

DIA $85.15 ... Green #4

Jeff Bailey : 10/28/2008 2:34:34 PM

I missed the 02:00 Internals ... my computer clock keeps "resetting" to fall back on hour.

Keene Little : 10/28/2008 2:32:14 PM

With the market pushing higher again we've got some kind of larger corrective wave structure here but it has now made it unclear again as to where it could be headed. The move up from this morning's low does not have an impulsive look to it and that leaves the door open for a quick reversal at any time.

Pushing higher again does improve the chances that we'll see SPX 917 get tagged. But first it will have to get through 890.50 which is where the move up from this morning's low would have two larger equal legs up. It would also essentially be a test of yesterday's high near 874.

Jeff Bailey : 10/28/2008 2:20:10 PM

FXY 60-minute interval chart with WKLY (blue); QRTRLY (green) and MNTHLY R2 (dark purple) Link

It has been my observation that STRENGTH in the yen has been a NEGATIVE for equities. Here in U.S. and in Japan.

Jane Fox : 10/28/2008 2:11:13 PM

This is a hoot. Eric Saltwell brought you the "Google gadgets," things you can load to your desktop like a clock, current stock prices, Sudoku, current news, etc. Apparently Mr. Staltwell has added a new gadget, the VIX so you can monitor the fear in the market. Oh and by the way he has added the TED Spread as well.

Jeff Bailey : 10/28/2008 2:09:01 PM

US Dollar Index (DXY) 87.57

Jeff Bailey : 10/28/2008 2:02:39 PM

dj- MMS: 361,913 B/D Oil; 2,476 MMCF/D Gas Off Line In US Gulf
27.8% Oil; 33.5% Gas Output Still Off Line In US Gulf

Jeff Bailey : 10/28/2008 1:58:19 PM

Honolulu reporting average price for unleaded gasoline of $3.397, but trending lower.

Jeff Bailey : 10/28/2008 1:58:15 PM

Corpus Christi reporting average price for unleaded gasoline of $1.987, still trending lower.

Jane Fox : 10/28/2008 1:44:49 PM

Here is a list of the biggest declines of Consumer confidence since 1987

Nov 1987 %change -14.3
Aug 1980 %change -17
Sept 2001 %change -17
April 1980 %change -20 (Iran Hostage Crisis)
Oct 1990 %change -23
Oct 2008 %change -23.4

Keene Little : 10/28/2008 1:42:43 PM

With the quick rollover from SPX 876 area I would use that last high as your stop now (a few ticks above). If this is to turn lower again it needs to do it from here otherwise another push higher would give us an impulsive (bullish) move up and that would call for a pullback to be followed by another leg higher into tomorrow.

Jeff Bailey : 10/28/2008 1:35:43 PM

PBR $20.88 +6.35% Link ...

RIO $11.03 +9.09% Link ...

Jeff Bailey : 10/28/2008 1:33:52 PM

dj- Brazil stocks extend gains; Bovespa Index Up 8.1%

Jeff Bailey : 10/28/2008 1:32:48 PM

Want to "make sure" DDM is getting the 200-times UPside performance to INDU. For a couple of days there, it was NOT, but WAS getting the 200-times DOWNSIDE.

Jeff Bailey : 10/28/2008 1:31:33 PM

DDM $30.92 +6.32% ...

Jeff Bailey : 10/28/2008 1:30:32 PM

INDU 8,393 +2.65% ...

Jeff Bailey : 10/28/2008 1:30:15 PM

RUT.X 451.13 +0.60% ... inches green.

Keene Little : 10/28/2008 1:27:43 PM

Updating the SPX 30-min chart I'm showing the two most probable price paths as I currently see them. Once again you need to understand that I'm trying to figure out this choppy price pattern as it unfolds and while I think EW gives me an edge in developing some ideas for where price could go, it's still a guess: Link

Price action is choppy up and down while it works its way lower. That's one reason I'm beginning to think we might see the market put in a sneaky bottom. If price turns back down from the SPX 876 area and chops its way lower again to a minor new low this afternoon then it will raise the odss that we'll see a bottom tomorrow, as depicted in dark red. If we see a rally continue on up to the 915-917 area (pink) we could get either a hard decline from there (not shown) or another choppy decline to a low by the end of the week. It is of course possible the rally will just punch right through 917 and keep on going. I just don't see that as likely yet.

And to be more precise and having conviction behind my trading call (wink), I'm not making one (other than being short against the 876 level which looks like it could get overrun). There is no good trade setup in this environment when I consider the risks (unless it gets up to the 917 area and stalls--then short it).

Jeff Bailey : 10/28/2008 1:27:38 PM

iShares Silver (SLV) $8.74 -1.24% ...

Jeff Bailey : 10/28/2008 1:27:11 PM

Coeur D' Alene Mines (CDE) $0.45 +9.75% ... long-time MM traders "shocked"

Jeff Bailey : 10/28/2008 1:14:10 PM

iShares Japan (EWJ) $8.21 +5.25% ...

Jeff Bailey : 10/28/2008 1:13:17 PM

DIA $84.37 +5.12% ....

Jeff Bailey : 10/28/2008 1:12:56 PM

Yen CurrencyShares (FXY) 103.04 -3.33% ...

Jeff Bailey : 10/28/2008 1:11:42 PM

2-year Note Auction:

1.600%; 93.81% at the high; Bid-to-cover 2.49%. Coupon is 1.500%.

Keene Little : 10/28/2008 1:05:31 PM

SPX has now achieved a 62% retracement of this morning's drop (867.80) and is hitting its downtrend line from yesterday's high (867). A 78.6% retracement is at 873.90 and two equal legs up from this morning's low is at 876.30. Therefore anything higher than 876 will mean new daily highs coming. Otherwise the bounce is only a 3-wave move higher so far and therefore a correction. Short against the 876.30 level is the recommendation

Jeff Bailey : 10/28/2008 1:03:59 PM

Just as a 1/2 backfill of a gap lower is "eagerness among sellers."

Jeff Bailey : 10/28/2008 1:03:22 PM

Somewhat encouraging for DIA $83.98 +4.63% ... that today's low (so far) was RED #6 and about 1/2 backfill of this morning's gap higher.

1/2 backfull can suggest more "eagerness" among buyers.

Jeff Bailey : 10/28/2008 12:57:30 PM

For those who entered a 1/4 bullish in the DIA today, the 1/4 is exactly that. YOU MUST know for your OWN account ($5,000.00 ; $10,000.00 .... $200,000.00) what 1/4 position size is.

I'm running an easily divisable $10,000.00 here in the MM.

So, 1/4 of $10,000.00 is equal to $2,500.00.

$2,500 / $83.06 (precise action point) is then 30 shares

Jeff Bailey : 10/28/2008 12:33:54 PM

Nymex Nat. Gas (open interest) into Wednesday's November contract termination. Link

Jeff Bailey : 10/28/2008 12:17:55 PM

12:00 Internals found at this Link

Keene Little : 10/28/2008 12:18:58 PM

For those who have been holding short and waiting for a new low to cover (as I am), one word of caution about something I'm now watching for. The type of choppy 4th wave correction I've been watching could lead right into a small choppy descending wedge pattern that puts in a minor new low and then suddenly shoots higher out of this whole mess. I'm mindful of the FOMC announcement tomorrow and while I don't think there's anything the Fed could do at this point to cheer up the market, I don't discount the possibility that whatever they do or say it could be enough to spark some short covering that then leads to a much larger rally.

So, at this point I think it's important to establish some stop levels that are relatively close but far enough away to prevent getting whipped out of a longer-term short position (in case the market is going to drop hard into mid November, a distinct possibility). For now I'm using SPX 920 as my puke point--above that level and I will exit all my short positions and go flat (until I get a feel for whether or not I want to get long for a larger bounce into December).

While I'm still looking for more profitability out of my short positions I'm moving more into profit protection mode and I suggest the same for you. A lot of people are waiting for a capitulation into a low and I have this sneaky suspicion that the market is going to surprise a lot of shorts with a low that masks itself. At least that's what I'm worried about.

Jeff Bailey : 10/28/2008 11:58:45 AM

INDU 8,300 +1.50% ... up 125-points.

Jeff Bailey : 10/28/2008 11:56:42 AM

Swing trade COVERED PUT filled alert! ... HUM-WE $1.10 x $1.25 ... HUM $28.91

Jane Fox : 10/28/2008 11:55:39 AM

October is a very interesting month in the stock market.

Oct 28th 1929 the Dow fell 12.82%
Oct 29th 1929 the Dow fell 11.72%
Oct 26th 1987 the Dow fell 8.04%
Oct 19th 1987 the Dow fell 22.61%
Oct 27th 1997 the Dow fell 7.18%

Keene Little : 10/28/2008 11:52:01 AM

If SPX breaks its downtrend line from yesterday afternoon, currently near 872.50, it should be a signal that we're going to see yesterday's highs exceeded. What path it takes to get there I have no clue. The corrective wave structure continues to warn me about fast reversals and more reversals of reversals as we've already seen this morning. But before feeling even short-term bullish I'd want to see SPX get above 873 and then hold the downtrend line on any pullback.

Keene Little : 10/28/2008 11:46:20 AM

SPX stalled at 50% (863.50) but so far looks like it will press higher still.

Jeff Bailey : 10/28/2008 11:44:41 AM

Dow Components ... PRICE weighted index, sorted by price at MONDAY's open. Link

Jeff Bailey : 10/28/2008 11:41:58 AM

Boeing, union reach deal ... Reuters Story Link

BA $44.40 +4.81% ...

Jane Fox : 10/28/2008 11:40:48 AM

Here are your overnight charts. As you can see the Russell 2000 futures (TF) have retraced 100% of their overnight move and retested yesterday's lows. ES (S&P futures) and YM (DOW futures) are certainly the stronger markets today. Link

Keene Little : 10/28/2008 11:35:46 AM

Now we reverse the retracement and watch to see how price behaves around the 38%, 50% and 62% retracements of this morning's decline--SPX 859.20, 863.50 and 867.80.

Jeff Bailey : 10/28/2008 11:35:15 AM

Swing trade sell COVERED PUT alert! ... for one (1) of the Humana Inc. HUM Nov. $25 Puts (HUM-WE) $0.95 x $1.20 at a LIMIT price of $1.10.

HUM $29.41 -4.51% ...

This would be COVERED against the currently LONG HUM-MF.

Keene Little : 10/28/2008 11:30:19 AM

A reader's comment about my 10:52 AM post:

...anyone that's been around for awhile would know better than to write that kind of comment in this market. I've been doing this full time for 6.5 years and have never seen volatility that approaches this. Day trading is very difficult with the multi-point whipsaws in every direction. Hard to find an entry where any kind of reasonable stops will hold. Opening the stops isn't a solution either. Back in 2002 we had volatile markets but not the incredible chop that the current market presents.

With the requirement for wide stops in this environment, anyone who bought this morning's bounce and used a wide stop, got creamed (again). Anyone who sold this morning's selloff once it broke yesterday afternoon's low (marginally), and used a wide stop, could find they're going to get creamed (again). It's very frustrating for us traders to sit on our hands, especially us 'A' types (and I'm one) but patience is truly the secret to success in this business--let the market come to you and not the other way around.

I do trade a little during these times but I wait for the large swings to the edges of the trading range to the upside and then add to my short position. I am slightly hedged with a couple of long positions but I much prefer to trade with the trend right now. My intent is to show traders where I think the market is headed, with key support and resistance levels identified. My hope is that you'll be able to use that information to help you decide how best to trade it and when to trade it (in a way that works for you).

Jeff Bailey : 10/28/2008 11:29:29 AM

dj (earlier)- COMMERCIAL PAPER RATES HOVER AROUND FED RATES

Rates offered in the commercial paper market for three-month debt hover around of 2.89%, what the Fed is offering through its backstop program, indicating that the Fed's rate is serving as a benchmark for the $1.45 trillion market.

Jeff Bailey : 10/28/2008 11:28:45 AM

dj (earlier)- THREE-MONTH DOLLAR LIBOR EXTENDS FALL

The cost of borrowing three-month U.S. dollar funds in the interbank market continues to fall, extending a streak of consecutive daily declines since it peaked on Oct. 10.

Jeff Bailey : 10/28/2008 11:27:58 AM

dj (earlier)- GE TAPS NEW COMMERCIAL-PAPER FACILITY

GE, the biggest U.S. issuer of commercial paper, says it borrowed from the Fed's Commercial Paper Funding Facility, the first day it became active. GE said last week that it planned to "test" the facility in a bid to show support for it.

GE $17.89 +0.90% ...

Jeff Bailey : 10/28/2008 11:26:45 AM

Valero: Port Arthur Coker Project Cancelled

Jeff Bailey : 10/28/2008 11:24:59 AM

DIA 5-minute interval Link

Jeff Bailey : 10/28/2008 11:04:36 AM

INDU 8,221 +0.55% ...

Jeff Bailey : 10/28/2008 11:04:16 AM

DIA $82.14 +2.34% ...

DDM $29.73 +2.23% ...

Jeff Bailey : 10/28/2008 11:03:23 AM

DIA 1/4 long ... stop will go $80.50. Target $87.40.

Jane Fox : 10/28/2008 11:02:37 AM

Internals all bearish. Link

Keene Little : 10/28/2008 10:58:53 AM

SPX sliced through 62% and is now tagging 78.6%, the "line in the sand", at 854. Typically a retracement of more than 78.6% leads to a complete retracement. We remain inside a very choppy pattern and as we've seen, it can go anywhere without warning. I like the short side but understand the possibility for another rally leg, especially up into the FOMC announcement. As for short term trade setups? I don't see any. Too whippy. If SPX drops below 824 I'll be convinced to recommend shorting all bounces again and not be as worried about a stronger rally back up.

Jane Fox : 10/28/2008 10:58:52 AM

AD line is now below 0 but at -335 it is not what you would call overly bearish. However, it reached a high of +2228 so the fact that it is now under 0 is bearish.

Jane Fox : 10/28/2008 10:57:43 AM

VIX is confirming S&P futures' lower lows. Link

Keene Little : 10/28/2008 10:52:14 AM

Keene, I was referred to you in a conversation with some traders [as a new subscriber], and had to send you a comment with no sugar added. While I realize these are volatile days to say the least, your commentary so far has always been too vague. It might go this way or that way, or I can't see a clear pattern, doesn't sound very encouraging to follow what I consider a pro at EW.

Have more conviction, right or wrong, and give a clearer signal as to which way I should trade. Anybody can be indecisive, that's not what I am paying you for. You have leaned to the short side, and the market has buckled, I will say that.

Zing! Believe it or not I like getting these emails (well, maybe not like, but it's important to get feedback). I'm not sure the timeframe that Vincent is using for this comment but I'm thinking it might be for the past two weeks, since the October 10th low. Before that low I think I was pretty clear about my calls for much lower prices.

Once we made the October 10th low and big bounce into the October 14th high I have repeatedly warned about trading a 4th wave correction that I saw us entering. Know when to trade and more importantly know when not to trade (Jesse Livermore's secret). I know when not to trade and they're called 4th wave corrections--the choppiest whippiest trading environment you'll find. As far as having more conviction about my calls? Again, I thought I was pretty clear--don't trade!

My mistake, in hindsight, was trying to call the 4th wave correction play by play and I think I ended up confusing too many people. There are 13 different types of corrections in the EW pattern and trying to figure out which one it will be in real time is more than a challenge. It's downright confusing. Add to the mix the huge moves and split-second reversals and reversals of reversals (requiring a change in thinking about what kind of pattern is playing out) and it's not been a fun time to figure out this market.

So I understand my observations sounded wishy washy. I will try to make my calls a little easier to understand where we could be, even if it's not a trade setup. I'll repeat again--we have no clear trade setup at the moment and haven't had one for over two weeks. Take one look at the wild price swings, even in just the last two days which are much smaller and still +/- 500 DOW points. Flat is a position and never forget that.

Jeff Bailey : 10/28/2008 10:51:36 AM

Swing trade long alert! ... for 1/4 position in the Dow Diamonds (DIA) $83.06 here.

Jane Fox : 10/28/2008 10:47:15 AM

But something along the way was taking place, people started using housing as an investment and not as a place to live so they just walked away when they got into trouble. One of the NINA (no income, no asset) loans on a house you didn't live in? I mean why not?

Jeff Bailey : 10/28/2008 10:45:03 AM

Swing trade long cancel order alert! for the DIA (from 10:22:19)

DIA $82.77 +3.12% ...

Jane Fox : 10/28/2008 10:35:06 AM

The people that bought these securities (that were rated AAA) totally believed house prices would continue up like they had forever. I mean why not?

Jane Fox : 10/28/2008 10:33:49 AM

The securities that were bundled and sold to others had very questionable loans in them but somehow they were rated AAA by the rating agencies but since these securities were giving a few percentage points above Treasuries money managers, bankers, investors decided to take part in the party. I mean why not?

Keene Little : 10/28/2008 10:33:29 AM

SPX is holding at 864 but it's looking more like a brief consolidation so far before heading lower again. Then watch 860 to see if it holds.

Jeff Bailey : 10/28/2008 10:30:16 AM

10:00 Internals at this Link

Data feeds were not coming in on NYSE in early going (0:0). Currently showing 0:49, but not overly confident. 49 seems very few.

Jane Fox : 10/28/2008 10:29:32 AM

Reading an article about unintended consequences that I found very interesting but before I go any further I would like to say that I will be relating what happened and NOT about who was running the government or which party was to blame. Heaven knows there is enough blame to go around and around and around again.

Since FDR it has been the American dream to own a home and of course each and every presidency has encouraged homeownership. Little did we know the unintended consequence of this stance. The Community Reinvestment Act (CRA) was passed in 1977 and many "blame" this act for our troubles. Well it was one piece but certainly not the root cause (greed was the root cause people and I dare you to enact anything that will stop greed). The CRA encouraged banks to relax their lending standards.

Then the Basel Accord came along and raised the amount of capital banks had to set aside for all mortgage loans. It was the Basel Accord regulation that got the banks to thinking about getting those mortgages off the books so they could then loan more. The best way to do this was to securitize them and sell them to others.

Jeff Bailey : 10/28/2008 10:22:19 AM

Day trade long setup alert! ... for 1/2 position in the Dow Diamonds (DIA) if they TRADE $82.55.

STOP would go $81.50. Target is $87.40.

Jeff Bailey : 10/28/2008 10:14:49 AM

VW briefly world top company as shortsellers caught ... Reuters Story Link

Keene Little : 10/28/2008 10:13:37 AM

A 50% to 62% retracement of this morning's rally is at SPX 864 and 860, resp. We shouldn't see much more of a retracement than that if the rally leg to 917 is going to happen.

Jane Fox : 10/28/2008 10:06:20 AM

Anyone expecting this market to recover in the next few months may have another think coming.

Jane Fox : 10/28/2008 10:04:29 AM

WASHINGTON (MarketWatch) -- Wounded by the financial crisis, U.S. consumer confidence plunged in October, reaching an all-time low, the Conference Board reported Tuesday. The October consumer confidence index fell to 38 from an upwardly revised September reading of 61.4. Economists surveyed by MarketWatch had expected an October reading of 52. Expectations turned "significantly more pessimistic," with the percentage of consumers expecting business conditions to worsen over the next six months rising to 36.6% from 21%, and those expecting fewer jobs rising to 41.5% from 26.9%.

Jane Fox : 10/28/2008 10:03:47 AM

Consumer confidence looks like it came out at a record low at 38. Still need confirmation though.

Jeff Bailey : 10/28/2008 10:01:05 AM

SPX 880.76 +3.75% ... WKLY Pivot 905.02

Jeff Bailey : 10/28/2008 10:00:06 AM

FXY $103.85 -2.57% ... trades WKLY Pivot.

Jeff Bailey : 10/28/2008 9:59:27 AM

EUR/YEN 120.24 +4.34%

Jeff Bailey : 10/28/2008 9:56:26 AM

SPX 876.55 +3.25% ...

Jeff Bailey : 10/28/2008 9:56:00 AM

Yen CurrencyShares (FXY) $103.95 -2.48% ...

Keene Little : 10/28/2008 9:47:58 AM

This SPX 30-min chart shows a closer view of the potential descending wedge and the possibility for a rally back up to the Fib projection at 917 to complete the 4th wave of the descending wedge pattern (pink). But if this morning's bounce is now followed by new lows it will be more immediately bearish. Link

Jeff Bailey : 10/28/2008 9:46:25 AM

European Markets Link ... UK's FTSE-100 +3.02% at 3,989 ; Germany's DAX up 8.68% at 4,710; France's CAC-40 +2.70% at 3,150

Jeff Bailey : 10/28/2008 9:45:03 AM

Asian Markets Link rebounded sharply Tuesday. Japan's Nikkei-225 +6.41% at 7,621. $HSI +14.35% at 12,596 and $SSEC edged up 2.81% at 1,772.

Jane Fox : 10/28/2008 9:37:50 AM

VIX closed yesterday at 80.00 but opens this morning at 73.17.

Jane Fox : 10/28/2008 9:38:02 AM

AD line opens at +1705 so the bulls certainly have the ball this morning.

Keene Little : 10/28/2008 9:31:43 AM

Looks like the bulk of the overnight gain in the futures is going to hold into the open. Just another +300-point gap up for the DOW to start the day. That after dropping more than 500 points from yesterday's high. What a whacky market. This morning's bounce will retrace the sharp drop in the last 30 minutes of yesterday's trading.

Jane Fox : 10/28/2008 9:20:44 AM

Articles like I just posted about the fall in house prices need to be read with the idea this is just an average across the US and does not mean every city is seeing the same kind of decline in house prices. The city I live in did not see any of the bubble so now our house prices are not only not falling but they are still climbing, albeit not as fast as they were but still moving upward. Our unemployment is still falling as well. We are not feeling the economy pinch much at all here.

My husband and I are looking to buy a rental property so we wish house prices were falling. .

Jane Fox : 10/28/2008 9:16:13 AM

WASHINGTON (MarketWatch)-- Home prices in 20 major U.S. cities dropped 1% in August compared with July and had fallen a record 16.6% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with a year ago. Only two of the 20 cities showed price gains in August: Boston and Cleveland. The largest declines in August were found in the San Francisco metro area, where prices fell 3.5%. In the past year, Phoenix and Las Vegas have had the largest declines, down nearly 31% in both cities. For the original 10-city index, prices fell a record 17.7% in the previous 12 months.

Jane Fox : 10/28/2008 9:15:38 AM

The FED began its 2 day meeting today and the futures are up big because the stock market is counting on it to lower rates ? point to 1%. Traders may be anticipating the FED will make the announcement of the cut today and not tomorrow like it is scheduled to do.

Jane Fox : 10/28/2008 9:11:24 AM

The S&P futures are now up 33 points and the DOW 308. Just another day in the stock market. Once we get back to 10-15 point moves in the S&P and 100 point moves in the DOW things are going to be feel soooooo slow and boring.

Jane Fox : 10/28/2008 9:09:36 AM

Here are your overnight charts. No market broke its previous day low and we have a very nice rally taking place. If you look at a fib retracement of each of the markets then you get a good idea as to which one is the strongest and which one the weakest.

From what I can see it is the Russell 2000 (TF) the weakest and the NDX (NQ) the strongest. Link

Jane Fox : 10/28/2008 9:04:27 AM

Datelin WSJ - Iceland's central bank raised interest rates to a whopping 18 percent on Tuesday, just two weeks after it had eased policy to soften the impact of the country's financial meltdown.

The massive 6 percent increase was the latest move to prop up the country's frozen currency and markets, offering investors a high return for putting money back into the North Atlantic island's crippled financial system.

Last week, the International Monetary Fund agreed on a program that could lead to a $2 billion stand-by loan to Iceland.

Sedlabanki, the central bank, said it would explain the rationale behind its decision later Tuesday.

Two weeks ago, the central bank cut rates by 3.5 points to 12 percent.

Jane Fox : 10/28/2008 9:01:50 AM

Good Morning all. This morning we have the 10:00 release of Consumer Confidence. Economists use this as an indicator of consumer spending, which is 70% of GDP so it is important and a market mover.

Keene Little : 10/28/2008 1:31:41 AM

Tuesday's pivot table: Link

SPX closed slightly below the trend line along the lows since October 15th and slightly below the closing low on October 10th. A quick recovery on Tuesday could leave it as just a head-fake break and it remains possible we'll see a bounce back up to the downtrend line from October 14th (the top of a potential descending wedge), shown in pink on the updated 60-min chart: Link

The downtrend line and a Fib projection for another leg back up provide an upside target in the 915 area. And as noted on the chart, we could see a rally into FOMC announcement on Wednesday, a fairly common occurrence. But if the market drops immediately lower on Tuesday, especially with a break below 824 I think we'll see a hard selloff that breaks the October 2002 low at 768.

The NDX short-term pattern is slightly different from the SPX pattern but the descending wedge idea still holds. Another leg up to about 1230 (shown in pink) could be a setup for the next leg down (either a choppy ending to finish the descending wedge or a stronger selloff). A break below 1100 early Tuesday would be more immediately bearish. 60-min chart: Link

Jeff Bailey : 10/27/2008 10:01:41 PM

Trade blotter of CLOSED and OPEN/active profiles that I (Jeff Bailey) have made at this Link

OI Technical Staff : 10/27/2008 9:59:59 PM

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