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Jeff Bailey : 10/31/2008 5:43:18 PM

Closing U.S. Market Watch Link

Jeff Bailey : 10/31/2008 5:34:28 PM

October'08 ...

INDU -1,525 -14.1%
SPX -196 -16.8%
OEX -79 -14.6%
NDX -250 -15.8%
RUT -142 -21%
BIX -12.5 -7.0%
SMH -$3.95 -16.0%
TNX +14 bp at 3.827%
US$ +6.18 +7.8%

Jeff Bailey : 10/31/2008 4:45:30 PM

Dow Transports (TRAN) 3,885.83 +4.26% ... (see 10:13:49 AM)

Jeff Bailey : 10/31/2008 4:35:52 PM

VIX.X 59.89 -4.78% ... session low 56.73 was just a tad under WKLY S1 (56.85).

Pivot traders watch this still. (10/14 and 10/21 saw WKLY S1, but that was it).

Jeff Bailey : 10/31/2008 4:30:17 PM

MS Healthcare Payors (HMO.X) 947.24 +2.82% ... only equity-based index to show a decline this week (-1.22%).

Jeff Bailey : 10/31/2008 4:11:23 PM

DJUSHB 238.94 +7.26% ... today's sector winner. This week's sector winner +23.58%.

Jeff Bailey : 10/31/2008 4:08:36 PM

PNC $66.67 +3.41% ...

Jeff Bailey : 10/31/2008 4:07:58 PM

NCC $2.70 print

Keene Little : 10/31/2008 4:04:08 PM

I've got to run off to an appointment. I hope everyone has a great weekend.

Jeff Bailey : 10/31/2008 4:04:02 PM

JAVA $4.65 -12.09% ...

Jeff Bailey : 10/31/2008 4:02:09 PM

SPX to the close ... 965.19 Link

Jeff Bailey : 10/31/2008 3:56:48 PM

LVS was $4.45 Tuesday afternoon.

Jeff Bailey : 10/31/2008 3:56:15 PM

dj- S&P cuts Las Vegas Sands rating on liquidity, econ worries

LVS $14.00 +34.87% ...

Jeff Bailey : 10/31/2008 3:54:45 PM

CI $16.33 +4.74% ...

HUM $29.70 +0.06%

AET $24.75 -4.58%

UNH $23.49 +4.86%

Jeff Bailey : 10/31/2008 3:53:36 PM

HUM $29.82 +0.47% ... inches green

Jeff Bailey : 10/31/2008 3:51:29 PM

NYSE a/d 2,042/942

Jeff Bailey : 10/31/2008 3:51:19 PM

NASDAQ a/d 1,902/975

Keene Little : 10/31/2008 3:50:33 PM

SPX is approaching its uptrend line from Wednesday afternoon, currently near 955. A break of that trend line would suggest this week's bounce is over and we'll start a decline on Monday. Take a few puts home with you--use Dec or Jan, closer to ATM and then if the market doesn't drop on Monday just give them back.

Jeff Bailey : 10/31/2008 3:49:20 PM

JAVA $4.66 -11.90% ...

QQQQ $32.67 -0.51% ...

Jeff Bailey : 10/31/2008 3:48:40 PM

JAVA 5-minute day trader's to the close Link ... Thought with even modest gains in NDX/QQQQ Java would go $4.81-$4.84 by the close.

Jeff Bailey : 10/31/2008 3:30:58 PM

QQQQ $32.70 ... back below GREEN #3

Jeff Bailey : 10/31/2008 3:29:47 PM

Day trade long exit alert! shares of Sun Micro (JAVA) at the bid of $4.62

Jeff Bailey : 10/31/2008 3:18:44 PM

Java $4.65 -12.09% ... just sitting here, the trade has been slow.

Jeff Bailey : 10/31/2008 3:17:30 PM

NYSE a/d 2,287/684

NASDAQ 2,140/729

Jeff Bailey : 10/31/2008 3:15:46 PM

As if offers just got lifted.

Jeff Bailey : 10/31/2008 3:15:42 PM

All energy (oil, gasoline, natural gas) showed quick gains at futures open outcry close.

Jeff Bailey : 10/31/2008 3:13:45 PM

HUI.X 201.44 -0.60% ... only equity-based index/sector in red now.

Keene Little : 10/31/2008 3:07:46 PM

Correction to my SPX 120-min chart--I had the wrong wave label for the dark red wave count for the next leg down. Corrected chart: Link

Tab Gilles : 10/31/2008 3:07:21 PM

Re-post from 3 weeks ago

I posted this chart 3 weeks ago, noting the similarities on the $SPX from 2001. Link

Again I've got the SPY Call Spread on the radar as mentioned earlier today. Let's see if it holds above its 21-ma (96).

Jeff Bailey : 10/31/2008 3:06:27 PM

QQQQ $33.38 +1.67% ... prarie dogs GREEN #6

Keene Little : 10/31/2008 3:04:45 PM

If the market can continue to push a little higher, I like the confluence of Fibs and trend lines around SPX 1000. It can certainly continue higher (1050 being the next upside target) but the way the leg up from Wednesday is progressing it has me thinking we're getting an a-b-c move up from Tuesday where the c-wave could finish near the 62% projection of wave-a (so at 1000). And that's right where the longer-term uptrend line from 1990 is located.

Assuming it will make it up that high and then turn back down there will be two potential wave counts from there: one, is immediately bearish and calls for a hard drop below the October 2002 low of 768; or two, another drop back down to the trading range we've been in since October 10th as it hammers out a sideways triangle into mid November, shown in pink on this 120-min chart: Link

The updated daily chart shows that each of the 3 possible wave count ideas that I'm presently considering all end up near the same place around the same time--in the 660-770 area by the end of November/beginning of December. From there we should get another big bounce into the new year. Link

Jeff Bailey : 10/31/2008 3:03:56 PM

We've gotten a taste of what most Dems think of the stock market vs. helping the "unfortunate."

Add the possible $700B (thanks to dem/rep) and there may be more at risk than has been factored in.

McCain in the balance.

Remember the futures reaction last two elections, and you know it isn't always factored in.

Jeff Bailey : 10/31/2008 3:01:12 PM

I would agree somewhat with Mr. Hulbert.

But do I trust what has been said?

At risk this year would be Dem Pres and Dem House/Senate.

Jeff Bailey : 10/31/2008 2:59:15 PM

Firing up the news feeds ... not sure what happened with oil at about 02:20-02:25

Jeff Bailey : 10/31/2008 2:57:59 PM

PBR $27.24 +0.81% ... #37 most active now.

Jeff Bailey : 10/31/2008 2:56:35 PM

USO alert! ... $55.60 +2.96% ... just seeing

Tab Gilles : 10/31/2008 2:46:23 PM

Watching CNBC, Prof. Jeremy Seigel just made an interesting comment:

Discussing how equity valuations are cheap and trading around 10/11 times earnings. He noted...an this is what caught my attention... on the S&P 500 if you take out General Motors, Ford and Sprint earnings, they account for 14% of the $SPX. WOW! 3 stocks accounting for a 1/7 of the indexs lower earnings!

Keene Little : 10/31/2008 2:43:33 PM

The quick pullback has been left as just another correction. The choppy rise continues. Big effort to hold this market up right now.

Jeff Bailey : 10/31/2008 2:39:34 PM

HUM -3.94%

AET -5.93%

UNH +6.92%

Jeff Bailey : 10/31/2008 2:38:20 PM

Cigna (CI) $17.29 +10.97% ... prarie dogs DAILY Pivot.

Keene Little : 10/31/2008 2:27:32 PM

The test of the October 20th highs acted a bit like a live wire--sharp pullback. But so far the pullback is just a 3-wave move which fits as a correction. We'll have to see what it turns into. Competing with those who want to see the week finish on a strong note will be those fund managers who stuffed their pockets with stocks this week that they don't really want and who will unload them before the weekend. So it could get volatile towards the end of the day.

Jane Fox : 10/31/2008 2:17:30 PM

Mark Hulbert, editor of the Hulbert Financial Digest, says that no matter how the presidential election turns out, it won't alter the path of the market in November. Hulbert says that the market historically has done such a good job of anticipating the future that by the time the vote is in the market has already priced the results into stocks.

Jeff Bailey : 10/31/2008 2:11:32 PM

02:00 Internals at this Link

Jane Fox : 10/31/2008 2:08:10 PM

WASHINGTON (MarketWatch) -- Federal Reserve board chairman Ben Bernanke on Friday launched the public debate over what the government should do with Fannie Mae and Freddie Mac once the financial market crisis is over. The government took over the two mortgage giants last month after they were judged to be operating in "an unsafe and unsound manner," Bernanke said. In a speech to a conference on the meltdown in the mortgage industry at the University of California, Berkeley, Bernanke said that some form of government guarantee is going to needed if the mortgage securities business recovers. This must be considered if Fannie Mae and Freddie Mac are privatized, he said. The government might create a government mortgage bond insurer to get around this obstacle, he said. Covered bonds, which are popular in Europe, are another attractive option, but at the moment these securities can't compete with Federal Home Loan Bank funding for mortgage assets, Bernanke said. Whatever course is chosen, the GSEs must be forced to shrink their loan portfolios, he said.

Tab Gilles : 10/31/2008 2:08:47 PM

Top 10 monthly percentage losses in the DJIA- October Declines Link

Keene Little : 10/31/2008 1:54:41 PM

SPX and RUT are nearing their October 20th highs (near 986 and 547, resp.) and there could be a stop run above them (or we'll get a double top). NDX is testing its 10/20 high now. The DOW is already above its 10/20 high which shows the greater amount of manipulation (in my opinion) to get the DOW higher so that Mom and Pop feel better about the stock market.

Jeff Bailey : 10/31/2008 1:39:37 PM

CNBC guest thinks a surprise McCain victory could mean 1,000 Dow points.

Those that were with us here in the MM at past elections, should know the implications.

Jane Fox : 10/31/2008 1:38:19 PM

Don't look now but the DOW is up 238 points.

Jane Fox : 10/31/2008 1:36:19 PM

AIG treated its CDS business the same way it treated all the other lines. Insurers sell policies for lots of cars and houses, betting that only a few customers will have wrecks or devastating fires.

Any one house burning down doesn't increase the likelihood that lots of other houses will burn down but unfortunately that doesn't apply to bond insurance.

with bonds, one default creates a domino effect. Investors lose confidence in the market. Interest rates spiral. Borrowers can't find new capital to stay afloat.

The first domino that started the ripple affect was Lehman.

Too bad AIG didn't think this through better.

Keene Little : 10/31/2008 1:35:12 PM

While the current rally continues to show weak breadth you can't argue with price when that's all the matters for your trade. There's very likely an agenda to paint the tape--for month/quarter/year end and heading into an election. The weak breadth tells us the indices are being propped up (that's what people see) but when the reason for the lift is removed it can all reverse very quickly.

Jane Fox : 10/31/2008 1:32:27 PM

AT least that is what the banks/hedge funds who were making a killing with them were saying.

Jane Fox : 10/31/2008 1:30:48 PM

Oh any by the way CDSs are all unregulated. Yup no one to watch over them because they were too complcated for the regulators to understand.

Jane Fox : 10/31/2008 1:28:25 PM

There are $5 trillion worth of bonds issued in the world, but the total amount that people have bet on those bonds is $60 trillion. For every one person insuring a bond with a credit default swap, there are more than 10 people betting on it.

Jeff Bailey : 10/31/2008 1:28:05 PM

NASDAQ a/d 1,936/786

Jane Fox : 10/31/2008 1:27:15 PM

Let me rephrase that they all HAD CDS desks.

Jeff Bailey : 10/31/2008 1:27:03 PM

Day trade long alert! ... for 1/2 position in shares of Sun Micro (JAVA) $4.68 here.

Stop goes $4.60. Target $4.80.

Jane Fox : 10/31/2008 1:26:01 PM

A credit default swap is what they call an over-the-counter instrument. It's not something that's traded publicly on an exchange, like a stock. Instead, it's a private deal between any two people with more than $5 million ? so that means, effectively, someone at an investment bank, or a hedge fund, or at a big commercial bank like Citibank and Credit Suisse. They all have credit default swap desks.

Jane Fox : 10/31/2008 1:25:27 PM

Here is a quick and dirty explanation. If you own a bond and you want to transfer the risk to someone else you buy insurance, this is the way CDSs started out. But then someone had the idea what if I bought that protection but without owning the bond. Let's relate it something we all understand, fire insurance. You take out fire insurance on your home to protect yourself but what if 1000 other people also take out fire insurance on your home. They are betting your home will burn down. When your home does burn down the insurance company who holds these policies not only has to pay you but all the others who took out this insurance. This is why AIG is in trouble. A lot of homes were suddenly burning down.

Jeff Bailey : 10/31/2008 1:25:17 PM

Prudential (PRU) $30.00 +3.91% ... erases % loser losses

Jane Fox : 10/31/2008 1:14:40 PM

I am listening to a program on Credit Default Swaps - no kidding. OK I need a life.

Jeff Bailey : 10/31/2008 1:12:22 PM

VIX.X alert! ... 59.25

Jeff Bailey : 10/31/2008 1:12:08 PM

Incredible action, its out of sight.

Don't forget folks, it's Halloween night!

Jeff Bailey : 10/31/2008 1:11:23 PM

UNH $23.02 +2.81% ...

Jeff Bailey : 10/31/2008 1:11:11 PM

AET $23.47 -9.52% ...

Jeff Bailey : 10/31/2008 1:10:52 PM

HUM $27.59 -7.04% ..

Jeff Bailey : 10/31/2008 1:10:17 PM

Cigna (CI) $15.29 -1.86% ... back to 5-mrt #0

Keene Little : 10/31/2008 1:07:31 PM

I've been corrected on my post about the past years' gains (12:46 PM). I'm told there have been several years greater than that, some just within the past 10 years. So much for believing everything you read (wink).

Jane Fox : 10/31/2008 12:59:57 PM

Heh Tab nice to have you back. Where have you been?

Tab Gilles : 10/31/2008 12:58:45 PM

I forgot about Ben speaking today...thanks Jane.

Tab Gilles : 10/31/2008 12:55:25 PM

JP Morgan Chase (JPM) $39.80 +$2.19 (5.82%)

JPMorgan to Modify $110 Billion Mortgages Including WaMu Loans

By Elizabeth Hester

Oct. 31 (Bloomberg) -- JPMorgan Chase & Co., the largest U.S. bank by market value, plans to modify $110 billion of mortgages, including some of those made to Washington Mutual Inc. customers.

The bank won't put any loans into foreclosure while it follows through on plans to open regional counseling centers during the next 90 days, the New York-based company said in a statement today.

Jane Fox : 10/31/2008 12:48:54 PM

Don't forget we have Bernanke speaking at 2:00ET today.

Jane Fox : 10/31/2008 12:47:30 PM

Oct 31 (Reuters) - The Reuters/University of Michigan Surveys of Consumers' October final consumer sentiment index fell to 57.6 from September's final reading of 70.3, according to a report released on Friday. Economists in a Reuters survey expected a final October reading of 57.5

Jane Fox : 10/31/2008 12:46:45 PM

Oct 31 (Reuters) - The Institute for Supply Management-Chicago said on Friday its index of Midwest business activity fell in October to 37.8 from 56.7 in September. Economists polled by Reuters had forecast a October figure of 48.0.

Keene Little : 10/31/2008 12:46:39 PM

It's been quite a week. If SPX were to close near here (960) it would be a gain of +9.5% for the week. I was just reading that a gain of +9.5% would make it the 3rd best YEAR if the year closed with a +9.5% gain. We're talking about just one week. Pretty amazing volatility. But alas, this year has thus far produced the greatest loss in history, even worse than 1929 and 1987 (which had stronger rallies into September before collapsing in October).

Jeff Bailey : 10/31/2008 12:41:18 PM

Assuming the SPX were to close in here ... next week's WKLY Pivot levels would be ... 804, 883, Piv= 925, 1005, 1047

Jane Fox : 10/31/2008 12:37:37 PM

The Troubled Asset Relief Program (TARP), the program designed to buy the toxic assets from troubled financial institutions has a mission to shore up balance sheets and spur economic growth through lending. However, the banks that have participated are being ordered to lend the money but can't find qualified borrowers because during a recession people and business batten down the hatches and quit borrowing.

Then there are some banks that never once bought or sold a subprime loan, are very well capitalized but are getting pressured into participating in a program they do not need nor want. Sort of like all the Americans who will have to participate in bailing out those folks who did participate in the subprime debacle.

Jeff Bailey : 10/31/2008 12:36:42 PM

VIX.X 60.81 -3.32% ... has yet to trade its WKLY S1 this week. Prints a "doji" on 60-minute interval. Still eyeballing that "bad tick" to 53.71 from Tuesday.

Tab Gilles : 10/31/2008 12:35:48 PM

Tear-ups reduce global CDS volumes by $25T-ISDA

NEW YORK, Oct 31 (Reuters) - Volumes traded in the credit derivatives market have fallen by $25 trillion in 2008 as banks and investors simplified their positions by cutting down on contracts that offset each other, according to the International Swaps and Derivatives Association.

The effect of the reduction likely reduces total volumes to $46.95 trillion, before accounting for new trades made since July 1.

ISDA said last month that volumes had dropped 12 percent in the first half of 2008 to $54.6 trillion, from $62.3 trillion at the end of 2007.

The industry is working to simplify exposures by reducing trades that offset each other and by netting trades.

So-called "netting" involves reducing a portfolio of trades down to one number, which simplifies the settlement of the contracts.

"This reduction in notionals is major progress by anyone's standards," ISDA Chairman Eraj Shirvani, who is also Co-Head of Credit Sales and Trading at Credit Suisse, said in a release.

"That we have been able to reduce outstanding CDS by more than $25 trillion during this period of immense growth and activity for our products is testament to the will and force behind the industry's efforts to keep operational issues firmly in check," he added.

Credit derivatives are used to hedge against corporate or other borrowers defaulting on their debt. They are also used to speculate on a borrower's credit quality.

The so-called notional figures represent activity in the contracts and do not measure the actual amount of credit at risk.

"Notional outstandings are often misunderstood," Robert Pickel, Chief Executive at ISDA, said in the release.

"While they tend to give an exaggerated impression of amounts at risk, reducing notionals helps both front and back offices. Cancelling out economically offsetting transactions reduces the cost and operational workload of managing those transactions," he said.

The Federal Reserve Bank of New York

To date in 2008, tear-ups have eliminated more than $24 trillion of CDS trade notional amounts, reducing the notional amount outstanding by more than one-third. Link

Jeff Bailey : 10/31/2008 12:26:11 PM

SPX 959.64 +0.58% ... last time the SPX was able to close ABOVE its WKLY R1 was 08/08/08.

Following Monday, SPX sprinted to that WKLY R1 by mid-day, but that was it.

Jeff Bailey : 10/31/2008 12:21:57 PM

12:00 Internals found at this Link

Jeff Bailey : 10/31/2008 12:16:05 PM

Pct gainers/losers @ 12:10 Link

Good tool for some day trade scalp ideas.

Keene Little : 10/31/2008 12:12:45 PM

Reading those numbers that Jane posted (12:04 PM) are astounding. A few hundred billion here and a few hundred billion there--pretty soon we're talking some serious money! The dollar is based on the good faith and sound financial policies of the U.S. government. I'm starting to feel a bit nervious about that one.

Jeff Bailey : 10/31/2008 12:12:08 PM

MFE $30.89 +11.31% ...

Jeff Bailey : 10/31/2008 12:11:47 PM

SYMC $12.84 +5.24% ... got whacked yesterday.

Tab Gilles : 10/31/2008 12:08:56 PM

S&P 500 SPDR (SPY) $96.30 UNCH

The SPY has been hovering around it's 21-ma of $95. Near term it is holding above a one-month trendline, however, I would like to see how it holds going into today's close going into a weekend?

With the election this Tuesday, it could provide the catalyst needed to send it higher, PT $105/$110 area. On the bearish side a re-test of the $85 base sets up a technical wedge formation.

November/December historically tends to be bullish months for equities, while September/October are bearish (an understatement).

I've got another Call Spread on the radar, for the SPY. December $95 SWG-LQ as a BUY & December $100 SWG-LV as a SELL. I'm watching this trade closely, looking at the last 30 minutes of today trading along with Monday on entering a 1/2 position prior to the election and another 1/2 post-election. *Watch the SPY to hold above 95.

Charts: Daily-- Link 60 minute-- Link

Jeff Bailey : 10/31/2008 12:07:41 PM

NASDAQ NH of 7 challenges the 8 from 10/14/08

Keene Little : 10/31/2008 12:04:57 PM

Another opinion on the RUT (thanks Barry):

For what it is worth, I think the Russell was most likely very heavily shorted since funds could not go short most of the S&P for several weeks. We may get a melt UP now as they cover.

Jane Fox : 10/31/2008 12:04:17 PM

WASHINGTON (MarketWatch) -- The Federal Reserve had bought $144.8 billion in commercial paper as of Wednesday, bringing the total funds provided to the financial system to $922 billion, the Fed reported Thursday. In addition to the new commercial paper program that began Monday, the Fed extended $301.4 billion in term auction credit to banks, $110.7 billion in discount window loans to banks, $96 billion to money market funds, $83.5 billion in AIG, $80 billion in repurchase agreements, and $79.5 billion in credits to primary dealers. The value of its stake in the former Bear Stearns fell to $26.9 billion.

Jeff Bailey : 10/31/2008 11:54:32 AM

USO at 5-mrt #0. Morning high almost hit GREEN #2, couldn't get a 5-minute close above GREEN #2.

Jeff Bailey : 10/31/2008 11:52:26 AM

PBR at 5-mrt #0. Morning low marked by RED#2.

Jeff Bailey : 10/31/2008 11:50:36 AM

Most Actives ... EEM $25.62 -0.11% (very rare to see #1), INTC $16.27 +0.61%, CSCO $17.50 -1.63%, SPY $96.44 +0.13%, MSFT $22.24 -1.72%, QQQQ $32.81 -0.09, AAPL $108.12 -2.63%, ORCL $18.30 -0.10%, LVS $12.70 +22.35%, PBR $25.85 -4.33% (rather rare to see PBR in top 10)

Keene Little : 10/31/2008 11:47:04 AM

SPX is pushing back up for what might be a test of Wednesday's post-FOMC high. But the bearish divergences on the 30 and 60-min charts are glaring. Hard to trust the upside here, in fact I don't. I see failure written all over the rally leg from yesterday's low.

Jeff Bailey : 10/31/2008 11:38:00 AM

Looks like "rebalancing" continues among asset classes.

Keene Little : 10/31/2008 11:39:47 AM

What's your take on why the Russell is so strong today?

I think they got dumped harder during the selloff so a combination of more short covering and possibly end-of-month/quarter/year window dressing as funds need to get their "balanced" portfolios rebalanced for their statements. Just a guess on that but possible.

I think there are a lot of fund managers who believe we've put in a longer-lasting bottom and are now hoping to improve their year-end results (for their bonuses) by buying the higher-beta stocks. We saw the same thing happening during the bounce into August and September where the RUT was the only one to test its May/June and August highs (that was a beautiful triple-top short play setup back in September). Then when they realized they were wrong they bailed quickly and the RUT led to the downside and sold off harder than the others into the October low, including lower lows after October 10th. Daily chart: Link

I suspect we'll see the RUT lead to the downside again once they realize that the market is not ready to rally into the end of the year (not yet anyway). The RUT is a great trading vehicle if you can get on the right side of that one. If we get a strong leg up into next week, as part of a stronger c-wave for the a-b-c bounce off the October 10th low, the RUT will probably continue to lead to the upside. Be careful if short that one. Potential upside is back above 600 next week.

The flip side is for a massive dump starting early next week as a 3rd of a 3rd wave down from the October 14th high gets underway. As long as the RUT stays below the October 17th high near 553 that remains a possibility. I'll put it this way, I definitely would not want to be long over this weekend. In fact I'd want to take a few puts home with me just in case. If the market doesn't drop hard on Monday then just give them back. Good insurance.

Jeff Bailey : 10/31/2008 11:30:18 AM

CI, HUM, AET, UNH (clockwise) Montage Link

Jeff Bailey : 10/31/2008 11:19:38 AM

I have "conventionals" of roughly August highs to the mid-October lows. Can "stack lower" your retracements, or simply add negative 19.1%, -38.2%, -50%, and so on. CI's -50 $9.80. Today's low so far ... $9.85.

Jeff Bailey : 10/31/2008 11:17:29 AM

CI $12.50 ... trades -38.2% ...

Tab Gilles : 10/31/2008 11:13:29 AM

Apple (AAPL) $106.90 -$4.18 (3.8%)

Suggested Call Spread from yesterday:

QAA-LC $7.05 Bid/ QAA-LD $5.40 Ask/ Net $1.65; cost basis $2.20 -$0.55 (25%)

Keene Little : 10/31/2008 11:13:18 AM

Using the sideways triangle idea on the DOW chart (the one that will run well into November) it would look something like this: Link . This obviously assumes for the moment that Wednesday's high will hold. We'll soon know whether that will be true or not. I show a downside projection into December at 6684 which is where the 5th wave would equal the 1st wave in the 5-wave move down from May. This is only conjecture at the moment but I thought I'd share what it would look like on the DOW.

Tab Gilles : 10/31/2008 11:09:55 AM

ECRI Chart: The Coincident Index is a composite of several economic indicators (includes measures of production, employment, income and sales) that provide an indication as to the current state of the US economy. Link

Jeff Bailey : 10/31/2008 11:02:38 AM

Balanced, but bearish.

Jeff Bailey : 10/31/2008 11:02:15 AM

One "reason" we may go OUT-the-money with the UHB-XW is the pair of long HUM-MF and the covered short HUM-WE.

Jeff Bailey : 10/31/2008 11:01:00 AM

VIX.X 63.38 +0.76% ...

Jeff Bailey : 10/31/2008 10:59:39 AM

Swing trade put alert! ... for one (1) of the United Health UNH Dec. $17.50 Puts (UHB-XW) at the offer of $1.20.

UNH $21.60 -0.79% ...

Jeff Bailey : 10/31/2008 10:56:24 AM

CI Link

HUM Link

AET Link

UNH Link

Jane Fox : 10/31/2008 10:50:06 AM

The Reserve Fund's president has come out and said he, "Sincerely regrets the inconvenience" of getting 50 cents on the dollar 6 weeks late will cause the shareholders. Now that is a hoot.

Some of the shareholders have reported they needed to take out loans to pay their bills. Yup that is an inconvenience. That statement was almost a slap in the face.

Keene Little : 10/31/2008 10:49:33 AM

I've shown in the past couple of days how SPX is fighting to get through its 20-dma, last hit on the big rally of September 19th. Others are facing the same moving average resistance. VIX is currently finding it to be support: Link

Jeff Bailey : 10/31/2008 10:48:59 AM

United Health (UNH) $21.56 -3.70% ... holding tough.

Jeff Bailey : 10/31/2008 10:48:23 AM

Cigna (CI) $10.53 -31.96% ... is this what HUM will look like Tuesday?

Jeff Bailey : 10/31/2008 10:46:47 AM

Aetna (AET) $22.60 -12.76% ... Looks like HUM yesterday.

Jeff Bailey : 10/31/2008 10:43:57 AM

Not that either of this year's candidates "health insurance" plans would be overly beneficial to the group, but it has been my opinion that there is certainly a "lesser of two evils" for the health insurers.

Jeff Bailey : 10/31/2008 10:41:50 AM

Some polls have Senator Obama handily ahead, other have Senator McCain within 3 points and closing rapidly.

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

Humana (HUM) $26.98 -9.0% ... notable weak and another 52-weeker.

Jeff Bailey : 10/31/2008 10:38:33 AM

Swing trade call LOWER target alert ... for the US Nat. Gas Fund UNG Jan $36 Call (UNE-AJ) to $43.00 in the underlying.

UNG $27.73 -0.25% Link ...

Jane Fox : 10/31/2008 10:34:04 AM

Looks like the Reserve Primary Fund, the money market fund that froze disbursements for over 6 weeks, is starting to mail out checks to shareholders today. That is the good news. The bad news is they will be getting 50 cents on the dollar - ouch.

This may be the first installment and the balance may come later when more cash becomes available.

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

European Markets Link ... Mostly higher in the last 1/2 of the session. France's CAC-40 off 0.43% at 3,393

Jeff Bailey : 10/31/2008 10:26:45 AM

Asian Markets Link ... finished mixed. Japan's $NIKK off 5.01% at 8,577 after BOJ lowered its OCR 20bp to 0.3%. Hong Kong's $HSI lower by 2.52% at 13,968. Mainland China's $SSEC lower by 1.97% at 1,729.

Jeff Bailey : 10/31/2008 10:23:13 AM

Friday's Global Econ. Calendar Link

Keene Little : 10/31/2008 10:17:26 AM

We've got new highs for the DOW and SPX (and RUT) but not NDX so we've got some divergence. That combined with a very choppy rise since yesterday's lows has me thinking this push higher won't last. But again, don't argue with price if your stop is getting run over.

Jane Fox : 10/31/2008 10:16:29 AM

AD line as "improved" to +123.

Jeff Bailey : 10/31/2008 10:16:23 AM

10:00 Internals at this Link

Jane Fox : 10/31/2008 10:16:06 AM

VIX is now making new daily lows supporting S&P futures' new daily highs. Link

Jeff Bailey : 10/31/2008 10:14:11 AM

SPX 956.56 +0.25% ...

Jeff Bailey : 10/31/2008 10:13:49 AM

Dow Transports (TRAN) 3,773 +1.24% ... retraces 19.1% of 06/05/08 all-time high close to recent 10/27/08 52-week low close.

Keene Little : 10/31/2008 10:10:44 AM

Often times you'll see similar patterns at the tops and bottom of moves--as above, so below. If you look at the way price chopped around last Thursday and Friday and then made a stab lower on Monday (lower for SPX but not NDX), we could get the opposite kind of price action at the top of the move here. Price has been chopping around since yesterday and we could see it continue today followed by a stab higher on Monday before pulling back. That's just a guess right now but it's looking eerily similar here (think of it as a mirror fractal pattern). We'll see how the rest of the day plays out in that regard.

Jane Fox : 10/31/2008 10:04:59 AM

The markets are trying their best to rally but they need to overcome yesterday's highs first and with the internals as bearish as they are I'm not sure that resistance will be broken easily.

Jane Fox : 10/31/2008 10:05:26 AM

Interestingly the markets are not falling even though the internals are saying they should. As my sister always tells me, "There are no shoulds in life."

Keene Little : 10/31/2008 10:00:33 AM

NDX is leading us to the downside this morning so that sets a bearish tone. I liked the setup for a short yesterday as it was jammed higher into the close for another retest of yesterday's broken uptrend lines. They did a masterful job at jamming the shorts out of the market again. Now we'll see if yesterday's highs hold. We should get at least a pullback to correct this week's rally.

Jane Fox : 10/31/2008 9:49:55 AM

VIX is climbing supporting the bearish AD line so no doubt the bears are in contorl.

Jane Fox : 10/31/2008 9:40:18 AM

AD line opens at -793 so the bears have the ball.

Jane Fox : 10/31/2008 9:36:05 AM

It looks to me that Crude is trying to hammer out a bottom here but I would be more convinced if the MACD was in the process of building a bullish divergence but it is not.

I paid $2.53/gal for gas at Costco earlier this week, a price I never thought I would see again. Link

Keene Little : 10/31/2008 9:30:08 AM

Equity futures had dropped sharply to a low near 5:00 AM before getting ramped higher this morning to a high that came close to the flat line. Manipulation to try for a flat market open? We've seen it too many times. But now we've got the overnight lows acting as magnets after the open.

Jane Fox : 10/31/2008 9:23:45 AM

HONG KONG (MarketWatch) -- The Bank of Japan's policy board decided Friday to cut its base lending rate to 0.3%, abandoning its goal of normalizing interest rates in favor of injecting stimulus into the No. 2 global economy in an effort to head off recession.

Jane Fox : 10/31/2008 9:19:52 AM

This October has been the worst October since 1987 but as of Monday it is all behind us. Ok Ok December is not shaping up to be much better but we at least have an idea of just how bad things are and we have all survived it. We now just have to heal the wounds and try our best to not sustain any more.

Jane Fox : 10/31/2008 9:12:10 AM

Even though we had some pretty dismal news out at 8:30ET the futures are staging a comeback. Link

Jane Fox : 10/31/2008 9:08:57 AM

WE now wait for the 9:45 release of the Chicago PMI, then the revised UoM Consumer Sentiment at 9:55 which includes the revised UoM Inflation expectations.

Bernanke is also scheduled to talk at 2:00ET today.

Jane Fox : 10/31/2008 9:05:54 AM

WASHINGTON, Oct 31 (Reuters) - U.S. consumers cut their monthly spending for the first time in two years during September, evidently bracing for hard times as jobs continue to disappear and credit conditions tighten.

A Commerce Department report on Friday showed that consumer spending shrank by 0.3 percent in September and was flat in both August and July. That was in line with forecasts by Wall Street economists surveyed by Reuters and underlined the steady weakening in spending, which fuels two-thirds of U.S. economic activity.

The decline in monthly spending was the first in two years and the largest since a matching 0.3 percent fall in May 2005. Many private-sector economists consider the U.S. already has entered a recession, especially since a report on Thursday that showed gross domestic product contracted during the third quarter.

Jane Fox : 10/31/2008 9:04:20 AM

Washington, October 31 - US employment costs rose at their slowest annual pace in two and a half years last quarter, due in part to flat compensation costs for financial service sector workers, the Labor Department said today.

Overall employment costs rose 0.7% in the third quarter, in line with the consensus estimate of Thomson Reuters IFR Markets. For the twelve months through September, compensation costs rose 2.9%, the slowest yearly pace since the first quarter of 2006.

Benefit costs rose 0.6% for the third consecutive quarter, leaving the annual gain at 2.6%. Wages and salaries rose 0.7% for the second straight quarter and have now risen 3.1% in the past year.

Jane Fox : 10/31/2008 9:02:58 AM

Personal income increased $24.5 billion, or 0.2 percent, and disposable personal income (DPI) increased $25.7 billion, or 0.2 percent, in September, according to the Bureau of Economic Analysis.

Personal consumption expenditures (PCE) decreased $33.6 billion, or 0.3 percent. In August, personal income increased $44.8 billion, or 0.4 percent, DPI decreased $107.7 billion, or 1.0 percent, and PCE increased $4.5 billion, or less than 0.1 percent, based on revised estimates. Excluding the rebate payments under the Economic Stimulus Act of 2008, DPI increased $30.3 billion, or 0.3 percent in September, and increased $44.0 billion, or 0.4 percent in August.

Keene Little : 10/30/2008 11:41:20 PM

Friday's pivot table: Link

The chart that I'm going to be using for at least the next several days is the SPX daily chart as I think it holds the secret for where this market is going (or not going) next. Above 1005 and I think we'll see 1050 and a quicker end to the correction from the October 10th low; back below Tuesday's low near 845, especially if the market drops quickly to that level, should see 768 and probably lower; otherwise I foresee a sideways triangle playing out into November (full of more of the same chop and whipsaws). Link

Jeff Bailey : 10/30/2008 11:22:22 PM

Closing Internals at this Link

Jeff Bailey : 10/30/2008 11:07:53 PM

Closing U.S. Market Watch Link

OI Technical Staff : 10/30/2008 9:59:59 PM

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