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Jeff Bailey : 12/2/2008 9:50:14 PM

Rather large volume on 60-minute interval in Petroleo Brasileiro (PBR) from $17.71-$18.71 of 1.5 million shares today.

5-minute interval has 1.03 million $18.35-45. Call it $18.40

Jeff Bailey : 12/2/2008 9:23:25 PM

SMH 60-minute interval chart Link ... Perfect example of a SECTOR reliant on the MARKET at this point. See ... NO reverse h/s pattern. Did manage to reclaim its MNTHLY 38.2% and WKLY S1 by the close.

Jeff Bailey : 12/2/2008 9:09:56 PM

Major Global Equity Indexes, Currencies, USO, GLD, HUI.X, OIX.X, XLF, DJUSHB Link

One could begin to make the case that the QQQQ/NDX is WEAKEST U.S. index, however Q4-to-date still too notable.

Jeff Bailey : 12/2/2008 9:04:47 PM

SMH $15.96 +2.76% ...

BIX.X 128.86 +8.64% ...

Jeff Bailey : 12/2/2008 9:03:58 PM

FXY finished fraction lower at 106.93 -0.03% ...

FXE finished higher at $127.15 +0.96%

Jeff Bailey : 12/2/2008 9:03:03 PM

VIX.X finished 62.98 -8.07% ...

Jeff Bailey : 12/2/2008 8:57:03 PM

Some of today's MM charts after system outage were covered in the Intraday Market Updates ... Link and Link

Jeff Bailey : 12/2/2008 2:46:33 PM

Check out the "cradle" of the very, very, very short-term upward trend and the downward trend from the 09/19/08 relative high to recent 11/04/08 relative high. And your 38.2% MONTHLY Pivot retracement of 422.74.

Jane Fox : 12/2/2008 2:45:17 PM

Crude has dropped to new yearly lows, something I didn?t think it would do. However, the MACD is still telegraphing an underlying bullishness. This along with Crude is way overdue for a little relief rally makes me very hesitant to be short here yet again taking a long position has proven to have been dangerous to your bank account. Link

Jeff Bailey : 12/2/2008 2:39:36 PM

Oooooeeee ... RUT.X 426.59 +2.28% ... with your MONTHLY Pivot retracement and that very, very, very short-term trend.

Keene Little : 12/2/2008 2:38:33 PM

ES (SPX) did not close its gap up this morning and just dropped down to its morning low at 817.75. It will close its gap with a tag of 816. It's anyone's guess as to whether it will hold or not. If we get a brief consolidation and then press lower again we'll have a clear impulsive 5-wave move down from today's high (which would indicate the downtrend is still alive and well). However, the jury is still out on that--this decline so far fits as a very sharp 3-wave pullback and could lead to another rally leg. So this morning's low just might hold.

Jeff Bailey : 12/2/2008 2:36:02 PM

5-year YIELD ($FVX.X) juuuuuuuust undercut yesterday's low. Off 7 bp at 1.655%

Jeff Bailey : 12/2/2008 2:30:55 PM

USO
o
o
o
$38.08 -4.58%

Jeff Bailey : 12/2/2008 2:27:58 PM

About 422.50. ... RUT.X stilllllllll above at 424.13 +1.69% ... DAILY S1 399.19.

Jeff Bailey : 12/2/2008 2:26:40 PM

Now you jump over to the RUT.X and get THAT very, very, very short-term upward trend on its chart.

Jeff Bailey : 12/2/2008 2:25:53 PM

When the STRENGTH starts to soften up ....

Keene Little : 12/2/2008 2:25:39 PM

Actually for the strangle play idea I'm looking at upside potential for SPX back up to its downtrend line from November 4th, currently near 880. But this afternoon's decline is lessening the probability of that kind of bounce at the moment. Just keep in mind that even a minor new low below yesterday's does not negate the possibility for another strong rally leg back up. Such is the nature of the pattern we're in--about the only thing we can expect is volatility, chop and whipsaw. Make no assumptions about any follow through.

Jeff Bailey : 12/2/2008 2:25:11 PM

You KNOW what a small-capper is thinking here ... Uh-oh.

Jeff Bailey : 12/2/2008 2:24:41 PM

DIA now below that very, very, very short-term upward trend.

Jeff Bailey : 12/2/2008 2:24:19 PM

Now you can "flip" to a 15-minute if you'd like. See the MACD?

Jeff Bailey : 12/2/2008 2:19:39 PM

OK ... DIA $82.30 ...

Keene Little : 12/2/2008 2:18:58 PM

But, if SPX manages to hold above its new uptrend line and start rallying again (not just a corrective sideways/up consolidation above the trend line), two equal legs up from yesterday's low would be at SPX 857, near the 50% retracement of yesterday's decline. So 857 upside potential and 768 downside potential. We're about in between. You could strangle the market here.

Jeff Bailey : 12/2/2008 2:18:29 PM

Very "quiet" today for cash traders (they focus more on percentages).

Futures traders ... it is all about POINTS.

Jeff Bailey : 12/2/2008 2:17:35 PM

Throw in these 200-times and 300-times leverages ETF's and you can really push the envelope.

Jeff Bailey : 12/2/2008 2:16:59 PM

A couple of months ago I suggested that we as traders needed to start looking at the financials 20% swings per day as being 2.00% to get used to the volatility.

Probably not a bad idea to start doing it with the major averages?

No kidding!

Used to be a 20% move for a YEAR was pretty good.

Keene Little : 12/2/2008 2:15:28 PM

If today's bounce was it (achieved a 38% retracement of yesterday's decline) and we're now heading down again, two equal legs down from Friday's high is at SPX 768--right at the October 2002 low.

Jeff Bailey : 12/2/2008 2:14:27 PM

02:09 PM Market Watch at this Link

Keene Little : 12/2/2008 2:11:27 PM

SPX is testing its new uptrend line from the November 21st low through yesterday's low, here at 827 which makes this level doubly important. It's a good place to try a long since it's the support level that should hold if the bulls have another rally up their sleeve. Tight stop just below 822.

Jeff Bailey : 12/2/2008 2:11:06 PM

OIH -1.49%

HMO.X -1.10%

UTH -0.62%

SMH 15.45 -0.51% ...

Keene Little : 12/2/2008 2:09:19 PM

The selloff looks bearish. The line in the sand for the bulls is 822 (78.6% retracement). Below that and it's new lows here we come.

Jeff Bailey : 12/2/2008 2:07:32 PM

XOM ... No reverse h/s pattern on its 60-minute interval.

Jeff Bailey : 12/2/2008 2:06:45 PM

Sometime you will SEE some "patterns" of an index, represented FULLY in a major component.

Check out IBM. It looks like it should belong in the RUT.X.

See the "right shoulder" in the ear?

Jeff Bailey : 12/2/2008 2:05:16 PM

BIX.X 121.86 +2.74% ... has slipped back below our correlation. Daily Pivot 126.19, pretty much marks the session high of 126.36.

Keene Little : 12/2/2008 2:02:38 PM

If SPX 830 doesn't hold then 827 is at 62% retracement of today's bounce. If that doesn't hold we might have seen all the bounce we're going to get today.

Jeff Bailey : 12/2/2008 2:02:29 PM

IBM $78.44 +2.00% ... WKLY Pivot marks the high of the day at $79.70 on the button. Daily Pivot $78.34. WKLY S1 $77.03 traded late Monday, was under at the open.

Jeff Bailey : 12/2/2008 2:00:29 PM

IBM $78.60 +2.15% ... #1 weight in INDU/DIA

Keene Little : 12/2/2008 2:00:18 PM

We got the pullback and SPX should soon be finding support (830-834) if there's another rally leg coming this afternoon, which is the setup. Consider a long play into the close if it looks like SPX will hold above 830.

Jeff Bailey : 12/2/2008 2:00:06 PM

CVX $74.65 +3.67% ... #3 weight in INDU/DIA

Jeff Bailey : 12/2/2008 1:59:37 PM

XOM $76.53 +2.96% ... #2 weight in INDU/DIA

Jeff Bailey : 12/2/2008 1:59:02 PM

OIX.X 546.41 +2.75% ... WKLY S1 right here.

Jeff Bailey : 12/2/2008 1:56:12 PM

EEV $79.29 -7.79% ...

OGZPY $16.40 +5.12%
CHL $45.64 +4.39%
PBR $18.40 +2.90% ...

Jeff Bailey : 12/2/2008 1:54:01 PM

DIA $83.04 +1.68% ...

Jeff Bailey : 12/2/2008 1:53:31 PM

General Motors (GM) $4.66 +1.52% ... WKLY Pivot here on sales figures headlines.

Jeff Bailey : 12/2/2008 1:51:41 PM

USO also below its 11/20 December futures termination benchmark.

Not a bullish thing.

FRIDAY was unleaded and heating oil's December termination.

Jeff Bailey : 12/2/2008 1:50:04 PM

USO $39.13 -1.98% ... WKLY S1 $39.99. DAILY S1 right here.

Jeff Bailey : 12/2/2008 1:48:15 PM

Another "T-chart" intra-day technique is to look at your market watch.

HMO.X 765.39 (unch) ... and OIH 73.27 +0.17% ...

Keene Little : 12/2/2008 1:46:00 PM

While studying the veins of the leaves for short-term clues as to what's next for the market I thought I'd show the daily chart of SPX with some trend lines and labels on MACD to point out what I'm watching for: Link

The uptrend line along the higher lows of MACD should hold (along with EW labels to match the pink count on price), regardless of whether we get a new low over the next week or not. That would help confirm we're putting in a final low whereas a break of the uptrend line on MACD would clue me into the possibility that we've got a stronger decline in progress (one that will drop through 661).

As for upside potential I would want to see MACD cross the zero line and get into positive territory if SPX breaks above SPX 900. If another rally leg up to the 950-970 area can't get MACD above zero then I'll have more confidence in shorting the rally (MACD rolling back down from beneath the zero line is a good sell signal).

So in addition to the wave counts and trend lines I'm watching MACD to help provide some additional clues. For the time being price is between support and resistance, between trend lines (on MACD as well) and still in a downtrend (and MACD still below zero). Therefore this market is somewhat in limbo at the moment but bearish until proven otherwise.

Jeff Bailey : 12/2/2008 1:45:49 PM

Trading is probably VERY similar to how a child learns "consequences."

Over time and with some experiences learned, a child will begin to "size up" things.

What has happened in the past when I was playing baseball in the house next to mom's vase?

What has happened in the past when I picked up my room without being told?

Jeff Bailey : 12/2/2008 1:41:06 PM

USO 39.49 -1.00% ...

FXY 106.70 -0.25% ...

Could throw both of these in a T-Chart too.

Jeff Bailey : 12/2/2008 1:39:19 PM

DIA's daily pivot from QCharts is $83.14.

Jeff Bailey : 12/2/2008 1:38:08 PM

Now, DIA 83.27 +1.97% ... could "slide" the W S1 (was in the middle, to slightly bullish) back to the left of your t-chart. This is done in the trader's mind.

Jeff Bailey : 12/2/2008 1:36:50 PM

Dow Diamonds (DIA) 60-minute interval. Same type of work as SPX, but DIA allows for a volume study. Perhaps a "bearish support" per trader e-mail. Note the SUBTLE difference in the reverse h/s pattern. Link

At top of chart, I show a "T-chart" of how a trader should look at what the PIVOT levels say about a trader's bias, or institutional computer's bias.

QRTR is LONGER term than MONTHLY and has GREATER POWER.

MONTHLY is LONGER-term than WKLY and has GREATER POWER.

WKLY is longer-term than DAILY and has GREATER POWER.

Keene Little : 12/2/2008 1:21:41 PM

The pattern of the bounce is not clean at the moment and therefore it's difficult to determine whether it will push higher again or pull back a little deeper before resuming the rally. For now I'm assuming we've started the larger pullback which could work its way back down to SPX 830-834. From there another equal leg up (to the one off yesterday afternoon's low) would take SPX up to about 860 by the end of the day or early tomorrow. It would also tag the downtrend line from September. 30-min chart: Link

Assuming that we're going to see more upside we will get to see how price behaves around the downtrend lines from September and November 4th (the latter being the top of a potential descending wedge pattern), currently near 862 and 883, resp. There are multiple possibilities for price direction at the moment which is why I'm not recommending any longer term plays than just day trades. I'm testing each leg along the way here to see what larger pattern develops.

Jane Fox : 12/2/2008 1:12:40 PM

SAN FRANCISCO (MarketWatch) -- Ford Motor Co. on Tuesday reported a 30.6% drop in November U.S. sales to 123,222 vehicles from 177,485 a year ago as the weak economy continued to dampen consumers' appetite for new cars. Ford, Lincoln and Mercury combined car sales fell 31.5% to 37,272 units while truck sales slumped 29% to 81,546 units with sales of the flagship F-Series pickup down 18.6% to 37,911. Volvo brand sales tumbled 46.5% to 4,404 vehicles. Ford earlier submitted to Congress its plans to return to profitability by 2011 in hopes of gaining access to $9 billion in loans.

Jane Fox : 12/2/2008 12:46:28 PM

Although there has been many opportunities to short today the highest probability trades will be long. Link

Jeff Bailey : 12/2/2008 12:45:05 PM

Now, LOOK at the STRONGEST INDU/DIA .... slap your MONTHLY and turn on your WKLY. See its "slightly higher" right shoulder (than the left). This very SUBTLE strength is probably what the bull-side trader should be playing. Not unlike the SPX, it too has its tests.

Jeff Bailey : 12/2/2008 12:42:32 PM

Now, LOOK at the WEAKER RUT.X ... slap your MONTHLY and turn on your WKLY. See its "hunch back" looking reverse h/s pattern? Where the "right shoulder" actually went a little more BELOW the "left shoulder" and grew a bit further in the ear of the head?

That's the WEAKNESS a bull-side trader wants to notice, and a RUT.X trader NEEDS the STRONGER indices to pull it along for the ride.

IF the SPX POTENTIAL h/s pattern is to FAIL, THEN RUT.X the likely clue for the WEAKNESS.

Jane Fox : 12/2/2008 12:38:14 PM

SAN FRANCISCO (MarketWatch) -- Toyota Motor Corp. said Tuesday that U.S. November sales fell 33.9% to 130,307 vehicles from 197,189 a year ago. Toyota U.S. November passenger car sales fell 32.3% to 76,954 units from 113,641 last year, and Toyota light truck sales fell 36.1% to 53,353 units from 83,548 last year. U.S. November Prius sales dropped 48.3% to 8,660 vehicles from 16,737 last year.

Jeff Bailey : 12/2/2008 12:37:09 PM

What would it take for the POTENTIAL reverse h/s pattern to come into play?

WKLY Pivot and MONTHLY Pivot are a technical start.

How about some HIGHER OIL price (know your weightings) and some type of RENEWED BID for the financials.

BIX.X 126.22 +6.41% ... have reversed losses, and they are now ABOVE the overlapping QRTRLY S1 (123.84) and WKLY S1 (123.38).

Jeff Bailey : 12/2/2008 12:32:47 PM

E-mail Question: Dear Jeff,

I noticed that you referred to the S&P and/or DJI breaking thru the downtrend line from the beginning of november, however what is your opinion on the resistance that the major averages are right up against on the downtrend line made from the series of lower highs on September 19 and November 4? it seems that this would be a crucial turning point if it cant break through or even if it does...ofcourse i am a definately an amature trader, but just hadn't heard you mention it and would like your thoughts on it's importance if any for the near term direction.

Jeff's Reply: ... In addition to my 11:36:40 and 11:44:59 I'll add some "symetry" to the "fractal" confusion.

60-minute interval of SPX Link with a very Symetrical reverse head/shoulder pattern POTENTIAL. TRENDS as noted by myself and trader.

This reverse h/s pattern probably getting some play from buyers today (especially shorts - see my EEV notes and protecting gains).

Now, as far as a "downard support trend," or what I like to refer to as "bearish support", that would be currently be the RED/GREEN very, very short-term trend shown at this point.

Keene Little : 12/2/2008 12:27:11 PM

It's possible we're putting in the final high right here (SPX 846 just got tagged) for the leg up from yesterday afternoon to set up a pull back to correct today's rally (and then continue higher again). But if it gets above 846 and holds above then the next upside target is 855-858.

Jeff Bailey : 12/2/2008 11:50:58 AM

Sector action mostly positive with gains spread evenly ... Oil Service HOLDRs (OIH) $71.32 -2.48% ... only equity-based sector I show in the red.

Jeff Bailey : 12/2/2008 11:45:51 AM

VIX and SPX 60-minute intervals, QCharts' WKLY Pivot Levels turned on. Link

SPX very bearish ... BELOW QRTRLY Pivot, BELOW MNTHLY Pivot, BELOW WKLY Pivot.

Keene Little : 12/2/2008 12:00:01 PM

I have noticed you have recently started using the term "fractals" in your market monitor commentary. I hate to assume meanings and intent, so could you clarify your use of the term "fractals" in one of you MM posts?

I'm very bad about using terms I'm familiar with but not explaining myself. So thanks for the question Tom. So here it is:
"frac'tal [frak-tl] - noun Mathematics, Physics. A geometrical or physical structure having an irregular or fragmented shape at all scales of measurement between a greatest and smallest scale such that certain mathematical or physical properties of the structure, as the perimeter of a curve or the flow rate in a porous medium, behave as if the dimensions of the structure (fractal dimensions) are greater than the spatial dimensions."

Now that we have a much better understanding of the term (wink), let me explain what I look for. Essentially they're repeating patterns. EW analysis is based on fractals--I look for 5-wave moves in the direction of the primary trend and then 3-wave corrections. This shows the basic EW pattern: Link . Within the 5-wave move waves 1, 3 and 5 are in the direction of the trend and are themselves 5-wave moves. Waves 2 and 4 are counter to the trend (corrections) and therefore are 3-wave moves (or a variation). Looking at a larger move these patterns repeat and form the basis of EW analysis in fractal geometry: Link

So the pattern grows in this form and becomes repeating. If you look at the pattern in a smaller time frame (a smaller degree of the pattern) you see the same pattern. You see a fractal of the larger pattern. Human beings tend to react the same way in similar circumstances. Social mood swings follow a somewhat predictable path and they cycle. These cycles give me a heads up to what I'm analyzing and looking for.

It's why I was so bearish in 2007 and why I'll get bullish next year once we finish the 5th wave down. I'll flip bullish and bearish within the larger pattern, down to intraday swings, depending on where I think we are in the larger pattern. EW patterns show the swings in social mood and the stock market happens to be one of the best reflectors of social mood and herd mentality (and why fundamentals follow, not lead, the market).

When we look for common trading patterns, such as H&S tops, triangles, flags, pennants, wedges, etc., we look for them on multiple time frames. They are fractal patterns and technical analysis is the recognition of these patterns and we attempt to play them in the direction they normally resolve. We're playing an expectation that the herd will react as it usually does.

That's a long-winded response to the question but I think it's very important to understand since I think it's the root of technical analysis, which is really what we do here every day.

Keene Little : 12/2/2008 11:37:21 AM

If the move to a new high is the 5th wave, it will equal the 1st wave (the initial bounce off yesterday afternoon's low) at SPX 845.60 so keep an eye on that level for possible resistance. The 5th wave has already achieved the minimum upside target at 840.68 (62% of the 1st wave) so we could get a reversal back down at any time (especially since it could struggle with the 840 level--yesterday's consolidation).

Jeff Bailey : 12/2/2008 11:36:40 AM

VIX and SPX daily interval montage with Quarterly (green) and Monthly (dark purple) Link

In sink like a leather glove in the MONTHLY. Cursor box set on yesterday's bar.

Keene Little : 12/2/2008 11:27:18 AM

So far the pullback is relatively small so if it pushes right back up to a new high we may be only in a 4th wave correction for the move up from yesterday. That would mean the new high will complete a 5-wave move up from yesterday afternoon and it would then be followed by a stronger pullback. So if you're long and we get a new high, pull your stop up closer if you don't want to ride out a pullback.

Jeff Bailey : 12/2/2008 11:25:01 AM

I messed up with my EEV stop this morning. Placed a "stop" with a price of $76.40, but didn't check the "trailing stop". So, out another 1/3 at $77.83.

Keene Little : 12/2/2008 11:24:47 AM

The pullback has a corrective look to it and supports the idea that we're going to continue higher after the pullback finishes. I'd be more comfortable long than short here.

Jane Fox : 12/2/2008 11:06:02 AM

Bulls are struggling but still in control so if you go short make it quick. AD line is a bullish +1624 and VIX is hovering at daily lows.

Keene Little : 12/2/2008 10:51:27 AM

The advance off yesterday's low can be considered an impulsive 5-wave move with the 5th wave getting put in now (as a small rising wedge pattern). This 5-wave move should be followed by a pullback to correct this morning's bounce but should then lead to another rally leg. Therefore look for a pullback as a trading opportunity on the long side for another leg up.

Jane Fox : 12/2/2008 10:38:08 AM

Thailand's prime minister resigned today after weeks of protests that closed the capital's airports and stranded many travelers. The protesters promised to lift their siege, and international flights were expected to resume by Friday.

Jane Fox : 12/2/2008 10:34:00 AM

WSJ is reporting General Motors, is expected to focus on efforts to lighten its heavy debt load and consolidate or sell at least one of its eight auto brands, most likely Saab. The Washington Post is reporting Chrysler plans to forge an alliance to share fuel-efficiency technologies and is likely to stress its need for cash to stabilize the company.

Jane Fox : 12/2/2008 10:31:40 AM

Ford Motor Co. plans to tell Congress it's speeding up development of hybrid and electric vehicles, and CEO, Alan Mulally, is willing to take a salary of $1 a year if Ford taps any federal funds, The Wall Street Journal reported.

Jeff Bailey : 12/2/2008 10:27:37 AM

VIX.X 64.50

SPX 833.10

Jane Fox : 12/2/2008 10:26:07 AM

Ford plan steps up development of electric, hybrid vehicles

Ford to spend $14 billion on new technologies over 7 years

Ford hands Congress business plan that sees profit by 2011

Jane Fox : 12/2/2008 10:24:15 AM

The internals are telling you the bulls finally showed up. Link

Jeff Bailey : 12/2/2008 10:19:50 AM

VIX.X 64.97 -5.16% ... sitting on top of Q R2 (64.50)

SPX 835.04 +2.30%

Keene Little : 12/2/2008 10:15:26 AM

So far so good for the bounce. Next Fib projection for the 2nd leg up is at 839.25, just under the breakdown level from yesterday (~840).

Keene Little : 12/2/2008 10:13:15 AM

The bounce off yesterday's low has achieved two equal legs up at SPX 831.29. The bulls want to keep this bounce going now otherwise it's just a correction that will lead to lower prices if it drops back down again.

Jane Fox : 12/2/2008 10:12:01 AM

Looks like the bulls just woke up and realized the markets were open. Testing daily highs now.

Jane Fox : 12/2/2008 10:03:49 AM

Looks like we have Paulson speaking again today at 11:30 and FOMA member Plosser at 12:30.

Jane Fox : 12/2/2008 10:01:44 AM

The bulls cannot get out of bed this morning and the markets are making new daily lows again.

Jane Fox : 12/2/2008 9:57:22 AM

The big 3 automakers are back in Washington today hoping to garner some support from congress. This time, however, they brought a roadmap showing how they will get back to profitability if the American taxpayers help bail them out. (Do you ever wonder why Toyota isn?t in Washington with its hand out?). The details of their blueprints may be revealed after the market closes today.

By the way, Ford's CEP Mulally drove to Washington.

Keene Little : 12/2/2008 9:51:00 AM

NQ is the first to close its gap so techs leading the way to the downside is a heads up for further weakness.

Keene Little : 12/2/2008 9:49:54 AM

So far the gap up is not holding but we so far have nothing more than just a pullback into the gap. Obviously the bulls don't want to see anything more than gap closure. ES has already retraced 62% of the gap up and it's more bullish if it can hold above the 50% retracement. This tilts the odds towards at least gap closure.

Jane Fox : 12/2/2008 9:48:01 AM

Well the markets are making new daily lows even though the internals are bullish. If you are day trading I would just let this all work its way out before trying to determine who has the ball because it is not clear at all yet.

Jane Fox : 12/2/2008 9:43:58 AM

NEW YORK (MarketWatch) -- General Electric Co. said Tuesday it expects fourth-quarter net income of 50 cents to 52 cents a share, the low end of its previously announced range of 50 cents to 56 cents a share, as the conglomerate weathers the credit crisis and the economic downturn.

Analysts expected earnings of 52 cents a share for the component of the Dow Jones Industrial Average , according to a survey by FactSet Research.

GE also said it expects to book fourth-quarter charges of $1 billion to $1.4 billion related to restructuring and other costs as it reviews losses in the current credit environment.

GE reiterated plans to pay a dividend of $1.24 a share in 2009.

Jane Fox : 12/2/2008 9:42:11 AM

... and the VIX is making new daily lows.

Jane Fox : 12/2/2008 9:41:49 AM

The pulse of our patient the market is quite bullish, AD line is +1625

Jane Fox : 12/2/2008 9:41:02 AM

Late start today. Here are your overnight charts. Although they look kinda bullish they really aren't the overnight rally was less than 38.20% of yesterday's drop, of course yesterday's drop was one hum dinger. Link

Keene Little : 12/2/2008 9:24:12 AM

It looks like we're going to have a gap up to start the day and the question of course is whether or not it will hold. Selling off into the close set up a reversal today if we saw a mini capitulation (the way this perverse market has been working). The 2nd leg down yesterday met the typical minimum requirements by achieving 62% of the 1st leg down so it's definitely possible we're not going to get an additional decline as I depicted in last night's charts.

If the gap up holds and the rally continues then I'll be looking for a move back up to at least test the level near yesterday's consolidation, perhaps around the 840 area. If it can move higher then the downtrend line from September, currently near SPX 865, would be the next resistance level.

Keene Little : 12/1/2008 11:58:29 PM

Tuesday's pivot table: Link

There's a very slight change to the SPX 30 and 120-min charts I posted at the end of the day Monday. Studying the pattern of Monday's decline has me looking at the mid-day consolidation as a b-wave triangle (so an a-b-c-d-e count) that started at the low at 11:00 AM and continued until the brief rally attempt to the bounce high just before 3:00 PM, as shown on this 10-min chart: Link

This changes the projection for two equal legs down from Friday's high to 799.64 and that places it right on top of the 62% retracement of last week's rally (800.14). Assuming we'll get another drop lower first thing in the morning I'll be looking for the 800 level to hold for a long play (day trade). Assuming we then get the bounce we'll have to wait and see how it develops in order to get some guesses as to what will follow it. SPX 30-min chart: Link and 120-min chart: Link

OI Technical Staff : 12/1/2008 10:00:00 PM

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