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Keene Little : 12/15/2008 4:45:03 PM

The price pattern from Friday's low has me thinking we'll see a bounce up to SPX 891 tomorrow and then a reversal back down for a lower target of 824 before another reversal back up. Well, that's one of 11 possibilities (wink). One leg at a time as I try to get a bead on this thing. 60-min chart: Link

Jeff Bailey : 12/15/2008 3:56:30 PM

HUI.X +4.41%
OIH +1.28%
HMO.X +1.10%
OIX.X (unch)

PHF $3.01 +5.24% ... "junk bond"

Keene Little : 12/15/2008 3:54:21 PM

Right after my post we got a strong spike up and it could be part of the larger leg up that would finish in the morning. What happens after that is still a mystery. Two equal legs up from Friday's low is at SPX 891 so that's the upside target for now.

Jeff Bailey : 12/15/2008 3:52:51 PM

EIA: US Diesel prices down record 26.8% Vs. Yr Ago.

Jeff Bailey : 12/15/2008 3:49:29 PM

EIA: US Retail Diesel Price -9.3C last week to $2.422/gallon.

Jeff Bailey : 12/15/2008 3:38:44 PM

ProShares Ultra Crude Oil (UCO) $16.28 -8.22% ... 200x USO

Jeff Bailey : 12/15/2008 3:37:17 PM

2nd "buy signal" off the bottom.

Jeff Bailey : 12/15/2008 3:36:55 PM

USO $36.48 -4.25% ... 50-cent box to match futures Link

Jeff Bailey : 12/15/2008 3:31:49 PM

Don't forget! Jan'09 Crude termination is also on Friday 12/19/08

Keene Little : 12/15/2008 3:31:36 PM

This time both NDX and SPX are confirming the new daily lows. Today's decline continues to look corrective and may be part of a larger correction that will require a stronger leg back up tomorrow that could get a little higher than today's high. That's just a guess at the moment while waiting to see what develops of this afternoon's decline.

Jeff Bailey : 12/15/2008 3:30:53 PM

Was a "gem" for GG a couple of weeks ago.

Jeff Bailey : 12/15/2008 3:30:25 PM

Gots to be a buyer of USO above MONTHLY S1/WKLY S1 overlap. Don't ya?

Jeff Bailey : 12/15/2008 3:04:56 PM

NWX.X 138.05 -1.75% ...

Jeff Bailey : 12/15/2008 3:04:27 PM

NASDAQ a/d 730/2,123

Jeff Bailey : 12/15/2008 3:04:10 PM

HUI.X +3.01% ... only equity-based index in U.S. Market Watch still green.

Jeff Bailey : 12/15/2008 3:03:45 PM

NYSE a/d 689/2,337

Keene Little : 12/15/2008 2:32:12 PM

After today's trading I definitely have the feeling the market is simply on hold until hearing something about the auto bailout and the Fed announcement. Nothing to do but wait with the market as price action is basically just getting pushed around at this point.

Jeff Bailey : 12/15/2008 2:09:54 PM

02:00 Internals at this Link

Jane Fox : 12/15/2008 1:58:32 PM

SAN FRANCISCO (MarketWatch) -- Caroline Kennedy, the daughter of President John F. Kennedy, will seek the vacant Senate seat of Hillary Rodham Clinton, The New York Times reported Monday on its Web site, citing a person close to the matter. Kennedy plans to ask New York Gov. David Paterson to consider her for the appointment, according to the newspaper.

Jane Fox : 12/15/2008 1:56:19 PM

The DOW is building a neutral wedge with no indication if it will break upward or downward however the MACD continues to tell us the bulls are in control. Notice the MACD's higher high when price made a lower high? This is a bullish divergence to match the bullish divergence we saw on the higher lows. Link

Keene Little : 12/15/2008 1:51:31 PM

While SPX made a lower low this afternoon (NDX did not), it looks like only a 3-wave move down and therefore could be part of a larger corrective move. If true then I get a Fib projection for the leg up from the low at 877.67 (162% of the bounce off this morning's low to the mid-day high).

This is all short-term stuff while waiting for clarity in the wave pattern. We're just chopping around and I don't have a good sense yet for what are the higher probability moves for the next couple of days. Stay loose, trade lightly (or not at all) and take profits quickly in this environment.

Keene Little : 12/15/2008 1:38:11 PM

Getting a slightly bigger bounce back up now and I see NDX made a higher low while SPX made a new daily low. That gives us some bullish non-confirmation of the low.

Jane Fox : 12/15/2008 1:25:25 PM

I totally missed the futures rollover last week. Rollover takes place (for the futures we follow in the MM) the Thursday before Opex week of the expiration month that would have been last Thursday. Luckily I have switched back to trading crude or I would have been trading the wrong contract - now that is a big NO NO.

Jeff Bailey : 12/15/2008 1:18:15 PM

Intel (INTC) $14.59 -1.08% ... "best of breed" among the chips in my opinion. WKLY Pivot Levels ... $12.96, $13.85, Piv= 14.34, $15.24, $15.73.

Jeff Bailey : 12/15/2008 1:14:38 PM

HUI.X +4.06%

OIH +0.40% ... holding fractional gain now.

Jeff Bailey : 12/15/2008 12:55:45 PM

FXE $136.82 +2.12% ...

Jeff Bailey : 12/15/2008 12:55:13 PM

USO WKLY Pivot $37.34.

Jeff Bailey : 12/15/2008 12:54:10 PM

US Oil Fund (USO) $37.50 -1.57% ... softening up.

Keene Little : 12/15/2008 12:49:04 PM

If we get a breakdown here and head for new daily lows, two equal legs down from Friday's high now gives us a downside target of 854.40.

Keene Little : 12/15/2008 12:46:04 PM

There are several reasons to feel bullish about the market right now--buying on bad news, some internal measures, cyclical studies and even opex--but so far the patterns for any bounces that we're getting suggest otherwise. While I want to believe we're going to see higher this week, at least into tomorrow or Wednesday, the price pattern is warning me to stay cautious if not short.

The SPX 120-min chart shows my expectation for higher, either up to 945 by tomorrow (bulls better hurry up for that one) or a more corrective climb up to 973 by the end of the week or just before Christmas (pink). But those bullish expectations could be dashed if we see new daily lows today. Link

Jeff Bailey : 12/15/2008 12:44:57 PM

Microsoft (MSFT) $19.03 -1.70% ... WKLY Pivot $19.76. WKLY S1 $18.27

Jeff Bailey : 12/15/2008 12:40:48 PM

Euro/Yen cross rate improving. Probably "explains" foreign markets firming to higher.

Jeff Bailey : 12/15/2008 12:40:08 PM

Yen CurrencyShares (FXY) $109.78 +0.29% ...

Jane Fox : 12/15/2008 12:39:51 PM

WASHINGTON (MarketWatch) -- High-net-worth and pension-fund investors are expected to launch a rash of investor lawsuits on the federal and state levels against Bernard L. Madoff Investment Securities LLC, whose founder was arrested and charged with securities fraud in what federal prosecutors are calling a Ponzi scheme that could involve losses of more than $50 billion.

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

Ability of SMH to firm at WKLY Pivot, a bot concerning to a short-term bear.

Jeff Bailey : 12/15/2008 12:38:46 PM

Still looking for some SMH gravitation towards Max Pain (not all the way) with a QQQQ target of WKLY S1.

Jeff Bailey : 12/15/2008 12:36:39 PM

From 12/11/08 02:41:05 entry of $68.46

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

Placing a $0.40 trailing stop on QID

Jeff Bailey : 12/15/2008 12:26:30 PM

SMH $17.57 -3.46% ... steady at WKLY Pivot.

Keene Little : 12/15/2008 12:22:44 PM

The bounce is clearly looking bear flaggish as it tries to work its way higher. Use an uptrend line from this morning's low as a break of it could signal the end of the bounce. A break below SPX 865 would now be a heads up that it will likely break below 862 which would be a heads up that it will likely head for 851.

But if we see the market suddenly shoot higher then the bounce pattern will become impulsive and I would abandon the short side for now. We'll probably see SPX head for Friday's high in that case before pulling back much (which would then be a buying opportunity).

Jeff Bailey : 12/15/2008 12:10:14 PM

12:00 Internals found at this Link

Keene Little : 12/15/2008 11:58:59 AM

If the bounce off this morning's low is going to be just a correction to the decline then watch for a reversal after two equal legs up, at SPX 872.56.

Jane Fox : 12/15/2008 11:50:58 AM

WASHINGTON (MarketWatch) -- The Treasury Department has made no decisions on the details of any rescue package for U.S. auto makers, said Brookly McLaughlin, a spokeswoman for the agency, on Monday. "We continue to assess and review the information we receive from the auto-makers," McLaughlin told reporters. The department is providing regular briefings to the White House on the results of the review, she said. The review is being conducted by Treasury staff, she said. McLaughlin had no comment on reports that the rescue plan could total somewhere between $10 billion and $40 billion.

Jeff Bailey : 12/15/2008 11:33:42 AM

EUROPEAN BANKS HIT BY MADOFF EXPOSURE, SHARES FALL

European banks and investment companies, including French, U.K. and Spanish banks, say they hold billions of dollars of exposure in Bernard L. Madoff Investment Securities, the New York-based business that allegedly lost $50 billion in an investment fraud. HSBC says it has an exposure of about $1 billion, making it one of the biggest victims, while Man Group and RBS are also affected.

Jeff Bailey : 12/15/2008 11:33:19 AM

dj- OIL MARKET OVERSUPPLIED, SAYS OPEC CHIEF

OPEC President says he thinks the global oil market is oversupplied by around 400 million barrels, furthering the expectation the oil-producer group will look to announce a hefty production cut group when it meets Wednesday.

Jeff Bailey : 12/15/2008 11:32:42 AM

dj- OIL UP ON OPEC CUT HOPES, DOLLAR SLUMP

Crude oil futures surge higher on growing expectations that the Organization of Petroleum Exporting Countries will make major production cuts when it meets in Algeria on Wednesday. Rising equity markets and the plummeting dollar were also helping to buoy oil prices.

Jeff Bailey : 12/15/2008 11:32:08 AM

dj- WHITE HOUSE SIZES UP AUTO RESCUE

In weighing a much larger rescue effort for U.S. automakers than originally envisioned, the Bush administration faces a complex set of decisions over what terms to seek and how to raise necessary funds.

Jeff Bailey : 12/15/2008 11:32:03 AM

dj- FOREIGN DEMAND FOR US SECURITIES DECLINES IN OCTOBER

Treasury Department reports that foreign demand for U.S. long-term securities declined in October, as foreign investors shunned all types of U.S. assets except for Treasury debt. The report also shows that China continues to foot the bill for the U.S. government.

Jeff Bailey : 12/15/2008 11:31:52 AM

dj- NEW YORK MANUFACTURING ACTIVITY WORSENS

The Federal Reserve Bank of New York's Empire Manufacturing Survey falls to a record low in December by 0.3 point to -25.76 from -25.43 in November, the fourth consecutive decline.

Jeff Bailey : 12/15/2008 11:31:39 AM

dj- US INDUSTRIAL PRODUCTION RETREATS IN NOVEMBER

November production by U.S. industries decreases 0.6% -- in line with economists' expectations -- compared with October, which saw a 1.5% rise, as capacity utilization drops to 75.4% from 76.0% in October.

Jeff Bailey : 12/15/2008 11:31:33 AM

dj- MADOFF INVESTORS MAY HAVE TO SURRENDER GAINS

Investors are unlikely to get back much of the money they invested with Bernard Madoff, and those who took out money in recent years may have to give it back.

dj- HALF OF FAIRFIELD GREENWICH ASSETS LINKED TO MADOFF

Alternative investment firm Fairfield Greenwich Group says that half its assets under management are linked to Bernard Madoff. Among those exposed are GMAC LLC Chairman J. Ezra Merkin, Sen. Frank Lautenberg (D-N.J.) and New York Mets owner Fred Wilpon.

Jeff Bailey : 12/15/2008 11:24:11 AM

Dow Components Weightings at this morning's open. Dec'08 "Max Pain" of each at this morning's open with % Distance (+/-) and 4% threshold. Link

Keene Little : 12/15/2008 11:12:35 AM

If SPX breaks below 862 I think that would be confirmation that the bounce off Friday's low will be completely retraced and then some. Friday's low near 851 would be the next possible support level. But if we're going to get just a corrective pullback before proceeding higher again, two equal legs down from Friday's high is at 857.31. Continue to stay aware that we're into opex week and this morning's decline has the potential to get reversed quickly.

Jane Fox : 12/15/2008 10:59:09 AM

On November 7th Bloomberg News filed a suit under the US Freedom of Information Act to discover the terms of the 11 Federal Reserve lending programs. The Fed's response was it is not required to release that information so therefore it won't. The FED said the US faces an unprecedented crisis and that "loss of confidence in and between financial institutions can occur with lightning speed." (Uh! I think we know that!)

Jane Fox : 12/15/2008 10:49:46 AM

Based on his current interpretation of this widely followed index, Dickson (the fellow who created this index) paints a pretty rosy picture: "Bottom line is that the market appears to have some important things in its favor, particularly rising demand, falling supply and a lack of any overbought indicator readings."

This was posted November 2003.

Jane Fox : 12/15/2008 10:47:03 AM

Lowry?s Index measures buying pressure and selling pressure by calculating, respectively, upside volume going into advances and downside volume going into declines.

Jane Fox : 12/15/2008 10:44:12 AM

Richard Russell of the Dow Theory Letters is saying. "On top of everything else, Lowry's Selling Pressure Index dropped substantially yesterday [Wednesday] and is now in a definite declining trend. At the same time, Lowry's Buying Power Index is trending higher. Thus, the odds are saying that the trend of the stock market is turning up.

"This is all the more dramatic since this potential upturn has arrived in the face of black-bearish news. Markets bottoming and rising in the face of bearish news are often the most profitable ones. I have never seen a bear market hit its low amid happy news headlines."

Jeff Bailey : 12/15/2008 10:40:28 AM

Various Dec'08 Max Pain Theory Levels at this Link

Jeff Bailey : 12/15/2008 10:34:08 AM

VIX.X 56.90 +4.82% ...

Jane Fox : 12/15/2008 10:28:15 AM

The FED meeting this week is Monday and Tuesday and although we all watch and wait there is really little they can do at this point with rates. Lowering interest rates should be a great big yawn for market participants even if they do the expected and lower them to 0.50%, a 50 year low.

Another arrow the FED has in its quiver is trying to flood the economy with so much cash that some of it will spill out over into lending and get the economy running again. To do this it will purchase long term Treasuries and agency debt and then maybe finance a wider range of asset backed securities (mortgage and credit card debt that have been bundled and securitized) However, one may ask when does all that money saturate the market and put upward pressure on inflation? No one knows for sure but the FED is just plain Jane not going to worry about that right now.

Jeff Bailey : 12/15/2008 10:25:09 AM

10:00 Internals at this Link

Keene Little : 12/15/2008 10:21:25 AM

Currently at 873, SPX is trying to find support at its uptrend line from November 21st. It has been cycling around this trend line since Friday morning's break so it's hard to trade around it.

Jeff Bailey : 12/15/2008 10:18:29 AM

Euro CurrencyShares (FXE) $136.44 +1.83% ... gapped above downward trend (07/15/08 high to 09/22/08 lower high)

Keene Little : 12/15/2008 10:13:29 AM

Keep an eye on the uptrend line from Friday's low, at SPX 867, for possible support if it drops to there. NDX has a slightly different pattern for Friday's bounce but has already broken its uptrend line. Firmer support for NDX doesn't come until Friday's low near 1157 which is where its uptrend line from November 21st is located.

Jeff Bailey : 12/15/2008 10:11:32 AM

Chevron (CVX) $80.00 +1.25% ...

Jeff Bailey : 12/15/2008 10:09:59 AM

Exxon Mobil (XOM) $81.38 +1.19% ... Holding 150-day SMA ($79.84) with 200-day SMA ($82.05) just above.

Jeff Bailey : 12/15/2008 10:08:24 AM

US Oil Fund (USO) $39.78 +4.38% ... strong this morning. Has gapped above the 11/20/08 December crude oil termination benchmark ($39.55). Session low so far $39.56.

Jeff Bailey : 12/15/2008 9:57:57 AM

Financials and chips early losers ... BKX.X -3.40%, BIX.X -3.14%, IUX.X -1.29%, XBD.X -1.12%

Jeff Bailey : 12/15/2008 9:56:52 AM

Energy and miners early gaingers OIH +4.37%, XNG.X +3.25%, OIX.X +2.31%, HUI.X +3.48%

Jeff Bailey : 12/15/2008 9:55:15 AM

SMH $17.68 -2.85% ... no trade at WKLY Pivot, or MONTHLY Pivot at this point.

OEX 424.05 -0.27% ... no trade at its WKLY Pivot.

Jane Fox : 12/15/2008 9:50:43 AM

AD line is neutral at +470

Keene Little : 12/15/2008 9:41:12 AM

Techs starting off a little more in the hole than the blue chips so that sets a bearish tone for the start of the day. But be cautious of potential whipsaw in the first 30 minutes. Then we'll see what the opening range looks like.

Jeff Bailey : 12/15/2008 9:39:18 AM

Weekly, Monthly, Quarterly Index Pivot Matrix Link

Jane Fox : 12/15/2008 9:36:40 AM

Sometimes we need to realize corruption is not just in America. Link

Jane Fox : 12/15/2008 9:33:57 AM

WASHINGTON (MarketWatch) -- The output of the nation's factories, mines and utilities fell 0.6% in November on broad-based weakness across manufacturing industries, the Federal Reserve reported Monday.

With the recession worsening, industrial output has now fallen 5.5% in the past year, while factory output is down 7.3% compared with November 2007.

The production of U.S. factories declined 1.4% in November, despite the resumption of work at Boeing Co. after a strike ended. Mining output rose 2.5% as oil and gas production continued to recover from September's storms. Utility output rose 1.6%

Jane Fox : 12/15/2008 9:31:12 AM

NEW YORK (MarketWatch) -- Waste Management Inc. said Monday that its board approved a 2009 capital allocation program that includes the authorization for up to $1.3 billion in combined cash dividends, common stock repurchases, debt reduction and acquisitions in 2009. Beginning in the first quarter of 2009, the company expects to raise its quarterly dividend to 29 cents a share, or $1.16 a share annually, which would be an increase of 7.4% compared to the dividend paid in 2008.

Jane Fox : 12/15/2008 9:28:36 AM

The White House will tap the TARP for the auto industry (no new news there) but we are all asking how much and when. The reason the money has not been forwarded yet is the Bush administration has been pouring over the books to see just how bad things are. Let's hope we don?t get any "surprises" later today concerning any questionable accounting practices they may find - we have had enough bad news for a while thank you very much.

The administration is also grappling with how to obtain concessions from the UAW, the car dealers and holders of the companies' debt.

Keene Little : 12/15/2008 9:28:02 AM

Equity futures were whippy in overnight trading and it looks like we're going to open relatively close to the flat line. The overnight high of ES 893, if tested after the open, could have SPX up to the 891 level I had mentioned last night as a Fib target.

Jane Fox : 12/15/2008 9:13:53 AM

Crude is up 2.84 so far this morning. I am long Crude with calls on the ETF USO because I think it has made a temporary bottom. Link

Jane Fox : 12/15/2008 9:13:38 AM

LONDON (MarketWatch) -- Federal investigators probing the alleged $50 billion ponzi scheme run by Bernard Madoff have found evidence he ran an unregistered money-management business alongside his firm's brokerage and investment-advisory subsidiaries, according to a Bloomberg report citing two people with knowledge of the investigation. The report said clients of the unit may have included hedge funds and added that investigators are looking for indications of whether anyone else participated in the alleged fraud. It added the Securities Investor Protection Corp., which insures brokerages, plans to take over Madoff's operations as early as Monday.

Jane Fox : 12/15/2008 8:50:33 AM

WASHINGTON (MarketWatch) -- Manufacturing activity in the New York area contracted at a record pace in November, the New York Federal Reserve Bank said Monday. The bank's Empire State Manufacturing index fell to negative 25.8 in December from negative 25.4 in November. New orders and shipments were slightly higher, but unfilled orders fell to a record low. Prices paid plunged to negative 7.5 in December from 27 in November. The Empire State index is relatively new, having started in 2001. Other regional factory indexes have further to fall before they reach record lows. The Empire State index is of interest to investors and economists primarily because it's seen as an early indicator of what the Institute for Supply Management's December national factory survey due out in two weeks may show. In November, the ISM manufacturing index dropped to 36.2, its lowest reading in 26 years.

Keene Little : 12/14/2008 10:30:40 PM

Monday's pivot table: Link

As the market chopped its way higher on Friday SPX stopped just shy of the top of a parallel down-channel based on the trend line along the two lows last Tuesday and Friday. So that's just a guide for now and a line to watch Monday morning, shown on this 30-min chart: Link . Slightly higher is last week's shelf of support near 885. That could turn into firm resistance.

And then if the bulls can push it higher there is the downtrend line from Monday that's near 895. But if the bounce off Friday's low is going to be just a correction before heading lower again, which is the way it looks so far, there are some internal Fib projections for the move that coincide near 891. So the bulls are likely to struggle with the 885-895 area and I'd be cautious about the long side until 895 breaks.

The one thing that continues to support the idea that we'll get another rally leg, with it being a corrective wave structure, is the potential rising wedge pattern from the November 21st low. This is the pattern that calls for a high in the 940-950 area in the next couple of days. A drop back below Friday's low near 851 would be a bearish heads up and a break below 818 would negate the rising wedge pattern and then I'd start looking for some downside targets. 120-min chart: Link

OI Technical Staff : 12/14/2008 9:59:59 PM

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