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Jeff Bailey : 12/18/2008 9:35:41 PM

Closing Internals at this Link

Jeff Bailey : 12/18/2008 9:26:18 PM

Closing U.S. Market Watch Link

Jeff Bailey : 12/18/2008 4:12:08 PM

Microsoft (MSFT) $19.30 -1.83% ... $19.48 extended. MONTHLY 38.2% held buyers

Jeff Bailey : 12/18/2008 4:11:24 PM

Oracle (ORCL) $16.61 -0.77% ... ticks $16.90 on headline numbers.

Keene Little : 12/18/2008 4:09:22 PM

Tough call at the close--the short term pattern for today's decline would look best with at least another minor new low. But that could set up more selling with a firmer break of support. With SPX holding its uptrend line we could see the next rally leg start from here in which case long against this afternoon's low could be a good play. I don't feel confident enough about either side to suggest a play into tomorrow morning. Flat is a good position.

Jeff Bailey : 12/18/2008 4:04:34 PM

DXY's 04:00 tick 79.83

Jeff Bailey : 12/18/2008 3:58:38 PM

YM 8,598 ... low has been 8,491

Jeff Bailey : 12/18/2008 3:56:17 PM

TRIN 2.39

Jeff Bailey : 12/18/2008 3:55:22 PM

Tomorrow should be a hum-dinger.

Jeff Bailey : 12/18/2008 3:55:05 PM

SPX/VIX traders fully callibrated now.

Jeff Bailey : 12/18/2008 3:54:45 PM

WKLY Pivot here.

Jeff Bailey : 12/18/2008 3:54:22 PM

SPX 883.30 -2.33% ... High/low has been 911.02/877.44.

Jeff Bailey : 12/18/2008 3:53:22 PM

VIX.X 48.49 -2.70% .... nearing WKLY S2 from underneath.

Keene Little : 12/18/2008 3:46:09 PM

SPX broke but recovered above its uptrend line from November 21st but the DOW remains underneath its uptrend line, currently near 8670. So keep an eye on the DOW to see if a retest fails.

Jeff Bailey : 12/18/2008 3:42:40 PM

I should say ... "what an afternoon!"

Jeff Bailey : 12/18/2008 3:30:08 PM

What a day for traders!

Jeff Bailey : 12/18/2008 3:28:27 PM

YM 8,510 ... would be good short cover from 8,606

Jeff Bailey : 12/18/2008 3:27:44 PM

YM 8,526 ... would aggressive move stop down to 8,540

Keene Little : 12/18/2008 3:27:23 PM

I'm seeing several support levels breaking now.

Jeff Bailey : 12/18/2008 3:26:42 PM

YM 8,555 ... WKLY 38.2% now in play.

Jeff Bailey : 12/18/2008 3:19:15 PM

If short YM again/still, would bring stop to 8,610.

Jeff Bailey : 12/18/2008 3:17:37 PM

DIA undercuts MONTHLY Pivot.

Keene Little : 12/18/2008 3:17:07 PM

If SPX drops below 885 it would negate the bullish wave count calling for a 5th wave up for the rally from last Friday's low. But it doesn't negate the potential for another leg higher as part of a more complex corrective count for the rally from November. In this case I would expect the uptrend line from November 21st to hold--880. Otherwise the pink wave count starts to look more probable, which is calling for a decline to 851 and possibly 810.

Jeff Bailey : 12/18/2008 3:16:34 PM

YM 8,606

Jeff Bailey : 12/18/2008 3:12:42 PM

To the close ...

NYSE a/d 1,430/1,601

NASDAQ 1,077/1,770

Jeff Bailey : 12/18/2008 3:06:53 PM

dj- S&P Warns GE's AAA Rating Could Be At Risk; Shares Slide

Jeff Bailey : 12/18/2008 3:06:15 PM

GE is a BIG weight in SPX

Jeff Bailey : 12/18/2008 3:06:03 PM

GE has come within penny's of its WKLY S1 $15.95. (regular session derived)

Jeff Bailey : 12/18/2008 3:05:09 PM

I'm "not sure" that bankrupt auto is necessarily bad news for STOCK market.

Jane Fox : 12/18/2008 3:04:56 PM

Standard & Poor's took the first step toward potentially lowering its AAA ratings on GE. - reports WSJ

Jeff Bailey : 12/18/2008 3:04:38 PM

NEWS providing BEAR catalyst today.

Jane Fox : 12/18/2008 3:04:25 PM

Obama Team prepares stimulus plan. Link

Jeff Bailey : 12/18/2008 3:04:20 PM

CNBC mentioning something about S&P cutting rating on GE $16.28 -6.36% ...

Jane Fox : 12/18/2008 3:01:45 PM

Obama's team crafts stimulus package worth between $675 billion and $775 billion over 2 years reports the WSJ

Jeff Bailey : 12/18/2008 2:58:51 PM

SPY 90.11 -0.96% ...

SPX 896.60 -0.86% ...

Keene Little : 12/18/2008 2:58:34 PM

The pattern of the leg down today looks incomplete and the bounce looks more like a correction. The combination is keeping me from suggesting a long play here. I'm watching for more evidence of what's playing out.

Jeff Bailey : 12/18/2008 2:53:10 PM

YM 8,660

Jeff Bailey : 12/18/2008 2:49:44 PM

YM 8,632 ... stopping short if 8,660 from 90. Low has been 8,599.

Jeff Bailey : 12/18/2008 2:46:46 PM

YM ... "in the zone" DAILY S2 and WKLY Pivot.

Jeff Bailey : 12/18/2008 2:41:39 PM

HYG $72.18 +6.61% ... iShares High Yield

Jeff Bailey : 12/18/2008 2:40:36 PM

LQD $100.28 +2.48% ... he's right. BIIIIG move from this investment grade corporate bond ETF

Jeff Bailey : 12/18/2008 2:39:05 PM

Must be active trade ... My QCharts hung up now

Jeff Bailey : 12/18/2008 2:38:41 PM

Beetle's Balanced Benchmark component ...

Jeff Bailey : 12/18/2008 2:37:51 PM

LQD ... Rick Santellie mentioning ...

Jeff Bailey : 12/18/2008 2:35:15 PM

USO losing DAILY S2. WKLY S2 at $31.59

Jeff Bailey : 12/18/2008 2:33:40 PM

VIX.X 46.88 ... comes to 50% dynamic. DAILY S2 at 47.63 (regular session derived)

Jeff Bailey : 12/18/2008 2:30:48 PM

GM not a big weight, but 1 of 30

Jeff Bailey : 12/18/2008 2:30:24 PM

YM 8,613 here.

Jeff Bailey : 12/18/2008 2:30:03 PM

If short the YM, would lower stop to just above WKLY Pivot. (regular session derived)

Jeff Bailey : 12/18/2008 2:28:50 PM

I see Jane mentioned something at 12:19

Keene Little : 12/18/2008 2:27:49 PM

DOW smoked right through 8670 and the leg down from this morning's high is looking more bearish. No long play while it's dropping hard. I want to see if support is going to hold and so far it's not.

Jeff Bailey : 12/18/2008 2:27:18 PM

Looking at intra-day chart of GM, look like President Bush's comments hit the wire at about 12:00 PM ET. Maybe somebody got wind at 11:40

Jeff Bailey : 12/18/2008 2:24:18 PM

02:00 Internals at this Link

Jeff Bailey : 12/18/2008 2:18:17 PM

QQQQ $30.01 -0.59% ...

Jeff Bailey : 12/18/2008 2:17:37 PM

Bull's resolve will be tested to the close.

Keene Little : 12/18/2008 2:13:32 PM

My interpretation of the VIX here is that it's showing too much complacency vs. price. While VIX is testing its November 4th low SPX is a little more than 100 points below its November 4th high. Too many bulls. It doesn't mean a reversal in the stock market is imminent but it does warn us to be cautious about any upside potential.

We're entering the phase of the bounce where we could start experiencing downside surprises again. So while I like the long play setup shown on the DOW, I will have one foot holding the exit door open (tight stop) and will keep a tight leash on it if it starts working.

Jeff Bailey : 12/18/2008 2:07:38 PM

There ... trader mention VIX.X and SPX. He thinks 50-day SMA on SPX influencial.

Jeff Bailey : 12/18/2008 2:05:52 PM

There ... oil trader discussing oil termination ... what to be careful of Monday.

Jeff Bailey : 12/18/2008 2:04:42 PM

VIX.X 45.50 ... 19.1% dynamic

Jeff Bailey : 12/18/2008 2:03:24 PM

YM 8,690 ...

Keene Little : 12/18/2008 1:56:40 PM

Earlier I had shown a DOW 60-min chart with a scenario showing a pullback to 8670 before the end of the day and potentially setting up a rally into next week from there. That's now only 55 points lower and still a good possibility. For the DOW's pullback from Tuesday's high, the 2nd leg down (the decline from yesterday's high) would achieve 162% of the 1st leg down at 8669--nice Fib and trendline correlation to try a long play there.

I continue to see potential support for SPX near 895, potentially as low as 892. It's uptrend line from November 21st is below the key level of 885 (which would negate the bullish pattern looking for another leg higher). So the DOW could be the one to watch to see if support holds or not.

Jeff Bailey : 12/18/2008 1:55:01 PM

Ford Motor (F) $2.79 -11.46% ...

Jeff Bailey : 12/18/2008 1:54:32 PM

General Motors (GM) $3.71 -15.10% ...

Jeff Bailey : 12/18/2008 1:53:31 PM

SPX 898.97 -0.60% ... alert!

Jeff Bailey : 12/18/2008 1:52:28 PM

Bush considering "orderly" auto bankruptcy ... AP story Link

Jeff Bailey : 12/18/2008 1:44:17 PM

VIX and SPX daily intervals with cursor box set at 11/04/08 VIX.X spike inflection low. Link

Jeff Bailey : 12/18/2008 1:40:36 PM

11/04/08 Wrap Link ... the low we're marking in the VIX.X and the relative high and the downward trend attach on the SPX.X

Jeff Bailey : 12/18/2008 1:36:59 PM

Oh my!

Jeff Bailey : 12/18/2008 1:36:47 PM

What happened on 11/05/08? Link

Jeff Bailey : 12/18/2008 1:35:54 PM

Place your cursor box on that 11/04/08 bar

Jeff Bailey : 12/18/2008 1:35:21 PM

Good grrrravy ... Not flip to a daily interval.

Jeff Bailey : 12/18/2008 1:33:03 PM

VIX and SPX 60-minute interval montage Link

That was then ... 10-minute from Link 12/10/08 market wrap.

NOTE SPX PRICE and VIX.X MEASURE levels.

Jeff Bailey : 12/18/2008 1:20:30 PM

Robert Ogilvie ... are you out there?

Jeff Bailey : 12/18/2008 1:17:35 PM

VIX.X daily interval bars Link

For whatever reason, that 11/04 low was important. So marking it.

Jeff Bailey : 12/18/2008 1:11:48 PM

01:06 PM Market Watch ... show a/d lines at top Link

Keene Little : 12/18/2008 1:09:45 PM

QCharts is still showing the January price for oil's continuous contract and based on its chart I continue to see the downside potential around $32 (from the current price of $39). Daily chart: Link

Jeff Bailey : 12/18/2008 1:05:46 PM

CBOE's SPX Option Montage (again; prior link not working) Link

Jeff Bailey : 12/18/2008 1:05:40 PM

Now, THAT was to the UPSIDE from a LOW.

Now we've had a rally.

Now I sens, based on observation GREAT PRESSURE building yet again.

Jeff Bailey : 12/18/2008 1:05:32 PM

Everyone might want to check out the SPX at last month's expiration benchmark. Note the MOVE, or PRESSURE unleash

Jeff Bailey : 12/18/2008 1:05:18 PM

Jane ... I think STOCKS and TRACKERS are being manipulated.

The OPTIONS are where the LEVERAGED risk is at. Into expiration, traders have to do what they have to do in order to keep the LEVERAGED trade from totally unwinding. Once they get done, be very, very alert.

Jeff Bailey : 12/18/2008 12:52:54 PM

USO 60-minute intervals Link

Jane Fox : 12/18/2008 12:50:44 PM

The internals are not in sync today telling me OPEX shenanigans could be taking place in the VIX. All the internals are bearish except the VIX and although this will usually mean choppy markets in OPEX week it could very well mean the VIX is manipulated like Jeff has mentioned. Today I see that possibility but yesterday I didn?t. Link

Jeff Bailey : 12/18/2008 12:45:10 PM

Analysis: CL 09f were NET LONG into TERMINATION. Still LIQUIDATING at Dec'08 benchmark.

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

Nymex crude OI screen capture from 12/12 Link

Jane Fox : 12/18/2008 12:40:50 PM

USO is making a double bottom at yearly lows, 33.00 and will not confirm until the swing high at 40.39 is broken. Now is the trader conundrum; do I take a position now and reap the rewards of $7.00 if this is a truly a bottom or do I wait until I get confirmation and lose the $7. A long here would have a very close stop but a much higher probability of being stopped.

If you trade options you could buy 1 call here with a stop just under $33 and then another one when/if USO breaks $40.00 Link

Jeff Bailey : 12/18/2008 12:37:19 PM

OI in the cl09f at last night's settle was 56,415

Jeff Bailey : 12/18/2008 12:36:04 PM

Tug and pull, everywhere you look

Jeff Bailey : 12/18/2008 12:35:53 PM

USO -3.64%

UGA $21.17 +3.16% ...

Jane Fox : 12/18/2008 12:34:42 PM

Here are your overnight charts and even thought the Russell 2000 futures (TF) is on a 20 minute delay it is obviously the strongest market today. Link

Jeff Bailey : 12/18/2008 12:31:37 PM

Great observation! Good work

Jeff Bailey : 12/18/2008 12:30:19 PM

Jane! I think that's the TERMINATION influence of Jan'09.

Jane Fox : 12/18/2008 12:29:50 PM

CHICAGO (MarketWatch) -- The benchmark 30-year fixed-rate mortgage tumbled to a national average 5.17% this week, the lowest level since Freddie Mac began its weekly rate survey in 1971.

Jeff Bailey : 12/18/2008 12:29:13 PM

See the TRIN measures at 10:00 and 12:00 benchmarks.

But the negative a/d line at the big board at 10:00, then flips to positive.

"Doesn't make sense" and suggests some near-term type of manipulation.

VIX.X continues to ease lower but we know this is caused by more put selling/call buying than put buying/call selling.

Jane Fox : 12/18/2008 12:28:27 PM

Once again we have a discrepancy in Crude futures contracts. I see Marketwatch.com stating Crude has made a low under $39.00 and indeed the January contract (Volume 27K) did make a low of 37.68 but the front month is now February (volume 112K) and its daily low is 42.73.

Jeff Bailey : 12/18/2008 12:26:32 PM

12:00 Internals found at this Link

Jane Fox : 12/18/2008 12:19:29 PM

I am reading where the White House is getting close to decision on the Auto bailout.

Jeff Bailey : 12/18/2008 12:12:39 PM

TRIN 1.59

Yet NYSE a/d 1,711/1,217

See last night's Market Wrap observation from yesterday.

Jeff Bailey : 12/18/2008 12:09:28 PM

I sense/feel based on observation GREAT pressure building in these markets.

Jeff Bailey : 12/18/2008 12:04:24 PM

SPY ... will take a look in a second to see up vs. dn tick vol

Jeff Bailey : 12/18/2008 12:03:11 PM

Monitor your TRIN indicator closely today.

Keene Little : 12/18/2008 11:59:49 AM

The US dollar is getting a nice bounce today but bonds have continued to rally and are holding near their highs. We could be seeing a little squeeze play in bond futures as we head into expiration. If true we could get quite a reversal next week. Bonds and equities have been trading in synch for the past few weeks but if bonds experience some selling next week we might see that money rotate into stocks to help a rally into the end of the year.

That's pure speculation at the moment but something I'm watching to see if it sets up. The larger pattern of the bounce in stocks since the November low has me very cautious about any further upside potential--it looks more like a setup for a reversal back down but maybe after a brief rally attempt next week.

Jeff Bailey : 12/18/2008 11:57:37 AM

As I see it ... with VIX.X falling sharply that would equate to more call buying/put selling action.

As it relates to the SPX 900 strike and the heavier volume in the call side, and SPX holding 900, we could be seeing some "save position" type of trade.

That is ... if institutions are NET LONG SPX/SPY and many of its component stocks, then perhaps they had SOLD COVERED this strike when premiums were "jacked" at higher VIX.X

What becomes near-term important (not unlike benchmark of oil terminations) is what the SPX.X does from 900.00.

Is it being "artificially pinned?"

Jeff Bailey : 12/18/2008 11:52:31 AM

CBOE's SPX Option Montage Link

Jeff Bailey : 12/18/2008 11:50:01 AM

SPX's session low 900.10

Jeff Bailey : 12/18/2008 11:49:40 AM

OK, this might "explain" some of today's VIX.X action.

Jeff Bailey : 12/18/2008 11:37:23 AM

At last night's closing values ... Major Global Indexes, Currencies, USO, GLD, HUI.X, OIX.X, XLF and DJUSHB Link

Jeff Bailey : 12/18/2008 11:32:56 AM

European Markets Link

Jeff Bailey : 12/18/2008 11:31:47 AM

Euro Drops On ECB Move To Discourage Euro-Denominated Deposits

Jeff Bailey : 12/18/2008 11:28:07 AM

Picked up a position yesterday with thought of "if oil won't rally on euro, then further decline of oil into termination might pull euro back lower"

Jeff Bailey : 12/18/2008 11:27:16 AM

EUO $20.24 +0.94% ... 200x bear on euro

Jeff Bailey : 12/18/2008 11:26:38 AM

FXE $143.12 -0.73% ... reversing gains.

Jeff Bailey : 12/18/2008 11:26:22 AM

FXY $111.28 -2.47% ...

Jeff Bailey : 12/18/2008 11:25:56 AM

SPX 904.67 +0.02% ... still not the "trigger" of influence. Is there one? Keep working hard.

Jeff Bailey : 12/18/2008 11:24:52 AM

VIX.X Link (per last night's Market Wrap)

Jeff Bailey : 12/18/2008 11:23:24 AM

VIX.X 45.44 -8.82% ... likely some eyeballs monitoring that 11/04/08 bar.

Jeff Bailey : 12/18/2008 11:22:17 AM

UNH $24.88 +4.10% ...

Jeff Bailey : 12/18/2008 11:21:13 AM

CI $16.55 +4.48% ...

Jeff Bailey : 12/18/2008 11:20:56 AM

HUM $35.33 +3.57% ...

Jeff Bailey : 12/18/2008 11:20:37 AM

AET $25.44 +4.17% ... (see 11/17 and 11/19 MM) those were the days!

Jeff Bailey : 12/18/2008 11:19:03 AM

HMO.X 903.83 +3.67% ... probes its 50-day SMA and the 10/10/08 low.

Keene Little : 12/18/2008 11:17:32 AM

Two equal legs up for SPX's bounce this morning is at 911.09 and the high for the bounce was 911.02. Close enough for government work. Now the sharper pullback says we're stuck in a corrective pattern for now. Chop chop, stay clear.

Jeff Bailey : 12/18/2008 11:12:23 AM

LENNAR LOSS NARROWS ON YEAR-AGO CHARGE; MARGINS UP

Home builder posts 4Q net loss of $811 million, or $5.12 a share, as President and CEO expresses hope the incoming Obama administration approves "a major stimulus package to stimulate housing values." Revenue slumps 41% to $1.28 billion.

Lennar (LEN) $10.52 +2.61% ... Earnings Pess Release Link

Jeff Bailey : 12/18/2008 11:05:22 AM

US COMMERCIAL PAPER OUTSTANDING UP $8.3B

The U.S. commercial paper market expands $8.3 billion on a seasonally adjusted basis, according to data released by the Federal Reserve, from $48.6 billion last week as the market winds down toward the end of the year.

Keene Little : 12/18/2008 11:01:00 AM

An interesting setup for a Santa Claus rally would be a choppy pullback today to DOW 8670 where a downtrend line from September 19th and the uptrend line from November 21st cross late this afternoon. Then a rally up to a Fib projection at 9500 before Christmas. 120-min chart: Link

Jeff Bailey : 12/18/2008 11:00:01 AM

NDX.X 1,232.07 +0.50% ... despite downgrade of Intel (INTC) $14.87 -2.55% ...

Jeff Bailey : 12/18/2008 10:59:20 AM

OEX.X 436.01 +0.50% ...

Jeff Bailey : 12/18/2008 10:58:57 AM

INDU 8,846 +0.23% ...

Jeff Bailey : 12/18/2008 10:58:22 AM

SPX 910.42 +0.66% ...

Jeff Bailey : 12/18/2008 10:58:03 AM

RUT.X 493.54 +1.42% ... takes another look at WKLY R1.

Jeff Bailey : 12/18/2008 10:44:38 AM

Dow Transports (TRAN) 3,483.54 +0.49% ...

Jeff Bailey : 12/18/2008 10:43:52 AM

XAL.X 24.23 +4.52% ... highs of the month.

Jane Fox : 12/18/2008 10:43:46 AM

President-elect Obama on is expected to name Mary Schapiro, a veteran financial regulator, to head the Securities and Exchange Commission

Keene Little : 12/18/2008 10:39:47 AM

If we're just into more chop n slop keep an eye on SPX 911 as possible resistance. This is where this morning's bounce would have two equal legs up.

Jeff Bailey : 12/18/2008 10:39:38 AM

EIA: Nat. Gas Storage Link ... Draw of 124 bcf

Jeff Bailey : 12/18/2008 10:35:25 AM

UNG 23.28 -1.23% ... industry looking for a draw of 112 Bcf

Jeff Bailey : 12/18/2008 10:31:30 AM

10:00 Internals found at this Link

Note: It would currently take a closing session measure of >=8.00% for the NASDAQ's 5-day NH/NL measure to see a 3-box reversal back higher.

Jane Fox : 12/18/2008 10:16:30 AM

WASHINGTON (MarketWatch) - Manufacturing in the Philadelphia region bounced off in December, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed diffusion index rose to negative 32.9 in December from negative 39.3 in November. The reading in November was the worst since October 1990. Readings below zero indicate contraction. The report was not as weak as expected. Economists were expecting the index to slip to negative 42.0.

Jeff Bailey : 12/18/2008 10:13:39 AM

OIX -2.87%, OIH -4.94%, XNG -2.53%

BIX 142.06 +1.89%, BKX +0.62%, XBD +1.01%, IUX.X +2.22%

Jeff Bailey : 12/18/2008 10:12:14 AM

Bulls want to see it above the pivot pretty quick.

Jeff Bailey : 12/18/2008 10:11:44 AM

SPX's DAILY Pivot at 906.25 ...

Jeff Bailey : 12/18/2008 10:11:08 AM

Lows of day could be in.

Jeff Bailey : 12/18/2008 10:10:27 AM

SPX 904.81 +0.04% ...

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

VIX.X alert! 47.04 -5.61% ...

Jane Fox : 12/18/2008 10:08:45 AM

WASHINGTON (MarketWatch) -- More economic weakness is in store for the first few months of 2009, the Conference Board said Thursday. The index of leading economic indicators fell 0.4% in November, with negative contributions from six of the 10 indicators, and the largest negative contribution from building permits. The largest positive contribution came from the money supply. "An intense housing downturn that's about to begin its fourth year and a severe financial crisis with nearly frozen credit markets have sharply lowered consumer and business expectations," said Ken Goldstein, economist at the Conference Board. The result for October was revised to a decline of 0.9% from a prior estimate of a 0.8% drop.

Keene Little : 12/18/2008 10:08:07 AM

SPX hit 900 and is ramping back up. NDX is ramping back up stronger. The pattern of the pullback suggests we're either going to head higher again or stay stuck in a sideways consolidation for the day (as depicted on last night's 30-min chart).

Jane Fox : 12/18/2008 10:07:04 AM

Dec. Philly Fed index -32.9 vs -39.3 in Nov.

Dec. Philly Fed above consensus -42.0

Jeff Bailey : 12/18/2008 10:02:16 AM

FXY $112.11 -1.74% Link ... could be an island reversal.

Keene Little : 12/18/2008 9:48:21 AM

So far just more choppiness and it's not clear what kind of pullback vs. sideways consolidation we might get. I'm looking for SPX to drop to the 895-900 area for possible support and if it's a choppy ride down to that area then it will look more bullish for a reversal back up.

Jane Fox : 12/18/2008 9:43:59 AM

Crude continues to fall with a daily low at 43.32. Let's all sing "Some day this thing will rally" (sung to the tune of "Some day my prince will come).

Jane Fox : 12/18/2008 9:42:15 AM

A line opens a neutral +467 but the VIX is anything but neutral making new daily lows.

Keene Little : 12/18/2008 9:28:16 AM

Bonds rallied back up to a little higher than yesterday's high and the bubble high continues. Equities had a mildly bullish but very choppy overnight session. The price pattern does not look bullish but we'll have to see what it does once the cash market opens.

Jane Fox : 12/18/2008 9:22:09 AM

Crude made a low of 43.79 overnight, its previous yearly low on December 5th was 45.05. I know this thing has to rally at some point but when is another question. I have tried long position a couple of times and needless to say I have been stopped both times. I'm not ready to try again until I get a little more confirmation. Link

Jane Fox : 12/18/2008 9:17:33 AM

The overnight charts are not telling us much today other than it was an uneventful session. I see both ES and YM challenging their ON highs while NDX futures are not even thinking about it. Link

Jane Fox : 12/18/2008 9:10:48 AM

Chrysler will be closing all of its North American plants for a least a month in an attempt to cut costs albeit Chrysler always closes its plants at this time of year for 2 weeks for general preventive maintenance. Ford will close its plants down for an extra week and GM will shut most of its plants for the entire month of January.

GM is halting construction of a plant tied to one of its most important projects, the Volt.

Chrysler says sales were off 47% last month year over year and are down 28% through the first 11 months of 2008. Ford on the other hand has fared a little bit better with sales only down 31% in November and off 20% for the year.

Jane Fox : 12/18/2008 8:56:42 AM

MADRID (MarketWatch) -- General Motors Corp. and Chrysler LLC have reopened merger talks, according to a report in The Wall Street Journal on Thursday. The latest move comes as Chrysler owner Cerberus Capital Management LP has indicated its willingness to give away part of its ownership in the carmaker, the report said, citing people familiar with the discussion. With cash low at both companies, Cerberus reportedly took the initiative to restart talks that failed weeks ago, when both GM and Chrysler saw a business combination as impractical and a distracting from growing liquidity issues. Chrysler and GM are fighting to survive amid that cash shortage with help from the White House after a plan to secure loans failed in the Senate last week. On Tuesday, Treasury Secretary Henry Paulson said the automakers will get a lifeline from the government as soon as it's prudent. Citing people familiar with the discussion, The Journal said Cerberus feels it has to be flexible on the use of its ownership stake in Chrysler in order to arrange a combination of Chrysler's finance arm with that of GM's. Part of Cerberus's strategy, say those people, is to protect its majority investments in GMAC, in which it holds a majority stake, and Chrysler's Chrysler Financial unit.

Jane Fox : 12/18/2008 8:54:27 AM

WASHINGTON (MarketWatch) -- First-time claims for state unemployment benefits dropped 21,000 to 554,000 in the week ended Dec. 13, easing back part of a surge in the prior week, the Labor Department reported Thursday.

Still, the four-week average of those claims rose 2,750 to 543,750 -- the highest level since December 1982. Initial claims are not expected to drop again until mid-January, according to the Labor Department.

For the week ended Dec. 6, the number of Americans continuing to collect benefits fell 47,000 to 4.38 million. The four-week average of continuing claims rose 92,000 to 4.23 million -- the highest since January 1983.

Jeff Bailey : 12/18/2008 2:12:33 AM

Asian Markets firm to higher. Link

I don't follow Karachi that much, but I don't think +81.2%.

Jeff Bailey : 12/18/2008 2:05:16 AM

YM +29 at 8,808

ES +1.75 at 904.75

Keene Little : 12/18/2008 1:50:01 AM

Thursday's pivot table: Link

I've tweaked a couple of things on the SPX 60-min chart to show the possible scenarios that I think are the most probable from here. For now the key levels are 919 to the upside and 885 to the downside. In between, especially for the rest of this week, could be filled with a lot of choppy price action if it's to consolidate a little longer. A consolidation would then be followed by another leg up and right now I see 933 and possibly 951 as upside potential, shown in dark red (and dashed line). Link

Looking a little closer at the leg up from last Friday I see the possibility for a small sideways triangle pattern to play out before the next leg up. Fibs and trend lines line up at both the 932-933 and 951-952 levels. But a break below 885 would negate those short-term bullish possibilities and instead would point to a run down to 850 if not 810. 30-min chart: Link

Keeping all of this in perspective, the daily chart shows what I think remains the higher probability for price action over the next couple of months--more of the same choppy price action in a wide trading range: Link

Jeff Bailey : 12/18/2008 2:03:09 AM

EIA: Refinery data (table) as well as USO's PRICE at each Friday's close and FXE's (euro) at each Friday's close. Link

Column E is what I consider US DEMAND. (remember Hurricane Ike impact until about Sep 19, 2008: Thus 3-Months Ago skew of +26.50%).

Anyhow, we can see some "demand destruction".

But you have to remember the "oil/euro" in columns M and S and the "short oil, short oil, short oil" the first half of this year with some focusing on Column E or Day's Supply and Column L, but no belief of euro (Column S). That was on the way UP in oil.

Now, in August (break in data due to horizontal limitations) the euro eventually "broke down" and oil/USO with it. Yes, we got the "buy oil, buy oil" and then one day ... "has anyone noticed the dollar's weakness?" was sounded. I about fell out of my chair.

Now ... THIS futures termination still important and OIL PRICE that follows, in my mind as the euro (column S) has jumped (strengthened) notably.

IF euro up/oil up is to come back in play, the FRIDAY's termination benchmark should begin to serve as a SUPPORT area as HEDGERS and TRADERS that BELIEVE in the trade POSITION around it.

The RESISTANCE of the Dec'08 TERMINATION serves the "perfect" ... just can't get it done type of technical level/benchmark resistance.

If we get a PIVOT level at that price, EVEN BETTER!

Jeff Bailey : 12/18/2008 1:34:36 AM

QM and USO daily interval bar charts ... I think they look very much the same. Link

QM day session begins at 09:00 AM ET and ends at 02:30 PM ET, but USO's day session doesn't begin until 09:30 AM ET and doesn't end until 04:00 PM ET.

USO's actual PRICE is "different" than QM or CL futures, but that's been the case for a VERY long time.

Now, the Jan'09 QM will terminate on Friday with the CL09f.

Traders in the QM/CL have two choices. They can ROLL their futures positions (long, or short) to FORWARD MONTHS (not just February), or a BULL will SELL TO CLOSE LONG. A BEAR may BUY TO CLOSE SHORT.

Let's "get away" from the "retail mentallity" for a moment.

Pretend YOU are the MASTER HEDGER for an airline. YOUR JOB is to PROTECT the airline from HIGH jet fuel prices. You use CL/QM/USO as a security to HEDGE. Suppose at some time prior to this month (maybe even this past summer) you were LONG oil. You may have rolled and rolled and rolled the position all the way to Jan'09. What are you going to do this month? OK, so you are not the hedger of the airline, but there are MANY market participants that are (airline, train, trash, trucking... etc).

Now, turn things around. Now you're the MASTER HEDGER for an oil producer. You job is to HEDGE against FALLING prices. March, April, May, June ... "no problem!" Then ... "something changed!" (euro weakness? Global demand weakness? U.S. demand weakness? Too much global production?). Now you're shorting, you're rolling positions, yet delivering production to terminals at MARKET prices. You've got too much oil, you're shorting, you're rolling and seven days (I'm counting the bars on the above chart) there goes oil prices (QM/CL) BELOW last month's termination price benchmark ($49.42 QM) or ($39.55 USO). You short.

Now ... see where WE as (back to retail trader) might want to "benchmark" terminations to develop a BIAS and get a feel for SUPPLY/DEMAND as it relates to a TERMINATION of a futures contract?

One the futures terminates, that's it! Oh, the other "option" is to either TAKE PHYSICAL DELIVERY of a LONG position, or be able to actually DELIVER OIL on a short position.

Jim Brown's reported that there are tankers FULL of oil just sitting at port. It isn't just sitting there lubricating rivots either. It's probably been "sold short" in the futures market, or even USO. Heck, the money from the short may be plowed into 13-week notes for all we know.

Now, at some point, PRICE will trigger and the HEDGES will come off and the "new trend" will develop.

Now, you do have to laugh a bit. Do you REALLY BELIEVE that SPECULATORS control the oil market? Do you REALLY BELIEVE that OIL companies control the oil market? Do you REALLY BELIEVE that OPEC controls the oil market?

I hope not!

Jeff Bailey : 12/17/2008 10:29:25 PM

James L.! I received your email regarding USO and QM and why the "benchmark termination" question. I sent back an email response at 10:26 PM ET.

OI Technical Staff : 12/17/2008 9:59:59 PM

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