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Jeff Bailey : 12/23/2008 7:58:09 PM

Closing Internals at this Link

Keene Little : 12/23/2008 4:04:03 PM

The market was held up into the close but I don't like the looks of it for tomorrow. I think we'll see lower prices. Whether SPX 850 will hold will then be the question. It's only a half day of trading and I suspect price action may be very slow, potentially non-directional.

Jeff Bailey : 12/23/2008 4:03:26 PM

DXY's 04:00 Tick 81.29

Keene Little : 12/23/2008 3:34:44 PM

The XLE, the energy SPDR, has a very different look than oil. It has not declined sharply like USO and in fact looks more like the stock market. So my attempt to use XLE as a heads up for what USO might do (or vice versa) is not working well. But XLE could give us a heads up for what the stock market might do and right now it's looking like XLE could break down from here, shown in pink on the daily chart: Link

The other option, just like the stock market, is that it could stay trapped inside a large sideways triangle pattern (dark red). A break of its uptrend line from October 10th, currently near 40.90, would be a bearish heads up and a break below 30.84 would have the downside targets of 32 and 20 in play. Otherwise, like the stock market, we could be trapped inside a very choppy consolidation pattern for another month or two.

Jeff Bailey : 12/23/2008 3:18:17 PM

USO has been trying to hold WKLY S1 on 30-min intervals now for 5 bars. Roughly 2.5 hours.

Jeff Bailey : 12/23/2008 3:17:03 PM

USO $30.12 -1.69% ...

Jeff Bailey : 12/23/2008 3:16:22 PM

BIX.X 127.36 -1.21% ...

SMH $16.71 -2.79% ...

Jeff Bailey : 12/23/2008 3:16:18 PM

INDU 8,418

SPX 863

OEX 414.35

NDX 1,179

Jeff Bailey : 12/23/2008 3:16:14 PM

RUT.X 466.15 -1.85% ... trades 1-point from its MONTHLY Pivot.

Keene Little : 12/23/2008 3:11:52 PM

I've been watching USO for a long play to set up and we could be getting close now. It has tracked down inside a narrow parallel down-channel since the July high (except for one brief foray out of it in September and then promptly dropped back inside) and the bottom of that channel is currently below $20. That would be a big drop from the current $30 so there's clearly some risk in this one yet. But as shown on its daily chart, there are some potential support levels getting closer: Link

The mid line of the down-channel (dotted blue line) is currently near $28 and the bottom of another parallel down-channel from November is down near $24. The wave count for its decline can be satisfactorily counted as complete to the downside although I see the possibility for a new low for a slightly better count.

The bottom line for me is that USO looks like it should be completing its decline soon (look at the bullish divergence on the oscillators) but there's enough risk to the downside yet that's keeping me on the sidelines for a little longer.

Jane Fox : 12/23/2008 3:06:44 PM

The bears grabbed the ball midday and still have it. Link

Jeff Bailey : 12/23/2008 3:03:33 PM

NASDAQ 992 / 1,879

Jeff Bailey : 12/23/2008 3:03:22 PM

NYSE a/d 1,111 / 1,914

Keene Little : 12/23/2008 2:56:04 PM

The bottom of the parallel down-channel from last Wednesday's high is currently near the SPX 851 level which is another reason why it must hold--a breakdown below the channel would be strongly bearish. It now takes a rally back above today's high, which would break the downtrend line from Wednesday, to say the bulls have a fighting chance. Updated 60-min chart: Link

Keene Little : 12/23/2008 2:51:26 PM

The a-b-c bounce off this morning's low has been confirmed a correction (obviously) with a drop to a new daily low. The key level at 851 continues to be a must-hold for the bulls.

Jeff Bailey : 12/23/2008 2:15:11 PM

02:00 Internals at this Link

Keene Little : 12/23/2008 2:03:50 PM

There's the 2nd leg up for the bounce. A failure now and a drop back below the low just past 1:30 PM would likely bring stronger selling or continuation sideways. In either case it would not be bullish.

Keene Little : 12/23/2008 1:45:30 PM

If we do get another leg up for the bounce watch SPX 870-872 for resistance. A turn back down from there would be a good short play setup (although I hesitate to recommend any trading during this week since a program trade could quickly spike the market in either direction).

Keene Little : 12/23/2008 1:42:08 PM

At this point it's looking like we should get another leg up for the bounce off this morning's low but that could then be followed by more selling. I'm just not seeing much in the way of bullish price action today.

Jeff Bailey : 12/23/2008 1:23:10 PM

No worries Jane!

Jane Fox : 12/23/2008 1:21:09 PM

Tks Jeff.

Jeff Bailey : 12/23/2008 1:18:41 PM

Yes Jane! ... see my 11:46:44 AM ET post

Jeff Bailey : 12/23/2008 1:18:02 PM

dj- French investment manager kills self over Madoff case

A French investment fund manager whose company raised funds in Europe for Bernard Madoff's investment scheme committed suicide in his New York office Tuesday, la Tribune reported.

Thierry de la Villehuchet, 65, was a co-founder of Access International, which raised funds on the European markets to plow into Madoff's scheme.

Villehuchet "could not cope with the pressure following the outbreak of the scandal. He took his own life, this morning, in his office in New York," the Web site of la Tribune quoted his relatives as saying. "This is a farewell from someone who had done nothing wrong.

"For the past week, he had tried day and night to find a way to recoup his investors' money and had begun legal action in the United States against U.S. authorities," the relatives said, according to La Tribune. "He could not stand the hunt for culprits launched by the Europeans.

"The truth is that everyone wanted to invest with Madoff, considered by everyone to be AAA, i.e. absolute security," the relatives said, according to the business newspaper.

Prosecutors allege that Madoff, 70, confessed to losing more than $50 billion over years of running a pyramid scheme, where new investors were fleeced to pay returns to existing investors.

He is free on bail of $10 million dollars as police continue a probe.

La Tribune did not specify how much Villehuchet's company had invested in the scheme.

Jane Fox : 12/23/2008 1:16:26 PM

Just got an email asking why the ETF's; DXD, SDS and QID are all down today and down a lot. These are all ultrashort ETFs trading on ARCX. I don't know. How about anyone else?

Jeff Bailey : 12/23/2008 1:09:25 PM

RUT.X 15-minute chart Link

Jeff Bailey : 12/23/2008 1:08:43 PM

RUT.X 15-minute intervals ... ONLY Major currently ABOVE its MONTHLY Pivot. If Santa Claus is coming, then this would have to be the likely major to start to show some firming. STRENGTH builds on move ABOVE the WKLY, with CONFIRMATION from other majors.

Jane Fox : 12/23/2008 12:53:55 PM

WE are getting the neatest snowfall today. Big white fluffy flakes to add to the 10 inches we already have.

Jane Fox : 12/23/2008 12:53:06 PM

Internals are telling me now the bears have the ball. Link

Keene Little : 12/23/2008 12:38:41 PM

The pullback today is deeper than I thought it would be if we're to get a bullish resolution this week but the bulls aren't dead yet. There are still several possibilities for what's playing out here and frankly there are too many possibilities to make a confident guess as to what could happen this week and into the end of the month.

The updated SPX 60-min chart shows what I consider the higher probability moves (dark red and pink), both of which call for a rally leg either from here or from slightly lower. But a break down below 851 would suggest a strong decline may be on its way. Link

Jeff Bailey : 12/23/2008 12:12:29 PM

RUT.X should be vulnerable to its MONTHLY Pivot.

INDU 8,462

SPX 866

OEX 416

NDX 1,184

Jeff Bailey : 12/23/2008 12:11:16 PM

12:00 Internals found at this Link

Keene Little : 12/23/2008 12:03:03 PM

A 62% retracement of the bounce off yesterday's low is at SPX 865.74, just a little lower than the broken downtrend line from Friday's high. It's already starting to look a little more bearish now and a break below 865 would suggest new lows are coming (but maybe with a bounce back up first).

Jeff Bailey : 12/23/2008 12:02:39 PM

RUT.X 60-minute interval chart with TREND observation Link

Jeff Bailey : 12/23/2008 11:55:56 AM

Here today, that very trend correlative with MONTHLY Pivot.

Jeff Bailey : 12/23/2008 11:55:13 AM

The upward trend that still looks to be "in play" for the RUT.X is very similar to that shown last week for the YM. The 11/20/08 morning low to the 12/01/08 afternoon low. Gets tested 12/05 (holds buyers), 12/12/08 (holds buyers), 12/15/08 (holds buyers), 12/22/08 (holds buyers).

Jeff Bailey : 12/23/2008 11:51:17 AM

CVX $70.12 +1.05% ...

Jeff Bailey : 12/23/2008 11:50:59 AM

XOM $75.56 +0.88% ...

Jeff Bailey : 12/23/2008 11:50:41 AM

OIX.X 556.22 -0.07% ...

Jeff Bailey : 12/23/2008 11:50:18 AM

INDU 8,527

Jeff Bailey : 12/23/2008 11:50:08 AM

SPX 872.86

Jeff Bailey : 12/23/2008 11:49:57 AM

USO $29.88 ... WKLY S1

Jane Fox : 12/23/2008 11:49:35 AM

I've shown these charts before but I thought a revisit won't hurt. This is why I am bullish short term:

1. Bullish MACD Divergence Blue trend lines - when price was making new yearly lows the MACD was making higher lows.

2. Bullish MACD Divergence Magenta trend lines - Macd made a higher high when price did not.

3. Reverse Head and shoulders.

This is all quite bullish but does not mean we are entering a new bull Cyclical market but the bottom is in for the short term Link

Jeff Bailey : 12/23/2008 11:46:44 AM

ProShares ETFs Distributions Link

Jeff Bailey : 12/23/2008 11:43:14 AM

USO 60-minute interval chart Link

Jane Fox : 12/23/2008 11:32:53 AM

The DOW and S&P futures are breaking below their respective ON lows. Link

Jeff Bailey : 12/23/2008 11:32:21 AM

USO $29.50 -3.68% ... new 52-weeker.

Keene Little : 12/23/2008 11:31:47 AM

One thing I don't like so far is the fact that the RUT tested its broken uptrend line from November 21st this morning and failed so that's a potential kiss goodbye. 60-min chart: Link

Jane Fox : 12/23/2008 11:31:39 AM

AD line has now gone negative.

Jeff Bailey : 12/23/2008 11:31:35 AM

For a "Santa Claus Rally" I would think SPX needs to see some type of trade ABOVE the WKLY Pivot.

Friday's close below this week's Pivot and Monday's action not suggesting Santa Claus rally at this point.

Keene Little : 12/23/2008 11:27:11 AM

SPX 868 is also the location of the broken downtrend line from Friday's high. A successful retest would be bullish.

Jeff Bailey : 12/23/2008 11:27:09 AM

SPX 60-minute interval chart Link

Keene Little : 12/23/2008 11:26:00 AM

The type of correction to yesterday's late-day rally has me thinking we could see a 50% retracement of the move up to this morning's early high. That would be at SPX 868.41 which is also where a Fib projection for the 2nd leg down is located. Below 868 would start to look more bearish. Anything above it maintains bullish potential.

Jane Fox : 12/23/2008 11:18:25 AM

The internals are not telling me anything at all and I don?t trade when they look like this. Link

Jeff Bailey : 12/23/2008 10:55:41 AM

Prior 3 WEEKLY Pivot Matrix at this Link

Jeff Bailey : 12/23/2008 10:46:26 AM

Weekly, Monthly, Quarterly Index Pivot Matrix at this Link

With 10:30 AM ET trade (Points from Pivot)

Jeff Bailey : 12/23/2008 10:38:51 AM

The RUT.X has shown some ability this morning to stick its head back above this WEEK's pivot (476.53), but so far has been unable to make a concerted move above that level.

While not in the Pivot Matrix, the shorter-dated 5-year Yield ($FVX.X) traded either side of its WKLY Pivot yesterday morning, but did find some YIELD sellers later in the afternoon on a check-back of its WKLY Pivot at 1.373%. I still think equity bulls need some cash from the Treasury bond market. Action in the 5-year somewhat positive for equities.

Jeff Bailey : 12/23/2008 10:35:20 AM

10:30 Market Watch at this Link

Keene Little : 12/23/2008 10:33:05 AM

Bonds snapped back up from this morning's quick pre-market decline and it continues to look like the bubble in bond prices may have a little more to go before we'll get a larger pullback in bond prices. Equities are struggling this morning but so far the pullback looks corrective and suggests higher prices to follow.

Jane Fox : 12/23/2008 10:19:49 AM

SAN FRANCISCO (MarketWatch) -- Consumer sentiment for December improved to a reading of 60.1, according to a survey released Tuesday by the University of Michigan and Reuters. That's better than a preliminary reading of 59.1 released earlier this month and beat economists' forecasts of 58.5. It also marked a sharp improvement from November, when consumer's outlook hit a 28-year low. Consumers reported that lower prices provided some needed relief, but continued job losses as well as income declines kept them pessimistic about their future economic prospects, the survey said.

Jane Fox : 12/23/2008 10:17:48 AM

Here are your overnight charts. As you can see we are still on the ON range so obviously the ON high and low are areas of resistance and support, respectively. Link

Jeff Bailey : 12/23/2008 10:16:50 AM

10:00 Internals at this Link

Jane Fox : 12/23/2008 10:08:41 AM

UMichigan consumer sentiment rises to 60.1 in December vs 58.5.

Jane Fox : 12/23/2008 10:07:55 AM

WASHINGTON (MarketWatch) -- With plummeting prices, resales of U.S. single-family homes and condos dropped 8.6% in November to a seasonally adjusted annual rate of 4.49 million, the National Association of Realtors reported Tuesday. Resales are down 10.6% in the past year. Economists surveyed by MarketWatch had expected sales to fall to an annual rate of 4.9 million. In the past year the median sales price fell 13.2% -- the largest decline since data collection began in 1968 and likely since the Great Depression -- to $181,300. The inventory of unsold homes on the market rose 0.1% to 4.2 million, an 11.2 month supply at the current sales pace. NAR attributed November's poor results to the weak stock market, job losses and low consumer confidence.

Jane Fox : 12/23/2008 10:05:42 AM

The AD line opened quite strong this morning but has retreated to +728.

Keene Little : 12/23/2008 10:03:59 AM

Techs and small caps are trying to lead the way higher so that's a good sign. But so far the blue chips are a bit of a drag this morning.

Jane Fox : 12/23/2008 9:48:28 AM

SAN FRANCISCO (MarketWatch) -- Standard & Poor's Ratings Services on Monday cut the unsecured debt of General Motors Corp. to C from CC, saying that debt holders could see a "significant decrease" in value in the event of a bankruptcy. At the same time, Moody's Investors Service cut Ford Motor Co.'s rating to Caa3 from Caa1, explaining that the company may have to restructure its balance sheet to reach the same union concessions that GM and Chrysler are likely to achieve in the wake of the federal bailout loans. Shares of GM plunged almost 22% to close at $3.52 while Ford's stock dropped 12.2% to end at $2.59.

Jane Fox : 12/23/2008 9:46:41 AM

I got a late start today. I see we still have the revised U0fM Consumer Sentiment and Inflation expectations out at 9:55 today.

Jane Fox : 12/23/2008 9:43:55 AM

WASHINGTON (MarketWatch) -- The U.S. economy slowed sharply in the third quarter, declining at a 0.5% annual rate, unrevised from last month's estimate, the Commerce Department reported Tuesday.

It's the weakest quarterly growth rate since the first quarter of 2001. The economy grew 2.8% in the second quarter.

Economists now say that a recession began December 2007, based on data showing declining employment, incomes and industrial production. But it didn't really sink in until the July-September quarter.

For the current quarter, economists are predicting a sharp decline in the neighborhood of 6.0%. This would be the biggest drop since the early 1980s.

Gross domestic purchases -- the total value of goods and services bought by U.S. residents -- fell 1.5% in the third quarter, experiencing downward momentum after falling only 0.1% in the second quarter. Final sales of domestic product, including exports, fell 1.3%.

Keene Little : 12/23/2008 9:31:08 AM

Equity futures had a very choppy and narrow range overnight session and we look to open near the flat line. The bulls need to keep the rally going this morning but a pullback is possible. Yesterday's low is a must hold for them.

Bonds have been active this morning--after an overnight rally to a high near 8:00 AM prices suddenly collapsed below yesterday's low by 8:40 AM and have since bounce back up a little. The whole pattern of the pullback in bonds since last Thursday's high looks like a correction and is pointing higher. The flip side of the pattern points to a sudden and hard breakdown. I'm watching the bonds because a big move in them could result in a bigger move for stocks, especially in a low-volume holiday week.

Jeff Bailey : 12/22/2008 11:50:03 PM

Closing U.S. Market Watch at this Link

Keene Little : 12/22/2008 11:22:00 PM

Tuesday's pivot table: Link

The market found support right where it needed to on Monday afternoon and then got a big bounce. So it's set up for a rally on Tuesday and into Wednesday at least. SPX needs to push above 878 and then break out of its down-channel, the top of which is near 889, to confirm the leg down from Wednesday the 17th is finished. Then it will be time to watch for a move back up to 919 and possibly higher, shown in dark red on the 60-min chart: Link

If SPX stays below 878 and then drops to a new low below 851 it would create a 5-wave move down from last Wednesday. That wouldn't necessarily be bearish, as shown in pink, but it does set up the possibility for just a bounce after that and then continuation lower. We'll cross that bridge if we come to it.

The equivalent level to SPX 878 that NDX needs to get above is 1193. Watch for a potential retest of its broken uptrend line from November 21st, broken on Monday and currently up near 1212. The two most probable scenarios as I currently see them are shown on the NDX 60-min chart: Link . I don't show a continuation lower but an immediate selloff Tuesday morning that breaks below 1157 could be potential bearish for a move down to the 1050 area.

OI Technical Staff : 12/22/2008 9:59:59 PM

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