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Jeff Bailey : 1/2/2009 6:07:21 PM

UYG finished $6.08 +0.82% ...

Jeff Bailey : 1/2/2009 6:06:06 PM

ULX-DY $2.25 x $2.65
UWM $20.70 +3.96% ...
RVX.X 47.35

Jeff Bailey : 1/2/2009 5:43:42 PM

Oil up 4% on Mideast, Russia tensions ... Reuters Story Link

Jeff Bailey : 1/2/2009 5:14:06 PM

Yes, Genevieve, there is a Santa Claus ... With one-day left for "Santa Claus Rally"

INDU +7.31%
SPX +7.95%
OEX +7.24%
NDX +6.80%
RUT +7.94%

2007-08 ... Santa did NOT show.

INDU -2.93%
SPX -2.51%
OEX -2.52%
NDX -2.84%
RUT -5.17%

StockTrader's Almanac - Santa Claus tends to come to Wall Street nearly every year, bringing a short, sweet, respectable rally within the last five days of the year and the first two in January. This has been good for an average 1.5% gain since 1969 (1.5% since 1950). Santa's failure to show tends to precede bear markets, or times stocks could be purchased later in the year at much lower prices. STA discovered this phenomenon in 1972.

Jeff Bailey : 1/2/2009 4:20:25 PM

DXY's 04:00 tick 81.89

Keene Little : 1/2/2009 4:00:43 PM

VIX is spiking at the close--looks like more than a few people may be buying some put protection as we head into the weekend.

Keene Little : 1/2/2009 3:59:34 PM

Today's volume is lighter than even Wednesday's. This whole week's worth of rally, while strong price-wise, is weak volume-wise. Certainly the bulls would feel better if there were some power behind the move. Next week's return by the post-holiday crowd could shift things a bit. Be careful if you're taking a long position home over the weekend--at least consider a hedge position.

Jeff Bailey : 1/2/2009 3:56:18 PM

Ryder Systems (R) $40.59 +4.66% ... email alert!

Keene Little : 1/2/2009 3:49:17 PM

No surprise, the bulls are going to push this up right into the close. SPX 935.65 is a Fib level of interest because it's the 127% projection off the previous leg down (December 17-22). It's very common to see that Fib level act as a reversal level. It looks like we'll see that level tagged before the close.

Jeff Bailey : 1/2/2009 3:43:27 PM

YM 9,000 !

INDU 9,045

Jeff Bailey : 1/2/2009 3:35:43 PM

FTSE-100 finished the day at 4,561.79 +2.88% ...

European Markets: Link

Jeff Bailey : 1/2/2009 3:33:58 PM

XLF $12.73 +1.75% ...

Jeff Bailey : 1/2/2009 3:33:42 PM

UYG $6.15 +1.99% ...

Jeff Bailey : 1/2/2009 3:33:05 PM

Sssssqueeeeeeeze .....

Jeff Bailey : 1/2/2009 3:32:43 PM

XBD.X alert! 80.01 +3.27% ... gets the trade above 12/09/08 relative high.

SPX 930.82

Jeff Bailey : 1/2/2009 3:28:01 PM

Last time USO was able to close above a WKLY R2 looks to have been 06/06/08

Jeff Bailey : 1/2/2009 3:25:46 PM

USO $35.53 +7.34% ... threatens a close above WKLY R2.

Jeff Bailey : 1/2/2009 3:22:26 PM

CNBC guest saying YIELD on INDU was 4.00% at this morning's open.

Keene Little : 1/2/2009 3:10:33 PM

No stopping the bulls today. Still buying and there's a good chance they'll keep buying right into the close today (bonds are still selling and it looks like climactic selling volume hit just before 3:00 PM. So that could set bonds up for a reversal on Monday. It's a case of too much too fast in this week's climb for the stock market but that will be a problem for next week.

Jeff Bailey : 1/2/2009 3:08:25 PM

CYC.X alert! ... 499.16 +5.00% ... 61.8% of reverse h/s pattern retracement.

Jeff Bailey : 1/2/2009 3:07:36 PM

Petroleo Brasileiro (PBR) $25.90 +5.75% ... takes a look at 12/16/08 relative high.

Jeff Bailey : 1/2/2009 3:06:38 PM

FXY 107.86 -2.02% ... continues to reverse course from 12/17 to 12/18 "island reversal"

Jeff Bailey : 1/2/2009 3:05:15 PM

TLT $116.91 -2.04% ... backfills its 12/16 to 12/17 gap higher.

Jeff Bailey : 1/2/2009 3:04:00 PM

NASDAQ a/d 2,034/791

Jeff Bailey : 1/2/2009 3:03:49 PM

NYSE a/d 2,555/487

Jeff Bailey : 1/2/2009 3:01:27 PM

HYG $75.83 -0.23% ... a little "tougher" to tabulate its SEC yield as dividend changes each month. Link

Jeff Bailey : 1/2/2009 2:57:40 PM

PHF $3.85 +4.61% ... recent news and lowering of monthly dividend to $0.055/share, we must now adjust to $0.66/year. So SEC yield currently 17.14%. If long on 12/18/08 at $3.08, SEC on that entry was 21.42 and you got the 12/23/08 dividend(s)

Jeff Bailey : 1/2/2009 2:53:51 PM

Might be some "dividend runs"

Jeff Bailey : 1/2/2009 2:53:27 PM

5-year yielding just 1.7%

Keene Little : 1/2/2009 2:52:34 PM

A little throw-over finish just above SPX 927 and now a sharp little (very small so far) pullback. That's the first hint I'm getting that we might have seen the top of this move. I'm going to watch for a stronger pullback and then look to short the following bounce. I don't feel like catching rising knives today since it's not common to see a late-day reversal (if we do it will be bearish for at least early next week).

Jeff Bailey : 1/2/2009 2:51:56 PM

Per Linda's Options 101 education article today. I did post some dividend and dividend YIELDS for your INDU and SPX components.

Good work Linda!

Jeff Bailey : 1/2/2009 2:42:26 PM

Was thinking quick little short, then cover, then wait about 15-minutes, then long to the close to 8,980

Jeff Bailey : 1/2/2009 2:41:06 PM

Liked it for about 5-minutes ...

Keene Little : 1/2/2009 2:40:59 PM

Short term bearish divergences continue but that's not stopping the bulls. There's obviously very little interest in selling today. Bonds continue to sell off and that money is clearly rotating into stocks today.

Jane Fox : 1/2/2009 2:37:55 PM

... Opps nope DOW hit 9026 on Dec 8th. MY bad.

Jeff Bailey : 1/2/2009 2:37:17 PM

02:00 Internals at this Link

Jane Fox : 1/2/2009 2:37:14 PM

DOW is up 221 points and breaks above 9000 for the first time since Nov 10th.

Jeff Bailey : 1/2/2009 2:26:19 PM

SNDK $11.00 +14.58% ... "bigger h/s bottom" in play now. Needed the first one to get taken out before we started going to the second one.

Jeff Bailey : 1/2/2009 2:24:56 PM

CYC.X 495.13 +4.15% ...

DDX.X 57.66 +8.15% ...

Jeff Bailey : 1/2/2009 2:24:31 PM

Good eye Jane !

Jane Fox : 1/2/2009 2:18:51 PM

And the S&P breaks its neckline so its H&S is confirmed as well. Link

Jeff Bailey : 1/2/2009 2:18:46 PM

YM short stop/exit alert! 8,915

Keene Little : 1/2/2009 2:18:17 PM

I liked Jeff's idea of trying a short here. The pullback is already slightly larger than we've seen today. But if it does push marginally higher I'll be watching that SPX 927 level for another opportunity to try the short side.

Jane Fox : 1/2/2009 2:16:32 PM

The Russell 2000 breaks its neckline so confirms its reverse head and shoulders. Projection is 600. Link

Jeff Bailey : 1/2/2009 2:14:57 PM

YM short lower stop alert! ... to even.

YM 8,907

Jane Fox : 1/2/2009 2:14:12 PM

I have been jawboning a lot about the reverse head and shoulders patterns on the major indexes of late (along with the bullish MACD divergences) so I wanted to give you an update on how the bullish scenario is progressing. The DOW has not yet confirmed its reverse H&S but if it does the projected target is 10140. Link

Jeff Bailey : 1/2/2009 2:13:04 PM

YM short ... stop goes real tight at 8,931. Target 8,875

Jeff Bailey : 1/2/2009 2:10:39 PM

YM short alert! 8,915

Jeff Bailey : 1/2/2009 2:02:39 PM

I don't like "13"

Jeff Bailey : 1/2/2009 2:02:20 PM

Or 13, hold 12?

Jeff Bailey : 1/2/2009 2:01:07 PM

VIX-MJ $11.70 x $12.30 ... Maybe feed another 12 out today?

Jane Fox : 1/2/2009 1:58:05 PM

AD line is a very bullish +2069 and the VIX is supporting each and every new high the S&P futures are making.

Jeff Bailey : 1/2/2009 1:54:45 PM

USO 5-minute intervals chart. Turn on QCharts' WKLY and DAILY Pivot levels. Link

Jeff Bailey : 1/2/2009 1:47:33 PM

UGA $20.85 +7.14% ...

Jeff Bailey : 1/2/2009 1:47:11 PM

UNG $24.86 +7.29% ...

Jeff Bailey : 1/2/2009 1:46:50 PM

USO $35.31 +6.67% ...

Jeff Bailey : 1/2/2009 1:46:12 PM

XOM $80.98 +1.44% ... back to test 61.8% retracement.

Jeff Bailey : 1/2/2009 1:43:46 PM

Anytime we see an S2 traded, PIVOT usually tough.

Jeff Bailey : 1/2/2009 1:41:31 PM

Could be tough though ... QRTRLY Pivot, MONTHLY R1/80.9% overlap.

Jeff Bailey : 1/2/2009 1:40:30 PM

Gott'a be bullish if SPX is going to 950-970.

Keene Little : 1/2/2009 1:36:05 PM

If I create a little paralle channel for the price consolidation since December 8th, the top of it is near 927, the same projection I showed on the 10-min chart. So it's potentially an important level to watch if reached. Much above that level and I'd say the chances are good for a rally to at least 950 if not 970 in the next week. Otherwise we could be looking at another pullback next week. 120-min chart: Link

Jeff Bailey : 1/2/2009 1:33:15 PM

At Wednesday's close, SPY's "Max Pain" still $90.00. Put OI= $134.9 million. Call OI= $165.8 million.

Jeff Bailey : 1/2/2009 1:30:52 PM

VIX.X 37.63 -5.92% .... continues to abate.

Jeff Bailey : 1/2/2009 1:30:10 PM

SPY $92.26 +2.23% ... starting to make some way above its Jan'09 "Max Pain" tabulation of $90.00 from 12/26/09 benchmarking.

Jeff Bailey : 1/2/2009 1:28:28 PM

Noted the volumes in DRYS a couple of week's ago.

Jeff Bailey : 1/2/2009 1:24:13 PM

Shippers Jump after 2008 Crushing ... DJ- Shipping stocks posted strong gains amid hopes that they may get a January bounce after being crushed in 2008. Dryships Inc. (DRYS, $12.67, $2.01, 18.86%), Genco Shipping & Trading Ltd. (GNK, $17.00, $2.20, 14.86%) and Eagle Bulk Shipping Inc. (EGLE, $7.44, $0.62, 9.09%) were among the gainers.

Jeff Bailey : 1/2/2009 1:23:11 PM

Miners Post Gains ... DJ- Mining stocks moved higher, as some of the shares are so cheap that they are priced for little short of an economic disaster in 2009. Teck Cominco Ltd. (TCK, $5.75, $0.83, 16.87%), Rio Tinto Plc (RTP, $98.50, $9.59, 10.79%) and Xstrata Plc (XTA.LN) all now trade for less than four times next year's projected earnings. Shares of Companhia Vale do Rio Doce (RIO, $12.92, 0.81, 6.69%) and Anglo American Plc (AAUK, $12.39, 0.77, 6.62%) now sell at projected price earnings multiples of less than six.

Jeff Bailey : 1/2/2009 1:21:01 PM

Energy Stocks Rise ... DJ- Energy stocks rose as Nymex crude clawed its way higher, spurred by concerns that Russia's cutting off natural gas to Ukraine could affect European supplies. Consol Energy Inc. (CNX, $31.18, $2.60, 9.10%), Massey Energy Co. (MEE, $15.06, $1.27, 9.21%), Peabody Energy Corp. (BTU, $24.44, $1.69, 7.41%) and Nabors Industries Ltd. (NBR, $12.94, $0.97, 8.10%) were among the top gainers.

Keene Little : 1/2/2009 1:20:24 PM

SPX is just walking up underneath the top of its parallel up-channel and running out of momentum as it does so. It's still not a market I want to buy here but it's also not a time to get short. If it can continue to "walk the line" there is a Fib projection at 927.33 for equality between the 5th and 1st waves shown on the updated 10-min chart: Link

Jeff Bailey : 1/2/2009 1:09:33 PM

Kind'a jittery with CROX putting up all of its intelectual properties. Link

Jeff Bailey : 1/2/2009 1:08:03 PM

Played CROX bull on 12/30/08 extended at $1.10, but bailed way too soon 12/31/08 at $1.22

Jeff Bailey : 1/2/2009 1:06:34 PM

Crocs Inc. (CROX) $1.34 +8.06% ... BIG bull loser in 2008. BIG bear gainer in 2008.

Jeff Bailey : 1/2/2009 1:04:10 PM

I would agree with you on that Keene ... BIG gains in Treasuries last year. Take profits and don't have to pay tax until April 2010.

As always, please consult your tax advisor for tax advice regarding any investment/security.

Jeff Bailey : 1/2/2009 12:57:26 PM

SPX 920 U.S. Market Watch Link

Jane Fox : 1/2/2009 12:55:31 PM

The Russell 2000 (TF) is the laggard today but that should have been expected because it lead the market last week. Link

Jane Fox : 1/2/2009 12:54:07 PM

Internals remain very bullish. Link

Keene Little : 1/2/2009 12:51:17 PM

Bonds are selling off further today and it's possible we're seeing a little rotation out of bonds and into stocks today. That needs to be considered by anyone wanting to short the stock market--there's waning momentum in the buying but it doesn't mean it will end anytime soon.

Keene Little : 1/2/2009 12:49:06 PM

Bearish divergences are now on teh 5 and 10-min charts as the market pushes higher. VIX has dropped to a new low below Wednesday's and is now a little more than a point from the downside projection at 36.20. If long the market just keep an eye on the exit door and now when you want to cut and run. It could certainly keep chugging higher but I would not chase it higher at this point.

Jeff Bailey : 1/2/2009 12:43:59 PM

SPX Heavyweights @ 920 trade Link

Jeff Bailey : 1/2/2009 12:41:53 PM

SPX alert! 920

Jeff Bailey : 1/2/2009 12:41:42 PM

As noted over the years ... I STRONGLY suggest rebalancing you more "longer-term" investment holdings on a QUARTERLY basis.

Jeff Bailey : 1/2/2009 12:40:53 PM

Beetle's Balanced from 12/31/07 benchmark to Wednesday's close Link

I haven't put together this year's benchmark, but here how the asset classes trade on a "buy and hold" for 1-year rebalance. Link

Jeff Bailey : 1/2/2009 12:36:43 PM

Yes ... certainly "looks" like some tax-related and rebalancing doesn't it?

Jeff Bailey : 1/2/2009 12:35:26 PM

12:00 Internals found at this Link

Keene Little : 1/2/2009 12:21:09 PM

SPX is still stalled underneath its downtrend line from October 14th but it's looking, so far, more like it's consolidating underneath resistance rather than getting ready to drop back down. So I'll sit tight for a bit longer to watch how price reacts around 918. If it drops down impulsively I'll wait for a bounce back up to try a short play again. If it rallies through resistance I want to see how it behaves on a pullback to retest it.

Keene Little : 1/2/2009 12:14:14 PM

NQ is first to make a new high again and I'm outahere. It could be just a quick retest of the high and then fail but I'd rather be cautious and get whipped out of a trade near breakeven than hang on for a slight loss. It was a quick test and now I'll wait for a little more confirmation of a high.

Jeff Bailey : 1/2/2009 12:05:56 PM

USO $35.27 +6.55% .... trades WKLY R2.

Keene Little : 1/2/2009 12:00:01 PM

Stop at a new daily high on the short play. I want to see it start working right away or else I'll cut and run.

Jeff Bailey : 1/2/2009 11:58:17 AM

OEX.X 437.45 +1.34% ... session high has been 438.58

Jeff Bailey : 1/2/2009 11:57:36 AM

SPX 916.11 +1.42% ... session high has been, been ... 919.07. (See recent Market Wraps)

Jeff Bailey : 1/2/2009 11:56:38 AM

Procter & Gamble (PG) $62.04 +0.35% ... trades 38.2% conventional (09/15/08 relative high to recent 10/13/08 low). 50-day SMA here too.

Jeff Bailey : 1/2/2009 11:53:33 AM

McDonald's (MCD) $63.16 +1.51% .... testing trend. (see 02:31:39 AM)

Keene Little : 1/2/2009 11:47:54 AM

I am seeing some bearish divergences on the 2 and 5-min charts at this last high, and the 10-min oscillators look like they're about to tip over. I'm trying a small short position here, tight stop, SPX 920. I'll add to it if it starts working. It's a good resistance level (SPX 918) to try it.

Jeff Bailey : 1/2/2009 11:42:58 AM

Oil traders following my commentary/analysis last several months ... Using USO as guide ... $33.06 is "heads up." MNTHLY Pivot is #2 "heads up." Day count would begin today of one (1) just to be safe.

Keene Little : 1/2/2009 11:41:40 AM

SPX reached 918 and I don't see anything slowing it down yet. Considering it's the 1st of the month and potentially bullish I'm going to stay cautious about a short play until I see some evidence of topping. So far I'm not seeing much in the way of bearish divergences to help give me some confidence that resistance is going to hold here. Just watching for now, although certainly tempted to dip my toe back in the water on the short side...

Jane Fox : 1/2/2009 11:38:35 AM

DOW is up 151 points on this "quiet" day.

Keene Little : 1/2/2009 11:35:20 AM

USO is rallying strong today and a move above 36 would be the first heads up that we might have seen the bottom. A break of the top of its parallel down-channel, near 38, would be bullish and a break above its 40.39 December 15th high would confirm the bottom is in. But until those levels are broken I continue to see the potential for another low this month. USO daily chart: Link

Jane Fox : 1/2/2009 11:30:47 AM

At some point Crude has to rally. I know many are thinking this will not happen because it sure hasn't happened, it feels, like forever. Well we do have short memories when it comes to the market and although Crude has not too many buyers for quite a while now it will rally at some point. There are a very few consistencies in the market but all moves in one direction will get an opposite move at some point. It is like Newton's third law "for every action there is an equal and opposite reaction" although I'm not sure about the equal part. Link

Jeff Bailey : 1/2/2009 11:25:59 AM

See one (1) contract crossed between $106.00 and $120.00 in CME's San Franciso Nov'09 regional housing futures. That's $-8.00 from 12/15/08 close of $124.00

Jeff Bailey : 1/2/2009 11:19:05 AM

UCO $14.82 +8.25% ...

Jeff Bailey : 1/2/2009 11:18:51 AM

DXO $2.97 +16.47% ...

Jeff Bailey : 1/2/2009 11:18:19 AM

USO Alert! ... $34.74

Keene Little : 1/2/2009 11:12:16 AM

Banks are struggling a bit today. BIX is still negative on the day and as you can see on the daily chart it's struggling with its broken uptrend line from November 21st as well as its downtrend line from November 4th: Link . Its 50-dma was tested on November 4th and again on December 8th and then almost tagged on Wednesday. I show the possibility for a continuation higher (in pink) but I think that's the lower probability move from here.

Jeff Bailey : 1/2/2009 11:04:44 AM

OK ... MONTHLY certainly in play.

Jeff Bailey : 1/2/2009 11:04:14 AM

USO $34.49 +4.19% ... "in the zone" ... (see Thursday's Wrap)

Jeff Bailey : 1/2/2009 11:02:40 AM

"Has to be" some beginning of year "bear tax gain" buying.

Jeff Bailey : 1/2/2009 11:02:09 AM

Avon Products (AVP) $24.57 +2.99% ...

Jeff Bailey : 1/2/2009 11:01:45 AM

Bare Escentuals (BARE) $5.54 +5.92% ... trying to clear 2-month resistance.

Jeff Bailey : 1/2/2009 11:01:05 AM

SMH $18.01 +2.27% ... too much room for this bear to QUARTERLY Pivot/Monthly R1

Jeff Bailey : 1/2/2009 10:58:37 AM

Looks like some major asset allocation action still underway ... not sure when it will stop.

Jeff Bailey : 1/2/2009 10:57:21 AM

Blowing out ProShares UltraShort (SSG) $75.12 -3.55% ...

Jeff Bailey : 1/2/2009 10:50:53 AM

Global Econ Calendar Link

Jeff Bailey : 1/2/2009 10:48:47 AM

BIX.X 135.80 -1.25%
BKX.X -0.63%
XBD.X +0.23%
IUX.X -0.75%
XLF $12.44 -0.63% ...

Keene Little : 1/2/2009 10:48:08 AM

The top of the parallel up-channel, which is obviously still holding, is currently near 916. It crosses 918 around 11:30 AM, right at the same place the downtrend line from October 14th (on the 60-min chart) crosses. It's also the previous high and a Fib projection for the move up from last week. I'm hoping it makes it up there and stalls as it would be a good place to try another short entry.

Jeff Bailey : 1/2/2009 10:47:36 AM

OIX.X +2.47% ...
OIH +5.32%
XNG.X +3.78%
USO +2.99%
UNG +1.12%

Jeff Bailey : 1/2/2009 10:46:06 AM

European Markets Link

FTSE-100 +2.30% at 4,536. (See Thursday's Wrap)

Jeff Bailey : 1/2/2009 10:45:10 AM

Asian Markets Link

Jeff Bailey : 1/2/2009 10:42:54 AM

SPX 911.43 +0.90% ... set to trade DAILY R1 (912.47)

Keene Little : 1/2/2009 10:38:13 AM

NDX has now rallied to a new high above Wednesday's and a new high for SPX (above 910.32) would negate the rising wedge pattern. The market would be talking to us so listen to it and don't hang around short. We'll see if it can make it up to the next resistance level (and perhaps have VIX dropping down to its 36.20 target).

Jeff Bailey : 1/2/2009 10:28:01 AM

10:00 Internals at this Link

Jeff Bailey : 1/2/2009 10:27:23 AM

NASDAQ looks correct ... currently 11:11

Jeff Bailey : 1/2/2009 10:26:52 AM

Pretty certain the NYSE NH/NL are NOT correct.

Keene Little : 1/2/2009 10:25:42 AM

NDX is acting a little stronger at the moment and has a little more upside potential before running into its downtrend line from December 9th, currently near 1231. If that happens then I suspect we'll see SPX make a run up to at least 918. A break of NDX's Wednesday high of 1223.28 would be the bullish signal, at least short term. NDX 60-min chart: Link

Jeff Bailey : 1/2/2009 10:20:41 AM

Not sure my NH/NL data correct.

NYSE 0:0

NASDAQ 11:10

Jeff Bailey : 1/2/2009 10:19:29 AM

SanDisk (SNDK) $10.45 +8.85% ... "hot" early.

Jane Fox : 1/2/2009 10:18:37 AM

The internals were a little hard to read earlier but have straighten out now and telling me the bulls are in control. Link

Jane Fox : 1/2/2009 10:14:14 AM

WASHINGTON (MarketWatch) -- The ISM index, a key manufacturing gauge, stood at 32.4% in December, showing the sector's fifth consecutive monthly decline. Economists surveyed by MarketWatch were expecting the ISM index to rise slightly from November's reading, to 36.3%. Orders, production, employment and inventories all contracted in December, according to the Institute for Supply Management.

Keene Little : 1/2/2009 10:13:02 AM

On Wednesday I posted a 10-min chart on SPX to show the parallel up-channel and then a small rising wedge pattern that was setting up the short play. Looking a little closer at this channel and rising wedge on the 5-min chart shows SPX bounced back up to the bottom of it this morning and then dropped away. Those are the kinds of setups you want to see (doesn't matter the time frame) for trade entries/confirmations. A rally back above 907 would be potentially bullish at this point. The Next confirmation for the short play is a break of the uptrend line just below 900 now. 5-min chart: Link

Keene Little : 1/2/2009 9:57:09 AM

The bottom of the parallel up-channel from Monday's low (the uptrend line) is near SPX 899 so a break of that and the mid-day low on Wednesday would be confirmation that that rally leg is finished and we'd be looking for at least a Fib correction of it.

Keene Little : 1/2/2009 9:45:12 AM

I should clarify my previous post--the pre-market bounce tested the highs going into Wednesday's close and not Wednesday's highs which were about 20 minutes before the close.

Jane Fox : 1/2/2009 9:37:06 AM

AD line opens at a neutral +386.

Keene Little : 1/2/2009 9:33:24 AM

After the 6:00 AM open futures made a dash for Wednesday's highs but couldn't hold. But bullishly the pre-market pullback essentially held the gap up open. The short-term key levels are Wednesday's highs.

Jane Fox : 1/2/2009 9:27:49 AM

The only report we have to anticipate today is the 10:00 a.m. Dec ISM Mfg Index: Expected: 35.7. Previous: 36.2.

Jane Fox : 1/2/2009 9:12:50 AM

Here are your unremarkable overnight charts. Interesting to see the DOW futures (YM) tagged its ON low at 5:30 but the S&P futures (ES) actually broke its low.

I suspect we will have a slow day today and that usually translates into choppy but Wednesday was a slow day as well and it was not choppy at all. It was a pretty good day trading session - as long as you stayed long that is. Link

Jeff Bailey : 1/2/2009 2:31:39 AM

INDU's Big 4 montage Link

Jeff Bailey : 1/2/2009 1:57:45 AM

SPX Components a MARKET CAP weighted index at this Link

Top 19 components account for 33.37% of weight to start the New year.

Top 42 components account for 50.11% of weight.

24 components have a 0.01% weight #476-#500.

Jeff Bailey : 1/2/2009 1:28:05 AM

INDU Components a PRICE weighted index at this Link

Keene Little : 1/2/2009 1:03:28 AM

I often show rising and descending wedge patterns because I think they're one of the more reliable patterns to trade. If price does a quick throw-over above the top of a rising wedge and then falls back inside, and especially if it then falls out the bottom of the wedge, it's a sell signal. If it does a quick throw-under below the bottom of a descending wedge and then rallies back inside it's a buy signal. If the throw-over or throw-under keeps going, such as a continuation of the rally out the top of the wedge, it's a confirmed move (bullish in the case of rallying out the top) and should be traded in that direction. So it's a good pattern to trade.

And that brings us to the latest ISEE call/put chart which I showed last Monday when referencing the very high reading of 206. Anything above 160 is a warning of a coming reversal (too many bullish bets with purchased call options). Now not only did we get the high reading but we also got a quick reversal from that reading (closed at 119 on Wednesday) and look at the broken rising wedge pattern it left behind: Link

Those bullish bets were quickly removed or else a lot of put buying suddenly occurred. In either case the reversal is a sell signal and the broken rising wedge is a sell signal. Will it play out? I have no idea but I like the setup.

Another sentiment indicator to watch is VIX. The decline from its October high is a 3-wave pullback and is nearing equality in the two legs down (at 36.20 and Wednesday's low was 37.96). It's also not far from its 200-dma. Oscillators are into oversold. It looks like a good setup for a reversal and of course a reversal in VIX would mean a selloff in the stock market. VIX daily chart: Link

None of these things mean that the market will reverse back down or even if it reverses that it won't then reverse again and head higher into January opex. But the game of trading is trying to line up as many factors as you can in favor of the direction of trade you want to take. Right now I'd say they're lining up bearish. Buyer beware right now.

Jeff Bailey : 1/2/2009 12:35:50 AM

Weekly, Monthly (new), Quarterly (new) Index Pivot Matrix Link

Keene Little : 1/2/2009 1:02:18 AM

Friday's pivot table: Link

The SPX 60-min chart we were watching Wednesday showed price heading up towards potential resistance near 981 which is where a Fib projection, the previous high and the downtrend line from October 14th are all located. But I liked the completion of the wave count for the move up from last Monday's low and suggested a short play at the end of the day on Wednesday. 60-min chart: Link

Using the RUT's 10-min chart we've got a clear example of a 5-wave move up from last Monday and the 5th wave nearly tagged the projection where it was equal to the 1st wave: Link . Again, it's a very good setup for a reversal and if it does then it becomes a matter of figuring out where to next.

Right after the cash market closed futures sold off fairly hard so it was either just hedging by some or profits were being taken instead of waiting until Friday. The short play has to work right away on Friday morning--any rally instead would have me looking for a move at least up to 918. The daily chart shows price reached the downtrend line and set up for a reversal: Link

If we see a pullback only to the bottom of the trading range, perhaps to about SPX 860-865, and then another rally leg I think the odds are excellent that we'll see a strong rally into opex. SPX could make it as high as 1050 although I see multiple levels of resistance between 920 and 1050 and I'd be watching every one of them for failure. The next leg down after that kind of rally is likely to be swift and strong into February (to potentially put in a low for the year).

The NDX daily chart has a very similar setup as that shown for SPX. I think we'll get a pullback and if so then I'll be watching to see if support near 1157 holds. Any break below SPX 850/NDX 1157 would suggest a stronger decline although, as depicted in pink, a larger consolidation into February remains a strong possibility. NDX daily chart: Link

I've got a slightly different wave count for the DOW but the setup is the same for this as well. It could tolerate a little higher before pulling back but it's not necessary. A break below 8347 would suggest a deeper pullback at a minimum otherwise once the little sideways consolidation since December 8th has completed we could see a strong rally into January opex. Look out below after that if it plays out that way. DOW daily chart: Link

Since I mentioned the RUT before, its daily chart also shows a very similar setup and could be our canary here since the uptrend line from December 1st, currently near 469 (about 30 points lower than Wednesday's close), should tell us which scenario will play out. If it holds (might get a slight throw-under) then the rally into January opex is likely. If it breaks then a selloff into January opex is likely. RUT daily chart: Link

OI Technical Staff : 1/1/2009 9:59:59 PM

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