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Jeff Bailey : 1/12/2009 7:42:12 PM

XLF daily intervals with Quarterly and Monthly Pivot retracement Link

Jeff Bailey : 1/12/2009 6:57:47 PM

Nymex Feb Crude Oil (cl09g) settled down $3.24, or -7.94% at $37.59. Link

Jeff Bailey : 1/12/2009 6:31:50 PM

Closing Internals at this Link

Jeff Bailey : 1/12/2009 6:12:36 PM

Major Global Indexes, Currencies, Oil/OIX, GLD/HUI, XLF, DJUSHB, 7to10-year Treas. ETF at this Link

Jeff Bailey : 1/12/2009 5:30:52 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 1/12/2009 5:25:07 PM

Daily Pivot = $11.10

Jeff Bailey : 1/12/2009 5:23:29 PM

OK ... $10.64 at DAILY S1.

Jeff Bailey : 1/12/2009 5:22:12 PM

If interested, traders can also type in today's regular session high/low/close $11.55/10.70/10.95 on the XLF and calculate its DAILY Pivot levels. (see 03:33:14).

Jeff Bailey : 1/12/2009 5:19:46 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 1/12/2009 5:16:50 PM

XLF component weightings Link

Jeff Bailey : 1/12/2009 5:16:17 PM

At this morning's open, JPM was #2 weight in XLF at 10.05%.

Jeff Bailey : 1/12/2009 5:06:21 PM

JPM ticks $25.39 extended.

WKLY Pivot Levels are ... s2=$22.57, $24.25, Piv= $27.48, $29.16, r2= $32.39.

Jeff Bailey : 1/12/2009 5:06:17 PM

The ONLY thing I'd read into that is this ...

Company's with some "problems" tend to DELAY earnings reports.

Jeff Bailey : 1/12/2009 5:03:28 PM

JP Morgan (JPM) $24.91 -4.08% ... Financial heavyweight saying it is MOVING UP its earnings release date.

Reuters Story Link

Jeff Bailey : 1/12/2009 4:59:26 PM

Various Jan'09 Max Pain theory tabulations at this Link

DIA currently 14.35% BELOW its 1/09/2009 Tabulation. Max Pain at 12/19/08 was $101.00. Fell $1.00 to $100.00 by 12/26/08 close. Was unchanged at $100 by 01/02/09 close. Fell $1.00 last week to $99.00.

SPY $90.00 has been unchanged since 12/19/08 benchmark.

"Biggest Pain" so far is on XLF (-35.59% from $17.00 strike).

Jeff Bailey : 1/12/2009 4:28:36 PM

Aluminum Corp. China (ACH) $12.68 -11.32% ...

Jeff Bailey : 1/12/2009 4:27:48 PM

Alcoa (AA) $10.06 -6.93% ... Earnings Press Release Link

Consensus was for EPS loss of $0.10 on Revenue of $5.26 billion.

Jeff Bailey : 1/12/2009 4:02:21 PM

XLF's fell from $18 to $17.00

Jeff Bailey : 1/12/2009 4:01:35 PM

UYG's Jan'09 "Max Pain" theory tabulation (add up all of the CALL OPTION and PUT OPTION Open Interest) is currently $6.00.

Keene Little : 1/12/2009 4:01:31 PM

NDX got a bigger bounce off this afternoon's lows than the others but it too looks bearish after breaking its uptrend line from November, currently near 1200. A retest and failure at that broken uptrend line tomorrow would be a good setup for a short play. NDX 60-min chart: Link

Jeff Bailey : 1/12/2009 3:58:56 PM

Level II of UYG and XLF ... will simply make a note that UYG session low of $4.51, probably hit/executed through the CINN bid.

For those new to trading, there are SEVERAL market makers that provide bids/asks of various securities.

There isn't "just one"

Jeff Bailey : 1/12/2009 3:52:12 PM

Good work!

Jeff Bailey : 1/12/2009 3:51:48 PM

And my "chart of the week"

Jeff Bailey : 1/12/2009 3:51:28 PM

You NOW know the "key level" for the XLF.

Jeff Bailey : 1/12/2009 3:50:59 PM

Tonight's Market Wrap Title ... BULLS need a BOUNCE in Financials. (I'm filling in for Robert)

Jeff Bailey : 1/12/2009 3:48:52 PM

OK ... did EVERYONE get a MONTHLY S1 of $10.70 for the XLF?

Put in on your chart!

Thats three (3) levels (1 human, 2 computer) potential levels of support at/near that level.

Jeff Bailey : 1/12/2009 3:45:49 PM

Same with consumer/discretionary ...

Jeff Bailey : 1/12/2009 3:45:33 PM

Same with Info/tech ...

Jeff Bailey : 1/12/2009 3:45:18 PM

Same with ENERGY ...

Jeff Bailey : 1/12/2009 3:45:09 PM

Now ... YOU do NOT necessarily HAVE to be Long a FINANCIAL today, tomorrow, or EVER to begin to make a "tie" with how they IMPACT DIA/SPY and IWM.

You can simply OBSERVE what we're going over today, and UNDERSTAND the implications of STRENGTH/WEAKNESS.

Jeff Bailey : 1/12/2009 3:42:38 PM

How would you WEIGHT Properly ?

Let's say you are SHORT $1,000.00 of DIA/SPY/IWM.

Then perhaps LONG $1,000.00 MAXIMUM worht of XLF. Or $500 MAXIMUM of UYG.

Or ... LONG $500.00 XLF, or $250.00 of UYG.

Jeff Bailey : 1/12/2009 3:38:29 PM

Now, I would NOT suggest a PURE/DIRECTION long only in the XLF/UYG at this time!

However, IF BEAR an INDU/SPX, even a RUT.X, then this (if WEIGHTED PROPERLY) might become a BULL trade to consider.

Then, IF financials continue LOWER, INDU/SPX and even RUT.X BEAR still "comfortable" with their BEAR trade.

However, IF financials (which have tended to act more like Internets) rebound sharply, then perhaps they provide a "hedge" with a more oversold group.

The REASON I do NOT suggest a PURE LONG in "financials" is they have been WEAKEST group and more OUT OF FAVOR among BUYERS (shorts covering, or pure bull buying).

Keene Little : 1/12/2009 3:34:06 PM

After the throw-over finish above its rising wedge pattern last week the RUT has now broken below the bottom of the wedge. It is now close to its key level at 461 and a break of it would indicate a likely drop to at least the 400 area if not a continuation lower to a new low below the November low. RUT daily chart: Link

Jeff Bailey : 1/12/2009 3:32:34 PM

For various reasons (vert. space in Pivot Matrix being one reason) I usually just go with the S2 to R2.

Jeff Bailey : 1/12/2009 3:33:14 PM

XLF ... I have it CLOSING at $12.52 on 12/31/08. December's (regular session H/L) was $13.82/$10.44.

Here, punch them in Pivot Level Calculator Link

Keene Little : 1/12/2009 3:29:32 PM

The daily SPX chart shows today's break below the rising wedge pattern is bearish. An immediate recovery tomorrow (if not into today's close) is needed to "save" the bulls here (to get back above 880). Now that it's been broken it will be important to watch price behavior at that uptrend line if it bounces back up to it. Link

Jeff Bailey : 1/12/2009 3:23:10 PM

Major Averages (INDU, SPX, OEX, NDX, RUT, etc) "should" go out at/near the lows of the session.

Jeff Bailey : 1/12/2009 3:22:26 PM

NASDAQ a/d 673/2,091

Jeff Bailey : 1/12/2009 3:22:12 PM

NYSE a/d to the close 670/2,322

Jeff Bailey : 1/12/2009 3:21:23 PM

RUT.X 467.26 -2.91% ...
SDD $70.50 +5.22% ... bid/ask $70.66 x $70.87 ...

Jeff Bailey : 1/12/2009 3:19:33 PM

UYG is $4.60 -11.36% ...

Jeff Bailey : 1/12/2009 3:19:14 PM

I'm goint to set an al_rt on the XLF at $10.70 and another at $10.64.

XLF $10.88 -5.88% ...

Jeff Bailey : 1/12/2009 3:16:07 PM

Indeed it is and 50% retracement of the 05/21/08 high to 10/10/08 low. I've shown this in the INDU, IBM, XOM and CVX montage.

Jeff Bailey : 1/12/2009 3:14:20 PM

XOM $76.31 -1.50% ... getting a DOWNSIDE al_rt I had set here. Probably from CONVENTIONAL retracement.

Jeff Bailey : 1/12/2009 3:13:20 PM

UYG and XLF 60-minute intervals Link

OK ... BLUE is "conventional use of Fib retracement" and let's pretend this is the HUMAN levels.

I've turned on the WKLY Pivot levels and lets pretend this is INSTITUTIONAL COMPUTER levels.

In the XLF, SEE THE OVERLAP, where HUMANS and COMPUTERS might be looking to buy back shorts? Or BUY some LONG?

The DASHED GREEN is VERY TENTATIVE trend as I'm attaching to today's CURRENT lows.

Keene Little : 1/12/2009 2:52:31 PM

SPX is nearing the price projection for two equal legs down from last Tuesday's high (864.89) and then below that is the bottom of a parallel down-channel from last Tuesday, currently near the key level of 857 (the December 29th low).

Jeff Bailey : 1/12/2009 2:48:15 PM

On UYG, it is APPROACHING 61.8% retracement ($4.64) and while "hefty," this would be a NORMAL retracement of the range.

WKLY R1 violated at $4.79, WKLY S2 $4.41.

I have not calculated MONTHLY or QUARTERLY.

Jeff Bailey : 1/12/2009 2:46:28 PM

Pivot are GREAT, but lets also take a RANGE with Fib on the UYG from that 11/21/08 low to 12/08/08 high.

Let's do the same on the XLF.

Jeff Bailey : 1/12/2009 2:43:54 PM

Now, I know I had some success with UYG on 11/21/08 @ 03:21:04 with an initial $3.62 long. Sold PARTIAL on 11/25/08 @ 10:51:31 at $5.24.

Then I AVERAGED UP on 12/10/08 @ $6.38.

Received a DIVIDEND on 12/30/08.

Didn't like how UYG and financial had been trading and DUMPED/SOLD the entire at $5.87 on 01/05/09.

Jeff Bailey : 1/12/2009 2:38:06 PM

UYG is a 200-x BULL of the Dow Jones U.S. Financial Index

Jeff Bailey : 1/12/2009 2:38:02 PM

XLF $10.99 -4.93% ...

UYG $4.71 -9.44% ... Let's work on this one a bit. ESPECIALLY if you have a SHORT/BEAR in INDU/SPX ... RUT.X even.

Jeff Bailey : 1/12/2009 2:28:47 PM

SDD $69.60 +3.88% ... bid/ask $69.39 x $69.58

Jeff Bailey : 1/12/2009 2:28:07 PM

RUT.X 472.90 -1.74% alert! ... MONTHLY Pivot.

Jeff Bailey : 1/12/2009 2:27:31 PM

Not much help for SPX bulls their either ...

Jeff Bailey : 1/12/2009 2:27:16 PM

OIX 574.61 -3.46%
OIH 74.63 -5.80%
XNG.X 372.17 -4.34%

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

BIX.X 116.03 -3.66% ... lowest levels of the session.

Jeff Bailey : 1/12/2009 2:25:10 PM

02:00 Internals at this Link

Jeff Bailey : 1/12/2009 2:21:34 PM

RUT.X ... I don't get the NH/NL until well after the close. What do YOU think they will be.

MAKE YOUR GUESS, then TEST it tonight. See if you are "SHOCKED" (upside/downside), or IF "exactly as I thought, I've got a good feel for things."

IF SHOCKED, then maybe need to make some adjustments.

Jeff Bailey : 1/12/2009 2:19:13 PM

NASDAQ new lows approaching Friday's 32. New Highs still 1, and well off of Friday's 16.

"Tail" of an inchworm trying to anchor itself, but the "head" of the inchorm coming back.

Jeff Bailey : 1/12/2009 2:16:02 PM

Mixed "headlines" from various news agencies on SAY today ... "soars in India" ... Link

Jeff Bailey : 1/12/2009 2:11:37 PM

EVEN THOUGH it GAPPED DOWN, you're still wanting to MEASURE the first 5-minute bar. See the BIG volume on the APPROACH to GREEN #3 of $1.785? Likely viewed as BUYER at the open, now DISTRIBUTING/SELLER at that LEVEL.

FIRST SIGN of RENEWED WEAKNESS is a 5-minute interval CLOSE back below $1.55. Try and ASSESS RISK (long, or short) to EACH LEVEL.

Jeff Bailey : 1/12/2009 2:08:37 PM

Take an UPPER 5-mrt on SAY $1.59 -82.99% ...

Keene Little : 1/12/2009 2:06:11 PM

It looks like we're going to see the stock market break down before consolidating further. If it keeps heading south, watch SPX 865 for support (or not). In the meantime a minor new low could simply be part of the larger consolidation pattern (which could include a sharp rally back up so stay aware if day trading).

Jeff Bailey : 1/12/2009 1:59:25 PM

IF your GOAL is 40%, you need to AVERAGE +3.33%/ MONTH
+0.833% per WEEK
+0.166%/ DAY.

Jeff Bailey : 1/12/2009 1:57:08 PM

IF your GOAL is 10%, you need to AVERAGE +0.83%/ MONTH: +0.21% per WEEK. +0.0416% per DAY.

Jeff Bailey : 1/12/2009 1:54:22 PM

Hey! What is YOUR goal this year for your trading account?

Grow it by 10%?

20%?

30%?

40%?

Jeff Bailey : 1/12/2009 1:52:36 PM

Now, COMPUTERS are programmed by humans, but the institutional computer's PRIMARY JOB is to NOT get sideways (big loss) in each security it is trading/managing inventory for.

What I LIKE about pivot levels, or LEVELS in general, is we can try and DEVELOP a BIAS.

We LOOK at and MANAGE OUR ACCOUNT just as a computer does.

GOAL is to MAKE MONEY, NOT LOSE MONEY.

Jeff Bailey : 1/12/2009 1:50:09 PM

At times, I too look at a security and think ... "I can't buy/sell it here, its moved to far too fast."

When I look at an INVERSE security, that really helps me try and CHANGE that type of thought process.

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

SDD and RUT.X 30-minute interval charts Link

Note for SDD is how THINLY traded it is, but "explosion" of volume late 01/07/09.

What is interesting to me, based on my thought process of "this is moved up too far" is that SDD is nothing more than INVERSE of RUT.X. Has it "fallen too far" and now holds "great value?"

Keene Little : 1/12/2009 1:39:49 PM

The semiconductors are at an important level--the SOX has dropped to potential support at the bottom of its flag pattern (which is a bearish pattern) and its 50-dma. The bulls need to do their thing. SOX daily chart: Link

Jeff Bailey : 1/12/2009 1:33:43 PM

BIX.X 117.54 -2.40% ... large regional banks.
BKX.X ... large money center banks.
XBD.X 76.21 -3.09% ... large brokers/dealers.
IUX.X 135.33 -4.34% ... large insurers (property/casualty/life)

Keene Little : 1/12/2009 1:33:39 PM

So far the bounce for the stock market has the corrective look I am expecting to see. A sideways/up consolidation for the rest of the day would not surprise me in the least (so no good trading opportunity but will set up another short play).

Jane Fox : 1/12/2009 1:31:26 PM

WASHINGTON (MarketWatch) - President-elect Barack Obama on Monday notified Congress that he is seeking the release of the second half of a $700 billion bank bailout, as momentum appears to building to direct more of the remaining funds to troubled homeowners and less to big financial institutions.

"Today, he [Obama] is asking for the authority to implement the rest of the financial rescue plan because the American people need to know that going forward our government has the resources to do whatever is necessary to stabilize our financial system and protect our economy from a potential catastrophe," wrote National Economic Council Director-designate Lawrence Summers in a letter to congressional leaders.

Jeff Bailey : 1/12/2009 1:31:11 PM

RUT.X and a 1% box size chart (scale to the right, or box size measures 1% moves).

SDD 2% box size (since 200-x I can change to twice) Link

Keene Little : 1/12/2009 1:25:46 PM

USO is working its way lower towards a potential retest of the broken downtrend line from early November. It's the retest around $26-$27 that I've been pointing out as a possibility and is shown on the updated daily chart. I would be concerned about any bounce potential if USO breaks below $26 as it would be difficult to determine the next level of support. For now keep an eye on MACD and RSI and their uptrend lines as a break below them would be bearish. USO daily chart: Link

Jeff Bailey : 1/12/2009 1:24:42 PM

SDD (200-x BEAR of S&P SmallCap 600) ...

Not an EXACT match with a RUT.X, but a "like" ETF to small cap.

Jeff Bailey : 1/12/2009 1:16:09 PM

SCO is the 200-x BEAR oil.

Jeff Bailey : 1/12/2009 1:15:55 PM

In chart (01:15:04) I meant to type "Establish SDD position" ...

Jeff Bailey : 1/12/2009 1:15:04 PM

RUT.X and SDD with BIX.X "tie" ... 60-minute interval chart Link

Keene Little : 1/12/2009 1:10:54 PM

VIX is looking bullish in its bounce off the January 2nd low. It now has a 5-wave move up and that sets the new trend for now. A 5-wave move in this position (after declining from November) will not stand alone. It will be followed by a pullback and then at least another 5-wave move higher that is at least equal to the leg up from January 2nd to wherever it tops out here. VIX 60-min chart: Link . And of course a bullish VIX is bearish for the stock market.

Jeff Bailey : 1/12/2009 1:07:01 PM

Fair Value for the INDU today is -44.33.

So, if I were to quote YM today, other than some brief seconds of arbitrage (difference between cash and futures) we would ADD back 44.33 to the futures to get the cash.

Fair value is an equation that takes into consideration the TIME LEFT until futures terminate, the Interest Rate (from yield curve), Interest on the Index, MINUS the dividends.

So, EACH DAY, the Fair Value will likely change. (become smaller and smaller toward futures termination).

Jeff Bailey : 1/12/2009 1:02:02 PM

mini-Dow (YM) 8,461

Dow Industrials (INDU) 8,507

Jane Fox : 1/12/2009 1:00:42 PM

Internals are quite bearish yet the DOW is only down 87 points Link

Jeff Bailey : 1/12/2009 12:57:16 PM

FXY $111.80 +1.23% ... yen strong vs. US$ again today. Has now come all the way back to the "island reversal" day of 12/17 to 12/18.

Jeff Bailey : 1/12/2009 12:55:52 PM

US Nat. Gas Fund (UNG) $23.28 +1.88% ... reversing losses from $22.40.

Jeff Bailey : 1/12/2009 12:54:34 PM

US Market Watch and BIX.X 60-minute interval chart Link

"Zooming in" a bit with a 60-minute to see how market participants and COMPUTERS are trading.

Not seeing the BOUNCE from M S1 at this point and assessing further downside to WKLY S1 and MONTHLY 19.1% (112.74).

Jane Fox : 1/12/2009 12:51:43 PM

WASHINGTON (MarketWatch) -- Dennis Lockhart, the president of the Atlanta Federal Reserve Bank, used a lunchtime address to begin the hard work of restoring U.S. investor and consumer confidence, which he said was "an essential ingredient" to turn the economy around. "Clearly, the U.S. economy is in a tough fight against pernicious economic forces. But, on balance, confidence is warranted," Lockhart told the Rotary Club of Atlanta. This theme of restoring confidence is likely to be echoed in the many speeches Fed officials will deliver over the rest of the week. Lockhart repeated that the economy could rebound in the second half of the year, but didn't press the point. Most academic economists do not see a turnaround until 2010. But Lockhart accentuated the positive, saying there has been some improvement already in credit markets from the worst period in September and October. He said the economy would be in worse shape if the Fed hadn't taken the extraordinary monetary policy steps, including the direct purchase of mortgage-backed securities and commercial paper.

Jane Fox : 1/12/2009 12:50:49 PM

NEW YORK (MarketWatch) -- A judge in New York City Monday ruled that admitted fraudster Bernie Madoff may remain free on bail pending his trial, and imposed new bail conditions on him, according to CNBC television. According to the report, Madoff's new bail conditions include an inventory of his personal property and searches of his mail. The judge ruled that federal prosecutors failed to prove their contention that Madoff posed risks sufficient to merit his incarceration pending trial, CNBC said.

Jeff Bailey : 1/12/2009 12:43:26 PM

S&P Banks Index (BIX.X) ... Daily interval bar chart with Quarterly (green) and Monthly (dark purple) pivot retracement Link

I'm going to associate MACD with downward trend.

IF Stochastics are to turn up at "low end of a range" then I would have to think BIX.X has to FIRM and begin a bounce ABOVE 112.73, or CURRENTLY Monthly S1.

Keene Little : 1/12/2009 12:21:11 PM

The wave pattern supports the idea that we've still got lower lows ahead. If we see a consolidation for the greater part of today we'll get another leg down. Backing up to the high last Tuesday, two equal legs down is at SPX 864.89 and is the downside target for now.

Keene Little : 1/12/2009 12:19:11 PM

I'm back and I see SPX and ES have both clearly broken below the potential descending wedges (bearish) and their uptrend lines from early December (bearish). Looks like the bears win. But looking at cash (SPX) the wave count for the move down from Friday afternoon now looks like a 5-wave move. That potentially sets us up for a correction and we could see a sideways/up consolidation for the greater part of the day from here (for a 4th wave correction in the decline from Friday morning). It might look similar to the correction that took most of Friday.

Jeff Bailey : 1/12/2009 12:11:28 PM

12:00 Internals found at this Link

Jeff Bailey : 1/12/2009 11:56:48 AM

RUT.X 475.02 -1.30% ... no trade yet at MONTHLY Pivot.

Jeff Bailey : 1/12/2009 11:56:00 AM

QQQQ $29.51 -1.86% ... not even close it its MONTHLY Pivot.

I would think it gets "closer" should SMH give up its MONTHLY Pivot.

Jeff Bailey : 1/12/2009 11:55:02 AM

SMH $17.16 -2.05% ... sits on its MONTHLY Pivot.

Jeff Bailey : 1/12/2009 11:54:24 AM

BIX.X alert! 117.40 -2.52% ... trades MONTHLY S1.

Jeff Bailey : 1/12/2009 11:50:23 AM

EXCELLENT note regarding the US$'s roll

Jeff Bailey : 1/12/2009 11:49:29 AM

Baltimore Sun's take on the 60-Minutes piece Link

Jeff Bailey : 1/12/2009 11:42:55 AM

What the 60-Minute report did for me was INSTILL the fact that TECHNICAL analysis and DISCIPLINE are VERY IMPORTANT when trading ANY COMMODITY (stocks too, but ESPECIALLY COMMODITIES).

Some interviewed said that oil's price on the way UP was NOT accurate REFLECTION of GLOBAL CONSUMER supply/demand, but reflected TRADER'S DEMAND.

Now oil "plunges" ... (hedge fund liquidation, TRADER liquidation, some EASING of GLOBAL CONSUMER demand).

Jeff Bailey : 1/12/2009 11:38:09 AM

Did anyone catch last night's spot on 60-Minutes regarding oil prices over last year?

Jeff Bailey : 1/12/2009 11:37:22 AM

USO and SCO 5-minute intervals Link

Make some notes regarding Friday's session and SCO at its WKLY Pivot, USO not quite a test of its WKLY S1.

Jeff Bailey : 1/12/2009 11:25:59 AM

Again ... 1-penny up/down in the DXO a greater percentage move than 1-penny up/down in the USO. Still, it has been my observation that the DXO "slightly stronger" on a one-to-one basis with USO.

Jeff Bailey : 1/12/2009 11:23:40 AM

USO and DXO 5-minute interval charts with QCharts' DAILY and WKLY Pivot levels (regular session derived) turned on Link

Jeff Bailey : 1/12/2009 11:07:29 AM

USO equivalent from $30.71 to $30.60.

This perhaps somewhat addressing email question in this weekend's MM. (leveraged ETF's to regular ETF)

Jeff Bailey : 1/12/2009 11:05:16 AM

DXO ... OK, now stopped in personal account on REST of position at $2.75

Jeff Bailey : 1/12/2009 11:03:44 AM

Personal Account (educational) at this Link ... Now sorted by Total Value of each position.

The reason a trader MIGHT want to do this is that they begin to contemplate AVERAGING INTO the WINNING trade (SCO) at this point.

However, you may NOT want to get "overleveraged," or can be HELPFUL in establishing POSITION SIZE and where a STOP should go in DXO to try and assure PROFITABILITY from the STRATEGY.

Jane Fox : 1/12/2009 10:55:27 AM

Not much hope for the bulls today unless they regroup and are able to make a stand. Unfortunately though that will probably not happen. Link

Jane Fox : 1/12/2009 10:55:23 AM

I agree Jeff, Crude's potential reverse head and shoulders is kuput!!

Jeff Bailey : 1/12/2009 10:51:42 AM

I do consider today's action in the USO a FAILURE of the POTENTIAL inverse h/s pattern. Friday was questionable and perhaps "hunchbacking" into the right ear of the head. Today, I would have to really say FAILURE.

Jeff Bailey : 1/12/2009 10:47:31 AM

USO $30.86 -4.38% ... has seen trade at its MONTHLY 38.2%.

QCharts' WKLY Pivot Levels are ... $41.55, $36.88, Piv= $34.08 (overlapping with M Pivot), $29.42, $26.63 (overlapping M S1).

Jeff Bailey : 1/12/2009 10:44:23 AM

Personal Account (educational) at this Link

On Friday I had mentioned taking some partial profit in the SDD and that now becomes a "smaller" portion of this account's weighting with the "junk bond (PHF)" slightly more heavily weighted (sold partial on 01/06/09 @ $4.24).

SCO slightly more heavily weighted and established 1/06/09 as USO itself approached its 11/20/08 futures termination benchmark.

SCO position had been reduced by legging out as prices moved higher.

Keene Little : 1/12/2009 10:40:48 AM

Bad timing (always is) but I've got to run off to the dentist. I should be back in an hour or two.

Keene Little : 1/12/2009 10:31:14 AM

Friday I showed a 60-min chart of ES to show the all-hours pattern for last week's move down. Updating it this morning shows the same potential descending wedge pattern I showed on SPX and a little throw-under could tag the uptrend line from December 1st, currently near 872. The wave count supports the idea that we could get a bounce back up today to correct the leg down from Friday morning's high, rallying back up to about 893 before a continuing lower (or not). ES 60-min chart: Link

Jeff Bailey : 1/12/2009 10:31:09 AM

Oil weak again today with USO $30.83 -4.75%.

DXO $2.78 x $2.79 -6.41% (suggest stop at $2.75).

SCO $33.81 x $33.86 +8.86% (would establish stop if/when DXO stopped out).

Jane Fox : 1/12/2009 10:29:49 AM

Gold is taking it on the chin today Link but that is because the US dollar is strong. Link

Jeff Bailey : 1/12/2009 10:24:09 AM

European Markets: Link ... broadly lower with FTSE-250 holding fractional 0.18% gain at 6,666. FTSE-100 ($FTSE) off 0.83% at 4,411. Germany's DAX -0.52% at 4,759 and France's CAC-40 -1.09% at 3,264.

Jeff Bailey : 1/12/2009 10:24:05 AM

Asian Markets: Link ... Were mostly lower on Monday. $NIKK was closed for national holiday. $HSI finished down 2.83% at 13,971, while $SSEC edged down 0.24% at 1,900.35.

Jane Fox : 1/12/2009 10:18:42 AM

This chart of the DOW has more lines and "stuff" on it than I like but I wanted to show you what I have been watching.

First of all the MACD Divergence that I noticed way back when the DOW made its 2008 low on November 21st the MACD did not make a lower low and sure enough the DOW rallied from there. So I have to say that bullish divergence has probably already played out and is over.

The next bullish pattern I have been watching is the reverse head and shoulders and, although I cannot say it is invalid yet, it is on the verge. A close below 8350 would render it invalid.

This does not bode well for the bulls and it is becoming more and more likely the targeted projection of the H&S will not be attained. Link

Jeff Bailey : 1/12/2009 10:16:55 AM

10:00 Internals found at this Link

Note: It would currently take a measure of <=30.00% for the NASDAQ's 5-day NH/NL ratio to see a 3-box reversal back lower.

Keene Little : 1/12/2009 9:48:58 AM

The throw-under is already getting a little excessive. Breaking below the descending wedge would be a bearish signal. Next support line is SPX 878, getting close to 879 now.

Jane Fox : 1/12/2009 9:47:44 AM

All markets are heading down to retest their overnight lows. S&P futures (ES) just broke its ON. Now NQ has.

Keene Little : 1/12/2009 9:45:56 AM

Here's the first thing I'm watching on SPX--zooming in a little closer on the 120-min chart posted last night, the 30-min chart shows a potential descending wedge pattern which SPX has dropped down to the bottom of this morning. A slight throw-under followed by a rally back up would be bullish. So far there's bullish divergence. SPX 30-min chart: Link

Jane Fox : 1/12/2009 9:45:05 AM

VIX is climbing, the TRIN is 1.42, AD volume is falling and AD ratio is 0.32, well below 1.00. This all leave little doubt the bears are in control today.

Jane Fox : 1/12/2009 9:35:24 AM

AD line is neutral to bearish at -448.

Jane Fox : 1/12/2009 9:35:03 AM

VIX closed Friday at 42.80 and opens below at 42.03. Not a big drop but it is down and not up.

Keene Little : 1/12/2009 9:33:15 AM

Do you still think there is a shot for a big Wave 3 down this week on the SPY? You mentioned this late Friday in the MM, but didn't say anything about it late last night. Just wanted to get your perspective going into this week.

Yes, that's a possibility and a break below 875, if it happens quickly, would suggest we're into the 3rd of a 3rd wave down in the decline from Tuesday's high. It would also suggest we're going to see the key level at SPX 857 break quickly.

But at the moment it's also possible to consider the wave count for last week's decline as a corrective count and it's why the break below 875 is important. If support at that level, or higher, holds we could see the market turn around and rally into opex.

Jane Fox : 1/12/2009 9:27:25 AM

... and another one bites the dust.

Jane Fox : 1/12/2009 9:27:05 AM

NEW YORK (MarketWatch) -- Tarragon Corp. said Monday that it and certain of its subsidiaries have filed for Chapter 11 in New Jersey. The residential real estate developer said it intends to reorganize and seek new financing. It is not expected that there will be any distribution to Tarragon equity holders in conjunction with the bankruptcy cases. Tarragon's operations are concentrated in the Northeast, Florida, Texas and Tennessee.

Jane Fox : 1/12/2009 9:26:26 AM

DETROIT (MarketWatch) -- General Motors Corp. President Fritz Henderson on Monday did not rule out the possibility that the struggling automaker, as outlined in the plan submitted to the U.S. government last month, may need to tap up to an additional $4.6 billion in funding. "We'll develop our plan, then we'll present it. We'll make judgments from there," he said at the North American International Auto Show. "It was pretty clear that the requirements were beyond, at that point, $12 billion for a continued downside scenario."

Jane Fox : 1/12/2009 9:25:22 AM

Crude made a low of 38.12 overnight so there is NO doubt the bullish reverse head and shoulders pattern will not play out. Amazing weakness in this market. Link

Keene Little : 1/12/2009 9:31:10 AM

The overnight effort to rally off the low near midnight resulted in a very choppy climb back up to near the flat line but it looks like a bear flag pattern. We'll see how the cash market does but so far it's looking more bearish than bullish.

Jane Fox : 1/12/2009 9:22:48 AM

The overnight session was just a plain old sideways consolidations, which suggests the intraday session will probably be weak to begin with. A lack of buyers makes it ripe for sellers to take over. Link

Jane Fox : 1/12/2009 9:01:01 AM

I see no economic reports due today but FOMC member, Lockart is scheduled to speak at 12:40ET.

Jane Fox : 1/12/2009 8:59:43 AM

TEL AVIV (MarketWatch) -- Citigroup may receive $2.7 billion for selling a majority stake in Smith Barney to Morgan Stanley, according to a published report.

The Financial Times reported that Citi could get $2.7 billion in cash from Morgan Stanley for a 51% stake in the retail brokerage.

That, in turn, could allow Citi to record a $6 billion capital gain on the difference between the valuation of Smith Barney on its books and the value of its share of the Smith Barney-Morgan Stanley joint venture.

Jane Fox : 1/12/2009 8:51:49 AM

Good morning all. I am reading President Bush has announced a news conference at 9:00ET. Nothing on the content though.

Keene Little : 1/11/2009 10:25:10 PM

Monday's pivot table: Link

Friday's decline took SPX just below its uptrend line from November 21st but in reality this trend line has been repeatedly broken as price has consolidated since early December. Another uptrend line from December 5th may be more important because it could be the bottom of a the month-long consolidation that will lead to another rally leg into opex and is just above 878 for Monday's open. This is shown in dark red on the SPX 120-min chart: Link

But as shown in pink, a break below 878 would mean we're probably going to see a drop that takes out 857 which would confirm the rally from November has completed. What that will mean in the larger pattern is still a question. We could stay inside a large sideways triangle for at least another month (pink on the daily chart) or we could head lower (pink dashed line). We'll cross that bridge when we come to it. SPX daily chart: Link

The NDX 120-min chart shows the same setup as that for SPX but it hasn't yet broken its uptrend line from November. In fact it's still showing relativel strength in that it did not drop to a new low Friday afternoon like SPX and the DOW (and the RUT) did. NDX is also still holding above its broken short-term downtrend line from December 9th. If you're feeling bullish the market, keep your eye on NDX. A break below 1210 would suggest it's going to join its big brothers. NDX 120-min chart: Link

The RUT also broke down on Friday afternoon and is now at an important level. The bulls must do their thing on Monday or else a drop lower will break its uptrend line from December 1st, which is where it stopped on Friday. RUT (maybe bearish) daily chart: Link

Another way to draw the bounce pattern for the RUT's rally since November is as a rising wedge, with a little throw-over finish at Tuesday's high. I also changed the wave labels to count it as a simple a-b-c correction (rather than a more complex double zigzag correction in the above daily chart): Link . Two equal legs up for the a-b-c count is at 517.83 and is shown on the chart. The high on Tuesday was 519. Wedges tend to get retraced quickly so a sharp drop back down to the beginning on it (416) would be the expectation out of this and a drop below 461 would confirm that's what we've got coming.

It's up to the bulls to thwart the bears Monday morning. The last thing they'll need is a gap down.

OI Technical Staff : 1/11/2009 9:59:59 PM

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