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Jeff Bailey : 1/14/2009 9:49:43 PM

INDU Components at the close Link

Note: YM is actual trade here this evening at screen capture.

C got ssssslamed! Not a big weight for the INDU, but "first string" traders know its implications.

Jeff Bailey : 1/14/2009 9:39:20 PM

RUT.X's NH/NL tally today is 2:43. 5-day NH/NL ratio now 17.7%. 10-day NH/NL ratio 35.2%.

Jeff Bailey : 1/14/2009 9:37:39 PM

SPX NH/NL tally today is 0:10.

12/05/08 was 0:25

Jeff Bailey : 1/14/2009 9:35:39 PM

MBA's Weekly Application Survey at this Link

Jeff Bailey : 1/14/2009 9:33:10 PM

YM day trader's 5-minute interval recap. Link

YM opened regular session right at my regular session (Tuesday's high/low/settle) DAILY S2. Then "failed" to hold and fell directly to WKLY S2 regular sessions derived (last week's regular session high/low and Friday settle). Then that gave way and eventually at 11:10-15 AM ET a morning "low" was found.

Slapped on "dynamic" and talked on phone to clients, compiled EIA data, monitored UWM, profiled DUG.

Then began to assess YM to the close.

Short #1 not "the best" as Stochs were near 20, but thought a break back below 8,128 with NYSE a/d line as it was a possibility for another "wave" lower. But buyers held ground at 19.1% dynamic. Squeeked out a small gain.

Once YM reclaimed WKLY S2, best place to then look is a 61.8% retracement of the intra-day range, especially with NYSE a/d line so weak.

Hit it with a short again #2, with real tight stop just above the inflection high. Nice Stochs setup back near 80. If it had broken there YM> 8,213, then YM likely backfills morning gap by 1/2 ~8,312, perhaps clear back to WKLY S1/DAILY S1.

Target on #2 short was just back above the WKLY S2.

That failed to find firm support.

YM then goes on to make new low of regular session 8,087, then elevated right back up to WKLY S2 by settle (8,159).

Jeff Bailey : 1/14/2009 9:24:05 PM

Current OPEN MM Profiles that I've made at this Link

Stopped on UWM @ $17.25 (-5.48% on 1/4 position)

Shorted YM twice (+31 x $5)= $155

Jeff Bailey : 1/14/2009 8:54:19 PM

Major Global Equity Indexes, Currencies, USO/OIX, GLD/HUI, XLF, DJUSHB, IEF Table Link

Looking for OIX to play some "catch down" with oil and natural gas.

Jeff Bailey : 1/14/2009 8:31:03 PM

Closing Internals at this Link

Jeff Bailey : 1/14/2009 4:29:37 PM

Closing U.S. Market Watch found at this Link

Keene Little : 1/14/2009 4:27:03 PM

Tomorrow could see a quick thrust lower to finish the move down from yesterday's high but that's not certain. Even if we do get a quick move lower I see the probability for another bounce. The only question in my mind at the moment is whether the bounce will be big or small before tipping back over. That's where the downtrend line from last week's high comes in. SPX 60-min chart: Link

A break above SPX 860 would increase the probability for a large bounce--potentially back up to the 890 level early next week as shown in dark red on the 60-min chart. Otherwise another sideways/up correction on Thursday that stays inside the down-channel should lead to another decline into Friday before setting up a larger bounce.

Jeff Bailey : 1/14/2009 4:16:53 PM

Germany's DAX down 10.43% since last Wednesday's close benchmark.

Jeff Bailey : 1/14/2009 4:13:51 PM

Looking "roundish" ...

INDU 8,200

OEX 400.90

Jeff Bailey : 1/14/2009 4:09:50 PM

dj- IMoneyNet: Money-Market Fund Inflows $43.38 Billion in Latest Week. Hit $3.85 Trillion in latest week.

Jeff Bailey : 1/14/2009 4:00:31 PM

SPX 842.67 -3.34% ... to the close.

Jeff Bailey : 1/14/2009 3:59:51 PM

Swing trade cancel SDS long setup alert! ... from 10:24:36.

SDS $80.11 +6.42% ...

Jeff Bailey : 1/14/2009 3:58:17 PM

AA $9.02 -5.54% ...

INTC $13.10 -4.24%

JPM $25.87 -1.89% (earnings tomorrow)

Jeff Bailey : 1/14/2009 3:54:00 PM

YM 8,155 ... could get funky to settlement

Keene Little : 1/14/2009 3:53:06 PM

I've got a downside Fib projection for this afternoon's leg down at 834.84 which is why I said we could get just a minor new low that then leads to a larger bounce tomorrow. But the pattern for the move down is starting to look a bit funky. It's possible we're getting a truncated finish and the bounce will start from here.

If we do get a bounce tomorrow morning the first thing for the bulls to do is get above the down-channel that price has been in, currently near 855. If instead we see price chop sideways then we'll know we can expect another leg down into Friday.

Jeff Bailey : 1/14/2009 3:50:47 PM

dj- Mexico's October Economic Activity Up 0.64% From September

Jeff Bailey : 1/14/2009 3:46:03 PM

DUG $27.15 +10.23% ... +3.08% from entry.

Jeff Bailey : 1/14/2009 3:45:15 PM

VIX.X came down to, to, to 48.72

Jeff Bailey : 1/14/2009 3:44:38 PM

SPX 837.39 -3.94% ... "in the sliver zone"

Jeff Bailey : 1/14/2009 3:43:54 PM

YM 8,097 nearing session low and "dynamic" 0%.

Jeff Bailey : 1/14/2009 3:42:54 PM

YM short cancel setup/order alert! from 03:40:11 ... YM 8,105.

Jeff Bailey : 1/14/2009 3:40:11 PM

YM short setup alert! ... with YM 8,126.

Go short a trade back at 8,150. Stop 8,170. Target 8,100

Jeff Bailey : 1/14/2009 3:24:12 PM

Oh ... there is NO such thing as "easy money."

Those that actually trade, KNOW that. It is earned. And it is NEVER easy.

Jeff Bailey : 1/14/2009 3:21:34 PM

Now, I could have NOT had a target at 8,166 and TRIED to go for the renewed weakness BELOW WKLY S2.

Usually when you do that, it gets pushed right back in your face.

So, you take the "easy money" as there's always another trade to be had.

Jane Fox : 1/14/2009 3:20:37 PM

AD volume continues to fall so it is turning out to be one of those days when the bears take hold and do not let go.

Jeff Bailey : 1/14/2009 3:20:00 PM

See, the YM short #2 was based on your "dynamic" 61.8% at 8,200, with the achievable target back to WKLY S2.

Didn't want to try a LONG back at WKLY S2 due to a/d line.

Jeff Bailey : 1/14/2009 3:17:42 PM

NYSE a/d 217/2,782

Jeff Bailey : 1/14/2009 3:17:18 PM

YM 8,120

Jeff Bailey : 1/14/2009 3:11:00 PM

VLO $22.00 -8.29% ... you know what? I'm just abuot willing to say JUST THE OPPOSITE of what I said when I called the top in the refiners.

Earnings due out next week and they will look TERRIBLE, yet crack spread improvement suggests a bottom may be in.

Jeff Bailey : 1/14/2009 3:07:00 PM

Gasoline "Crack Spread" = This is the difference between oil's price and unleaded's price. Think of it as a "Gross Margin".

Cost of the input (oil) then what the product (gasoline) is sold for.

Last night, Feb crack spread by my calucation was 30.41. Last time it was near 30.00 was 7/13/2007.

Keene Little : 1/14/2009 3:04:42 PM

A drop now below SPX 840, this afternoon's low, would say the bounce is over and we'll sell off into the last hour. Either that or we'll dribble out sideways and then drop tomorrow morning.

Jane Fox : 1/14/2009 3:00:13 PM

WASHINGTON (MarketWatch) -- U.S. House lawmakers voted Wednesday to expand the State Children's Health Insurance Program to cover 4 million lower-income uninsured children in addition to the 7 million children already served. The representatives voted 289 to 139 to extend SCHIP, which is currently set to expire on March 31, for four-and-a-half years. The legislation will increase direct spending by about $32.3 billion, according to an estimate from the Congressional Budget Office, and raise taxes on tobacco products, with the federal excise tax on cigarettes rising to $1 a pack from 39 cents. The Senate Finance Committee is considering a version of SCHIP legislation on Thursday.

Jeff Bailey : 1/14/2009 2:58:39 PM

NYSE a/d 251/2,745

Jeff Bailey : 1/14/2009 2:57:42 PM

YM short target alert! ... to 8,166

Jeff Bailey : 1/14/2009 2:50:29 PM

YM short ... stop goes 8,214. Target 8,166

Jeff Bailey : 1/14/2009 2:49:09 PM

YM short alert ... 8,190

Jeff Bailey : 1/14/2009 2:44:50 PM

Jane mentioned TRIN surge this morning.

Now let me give you some analysis, thought.

A TRIN to 9.45 measure at the open is a "I want OUT," or a "it didn't pan out as planned" type measure.

Tie that at a MINIMIM with yesterday's closes RELATIVE to some pivot levels.

Keene Little : 1/14/2009 2:43:51 PM

SPX has broken above the top of a bear flag pattern off this morning's low so if it can hold here and push higher we'll have our first hint of bullishness. A drop back below 847.50 would be a drop back inside the flag pattern, leaving a potential sell signal after the throw-over.

Jeff Bailey : 1/14/2009 2:39:19 PM

NYSE a/d 306/2,792

Jeff Bailey : 1/14/2009 2:37:46 PM

SDS $79.00 +4.95% ...

Jeff Bailey : 1/14/2009 2:37:16 PM

SPX 848.43 -2.67% ...

Jeff Bailey : 1/14/2009 2:31:09 PM

It's starting to be a "tough short" in the refiners. Crack spreads are going "gonzo" of late.

Jeff Bailey : 1/14/2009 2:23:48 PM

Goood grrrravy ... UGA $22.50 +2.97% ...

Jeff Bailey : 1/14/2009 2:22:51 PM

YM 8,172

Jeff Bailey : 1/14/2009 2:21:33 PM

28 of the 30 YM/DIA/INDU components are NYSE-listed. So I get the feeling the lows of the day may be in.

We could still close there with the NYSE a/d as it is, but if sellers couldn't drive back below WKLY S2 with THIS a/d line, then its BEARS doing some covering.

Jeff Bailey : 1/14/2009 2:19:17 PM

NYSE a/d folks is 189/2,799

Jeff Bailey : 1/14/2009 2:18:10 PM

AA $9.00 -5.86% ... quick check.

Keene Little : 1/14/2009 2:16:03 PM

I guess it's not ready to drop yet. The sideways/up consolidation continues but still looks bearish. It will stop looking bearish when SPX gets back above 860, another 15 points higher. Currently, at 845 it's banging up against the mid line of its down-channel.

Jane Fox : 1/14/2009 2:12:32 PM

WASHINGTON (MarketWatch) -- The U.S. economy continued to weaken across the country, according to the Federal Reserve's latest beige book report released on Wednesday. Labor market conditions were poor, with layoffs and hiring freezes common in many regions. Both commercial and residential real estate continued to suffer - hurt by tight credit standards and a drop in lending activity. Reports from the Christmas sales season seemed to confirm reports that consumers did not splurge. There was little sign of life in the manufacturing sector. Even the energy sector, which had been booming, was subdued.

Jeff Bailey : 1/14/2009 2:11:53 PM

YM short stop alert! 8,140

Jane Fox : 1/14/2009 2:11:29 PM

The middle chart should be all you need to look at today. Never mind the VIX is hovering at daily highs or that the Trin is at extremes, all you need is the trajectory of the AD volume. Link

Jeff Bailey : 1/14/2009 2:09:09 PM

Beige Book should be out by now ...

Jeff Bailey : 1/14/2009 2:08:32 PM

YM short lower stop alert! to 8,140.

YM 8,131

Jeff Bailey : 1/14/2009 2:05:25 PM

The NYSE a/d line very, very, very weak, but at a level where shorts could come in card for some covering

Jeff Bailey : 1/14/2009 2:04:45 PM

YM short lower stop alert ... to even.

YM 8,132.

Jeff Bailey : 1/14/2009 2:01:27 PM

YM 8,141

INDU 8,193

Jeff Bailey : 1/14/2009 2:00:31 PM

You and I KNOW where SPX is at and KNOW what we NEED to happen in order to get CLOSE to YM bear target.

Jeff Bailey : 1/14/2009 1:59:21 PM

I'm shorting AGAINST WKLY S2 (8,157) regular sessions derived.

Jeff Bailey : 1/14/2009 1:58:13 PM

YM short entry alert! 8,147

Jeff Bailey : 1/14/2009 1:57:24 PM

YM 8,141

Jeff Bailey : 1/14/2009 1:57:07 PM

YM Short setup alert! to short 8,147.

Stop tight at 8,161. Target 8,025

Keene Little : 1/14/2009 1:56:32 PM

Today's pattern for the decline looks good for a continuation lower from here.

Jeff Bailey : 1/14/2009 1:43:22 PM

BTK.X 639.45 -2.17% ...

DRG.X 263.65 -1.54% ... not much change since morning benchmarks.

Jeff Bailey : 1/14/2009 1:35:08 PM

Narrower BPOEX Link

Jeff Bailey : 1/14/2009 1:33:49 PM

Here's StockCharts.com's BPSPX Link

Jeff Bailey : 1/14/2009 1:32:42 PM

Dorsey/Wright's BPSPX at last night's close Link

Read= "of the 500 components, 60.60%, or 303 of the stocks had a buy signal associated with their chart."

Some analysis ... I would think this number falls further today and may fall to 52.00% (eyeballing with PRICE).

And will begin to try and tie SPX MONTHLY S1 with 52%, just as I might MONTHLY Pivot with yesterday's 62.00%.



Again, levels at or ABOVE 70% are deemed "overbought" (bull has greater RISK) and levels at or BELOW 30% are "oversold" (bear has greater RISK).

Now, if we check the BPSPX TONIGHT and its at 50% or LOWER, I'm going to begin to ASSESS FURHTER PRICE downside in SPX to $815 even $776.

Keene Little : 1/14/2009 1:23:08 PM

Within the down-channel from last week there's an internal downtrend line running along the lows from January 8th that was broken this morning and is so far acting as resistance to the bounce (for a kiss goodbye?). The wave count would look best with another minor low (SPX 832 target) to finish a 5-wave move down from yesterday's high. That would then set up either a stronger bounce into early next week (dark red) or just another sideways/up correction tomorrow before heading lower again into Friday (pink). SPX 30-min chart: Link

Jeff Bailey : 1/14/2009 1:17:30 PM

SPX and SDS ... 15-minute interval montage Link

Jeff Bailey : 1/14/2009 1:07:26 PM

FTSE-100 ($FTSE) ... closed just off low of 4,115.43 at 4,180.64.

So, would see BREAK below BULLISH support.

Would once again begin 45-degree angle LOWER BEARISH resistance from 4,700.

Keene Little : 1/14/2009 1:05:21 PM

Look for where the bounce off this morning's low will have two equal legs up and watch to see if it tips back over from there (SPX 847.38, ES 844.00).

Jeff Bailey : 1/14/2009 1:04:08 PM

FTSE-100 ($FTSE) ... Link

Jeff Bailey : 1/14/2009 1:02:57 PM

European Markets lower just shy of -5% Link

Jeff Bailey : 1/14/2009 1:02:05 PM

Asian Markets had finished mostly higher prior to U.S. open Link

Jeff Bailey : 1/14/2009 12:52:11 PM

SPX and SDS daily interval montage. (use SPX with SDS) Link

SPX does go "837-ish"

Yesterday, RUT.X closed juuuuust above its MONTHLY Pivot, thus thought for 1/4 long (stop today).

Jeff Bailey : 1/14/2009 12:41:46 PM

SPX 842.64 -3.34% ... has tested MONTHLY S1. Updated SPX chart from Monday's Wrap Link coming.

Would not suggest BIG bear entry here.

Jeff Bailey : 1/14/2009 12:38:20 PM

Current OPEN MM Profiles that I've made at this Link

Not filled at this point on 1/8 LONG SDS $77.55

Jeff Bailey : 1/14/2009 12:20:35 PM

Alcoa (AA) $9.00 -5.86% ... see 01/13/09 MM

Keene Little : 1/14/2009 12:16:38 PM

The same 50% and 62% retracement levels for the DOW are at 8269 and 8075, resp. NDX is showing some relative strength here as well--it hasn't quite reached the 50% retracement level at 1152.47 (today's low is 1160.75). Its 62% retracement is near 1121.

Jeff Bailey : 1/14/2009 12:16:04 PM

The SDS setup (see 10:24:36) is predicated an a half backfill of this morning's gap, with VIX.X coming back to the WKLY R2/MONTHLY Pivot.

Keene Little : 1/14/2009 12:14:19 PM

Looking at some Fibs on the daily chart, a 50% retracement of the November-January rally is at 842.43 which obviously has been tagged. It will be interesting to see whether or not SPX closes on or above that level today. A 62% retracement is down at 818.50.

Jeff Bailey : 1/14/2009 12:13:38 PM

VIX.X 49.94 +15.41% ... "easing" a bit, but monitor the action closely if it were to come back to the overlapping WKLY R2/MONTHLY Pivot.

BEARISH today on "easy" break above that overlap.

Jeff Bailey : 1/14/2009 12:11:06 PM

12:00 Internals found at this Link

Keene Little : 1/14/2009 12:02:32 PM

Ideally, from a short-term perspective for the move down from yesterday's high, it looks like we should get a small bounce (already in progress) followed by a new daily low this afternoon. In that scenario I would expect SPX to find support at or above 830 and then start a larger bounce into tomorrow.

Keene Little : 1/14/2009 11:44:10 AM

Updating the SPX daily chart to reflect today's decline now shows the two scenarios calling for lower prices into the end of the month. The big question for now is whether we'll only see a drop to a higher low than November's as part of a larger sideways triangle pattern (dark red) or a drop to a new low into February (pink): Link

For now, until I get some more information based on the declining pattern, I've got a downside projection for the new low near SPX 606 (the 1996 low). For equality between the 1st wave and the 5th wave in the decline from October 2007 the pink 5th wave has a a Fib projection at 625 so we're getting close correlation between the EW pattern and that 1996 low.

If you're in, or considering, a bull put spread for February keep that downside projection in mind. It's not a given, especially if we remain in the sideways triangle pattern into February opex, but that's the downside risk I see at the moment.

Keene Little : 1/14/2009 11:20:54 AM

Today's decline below SPX 857 significantly lowers the probability that we'll see another rally leg above last week's 944 high. Not impossible, just highly unlikely and we play the odds in this game of ours. A Fib projection for the 3rd wave down in the decline from last week is at 835.82 which it's now nearing.

It looks like the pattern isn't quite finished to the downside so I'm not sure that level will hold but if it does we could see at least a larger correction before heading lower again. The two scenarios as I currently see them are shown on the updated 60-min chart: Link

Jane Fox : 1/14/2009 11:12:16 AM

The only green I am showing on my charts are the Ultrashort (insert any index here)!!

Jane Fox : 1/14/2009 11:04:18 AM

DOW is down -275 but as low as -300 points earlier.

Jane Fox : 1/14/2009 11:02:02 AM

Not looking good for the bulls at all is it? Link

Jeff Bailey : 1/14/2009 11:02:00 AM

On the refinery side of things (demand) ... Crude oil inputs inched up 64,000 barrels/day to 14.586 million barrels/day. Refiners added some capacity and now have the ability to refine 17.621 million barrels/day (from 17.610). Of that capacity they utilized 85.23%, up a hair from prior week's 84.57%.

My tabulated # Days of Supply comes in at 22.6 days supply of crude oil, up a bit from prior week's 22.5.

Jeff Bailey : 1/14/2009 10:55:34 AM

SPR did add 66,000 barrels, its first add since the week ended August 8, 2008.

Jeff Bailey : 1/14/2009 10:53:48 AM

Heating Oil (>500 PPM Sulfur) showed a build of 363,000 barrels to 40.62 million barrels. Also a part of Total Distillate

Jane Fox : 1/14/2009 10:52:45 AM

I would certainly not be long until I see the VIX tell me the sellers are done. A divergence between the VIX and the S&P futures (ES) would be a clue but no hint of a divergence yet. Link

Jeff Bailey : 1/14/2009 10:51:40 AM

ULS Diesel (0-15 PPM Sulfur) up a hefty 5.7 million barrels to 83.38 million. This is a component of the Total Distillates.

Jeff Bailey : 1/14/2009 10:49:06 AM

Crude oil stockpiles showed a build of 1.14 million barrels.

Jane Fox : 1/14/2009 10:49:01 AM

Cushing oi inventories hit new record of 33 million barrels

Jeff Bailey : 1/14/2009 10:48:35 AM

Biiiig build in Total Distillates of 6.3 million barrels.

Jane Fox : 1/14/2009 10:47:58 AM

BOSTON (MarketWatch) -- Lennar Corp. on Wednesday said it has named Barry Minkow and his firm, Fraud Discovery Inc., as additional defendants in a lawsuit against Nicolas Marsch III alleging libel, extortion and various criminal acts against Lennar. Minkow last week alleged Lennar treated its joint ventures like a Ponzi scheme, and the allegations contributed to a 20% decline in the home builder's stock on Friday. Lennar on Wednesday said Minkow has been operating as an agent for Marsch, who paid Minkow for his services. "Lennar is taking all necessary and appropriate action to protect its investors and shareholders from the dissemination of false and scurrilous claims about the company," the builder said in a statement.

Jeff Bailey : 1/14/2009 10:43:59 AM

UltraShort Oil & Gas (DUG) ... Stop will go $22.50. Target will be $33.00

Keene Little : 1/14/2009 10:43:30 AM

Looking at the move down from yesterday's high it looks like a 1st wave decline into the afternoon low, a 2nd wave correction into the high near the close and then a gap down this morning to kick off the 3rd wave. The 3rd wave is extending so the selling pressure is intense at the moment but we should soon find a short-term bottom and consolidate a bit (4th wave) before heading lower again (5th wave). Once the 5th wave down completes then we can expect at least a larger upward correction. Bottom line though is we've got a bearish pattern on our hands--don't be looking to buy the dip today unless it's for a scalp trade.

Jeff Bailey : 1/14/2009 10:37:02 AM

Several traders have emailed me that they are still holding a BEARISH long in the SCO $34.87 +9.86% ... so I am WEIGHTING the DUG to 1/8 in the MM Profiles

Jeff Bailey : 1/14/2009 10:34:14 AM

UGA $21.10 -3.42% ...

Jeff Bailey : 1/14/2009 10:33:59 AM

USO $30.70 -3.58% ...

Jeff Bailey : 1/14/2009 10:33:25 AM

ProShares Products Web Page Link

Jeff Bailey : 1/14/2009 10:32:42 AM

OIH 72.97 -4.99% ...

Jeff Bailey : 1/14/2009 10:32:09 AM

OIX.X 559.43 -3.97% ...

XNG.X 363.89 -4.06% ...

Jeff Bailey : 1/14/2009 10:29:19 AM

Swing trade long BEARISH long alert! ... for 1/8 position in the ProShares UltraShort Oil & Gas (DUG) at the offer of $26.29 +6.73% ...

Jeff Bailey : 1/14/2009 10:27:38 AM

Biotech -1.10%, Pharma -1.27% and Utilities -1.76% are sector "winners"

Jane Fox : 1/14/2009 10:27:25 AM

Keene has been talking about bonds so I thought I would throw up a 30-year chart here - well not throw up but show you. Huge move today. Link

Jeff Bailey : 1/14/2009 10:24:36 AM

Swing trade BEARISH long setup alert! ... for 1/8 position in the ProShares UltraShort S&P 500 (SDS) if it trades $77.55 today.

SDS $79.60 +5.75% ...

Keene Little : 1/14/2009 10:24:24 AM

SPX is now tagging the bottom of its down-channel. Uber bearish if it drops out the bottom of the channel.

Keene Little : 1/14/2009 10:19:58 AM

30-year bond is up 2 handles and no sign of slowing down yet. Big move in yields this morning--flight to safety again.

Jeff Bailey : 1/14/2009 10:19:22 AM

IWM $46.02 -2.72% ...

Jeff Bailey : 1/14/2009 10:19:06 AM

RUT.X 461.26 -2.64% ...

Jeff Bailey : 1/14/2009 10:18:46 AM

Swing trade bullish stop alert! ... UWM $17.25 -5.11% ...

Jane Fox : 1/14/2009 10:18:41 AM

Remember the brokerage firm Soloman Smith Barney, then it reverted back to Smith Barney? Well the next reiteration will be Morgan Stanley Smith Barney (now that?s a mouthful).

Keene Little : 1/14/2009 10:17:52 AM

At this point I watch the shape of the bounces to see if we're forming any kind of bottom, even if only for a larger bounce before heading lower again. So far the bounce looks corrective and therefore lower looks to be the order of the day. Don't forget that opex will often exacerbate a move as traders are forced to hedge their expiring positions.

If traders have been positioned long (which the put/call ratio told us they were), once selling kicks in they are forced to sell futures, stock or buy puts to hedge themselves (or sell their long calls) and that just adds more selling pressure. Then the opposite can happen quickly as the hedges are removed and it makes for a fast and furious short covering rally. So don't let a trade get away from you.

Jeff Bailey : 1/14/2009 10:17:33 AM

This is looking VERY bearish near-term.

Last night as I was updating the various major market bullish % there was some notable damage done in the BPSPX and BPOEX. The very narrow BPDJIA had also fallen to 50.00% and I thought to myself that BULLS needed a rally here today.

Not seeing it this morning for sure.

Jane Fox : 1/14/2009 10:15:16 AM

Citigroup is unveiling a plan to unload several businesses and that will reduce its size by 1/3 and mark and an end to its financial services model.

The first part of Citi's restructuring plans is its brokerage joint venture with Morgan Stanley but beyond this first step it is expected Citi will announce new measures to part ways with two consumer-finance units and its credit card business then take a huge step back from proprietary trading. I bet you didn't know it did this kind of trading did you.

Citi will focus on returning to wholesale banking for large customers and retail banking for small customers. A return to its roots.

Citigroup was instrumental in repealing the Glass Stegal Act back in 1999 and now 20 years it is paying the price. The Glass Stegal Act separated a holding bank from an investment bank and its repeal allowed Citicorp to merge with Travellers to form Citigroup. I wonder if it will try and get back some of the thousands it spent on lobbyists to get this act repealed.

Jeff Bailey : 1/14/2009 10:14:51 AM

10:00 Internals at this Link

Keene Little : 1/14/2009 10:02:01 AM

Bonds are zoom climbing. All that buying in the bonds is probably taking money out of stocks.

Jane Fox : 1/14/2009 9:57:18 AM

The internals are telling you the bears are nowhere near ready to release the reins. Take note of the TRIN. Link

Jane Fox : 1/14/2009 9:52:47 AM

AD line a very bearish -2370

Jane Fox : 1/14/2009 9:51:51 AM

The $TRIN is still at 4.64

Jane Fox : 1/14/2009 9:47:37 AM

SPX's swing low support is 857 and the low today so far is 852 so if the bulls can hold on here and close above that level today then they are still in the game. If not then game over. Link

Keene Little : 1/14/2009 9:41:05 AM

It looks like the pink wave count on last night's SPX 60-min chart wins. Price continues to be held inside the down-channel and as long as that's true we've obviously got a bearish market. The bottom of the channel is currently near 845.

Jane Fox : 1/14/2009 9:40:27 AM

TRIN has fallen but still at 5.09

Jane Fox : 1/14/2009 9:35:26 AM

TRIN is 7.52. Whoa!!!

Jane Fox : 1/14/2009 9:35:05 AM

VIX closed at 43.27 and opens at 46.54.

Jane Fox : 1/14/2009 9:34:26 AM

Not as bearish as I thought it would be.

Jane Fox : 1/14/2009 9:34:11 AM

AD line opens -956.

Keene Little : 1/14/2009 9:29:40 AM

I was a bit surprised this morning to see equity futures had dropped hard from their overnight highs (which were up nicely when I went to bed) with ES giving up 28 points from high to low. Reminds me of September-November. Bonds spiked higher this morning but they didn't start their rally until 6:00 AM. It certainly looks like SPX will easily break it's key level at 857 this morning.

Jane Fox : 1/14/2009 9:21:18 AM

WASHINGTON (MarketWatch) -- Nortel Networks Corp., once the largest company in Canada, has filed for bankruptcy protection, victimized by the deepening economic slump. Nortel (NT) on Wednesday filed for Chapter 11 bankruptcy protection in the U.S. and is making similar filing in Toronto and Europe. In recent months sales have fallen sharply, especially in North America. The company's stock price, which once topped $860 a share adjusted for reverse stock splits, recently tumbled to as little as 21 cents. Nortel owes creditors about $3.8 billion, but efforts to sell assets to meet current obligations faltered after the global financial crisis struck in October. The Canadian maker of equipment for phone networks has struggled for years after the Internet boom collapsed in early 2001. An accounting scandal in 2004 that forced out Nortel's CEO further weakened the company.

Jane Fox : 1/14/2009 9:19:27 AM

WASHINGTON (MarketWatch) -- Philadelphia Fed president Charles Plosser on Tuesday staked out a few positions that differ from Fed chief Ben Bernanke regarding the conduct of the unconventional monetary policy. In a speech in Wilmington, Plosser said the Fed should set a target for the growth of its balance sheet in measuring its new policy. Plosser also said the Fed's decision to purchase longer-term securities could threaten its independence because it may face political pressure not to sell these assets. These arguments run counter to remarks that Bernanke made in a speech in London on Tuesday. Plosser said that the economy may begin to slowly recover in 2009. He said he was not too worried about the possibility of "persistent" deflation.

Jane Fox : 1/14/2009 9:18:33 AM

Crude's overnight low was $37.82. I am looking for crude to make a higher low and when/if it confirms that higher low with a break of the January 6th swing high (50.47) it may be safe to dip your toes back into this market on the long side. Until then though I would stay away from it. Link

Jane Fox : 1/14/2009 9:12:04 AM

NEW YORK (MarketWatch) -- Gottschalks Inc. said Wednesday it filed for reorganization under Chapter 11 bankruptcy law.

The Fresno, Calif., department-store operator said it also plans to file a first-day motion to allow it to continue to conduct business as usual without interruption.

Gottschalks said it is considering "one or more options to create value for stakeholders," including a possible sale of the business, and said it had negotiated $125 million worth of debtor-in-possession financing from a group of lenders led by GE Capital.

"This was a very difficult, but necessary decision," Chairman and Chief Executive Officer Jim Famalette said in a statement. "However, we want to assure our employees and loyal customers that Gottschalks will be conducting business as usual. Gottschalks is very proud of its 104-year heritage and our culture as the 'hometown store' serving the communities where our stores operate."

Jane Fox : 1/14/2009 9:10:50 AM

The markets did not like the retail sales numbers out at 8:30ET, not one little bit. As a day trader you hate to see all this movement overnight as you were sleeping because you know there will be little juice to move the markets around enough to make it a profitable day once the cash markets open. On the other hand for other retail investors that are in the market for the long and hold, they are hoping the bulls are able to put a bandage on the gash at some point today. Link

Jane Fox : 1/14/2009 9:05:23 AM

WASHINGTON (MarketWatch) -- Prices of goods and services imported into the United States fell 4.2% in December, as the price for imported petroleum fell 21.4%, and non-petroleum imports fell 1.1%, the Labor Department reported Wednesday. Analysts polled by MarketWatch had expected an overall decline in import prices of 5%. Prices of nonfuel imports fell 1.1%. In the past 12 months, import prices are down a record 9.3%, including a 47% drop in petroleum prices. The prices that U.S. producers received for their exports also fell, dropping 2.3% in December. In the past 12 months, export prices are down 3.2% -- the largest decline since 1998.

Jane Fox : 1/14/2009 9:03:17 AM

Nortel just announced it is filing for bankruptcy.

Jane Fox : 1/14/2009 9:02:24 AM

WASHINGTON (MarketWatch) - Stung by weak demand and falling prices, U.S. seasonally adjusted retail sales plunged 2.7% in December, the Commerce Department estimated Wednesday.

Excluding the 0.7% decline in auto sales, retail sales recorded their biggest drop since record-keeping began in the early 1990s, falling 3.1%. Excluding gasoline and autos, sales fell 1.5%, the largest drop since September 2001.

Retail sales have fallen for six months in a row, the longest decline on record. Sales in October and November were revised lower.

Chain stores have reported further weakening in early January as the recession began its second year.

December's sales were down a record 9.8% compared with the previous December. Sales excluding autos were down a record 6.7% in the past year.

For all of 2008, sales fell 0.1% compared with 2007, the first decline in annual sales since 1992.

Keene Little : 1/14/2009 12:13:48 AM

Wednesday's pivot table: Link

The minor new low today for SPX wasn't enough of a break of the 865 level, where the decline from January 6th achieved two equal legs down, to negate the possibility that the pullback is over and we'll see a new rally leg from here (dark red on the 60-min chart). A rally above 882 would be a bullish heads up and above 900 would significantly increase the probability for SPX to rally up to 950. SPX 60-min chart: Link

If a bounce on Wednesday fails to move much above 882 we should see the market work its way lower and the bearish potential is for SPX to head down to the 810-820 area by Friday. Now we'll let price lead the way.

OI Technical Staff : 1/13/2009 9:59:59 PM

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