Option Investor
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Jeff Bailey : 2/4/2009 9:42:51 PM

SPX NH/NL tally was 0:17

RUT.X's was 3:63

Jeff Bailey : 2/4/2009 6:18:13 PM

Futures should be tracking ...

Jeff Bailey : 2/4/2009 6:17:56 PM

QQQQ $29.40 extended ... so you can get calibrated into extended close.

Jeff Bailey : 2/4/2009 6:14:25 PM

CSCO's high/low/close today (regular session) was 16.16/15.38/15.84.

Jeff Bailey : 2/4/2009 6:12:03 PM

VIX.X traders have the WKLY/MONTHLY/QRTRLY memorized by now.

Don't have the room for VXN.X, but you should have a pretty good idea from my VIX.X commentary.

Jeff Bailey : 2/4/2009 6:10:18 PM

Here's your pivot calculator Link

See US Market Watch for day's High/Low/Close

Again ... use the REGULAR SESSION!

I'll post your Fair Values later this evening for ES

Jeff Bailey : 2/4/2009 6:03:11 PM

Those that played a VXN, or VIX.X strangle, keep an eye on the ES and NQ futures. Have your pivot levels on your chart and ready to execute in the morning. Premiums will be jacked at the cash open.

Jeff Bailey : 2/4/2009 5:52:53 PM

Closing U.S. Market Watch at this Link

Keene Little : 2/4/2009 5:32:55 PM

There's lots of darkness before tomorrow morning but NQ being down 21 points in after hours is not painting a bullish picture for tomorrow. Just don't make any assumptions about the move though--short players have been squeezed more than a few times by a rescue in the morning that squeezes short players out of the market before the bell rings.

Jeff Bailey : 2/4/2009 5:20:22 PM

Juniper Networks (JNPR) $14.65 +2.37% ... $14.16 ... If trading CSCO, know this one and learn from it.

Jeff Bailey : 2/4/2009 5:17:56 PM

Obama signs law expanding health care insurance for children, raising tobacco taxes to pay for it

Jeff Bailey : 2/4/2009 5:15:16 PM

QQQQ $29.91 +0.13% ... $29.47 extended ...

Jeff Bailey : 2/4/2009 5:13:10 PM

Cisco Systems (CSCO) $15.84 +1.40% ... darts lower to $15.23 as call gets underway.

Jeff Bailey : 2/4/2009 4:56:19 PM

Closing Internals at this Link

Jeff Bailey : 2/4/2009 4:36:00 PM

Visa (V) $49.13 +1.53% ... active at $51.16 on headline numbers.

Jeff Bailey : 2/4/2009 4:33:56 PM

BMC Software (BMC) $25.89 -0.34% ... jumps to $26.95 on headline numbers, guidance.

Jeff Bailey : 2/4/2009 4:29:46 PM

dj- House delays digital TV shift to June; Obama signiture expected

Jeff Bailey : 2/4/2009 4:21:23 PM

Cisco (CSCO) $15.84 +1.40% ... $16.03 extended.

Many NDX/QQQQ traders keeping an eye/ear on this evening's call.

Keene Little : 2/4/2009 4:10:00 PM

Jeff mentions seeing pressure building on VIX and one could certainly say something's ready to blow on NDX as well. Since the October 10th low at 1196 it has been oscillating about a line near 1201, shown as the dotted line on today's daily chart of NDX: Link

This line is precisely between the November 4th high and 21st low as well. I don't show the Bollinger Bands on the chart but they have obviously narrowed considerably as well. This market is getting ready for a big move and since the sideways triangle pattern is typically a continuation pattern my bet is that NDX will break down, and soon.

Jeff Bailey : 2/4/2009 4:09:51 PM

Cisco Systems (CSCO) $15.84 +1.40% ... unch, but active on headline numbers extended.

Jeff Bailey : 2/4/2009 4:08:20 PM

OK, Gotch'a on that.

Jeff Bailey : 2/4/2009 4:06:51 PM

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

Keene Little : 2/4/2009 3:58:24 PM

Jeff, I don't play the VIX (don't trust the options on them due to them being based on the futures) but I certainly look for the larger pattern to see if it's confirming anything. Right now it's in between both a bearish and bullish price pattern and I can't say that it's helping me figure out whether or not we've got a bigger market bounce or decline as the very next move.

I don't see too much downside potential on VIX but I do see lots of upside potential so I'd say a strangle could work although this market has an uncanny ability to deflate option prices before anything happens (and the reason I prefer to be a seller of options for the longer-term moves).

Jeff Bailey : 2/4/2009 3:57:19 PM

STRANGLE = An options strategy where the investor holds a position in both a call and put with different strike prices but with the same maturity and underlying asset. This option strategy is profitable only if there are large movements in the price of the underlying asset.

This is a good strategy if you think there will be a large price movement in the near future but are unsure of which way that price movement will be.

Jeff Bailey : 2/4/2009 3:53:05 PM

Keene ... you like a VIX.X strangle here? Anything?

Jeff Bailey : 2/4/2009 3:51:11 PM

VIX.X 60-minute interval Link

Jeff Bailey : 2/4/2009 3:48:12 PM

Can see the pressure building and tensions rise on 60-minute interval of VIX.X and your MONTHLY/Quarterly Pivot retracement (RSD).

Jeff Bailey : 2/4/2009 3:46:32 PM

VIX.X 43.77 +1.64% ...

SPX 834.38

Jeff Bailey : 2/4/2009 3:41:23 PM

RKH $48.65 -0.80% ... session low has been $48.18. See yesterday's MM.

Jeff Bailey : 2/4/2009 3:40:03 PM

UYG $3.11 +0.32% ...

Jeff Bailey : 2/4/2009 3:36:34 PM

Micron Tech (MU) $3.87 +2.92% ... Has slipped below AvgHLT of session ($3.91)

Jeff Bailey : 2/4/2009 3:30:56 PM

Cisco Systems (CSCO) $15.70 +0.51% Link ... into earnings.

Consensus is EPS of $0.30 on Revenue of $9.02B

Jeff Bailey : 2/4/2009 3:27:58 PM

5-year Yield ($FVX.X) finished 1.918% and held above 11/20/08 low.

Keene Little : 2/4/2009 3:25:40 PM

The banks (BIX) continue to be relatively weaker than the rest of the market. BIX tested Tuesday's low this afternoon and is one of the few sectors to do so. If they break down further I'd say follow the money. And after giving its broken uptrend line from January 20th a kiss goodbye at this morning's high it's looking like the next move will be lower. BIX 60-min chart: Link

Jeff Bailey : 2/4/2009 3:22:45 PM

RVX.X 50.60 -1.01% ...

IWM $45.00

Jeff Bailey : 2/4/2009 3:19:37 PM

NASDAQ a/d 1,206/1,510

Jeff Bailey : 2/4/2009 3:19:25 PM

NYSE a/d 1,389/1,649

Jeff Bailey : 2/4/2009 3:18:42 PM

Various Feb "Max Pain" as of last night with intra-day trade Link

Keene Little : 2/4/2009 3:18:21 PM

We could easily get a big rally in the last 45 minutes of trading so who knows how the day will finish but right now we've got a bearish shooting star on NDX after it tagged resistance at its downtrend line from November (actually an even more bearish dragonfly doji): Link

Jane Fox : 2/4/2009 3:12:15 PM

Don't look now but the three of the four markets we watch here in the monitor are below their respective ON lows. Link

Jeff Bailey : 2/4/2009 3:11:37 PM

USO also down a bone to $30.00

Jeff Bailey : 2/4/2009 3:10:28 PM

Since Friday's close ... SPY's Feb "Max Pain" down another bone to $86.00.

Jeff Bailey : 2/4/2009 3:06:13 PM

Obama: Catastrophe coming if Congress doesn't act ... AP Story Link

Jeff Bailey : 2/4/2009 3:05:01 PM

RUT.X 450.54 -0.52% ...

IWM $45.00

Jeff Bailey : 2/4/2009 3:04:55 PM

RUT.X 450.54 -0.52% ...

IWM $45.00

Jeff Bailey : 2/4/2009 3:04:14 PM

NASDAQ a/d 1,215/1,499

Jeff Bailey : 2/4/2009 3:04:02 PM

NYSE a/d 1,364/1,650

Jeff Bailey : 2/4/2009 3:03:46 PM

PBR $27.00 +0.37% ... edges back under MONTHLY 61.8% pivot retracement (RSD)

Jeff Bailey : 2/4/2009 3:03:42 PM

PBR $27.00 +0.37% ... edges back under MONTHLY 61.8% pivot retracement (RSD)

Jeff Bailey : 2/4/2009 3:01:51 PM

SPX 834.68

Keene Little : 2/4/2009 2:54:42 PM

With an hour to go it looks like we need another low to complete the wave count for the move down from today's high. That's a little iffy because of the way the decline started today. But if it does drop a little lower I see support at SPX 825-827 which should set up another bounce tomorrow for another lower high (and a shorting opportunity before it really lets loose to the downside).

Jeff Bailey : 2/4/2009 2:42:20 PM

dj- iMoneyNet: Money-Market fund outflows $7.82B in latest week

Assets drop to $3.826 trillion.

Jane Fox : 2/4/2009 2:41:28 PM

AD line is now -613 so the bears are getting stronger indeed.

Jeff Bailey : 2/4/2009 2:31:23 PM

Good grrravy ... for those of you here in Colorado that know of Mr. Salazar's politics, this not a surpise at all.

Jeff Bailey : 2/4/2009 2:30:29 PM

DJ- US Salazar to cancel oil, gas leases on Federal land in Utah

Jeff Bailey : 2/4/2009 2:27:47 PM

A couple of traders noted "rather few" NH at both exchanges earlier this morning on their own!

That's what makes some of this so rewarding to me. Good work!

Jeff Bailey : 2/4/2009 2:26:08 PM

NYSE NH/NL daily ratio 6.8% at 02:00


Jeff Bailey : 2/4/2009 2:23:47 PM

02:00 Internals at this Link

Keene Little : 2/4/2009 2:17:02 PM

Assuming we've seen the high for the bounce off Monday's low we should now be entering the phase of the wave pattern that will experience strong and sharp selling. We could see SPX down to the 768 or 741 level by Friday. Any bounce back above today's high would now be bullish for a run at least up to 886 so today's high is your stop level if short the market. The updated 60-min chart shows the path lower if it has now started (confirmed with a break below 820): Link

Keene Little : 2/4/2009 2:03:49 PM

We should see the market stair-step lower now as it unwinds its wave count for the leg down today. Any higher than SPX 840 would have me backing away wondering what's playing out today (other than just a lot of whipsaw price action).

Jeff Bailey : 2/4/2009 2:02:15 PM

Swing trade PUT alert! ... for one (1) of the Family Dollar Stores FDO Feb $27.50 Puts (FDO-NY) at the offer of $0.95.

FDO $28.32 -2.51% ...

Jeff Bailey : 2/4/2009 1:57:58 PM

VIX.X 44.22 +2.69% ... sticks its head back above QRTRLY 38.2% (see earlier MM post of VIX.X charts) we knew VIX.X wasn't out of the woods yet.

Keene Little : 2/4/2009 1:57:10 PM

No retest of the broken uptrend line and probably won't get it now. Next uptrend line is the one off the November 21st and January 21st low, currently near 822.

Jeff Bailey : 2/4/2009 1:56:25 PM

NDX.X 1,213.36 -0.27% ... slips red.

Jeff Bailey : 2/4/2009 1:55:47 PM

$IRX.X 0.29% ...

Jeff Bailey : 2/4/2009 1:55:26 PM

dj- US 49-Day Bills: 0.290%; 3.97% at High

Bid-to-cover was 3.12

Jeff Bailey : 2/4/2009 1:53:31 PM

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

Keene Little : 2/4/2009 1:52:12 PM

Now that the uptrend line from Monday afternoon has been broken by SPX, watch for a retest and failure for a short entry (currently just below 840).

Jeff Bailey : 2/4/2009 1:49:29 PM

RUT.X 452.06 -0.18% ... slips red.

IWM $45.05 -0.24% ...

Jeff Bailey : 2/4/2009 1:48:27 PM

UUP $25.84 +0.89% ...

FXE 128.58 -1.41%
FXY $111.12 -0.47%
FXB $144.72 +0.04% ...

Keene Little : 2/4/2009 1:47:10 PM

I'd normally completely agree with you Jeff on taking the assets at 20 cents on the dollar (which would still devastate the balance sheets of most banks) and sell them years from now at a profit. I happen to believe those assets will be worth zero, nada, zilch, nothing before this whole mess is cleaned up. There are certainly some gems in there that have been marked down but not enough to compensate for the POP (pile of poo). Just my humble opinion on that.

Jeff Bailey : 2/4/2009 1:46:31 PM

BIX.X 81.93 -1.18% ...

Jeff Bailey : 2/4/2009 1:46:09 PM

RUT.X 453.39 +0.10%

NDX 1,221.62 +0.49%

Jeff Bailey : 2/4/2009 1:45:04 PM

SPX 838.49 (unch)

Keene Little : 2/4/2009 1:43:53 PM

Notice that if the uptrend line breaks that the shape of today's decline will take on more of a waterfall appearance--that would be bearish confirmation that the choppy pullback was simply winding up for a stronger selloff (something that's only discernable in hindsight). If we get a breakdown then it will be time to wait for the next bounce to get short (assuming most missed shorting this morning's high since it did not achieve its upside objective at 853 and its downtrend line).

Jeff Bailey : 2/4/2009 1:41:56 PM

I think it has something to do with "credit crisis" as to why you can't have the banks sell their productive assets, and hold the nonperforming (right now) assets.

As I said before, I think tax payers would LOVE to take even the BAD assets at $0.20 on the dollar right now (As Pres. Bush Sr. did), hold onto them, then DUMP THEM FOR HUGE GAIN (as Clinton administration did) when real estate recovers!

Unfortunately, President Clinton kept the money, and RAISED our taxes.

Keene Little : 2/4/2009 1:41:45 PM

Here comes the test of the uptrend line.

Keene Little : 2/4/2009 1:38:16 PM

The pullback from this morning's high remains choppy enough to be considered a 4th wave pullback within the move up from Monday afternoon. It would start to look much more bearish with a break of the uptrend line that's currently just below 840. If the pullback is finished I get an upside projection for the 5th wave at 855 (where it would equal the 1st wave), as shown on the updated 10-min chart: Link

Jeff Bailey : 2/4/2009 1:26:34 PM

PBR $27.70 +3.05% ... edges back under QRTRLY Pivot.

Keene Little : 2/4/2009 1:26:18 PM

I liked a recommendation I recently read (about this whole bad bank, good bank business)--let the banks who screwed up sell their golden assets to someone else in order to recapitalize themselves, leaving the bad assets where they belong. Why should the tax payer be left with the bad assets and the banks who screwed up be left with a pristine balance sheet? I know, I know, it's so that the investment banks have money to lend again. Well, if they can't, trust me, someone else will step in and take their places. The government players have it completely backwards. And with that I'll relinquish the soap box.

Jeff Bailey : 2/4/2009 1:24:03 PM

Battled and battled to try and hold 11/20/08 low last three days.

Jeff Bailey : 2/4/2009 1:22:42 PM


Shares slide 7% as warehouse retailer warns that its earnings per share for the quarter ending February 15 are likely to come in well below expectations of 70c as sales and margins have been hurt by economic conditions.

COST $43.01 -6.74% ... notable 52-weeker at the NASDAQ

Keene Little : 2/4/2009 1:22:03 PM

Isn't it amazing when you threaten bank executives with a cap on their pay that they suddenly get religious and find ways to survive on their own without the government's help.

Jeff Bailey : 2/4/2009 1:18:20 PM

INDU 8,042 -0.44% ...

Jeff Bailey : 2/4/2009 1:18:02 PM

OEX.X 397.31 (unch) ...

Jeff Bailey : 2/4/2009 1:17:01 PM


Goldman Sachs CFO says company is pondering ways to pay back the government, but it might take some time. Goldman Sachs, along with fellow surviving investment bank Morgan Stanley, received $10 billion last year.

GS $88.39 +6.72%

MS $22.22 +6.11%

Jeff Bailey : 2/4/2009 1:15:01 PM

KFT $26.32 -8.42% ... between 61.8% and 50% of 11/20/08 and 01/06/09 high.

Jane Fox : 2/4/2009 1:13:51 PM

AD line is still above 0 so the bears haven't picked it up but both are scrambling to get it

Jeff Bailey : 2/4/2009 1:13:27 PM


Packaged food giants Kraft Foods and Sara Lee both lowered their guidance as consumers cut back even on small purchases. Sara Lee reports a net loss of $17 million, or 2 cents a share. Kraft's earnings fall to $163 million, or 11c, below the 44c expected by analysts.

Jane Fox : 2/4/2009 1:12:48 PM

I see the VIX making new daily highs now so all bullish bets are off, the bulls have now lost the ball.

Jeff Bailey : 2/4/2009 1:11:31 PM

KFT $26.30 -8.50% ... notably weak. #16 most heavily weighted.

Jeff Bailey : 2/4/2009 1:10:35 PM

INDU "Big 10" 2:8

Jeff Bailey : 2/4/2009 1:06:09 PM

INDU 8,055 -0.29% ... slips red.

Jeff Bailey : 2/4/2009 1:05:27 PM

BKX.X 27.25 +0.73% ...

Jeff Bailey : 2/4/2009 1:05:11 PM

BIX.X 82.90 (unch)

Jeff Bailey : 2/4/2009 1:03:18 PM

WFC $18.28 +0.49% ..

JPM $24.71 +2.74% ...

Keene Little : 2/4/2009 1:02:44 PM

There was a brief break of the downtrend line from this morning's high but it didn't hold--quick bull trap. That's not a bullish sign. There's nothing yet to signify we've seen the high for the day but the pullback is starting to get a little long in the tooth.

Jane Fox : 2/4/2009 1:01:27 PM

SAN FRANCISCO (MarketWatch) -- Bloomberg is cutting roughly 100 jobs in its multimedia division as part of the financial news company's ongoing reorganization, a Bloomberg spokeswoman said Wednesday.

Jane Fox : 2/4/2009 12:59:21 PM

Internals are suggesting the bulls are getting weaker but not out quite yet.

Jeff Bailey : 2/4/2009 12:59:15 PM

Swing trade long exit alert! for the ProShares Ultra Financial (UYG) at the bid of $3.20

Jeff Bailey : 2/4/2009 12:57:50 PM

Bank of America (BAC) alert! $4.96 -6.60% ... new 52-weeker.

Jeff Bailey : 2/4/2009 12:52:28 PM

IWM's 38.2% at $46.76

Jeff Bailey : 2/4/2009 12:51:33 PM

iShares IBOXX High Yield (HYG) $73.45 +0.57% ... under 38.2% of 11/20/08 to 01/06/08 high.

Jeff Bailey : 2/4/2009 12:47:08 PM

dj- Source: Petroleo Brasileiro 10Yr bond to yield in the area of 8.25%

Keene Little : 2/4/2009 12:45:25 PM

The pullback continues to look more corrective than impulsive and that has me still leaning towards another new high before the rally leg is complete. If SPX drops below 840, especially if the decline takes on a waterfall appearance, I'll start to doubt that but so far I don't see anything to negate the expectation for a new high (853-855 still a good upside target).

Jeff Bailey : 2/4/2009 12:47:02 PM

dj- Brazil's Petroleo Brasileiro to start Tupi field test in April

PBR $27.90 +3.79% ...

Jeff Bailey : 2/4/2009 12:43:16 PM

BIX.X 83.35 +0.53% ... nowhere close to 11/20/08 low of 112.49. TAIL of the financials.

Jeff Bailey : 2/4/2009 12:42:26 PM

XBD.X 76.50 +3.11% ... under 19.1% fib (78.70) of 11/20/08 to 01/06/09 high.

Jeff Bailey : 2/4/2009 12:39:54 PM

Good work/observation Bill!

Jeff Bailey : 2/4/2009 12:38:59 PM

Financial Select SPDRs (XLF) $9.21 +1.54% ... battles 11/20/08 low ($9.24)

Jeff Bailey : 2/4/2009 12:28:49 PM

12:23 Market Watch Link

Jane Fox : 2/4/2009 12:28:03 PM

The DOW dips back into its overnight range, S&P is now testing its ON high and the NDX, the stronger market, has a ways to go to even test its ON high. Link

Jeff Bailey : 2/4/2009 12:24:52 PM

12:00 Internals at this Link

Jeff Bailey : 2/4/2009 11:54:19 AM

VIX.X daily interval montage (per 11:32:04) and other comments in recent days, weeks and years at this Link

Keene Little : 2/4/2009 11:40:06 AM

Updating the SPX 10-min chart from last night shows the wave count ideally needs one more push higher to finish the 5-wave count from Monday afternoon. Assuming we'll see 853-855 hold it will then become important what kind of pullback we see that will help determine whether or not we'll continue pushing higher or if the high will be in. If we get the new push higher and 853-855 holds I think it will be a very good shorting opportunity considering the downside potential. SPX 10-min chart: Link

Jeff Bailey : 2/4/2009 11:34:40 AM

VIX.X Pivot trader (MONTHLY) also noted action on 02/02/09 open to drive lower close as put sellers/call buyers outnumbered put buyers/call seller from the opening tick.

Jeff Bailey : 2/4/2009 11:32:04 AM

VIX.X 41.83 -2.85% ... couldn't quite close the deal on Monday at 19.1% (45.77) of 11/20/08 HIGH to 01/06/09 low Fib range. Slips back below its 150-day SMA (42.37).

Jeff Bailey : 2/4/2009 11:26:25 AM

MBA's Weekly Application Survey at this Link

Jeff Bailey : 2/4/2009 11:24:44 AM

Dow Jones Home Builder Index (DJUSHB) 208.32 -0.03% ... Battles 38.2% of 11/20/08 to 01/06/09 Fib range.

Jeff Bailey : 2/4/2009 11:21:27 AM

Euro CurrencyShares (FXE) $128.39 -1.53% ... slips below 61.8% of 11/20/08 to 01/06/09 Fib range.

Jeff Bailey : 2/4/2009 11:19:53 AM

OIX.X 578.84 +1.69% ... sticks its head above 38.2% Fib (576.79) of 11/20/08 to 01/06/09 range.

Jeff Bailey : 2/4/2009 11:17:40 AM

USO $29.16 +1.01% ...

UGA $22.60 +4.63% ...

See Jane's 10:48:41

Jeff Bailey : 2/4/2009 11:14:17 AM

Semiconductor HOLDRs (SMH) $18.46 +5.30% ... testing 19.1% of 11/20/08 to 01/06/09 relative high.

Session high $0.10 shy of MONTHLY R1.

Jeff Bailey : 2/4/2009 11:12:27 AM

Biotech Index (BTK.X) 693.64 +2.86% ... rips higher after closing above its 01/06/09 relative high yesterday.

Jeff Bailey : 2/4/2009 11:11:00 AM

NASDAQ-100 Index (NDX.X) 1,241.94 +2.16% ... sticks its head above 11/20/08 to 01/06/09's 19.1% retracement.

Jeff Bailey : 2/4/2009 11:09:22 AM

Thank you Linda!

Linda Piazza : 2/4/2009 11:12:46 AM

Jeff wrote to ask if I'd noted anything unusual in the TED spread since the 13-week Treasury Yield (IRX.X0, $IRX.X, etc., depending on the quote service) traded 0.25% and above. I have just a few minutes before I have to attend to other matters today, but I thought I'd take the time to answer here.

Actually, I have been watching the TED spread closely. It has been dropping hard toward a support zone from about 0.80-0.97: Link . My delayed quote shows it at .9363 this morning, up from yesterday's 0.92. What happened as that yield climbed earlier in the week? The TED spread dropped fairly hard (0.98 down to yesterday's 0.92) from the top of the support zone down into that support zone. Bounces from this zone have been fairly disastrous for the equities (AUG,2007; OCT, 2007; FEB, 2008; SEP, 2008, etc.), so it's an important level to watch, I think, for either a TED spread bounce or a drop finally through this higher-than-normal band for the TED spread into more normal levels. Bloomberg's charting gives me limited ability to make any kind of predictions, but I have noted in the past that there's often a punch down and then a second one, a retest, two to three weeks later, before the TED spread bounces, if it does. I don't know that we can expect a resolution immediately. I just know that those who are long equities would prefer not to see a strong TED spread expansion that sticks right now. I don't use the TED spread for market timing, but I certainly do watch it for background information. Unfortunately, all I can say is that it's testing an important level.

Jeff Bailey : 2/4/2009 11:04:42 AM

Swing trade put raise target alert! for the PBR-PK to $22.00 in the underlying.

Keene Little : 2/4/2009 10:59:01 AM

SPX is quickly approaching its 62% retracement level at 853 and its downtrend line from September is currently near 856. NDX is much stronger and is now challenging its January 28th high at 1245.24 (only about 1.50 points higher). It is also attempting to break its downtrend line from the November 4th high, which is potentially the top of a sideways triangle pattern, shown in the updated NDX daily chart: Link

The significance of the dark red wave count is that today's rally could now be finishing the e-wave of the sideways 4th wave triangle (playing out since October). If true we're about to embark on a strong decline into March. The short-term bullish wave count (pink) calls for a continuation of the rally up to about 1369 (for two equal legs up from November) before finishing the 4th wave. Note that this short-term bullish count would likely have the market topping during February opex.

It takes a push above the January 6th high near 1286 to confirm the pink wave count and a drop below the February 2nd low near 1167 to confirm the dark red wave count.

Jeff Bailey : 2/4/2009 10:55:11 AM

Petroleo Brasileiro (PBR) $28.05 +4.35% alert! ... (also see 10:24:52). Moving to "hold/neutral" in MM Profiles. Has traded 01/06/09 relative high CLOSE.

Jane Fox : 2/4/2009 10:48:40 AM

NEW YORK (MarketWatch) - U.S. crude inventories rose for a sixth straight week, up 7.2 million barrels to an 18-month high of 346.1 million barrels in the week ended Jan. 30, the Energy Information Administration reported Wednesday. The gain was much higher than the 2.9 million increase expected by analysts surveyed by energy information advisor Platts. After the data, crude for March delivery reduced gains, up 0.5% to $41 a barrel on the New York Mercantile Exchange. It was up 2% before the data. The EIA also reported that inventories at Cushing, Okla., the delivery point of Nymex futures, rose to a new record level of 34.3 million barrels. Meanwhile, gasoline inventories rose by 300,000 barrels and distillate stockpiles fell by 1.4 million barrels in the same week, the EIA reported.

Jeff Bailey : 2/4/2009 10:44:54 AM

USO $28.92 +0.13% ...

UGA $22.25 +3.00%

Jeff Bailey : 2/4/2009 10:38:10 AM

GLD $89.16 +0.77% ... ~891.60 spot.

HUI.X 298.75 +2.92% ...

Keene Little : 2/4/2009 10:28:11 AM

The Fed has been trying to talk rates down by threatening to buy Treasuries themselves (to monetize our debt). Their hope of course is to be able to convert our huge, and growing, debt burden into long-term debt at a very low rate and then pay it off over time with inflated dollars. But as Greenspan would often say, the bond market is a "conundrum" and not cooperating. Seems the bond market is sniffing out higher rates of inflation due to all the money creation going on.

TYX, the 30-year yield, has rallied from a low of 2.52% in December to 3.7% today. After the big move down in yields in November/December, that's an equally big move for the 30-year in reverse. TYX has now retraced more than 62% of the decline from November and could make it a little higher to a Fib projection near 3.8%. We should then see at least a consolidation if not a larger pullback (meaning buying in bonds--maybe by the Fed). TYX daily chart: Link

Jeff Bailey : 2/4/2009 10:24:52 AM

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

Jeff Bailey : 2/4/2009 10:19:18 AM

10:00 Internals found at this Link

Jane Fox : 2/4/2009 10:18:12 AM

WASHINGTON (MarketWatch) -- U.S. nonmanufacturing sectors continued to contract but at a slower pace in January, according to a Wednesday report from the Institute for Supply Management, with the global slowdown taking its toll on demand. The ISM non-manufacturing index rose to 42.9% in January from 40.1% in December. In November, the index reached a record low of 37.4%. Economists polled by MarketWatch were looking for a January result of 39%. Readings below 50% indicate that more firms are contracting than expanding.

Keene Little : 2/4/2009 10:11:06 AM

Bonds are selling off further this morning and that freed-up money is helping the stock market. But TLT is now approaching potentially strong support at its September high at 100.86 and it's currently trading at 101.89. It gapped above it on November 20th and then used it briefly as support before zoom climbing into December. TLT daily chart: Link

Jane Fox : 2/4/2009 10:10:40 AM

Here are your internals and they are telling you the bulls not only have the ball but field advantage as well. Link

Jane Fox : 2/4/2009 10:06:03 AM

I see today so far as a buy the dips.

Jane Fox : 2/4/2009 10:05:43 AM

The bulls are getting stronger and stronger. VIX making new daily lows and AD volume new daily highs and AD line is above +1000.

Jane Fox : 2/4/2009 9:59:23 AM

AD volume and the AD ratio are both making new daily highs but then again so is the TRIN. Sigh!!

Jane Fox : 2/4/2009 9:58:02 AM

I see the VIX climbing so this little flurry of buying may come to an end real quick. AD line is still well below +1000 so that means the bulls may have the ball but they don't have field advantage.

Keene Little : 2/4/2009 9:57:17 AM

Techs have led the way higher and continue to do so this morning. The first level of potential resistance for NDX is near 1230, which is a 78.6% retracement of last week's decline and is being tested now. The next level is near 1240 which is the downtrend line from November through the January high (and where last week's rally stopped just shy of).

Jane Fox : 2/4/2009 9:47:01 AM

VIX is making new daily lows so the bulls have the ball. It remains to be seen if they can keep it.

Jane Fox : 2/4/2009 9:45:57 AM

AD ine is a neutral +402

Jane Fox : 2/4/2009 9:45:21 AM

Here is the chart of Gold I intented to post. Link

Jane Fox : 2/4/2009 9:43:17 AM

If you trade Crude and have been trying to time a bottom you may not like its chart but from a technician's point of view it is a very very easy chart to read. Now take the chart of Gold and you have a chart that much harder to decipher.

In any case Gold is showing signs of weakening, a bearish rising wedge and a bearish MACD divergence even though its trend is up and it has been making higher highs and lows. Link

Jane Fox : 2/4/2009 9:38:27 AM

The only thing I can say about Crude is, "Well at least it's not falling anymore." This market has not been able to make one higher low then a higher high since July of last year. Once this happens though we will have a very very good indication the fix is in. Link

Jane Fox : 2/4/2009 9:33:26 AM

LONDON (MarketWatch) -- The number of planned job cuts announced in January rose to 241,749, a seven-year high, according to a report released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc. The January job-cut total was 45% higher than the 166,348 cuts announced in December. Retailers led the job-cut wave, the report said.

Jane Fox : 2/4/2009 9:31:48 AM

The overnight session was not much more than an extension of the previous day range with a small (very small) bullish bias due to the recent higher high made at 8:50ET, right after the ADP Non-farm Employment report was released. You would have to take this move as the market liked the report, or in other words it didn't think it was as bad as it expected.

I am talking about the market as if this non-human entity can think but in reality it does because it has a "collective" thought process of everyone who is participating in it. That means me and all of you as well. Link

Keene Little : 2/4/2009 9:29:51 AM

ES made a minor new high this morning right after the ADP jobs number and came within a tick of its 50% retracement at 841 so that might be strong resistance. SPX 50% is at 845.36 which would have ES a little higher. The bulls remain in control this morning so I'll continue to watch how any morning rally progresses.

Jane Fox : 2/4/2009 9:24:16 AM

WASHINGTON (MarketWatch) -- U.S. private-sector companies shed a seasonally-adjusted 522,000 jobs in January, according to the ADP employment index, pointing to another hefty month of job losses when the government reports its payroll figures on Friday.

The ADP index, compiled from anonymous payroll data, showed that goods-producing industries lost 243,000 jobs, while service-producing industries lost 279,000 jobs.

Large firms cut 92,000 jobs, medium-sized firms shed 255,000 jobs and small firms reduced their payrolls by 175,000 jobs.

December's job loss, according to ADP, was revised to a loss of 659,000 from 693,000. By contrast, the government data showed private-sector job losses of 531,000 in December.

The ADP index covers only private-sector jobs. Adding in some 10,000 government jobs created in a typical month, the report suggests nonfarm payrolls fell by about 510,000 in January.

Economists now expect payrolls to fall by 525,000, which would be the fifth straight month of at least 400,000 jobs lost.

Jane Fox : 2/4/2009 9:20:07 AM

WASHINGTON (MarketWatch) - The Treasury Department will auction $67 billion in notes and bonds next week in its quarterly refunding auctions, the government said Wednesday. The department will auction $32 billion in 3-year notes, $21 billion in 10-year notes and $14 billion in 30-year bonds to refund $36.3 billion in maturing securities and raise approximately $30.7 billion. Treasury announced that it will 7-year notes monthly starting in February. The 7-year note was retired 16 years ago. In addition, the department said it would sell a new 30-year bond each quarter, with one reopening. This increases the number of 30-year auctions to eight per year, up from four auctions last year. The agency said it would consider a second reopening each quarter, with a decision expected in May. The rest of the government's $493 billion financing requirements will be met with weekly bills, monthly 2-year and 5-year notes and other instruments, Treasury said. The department made no changes to the 5-year inflation-indexed note. Many analysts had expected the 5-year TIP auction to be eliminated to make room for an auction that raised more funds.

Jeff Bailey : 2/4/2009 3:40:46 AM

Hey YM traders that use REGULAR SESSION DERIVED weekly pivot. Maybe ALL of you YM/ES/NQ/MR traders.

If you've been following my comments of late, YM/INDU/DIA has been WEAKEST.

Slap the 11/20/08 to 01/06/09 on the INDU. See it?

This is the TAIL and those that follow my teachings, when trading LONG the STRENGTH, you've got to keep an eye on the TAIL.

Jeff Bailey : 2/4/2009 3:33:03 AM

For those that want a list of ETF's, I posted the Beetle's Balanced asset classes in Tuesday's MM, and they would all be PRICE.

Jeff Bailey : 2/4/2009 3:32:58 AM

Keep going with the 10 and 30-year. REWARD is the YIELD, RISK is TIME (13-week little risk/little reward. 5-year more RISK than 13-week, but better YIELD reward; 10-year more RISK than 5-years, but better YIELD reward; 30-year .... )

Jeff Bailey : 2/4/2009 3:32:32 AM

5-year Yield with an 11/20/08 to 01/06/09. I'm placing the 100% at the LOW of 11/20/08 as I would think CASH BUYING of that bond drove YIELD to LOW as an AVERSION to EQUITY RISK as the majors made that day's low. I place the 0% at the HIGH of 01/06/09 as I would think CASH SELLING of that bond drove YIELD to a HIGH as an I want out of bond and INTO EQUITY at 01/06/09 "eurphoric" high. Link

See how the 5-year YIELD on 11/20/08 wasn't exceeded to the downside on 11/21/08?

That's why I'm going to "anchor" other retracement at the 11/20/08 lows of everything and not the 11/21/08 low.

Let's pretend for a moment that the 11/21/08 intra-day low was a "trap" or some type of exhaustion low.

Jeff Bailey : 2/4/2009 3:14:29 AM

Hey ... take your conventional on the ES from 11/20/08 regular session low to 01/06/09 regular session high. We'll be doing that with the SPX/SPY

Jeff Bailey : 2/4/2009 3:11:57 AM

Hey, check out ES on 02/02/09 from 12:50-01:00 and my 02/14/36 AM post. Even though its a 60-minute, where ES was at the PINK 19.1%.

Jeff Bailey : 2/4/2009 3:08:40 AM

Just thinking ... Linda! You still following the "TED spread?"

Jeff Bailey : 2/4/2009 3:07:55 AM

SPY ... on 02/02/09 at 12:50-01:00 was about to make an intraday inflection high of $82.97. Fell to $81.70 before edging back higher to its close. No unusual volume spike that I see.

Jeff Bailey : 2/4/2009 3:04:03 AM

Making a note here ... it was on 01/28/09 at 12:20-12:30 PM interval (looking at a 10-minute interval chart) that the IRX.X first ticked above that 0.15% (01/06/09 high).

Anything "unusual show up in any of the major indexes (DIA, SPY, IWM, QQQQ with a volume observation) that would suggest institutional computers became active?

Note #2: It was on 02/02/09 at 12:50-01:00 PM that the 13-week ticked 0.25%. Anything unusual?

Jeff Bailey : 2/4/2009 2:58:49 AM

13-week Treasury Yield ($IRX.X) in Monday's MM I had al_rted to the 13-week having traded 0.25% and "upper-end" of Fed target for Fed funds. Just like "dollar decline finds buyers for stocks" we could also begin to observe "shortest-dated treasury above FF target good for stocks."

13-week is a bit tough to tie directly to stocks as it has been a "hide out" for cash, even at a yield of 0.005% there were buyers. The SELLING could simply be somewhat of a NO REWARD at 0.31%. That's 0.31% annualized, not 0.31% every quarter. Link

Jeff Bailey : 2/4/2009 3:34:19 AM

In Wednesday's Market Wrap, I'm going to be showing quite a few charts with conventional (regular session derived) retracement on various indexes from 11/20/08 session lows to the 01/06/09 regular session highs.

Not just the equity side of things either.

Check out the 13-week yield to the 30-year, the PHF and even the currencies.

The currencies and the UUP (ETF of U.S. Dollar Index) is impossible for me to verify some of CNBC's comments today regarding "dollar weakness good for stocks" other than today.

The TREASURY YIELDS are fascinating and your eyes may pop out. Again ... 11/20/08 to 01/06/09.

Hey, throw them on the VIX.X, HMO.X and the BTK.X, even the HUI.X.

Jeff Bailey : 2/4/2009 2:14:36 AM

ES regular session only 60-minute (see 02:01:34 and 12:05:40) Link

One reason SPX/SPY traders are "confused" as it relates to pivot levels is how they are derived (Why don't Keene's levels match SPX and SPY?)

Note how different the moving averages are (measuring 21, 50, 150 and 200-pd over many more periods of trade vs. regular session pd of trade).

Jeff Bailey : 2/4/2009 2:01:34 AM

Interesting chart Keene ... Did somewhat the same, but also turned on the volume. Looks like a possible "retail" trap down there at 806.25. When regular session clicked, all participants vote, es to 819.50 in 60-minutes.


Keene Little : 2/4/2009 12:05:40 AM

Wednesday's pivot table: Link

SPX stopped shy of its 50% retracement of last week's decline, near 845, and if that doesn't stop the bulls we could see a push up to the 62% retracement near 853. And if the bulls really get feisty there is the potential to rally on up to a projection at 886 where the bounce off the January 21st low would have two equal legs up. Above 853, and especially above 865, would strongly support the more bullish possibility. Otherwise I think we need to be watchful for a quick and hard reversal back to the downside. SPX 60-min chart: Link

Note that if SPX can push up to the 853 level it will also run into its downtrend line from September, the one that stopped the rally on January 28th. The 10-min chart shows how the market could stair-step higher tomorrow to get SPX up to the 853 level and complete a potential wave count for the move up from Monday: Link

I was looking at the ES all-hours chart to see if there were any additional clues from it and I noticed it counts well as complete at Tuesday afternoon's high where it tagged a Fib projection at 839.50 for two equal legs up from Monday and it hit the top of its parallel up-channel (bear flag pattern so far). Only slightly higher at 841 is its 50% retracement. Based on the 60-min all-hours chart I wouldn't be a bit surprised to see the selling start right away on Wednesday. We'll see how it all looks in the morning. Link

Jeff Bailey : 2/3/2009 11:53:44 PM

YM Pivot Matrix for tomorrow at this Link

Jeff Bailey : 2/3/2009 11:48:53 PM

Nothing meaningful took place in the major market bullish %. BPALL, BPNYSE and BPOTC all inched up, but no chart reversals.

BPSPX saw a net loss of two (2) stocks to reversing lower PnF sell signal to 46.60, but not yet the 46.00% needed for the reversal lower.

Narrower BPOEX, BPNDX and rarely used BPDJIA all unch.

Jeff Bailey : 2/3/2009 11:39:43 PM

YM +15 at 8,001

Jeff Bailey : 2/3/2009 11:19:28 PM

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

Day traded short the YM twice (-33, +4) net -29

Jeff Bailey : 2/3/2009 11:11:05 PM

Closing Internals at this Link

SPX NH/NL tally was 0:18

RUT.X NH/NL tally was 4:65

OI Technical Staff : 2/3/2009 9:59:59 PM

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