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Jeff Bailey : 2/10/2009 9:33:36 PM

UUP 25.84 +1.17% ... largely on pound -2.70% weakness.

Jeff Bailey : 2/10/2009 9:25:53 PM

I had several question ragarding cantagno and backwardation. One way to measure it take the percentage difference between the March and April, or even the March to May contract. March to April widended further today to 16.5%, its widest since 01/20/09 termination.

Contango and bakwardation tell traders little about PRICE direction near-term, but gives the hedger (long near-term contract, short long-term contract) a measure to judge against.

At the 11/20/08 December termination we had backwardation for that one day (dec/jan)

Jeff Bailey : 2/10/2009 8:59:39 PM

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

Small caps as depicted by the Russell 2000 were holding up well in the earlier part of the session and actually went green, but simply got pulled lower by the INDU and large caps to trigger the IWM stop @ $45.90 with the IWM-CU bid $2.50.

I wasn't certain as to the eventual market reaction to Mr. Geithner's announcement (it doesn't appear there's a plan in place yet).

Exited a portion of the SanDisk April $10 Calls (SWQ-DB) at the bid of $2.50 on the early pop to $11.50 on the new product news.

Jeff Bailey : 2/10/2009 8:46:05 PM

Closing U.S. Market Watch found at this Link

Not the best looking picture when what the "new" Treasury wants to fix ends up as percentage losers (banks and housing).

Keene Little : 2/10/2009 4:06:29 PM

No real change from from my earlier SPX 60-min and NDX 60-min charts. We could see a quick spike down tomorrow morning but that's not what I'm seeing for the setup into the close. Expect a bounce tomorrow into mid day before the market continues lower. The pink wave count calls for another bounce back up to recent highs over the next week but at this point I think the chances of that are remote (not impossible, just remote). The odds say we're now going to head rapidly lower into opex week. SPX 60-min chart: Link

Keene Little : 2/10/2009 3:44:59 PM

As is typical, there was no reversal of today's trend this afternoon. So far the bears are not afraid to hold their short positions overnight. The reaction from overseas could further depress the market heading into tomorrow. But it continues to look to me more like we're setting up for a bounce first thing tomorrow morning. If you want to hold short overnight (always a little riskier), buy a few February call options for insurance.

Keene Little : 2/10/2009 3:31:23 PM

At this point taking out a previous bounce high should indicate the low is in for now. In the meantime trail your stop just above each high and follow the bouncing ball lower.

Keene Little : 2/10/2009 3:19:11 PM

Unless this suddenly breaks down I think the market is hammering in a bottom for the day. Even a sudden little breakdown should find support around SPX 820 so watch for 820-825 as a support zone (and for now closer to 825).

Keene Little : 2/10/2009 3:08:57 PM

NDX is trying to find support at its broken downtend line from November, near 1230, and could be good for a bounce into tomorrow morning. NDX 60-min chart: Link

Keene Little : 2/10/2009 2:32:01 PM

It's just a thought but watch for the possibility for a small descending wedge to play out for the rest of the afternoon, potentially down to around SPX 825, and then a reversal either into the close or tomorrow morning. SPX 5-min chart: Link

Keene Little : 2/10/2009 2:29:12 PM

Bullish divergences at this afternoon's new lows is still holding. It doesn't mean the market can't continue to settle lower but it does mean the selling momentum is waning. It wouldn't take much buying to get the shorts to start covering.

Keene Little : 2/10/2009 2:27:38 PM

SPX is sneaking its way down to 828 so watch for support (or not).

Jane Fox : 2/10/2009 2:20:27 PM

I think there will be a bounce before/if the markets make new daily lows.

Jane Fox : 2/10/2009 2:19:30 PM

TRIN is at a very bearish and very oversold 3.41.

Keene Little : 2/10/2009 2:13:29 PM

It's only small time-frame stuff but the bounce off the low looks more corrective than impulsive and therefore we could see another drop lower before potentially finding stronger support for the day. Except for perhaps an end-of-day short-covering bounce (such as in the last 30 minutes), a strong trend-down day like today is often not reversed in the afternoon. Therefore planning a long trade this afternoon could be tricky. Protecting profits on a short play is one thing but hoping for a big bounce may not work out.

Jane Fox : 2/10/2009 1:45:19 PM

Here is another bullish divergence. Es made lower low but the VIX didn't make a higher high. Link

Keene Little : 2/10/2009 1:37:43 PM

Some bullish divergences are showing up now at the new daily lows and with SPX 828 trendline support close by I would not want to press my luck further to the downside. Unless you're a longer-term swing trader (looking for more downside), pull your stop down closer now and take what you can out of today's decline. One more small drop lower could finish it.

Keene Little : 2/10/2009 1:35:13 PM

Short covering led the banks higher in the recent rally and now the sellers are taking over again. BIX is down -13% today, the leading sector charging down the hill.

Keene Little : 2/10/2009 1:27:02 PM

With today's steep drop, especially since it's looking like a sell-the-news event (following way too much bullish enthusiasm, as measured by put/call ratio), we have to be prepared for the start of the next leg down that will take the market down for at least a test of the November low (SPX 741). But the EW pattern also supports the idea that we haven't seen the end of the consolidation pattern since the January 21st low, shown in pink on the updated 60-min chart: Link

A break of the uptrend line from November, near 828 (and close to getting tested as I type), would clearly be bearish but the final nail in the bulls' coffin doesn't come until a break below 820. Bears cannot get complacent here-- a strong bounce back up at any time remains a possibility. Therefore protect your position if you're short the market. Once below 820 then you can start adding to your short position and sell every rally.

Jane Fox : 2/10/2009 1:09:37 PM

President Barack Obama's economic recovery plan has passed the Senate and is on its way to difficult House-Senate negotiations. Just three Republicans helped pass the plan on a 61-37 vote and they're already signaling they'll play hardball to preserve more than $108 billion in spending cuts made last week in Senate dealmaking. Obama wants to restore cuts in funds for school construction jobs and help for cash-starved states.

Keene Little : 2/10/2009 12:46:22 PM

Looking at equities, bonds and metals it's looking like everyone is just standing back and watching for a bit. Not much is moving at the moment (lunch time lull).

Keene Little : 2/10/2009 12:09:43 PM

SPX has now dropped down to the broken downtrend line from September, at SPX 836.50. The small bounce looks corrective so far and therefore I expect to see lower prices. Until I see evidence to the contrary I expect SPX to work its way down to the uptrend line from November near 828.

Jane Fox : 2/10/2009 11:56:25 AM

This is certainly not looking good for the bulls is it? A break back below the magenta trend line means the probability 1-800-support will be retested. Link

Jane Fox : 2/10/2009 11:56:25 AM

This is certainly not looking good for the bulls is it? A break back below the magenta trend line means the probability 1-800-support will be retested. Link

Jane Fox : 2/10/2009 11:46:03 AM

The VIX is not giving any clues that the bears are going to let go. Link

Keene Little : 2/10/2009 11:41:01 AM

The move down now has taken on a very bearish wave pattern. It should stair-step lower. The next support line is the uptrend line from November at SPX 828.

Jane Fox : 2/10/2009 11:29:42 AM

Internals are showing you very clearly who has control now. The TRIN over 1.50 is supporting it as well. Link

Keene Little : 2/10/2009 11:20:13 AM

The bottom of a parallel up-channel for price action since the February, shown on the 60-min chart, is near SPX 845. Below that would tell me there's no chance for recovery.

Jeff Bailey : 2/10/2009 11:18:20 AM

RVX.X 52.62 +4.74% ...

Jeff Bailey : 2/10/2009 11:17:28 AM

Swing trade call stop alert! for the one (1) iShares Russel 2000 IWM Mar $47 Call (IWM-CU) at the bid of $2.25

IWM $45.90

Jane Fox : 2/10/2009 11:12:17 AM

All overnight lows have just broke and the bears have taken over the reins.

Keene Little : 2/10/2009 11:09:28 AM

NQ not following ES on that spike up was your telltale that ES would not hold and it's not.

Jeff Bailey : 2/10/2009 11:07:00 AM

11:00 Market Watch Link

Jane Fox : 2/10/2009 11:06:27 AM

So far both the DOW's and the S&P's overnight range have held whereas the previous day ranges have contained both the NDX and Russell. Link

Keene Little : 2/10/2009 11:06:07 AM

Spike back up in ES is NOT being matched by NQ.

Keene Little : 2/10/2009 10:43:51 AM

A break below SPX 860 is a warning but nothing much more than that, yet. Below 852, the high on February 4th, would be more bearish as it would create overlap within the move up from February 2nd. That overlap is not critical if the move up is a rising wedge but if it's a "normal" 5-wave advance it can't overlap. So for now that becomes the next key level. There remains the possibility for another rally leg, the 5th wave, as shown on the updated 60-min chart: Link

Keene Little : 2/10/2009 10:26:27 AM

This drop looks a little sinister.

Keene Little : 2/10/2009 10:18:50 AM

For now SPX 860 remains an important level although not critical. If SPX drops below 860 I think it will start to look more bearish and I'd be reluctant to think about even a day-trade long. But until I see some kind of impulsive move to the downside the pullback/consolidation remains potentially bullish. That keeps me from aggressively recommending a short play here. So I sit and wait for a prettier bus to come pick me up.

Jane Fox : 2/10/2009 10:02:34 AM

This shows the bears are gaining strength today but the AD line is only -238 so I think it could go in either direction with no clear winner at all. Link

Jane Fox : 2/10/2009 9:58:01 AM

Dateline 24/7 Wall St. - GM (GM), Ford (F), and Chrysler better pick up the pace of their sales in China. It is about the only place where anyone is buying cars. China car sales slowed a bit in the second half of last year, but not nearly as much as they did in the US, Europe, and Japan. Now, China has pulled ahead of the US in total monthly car sales.

According to the AP, in January only 657,000 light vehicles were sold in the US. In China, that number was 730,000. So, the race was not even close.

Jane Fox : 2/10/2009 9:56:15 AM

LONDON (MarketWatch) -- Troubled Swiss banking group UBS said Tuesday that it will cut another 2,200 jobs at its investment banking arm and restructure its wealth management operations as it reported a hefty 8.1 billion Swiss francs ($7 billion) fourth-quarter loss.

Jane Fox : 2/10/2009 9:55:39 AM

WASHINGTON (MarketWatch) - A new bank bailout plan to be unveiled Tuesday by the Treasury Department is set to create incentives for private sector investment into troubled banks.

However, regulatory observers worry that those incentives may not be strong enough to bring in the hedge funds, private equity companies and other investors Treasury Secretary Timothy Geithner hopes to bring to the table.

As part of the revised plan, Treasury is considering creation of a "bad bank" or "aggregator bank" that would buy illiquid mortgage securities from struggling financial institutions. According to the new approach this plan would be partly funded by some of the remaining money from an existing $700 billion Troubled Asset Relief Program fund, but the majority of the funds would come from the private sector.

Jane Fox : 2/10/2009 9:53:50 AM

Geithner: Fed and private money to buy 'legacy loans'

Jane Fox : 2/10/2009 9:53:37 AM

Geithner - New program of 'capital support' to start soon

Banks must have 'comprehensive stress tests'

I want bank 'balance sheets cleaner and stronger'

Keene Little : 2/10/2009 9:50:32 AM

Techs continue to lead the way higher and the pattern is becoming a little familiar now--selling after the market closes gets reversed in the early-morning hours and then jammed higher after the open. "Somebody" really doesn't want this market to sell off in front of the Treasury announcement of the new bailout plan.

Jeff Bailey : 2/10/2009 9:49:38 AM

VXN.X 43.48 -0.06% ...

Jeff Bailey : 2/10/2009 9:49:21 AM

Swing trade call exit partial alert! for half of the SanDisk SNDK April $10 Calls (SWQ-DB) at the bid of $2.50.

SNDK $11.60 +4.00%

Keene Little : 2/10/2009 9:48:08 AM

Stocks continue to trade essentially in the trading range of the past two days and as long as that remains true it stays potentially bullish for another push higher.

Jane Fox : 2/10/2009 9:43:04 AM

AD line is -404.

Jane Fox : 2/10/2009 9:31:20 AM

Crude bulls are trying to make a stand but certainly not the kind of stand that would impress anyone. Link

Jane Fox : 2/10/2009 9:27:22 AM

NEW YORK (MarketWatch) -- General Motors Corp. (GM) will slash 10,000 jobs, or 14% of its salaried workforce, in 2009 as part of its plan to get funding from the federal government, according to a report Tuesday in The Wall Street Journal. About 3,400 employees will lose their jobs in the U.S., most of them by May 1. Most remaining workers will take a 3% to 7% pay cut through year-end, while executives will see their paychecks trimmed by 10%, the article said.

Keene Little : 2/10/2009 9:27:19 AM

We've got a big reversal in bonds this morning as they rally strongly off yesterday's lows. Other than the recovery effort again in equity futures off their 4:00 AM lows they're looking weak this morning. But we'll have to see how the cash market does, especially if a quick drop shows equity futures holding the overnight lows (ES 851.75, which are running about 3 points less than cash).

Jane Fox : 2/10/2009 9:26:24 AM

Here is the daily chart of SPX with all the "stuff" I put on the chart last week. I have a Fib retracement bracket from all time highs to November lows. Then trendline joining important swing highs and one from the swing high made on Jan 28th at 877.

I believe resistance will come first of all from the black trendline (which it did yesterday), then the blue line, then from the 23.60% retracement area. If the bulls can overcome those levels of resistance the probability increases that support at 800 (which I call 1-800-support) will hold. Link

Jane Fox : 2/10/2009 9:12:29 AM

Here are your overnight charts. S&P (ES) and DOW (YM) made a triple bottom at their respective previous day lows. The NDX (NQ) futures they made a double bottom a little higher than its PDLs so a tad stronger overnight.

From what I can see the ON highs and lows should be very good areas of support and resistance today Link

Jane Fox : 2/10/2009 9:07:33 AM

Other than the scheduled appearances by FOMC members and Geithner we have the IBD/TIPP Economic Optimism report and the Wholesae Inventories out at 10:00.

Jane Fox : 2/10/2009 9:05:12 AM

Good morning all. We have a full day to testimonies today:

9:00 - FOMA Member Dudley
11:00 Tresury Secretary Geithner
1:00 Fed Chairman Bernanke (haven't heard from him in a while)
I am reading that Geithner is scheduled to speak at 2:30 again but I doubt he has two schedules speeches today

Keene Little : 2/10/2009 12:13:26 AM

Tuesday's pivot table: Link

Equity futures are down hard again tonight, as they were Sunday night. We'll have to see if "someone" comes to the rescue again in the early morning hours. If we start with a big gap down tomorrow morning it will clearly be bearish as it would suggest there's not going to be one more bounce up to the SPX 886 area as I showed on the end-of-day 60-min chart: Link

Ideally, from an EW pattern standpoint, I'd like to see another push higher tomorrow as I think it would give us a clean ending pattern to set up a very nice short play. Shorting into the hole tomorrow morning is not my idea of fun. We are nearing the point where we'll get downside surprises (too much bullish expectation in the market currently) so stay on your toes now.

Jeff Bailey : 2/9/2009 10:29:36 PM

Out of Office: I will be out of the office for the better part, if not all of tomorrow's trade due to a family illness.

Jeff Bailey : 2/9/2009 10:24:02 PM

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

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

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