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Jeff Bailey : 3/2/2009 4:16:39 PM

PowerShares US Dollar (UUP) $26.75 +1.02% ... closes above QRTRLY R1. Overlapping WR2/MR1 ($26.90) not tested today.

Jim Brown : 3/2/2009 4:10:51 PM

Jane, I agree. I thought it was strange but figured he was talking about some trend I was missing. If you draw an uptrend line from the 1982 low through the 1992 low you get 732 as uptrend support. I reported this in the Sunday newsletter. SPX Chart Link

Jane Fox : 3/2/2009 4:04:22 PM

Jim I'm not sure what Cashin was talking about but the SPX was not anywhere near 700 in the '80s. Link

Jim Brown : 3/2/2009 4:04:00 PM

Oil is being dragged lower by the market rather than by the fundamentals. We are getting another buying opportunity for a long term entry point for the DXO. The DXO declined to trade at support at $2.00 and struggling to hold that level. OPEC is likely to cut production again when they meet on March 15th despite what Iran said today.

Keene Little : 3/2/2009 4:00:17 PM

SPX and NDX sport a similar pattern and both are now close to the bottoms of their February down-channels. At the same time we've got potetential bullish descending wedges by drawing a trend line along the Friday and Monday lows and one from Friday afternoon's high through this afternoon's high. The bottoms of these patterns point a little lower for each and potential support around NDX 1168 and SPX 690 first thing tomorrow morning. Maybe a quick jab lower Tuesday morning followed by a reversal.

Jim Brown : 3/2/2009 4:15:21 PM

I heard Art Cashin saying that 700 is the critical support level dating back to the 1980s. At the rate the market is deteriorating we could easily close below 700 today. If we get an closing flush it could be well under 700. There appears to be no buying interest at all and that is troubling.

Jane Fox : 3/2/2009 3:52:57 PM

DOW is down more than -300 points.

Jane Fox : 3/2/2009 3:44:13 PM

Crude is down more than 10% ($4.60) today. Link

Linda Piazza : 3/2/2009 3:36:59 PM

Whether it makes any difference or not, I don't know, but I wanted to warn that a FIB bracket fitted to the SPX decline off Wednesday afternoon's high and today's low shows Friday's 30-minute closes all happening at or above what would now be the 50% retracement and at or below the 61.8% retracement until the last hour of the day on Friday. This means that consolidation was taking place about midway through the move that has so far occurred, and it's the type of consolidation band that sometimes does take place about midway through a move. What does this mean for the traders out there? Maybe nothing, but if I were short, I'd be following Keene's admonition from earlier in the day and cinching up my stops, just in case.

From my viewpoint, though, we need 30-minute closes above the 30-minute 9-ema, now at 709.36, and preferably above another potential resistance level, now at about 713.75, before I even begin to believe the short-term trend has changed. Keep those stops at appropriate levels if in bearish trades, however, just in case.

Jeff Bailey : 3/2/2009 3:05:39 PM

03:00 US Market Watch Link

Jane Fox : 3/2/2009 2:43:18 PM

Internals remain very bearish with no bullishness lurking anywhere. This is a sell the rallies environment and one, I must admit, I am getting downright sick of. I used to be a daytrader so didn?t care which way the market moved as long as it moved but nowadays I watch the daily charts more and can feel a heaviness when it is too bearish for too long. I feel it in the commentary I read, in the discussions I have with other traders, in my interactions with friends and family and I just want a little less of the doom and gloom. I am just getting tired of it all. Link

Jeff Bailey : 3/2/2009 2:23:34 PM

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

Jeff Bailey : 3/2/2009 2:06:17 PM

VIX.X 51.34 +10.76% ...

Jeff Bailey : 3/2/2009 2:05:58 PM

Swing trade sell NAKED PUT alert! ... sell one (1) of the Freeport McMoran FCX April $20 Puts (FCX-PD) at the bid of $1.00.

FCX $27.00 -11.20% ...

Keene Little : 3/2/2009 1:04:09 PM

A lunch-hour update doesn't show much hope yet for any bullish resolution out of this. By breaking below 716 SPX now has a lower target near 690-700 by the end of the day where there is a Fib projection and the bottom of its parallel down-channel from the February 9th high. What's worrisome is the breakdown in the oscillators and no sign of bullish divergence. But that's a confirming signal that I like to look for and not a predictive one. SPX 60-min chart: Link

I continue to look for the start of a bigger bounce (the 1 to 2-week choppy rally that should stay below 800) so whether it happens from here or a little lower first, stay aware that the short-term price patttern is calling for a bounce--keep dragging your stops down if short. By the same token, don't hang around in a long position with the market going against you. A 1937-1938 analog shows the potential for a very sharp and steep decline into the end of the month (which would look like never-ending capitulation).

So far it's been a relatively mild decline (if you can call SPX losing -11% in February mild) and that has had many investors holding on. It's like the frog being cooked to death by raising the temperature of the water slowly. A capitulation to the downside (I'm not saying it will happen) would have those investors bailing (at the worst time, which is typical).

Jane Fox : 3/2/2009 12:26:59 PM

DOW is now down -231 points.

Jeff Bailey : 3/2/2009 12:11:28 PM

S&P 500 Index (SPX.X) daily interval chart Link

Jeff Bailey : 3/2/2009 11:59:40 AM

VIX.X 51.77 +11.69% ...

Jeff Bailey : 3/2/2009 11:58:14 AM

S&P 500 (SPX.X) alert! 707.17 -3.79% ... QUARTERLY S1.

Jeff Bailey : 3/2/2009 11:28:31 AM

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

February CLOSED Trade Blotter at this Link

Jane Fox : 3/2/2009 11:02:30 AM

WASHINGTON (MarketWatch) -- U.S. manufacturers said their business worsened again in February for the 13th straight month, but the pace of the decline didn't accelerate as expected.

The Institute for Supply Management/ s monthly purchasing managers' index rose to 35.8% in February from 35.6% in January, the ISM reported Monday. Economists surveyed by MarketWatch were expecting the ISM to fall to 34%.

The past three months have seen the three lowest ISMs since 1982. December's ISM hit a 27-year low of 32.9%.

Readings over 50% indicate more firms are reporting improving conditions than are reporting declines.

Jane Fox : 3/2/2009 10:50:45 AM

Here are your internals, they are bearish. Link

Jane Fox : 3/2/2009 10:32:32 AM

NQ has tagged ON highs. TF may have as well but I will have to wait 20 minutes. Link

Jeff Bailey : 3/2/2009 10:19:41 AM

Will use the RXO-CE as partial hedge.

Jeff Bailey : 3/2/2009 10:19:13 AM

Swing trade short alert! ... 1/4 position in shares of Companhia Vale Do Rio Doce (RIO) at the bid of $12.14.

Jane Fox : 3/2/2009 10:15:20 AM

The VIX is certainly trying to do its part to hold up the markets but it can't do it alone. AD line is a very bearish -2250 and no matter how bullish the VIX is, an AD line that bearish will overpower it. Link

Jane Fox : 3/2/2009 10:12:29 AM

NEW YORK (MarketWatch) -- Government mortgage giant Freddie Mac said Chief Executive David Moffett will resign no later than March 13, and the company is working with the Federal Housing Finance Agency to appoint his successor.

Jane Fox : 3/2/2009 10:10:08 AM

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during January 2009 was estimated at a seasonally adjusted annual rate of $986.2 billion, 3.3 percent below the revised December estimate of $1,020.0 billion. The January figure is 9.1 percent below the January 2008 estimate of $1,085.4 billion.

Jane Fox : 3/2/2009 10:07:34 AM

Feb. ISM index better than 34.0% expected

Feb. ISM index 35.8% vs. 35.6% Jan.

Jane Fox : 3/2/2009 10:01:03 AM

Gold retraced to its 38.2% retracement level and looks like it is trying to make a swing low. If it does then I suspect it will break the $1000 resistance but if not then it makes a lower high and you have the dreaded head and shoulders pattern. A head and shoulders pattern at a significant resistance level is one bulls should take note of. The MACD however is not supporting the bearish scenario. Link

Linda Piazza : 3/2/2009 9:50:53 AM

While I'm temporarily signed in, I wanted to encourage those in MAR bear call spreads to check those spreads this morning, to see if they've narrowed enough to allow you to exit for a small pittance. Although it's hard to comprehend this possibility when markets are diving, we're long overdue for some kind of bounce. I don't know when one will occur, but it could be vicious when it does. I always choose to close my spreads and lock in profit and reduce risk when offered the possibility. I know not everyone does, but take a look at your spreads and do some thinking about whether it's something you'd like to do today, if you have the opportunity.

Jane Fox : 3/2/2009 9:47:24 AM

Crude is making it quite clear where the sellers overtake the buyers. We now wait to see if the buyers can regroup and rally this market before it breaks yearly lows. If they can and subsequently break through resistance that is one of the first indications the market is bottoming. Link

Linda Piazza : 3/2/2009 9:46:58 AM

I sometimes drop back into the Market Monitor to comment on the TED spread, a measure of credit default risk. I posted in early February to warn subscribers that the TED spread was approaching a support zone from which it sometimes bounced, usually with disastrous effects for the equities. I noted then that it sometimes did not bounce until after a retest of the support zone within a couple of weeks, with that lower-low retest coming only one week later in this case, on 2/10. I stopped back in again about a week ago to note that the TED spread had done something it hadn't done in a long time: reached a higher bounce high. The TED spread sometimes leads equities and I had been noting that support test to warn equity longs that, although the TED spread isn't a good market-timing tool, longs should be watchful in case it bounced. It did.

This morning, the TED spread, on my delayed Bloomberg quote, is 101.97, having moved back above 1.00 late last week. It's down from its day's high of 105.14, however, and it's now within a sort of choppy consolidation zone. To put everything into context, the TED spread appears to be bouncing back toward a possible kiss-goodbye test of a long-time rising trendline that it fell through early this year. So, although the short-term context warned of short-term bearishness for equities, bearish traders should now be aware that, if this is a kiss-goodbye test, the TED spread might roll down anywhere within this congestion zone or anywhere along the way up to retest that broken trendline, now crossing at about 1.45. Equity longs really don't want to see the TED spread move up to 1.45, although that of course remains a possibility.

So, very short term, the TED spread first warned of and now confirms very short-term bearishness, but those who are short the equities should be aware of the possible stickiness of this congestion zone, just in case.

This possible "stickiness" may or may not gain importance when we consider the reports still to come this morning, reports that Jane has already detailed. For whatever it's worth, my 30-minute Keltner charts showed potential downside targets and potential support on 30-minute closes at 6918 for the Dow, 722.12 for the SPX, 342.52 for the OEX, 387.05 for the Dow and 1358.14 for the Nasdaq as of the close on Friday. The downdraft this morning would have driven those dynamic lines a bit lower this morning, low enough that what we may be seeing is a test of that potential support on 30-minute closes. My charts won't reset those numbers for almost an hour, so I can't be sure how low the support was driven. This is not a guarantee that support will be found at those levels. We all know that when markets start barrelling lower, nothing on a 30-minute chart is going to stop them. However, do be aware of the possibility that potential support is being tested as the time for those important releases approaches.

Jane Fox : 3/2/2009 9:43:39 AM

The DOW is now trading under 7000, levels not since 1997. All those buy and hold investors have now lost 12 years of gains.

Jane Fox : 3/2/2009 9:37:00 AM

AD line opens with the bears roaring loudly. -1665

Jane Fox : 3/2/2009 9:36:35 AM

Overnight session has built a reverse head and shoulders with the necklines very close to previous day closes. Should be an interesting intraday session. Link

Jane Fox : 3/2/2009 9:31:15 AM

Also out at 10:00 is Construction Spending report, which is the change in the amount builders spent on construction projects.

Jane Fox : 3/2/2009 9:29:43 AM

AT 10:00ET today the ISM Manufacturing PMI will be released, an index based on surveys of purchasing managers in the manufacturing industry. Economists beleive the Feb number will not only show a slowing from the previous month but that the contraction is picking up its pace, slowing at a quicker rate.

Readings under 50 signal the manufacturing industry is contracting rather than growing. January was 35.60 and surveyed economists believe Fed will be 34.

Jane Fox : 3/2/2009 9:14:58 AM

WASHINGTON (MarketWatch) - U.S. households socked away most of the extra income they got in January from annual cost-of-living raises, boosting the personal savings rate to a 14-year high, the Commerce Department said Monday.

Disposable real incomes rose in January at the fastest pace since May as annual pay raises and cost-of-living increases took effect, the Commerce Department said. Real disposable incomes (adjusted for inflation and after taxes) increased 1.5%, despite the third straight decline in income from wages and salaries.

Meanwhile, real (inflation-adjusted) consumer spending increased 0.4% in January, the largest increase since November 2007 and only the second increase in the past eight months.

Prices increased 0.2% in January, the first increase since September. Core consumer prices - which strip out food and energy prices to get a better view of underlying inflation - rose 0.1%. Consumer prices are up 0.7% in the past year, while core prices are up 1.6%.

Keene Little : 3/2/2009 12:07:34 AM

Monday's pivot table (new monthly and weekly numbers): Link

The Wilshire 5000 index continues to be a very good index to watch since I think it has one of the cleaner price patterns and should provide some good clues for what the other indices will also do. The daily chart shows potential support near 7300, just below its November low and at the bottom of a parallel down-channel from the January high: Link

As depicted on the chart I'm expecting a bounce after a little lower and then we'll have to see what develops in order to tell us what happens next. As long as it stays below 8125 a 1 to 2-week bounce should be followed by another and final leg down. The weekly chart shows how each scenario might play out: Link

The daily chart of SPX shows the same setup--a quick move down to possible support around the 720 area before starting a bounce. On this chart I'm using a light dashed line to show the possibility for a quicker and deeper bottom if the 720 area doesn't hold. Above 800 would indicate the higher bounce is in progress (pink). Daily SPX chart: Link

The SPX 60-min chart shows it could drop slightly below 720 if it's to tag the price projection at 716.46 where the 1st and 5th waves in the move down from February 9th are to be equal: Link

I probably will not be posting much during the day Monday as I step back and try to figure out some next steps I will be taking with OIN and some other possibilities.

OI Technical Staff : 3/1/2009 9:59:59 PM

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