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Jeff Bailey : 3/4/2009 9:32:13 PM

The S&P 500 Index (SPX.X) finished up 16.54 points, or +2.37% at 712.87 Link

383 components advanced, while 57 declined and 60 were unchanged. 0 components achieved a 52-week high, while 59 achieved a new 52-week low.

Jeff Bailey : 3/4/2009 9:32:07 PM

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

All previously profiled trades except for Cell Therapeutics (CTIC) Link

Should you wake up some morning, or pop in after lunch and there appears to be a favorable error to the value of your account, check this very small position and remember the days of yesteryear.

Keene Little : 3/4/2009 4:12:23 PM

At 712 SPX held its uptrend line from yesterday afternoon. Interesting setup heading into tomorrow. Flip a coin on direction though. We'll find out soon enough.

Keene Little : 3/4/2009 4:07:15 PM

I guess the bounce is over, or at least this leg of it. The risk now, if you're long or thinking of the long side, is for a drop to a new low below yesterday's. If we've started the larger choppy bounce into mid month (and remember I mentioned that it will likely be filled with whipsaws) then we might have completed an a-wave up today to be followed by a sharp pullback (wave B)to scare out the longs and suck in some more shorts and then reverse again and spike higher (wave C). If we've started the 4th wave correction these are the ones that chop traders to pieces so be very careful right now.

Jeff Bailey : 3/4/2009 4:01:38 PM

SLV $12.75 +0.79% ...

Jeff Bailey : 3/4/2009 4:04:28 PM

Swing trade long exit alert! ... the remaining 1/8 position in shares of Coeur D' Alene Mines (CDE) at the bid of $0.6899

Jane Fox : 3/4/2009 3:43:49 PM

I think Crude has a much more exciting story though. Look at that tag of resistance. Just classic, just classic. Link

Jane Fox : 3/4/2009 3:42:54 PM

DOW is up 218 points.

Keene Little : 3/4/2009 3:42:40 PM

So far the bottom of Monday's gap has held (for ES/SPX). The bullish setup here is for a gap up tomorrow which would leave an island reversal (an island of candles on the 60-min chart would be left by itself, a bullish reversal pattern).

Jane Fox : 3/4/2009 3:40:08 PM

Well geesh the bulls were able to pull this rabbit out of the hat. I like to have all the internals telling me one story and lately it seems the AD line is the one running the show, which is different from the days when the VIX ran the show. So when the VIX turned bearish earlier today but the AD line was still bullish I was hesitant to believe the bulls were able to overcome the bearishness in the VIX but lo and behold they did. Link

Keene Little : 3/4/2009 3:19:34 PM

Good save by the bulls--the little ascending wedge has been effectively negated at this point.

Jeff Bailey : 3/4/2009 3:18:25 PM

YM 6,957 ... moves into Friday-Monday's gap lower.

Keene Little : 3/4/2009 3:12:33 PM

The worrisome thing here is the rising wedge pattern for the bounce off yesterday's low (morphed into a slightly larger one than this morning's). We just got a little throw-over so far and a drop back inside would be a sell signal. SPX 10-min chart: Link

Keene Little : 3/4/2009 3:05:00 PM

The bottom of Monday's gap down is near SPX 724 and potential resistance as well. If it makes it into the gap in the last hour I think that would be bullish.

Keene Little : 3/4/2009 3:01:39 PM

SPX might find resistance here at 720 where it's tagging the top of its parallel down-channel from the February high. It's a good start to a larger bounce but we could see a pullback before launching higher (or another leg down to a new low). SPX 60-min chart: Link

Jeff Bailey : 3/4/2009 2:53:03 PM

VIX.X alert! ... 46.14 -9.56%

Keene Little : 3/4/2009 2:32:14 PM

The stock market is holding up and SPX is challenging the 715 level. An uptrend line from yesterday afternoon is now near 709.50 so as long as that holds we could see the market press higher into the close.

Jeff Bailey : 3/4/2009 2:30:37 PM

USO Alert! $27.94 +9.88% ... takes out Thursday's high.

Jane Fox : 3/4/2009 2:29:49 PM

WASHINGTON (MarketWatch) -- Downward pressure on the economy continued through the last week of February, according to the latest anecdotal report on the economy released on Wednesday. The tentacles of the recession continued to grab other sectors of the economy - with farmers feeling the pinch from reduced global demand. Only the food and drug sectors seem recession-proof, the survey found. Real estate remained in the doldrums, the Fed said. Bank lending declined on net. There was lower demand for consumer and business loans. Credit was tight as lenders were imposing strict standards on loans. Commercial real estate loans were receiving "particular scrutiny" the report said.

Keene Little : 3/4/2009 2:29:36 PM

The daily gold chart shows it could get a little bounce back up to the 936-940 area (or higher) before heading lower again: Link . Ideally it needs to close above 900 today for that scenario to play out.

Jeff Bailey : 3/4/2009 2:21:23 PM

VIX.X 46.98 -7.75% ...

Jeff Bailey : 3/4/2009 2:20:20 PM

Swing trade put exit alert! ... the PBR-PK at the bid of $1.10.

PBR $27.21 +6.87% ...

Keene Little : 3/4/2009 2:16:45 PM

As for the shiny metal itself, I've been calling for a major selloff in gold, one that will take it down to a target near $650 (where I will be buying a boat load of it--my boat is small). But the bears have a lot of work to do. The weekly chart of the gold contract (GC, May prices currently) shows how it spiked above the top of its parallel up-channel from October and then collapsed back down. GC weekly chart: Link

That was the sell signal on the weekly chart. But there is potential support at its broken downtrend line from March 2008 at 903 (breaking today but only marginally). It's also still within the up-channel, the bottom of which is currently near 875. Its 200-dma and 50-week MA are at 858 and 868, resp. So I'd say it takes a break below 850 to declare a top is in and the next leg down is in progress.

Keene Little : 3/4/2009 2:00:38 PM

Here's a good example of why you want to check trend lines with both the log price scale and arithmetic scale, especially on longer-term charts with a big price move. I had shown a weekly chart of XAU (gold/silver ETF) a couple of weeks ago to show why I liked a short play setup for GDX (gold miners with better options). A bounce up to its broken uptrend line from October 2000 was a picture-perfect kiss goodbye setup (using the log price scale). Weekly XAU, log scale: Link

Tthe same chart with the arithmetic scale gives us a different picture. Weekly XAU, arithmetic scale: Link . We've got the exact same trend line acting as support now. Needless to say bulls want to see this trend line, using the arithmetic price scale, continue to act as support. The weekly oscillators say watch out below and in this case I believe the log scale rules. But you can see what traders are watching and a break of its recent low at 107.31 will likely trigger all kinds of stops.

Keene Little : 3/4/2009 1:24:44 PM

I will admit to knowing very little about fundamentals of one bank vs. another but after a question from Barry about a chart on Wells Fargo (WFC) I must admit to being intrigued by the idea of a long play in that stock (maybe a LEAP call). It's currently trading 9.21 and not far above the trend line along the lows since last October, near 8.00 tomorrow, and bullish divergences are showing up as it traces out a bullish descending wedge. WFC daily chart: Link

The only thing worrisome is the relative strength of WFC vs. the banking indexes, which has been declining since December. This could mean it will underperform on the way up and there could be better banks to select for a ride back up (assuming they'll take a ride back up). If the market gets a bounce into mid month and then heads lower we could see the same for WFC for a little lower within the wedge. Let the play come to you if interested otherwise let it go.

Jane Fox : 3/4/2009 1:18:53 PM

SPX needs to rally, make a swing high, retrace and then make a swing low that is a higher low (not break to a new yearly low). Then it needs to rally and break through 877 before I will believe the bulls have a chance. Link

Jeff Bailey : 3/4/2009 1:13:10 PM

dj- EX-CITI CHAIRMAN SAID TO SWAP PREFERREDS FOR COMMON

Sandy Weill, former chairman and CEO of troubled Citigroup, will participate in the company's plan to exchange much of its outstanding preferred stock for Citi common shares, someone familiar with the matter says.

C $1.16 -4.09% ...

Jeff Bailey : 3/4/2009 1:11:26 PM

dj- OPEN TO OTHER WAYS TO FUND HEALTH CARE REFORM

U.S. Treasury Secretary Timothy Geithner tells senators that the Obama administration is open to alternatives to fund its health care plan, in lieu of its proposal to slash itemized deductions for high-income taxpayers.

Jeff Bailey : 3/4/2009 1:10:03 PM

dj- SEC TO RAISE TRANSACTION FEES TO $25.70 PER $1M

With the SEC receiving fewer fees as shares trade at lower values, the SEC is raising the transaction fees it charges exchanges to $25.70 per $1 million in securities sales from the current level of $5.60.

Jeff Bailey : 3/4/2009 1:06:23 PM

01:00 Market Watch at this Link

Jane Fox : 3/4/2009 1:39:44 PM

I think all I can say about today is "Well the bulls haven?t given up yet." Link

Jeff Bailey : 3/4/2009 12:55:15 PM

SPX 707.45 +1.59% ... battles 119.1% (11/20/08 low 100% to 01/06/09 high 0%).

Jeff Bailey : 3/4/2009 12:54:04 PM

SPX 707.54 +1.55% ... battles Q S1.

Jeff Bailey : 3/4/2009 12:53:15 PM

XLF $6.78 -2.86% ... notable new 52-weeker

Jeff Bailey : 3/4/2009 12:36:48 PM

VIX.X 47.35 ... sits on overlapping WKLY Pivot (47.14) and MONTHLY Pivot (46.76).

Keene Little : 3/4/2009 12:32:35 PM

The SPX closed at 735, the VIX closed at 46. We are now below the November lows where the VIX was north of 80. Shouldn't the VIX be around 80? Or is it telling us there is not enough fear in the market? The same is true of VXO, VXN, QQV etc.

Steve has the same exact question I and others have. A look at the VIX daily chart shows the lack of fear as the market makes 12 to 13-year lows: Link . One look at this chart and I want to run for cover and not even think about the long side of the stock market.

After breaking its downtrend line from November VIX came back down for a retest last week and is so far holding above its 50-dma--both bullish for VIX. It looks like it's going to head higher and that of course would be bearish for stocks.

Here's the caveat--for the 5th wave down in the stock market (the leg down from the January high) I've been expecting to see a lower high for VIX. The 5th wave is typically weaker than the 3rd wave (the stock market drop from May to November) and therefore a positive divergence with VIX (with a lower high) is something I would expect to see. However I must admit this lack of fear here is disturbing and a potential spike in fear (reflected in VIX spike higher) may be something the market needs to get the capitulation flush and finish the decline.

A small bounce correction in the stock market into mid month followed by a decline to new lows just might give us that spike in VIX but that's just a guess at this point. For now we have our warning that things could get a lot worse and in a hurry.

Jane Fox : 3/4/2009 12:25:29 PM

Here are the overnight charts. Looks like TF (Russell 2000) is lagging but it is on a 20 minute delay so I suspect it has broken it ON highs as well. Link

Jeff Bailey : 3/4/2009 12:23:04 PM

SPX 708.56

Jeff Bailey : 3/4/2009 12:22:50 PM

BIX.X alert! 47.55 -6.08% ... probes WKLY S1 first time this week.

Jeff Bailey : 3/4/2009 11:52:39 AM

USO $27.09

Jeff Bailey : 3/4/2009 11:52:04 AM

Swing trade call exit alert! ... the UBO-DE at the bid of $1.15.

Jeff Bailey : 3/4/2009 11:47:02 AM

VIX.X 47.31 -7.10% ...

Jeff Bailey : 3/4/2009 11:46:48 AM

Swing trade NAKED Put buy back alert! ... for the PBR Mar $25 Put (PBR-OE) at the offer of $0.85.

PBR $27.70 +9.15% ...

Keene Little : 3/4/2009 11:28:31 AM

SPX stalled right at the top of its potential wedge so we know what the bulls need to do now--drive it above 715 and keep it above (to break the wedge, which would be a bullish signal). Above 715 would also be a break of resistance at the bounce highs the previous two days. In the meantime the risk is for another sharp decline below yesterday's low.

Jeff Bailey : 3/4/2009 11:07:32 AM

RIO $13.63 +11.24% ...

Jeff Bailey : 3/4/2009 11:05:20 AM

Freeport McMoran (FCX) $32.24 +13.48% ... alert! (see prior MM positings).

Jane Fox : 3/4/2009 11:04:46 AM

Crude is up +3.10. Link

Keene Little : 3/4/2009 11:03:28 AM

One caution about the upside--drawing a trend line along the two highs from yesterday afternoon and this morning and then from yesterday afternoon's low through this morning's low gives us a little ascending wedge, the top of which is currently near SPX 713. If the market pushes a little higher but stalls around 713-714 be careful of a possible failure since it would be followed by a quick decline below yesterday's low.

Jane Fox : 3/4/2009 10:57:56 AM

BOSTON (MarketWatch) -- Toll Brothers Inc. reported a narrower first-quarter loss Wednesday as the luxury home builder booked smaller write-downs on land and inventory holdings, but management wouldn't offer an earnings outlook for the rest of fiscal 2009, citing ongoing market uncertainty.

Jane Fox : 3/4/2009 10:54:12 AM

CHICAGO (MarketWatch) -- Twenty percent of all U.S. residential properties that had a mortgage on them were underwater at the end of December, with mortgage debt greater than what the homes were worth, according to a report released Wednesday by First American CoreLogic.

Jeff Bailey : 3/4/2009 10:49:54 AM

HMO.X 743.70 +4.05% ...

Jeff Bailey : 3/4/2009 10:47:53 AM

VIX.X 47.90 -5.94% ...

Jane Fox : 3/4/2009 10:47:42 AM

CHICAGO (MarketWatch) -- Blockbuster Inc. shares doubled Wednesday after the company denied a report that it is considering a bankruptcy filing.

Shares of the video-rental chain were recently up 23 cents at 45 cents. The stock had dropped 77% after a published report said the company was looking into a possible bankruptcy-law filing.

Blockbuster has hired the law firm of Kirkland & Ellis LLP to assist it in financing efforts, according to Blockbuster spokeswoman Karen Raskopf.

The Dallas company has said it has the cash to fund debt through 2009 if necessary, but is trying to secure refinancing to make a debt payment due in August, Raskopf said.

Jeff Bailey : 3/4/2009 10:47:40 AM

Swing trade put exit alert! ... the one (1) Cigna Corp. CI July $15 Put (CI-SC) at the bid of $3.50.

CI $13.83 +3.67% ...

Jane Fox : 3/4/2009 10:40:43 AM

TRIN is a bearish 1.36

Jane Fox : 3/4/2009 10:38:22 AM

WASHINGTON (MarketWatch) -- U.S. nonmanufacturing sectors contracted at a faster pace in February, according to a Wednesday report from the Institute for Supply Management, as the global slowdown continued to take its toll.

The ISM non-manufacturing index fell to 41.6% in February from 42.9% in January as survey respondents' comments reflected concern about financing and general weak economic conditions.

Economists polled by MarketWatch were looking for a February result of 41%. Readings below 50% indicate that more firms are contracting than expanding.

Earlier this week, a separate report from ISM showed that 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. Economists surveyed by MarketWatch were expecting the ISM to fall to 34%.

Keene Little : 3/4/2009 10:33:54 AM

So far we've got a 3-wave pullback and ES 698 held. A move to a new daily high would be bullish. A drop below 698 now could be followed by strong selling.

Jeff Bailey : 3/4/2009 10:25:16 AM

FCX $30.76 +8.34% ....

Jeff Bailey : 3/4/2009 10:24:53 AM

VIX.X 48.43 -4.90% ...

Jeff Bailey : 3/4/2009 10:24:32 AM

Swing trade call exit alert! ... for the one (1) Companhia Vale Do Rio Doce RIO Mar $12 Call (RXO-CE) at the bid of $1.65.

RIO $13.20 +7.57% ...

Jeff Bailey : 3/4/2009 10:16:12 AM

$VXN.X 46.64 -8.34% ...

Jeff Bailey : 3/4/2009 10:15:55 AM

Swing trade call exit alert! for the one (1) SanDisk SNDK April $10 Call (SWQ-DB) at the bid of $0.54.

SNDK $8.00 -0.62% ...

Jeff Bailey : 3/4/2009 10:13:21 AM

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

Note alert!: Today will be my last day in the MM and I will be "CLOSING" all positions (i.e. will not longer be offering guidance, updates, etc.). However, for those that will want to trade and manage on their own, I've updated STOPS.

Jane Fox : 3/4/2009 10:02:40 AM

And here we have Crude bulls making a stand. Whoa!!!! Are we actually seeing some bullishness now? If Feb 26th swing high breaks AND we see MACD above 0 I will say Yup we are. Link

Jane Fox : 3/4/2009 9:59:55 AM

Dang it all anyways bulls, the VIX is making new daily highs and ES is responding by making new daily lows. AD line is still a very bullish +1581 but I have seen this number disintegrate to under 0 in a few hours before so I'm not holding my breath and not playing the long side. I need all my ducks in a row to believe the bulls are able to maintain any kind of strength. Now if it were reversed and I saw the bulls trying to make a stand against the bears, I would believe they didn?t have a chance.

Keene Little : 3/4/2009 9:52:17 AM

The overnight rally in futures looks like an impulsive 5-wave advance which should be telling us the low is in for now. It also means we should get a pullback to correct the overnight rally. For ES a typical pullback would be down to about 696-700 so only about a 10 to 15-point drop from this morning's high. Bulls would like to see no more than 50% gap closure and for ES that's near 698. Below that and the odds improve for complete gap closure.

Jane Fox : 3/4/2009 9:49:09 AM

Internals are very bullish but the TRIN is 0.94. Remember the TRIN yestday? Yesterday's ranges was 0.42 to 0.72 and it closed at 0.55. Now if you were only looking at the TRIN for bullishness or bearishness you would have had it wrong thinking yesterday was a lot more bullish than today.

Jane Fox : 3/4/2009 9:36:29 AM

AD line opens a very bullish +1626

Jane Fox : 3/4/2009 9:36:01 AM

Sorry for my late start this morning. I just Plain Jane slept in. opps.

Overnight markets were very bullish and it looks like it is carrying over into the intraday session. Link

Jane Fox : 3/4/2009 9:34:02 AM

WASHINGTON (MarketWatch) -- U.S. private-sector firms cut 697,000 jobs in February, according to the ADP employment index, which is based on millions of company payroll records. The ADP index released Wednesday showed the goods-producing sector shed 338,000 jobs, the 26th consecutive decline. The services sector lost 359,000 jobs. The index does not include government jobs. Adding in the typical 12,000 jobs gained in the public sector, the ADP report points to nonfarm payrolls falling by 685,000, compared with the MarketWatch consensus of 640,000.

Linda Piazza : 3/4/2009 9:32:23 AM

I've been dropping back into the Market Monitor every now and then lately to comment on the TED spread. I wanted to update this morning. Since its test and then retest (with a lower low) of an important support zone on 2/03 and 2/10, the TED spread has been climbing, having reached above 1.00, also above a previous interim peak high. Reaching above that previous peak confirmed the bounce in the TED spread, a bad sign for equities.

Now the TED spread has been pulling back a bit the last couple of days, although only minimally. The delayed Bloomberg quote is currently 101.28. A one-month chart shows rising trendline and possible horizontal support coinciding at about 0.9799, so equity bulls would like to see the TED spread crater beneath that support.

For those not familiar with the TED spread, it's a measure of credit default risk. It's only one measure, and some prefer other spreads to watch this risk. In general, equities tend to move in opposition to the TED spread, with equity prices cratering when the TED spread is rising (the spread widening). It's not a great market-timing tool, but it does sometimes tend to lead or confirm equity movements, so those hoping for at least some minimum confirmation of an equity bounce would like to see the TED spread end the day today below 0.9799. Don't use this as a trading tool, but do use it as background information.

Keene Little : 3/4/2009 9:24:52 AM

By the looks of the overnight futures rally in equities I'd say we've got our low for now. The big question for this morning is how much of a pullback we'll get (and whether or not we'll get gap closure). The one thing to be cautious about over the next several days, assuming we will get the multi-day rally, is that it will likely be very choppy and full of whipsaws. This is a scared market right now.

Keene Little : 3/4/2009 1:04:23 AM

Another interesting looking chart is the DOW and the potential for a little lower to tag support at the bottom of a parallel down-channel for price action since last October, currently near 6550 (a half day's run for tomorrow maybe?). As its daily chart shows, it would be ideal, from an EW perspective, to see a bounce into mid March followed by one more leg down into the end of March to finish its decline. Link

Keene Little : 3/4/2009 12:43:52 AM

Wednesday's pivot table: Link

We've been able to work the kinks out a few things and I'm stepping back into the game with you. Sorry for my brief absence.

SPX dropped into the close after making only a 3-wave bounce off today's mid-day low. That's a corrective move but I don't know yet if it's merely the start of a larger correction (the 1 to 2-week choppy rally into mid month) or if it means we'll drop lower tomorrow. The after-hours selloff in futures had me thinking we'll get the leg lower before starting the bigger bounce. But now futures are up so who knows what the morning will bring.

I keep warning that the bottom is near so a rally on Wednesday would not surprise me (pink on the 60-min chart). Otherwise a push lower could target 677, the next downside Fib projection for the leg down from February 26th. This level coincides tomorrow, about mid day, with the bottom of the parallel down-channel from the February high. SPX 60-min chart: Link

I think a push back above Tuesday afternoon's high near 710 would be the signal that the bottom is in so use that to cover any March put options as we could see a consolidation/bounce into opex from there. The daily chart shows a bounce back up to the top of a new parallel down-channel for the decline from January--potentially up to the 770 area by opex Friday--before tipping back over and heading for a final low for the year into the end of the month. SPX daily chart: Link

There is the potential that a bounce from here could make it higher than the 770 area (pink on the daily chart) but for now I consider that to be a much lower probability. First let's just get a bounce started.

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

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