AheadoftheNews.com

WASHINGTON (Reuters) - The White House on Friday said it was "premature" to discuss possible new steps to address the mortgage crisis and declined to comment on reports that officials are working on a deal with lenders to freeze interest rates on some loans.

That gave us a bit of selling in the closing hour.

Closing hour:

More selling and ES pretty much closes the gap (1473). Buyers step in once again at NQ 20 dma (2080). But being flat earlier at 2100 was not a bad idea.

PM update (2):

Bonds can't get much of a bid, and equities should hold on to the lows. Numerous attempts to drive NQ below yesterday's lows have failed. This market wants to go higher. It might have a few hiccups, but we are far from done. If NQ breaks 2085, the trend flips to down. For now, it's still in the bull camp.

There is lots of noise around SPX 200 dma, so conservative traders should book profits and wait to see if we do get a close above 1484. There's always another day. If we do not get an SPX close above 1484, ES will go down and close the 1471.50 gap on Monday. We are coming up against the last hour on a Friday with techs and semis down. I would be flat.

PM Update:

SPX battle at 1484, 200 dma. For ES, that level is 1486, which is also 50%. Given the strong AD lines and financials, SPX should close above 1484. Otheriwse, this rally is in trouble. Watch those bonds, they need to stay negative.

Pre-open:

Big move in the futures, NQ testing its 50 dma, near 2132. It's buy the dips. Support will be 2114, 2111 and 2105. There is probably an opening short, but it's just a trade. The trend is clearly up as shorts scramble to cover. ISE was very low yesterday.

Keep in mind that this is also the end of the month with lots of window dressing and rotation into stocks that will look good next quarter. It could be a choppy day to trade once the opening moves are done.

There is really no good news out there, other than a priced in rate cut, so at some point we should get a pullback. Just be careful of standing in the way of this freight train when it decides to go forward. If you are not long, be patient and let it come to you.

WASHINGTON -- The Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze interest rates on certain troubled subprime home loans, according to people familiar with the negotiations.

Morning update;

Buyers hold on to NQ 20 dma and overnight lows (2087) and we definitely have a change in trend. A few days ago, a negative start like today would have meant much more selling. If we should lose 2087, look for 2075. Resistance will be 2104.75. Weekly R2 is 2111 if things get really wild.

Pre-open:

Sears misses (does anyone still shop there anyawy?) and futures are down. Bonds are bidding, so expect lower lows. Watch NQ 2074.75 support if overnight lows break (2085.75).

Clsoing hour:

NQ closes the early November gap at 2104.50. What a day. Almost 80 points for NQ, a little overdone, but with all that negativity a violent rally was in the making.

PM update:

The slow grind updward continues. Shorting this is uselesss, at leats for now. This is not one of those frantic whipsaw days, it's steady volume buying. Like yesterday, all key sectors are up.

Investor intelligence latest reading has bulls drop to 47.3 and bears moved up to 29, confirming form a contrarian point of vue that this rally could have further to go. ISE at 139 shows disbelief, once again. Shorts just don't get it. You need to respect this turn of events as long as NQ holds 2170/2174.

Morning update:

Don't say I did not warn shorts. We are due for a bit of a pullback, but do not stand in front of this train. NQ broke out above 2074.50, and that is setting up the 20 dma at 2094.

Pre-open:

8:30U.S. durable-goods orders fall 3 months in a row
8:30U.S. Oct. computer orders fall 8.4%, most in a year
8:30U.S. Oct. durable-goods orders ex-defense fall 0.9%
8:30U.S. Oct. durable-goods shipments rise 0.6%
8:30U.S. Oct. durable-goods orders ex-transportation down 0.7%

No drop from futures, but we should see some kind of pull back at the open. NQ support would be 2049, 2045.75 and 2040 and 2032. Bonds keep selling, so equities hold the bid.

Overnight:

Another big session for bulls as bonds drop further. Durable goods at 8:30. NQ support is now 2032, weekly pivot. Currently, not far from my 2072 target, at 2066.

Nov. 27 (Bloomberg) -- Online sales rose to a record $733 million yesterday as U.S. consumers returned to work after Thanksgiving and continued holiday shopping online.

Internet retail purchases increased 21 percent, with shoppers favoring Amazon.com Inc., Wal-Mart Stores Inc. and Target Corp., Reston, Virginia-based ComScore Inc. said today in a statement.

The slack in brick and mortar is being picked up by online purchases.
Wells Fargo hits us with more bad news on housing. It's going to be a volatile week. Again, watch bonds. Many traders are getting too complicated about this.

Bulls pulled it off. NQ manages a close above the weekly pivot (2032) and we could see R1 at 2070 sometime this week. But the most important victory was the SPX bounce at yesterday's 20 month moving average close (1407). However, until the DOW clears 13026, we could see some defensive plays. But I am nitpicking, we had a broad based rally (semis, banks, transports, retail, housing) and as I warned last night, shorts could be in for some pain. We still have many disbelievers out there, that can only help. I'm not saying to throw everything at this rally, there will be lots of swings, but the worst could be over for now. Watch those bonds for any sign of flight to quality and stick with technology if long. Support levels for NQ are: 2032, 2022, 2020.75, 2015, 2009.25 and 2004.50. Resistance is 2034.75, 2045.75 and 2053.50. A breakout occurs above 2074.50, a breakdown below 1989.50. Respect these numbers.

Noon update:

Bulls push NQ back above weekly pivot and if they hold that (2032), this could be quite a rally. The DOW is back above 12900. What I like about this bounce is that the AD lines are slowly building as if climbing a wall of worry. Not many believers out there and that is bullish. What I don't like about this rally is the TRIN at 1 and the GOOG failure at 676.
Target for NQ would be 2072 if we hold 2032. Watch TNX 4% for signs of bond selling abating.

Morning update:

Gaps get closed on the consumer confidence numbers, but we are seeing a bounce from there (NQ 2000 and ES 1409.25). Semis, banks and retailers are all in the green. Transports are up due to lower oil. This could be one reversal the bears do not win. NQ needs to hold 2004.25 on this bounce.

Nov. 27 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, will receive a $7.5 billion cash infusion from Abu Dhabi to replenish capital after record mortgage losses wiped out almost half its market value.

Now if someone could come and help some of the folks who took out these lousy loans, we might actually get out of this mess.

Watch ES 1417.50 resistance, but above all bonds. We have seen many of these rallies fail before, so there will be nervous traders.

The one concern is the action in GOOG. It closed the early November gap at 693 and promptly retreated. Bulls want to see it get abck above 676 and stay there.

Overnight session upadte (2):

We have a monster rally in the futures, only three hours into the session. ES is up 15 points, YM 102 and NQ 14.75. It all started with a bond drop, see my first post for the overnight session. If you acted then, NQ was at 1996 and ES at 1408. Whether or not this holds, it is going to shake out some bears.

The Bullish Percentage Index for NDX (BPNDX) has reached levels where shorts need to pay attention. At new lows for 2007, it's not quite as low as the 2006 number, but at 36 we are at reversal levels.

The COMP BPI is at the lowest level in three years.

Yes, we can go lower, but you have to ask yourself if it is worth panicking like the herd down here. Risk below 1987 for NDX is probably a very quick flush down to 1971 and 1965. The 200 dma is at 1946. But the way bonds are selling overnight, we might not get there. In conclusion, if short, you need to understand that we can get a very powerful rally any day.

Overnight session:

Bonds have gotten way ahead of themselves. In an interesting twits, ZB (30 year) has just turned negative before ZN (10 year), something of a change. ES caught a bid on that move. Are bonds starting to reverse course? We will soon find out. Obviously, that would mean a more sustainable equity rally.

SPX closed below the 20 month moving average (1407.94). Bulls need to rectify this situation quickly. On the other hand, the two major rallies since 2006 started at the 20 month MA. There is still hope, but again, bulls cannot drag their feet much longer.

The daily VIX is not confirming the new daily lows by SPX. As daytraders, we often use this tool intraday, the question remains whether or ot it has toom much significance on the daily. I think it does.

Closing hour:

NQ and ES close last week's gaps (2005 and 1417.75). Bulls must hold these levels at the close.

Closing hour:

So much for that. Bonds are hitting new highs and yields are now near some 2005 levels. A little overdone, but you can't argue with the market. Are we headed for a capitulation move?

PM Update:

TNX hits 3.89% which could be supportive of equities going into the close, even though we got hit with a rough sell program on the YM loss of 13K. NQ needs to hold 2027.75.

Pre-open:

The bloom has faded little on the YM drop below 13K, but NQ holds weekly pivot at 2032. Resistance is the overnight high, which is also the 10 day ema (2049).There is no economic news on the calendar so traders will key off bonds and oil prices. TNX just lost 4% and that is giving equties a pause. Support below is 3.95. We have consumer confidence tomorrow, so any rally will probably find some sellers. We will see how the AD lines stack up.

Overnight session:

Trading started almost two hours ago and ES has already closed the November 20th gap at 1447. If buyers keep this up, we could be in for a nice pop higher tomorrow. Oil is still a problem, at 98.70.

NQ will need to see a cross of the 5 dma above its 10 dma in order to put any faith in a rally. Currently 2029/2035. But right now, I would not be short this market.

Nov. 24 (Bloomberg) -- U.S. consumers spent $10.3 billion on holiday purchases yesterday, an 8.3 percent increase from last year, after retailers promoted electronics and toys to woo shoppers.
Consumers remained resilient and proved they were willing to spend even with oil prices rising and other economic pressures, ShopperTrak RCT Corp. said today in a statement. The day after Thanksgiving, dubbed Black Friday, typically accounts for between 4.5 percent and 5 percent of all holiday sales, the company said.

According to The Wall Street Journal, the iShares Russell 2000 Index is the most heavily shorted ticker in the U.S. markets -- by a huge margin. It's been that way since the summer, when, again according to the Journal, short positions were "at record levels."
There are more than 255 million shares shorted of the small-cap exchange-traded fund. In second place is the S&P-tracking SPDRs, with 250 million shares shorted, followed by Ford, the Nasdaq 100-tracking Cubes, Level 3 Communications, and Countrywide Financial. Intel (Nasdaq: INTC), Yahoo! (Nasdaq: YHOO), and Washington Mutual (NYSE: WM) make the top 20, too.

Has anyone forgotten the January effect and how it has been coming earlier every year? Small caps might have a big upside surprise for those heavily short.
Another set up for an equity rally is bonds. They are way overbought and yields at 4% (and below) might just be the ticket.

Good day for bulls on this Black Friday. Last year, this very same day marked the high for techs. There is a chance we will do just the opposite this year and drive NQ higher. Support is now 2016.50, resistance 2028.
A close for ES above 1433.25 would be welcome news for bulls. ES has a gap to close at 1448.
Keep in mind that Globex will close at 1:15 eastern.

Thanksgiving abbreviated Globex session:

NQ is up 10.75, stalling at 2016.50 resistance (old gap open from last week). ES is up 8. QM (oil) is down at 96.55.

HAMBURG (Reuters) - Daimler AG Chief Executive Dieter Zetsche does not expect the U.S. economy to contract as a result of high oil prices and the real estate crisis.
"I personally do not anticipate a recession in the USA, rather a reduction in growth," Zetsche told reporters in Hamburg on Wednesday evening, adding that the softer demand would impact the U.S. car market.

Maybe the sell-side hysterics fueled by hedge fund liquidations will abate next week.

It's almost un-American. They keep whacking the markets until the mashed potatoes are served.
If there was any doubt as to the finality of the QQQQ/NDX gap close from last week, it was laid to rest today. Support below that would be 48.47. Note that the 20 dma is now a whopping 6% away. That turkey is a little overdone if you ask me. Let's hope Black Friday delivers and we cleared most of the cobwebs.


The DOW, on the other hand, closed below 12800, which is not just a cute round number, it is also the all important 61.8% level of 2007. Not only that, we broke trendline support. Bulls need to wake up and fast.

Technology will need good news from AAPL sales on Friday and DELL earnings next week. It's lined up for a big relief rally, but the DOW chart is getting scary. The good news is that there has only been bad news. It's bound to change at some point.

Lots of press coverage on today's DOW Theory sell signal. It has a good track record, although Russell in recent years doesn't. The caveat I would have is that the TRAN's underperformance can be linked to a year of mostly record high oil prices. DT or not, it is bearish for the DOW to close below 61.8%.
This market feels like a bear market, I didn't need the DOW theory to tell me that late in the game. But remember that bear market rallies, particularly around this time of the year, can be powerful and last more than a day or two. SPX only has a few more trading days left this month, and my preferred indicator, the 10 month moving average, is very far away, at 1476. It will take a massive effort by bulls to regain that level at the close of November and it does look a little hopeless. But it ain't over yet. We are all very curious to see how this weekend's shopping numbers poll.

Overnight:

Things are getting very heavy as oil above 98 has sent shivers across the board. NQ needs to hold 2014. Vulme is light, so prices are getting moved around a lot. Be careful.

Wild session, but in the end we had what could be a key reversal day. QQQQ/NDX went down and pretty much closed last week's gap. Still a very tough environment, but the buy orders were lined up and shorts scrambled to get out of the way.
ISE closed at 107 (equity), another plus for the bulls as pessimism keeps mounting. As noted earlier, the RUT successfully tested the August lows.
Consumer sentiment and leading indicators tomorrow at 10. More volatility.
Oil at 98 is a major negative, hopefully EIA inventories at 10:30 will help temper this surge.

NQ traders, support is now 2028, 2016.75, 2014 and 1996. ES has clear cut resistance at 1447.50.

PM update (2):

Oil hits 97. That could be why we sold off. No other news. FOMC at 2PM.

RUT does a double bottom off August lows. That could have been the plan all along.

Noon update:

Another failed rally. Book it when you can, it seems. ES needs to hold 1437.50. This might be a head fake to the downside, so be careful if shorting this. The path of maximum frustration could be to end up with a rally that holds. The key for bulls will be for ES to end up with a higher low today. NQ already did that yesterday.
I'll be out for the rest of the day, be safe and always use stops.

Open:

We get a nice little rally after ES holds last week's lows of 1437.50 right at the opening bell. Resistance will be 1453, 5 dma. For NQ, it's the 10 dma at 2062. The only problem for bulls is the continued weakness in the financials. SOX, HGX and RLX are up.
YM traders want to see CAT hold above 69.07.

HPQ delivers and we have a bit of a tech rally after hours. For ES, watch last week's low at 1437.25, and NQ the 2035.25 level, 50% August rally on the continuous contract (#F for e-signal and 6.0 Qcharts). We are due for a real bounce and if housing starts are not as bad as forecast, it could have some legs. Resistance will be the 10 dma's. Don't stay married, if we are in a bear market, these rallies won't last.

Am I the only one that noticed the COMP gap close (2584) from last week/ snap rally? In any case, it made me hit NQ long at lows.

PM update (2);

SPX tags 1432 and some, but finds support there (Aug 28th low, see yesterday's wrap). Bulls need to hold this level at the close.
As for bonds, unless stocks completely fall apart, they have gotten way ahead of themselves. The 30 year is at 4.48% and the ten year at 4.07%. Stocks will become attractive once again, but it is definitely scary down here. Internals are very bearish, but keep in mind that we have HPQ after the close.

PM update:

Yields on the ten year hit 4.1%, the 1998 low. This could be supportive of an equity rally very soon. ZB (30 year futures) hit 116, a key fib level of resistance. I really doubt the ten year is going below 4%. There is always the chance of a crash, but unlikely the week of Thanksgiving.

Open:

Sellers are hitting it. If ES loses 1447.50, the risk is to 1435, or SPX 1432. VIX and VXN are not confirming the new lows, so it's a little odd.

ISE equity only has the lowest close since March of this year, indicating that the short/bear trade is getting way too crowded.

ES (SPX futures) August 28th low is now critical support at 1447.50. The chart is pretty clear, any break below will set up the same test on the continuous contract at 1434 (cash SPX would be at 1432). Resistance is 1462, interim support is 1455. Bulls will need a close above the 10 dma to regain control, something which has not occurred the entire month. We have not seen a November like this since 2000. If that year is any guide, bulls only regained control the first week of December, but the selling resumed mid-December.

In 2000, the bear market technically kicked when SPX closed below its 10 monthly moving average in September, followed by another close below that level in October. SPX current 10 monthly is at 1480, so a close below that in November could be a very serious red flag.

Nov. 18 (Bloomberg) -- The falling U.S. dollar's effect on oil revenues overshadowed Saudi Arabia's promises to fight global warming at this weekend's OPEC summit in Riyadh.
Saudi Arabia, considering a revaluation of the riyal against the dollar, had to fight off an attempt by Iran and Venezuela to get the group to discuss pricing oil in different currencies. Hosting the summit, King Abdullah committed $300 million to research climate change, while OPEC leaders pledged to cut emissions from oil and gas production.
The dollar's 10 percent decline this year has cut the buying power of revenue from record oil prices above $90 a barrel. A further drop may harden OPEC's reluctance to raise supply in a bid to ease prices. Ministers at the summit said the oil market was well-supplied and recent gains were due to speculation and beyond the group's control.

As long as the dollar stays this weak, oil will not drop significantly. I don't see how the Feds can even consider further rate cuts. The best help the American consumer can get is a drop in gas/heating oil prices, and cutting another 25 basis points would do more harm than good. After all, .25% will not do much for the average borrower, but a continued dollar plunge will definitely drive oil above 100 a barrel and that would be a disaster for the consumer.

Interesting interview on Globalization, recession and subprime with a nobel prize winner: link.

PM Update:

QQQQ 50 pin, holding prices in a range. There is still a danger of a closing sell-off, so traders should be careful, but as long as ES holds 1447, the worst should be over. Keep in mind that a Monday morning gap down is also a possible scenario. In other words, be patient.

Noon update:

Lots of noise, but pessimism has grown to levels that could set up a nice Thanskgiving rally. ISE currently at 82, a very low level. The VIX, of course, is definitely ready for a drop. If you want to buy calls, take them at least out to January, as the vol. drop on Dec will eat up any profits.

ES held an important tets at 1447.50.

I like DELL here, holding its 200 ema at 26.44.

SAN FRANCISCO (Reuters) - Starbucks Corp on Thursday said that for the first quarter in its history, the number of visits to its established U.S. stores fell as economic worries and two recent price hikes spooked customers, sending shares nearly 9 percent lower.

I think this is a significant story. Whatever obligatory year-end rally we get could very well be followed by heavy January selling as Q4 fears materialize.

Watch NQ 2037 resistance and 2016.50 support.

Morning update:

Bond bid and ES tests 5 dma and S1 at 1466 (see yesterday's wrap). As long as this holds, there will be no major catastrophy. It looks like a QQQQ pin as close as possible to 50, which has 350K call open interest, but it would also mean call writers covering if bulls can push above 50.50. Very choppy day. Semis are up, financials are down.
VXI and VXN are in the lower ranges of the day and that could be supportive.

Nov. 15 (Bloomberg) -- U.S. inflation last month continued to accelerate at a pace that may limit the Federal Reserve's room to cut interest rates in 2008.
Consumer prices rose 0.3 percent in October, the Labor Department said today in Washington, matching economists' forecasts. Prices were 3.5 percent higher than a year earlier, the biggest 12-month increase since August 2006.

The next big play is short long bonds.

Phil. Fed at 12.

Morning update:

We are getting a pullback. ES is testing 1486, with a gap close at 1483.25 if that fails. Semis are down, banks and retail are down, this could turn into a negative day, so be careful. SPX once again finds resistance at 1490. NQ did not quite get to 2105, topping out at 2101.75, which is the July high. Remember that Wednesday op-ex can be very choppy.

Pre-open:

Another big gap on the upside. Watch that NQ 2105 level. This is Wednesday op-ex, so we might see some backing and filling at some point. If NQ breaks out above 2105, next stop is the 50 dma at 2129. Support is 2074, 2067 and 2060.
ES has the 38.2% level at 1494.25 to contend with.

Big, big day for bulls. But the sizes of these candles, both up or down, most likely indicate that we are in the blow-off stages of the bull market. The problem is that it can last weeks or months. But it is becoming increasingly challenging and dangerous. Start raising cash on rallies.

NQ has a gap to fill between 2072 and 2105, which would be close to QQQQ 52.

PM update:

If NQ breaks above 2051.75, next resistance would be 2062.50, Sep. 4th high. Bulls are in complete control, but the week is not over. For now, it seems they want to pin QQQQ 50 and NDX 2050 above.

Morning update:

Big rally, as in bear market rally, or resumption of trend? In any case, don't fight this tape. The gap below is huge, so we could come down there, but it might not be today. Watch ES 1462, 61.8%.

For all the wackos out there who still dispute man's effect on global warming, this is a great rebuttal using actual scientific facts: link. At least, we have a great Gov. here in California who is on top of it.

Pre-open:

Techs are back. NQ pushes up above 2006.50. The gap is pretty big, so expect a retrace ahead of the pending home sales, but the bullish bias should hold today given the extremely oversold level. Resistance will be 2020.50.

Overnight:

Nov. 13 (Bloomberg) -- The yen dropped against all 16 of the most-active currencies on speculation Bank of Japan Governor Toshihiko Fukui will signal plans to leave interest rates unchanged to support economic growth.

That's giving futures a slight bid in the early overnight session.

Closing hour:

COMP needs to hold 2590, 200 ema, on a closing basis.
SPX September lows are at 1439.29. That needs to hold as well.

PM update:

More selling as NQ enters the old gap and will probably try and close it at 2006.50, or close. That should hold, AD lines are not that bad. That can change, of course, but you have to start thinking we are close to some kind of bottom, even if temporary.

Noon update:

The overnight lows held, and that is reassuring for bulls. Now they need more negative sentiment in order to build the foundation for a real rally. We will have to check the closing ISE numbers. For now, this is just an oversold bounce, but bears should be careful as NDX sits more than 6% away from its 20 dma. That is an extreme level and a bounce to the 2100 level is a definite possibility. AAPL and GOOG need to go green, though.
Note the failure of the RUT at its 5 dma (781/782). I like small caps going into December, the question will be from where. A close above 782 would be bullish. For now, it's still up for grabs.