AheadoftheNews.com

QQQQ update:

2008-09-30T20:03:00.003-04:00

Nice rebound today on average volume for the month (moving average on volume bars is 30 day), with a stall at 61.8% of yesterday (39.16). Above that, resistance is 39.50 and 39.63. That 2006 gap below is still open. We need another quick rally to get out of this huge inside day before bulls can breathe easier. This is still a very dangerous environment. There were some shoppers today, judging from the ISE equity, so it was not only short covering. NDX will need to hold that 1579/1580 mark noted earlier, resistance now turned support.
Today was also the last day of the quarter, adding a twist to the bounce, since right after cash close, futures dropped.
There is no telling where this will go, but banking on a lasting bottom seems a little premature. One more low to close that August 2006 gap at 36.77 followed by a sharp key reversal day would be more to my liking.

2008-09-30T14:32:00.003-04:00

PM update(2):

NDX tags 1579.81, right at the resistance level I outlined earlier. Now we find out what bulls are made of. If you are going to initiate a short today, this is the spot (NQ 1586). Stops must be tight, though. I will update after the close.

2008-09-30T13:34:00.003-04:00

PM update:

The rally holds as NQ/NDX/QQQQ push above weekly S2's. Next resistance is 1579/1580 for NDX (August 2006 monthly close). Always watch the leaders in futures on day like today, in this case NQ. VIX drops 40. ES 1158.50 is also key.

2008-09-30T10:56:00.008-04:00

Morning update:

NQ does find resistance at weekly S2 (1564). ES only makes a .50 new high on that move. We should chop around until we get news of the bill. The VIX is finding support at its weekly R2 (40). Interim level to watch for ES is now 1144.50.
We have some opening gaps that have not been filled, ES 1118.75 and NQ 1512. For now, this rally is still in the dead cat bounce category. It's amazing that we can even use that saying with a 250 point DOW rally, but that is how bad yesterday's drop was.

The Euro is taking a big hit. Even the Yen is down versus the dollar. It's interesting to note that the dollar is finding more and more takers as we muddle through this crisis. The bill is now expected to pass, a bullish dollar implies a positive for the measure. At the very least, it means the US will lead in any recovery.

As a reminder, the ban on short selling financials end Thursday.

2008-09-30T09:42:00.005-04:00

Open:

NO bill yet, but we have a bounce. Weekly S2's should be resistance. Watch ES 1136, previous low.
Consumer confidence at 10 (yes, there is other news).
David Tice is back in the spotlight, calling for DOW 5000: link. That usually means we are close to a bottom.

Pivots: link.

2008-09-29T23:33:00.006-04:00

Note to readers:

We will be switching over to the new site in a few days (same URL). The only item that will not be functional right away will be the live monitor, as it needs to be tested when the site is running.
Newsletter subscribers do not need to take any action, the transition should be seamless (we hope). Thank you for your patience.

Marc Eckelberry.

VIX/VXO update

2008-09-29T18:21:00.011-04:00

Analysts clamoring for a higher VIX in order to confirm a bottom are suddenly very quiet as we hit a high of 48.40, surpassing 1998 and 2002 peaks.

The old VIX (OEX volatility), now VXO has seen higher levels in 2002, 2001, 1998 and 1997. In 1987, there was no volatility index, but calculation have been made that put it north of 150 (Vix and More).
Will today (and tomorrow's) action be remembered as a great buying opportunity, or the beginning of the biggest cataclysmic event since 1929?

All I know for a fact is that today's gaps will be closed one day: SPX 1215, COMP 2185, QQQQ 41.17. Futures: ES 1214.50, NQ 1677.

QQQQ update:

2008-09-29T16:57:00.004-04:00

The Q's suffered the biggest percentage trading day loss ever. If you are trying to find the bright side, we almost killed two birds with one stone, that being the August 15 and 16 gaps, 36.77 and 37.70. We still have a little more to go on the 15th gap, but if we can somehow manage a comeback from these levels, it's a trade. I emphasize the word trade.

DOW update:

2008-09-29T16:16:00.007-04:00

Closing sell-off. The DOW is now only 365 points away from 10K, support below that would be 9871.72, 61.8% retrace of the entire bull market and a 30% correction. Washouts are often a quick affair. If they aren't, the pain can be devastating.

I believe this is the single biggest trading day loss for NDX/QQQQ, 10.5% and 8.8%.

When the greatest bond trader of all time (Bill Gross) agrees with the greatest investor of all time (Warren Buffett), it might pay to listen. These men often have opposing market interests. Right now, they are in agreement. Read more from Barron's: link.

Sept. 29 (Bloomberg) -- U.S. stocks plunged and the Standard & Poor's 500 Index tumbled the most since the 1987 crash after the House of Representatives rejected a $700 billion plan to rescue the financial system.

The Dow Jones Industrial Average slid 778 points for its biggest point drop ever as $1.2 trillion in market value was erased from American equities. The MSCI World Index of 23 developed markets slid 6.9 percent, the most in 21 years.

2008-09-29T15:29:00.003-04:00

Closing hour:

NQ is being pushed down to the July 2006 close (1518.75). That will need to hold, at least on a closing basis. QQQQ has another gap to close from August at 36.77 (8/15 gap 36.77/37.22). VXN is at 50.45, VIX at 47.84.
The Q's have corrected almost 33% from the highs. Again, stay calm and look for the opportunities.

House Democrats Hope To Revive Bailout Plan

2008-09-29T14:52:00.005-04:00

Wire Reports | 29 Sep 2008 | 02:50 PM ET

Democratic leaders in the House of Representatives are going to try to move another financial rescue bill after a $700 billion plan was rejected in a House vote, a senior House Democrat said on Monday.

As he rushed into a meeting in the office of House Speaker Nancy Pelosi, Rep. Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee, said he expected the leadership to advance another bill, but that he had no idea when it would happen.

The House defeated the rescue plan after ignoring urgent pleas from President Bush and bipartisan congressional leaders to quickly bail out the staggering financial industry.

When the critical vote was tallied, too few members of the House were willing to support the unpopular measure with elections just five weeks away.

Stocks plunged on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor. But after being down more than 700 points, the market pared its losses.

"I think they're anticipating that there'll be another vote." Bill Gross of Pimco told CNBC right after the vote. "Because if there is no package, there will be a tremendous hole in credit markets. This must be passed."

2008-09-29T13:53:00.007-04:00

PM update (3):

The House does not have the votes to pass the bill and we get a massive drop pushing QQQQ right down to that August 2006 gap close mentioned earlier (37.70 or so). We bounce from there, now at 38.45. Was that the target after all? We will soon find out. Watch the ES move back up to 1163, now R. ES 1136 will need to hold on a retest.
QQQQ Dec 38 calls at 3 are a take. This is not the time to panic (it is in many ways, but for traders it's stay calm and work the flow).

Watch the vote live: link.

2008-09-29T13:44:00.003-04:00

PM update (2):

Another bounce attempt to 1174 fails and we fall hard as we get to the 1:40 turn. ES lost 1158 support and now looks headed for a retest of 1136.

2008-09-29T13:27:00.002-04:00

PM update:

Another flush, pushing ES to the 9/17 close (1163) and we are back at the 1171.75 level. There is still bounce potential, given TRINNQ at a whopping 7 high, an extreme to say the least. Watch that 1174/1177 level on any third attempt to break through to the upside.

2008-09-29T11:55:00.007-04:00

Noon update:

QQQQ is working hard at holding 38.87 (NQ 1586) and ES 1171.75. Bulls are obviously fighting for these levels. Resistance for ES is 1174 and 1177.
RIMM has reached my buy target (66/67), but stops need to be respected on a day like today, or just stay out altogether from any longs.
The VIX has reached weekly R2 at 40 (39.99). If short, you need to be aware of the mid-day bounce potential.

2008-09-29T10:22:00.004-04:00

Morning update:

We keep falling, QQQQ loses the August 2006 close of 38.87. There is an old gap between 37.70 and 37.99 ( previously discussed). if we really fall. But we are due for a morning corrective bounce. Watch ES 1171.75, support now turned resistance and QQQQ 38.87.

2008-09-29T10:05:00.003-04:00

Open (2):

ES hits 1169 and we bounce. Watch 1171.75/1172.50 on a retest. QQQQ seems to hold 39 for now. Resistance will be ES 1187. 8 to 1 down volume day on NYSE so far.

2008-09-29T09:47:00.008-04:00

Open:

Retest of overnight lows, and they don't hold. NQ loses weekly S1 (1619.25) and ES is trying to hold the 9/24 low of 1180.25. There was an easy short at the open from 1195, either close it now for +12 or lower your stops to 1193.25. The day will be volatile so I suggest trading in and out of it. If you are on multiple contracts, take partials and lower the rest to even.
We also have end of quarter window dressing.

2008-09-29T09:15:00.003-04:00

Pre-open:

The Libor jumped to 5.22% overnight, a disaster for many loans out there. NQ is testing last week's lows and ES is barely hanging on to the 1195 level. Bonds have a bid. The one positive is oil, falling sharply as the dollar gains against the Euro.
This is also the day Morgan Stanley chose fit to downgrade AAPL.

Overnight session:

2008-09-28T21:27:00.004-04:00

Sept. 28 (Bloomberg) -- President George W. Bush and congressional leaders said they reached an agreement on a $700 billion bank-rescue package designed to revive moribund credit markets.

The week of 9/14 saw ES trade in a very wide range between 1136.25 and 1291.25. Last week, the battle centered around 1213.75, the 50% mark. Expect the same level to be important going forward, including tonight. 10 dma support is at 1205.75, trouble starts again below 1195.
For NQ, it's pretty straightforward: don't lose the March lows at 1668.75.

Pivots: link.

Tracking the NQ closing hour

2008-09-27T13:31:00.008-04:00

Friday's trading was a classic case of support being defined in the first hour of trading (1648/1650, resistance turned support, see the pre-open note on NQ). On the first chart (NQ 10mn), you see the support set up in the first hour and a retest at 15:00.
On the second, we have the NASDAQ advance/decline line, showing the same test.

Note the bullish divergence as we hit the closing hour (-1182 versus -1400). The long white candle with volume (note the moving average volume overlay) told you to stay in for the trade up to the opening gap close, regardless of overall sentiment. Of course, savvy traders also understood that no one would want to be short futures ahead of potentially adverse news on Saturday.
The big rewards are often at the open and the close, save your scalping/brackets for the lunch hour.

RIMM mid-day update

2008-09-26T12:07:00.004-04:00

RIMM is barely finding support at 72 and noting confluence 200 weekly and 61.8% 2005/2007 around 67. That could be the ultimate destination. I would be interested in the stock at those levels.

2008-09-26T10:06:00.003-04:00

Morning update:

9:57 a.m.

U.S. Sept. UMich consumer sentiment 70.3 vs. 71.5 expected

NQ manages a spike to yesterday's lows (1664.75), pretty strong resistance after a battle at the 1650 level. If we lose 1650, we run the risk of testing pre-open lows. A move above 1665 sets up a gap close (1680). As for ES, a brief move above 1200 was sold, now trading at 1197. but the action is choppy up here. Internals are very negative.

2008-09-26T08:56:00.006-04:00

Pre-open:

Sept. 26 (Bloomberg) -- Republicans splintered over the proposed $700 billion rescue of the U.S. financial system, imperilling an agreement hours after a bipartisan group of negotiators and the White House said one was near.

The markets are speaking out and it is not pretty. Futures are down more than 2%, NQ 2.75%. Support is currently weekly S1 for NQ at 1634. For ES, 1187/88 is an important mark.
Gaps are ES 1213.50 and NQ 1680. Interim resistance for NQ is at 1650.75.

Pivots: link.

2008-09-25T16:32:00.003-04:00

Close:

The rally in techs faltered as someone probably got word of the RIMM news (down 16% as I type to 80.55). We held 41.41 at the cash close, but after-hours, NQ is retesting the March low of 1668. 75. Bulls cannot afford to lose that level after getting it back the past two days.
Once again, the open was the smoothest trade.