Market Stage
(11/18/2008)

From our last MO, we stated: 'As a situation now stands, the still flat SBV points to weak market sentiment, however as they rise closer to zero, chances of a recovery are increasing.' Overall the trading was mixed, after weakness in the morning, we saw a strong recovery at the end of the day.

The medium term view presented by the 60-day SBV(20 period) charts show declining SBVs. Their value at the end of the session read: minus 36% on the NASDAQ 100, minus 48% on the S&P 500 and minus 30% on the DJI. Typically declining SBVs points to greater odds of a move down on the other hand the big bearish volume accumulation (red SBV) since November 6, 2008 until now points to the possibility of the strong recovery. We will continue to monitor this chart setting in order to determine at which point the SBV oscillator readings start to advance; this might then suggest better odds for a move higher.

The markets remain highly volatile and it is recommended that traders consult the 30-day timeframe, which will react faster to trend reversals than the longer term 60-day chart.

Our longer term 1.5-year SBV(10 period) charts continue to show declining SBVs. The huge bearish volume surges and absence of bullish volume point to the heavily oversold markets, however declining SBV reveals that the market is still weak and sentiment is still Bearish. The market requires time in order to base and will proceed after that long process.

Market Status
(11/18/2008)

Market Performance:
 

	Last	Change	Volume
S&P 500	859.03	8.28 (0.97%)	4,756,078 k
NASDAQ 100	1,155.75	3.79 (0.33%)	1,120,247 k
DJI	8,422.52	148.94 (1.80%)	1,356,395 k

Today's session continues to show the volatility that has recently plagued the markets. Unchanged conditions in the morning gave way to afternoon weakness and strength at the end of the session. Most of the indexes close relatively unchanged, the NASDAQ 100 was higher by 0.33%, the S&P 500 gained 0.97% and the Dow was best in breed up 1.8%. Combined with the results of yesterday, the NASDAQ 100 is still down 2.02%, the S&P 500 is down by 1.63% and the Dow is down by 0.88%.

The day ended with total volume generation of 4,756 million shares on the S&P 500. This volume was 5% less than the daily volume average of the past 3 months and is typical of recent volume patterns where days of bearish volume generation are typically lower in total volume produced.

NASDAQ 100 - 11/18/2008. 1-day Intraday, Modulated Volume.

Volume Analysis:
9:30 - 12:00 After finishing yesterday's session with a brief move down, the NASDAQ 100 started today session relatively unchanged. At this point in the morning, the volume production was relatively low as view on the 5 day chart. In low volume conditions markets typically do not trend. This probable scenario played out as after 2 hours of trading the index was relatively unchanged.

12:00 - 15:00 After the early morning session, the markets had remained relatively unchanged. The probability for a move in either direction increased.

In this time period, the index proceeded to decline sharply in the afternoon. It made a move down into the lows of last week. The move down generated larges surges of bearish volume. One interpretation of this volume is that buyers moved in and bought at low levels. For the next hour, as the index moved lower volume activity still remained heightened. More and more is look like the market was oversold.

15:00 - 16:00 Despite moving down a substantial amount in the last time period, the NASDAQ 100 did not follow through on the down move. Instead traded relatively close the lows set at 13:50. From that point, the index would move up higher. The strong surge higher propelled all the indexes to finish in positive territory.

Short Term (lasts a few hours to a few days): In yesterday's short term outlook, we said that 'we see probability for milder positive trading that is more range bound rather than trending.' Today's trading showed range bound conditions as well as a slightly positive finish.

Looking forward, not much has changed from yesterday's facts: we continue to have an excess of bearish volume produced compared to bullish volume and the probability for trending markets is lower than choppy ones. The markets will probably move around these levels either higher or lower for a relative long period of time before trending in either direction.

Analyst's Daily Tip:
Trend Reversal
Volume surges Precede price trend Reversals. One or more large volume surges during a price decline indicates that Large Institutional Money is Buying. We call this Buying Volume, telling us that Price is about to Reverse and Price is about Increase. Contrarily one or more large volume surges during a price Increase indicates that Big Money is Selling. We call this Selling Volume telling us that Price is about to Reverse and Price to Decrease.

Charts: Drawing Trendlines
You may draw trendlines on all our charts. To draw a trendline, simply right-click anywhere on a chart. Then, while holding the right mouse button down, move the cursor to where you wish to place the other end of the trendline. You can delete the last trendline you added simply by right-clicking once anywhere on a chart. When erasing a trendline, do not drag the mouse (this would create a new trendline); instead, make a quick right-click. To delete multiple trendlines all at once, press the DELETE button.

Financial Press Overview:
Fed chairman Bernanke and treasury secretary Paulson were called to testify about the $700 billion relief package before the House Financial Services Committee. Much of the questioning revolved around why the original plan to buy trouble assets were scrapped in favor of a direct capital injection plan. Paulson believes that the economy will not recover as fast as anyone would like but will recover quicker because of the relief package.

Recently the Treasury has bought $33.6 billion in preferred stock from 21 banks. The total amount purchased was up to $158.6 billion.

Wholesale prices in October experienced the biggest monthly drop on record. Prices move down by 2.8% last month mainly due to declines in commodities. Economists believe that the deflation was due too demand slow downs in the rest of the world.

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Key economic data for the week starting November 17th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.

Wednesday:
	08:30 Building Permits Oct 770K 805K 08:30 Core CPI Oct 0.2% 0.1% 08:30 CPI Oct -0.8% 0.0% 08:30 Housing Starts Oct 780K 817K 14:00 FOMC Minutes Oct 29

Thursday:
	08:30 Initial Claims 11/15 NA NA 10:00 Leading Indicators Oct -0.6% 0.3% 10:00 Philadelphia Fed Nov -30.0 -37.5

Disclaimer: Individual traders are responsible for making their own trades based on our Market Outlook.