Henry Ford's Market Watch

1:56 PM

UPDATETraders start coming back from lunch in the next 20 minutes...lets see what they have in mind
:: Henry Ford ::

---

1:35 PM
UPDATENothing to do but wait it out here...With the SP this close to closing that gap they aren't going to leave it on the table....NDX and QQQ shaping up very nicely....As long as NDX holds the line at 869 this should be a nice double bottom pattern which will be the next one I cover in our little chart school... Should be interesting...
:: Henry Ford ::

---

1:05 PM
UPDATESo far we have gotten within 5 points of our target on the SP500 Futures contract...
:: Henry Ford ::

---

12:35 PM
UPDATE13 hour RSI's continue to drop on DOW and S&P positioning us to take advantage once we get a reversal...
:: Henry Ford ::

---

12:08 PM
CIRCUIT BREAKERS & CURBS
RESTRICTION----------------------------------TRIGGERED BY
NYSE collar (Rule 80A) -------------------DJIA moves 180 points
CME restriction 1--------------------------S&P500 futures contract moves 2.5%
CME restriction 2--------------------------S&P500 futures contract moves 5%
CME restriction 3--------------------------S&P500 futures contract moves 10%

NYSE circuit breaker nr. 1-------------DJIA moves 10%
NYSE circuit breaker nr. 2-------------DJIA moves 20%
NYSE Circuit breaker nr. 3-------------DJIA moves 30%

NYSE Collar (Rule 80A): Restrictions on program trading
This restriction is triggered if the Dow Jones Industrial Average (DJIA) moves up or down by 180 points (for 2Q02). If this trigger occurs, program trading curbs are put in effect. Essentially a key computer is turned off, so program trading must be done "by hand." This rule is also known as the "uptick downtick rule" (more formally: index arbitrage tick test) because it restricts sells to upticks and buys to downticks. In other words, when the market is down (last tick was down), sell orders can't be executed at lower prices. In an up market (last tick was up), buy orders can't be executed for higher prices. This collar is removed when the DJIA retraces its gain or loss to within 100 points of the previous close.

CME Restrictions
Trading in the S&P500 futures contract is halted just for a few minutes if the prices moves 2.5%, 5%, or 10% from the previous close. Because restrictions on the NYSE effectively shut down trading in this futures contract, there is little need for additional restrictions on the CME.

NYSE Circuit Breakers
These restrictions are also known as "Rule 80B." The first version of this rule, adopted in 1988, set triggers at 250 DJIA points and 400 DJIA points. These restrictions are updated quarterly to reflect the heights to which the Dow Jones Industrial Average has climbed.

10% decline (1050 points for 1Q01)
The first circuit breaker is triggered if the DJIA declines by approximately 10%. The restrictions that are put into place -- if any -- depend on the time of day when the circuit breaker is triggered. If the trigger occurs before 2pm Eastern time, trading is halted for 1 hour. If the trigger occurs between 2 and 2:30pm Eastern, trading is halted for 30 minutes. If the trigger occurs after 2:30pm Eastern time, no restrictions are put into place. (This restriction was first used during the afternoon of 27 Oct 97.) If the Dow Jones rallies 10%, there is no restriction, because program buying and the accompany rally is always perceived as "good."

20% decline (2150 DJIA points for 1Q01)
The second circuit breaker is triggered if the DJIA declines by approximately 20%. The restrictions that are put into place again depend on the time of day when the circuit breaker is triggered. If the trigger occurs before 1pm Eastern time, trading is halted for 2 hours. If the trigger occurs between 1 and 2pm Eastern, trading is halted for 1 hour. If the trigger occurs after 2pm Eastern time, the NYSE ends trading for the day. There is no trading halt if it rallies 20%, as that would be perceived as "very very good."

30% decline (3200 DJIA points for 1Q01)
The third circuit breaker is triggered if the DJIA declines by approximately 30%. The restriction is very simple: the NYSE closes early that day. There is no trading halt if it rallies 30%, as that would be perceived as "the best thing that ever happened in the history of the world."
The circuit breakers cut off the automated program trading initiated by the big brokerage houses. The big boys have their computers directly connected to the trading floor on the stock exchanges, and hence can program their computers to place direct huge buy/sell orders that are executed in a blink. This automated connection allows them to short-cut the individual investors who must go thru the brokers and the specialists on the stock exchange.
:: Henry Ford ::

---

12:06 PM
CURBS ONThere go the curbs again...I'll post the rules
:: Henry Ford ::

---

11:57 AM
UPDATEStill an orderly selloff...no panic, just the usual grinding erosion of the indices. Going into the noon hour now where the floor traders and scalpers can move things around a bit. expect the last hour is where all the excitement will be.
:: Henry Ford ::

---

10:54 AM
UPDATETarget we are looking for on DOW is 8264, but closing that gap is not all that important. The key index to watch now is the SP and there we still want to see 852 area taken out before rebounding.
:: Henry Ford ::

---

10:46 AM
UPDATE We are seeing a fairly orderly selloff this morning..slow and steady. My guess is that on each dip the Commercials are coming in and buying the market adding to long positions on the way down. Things could get precipitous once/if we break 869 on the SP September futures. Currently 874
:: Henry Ford ::

---

10:37 AM
UPDATENDX has now reached its minimum target...needs to hold above 869 for this pattern to be valid for rally to come. Notice that the 13 hour RSI (green line at top) has dropped below 20 making it oversold...now need to see that turn up and get back above 20.

:: Henry Ford ::

---

10:12 AM
UPDATEMuted reaction to the June Factory orders report. Nothing much moving here yet.
:: Henry Ford ::

---

9:51 AM
UPDATE

:: Henry Ford ::

---

9:42 AM
UPDATENext event is the release of June factory orders at 10AM. Opening was fairly mild in relation to the premarket trading.
:: Henry Ford ::

---

9:31 AM
SP FUTURES 8/1 CLOSE This is the SPU2 contract. You can clearly see that gap that needs to be closed as well as the failure of the Rectangular Top channel which started this selloff. Target for the SP is 852.50

:: Henry Ford ::

---

9:23 AM
GOOD MORNING: Look for gap down this morning, continuing the closing weakness we saw last night. We have broken down through support confirming the bearish Rectangle Top formation we outlined in yesterday's log.. I'll put a chart up in a moment so we can see where we start from today, hopefully on the way to getting rid of those pesky gaps we want to see closed. [BRIEFING.COM] S&P futures vs fair value: -6.0. Nasdaq futures vs fair value: -3.0. The pre-market bias remains modestly negative but stable. Look for the July Employment Report to set the tone today as the research community has apparently taken a vacation day -- limited impact calls this morning. In the wake of this morning's employment data, the Fedfunds futures are now pricing in over a 50% chance of a 25 basis point ease by the end of the year.

:: Henry Ford ::

---