Guru View

Developing Stories:

• Evidence of significant commercial interest on the long-side for crude oil - as of last week.


• Commercials continue to sell the US dollar as its dropping to record lows. This is very bearish: Key resistance at 76. So if we rally above 76, watch out for a short squeeze.


• The US stock market remains weak after breaking below key levels a few weeks ago. We may see a bottom soon, as the indexes are nearing key support, while the NASDAQ-100 is displaying relative strength...

COT Report, Guru View

Source: U.S. Commodity Futures Trading Commission (WWW.cftc.gov)

Index	Trader Group	11/2/2007	11/9/2007	Difference
Dow	Commercials	-177	-1093	-916
Nasdaq	Commercials	5885	6050	165
S&P 500	Commercials	51694	46398	-5296
Russ	Commercials	3427	4754	1327
VIX	Commercials	-4304	119	4423

In last week, Commercial traders sold off S&P and Dow, but increased holdings on Russell index slightly. They also bought heavily on the VIX - Volatility index, expecting tough time ahead. After testing support for several days, the stock-market indexes finally broke-down below critical support levels.

Monday morning crash talk is in the air, but the market gods have denied that event through every other opportunity in the last 20 years. Of course, anything could happen because this is easily the worst price action since the summer of 2002.

In short term, the market has been severely over-sold, but it's time to exercise caution!

Hope the best for all,

Market Swimmer

Guru View

Introducing the new blogger site: www.marketswimmer.com

** US Dollar

The US Dollar continues its 'relentless' decline. While there
are no signs of a bottom on the price-chart, the COT chart
is not any less bearish. Commercial position has been
declining marginally, but declining never the less for the last
5 consecutive days. Commercials typically like to buy when
prices fall. Well, the USD has been clearly falling, and
commercials are NOT buying.
In other words, the outlook for the USD continues to
remain bearish from a price/COT chart perspective.

** Stock Market

DIA - Stockcharts chart
After Thursday's sell-off: the markets reversed on
Friday after bottoming near key support levels:
Dow Jones - 13400
S&P 500 - 1490
Russell 2000 - 790

If we hold above these levels in the coming weeks, one
may argue that a short-term bottom is in place and we
are headed back up to test overhead resistance.

From the COT charts, not much has changed. The S&P
500 & Dow Jones charts look constructive. While the
Russell 2000 & Nasdaq 100 charts look bearish.
As for the Nasdaq 100 chart specifically, there was some
evidence last week of commercial buying, nothing major
but worth keeping an eye on.

** Gold & Oil

Gold & Oil have had stellar performances with their trends
still pointing UP. As for GOLD, its COT chart remains
bearish, so be mindful of price break-downs. Oil's COT
chart is more constructive than that of gold's, as net-
commercial position remains well above 2007-lows.
However, as with any sizable rally, the time to be bullish
was probably 5-6 months ago. As for right now, down-side
risk, in my opinion, outweighs reward.

CHART:
USO - Stockcharts chart
Keep an eye on oil's price-chart, there is evidence of an
accelerating (parabolic) trend. It is probably not wise to
get in its way, but once a top IS in place, a steep correction
and/or a consolidation period are very likely.

Guru View

**

The stock market has reversed after first testing new
highs (for the week) on Wednesday following the FED
decision - only to dramatically sell-off on Thursday
violating short-term support.
This breakdown in price is starting to confirm the
bearish COT charts of the Nasdaq 100 and Russell
2000.

It looks like we are headed for a test of last week's
reaction-lows. Here are the support levels:
Dow Jones- 13,400 | 134 for the DIA etf
Russell 2000- 790 | 78.5 for the IWM etf
S&P 500- 1,490 | 149 for the SPY etf
NASD 100- 2125 | 52 for QQQQ etf

Even though it declined for the day, the Nasdaq-100 price
chart continues to look the most constructive out of all the
indexes. The intermediate trend remains UP unless we
start to break below critical support at around 2125.

If the above support levels are taken out, the US stock
market is going to start to paint a bearish trend. Consider
the breakdowns in financial companies such as Citibank.
Also keep in mind that the Russell 2000 closed below 800
today. Last time that happened, the RUT reversed in the
very next session - to the upside. We'll see if the bulls
show up this time around...

Guru View - The Big Picture

For FED Watchers:

Tomorrow FOMC will make decision on interest rate. The market is already priced in a quarter point cut. According to a survey, as of today there is a 98% chance for a 25-basis-point cut versus a 2% chance for no-change. Virtually nobody is expecting a 50-basis-point cut. If the Fed indeed cut .50%, the market will rally, otherwise, the market will experience some volatility this week.

Dow Jones (ETF DIA), Nasdaq (ETF QQQQ), S&P 500 (ETF SPY) and Russell 2000:

After Friday's sell-off two weeks ago, the markets have rebounded. If you look at the DIA (Diamond) chart, you will see a total of six consecutive up closes. We are probably due for some sort of pullback/consolidation.

COT Charts for NASDAQ and Dow are largely unchanged (see COT Report earlier), while for the S&P 500 and Russell 2000 there is evidence of recent commercial selling (last several weeks).

While the S&P 500 and Dow Jones corrected two weeks ago, their intermediate-term trends remain up. The story is different for the Russell 2000 however: this index did not better its July highs in October like all of the other major indexes.

There are two key warning signs worth paying attention to:

-Nasdaq 100 bearich COT chart (see Guru View 3 weeks ago, commercial sell-off NASD)
-Divergence in Russell 2000's intermediate trend

Good night,

Market Swimmer