The major indexes have fallen to their lows of the session after reports began circulating trading desks that U.S. intelligence has gathered information that has it believing that Iraq has been planting bombs in and around its oil fields.
Just as this news also began hitting the news wires, I was making note in the market monitor at OptionInvestor.com that a recently mentioned highly speculative oil service company that specializes in putting out oil well fires in Boots & Coots (AMEX:WEL) $0.68 +36, which we've mentioned before as a speculative bullish play from $0.40 back in January was trading higher, but just under its 52-week low of $0.60. However, when CNBC and other investment- related television networks noted the stock as one of today's percentage gainers in oil service sector, the stock has jumped to a 52-week high. It has been noted since first mentioning, that this company's financials look to be HIGHLY SPECULATIVE as to it continuing to operate out of bankruptcy, but today's action in the stock, once again hints to us that the MARKET does seem to be concerned that Iraq may indeed be planning a "scorched earth" type of policy if it is attacked by a U.S./British lead assault.
As it relates to Boots&Coots (WEL), I've been working with a "fitted" retracement on the stock from $0.84-$0.15, which has 50% retracement at $0.49, and with the stock trading a 52-week high today, I would now strongly suggest that traders in this HIGHLY SPECULATIVE name raise stops to $0.47. With 80.9% retracement just above at $0.70, which has been today's highs, I would also strongly suggest some partial profits be taken off the table near current levels, with news in the past month showing a likelihood that the company may have to file for bankruptcy protection from its creditors.
Moving on, on I wanted to quickly update traders and investors on some key near-term support levels in the broader S&P 500 Index (SPX.X) 813.78 -1.82%, which was briefly discussed in Friday afternoon's market monitor at OptionInvestor.com relating to our updated WEEKLY pivot analysis level, and correlative support near the 809 level. Here's a quick look at the SPX's bar chart, with WEEKLY retracement (blue) and MONTHLY retracement (red) from our pivot analysis S2-R2 levels.
S&P 500 Index Chart - Daily Interval
After Friday's close, I updated both the DAILY and WEEKLY pivot analysis levels and found correlative support in the SPX at the 409 level in both the WEEKLY and MONTHLY pivot matrix at their respective S1 levels. I've marked the WEEKLY S1 level in green on the above chart of the SPX at 809.3, and have actually extended this line back to the left, as it shows some historical significance as it relates to resistance back in October, just before a powerful move higher. This may be an important level of support for the SPX as we also see how the SPX found support near this 809 level just a couple of weeks ago, when the SPX spiked to a session low of 806.29 on February 13th on an intra-day basis, only to reverse those intra-day losses to close at 817.37.
Observations made today is that the SPX did NOT come close to challenging its WEEKLY pivot of 830 and quick decline back below a near-term support zone of 821-823 does have a lower support zone of 801-805 as my MAX WEEKLY decline zone. In Friday's market monitor, I had place "MAX WEEKLY decline zone" as being the 805-809 zone, on the thought that the SPX might have been able to extend Friday's gains back near the 837-840 zone, however today's action shows that hasn't been the case.
Last week, we saw little sign of internal strength from the S&P 500 Bullish % ($BPSPX) developing as this broader market indicator of market internals continued to deteriorate, and still has the SPX looking vulnerable longer-term to its October lows, which would be marked perhaps by the MONTHLY S2 of 779, but for trader's holding FULL positions at this point, with the SPX approaching WEEKLY S1 of 809, I would once again suggest that traders look to take some profits on today's weakness, free up some cash, and look for potential rally points for new entries based on your feel for "news" that may have had stocks rallying to a bearish entry point.
Sector action remains broadly negative at this hour, with the Biotechnology Index (BTK.X) 318.69 (unch) being the only sector index I show with anything resembling a gain.
Early weakness in the Airline Index (XAL.X) 28.95 -4.29% has been building as the session progresses. Despite some of the geopolitical news hitting the markets today, the Gold/Silver Index (XAU.X) 65.26 -3.23% has seen a reversal lower from marginal gains, into more noticeable losses.