Google and oil. Google and oil. Google and oil. That's what grabbed the bulk of today's headlines.
As I struggle for any theme to today's trade, it would have been neat if the Dow Industials (INDU) 10,040.82 -0.41% could have closed at 10,000, and Google (NASDAQ:GOOG) $100.36 +18.08% close out at $100.00.
I'm growing a bit frustrated with people saying something, and then not doing what they say they will do.
Today, the interim Iraq government may have had enough with Mr. al-Sadr's militia. A letter purportedly from Sadr urged his militia to hand the Imam Ali shire to Najaf's religious authorities, but Sadr rejected demands that he disband the Mehdi Army and join Iraq's political process.
But the letter, circulating in Najaf, carried a seal that was not consistent with marks of previous letters from Sadr and fighting escalated in the city.
Crude oil surged to record highs on reports that battles between coalition forces and Iraqi insurgence were picking up. At times, trading became rather choppy, as headlines out of Iraq aren't necessarily accurate as to what caught fire, or what has exploded.
One trade that has been consistent is oil rising regardless of how accurate the immediate news items are, while stock and bond traders see more of a knee-jerk reaction and some intra-day volatility.
U.S. Market Watch - 08/19/04 Close
As I said, investors rolled out the red carpet for Google's debut with the bulk of equity-based indices finishing in the red.
Some oil futures traders were cited as saying today's further jump in futures was attributed to some last minute short covering into contract rollovers from September expiration. This might make some sense if a speculator has been trying to catch a top and lacks any of the commodity to deliver against. Heck, even if you do have the commodity itself, at the rate things are going, you might just buy the previously sold contract back at a loss and wait a day or two.
Whether you're a bond, stock, or commodity trader, its NEVER fun to be short when you're short at 52-week highs and overhead supply is limited.
Miners found gains in today's session, with precious and industrial metals finding gains.
Market Snapshot / Internals - 08/19/04 Close
The CRB Index got a double-dose of bullishness today with gold and oil rising. After trading limit up on Monday and Tuesday, September Lumber futures (lb04u) 442.00 traded a contract high this morning at 448.80, but finished flat.
Good gravy! September Lumber futures settled around 407 on Friday and one hurricane later, they're up 8.8%.
Nothing too exciting from the internals, but the NYSE 10-day NH/NL ratio did get a close above 38%, so there's some bullish leadership among 1, 2 and 3-lettered stocks. We can perhaps see a slight falloff, or pickup in new lows from the 02:00 PM EDT mark, where as the TRIN made a mid-session relative high, it was kind of like taking a little hammer and tapping a nail into a piece of wood.
QQQ at $33.22?
Pivot Matrix -
Hmmmm... three support correlation for the NDX/QQQ at their DAILY S2, WEEKLY R1 and MONTHLY S1. Is that a gravitation point into tomorrow's QQQ option expiration?
Since adding the TRIN to the Pivot Matrix, I've had little luck getting the TRIN DAILY levels to line up with the QCharts' derived pivot levels, and boy oh, boy, has the TRIN been treating intra-day trader's well.
I think I figured out how to get the Pivot Matrix TRIN levels to line up with QCharts, and while I update traders with a QCharts TRIN chart in the Market Monitor in the morning, I'll update all OptionInvestor.com traders in the 11:00 AM EDT update, if my DAILY TRIN levels posted above are different than those displayed by QCharts.
Right now, I'd have to say I'm going to be entering tomorrow's trade with a bearish bias. Conviction isn't overly strong, simply because of option expiration, but here's why I have a bearish bias.
NYSE Short Term Trade Index (TRIN) - 15-minute intervals
TRIN closes above the "waterline" of 1.00 today, so I'm a little bearish. The goofy TRIN DAILY Pivot levels didn't do too bad today.
You intra-day traders may have noted in the past, or even this week as I've used TRIN observations a little more frequently in this week's Market Monitor, is that when a relative intra-day high takes place when TRIN is ABOVE or BELOW its DAILY Pivot, a decent move takes place.
OK then. If our Pivot Analysis Matrix is correctly tabulated for the TRIN tomorrow, the DAILY Pivot for TRIN will be 0.95, or pretty close.
Look at how TRIN has traded this week, Bull days were Monday and Wednesday. Tuesday was flat for the QQQ, and today was -0.52%. Get a feel for how the TRIN Daily pivot can give traders some feel for bullishness and bearishness in relation to 1.00?
That is... when BELOW 1.00 some bullish tint is taken AWAY, when TRIN is ABOVE its DAILY Pivot. When TRIN is BELOW its DAILY Pivot AND the 1.00 mark, a nice bullish session can be found.
Ok, now I'm thinking TRIN 1.00 and QQQ DAILY Pivot for tomorrow are EQUIVALENT.
NASDAQ-100 Tracker (QQQ) - 15-minute intervals
I'm using the QCharts DAILY Pivot analysis levels just to give us a quick look at this week's trade, get a feel for how even the QQQ, which is full of NASDAQ stocks can still be traded against the TRIN. This was a question asked this week.
A point I would make as it relates to "oil higher equity lower" and option expiration is this.
Option expiration week can be a TOUGH trade can't it? If a trader were trading short the QQQ simply based on oil's rise, that would have been a tough trade so far.
The QQQ's rise to August's calculated "Max Pain" of $34.00 sure looks like it has been in play doesn't it?
Keep that in mind tomorrow, and try to let the TRIN be your friend.