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OI Technical Staff : 2/17/2006 10:00:00 PM

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Jeff Bailey : 2/17/2006 5:21:28 PM

Question: Dear Jeff,

I seem to have read in the monitor about someone writing about the Options Manipulation game at expiration. Where can I find something on that?

Thanks,

Silvio

Option Manipulation Game description from HL Camp & Company at this Link

Please note that HL Camp's description is using Central Time Zone.

Jeff Bailey : 2/17/2006 4:37:48 PM

02:12 PM EST Temperatures with March Nat. Gas and Heating Oil futures settlements at this Link

Yes Jonathan ... you had better bundle up!

March Unleaded settled up 6.39% at $1.5026.

March Crude Oil settled up 2.43% at $59.88.

June Unleaded settled up 3.59% at $1.6847, while June Crude Oil settled up 1.85% at $63.15.

Jonathan Levinson : 2/17/2006 4:21:15 PM

Have a great weekend, all.

Jonathan Levinson : 2/17/2006 4:16:36 PM

Thanks, Jane ;) You'd be surprised how many people never let me forget. My folks swear my name had nothing to do with the bird, for what it's worth. Personally, I love it.

Jonathan Levinson : 2/17/2006 4:10:31 PM

Enjoy! I'll be focused on staying warm. They're calling for some -20c action this weekend.

Jeff Bailey : 2/17/2006 4:08:21 PM

Jonathan ... you're missing out! Drake and I were going to take you Snow Goose hunt'n this weekend. A friend of mine from Washington, DC is coming out.

Jonathan Levinson : 2/17/2006 4:07:26 PM

Jeff, I wish. This seagull hasn't flown south in way too long.

Jonathan Levinson : 2/17/2006 4:06:09 PM

QQQQ at a session low but still no test of 41.15. Bears got their lower high, but no lower low for the day yet. Link

Jeff Bailey : 2/17/2006 3:58:44 PM

BRCD $5.26

Jeff Bailey : 2/17/2006 3:57:14 PM

BRCD $5.21

Jeff Bailey : 2/17/2006 3:56:03 PM

Jonathan ... Are you coming down for the Snow Goose Festival this weekend? Link

Jonathan Levinson : 2/17/2006 3:52:42 PM

QQQQ daily chart updated at this Link

Jeff Bailey : 2/17/2006 3:52:35 PM

Bearish day trade close out alert ... for Brocade Comm. (BRCD) at the offer of $5.26.

Jeff Bailey : 2/17/2006 3:34:18 PM

Bearish day trade lower stop alert ... for Brocade Comm. (BRCD) $5.25 +6.06% ... to $5.28.

Jonathan Levinson : 2/17/2006 3:34:00 PM

Volume breadth is down to -1.1:1 on the NYSE, -1.75:1 on the Nasdaq. QQQQ holding 41.20 support, the short cycle bottomy but price still heavy at the lows. Link

Jeff Bailey : 2/17/2006 3:21:36 PM

03:00 Internals found at this Link

Jeff Bailey : 2/17/2006 3:17:42 PM

Sell Program Premium ... DIA $110.96, SPY $128.86, QQQQ $41.29

Jonathan Levinson : 2/17/2006 3:16:27 PM

New low for QQQQ on a surge of volume. 41.15 is critical support. Link

Jonathan Levinson : 2/17/2006 3:13:34 PM

Nasdaq volume breadth has just dipped to -1.54:1- a very minor decline, except that the range has been so much narrower than usual. Price has dipped back below the 72 SMA in a big 5 cent move. Link

Jeff Bailey : 2/17/2006 3:03:30 PM

03:00 Market Watch found at this Link

Jeff Bailey : 2/17/2006 2:46:21 PM

Brocade Comm. (BRCD) $5.32 +7.47% ... day trader's chart at this Link ... Open interest heavy at the $5.00 Call.

The other day I traded IIJI from similar pattern and that bugger has fallen right back to $10.00 strike. It gave it back about an hour into its big gap up day earnings.

Might happen to BRCD into today's expire.

Jonathan Levinson : 2/17/2006 2:33:21 PM

Volume breadth +1.1:1 on the NYSE, -1.3:1 on the Nasdaq, flatlined along with price.

Jeff Bailey : 2/17/2006 2:16:35 PM

Bearish day trade short alert ... for Brocade Comm. (BRCD) at the bid of $5.32, stop $5.37, target $5.11 toward the close.

Jane Fox : 2/17/2006 1:56:14 PM

Figure 1 Link

Jane Fox : 2/17/2006 1:55:04 PM

Here is McMillans weekly commentary. Aided by expiration related buy programs, the market moved to the upside on Friday, and -- in doing so -- negated most of the negative technical indicators to one extent or another. Let's begin with the charts of the broad market. The Dow is actually leading the way, and is making multi-year highs (this is not a particularly good thing, though, as many times in the past, the market has subsequently failed with the Dow as the leader). However, $SPX and QQQQ are not far behind. $SPX traded up through what had been a downtrend line formed by the tops of 2006 (see Figure 1 to follow). There is still resistance at those previous peaks, but the downtrend has been broken. QQQQ is the worst of the group, having just edged above its own down-trend line today.

Equity-only put-call ratios remain very negative, however -- the only fully negative indicators of the group at this time. This week's rally, which has been fairly strong, has not fazed these put- call ratios as they have continued to rise. A rising ratio is bearish.

Market breadth has not been particularly positive this year, but this week it has been stellar, which is constructive.

Finally, volatility ($VIX) broke down through the uptrend it had been in. This breaks the bearish trend of $VIX, and gives it somewhat of a bullish tinge. Note: a real $VIX buy signal comes when it spikes higher, not when it is breaking down. However, a declining $VIX -- even at low levels -- will not impede an advance, and so we rate this as neutral to modestly bullish.

The bears had their chance to run this market to the downside, as recently as a week ago. But they did/could not, and so the bulls have taken over. Look again at Figure 1. Twice in the last few months, $SPX has fallen below a significant support level: below 1250, near the end of 2005 and below 1260, just a week and a half ago. Rather than following through on these breakdowns, neither of which was accompanied by more than a modest oversold condition, they were both false breakdowns.

After the first one, the market rallied to new highs early in 2006, so something similar may happen this time. It didn't get far, though -- about 20 $SPX points at best -- before declining once again. So there will definitely be a contingent of traders looking to fade a breakout. Fading any breakout move -- upside or downside -- has worked very well so far this year, so it's hard to argue with that strategy, even though it's not one that we generally espouse.

In summary, the ball is in the bulls' court. They could easily take the market to new highs. But the fact remains that none of our indicators registered a normal buy signal from an oversold condition -- the usual precursor to a strong rally. They did do that last October, and we got a tremendous rally, but there are no such buy signals now. This doesn't mean that the market can't rally, but any such rally will probably be spotty at best.

Jeff Bailey : 2/17/2006 1:46:53 PM

Google (GOOG) $370.57 +1.12% Link ... A trade at 376 would negate the current bearish vertical count of $316.

Updated bar chart at this Link

Jonathan Levinson : 2/17/2006 1:41:40 PM

Volume breadth is up to +1.17:1 on the NYSE, -1.3:1 on the Nasdaq, QQQQ ticking up to retest the highs on a small burst of volume: Link

Jonathan Levinson : 2/17/2006 1:29:27 PM

QQQQ flatlined, back at yesterday morning's print at 41.39: Link

Jeff Bailey : 2/17/2006 1:25:20 PM

XOM $60.49 +0.39% ... slips back to DAILY R1. 5-minute chart does have MACD showing some "bearish divergence" from this morning's highs, where session high remains $60.61.

Jeff Bailey : 2/17/2006 1:20:32 PM

01:00 Internals found at this Link

Jonathan Levinson : 2/17/2006 1:18:19 PM

Crude oil closed 17.5 cents off 60.00 high, ramping up into the early close, +1.375 at 59.825. Chart for the week at this Link

Jeff Bailey : 2/17/2006 1:03:33 PM

01:00 Market Watch found at this Link

Jonathan Levinson : 2/17/2006 1:02:03 PM

Volume breadth +1.1:1 on the NYSE, -1.4:1 on the Nasdaq.

Jeff Bailey : 2/17/2006 1:01:14 PM

XOM $60.59 +0.56% ... right at this morning's high when the XOM-BL traded $0.70.

XOM-BL currently bid/ask $0.55 x $0.60.

Jeff Bailey : 2/17/2006 12:54:51 PM

Anyone up for a naked call?

Not me. I'm cross-eyed after watching Level II yesterday.

Jeff Bailey : 2/17/2006 12:53:53 PM

XOM $60.61 +0.60% ... gets the trade at BLUE #1 (first 5-minute bar high)

Jeff Bailey : 2/17/2006 12:49:11 PM

Apex Silver (SIL) $18.35 +11.89% ... Stock was upgraded by BMO Nesbitt.

Jeff Bailey : 2/17/2006 12:32:50 PM

The XOM-BL is officially closed at the bid of $0.50.

I'm seeing plenty of buyers at the offer of $0.55 though.

XOM $60.50 +0.41%

Jonathan Levinson : 2/17/2006 12:32:40 PM

QQQQ trading both sides of the 72 SMA, directionless with the short cycles rolling over from a choppy, sideways range. Volume breadth remains negative and volume moderate- it's either directribution or accumulation, and I believe the former, but we won;'t know until a break of yesterday's 41.15-41.55 range. Link

Jeff Bailey : 2/17/2006 12:30:20 PM

NYMEX closes at 01:00 PM EST today, early ahead of the 3-day weekend.

Jeff Bailey : 2/17/2006 12:28:29 PM

XOM $60.51 +0.43% ... My QCharts option montage show 6,286 of the XOM-BL having traded, but the DnTick 530 vs. UpTick 175 and the continual bump at DAILY R1 just doesn't look all that bullish.

Jeff Bailey : 2/17/2006 12:22:25 PM

Bullish spec call exit alert ... judgement call here, but I think we should blow out the XOM Calls at the bid of $0.50.

XOM $60.48

Jeff Bailey : 2/17/2006 12:13:45 PM

This is probably it ... either XOM goes from here, or it isn't going to go. $60.50. 5-minute interval has MACD curling up and moving above its Signal.

Jeff Bailey : 2/17/2006 12:05:18 PM

I'm also seeing XOM $60.45 +0.34% continue to bump against DAILY R1....

Jeff Bailey : 2/17/2006 12:02:44 PM

XOM $60.49 +0.39% ...

Jeff Bailey : 2/17/2006 12:02:19 PM

Seeing some XOM Level II action from INET that may suggest XOM trades $61.00.

If looking to sell strength, be ready at $0.85-$0.90.

Jonathan Levinson : 2/17/2006 11:42:32 AM

Stepping away.

Jonathan Levinson : 2/17/2006 11:26:00 AM

Volume breadth -1.25:1 on the NYSE, -1.5:1 on the Nasdaq.

Jeff Bailey : 2/17/2006 11:25:11 AM

Bullish swing trade call establish stop alert ... Let's establish a stop on the speculative Exxon Mobil XOM Feb. $60 Calls (XOM-BL) at $0.30.

Currently bid/offer $0.45 x $0.50 with XOM $60.38.

Session low/high for these options has been $0.35 x $0.70.

Jeff Bailey : 2/17/2006 11:22:04 AM

11:00 Internals found at this Link

Yesterday's Internals found at this Link

Jonathan Levinson : 2/17/2006 11:14:37 AM

QQQQ pops back above the 72 SMA here. My guess is that op-ex pinning is at work, and 30/60 min cycle bears will have to wait for next week to see if the overdue downphase will deliver or not. Link

Jeff Bailey : 2/17/2006 11:03:45 AM

11:00 Market Watch found at this Link

Jeff Bailey : 2/17/2006 10:54:32 AM

XOM $60.47 +0.36% ... hang'n in there.

Jeff Bailey : 2/17/2006 10:52:54 AM

Should be done with steps 5 and 6 of "The Expiring Option Exercise Manipulation Game."

Jonathan Levinson : 2/17/2006 10:50:24 AM

Volume breadth -1.22:1 on the NYSE, -1.5:1 on the Nasdaq.

Jeff Bailey : 2/17/2006 10:48:04 AM

ICE $50.66 -1.76% ... It's melting

Jeff Bailey : 2/17/2006 10:39:28 AM

OIX pressed against DAILY R2, XOM pressed up against DAILY R1.

C'mon "Mother Mobil!"

Jeff Bailey : 2/17/2006 10:37:20 AM

Current OPEN MM Profiles found at this Link ... Favorable crack spread action for March and April may be due to some forward roll.

Lose a bit for May and and June at this point.

Jonathan Levinson : 2/17/2006 10:37:03 AM

QQQQ volume is moderate at 27.2M shares so far, but price has stopped dead in a 5 cent range for the past half hour. Could be a short cycle bottom- the 30/60 min cycles, overbought and bearish-divergent, refuse to roll over yet. Link

Jeff Bailey : 2/17/2006 10:23:30 AM

Apex Silver (SIL) $17.39 +6.03% ... Oh my!

I sold a long on Wednesday at $16.12

Jeff Bailey : 2/17/2006 10:17:50 AM

Oil Index (OIX.X) 557.32 +0.95% ... Traded DAILY R2 of 557.91.

Jeff Bailey : 2/17/2006 10:15:26 AM

XOM Option Montage found at this Link

Jonathan Levinson : 2/17/2006 10:15:06 AM

Correction - I noted earlier that the Fed had done a weekend repo- but in fact, it's a 5-day repo, maturing Wednesday, Feb. 22.

Jonathan Levinson : 2/17/2006 10:14:04 AM

Session high for gold, +6 at 554.70. Crude oil down to a .95 gain at 59.40.

Jeff Bailey : 2/17/2006 10:14:00 AM

XOM Option Montage ... Not all that bullish at this point.

Right? What a XOM Feb $60 Call holder wants to see develop is a "saving of position" trade where a COVERED CALL seller says "hey, oil might be rebounding and I don't want to have my XOM stock called away from me." The call seller buys back his/her calls.

Jonathan Levinson : 2/17/2006 10:04:49 AM

Although the broader uptrend is still in place, it's not looking good for QQQQ bulls on a 30/60 min cycle basis, with price holding steadily below the 72 SMA. Below 41.15, new downphases in those cycles will confirm: Link

Jeff Bailey : 2/17/2006 9:59:18 AM

Continuous Unleaded vs. Continuous Oil relative strength chart at this Link ... 0.20-point box.

0.10 box Link

Jonathan Levinson : 2/17/2006 9:53:42 AM

The Fed announces a 5.25B weekend repo to cover the 9.75B expiring, for a net drain of 4.5B.

Jeff Bailey : 2/17/2006 9:49:07 AM

Exxon Mobil (XOM) $60.40 +0.24% ... Day trader's chart with upper 5-MRT at this Link ... "5-MRT" is a technique where a trader simply takes a retracement bracket and anchors at the low of the first 5-minute bar, then "fits" the 19.1% at the upper end of the 5-minute bar.

I'm just showing the upper 5-MRT. A lower 5-MRT can also be used. Place the 0% at the top of the first 5-minute bar and 19.1% at the bottom. The resulting 100% can give trader's a "Max Target" for the day.

Jonathan Levinson : 2/17/2006 9:48:57 AM

Michigan Sentiment 87.4 vs. 91 exp., prior 91.2.

Jonathan Levinson : 2/17/2006 9:48:34 AM

The Fed has 9.75B in expiring repos to cover today ahead of the 3 day weekend. Awaiting the announcement during the coming minutes, just after Michigan sentiment.

Jane Fox : 2/17/2006 9:37:44 AM

AD line is a very neutral -18 and AD volume sitting right at 0 so we have no one holding the reins.

Jonathan Levinson : 2/17/2006 9:31:58 AM

Volume breadth at the open: +1.4:1 on the NYSE, -2.33:1 on the Nasdaq.

Jonathan Levinson : 2/17/2006 9:30:29 AM

72 SMA is at QQQQ 41.40, 30/60 min channel resistance 41.56-.61, support 41.18-.22. Link

Jeff Bailey : 2/17/2006 9:28:58 AM

Program Trading Levels ... HL Camp & Company has their computers set for program buying at $+3.67 and set for program selling at $+1.09.

Jonathan Levinson : 2/17/2006 9:21:13 AM

QQQQ's 30 and 60 min cycles are in suspended animation on bearish divergent lower highs, still pinned within overbought. If the bulls run prices any higher today, we'll be looking at a very bullish and very rare trending move on the 60 and 30 min cycles. More likely is a downphase from here, but it's op-ex week, and we might have to spend a sideways day first before finding out which it will be. I'll update the intraday levels when they refresh at the opening bell.

Jane Fox : 2/17/2006 9:06:26 AM

Dateline WSJ Sirius Satellite Radio Inc.'s fourth-quarter net loss widened on higher programming costs despite better-than-expected subscriber growth.

Sirius, the second-largest satellite radio company behind XM Satellite Radio Holdings, said its fourth-quarter loss widened to $311.4 million, or 23 a share, from a loss of $261.9 million, or 21 cents a share, a year earlier. Total fourth quarter revenue increased to $80 million from $25.2 million a year earlier. On average, analysts polled by Thomson First Call expected a net loss of 22 cents a share on revenue of $75.9 million.

Sirius's results came a day after XM disclosed that director Pierce Roberts abruptly resigned, close on the heels of a board meeting in which he argued for cutting the Washington-based company's marketing and programming costs. In his resignation letter, Mr. Roberts said he was "troubled about the current direction of the company" and predicted that there is "a significant chance of crisis on the horizon."

Jane Fox : 2/17/2006 9:03:39 AM

Dateline WSJ U.S. wholesale prices increased modestly last month as expected, but underlying price pressures grew more markedly, suggesting that higher energy prices may be feeding into broader producer price pressures.

The producer price index for finished goods rose 0.3% on a seasonally adjusted basis last month, versus a revised 0.6% increase in December, the Labor Department said Friday. December's gain was originally estimated at 0.9%.

Excluding food and energy costs, the core producer price index increased 0.4%, doubling expectations and the steepest core rise since January 2005. December's core increase was unrevised at 0.1%.

In the 12 months ended in January, overall wholesale prices climbed 5.7% on an unadjusted basis, versus a 5.4% year-over-year climb in December.

Wall Street economists had expected the overall PPI to rise 0.3% in January and that the core PPI would rise 0.2%.

The latest PPI data could prove worrying to Federal Reserve policymakers, who cautioned in their most recent statement on Jan. 31 that higher resource utilization "as well as elevated energy prices have the potential to add to inflation pressures."

Jonathan Levinson : 2/17/2006 8:39:43 AM

Top international energy experts Wednesday urged European countries to unify their energy and foreign policies in order to increase energy security and reduce their dependence on Russia and the Middle East for oil and gas.

The calls were made against the backdrop of growing concern within the European Union that Russia may use its reserves of oil and gas to exert political pressure, and that instability in the Middle East could lead to sharp fluctuations in energy prices, increasing Europe's economic vulnerability.

Link

Jonathan Levinson : 2/17/2006 8:37:55 AM

Gold +1.7 to 550.40, silver +.104 to 9.469. Crude oil is now up 1.15 to 59.60, natgas +.18 to 7.315.

Jonathan Levinson : 2/17/2006 8:33:53 AM

Ten year note yields have edged .2 bps lower to a 2.3 bp loss at 4.573%, QQQQ -.04 at 41.50 following the data.

Jonathan Levinson : 2/17/2006 8:31:49 AM

Headlines:

U.S. Jan. PPI intermediate prices up 1.2%

U.S. Jan. PPI crude prices fall 0.5%

U.S. Jan. PPI energy prices flat

U.S. Jan. PPI higher on vehicles, food, drugs, electricity

Jonathan Levinson : 2/17/2006 8:31:02 AM

Headlines:

U.S. Jan. PPI up 0.3% vs. 0.2% expected

U.S. Jan. core PPI up 0.4% vs. 0.2% expected, most in a year

Jonathan Levinson : 2/17/2006 8:27:37 AM

Bonds hold their gains, TNX opening -2.5 bps at 4.571%, IRX flat at 4.430%.

Jonathan Levinson : 2/17/2006 7:50:42 AM

Equities are down, ES trading 1291.25, NQ 1693.5, YM 11125 and QQQQ +.02 to 41.52. Gold is up 2 to 550.70, silver is up .076 to 9.441, ten year notes are up 7/64 to 107 59/64, crude oil is up 1.05 to 59.50 and natgas is +.155 to 7.29.

We await the 8:30 release of the PPI and core PPI, est..2% each, and at 9:50, Michigan sentiment, est. 91.

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