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Jeff Bailey : 3/18/2006 12:11:37 AM

Current OPEN MM Profiles found at this Link

Trade Blotter of CLOSED Trades month-to-date and quarter-to-date at this Link

Today's Activity ... This morning, shares of BIDU jumped at the open on news of a marketing pact with Nokia. I would not have profiled adding to the short position. However, I did try to short additional shares in my personal account and my broker (Ameritrade) informed me that I could not short the stock as they did not have any stock to loan. I have decided to DROP/CLOSE this trade from my MM Profiles based on potential SUBSCRIBER TRADE RISK! While many traders here in the MM are watching things on a minute-by-minute basis, I'm aware that some traders are swing trade only and may only check in once a day, or may be new to the monitor, like the trade as a new play, and short the stock at a later date, unaware that there may be a large short position on the stock. In the 03/17/06 MM, I discussed my mixed feelings (from an advisory/educational standpoint) of being short a stock where it is "so short" that there is limited amounts of stock to borrow, in order to short. As such, RISK MANAGEMENT has me CLOSING THE TRADE at $48.85 ($+0.86, or +1.73%). I will keep BIDU as a "watch list" stock. I may profile it as a day trade.

Today's BIDU comments and "new information" is not usual for me. Again, I was NOT going to make an official PROFILE for new short entry positions today. The ONLY way I learned that there may be limited amounts of stock to borrow, in order to short, was by trying to short additional shares for my personal account. I DO NOT PROFILE long/short, or put/call trades by initiating my position BEFORE I profile any trade. If I do have a position in the stock when a NEW PROFILE is made, I DISCLOSE TO YOU that I hold the same position.

Sunoco (SUN) $79.61 -2.16% Link ... Credit Suisse cut its price target to $85 from $90 on this "oil refiner." This is the second broker in the past several weeks to do so that I am aware of. While I do tie in some "fundamental" analysis such as trying to tie the crack spread of unleaded gasoline vs. crude oil in order to ASSUME that refining margins are/should be healthy, it is a bit curious as to why Banc of America Securities and Credit Suisse don't seem to be agreeing with that type of analysis. I admit today that I am not all that knowledgeable on what is taking place with the MTBE/Ethanol switch for blended products. The TECHNICALS for SUN look very similar to that of VLO, but SUN seems to be drawing more "negative/cautious" commentary from fundamental-based shops. One reason I like SUN as a call option play for a "refiner" is so that we can perhaps DAY TRADE, or STOCK TRADE the lower priced VLO Link , perhaps buy/short 100 or 200 shares (for a $10,000 + margin account) and then use a call/put option.

OI Technical Staff : 3/17/2006 9:59:59 PM

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Jeff Bailey : 3/17/2006 4:29:17 PM

Sometimes you get the feeling, based on observation that stocks can be "manipulated." Check this out and remember ... The Option Expiration Manipulation Game ... WMT Link

Jeff Bailey : 3/17/2006 4:07:47 PM

Google (GOOG) 339.79 +0.30% ... I never got filled on my sell long GOOG Mar $360 Call (GGD-CL) ... session high was $0.15.

Jeff Bailey : 3/17/2006 3:59:50 PM

General Electric (GE) $34.51 +0.37% ....

Jeff Bailey : 3/17/2006 3:59:24 PM

Exxon/Mobil (XOM) $61.03 -0.98% ....

Jeff Bailey : 3/17/2006 3:58:47 PM

OEX 593.13 +0.07 ... Only way I see WMT falling to $46.25 is if somebody wanted OEX 592.50.

593.00 seems round enough though.

Jeff Bailey : 3/17/2006 3:55:49 PM

No way WMT can fall to $46.25 in next 5 minutes... is there?

Jeff Bailey : 3/17/2006 3:50:52 PM

Wal-Mart (WMT) $46.75 +0.81% ... holding right on its MONTHLY R1.

Level II traders. Do you see MWSE down there at $46.11 and up at $46.86.

That's the specialist firms market maker ID out of Chicago.

Jeff Bailey : 3/17/2006 3:37:07 PM

Yes Tab we have!

Updated RS chart of Cont. Unleades vs. Cont. WTIC Link

Jeff Bailey : 3/17/2006 3:29:28 PM

03:05 Internals found at this Link

Jeff Bailey : 3/17/2006 3:15:18 PM

03:05 Market Watch found at this Link

Jeff Bailey : 3/17/2006 3:16:59 PM

Swing trade close out alert ... the Baidu.com (BIDU) $48.85 +0.95% here.

Now that I think on this a bit. The REASON I'm wanting traders to close out their short is that I learned that my broker doesn't have any stock to borrow, in order to short.

One of my responsibilities is to not just profile what I believe will be profitable trades, but to make sure YOU don't blow up your account.

Tab Gilles : 3/17/2006 3:02:14 PM

Have you noticed that gasoline prices have been inching back up in the last month? Link Link

Jeff Bailey : 3/17/2006 3:04:39 PM

I have mixed thoughts on being SHORT stocks that are so short, you can't borrow the stock anymore.

Especially when there are no OPTIONS to hedge your risk.

One thought is that there are a lot of market participants that see the stock lower over time.

The other thought is that when/if they all decide they are wrong and start competing with bullish buyers, the stock can really move.

A couple of weeks ago, after we had short BIDU (today was the first day I tried to short and didn't was told by Ameritrade they didn't have any stock to loan for a short) remember how the stock rose quickly to WEEKLY Pivot, but has since gotten smacked lower?

I'm thinking there was some type of short covering, perhaps even some brokers buying some stock to then be able to loan out.

Assess your tolerance for RISK alert on this one. I've got my SWING trade position at 1/2 as that's one way I can limit our RISK should a short squeeze develop. If this one isn't your cup of tea, then close out here.

Tab Gilles : 3/17/2006 6:12:51 PM

OPEC March 2006 Report Link Link Link

Murphy Oil down today $46.51 - $0.98 Link

Jeff Bailey : 3/17/2006 2:54:49 PM

Baidu.com (BIDU) $48.48 +0.33% ... just went unchanged.

Jeff Bailey : 3/17/2006 2:41:06 PM

Ashworth (ASHW) $9.68 +0.51% Link ... yesterday I noted that this stock "surged" higher from $8.77 to $10.00.

This is a very thinly traded golf apparel maker (yes, I'm monitoring it along with SPOR Link ). ASHW reminds me a bit of MTRX. Small cap that trades options.

$10.00 strike at the quarter had some OI on it.

Jeff Bailey : 3/17/2006 2:35:46 PM

ICE $67.82 +1.54% ... low/high $64.40-$68.39. While this one is usually a choppy trade, this one is whipping back and forth between the $65-$70 strike like crazy the past couple of days.

I told myself last night that I would NOT trade a stock today that had options on it. As soon as I attempt to trade it, the thing will whip back against me.

BIDU is the only security in our MM profiles that doesn't trade options with it.

Jeff Bailey : 3/17/2006 2:31:10 PM

I keep scratching my head as to Banc of America Securities "downgrade" on SUN, now Credit Suisse lowering their target.

I just don't envision gasoline demand falling off and while I really don't trust OPEC (remember when the economy started to show sign of life a couple of years ago and OPEC kept cutting their production, forecasting low usage).

One things I'm not up to speed on at all is this MTBE stuff.

Jeff Bailey : 3/17/2006 2:10:52 PM

Sunoco (SUN) $79.58 -2.19% ... just seeing this corrected news story from MarketWatch Link .

OPEC cut its 2006 growth demand forecast.

Credit Suisse cut it price target on SUN to $85 from $90.

Jeff Bailey : 3/17/2006 2:06:31 PM

Current OPEN MM Profiles found at this Link

Very little volume in the GOOG Mar $360 Calls and probably with good reason. Only reason to buy them today is either to close out a NAKED call and remove the risk of any unforseen move higher. Only reason to BUY LONG is if you KNEW SOMETHING FOR CERTAIN that would drive the stock higher. No volume = no interest in my opinion.

Jeff Bailey : 3/17/2006 1:53:44 PM

GOOG 339.21 +0.15% .... session low comes at DAILY S1, session high has been DAILY Pivot.

Jeff Bailey : 3/17/2006 1:52:02 PM

Jane: You comments on the VIX. Its action this week. I went looking for an "explanation" tied in the TRIN, and suddenly it came together.

As the session unfolds, we look somewhat range bound. The YM is perhaps the only index-like security that a trader like myself might be "bold enough" to trade. If I could get 10-20 points move I might be able to scalp some profit to help pay off my GOOG Mar $360 Call looming loss.

Jeff Bailey : 3/17/2006 1:41:31 PM

Jane! Once again, you got me thinking. Looked around and found a decent trade. Thank you!

Jeff Bailey : 3/17/2006 1:40:36 PM

TRIN 1.01, but juuuust shy of DAILY Pivot.

YM didn't quite make it to its DAILY Pivot.

VIX 11.05

Jeff Bailey : 3/17/2006 1:38:46 PM

YM 11,339 ... here I would cover a short from 11,360

Jeff Bailey : 3/17/2006 1:36:00 PM

TRIN 1.00

Jeff Bailey : 3/17/2006 1:35:35 PM

YM 11,377

Jeff Bailey : 3/17/2006 1:34:58 PM

TRIN alert ... 0.98

Jeff Bailey : 3/17/2006 1:30:32 PM

There had to be a HECK OF A LOT OF short-side selling (not because they WANTED TO, but because of OPTION expiration) to keep things in check.

Take the RISK of shorting futures/stock in order to save your skin on all the CALLS that had been sold, that had moved IN THE MONEY this week.

Jeff Bailey : 3/17/2006 1:28:28 PM

Is anyone questioning YESTERDAY's TRIN action? Isn't a TRIN above 1.00 and DAILY Pivot supposed to be bearish gas?

Yes it is. Guess what I think that tells us.

Jeff Bailey : 3/17/2006 1:27:19 PM

YM 11,345 ... now I'd have my finger on the buy it back button.

TRIN 0.88

VIX 11.84

Jeff Bailey : 3/17/2006 1:26:07 PM

01:07 Internals found at this Link

Jeff Bailey : 3/17/2006 1:10:16 PM

01:07 Market Watch found at this Link

Jeff Bailey : 3/17/2006 1:05:39 PM

VIX / YM/ TRIN 15-minute interval chart at this Link

I agree with Jane, that I think today is not the best day to be overly aggressive with your trading.

See that VIX action earlier today, about 1.5 hours ago? That can be an al_rt to a BIG OPTION trade having taking place.

See how I've added the DAILY Pivot Levels. VIX above DAILY Pivot, so my mind is thinking the "clutch" is slightly bearish today, but this WEEK, oh so bullish. How far out can you let the clutch?

TRIN ... plunges to DAILY S2. Bugger is BULLISH relative to 1.0 and DAILY Pivot.

But ...if the TRIN gravitates up toward 1.00 and DAILY Pivot and VIX edges up toward WEEKLY Pivot (stays ABOVE DAILY Pivot), then the YM might gravitate back toward its DAILY Pivot.

Jeff Bailey : 3/17/2006 12:49:18 PM

Here I'd be shorting the YM 11,360, stop just above this high, then targeting daily Pivot. (using TRIN and VIX)

Jeff Bailey : 3/17/2006 12:39:29 PM

Hey! Somebody's stepping on the BULLISH gas ... Here's the VIX / SPY / TRIN (15-minute intervals) at this Link

Jeff Bailey : 3/17/2006 12:26:35 PM

VIX / SPY / TRIN chart montage (15-minute intervals) at this Link

Jane: I see you are discussing this week's VIX action, and today's action. You're a/d volume observation is also very good.

Jane's comments/observations are EXACTLY why I like to place the VIX and TRIN indications next to each other in the Internals and why I feel the VIX is perhaps the most confusing indicator to many a trader (it confuses me from time to time too).

What kind of TRANSMISSION is in your car? Is it an automatic transmission where all you have to do is put the vehicle in gear and press on the gas pedal, or a "stick shift" where you have to use both a clutch (with one foot) and the gas pedal (with the other foot)?

What really started getting me hooked on Pivot Levels is how they seemed to put things into a RELATIVE range.

VIX as I've come to understand it best it to SIMPLY think of it like this. If it is going up (from any level 10.78 to 12.00) all that tells me is that at any strike, or set of options, there is MORE call selling/put buying than there is call buying/put selling. Remember, VIX can rise if all that is going on is CALL SELLING. I like to think of the VIX as the clutch on a vehicles transmission. I can have the gas pedal (TRIN) to the floor, but if I'm moving my clutch to-and-fro, I can still control the speed of the vehicle.

Now let's look at the VIX and SPY within their WEEKLY Pivots On Monday, the VIX starts out BELOW its WEEKLY Pivot and falls to its WEEKLY S1. What "should the SPY do" if we're ONLY associating VIX movement with SPY movement? The SPY should move counter-VIX, or the opposite direction right?

Jane is correct that the VIX didn't work very well on Monday. The SPY didn't really budge after its gap higher open.

If you've ever driven a "stick shift" and "popped the clutch" (released it quickly) without having your foot on the gas pedal, you've probably stalled out the engine.

That's where the TRIN comes in. This is your "gas pedal." But the TRIN is "measured" (or it should be measured) different than the VIX. Each day, the TRIN should be reset to 1.00. This makes sense doesn't it? If I take my truck for a drive and drive all day, then turn the truck off that afternoon and don't start it up to go driving until the next morning, my enging cools, overnight. The next morning when I get up and start driving again, it is a new day and a new set of road conditions (etc, etc).

But the DAILY Pivot still lets a trader know where you are/were relative to where you were the previous day! Think about that. Was I driving in the mountains the prior day and was really using the gas pedal to go up and down a mountain? Or was I in the hill country? Or were we driving across Nebraska and had the gas pedal steady? Again... 1.00 is a "waterline" point for when the engine is started. If TRIN is above 1.00 then the gas pedal is pushed more BEARISH with "sell side" gas. If TRIN is below 1.00, then the gas pedal is pushed more BULLISH with "buy side" gas.

Jeff Bailey : 3/17/2006 11:25:18 AM

11:05 Internals found at this Link

Jane Fox : 3/17/2006 11:15:04 AM

Talk about your sailboat without a rudder. I have no VIX today and now the AD line and volume are also not telling me anything. I guess this speaks volumes in itself and says "Stay out of this mess."

Jane Fox : 3/17/2006 11:12:38 AM

I modified my last post because AD volume is NOT making new daily highs.

Jeff Bailey : 3/17/2006 11:08:57 AM

11:05 Market Watch found at this Link

Jane Fox : 3/17/2006 11:12:16 AM

Still no direction Link

Jane Fox : 3/17/2006 10:52:16 AM

Link Link Link

Jane Fox : 3/17/2006 10:43:44 AM

And here is the rest of the story You might also notice that there was a sharp downward spike, followed by an upward spike about 4 days ago -- on both put-call charts. That was an artificial move caused by dividend arbitrage in Altria (MO). Last Friday, over 2.4 million call options traded in MO, prior to Monday's ex-dividend of 70 cents. That was a huge amount of call volume, and it caused the put-call ratios to spike downward. However, by the next day, the 'regular' option activity in the overall market returned, pushing the ratios to new highs and keeping them on sell signals.

Finally, $VIX fell to near its historic lows recently. That is bullish. You can see the breakdown in the chart in Figure 4. The close below 11.50 was the confirmation that any bearish scenario from $VIX was dead, and the bulls took control. As long as $VIX remains at these low levels, the market can continue to rise.

In summary, we look for $SPX to run to the 1320-1325 area at least. That's commensurate with the move that took place near the first of the year when the market broke out to the upside at that time. This is more important than the fact that it's been three years since this market had a meaningful correction, or the fact that the mid-year of the Presidential Cycle (this year) usually sees a sharp decline into a good trading bottom. Those longer-term facts may lead to a decline later this year, but for now the bulls have the upper hand and -- for once -- seem to be taking advantage of it.

Jane Fox : 3/17/2006 10:31:44 AM

I will report McMillan's weekly commentary in two pieces today. Here is the first Traders have been frustrated by this market's inability to hold what happeared to be breakout moves -- on both the upside and the downside. Nevertheless, this one looks like it might have 'staying power.' Both $SPX and $DJX (the Dow) have broken out to new 5-year highs, and appear to be holding the breakout levels. QQQQ is not nearly in as good shape, but a close above 42 would be constructive for that index as well.

Most of our technical indicators are falling into line with this breakout move, although it is still the case that none have given true buy signals for quite a while. For example, market breadth has expanded nicely in the last few days as $SPX approached the 1295 resistance area and then broke on through. Prior to that, though, there was not a true oversold condition which would have been a proven buy signal.

The one problem we've had all along is that the equity-only put-call ratios have remained on sell signals since early February. They are shown in Figures 2 and 3. They are still on sell signals, but if you look closely, you will see that they 'ticked' downward after Wednesday's close. Buy signals will arise if they roll over and begin to trend downward. This could be the beginning of such a signal.

Jeff Bailey : 3/17/2006 10:09:59 AM

Current OPEN MM Profiles found at this Link

Jane Fox : 3/17/2006 10:05:32 AM

Dateline Reuters U.S. consumer sentiment held steady in early March, a report showed on Friday. The University of Michigan's preliminary March index of consumer sentiment read 86.7, unchanged from the final February figure of 86.7, said sources who saw the subscription-only report. The median forecast of Wall Street economists polled by Reuters was for a rise in the preliminary March index to 88.0.

The survey's index of current conditions rose to 106.2 in early March from 105.6 in February. The gauge on consumer expectations, however, went in the opposite direction, slipping slightly to 74.2 in early March from the final February reading of 74.5.

Confidence measures are often used as a gauge of future spending patterns. Consumer spending comprises roughly two-thirds of overall U.S. economic activity, and is seen as an indication of strength or weakness in economic growth.

Jeff Bailey : 3/17/2006 10:02:48 AM

10:00 Market Watch found at this Link

Jeff Bailey : 3/17/2006 9:52:12 AM

10-year yield ($TNX.X) up 3.0 bp at 4.676%.

Jeff Bailey : 3/17/2006 9:50:15 AM

Google (GOOG) $335.00 -1% Link ... O gets the square.

Jeff Bailey : 3/17/2006 9:43:01 AM

Baidu.com (BIDU) $49.86 +3.18% ... I tried shorting a little more on this "pop," but Ameritrade telling me there is no stock available at this time.

Jane Fox : 3/17/2006 9:35:43 AM

I'm not sure I will even report the VIX today because it has been useless most of this week. Too bad, for some OPEX weeks it is OK.

Jane Fox : 3/17/2006 9:34:31 AM

With the AD line at +563 and AD volume above 0 the bulls have the reins.

Jane Fox : 3/17/2006 9:31:23 AM

Dateline WSJ U.S. industrial output increased at a solid clip in February, driven largely by a surge in utilities production and robust consumer goods output.

The output gains put a further strain on capacity use, which could pose an inflationary threat in coming months.

Industrial production rose 0.7% in February, the Federal Reserve said Friday, reversing a 0.3% decrease in January, which was previously estimated at a 0.2% drop. "The output of utilities jumped 7.9% in February, as the weather moved closer to seasonal norms after January's warm temperatures," the Fed said.

Capacity utilization edged up 0.4% to 81.2%, matching the highest level since September 2000. The previous month's capacity usage was revised to 80.8% from 80.9%.

Manufacturing production was unchanged in February following January's 0.8% gain. The Fed said production at the nation's mines fell 0.5% last month.

Jeff Bailey : 3/17/2006 9:27:30 AM

Baidu.com (BIDU) $48.32 ... higher at $50.26 pre-market. The company's search services will be made available via a search icon on the screen of some Nokia phones.

Jeff Bailey : 3/17/2006 9:19:06 AM

Google (GOOG) $338.77 ... $340.04 pre-market. This isn't going to do anything for our $360 Calls. Open order to sell for what we can as long as a broker commission is covered.

Jane Fox : 3/17/2006 9:16:48 AM

Futures are climbing so the 9:15 report must have been good. I will will report the numbers as soon as I can.

Jane Fox : 3/17/2006 9:11:04 AM

... and Mid March University of Michigan Consumer Sentiment at 9:45 (or there about for this report is notoriously late)

Jane Fox : 3/17/2006 9:09:20 AM

Remember we have February's Industrial Production and Cap Utilization at 9:15EST.

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