Option Investor
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Jeff Bailey : 8/16/2006 1:10:11 AM

QQQQ August Option Montage at the close with Monday's Open Interest readings at this Link

Total up all the $36/$37/$38 Calls and you come close to the $36 Put OI.

From the "long option" trader's perspective, biggest near-term RISK is in the Aug $37 Calls (3-days to expiration).

Eyeballing a QQQQ Friday close of $37.43.

QQQQ Option Montage from Tuesday at 12:37:54 PM EDT Link and volume really cranked on the $38 Calls in last 1/2 of session.

Jeff Bailey : 8/16/2006 1:09:59 AM

Current OPEN MM Profiles that I've made at this Link

Today's Activity

Lowered the stop on the Deere, Co DE Sep $75 Puts (DE-UO) to $68.75 in the underlying and was stopped at the bid of $6.80 ($+1.50/contract, or +28.3%)

Swing traded long 1/2 position in shares of Dynamic Materials (BOOM) at the offer of $31.34. Stop currently $30.75, targeting $32.90.

Lowered stop on the 1/2 position short for the StreetTracks Gold (GLD) to $63.60.

Might be an active day for the MM profiles tomorrow, so be at the ready.

CPI and host of other ecomic reports could impact GLD position.

Then EIA Weekly Inventory data at 10:30 AM EDT with ICE and OXY.

OXY splits 2:1 at Wednesday's opening tick. I'll update/replace the OXY-IA with OXY-IX (Might have a ticker change on the option). Stop becomes $49.00.

Jeff Bailey : 8/15/2006 11:55:28 PM

Marc ... just seeing your 08/15/06 03:54:29 PM and 03:57:23 post.

That QQQQ August $36 Put OI looks more like SELLING with obligation to buy, that all out put BUYING.

What do you think? As short covering hits in July, institutions sold the $36 Puts for $+0.80 premium.

Jeff Bailey : 8/15/2006 11:28:23 PM

NASDAQ Summation ($NASI) 10-point box (X -690) Link

Jeff Bailey : 8/15/2006 11:28:17 PM

NYSE Summation ($NYSI) 10-point box (X to +250) Link

Jeff Bailey : 8/15/2006 11:24:30 PM

StockCharts.com's Bullish % Measures

NYSE Bullish % Link

NASDAQ Comp. Bullish % Link

S&P 500 Bullish % Link

S&P 100 Bullish % Link

NASDAQ-100 Bullish % Link

Dow Industrials Bullish % Link

Keene Little : 8/15/2006 11:07:20 PM

Wednesday's pivot tables: Link and Link

Jeff Bailey : 8/15/2006 11:09:28 PM

What about "mid-caps?" ....

IWR $90.08 +1.72% Link

IWP $92.64 +1.97% Link

IWS $132.61 +1.48% Link ... Oh my! "What's in your wallet?"

Jeff Bailey : 8/15/2006 10:39:07 PM

IWO / QQQQ PnF relative strength chart Link

I'm a bit surprised here. I would have thought "small cap growth" outperforming "large cap growth."

Trades back and forth for much of the year.

Bull strategy might be to play the Small Cap Value instead of Small Cap Growth, then for the growth, stay with something like the QQQQ.

Jeff Bailey : 8/15/2006 10:34:24 PM

I know what you're thinking! ... OK Jeff, I understand that part of "style" (ie .. growth vs. value) ... what about large-cap growth vs. small cap growth?

Jeff Bailey : 8/15/2006 10:32:07 PM

IWN's $71.58 +2.11% August "Max Pain Theory" is $70 ($1 increments)

IWO's $69.46 +2.50% August "Max Pain Theory" is $70 ($1 increments)

Jeff Bailey : 8/15/2006 10:17:32 PM

IWN / IWO PnF-style relative strength chart, 1-point box Link

Jeff Bailey : 8/15/2006 10:14:33 PM

"Growth" not as strong with the PnF chart of IWO Link and its bar chart Link

Jeff Bailey : 8/15/2006 10:12:18 PM

"Value" more in favor with the PnF chart of IWN Link and its bar chart Link

Jeff Bailey : 8/15/2006 10:10:01 PM

Remember! There are Russell "value" (AMEX:IWN) $71.58 +2.11% and Russell "growth" (AMEX:IWO) $69.46 +2.50% iShares.

Jeff Bailey : 8/15/2006 10:03:27 PM

Russell 2000 Index (RUT.X) and a daily interval bar chart at this Link ... Same high close and 06/13/06 low close as shown in some of Monday and tonight's Market Wrap.

Check out the March-May 2005 high close/low close retracement.

OI Technical Staff : 8/15/2006 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

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Marc Eckelberry : 8/15/2006 9:26:28 PM

AMAT delivers. CPI tomorrow. Watch gold 626/629 support and 642 R. SMH needs to keep 31.70. NQ 1544 is weekly R2 and we are already there. Lots of bear out there, checked a few websites, this one has everyone calling for a tsunami of sorts. Maybe. Link

Jeff Bailey : 8/15/2006 5:53:28 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 8/15/2006 5:28:54 PM

Closing Internals found at this Link

Marc Eckelberry : 8/15/2006 4:01:13 PM

SMH headed for 33 as we cruise past 61.8% and 50 dma.

Jane Fox : 8/15/2006 3:58:38 PM

Economic Reports for tomorrow include:

8:30a.m. July Consumer Price Index. Consensus: +0.4%. Previous: +0.2%.

8:30a.m. July CPI, Ex-Food & Energy. Consensus: +0.3%. Previous: +0.3%.

8:30a.m. July Housing Starts. Consensus: -2.2%. Previous: -5.3%.

9:15a.m. July Industrial Production. Consensus: +0.6%. Previous: +0.8%.

9:15a.m. July Capacity Utilization. Previous: 82.4%.

Marc Eckelberry : 8/15/2006 3:59:19 PM

The Bull/Bear ratio is also at the lowest since 2002. All indicators that shorts could have more pain ahead. Link

Jeff Bailey : 8/15/2006 3:57:04 PM

Only test for conviction now is if QQQQ can hold the close above trend at about $37.60. No question about $37.25.

Those short become eager buyers on QQQQ at $36.33.

Marc Eckelberry : 8/15/2006 3:57:23 PM

In fact, at 682,000 puts, the QQQQ August 36 strike shows the highest short sentiment I can remember. Maybe 2002 was higher, I forgot. Lately, I saw 450K at the 40 strike in December, but this takes it.

Marc Eckelberry : 8/15/2006 3:54:29 PM

Jeff, those short interest figures are one month late. Just loking at QQQQ 36 puts last week, I think when they release the August numbers, we could see a jump from July.

Keene Little : 8/15/2006 3:56:17 PM

ES is pushing closer to its downtrend line from the May high, currently at 1291.75. Bears are being driven out of the park into the close but I still like a short from here and would consider it at the cash close.

Marc Eckelberry : 8/15/2006 3:53:21 PM

SPSX hits 1286, a target from 2001, so I doubt it will get past that today. Looks like INTC did a head fake and is now cathing up. I am still long my calls, but I did not feel comfortable keeping readers in. I am a bit more adventurous. I expect this rally to plod along right through early September. Again, if QQQQ 50 dma holds.

Jeff Bailey : 8/15/2006 3:47:07 PM

Every NAKED CALL writer and his/her brother/sister buying them back with a vengance.

Jeff Bailey : 8/15/2006 3:46:20 PM

VIX 13.16 -7.71% ... oh my! WEEKLY S2 just below.

Jeff Bailey : 8/15/2006 3:45:33 PM

BIDU $77.14 +8.72% ... more than a "little" pain being inflicted on some.

Jeff Bailey : 8/15/2006 3:43:10 PM

Short Interest Link from NASDAQ Market Site

Jeff Bailey : 8/15/2006 3:42:25 PM

DIA ... short interest as of July 14 was 14.29 million, up from June 15 of 13.74

Jane Fox : 8/15/2006 3:41:23 PM



Jeff Bailey : 8/15/2006 3:40:22 PM

SPY ... short interest as of July 14 was 98.3 million, down from June 15 of 118.24 million.

Jeff Bailey : 8/15/2006 3:39:18 PM

QQQQ ... short interest as of July 14 was 124.3 million, down from June 15 of 149.9 million.

Jeff Bailey : 8/15/2006 3:32:13 PM

QQQQ $37.75 +2.64% ... gets the trade at WEEKLY R2.

Jeff Bailey : 8/15/2006 3:31:44 PM

Only bears that "piled on" today was just after the cash open, but they left at QQQQ $37.35 in my opinion.

Marc Eckelberry : 8/15/2006 3:28:14 PM

The amount of bearish bets that still need to unwind is staggering. And of course, more bears piled on today. If bulls can work this one right, the rally could have legs into next week and labor day after some backing and filling. Just as long as SMH and QQQQ 50 dma hold.

Marc Eckelberry : 8/15/2006 3:26:08 PM

They are going to keep buying right into the close. NQ should tag 1544/1545.

Marc Eckelberry : 8/15/2006 3:21:23 PM

SPX 1286 is a big deal and I would be more comfortable shorting ES than NQ.

Jeff Bailey : 8/15/2006 3:20:28 PM

03:00 Internals found at this Link

Marc Eckelberry : 8/15/2006 3:16:46 PM

Wednesdays are often bearish on opex week, but it sometimes waits until mid morning. We will see, but I am watching NQ 1544 now, weekly R2.

Marc Eckelberry : 8/15/2006 3:15:52 PM

It;s not huge volume, but it is better than the upside volume we have seen this month.

Marc Eckelberry : 8/15/2006 3:14:06 PM

My view is to be very careful shorting a first time break and close above such an important MA as the 50 dma. We will see where the Q's close, but if it is above 37.37, it would be quite a turning point and set up the gap close from July just under 39. I'm not saying we won;t go down and retest 37.37, I would be a little patient here as something has clearly changed. Again, this is the first time since May that QQQQ trades above 50 dma and the same goes for SMH and they are doing it on volume.

Jane Fox : 8/15/2006 3:11:40 PM

These should have kept you on the long side all day today. Link

Jane Fox : 8/15/2006 3:09:12 PM

The short I was talking about in my 3:02 post is for a swing trade and not a day trade. Sorry I should have specified that. For a swing trade I don't use the futures and in this case the Qs would work nicely.

Jeff Bailey : 8/15/2006 3:04:36 PM

03:00 Market Watch found at this Link

Jane Fox : 8/15/2006 3:02:39 PM

NQ is hitting the resistance and I think it is a great place to get short. Link

Marc Eckelberry : 8/15/2006 2:59:13 PM

As I thought, shorts scrambling like mad once NQ went above 50 dma and some computers hit the buy button. Computers don't care about timing or worry about being wrong, they just buy when the parameter is set and off we go. Volume is the highest we have seen in a while, almost 100% normal.

Jeff Bailey : 8/15/2006 2:59:38 PM

Swing trade long alert ... for 1/2 bullish position in Dynamic Materials (BOOM) $31.34 +3.29% here, stop $30.75 target $32.90

Keene Little : 8/15/2006 2:58:38 PM

ES is pressing a little higher now and is hitting the top of the channel I showed earlier (12:57) which is at about 1288.75 right now. Negative divergences continue and therefore this is a good spot to try a short play.

Jeff Bailey : 8/15/2006 2:56:58 PM

Baidu.com (BIDU) $74.50 +5% ... good gravy! Pulls away from WEEKLY Pivot with some force. Couldn't pull the trigger an hour ago.

Marc Eckelberry : 8/15/2006 2:54:46 PM

QQQQ is headed for 38.64 gap open. Possible this week, right down the wire if we hold 50 dma and shorts get whacked. 38.50 was my target for this week, before that last selling we had and I had stopped believing it could happen, but this might be a suprise week for bears.

Marc Eckelberry : 8/15/2006 2:52:32 PM

1544 is next target for NQ. Support is now 50 dma at 1533.50. First time since May. Same with SMH.

Jeff Bailey : 8/15/2006 2:46:55 PM

Ryland Group (RYL) $40.73 +3.40% ... busts a move.

Jeff Bailey : 8/15/2006 2:46:04 PM

Russell 2000 Index (RUT.X) 695.28 +1.98% ... edges above WEEKLY R1.

IWM $69.25 +1.83% ... its WEEKLY R1 is $69.33 and yet to be tested. August "Max Pain" still some room to $70.

Marc Eckelberry : 8/15/2006 2:40:04 PM

NVDA going gangbusters. Earnings mattered more than the option grant business.

Marc Eckelberry : 8/15/2006 2:36:59 PM

Alert: CLose INTC Jan 17.5 calls at 1.80, +.10. The stock is lagging the market.

Jane Fox : 8/15/2006 2:36:23 PM

VIX is falling so there is a much better chance now that ES will break to a new high and that it will hold.

Jeff Bailey : 8/15/2006 2:32:33 PM

VIX 13.43 -5.82% ... has spent the ENTIRE DAY below 14.00. This is a first since late June/early July.

Jeff Bailey : 8/15/2006 2:29:54 PM

DuPont (DD) $39.99 +2.40% ... $40 Call OI 6,954 vs. $40 Put OI 4,048.

Jane Fox : 8/15/2006 2:27:02 PM

ES peeks to a new daily high but I don't think it will have follow-through.

Jeff Bailey : 8/15/2006 2:25:42 PM

YM 11,235 ... finally gets the trade at 11,240

Jeff Bailey : 8/15/2006 2:19:36 PM

Occidental Petroleum (OXY) $103.50 +1.10% ... came very close to WEEKLY S2 ($101.92) this morning, has been bumping along WEEKLY S1 ($103.55) since 10:40 AM EDT. This is a third attempt.

Jane Fox : 8/15/2006 2:16:18 PM

ES tests daily highs but VIX is no where near its daily lows so ES's highs should hold for now.

Jeff Bailey : 8/15/2006 2:07:29 PM

Dollar Index (dx00y) 85.18 -0.53% ... right at its WEEKLY Pivot.

Jeff Bailey : 8/15/2006 2:06:28 PM

My 10:51:24 Post was this morning's 09:00 AM release of the Treasury Intl. Capital Report

Consensus was $62.8B

Today's dollar weakness a "surprise" to me. "Should have" found dollar strength on those numbers, but PPI figures seem to be more important.

Jane Fox : 8/15/2006 2:04:15 PM

IF the bulls are going to make new daily highs today they better get their royal butts in gear. It is getting quite late in the day.

Jeff Bailey : 8/15/2006 1:57:17 PM

Gold and dollar index both lower today. At least "tells me something" that gold isn't all about the dollar, which most of us knew all along.

Jeff Bailey : 8/15/2006 1:55:45 PM

If I, or the MM profile was short a FULL position, I'd be taking 1/2 of it off the table today.

Jeff Bailey : 8/15/2006 1:54:54 PM

StreetTracks Gold (GLD) $61.82 -0.69% ... Daily interval bar chart we've been trading (long and short) at this Link ... Noting both WEEKLY S1 and 50-day SMA. Trader's DO NOT short new positions here. Snug down short position stops, monitor for the break.

CPI and Industrial Production/Capacity Utilizatioin due out tomorrow morning.

Jane Fox : 8/15/2006 1:53:08 PM

Bullish above and bearish below. Very simple with no room for interpretation.

Jane Fox : 8/15/2006 1:51:43 PM

TAke everything off the Gold chart except for one trendline. Now tell me if that one trendline is about the most useful indicator you could find. Link

Jeff Bailey : 8/15/2006 1:43:28 PM

GLD ... 40-cent box chart at this Link ... futures traders will view on $4.00 box, so I adjust GLD for $0.40

Marc Eckelberry : 8/15/2006 1:42:48 PM

On the future's end, October gold is right at 50 dma as well Jeff.

Jane Fox : 8/15/2006 1:42:10 PM

See how the markets are moving sideways and MACD is moving down. This is bullish. Link

Marc Eckelberry : 8/15/2006 1:41:22 PM

Gold drops back down to 626.50 after an attempt at a bounce and the equity rally resumes.

Jeff Bailey : 8/15/2006 1:40:54 PM

BIG, BIG, BIG near-term test coming up for the StreetTracks Gold (GLD) $61.80 -0.72% ... at $61.50 area.

WEEKLY S1 and my two high/low retracement.

And 50-day SMA

Marc Eckelberry : 8/15/2006 1:37:41 PM

What we look for now is if enough cash has been raised by selling equities, above an beyond what was needed to cover positions after the BOJ move, thus ensuring a need for money to move to valuation, if that is deemed to be present. That is not certan yet, but we are close. Bond allocations will eat into this scenario, but enough should be left to move into techs/small caps as rates go down.

Jeff Bailey : 8/15/2006 1:32:34 PM

The NAHB data was released at 01:00 PM EDT (see 01:26:47 post)

Jeff Bailey : 8/15/2006 1:26:47 PM

Homebuilder's Outlook Least Optimistic In 15 Years

DJ- The National Association of Home Builders' index for U.S. sales of new, single-family homes fell in August to 32, its lowest point since February 1991 when the economy was in recession.

The housing market index, compiled by the NAHB and Wells Fargo, was down seven points from July's unrevised level of 39. August was the seventh straight month of declining builder confidence, as gauged by the index.

"It's important to recognize that home sales and housing production are subsiding from record levels a year ago, and those levels clearly were unsustainable," said NAHB Chief Economist David Seiders. "We expect the erosion in market activity to continue through most of this year before stabilizing in 2007."

Builder sentiment tends to contract more than actual sales and production, Seiders said. For their part, buyers should be optimistic about the market, he said, citing a healthy economy, historically low interest rates, slowing price appreciation and builders' sales incentives.

The NAHB economist attributed homebuilders' dimming view of the market to two main factors: increasing sales cancellations and substantial inventory growth for both new and existing homes. More potential buyers are taking a "wait-and-see" approach to the market, and high energy prices also seem to be weighing on demand, he said. In addition, real estate investors and speculators are withdrawing as expected after a big influx in 2004-05, he said.

The index was based on a survey of 436 home builders, who answer questions about sales prospects now and in the near-term. When the Housing Market Index is under 50, it means the number of builders who see "poor" sales outnumber those who see "good" sales. It has been under this threshold since May.

Within the NAHB's Housing Market Index, the component for present sales of single-family homes fell seven points in August to 36. Meanwhile, expectations for sales in the next six months decreased six points to 40, and the traffic of prospective buyers fell six points to 21, the NAHB said.

The NAHB index fell during August in all four regions of the country. It was down three points to 34 in the Northeast, down five points to 15 in the Midwest, down nine points to 41 in the South and down ten points to 42 in the West.

The numbers are adjusted for seasonal variations.

Keene Little : 8/15/2006 1:25:57 PM

The 30 amd 60-min charts are overbought so a pullback would be logical here. Perhaps a choppy pullback to the broken downtrend line at 1278-1280 (depending on how long it takes into tomorrow) which would set up a nice long play.

Jane Fox : 8/15/2006 1:21:05 PM

ES is finding support at its PDH 1283.25.

Jeff Bailey : 8/15/2006 1:21:36 PM

20-dayNet% ... DIA +3.46%, SPY +3.41%, QQQQ +3.40% ... That would be "simple" Net Change. Not sure what the exponential would be.

Jeff Bailey : 8/15/2006 1:18:18 PM

ICE $60.30 +0.43% ... "held up," or "held back" by $60.00 strike? Session high $60.99 and session low $60.00.

Jane Fox : 8/15/2006 1:17:32 PM

Man alive the internals are all messed up again. Volume climbing, line falling, Vix climbing and TRIN doing nadda!

Jeff Bailey : 8/15/2006 1:17:20 PM

See quite a few $X.99's and $X.01's today.

Jeff Bailey : 8/15/2006 1:16:50 PM

Here comes AXP $52.45 +1.23% ... off its highs of, of, of $52.97.

Jane Fox : 8/15/2006 1:16:32 PM

I just got stopped at 1283.75.

Jane Fox : 8/15/2006 1:15:20 PM

I moved my daughter's 401(k) out of equities and into bonds.

Marc Eckelberry : 8/15/2006 1:17:02 PM

The interim bull is in bonds and I would buy them on weakness.

Jeff Bailey : 8/15/2006 1:14:24 PM

01:00 Internals found at this Link

Jane Fox : 8/15/2006 1:13:57 PM

I know where money needs to go - into my pocket!

Marc Eckelberry : 8/15/2006 1:13:25 PM

The bull market got severaly spanked when the BOJ raise rates from zero a few months ago. Nothing else. The cheapest international hedge and leverage out there disappeared and funds lost billions overnight as all of sudden they could not cover the cost of selling volatility.

Jeff Bailey : 8/15/2006 1:04:01 PM

Where's the best risk/reward? That's what I always ask myself.

Jeff Bailey : 8/15/2006 1:03:03 PM

01:00 Market Watch found at this Link

Marc Eckelberry : 8/15/2006 1:01:50 PM

Where does money need to go is what you must always ask yourself.

Marc Eckelberry : 8/15/2006 1:01:24 PM

In the end, MA's and pivots are self-fulfilling prophecies, compete arbitraries. I mean why 10, not 12? WHy 200 not 225? It means nothing but what we agree on. Fibs is the only nature's constant especially when it comes to the golden fib, 61.8, .618 etc... Otherwise a self-fulfilling prohecy as well. Realize that as more and more traders latch on to pivots, it will also become a useless tool over time, other than a contrarian play against the poor sould still using them. The fashionable one now is sentiment and options, combined with volatility. That too will become overplayed and we will get tricked, like I have starting seeing in May opex and even this one. In the end, traders will have to learn how to use their brains and study economics and money flows and macro economic issues. That never lies. Interest rate plays, hedges, international structures like what we see with hedge funds and BOJ. That is of course of you want the big returns, then you MUST go macro. In dayrading, you can make an OK living playing in and out of oscillators and getting stopped left and right, but frankly, you make more money starting a pizza parlor for the work involved.

Jane Fox : 8/15/2006 12:59:39 PM

VIX peeking to a new daily low.

Jane Fox : 8/15/2006 12:57:55 PM

MACD is falling as price is moving sideways and is another reason that I think daily highs will be broken.

Keene Little : 8/15/2006 12:57:39 PM

It looks like we have a new up-channel in place now but as shown here ES is pressing the top of it which is currently at about 1288, the same level that has acted as resistance several times in the last 2 weeks. Link

Jane Fox : 8/15/2006 12:56:18 PM

ES did not have enough to push through to a new daily high.

Jane Fox : 8/15/2006 12:55:28 PM

Of course, IMHO, there is nothing that can replace the internals for daytrading.

Jane Fox : 8/15/2006 12:54:57 PM

ES tags its daily highs but the VIX is not tagging its daily low... yet.

Jane Fox : 8/15/2006 12:53:40 PM

Do the buyers or sellers come in at the 20MA on the 5 minute or the 1 minute or is the 50MA on the 60 minute. You just never know.

Keene Little : 8/15/2006 12:53:26 PM

The 15-min chart is showing negative divergences at today's highs following the first one this morning. We could still press to a minor new high (or negate the negative divergences all together and head much higher) but I'd be reluctant to chase it higher. I'd like to see a deeper pullback first.

Jane Fox : 8/15/2006 12:52:35 PM

I once subscribed to a trading site that used the 8MA (can't remember which one EMA or SMA) on a 13 minute chart (or was it a 13MA on an 8 minute chart) and totally swore it was the line in the sand. There is just too many combinations and permetations of MAs and timeframes for me to rely on any but the majors like the 20, 50, 100 and 200.

Jane Fox : 8/15/2006 12:46:03 PM

Isn't it great that the readers have such a diversified group of commentators?

Jeff Bailey : 8/15/2006 12:45:27 PM

QQQQ Option Montage ... Aug/Sep strikes at this Link

Marc Eckelberry : 8/15/2006 12:47:13 PM

I think moving averages are the biggest deal out there, aside from fibs, pivots and RSI divergences. FIBS and pivots are not lagging, which is why they are tops, but MA's is where the majority of computerized buying or selling kicks in.

Marc Eckelberry : 8/15/2006 12:43:22 PM

NQ and 50 dma (sma). Pretty clear: Link

Jane Fox : 8/15/2006 12:41:01 PM

MAs to me are not a big deal and since I don't use them intraday which one to use is a moot point for me. I think trendlines and swing highs and lows are much more important. However, the point I was hoping to make is that it is important that we specify which one we are using for the readers.

Jeff Bailey : 8/15/2006 12:30:16 PM

I know very few professional traders that use EMA Marc.

The prices two weeks ago as important as prices today. EMA weights more importance near-term.

Jeff Bailey : 8/15/2006 12:28:49 PM


DJ- Institute of International Finance finds oil-rich investors are spending billions of dollars on foreign assets but have been apprehensive about directly investing in the U.S. since 9/11, suggesting they're using U.K. and Asian intermediaries.

Marc Eckelberry : 8/15/2006 12:23:22 PM

In fact, I would bet 75% of retail traders out there only use sma. I agree that ema is more to the point, but I have definitely noticed that it takes a back seat to sma on daily, weekly and monthly and I have labored over this for years, finding the right balance. However, I only use ema on intraday charts. I think sma on intraday is an oxymoron.

Marc Eckelberry : 8/15/2006 12:19:11 PM

Jane, no big deal. But realize that only traders fool around with ema's, the general public hears "moving average" , it is pretty clear it is sma. I have been writing dma for simple day ma for years and have not heard any complaints, but I will try to change my wayward ways...

Jane Fox : 8/15/2006 12:13:10 PM

Try to stay long and I think you will be rewarded later today.

Jeff Bailey : 8/15/2006 12:11:50 PM

Correction Alert! to this morning's 11:00 internals and NH/NL readings for both the NYSE and NASDAQ.

I deleted that post

NYSE NH/NL currently 61:11


SPX NH/NL 16:1

Jane Fox : 8/15/2006 12:06:40 PM

NEW YORK (MarketWatch) -- With a batch of scuttled IPOs this summer adding to the void, the market for initial public offerings has slowed down this year in the face of rising interest rates, record oil prices and geopolitical jitters.

A total of 137 U.S. initial public offerings have priced in 2006 for proceeds of $26.3 billion, according to Dealogic.

That's about 10% less in number than the 153 IPOs priced in the year-ago period for proceeds of $28.3 billion.

Forty-two IPOs have been withdrawn or postponed so far in 2006, a 17% increase compared to this time in 2005, when 36 deals had been withdrawn or postponed.

IPO investors have been particularly cool to the tech sector, once the darling of the IPO market, after the lackluster debut of Vonage (VG) , hit by swooning markets in May. Another high profile IPO from Burger King (BKC) has been bumpy.

Jane Fox : 8/15/2006 12:03:45 PM

Marc I don't think it is accepted that MA means simple and is why will always try to specify.

Jane Fox : 8/15/2006 12:02:26 PM

Looking at the market from a bullish point of view you have to consider the huge gap we had this morning, which has not been filled and we are consolidating at daily highs suggesting higher highs are in store later on today.

Marc Eckelberry : 8/15/2006 11:49:14 AM

1534.50 is 23.6% 2006.

Marc Eckelberry : 8/15/2006 11:48:41 AM

If you indicate MA, it is pretty much accepted it is SMA. EMA is the one that has to be specified. I use DMA to quickly differentiate from intrady MA, otherwise I will write 10 day ema or so. I think readers get it.

Jeff Bailey : 8/15/2006 11:45:59 AM

VXN.X 18.43 -3.55% ... hasn't fallen below yesterday's lows, but call buyers/put sellers outnumber call sellers/put buyers.

DAILY Pivot Levels ... 17.65, 18.38, Piv= 18.79, 19.51, 19.92.

WEEKLY Pivot Levels ... 17.60, 18.83, Piv= 21.13, 22.36, 24.66

Jane Fox : 8/15/2006 11:45:14 AM

Marc that is what I thought and that we should probably clear that up for the readers since we are both looking at the 50MA on the NQ chart.

Marc Eckelberry : 8/15/2006 11:47:21 AM

In any case, that is our stall earlier, right below 50 dma (sma). There is no other indicator in sight there, other than 23.6% at 1534.

Marc Eckelberry : 8/15/2006 11:44:10 AM

Only use sma on the daily, except maybe 10 and 200, Jane.

Marc Eckelberry : 8/15/2006 11:43:27 AM

They see you coming with your 1 or 2 contract short orders right at key resistance. If anything they will knick you at 1535 or so, catch a thousand stops or two.

Jane Fox : 8/15/2006 11:42:44 AM

Marc the 50EMA on TS is at 1539. R U using the 50SMA?

Marc Eckelberry : 8/15/2006 11:41:39 AM

I wonder how many traders are shorting NQ 50 dma at 1533. It looks like small traders because we are holding and about to crack it.

Jeff Bailey : 8/15/2006 11:41:48 AM

QQQQ $37.44 +1.82% ... 5-minute interval chart with my MONTHLY/WEEKLY Pivot retracement and QCharts' DAILY Pivot levels turned on at this Link ... Cursor set on move above the $37.25 level.

QQQQ should not come back below $36.91 today.

Jane Fox : 8/15/2006 11:40:09 AM

The VIX made a new daily low and ES did not make a new daily high. This usually is quite bullish - no really bullish - but that did not seem to make too much of a difference today. My ES long is hanging on by its teeth. I have a stop at 1283.75 and the last low was 1284.

Jane Fox : 8/15/2006 11:36:29 AM

But the markets are struggling.

Jane Fox : 8/15/2006 11:36:03 AM

I wonder if we will get a late day sell off like yesterday? The market rarely repeats itself two days in a row.

Marc Eckelberry : 8/15/2006 11:32:47 AM

COMP slanted inverted H&S, not as powerful, but valid. Sets up 2130 if 2100 holds: Link

Jane Fox : 8/15/2006 11:31:26 AM

With internals that bullish you should be able to get long and stay long but price is telling us a totally different story today.

Jeff Bailey : 8/15/2006 11:30:53 AM

QQQQ $37.45 +1.84% ... today's trade above $37.30 NEGATES that h/s pattern discussed last week. 4 million shares traded on the move above $37.30, signaling to me that the MARKET also deems that a very important level.

Today's close looms large in my opinion.

Jane Fox : 8/15/2006 11:30:30 AM

Here are the internals. :

AD line +2142
AD volume making new daily highs
VIX making new daily lows
Trin 0.70

Jane Fox : 8/15/2006 11:29:26 AM

The internals are about a bullish as they can get yet ES cannot make new daily highs.

Marc Eckelberry : 8/15/2006 11:25:13 AM

Those with a longer perpective should keep it at 1504.

Marc Eckelberry : 8/15/2006 11:24:11 AM

Just raise your stops if you caught the earlier dips. NQ stop should be moved up to 1515.

Marc Eckelberry : 8/15/2006 11:22:26 AM

An NQ close above 1533 would open the floodgates, but we are several hours from that and we have been fooled before.

Keene Little : 8/15/2006 11:20:41 AM

The move up looks constructive so far but we're starting to see some short term negative divergences. I'd look for another pullback and see if it will continue to hold above the broken downtrend lines (unlike yesterday) and try a long play again on that pullback.

Marc Eckelberry : 8/15/2006 11:20:36 AM

NQ 1533 did act as resistance so far. It's the 50 dma and along with SMH 31.70 50 dma, haven't played with that in months.

Marc Eckelberry : 8/15/2006 11:19:16 AM

There are that many times rallies can fail and bears get away with it. This one is being shorted all the way, but someone is buying pretty steadily and it could be the one that sticks. It's a tough call with CPI tomorrow, but that is exactly what keeps it going as shorts pile on. This is why I am watching gold, it tells me if it is for real and right now, it looks that way, but again watch 626.50. Gold is important because inflation is the biggest concern out there these days, and that is your canary in the mine.

Jeff Bailey : 8/15/2006 11:17:52 AM

Swing trade short lower stop alert ... on the StreetTracks Gold (GLD) $61.80 -0.70% ... to $63.60.

Jeff Bailey : 8/15/2006 11:16:58 AM

Great observation Marc, and I was thinking/seeing same thing (see 10:59:13).

Jane Fox : 8/15/2006 11:14:54 AM

One of our readers is a realtor in Phoenix Az and has sent me an email about the housing inventory in her area. In June 2005 there were ~ 1650 homes in the 250-300K range. Today there are over 8500 homes in that range.

Jane Fox : 8/15/2006 11:07:41 AM

VIX is now confirming the bullishness with new daily lows.

Jane Fox : 8/15/2006 11:06:54 AM

I am long Es here with a stop at 1283.75.

Jane Fox : 8/15/2006 11:06:06 AM


Jeff Bailey : 8/15/2006 11:02:21 AM

11:00 Market Watch found at this Link

Marc Eckelberry : 8/15/2006 10:59:13 AM

Smart money is watching gold so you need to do the same. That action down to 626.50 ignited more equity buying. Now we see if it holds.

Jeff Bailey : 8/15/2006 10:59:12 AM

American Express (AXP) $52.75 +1.83% ... probes WEEKLY R1 $52.80 with session high of $52.79.

Jeff Bailey : 8/15/2006 10:55:43 AM

QQQQ $37.40 +1.71% ... probes its trending lower 50-day SMA. First time since closing below on 05/10/06 at $41.67.

Jeff Bailey : 8/15/2006 10:54:26 AM

Bears might be "in trouble"....

Jeff Bailey : 8/15/2006 10:51:24 AM


DJ- Purchase of $75.1 billion in June is slightly above the 12-month average and is 18% above May's downwardly revised figure. Foreign net purchases of U.S. Treasury notes and bonds more than triples in June to $27 billion.

Jeff Bailey : 8/15/2006 10:50:07 AM


DJ- Home improvement retailer posts 2Q earnings of $1.86 billion, or 90c a share, and says it expects 2006 sales and earnings to be at the low end of guidance due to the current economic environment. Adjusted EPS of 93c tops Wall Street expectations by a penny.

HD $34.19 +2.79% Link

Marc Eckelberry : 8/15/2006 10:49:50 AM

Just a quick note: yesterday's action is very reminiscent of that last trap they hit bears with in October, before starting a real rally. I still think we rally into Labor day, so my bias is bullish. I am just not sure it will have legs in September. In any case, SMH is back above 50 dma and NQ is headed there. That is a big first in months.

Jeff Bailey : 8/15/2006 10:48:35 AM


DJ- Retailer's earnings drop to $2.08 billion, or 50c a share, amid $863 million loss on planned sale of German unit. Earnings from continuing operations rise 5% to $2.98 billion, or 72c a share, with revenue up 11% to $85.43 billion.

WMT $44.23 -1.92% Link

Keene Little : 8/15/2006 10:46:55 AM

Now the buyers are stepping back in. Either that or the Boyz are pushing it up and it'll be just a bull trap. Hard to trust moves these days. With all the chop we've been experiencing it's a tough call here.

Marc Eckelberry : 8/15/2006 10:41:12 AM

Again, watch NQ 1533 as key resistance if this rally gathers steam. See you later.

Keene Little : 8/15/2006 10:41:06 AM

YM bounced above the downtrend line from Aug 4th yesterday to then only drop back down below it and crash to earth yesterday. This morning it jumped above it again and has retested it this morning (11196) but it doesn't give me the feeling that the retest is going to hold, at least not yet. Link

But as long as it holds this is the place to try a long and have your stop at a new daily low. If it drops back down to a new low today it will probably suffer the same fate as yesterday (which would be a clear sign of distribution by the Boyz).

Marc Eckelberry : 8/15/2006 10:40:10 AM

My inflation line in the sand is YG 626.50 (October contract).

Marc Eckelberry : 8/15/2006 10:32:42 AM

CPI tomorrow is what matters the most, since many government disbursement, including social security, rely on it for either an increase or not. It is in the interest of the government to work the CPI numbers as low as possible, so you have to go to commodities to judge true inflation and gold is it. Right now, it is saying inflation is not a problem, but keep a look out tomorrow.

Jane Fox : 8/15/2006 10:29:03 AM

WASHINGTON (MarketWatch) -- Capital flows into the United States rose in June, as private foreign investors bought more Treasury bonds and notes, the Treasury Department reported Tuesday.

Private investors bought $31.4 billion in Treasury bonds and notes, up from $21.8 billion in May. They also purchased $37.7 billion in corporate bonds, $1.4 billion more than in May. Read the Treasury report.

But foreign central banks continued to unload Treasurys in June, selling $4.4 billion. It's the second consecutive month they've sold bonds and notes. They sold a revised $13.6 billion in May.

Foreign official institutions' purchases of government agency and corporate bonds were down from their May levels. They bought $4.4 billion of agency bonds in June, compared to $8.5 billion in May, and $1.1 billion in corporate bonds versus $2.4 billion in May. Purchases of equities rose slightly to $1.3 billion from $1.2 billion.

Jane Fox : 8/15/2006 10:27:14 AM

Interesting that Spokane WA one of the top 10 is 2 1/2 hours north of me and Yakima WA one of the bottom 10 is 90 miles west.

Jane Fox : 8/15/2006 10:26:04 AM

WASHINGTON (MarketWatch) -- Fewer cities are experiencing large, double-digit increases in home values, while prices are falling in more cities, according to quarterly data on metro home prices released Tuesday by the National Association of Realtors.

"With more sellers competing for the pool of buyers, the pressure on home prices has evaporated in most metro areas," said David Lereah, chief economist for the real estate industry group.

In the second quarter, 37 metro areas saw double-digit increases in media existing home sales prices from a year earlier, down from 66 cities in double-digits in the first quarter. At the same time, the number of cities showing price declines rose to 26 from 16.

Nationally, median prices for existing homes were up 3.7% year-over-year, according to data already released by the group.

The biggest year-over-year gain was in Baton Rouge, La., where prices jumped 27.3% as demand skyrocketed after the hurricanes. The rest of the top 10: Ocala, Fla.; Virginia Beach, Va.; Gainesville, Fla.; Portland, Ore.; Jacksonville, Fla.; Tampa, Fla.; Spokane, Wash.; Beaumont, Texas; and Eugene, Ore.

The biggest year-over-year decline came in Danville, Ill., where prices fell 11.2%. The rest of the top 10: Detroit, Mich.; Davenport, Iowa; Rockport, Ill.; Cleveland, Ohio; Youngstown, Ohio; Green Bay, Wis.; Yakima, Wash.; Bloomington, Ill.; and Toledo, Ohio.

Jane Fox : 8/15/2006 10:22:57 AM

HEMPSTEAD, N.Y. (MarketWatch) -- While the pundits debate whether the economy will come in for a soft or a hard landing, one thing seems certain: the Federal Reserve's latest tightening cycle is likely to precipitate some sort of crisis in business or finance.

... you can't whip inflation without inflicting some pain on the economy. From the Fed's standpoint, this means raising interest rates until it hurts.

True, when it begins its tightening cycle, the central bank does not deliberately set out to create a recession, or a hard landing, as it has come to be called. But monetary policy is such an imprecise tool, and the economy is so big and complex, that the Fed invariably overshoots to ensure that its campaign against inflation is successful.

All recessions that have occurred since 1970 followed periods in which the Fed was actively tightening money. And all tightening cycles except two have produced a recession within at least two years after they ended.

Marc Eckelberry : 8/15/2006 10:19:14 AM

Core PPI drops .03, you bet gold is down. YG does have key support at 626.50 and we still have CPI tomorrow, so nothing decisive there. I have tog go, watch NQ 1520 and above that, 1533, the most critical number out there now that SPX is above 10 monthly at 1276.

Jane Fox : 8/15/2006 10:18:49 AM

If you tried a long here your most logical stop would be just under daily lows but that seems to be a ways off and pretty wide stop for a day trade. The choppy move up has been hard to figure and with the VIX and TRIN not confirming the AD line and volume bullishness hard to even come up with a rational to be long.

Keene Little : 8/15/2006 10:17:07 AM

Let's try again on that ES chart: Link

Jane Fox : 8/15/2006 10:14:51 AM

TICKs daily low so far today has been -200 which is quite bullish.

Keene Little : 8/15/2006 10:14:44 AM

I'm back with you for at least a little bit while I trouble-shoot my connection issues. As for the market, let's see if the bulls can do a little better with their gap up this morning than they did with yesterday's. ES jumped above its new downtrend line from Aug 4th through yesterday's high and is now testing it (1281.25). If it drops back below 1280 at this point I'm thinking the bulls will suffer the same indignity as yesterday. Otherwise, look for higher to the next resistance level around 1290 (as Jane pointed out earlier). Link

Jeff Bailey : 8/15/2006 10:14:15 AM

Current OPEN MM Profiles that I've made at this Link

** Screen capture prior to DE stopping out at $68.75

Jane Fox : 8/15/2006 10:12:58 AM

There is not market leading so far today. Link

Jeff Bailey : 8/15/2006 10:11:00 AM

DE did tick $68.79

Jeff Bailey : 8/15/2006 10:10:33 AM

Swing trade put stop alert on the DE-UO at the bid of $6.80 ($6.80 x $7.00) with DE $68.51

Jane Fox : 8/15/2006 10:09:47 AM

AD volume making new daily highs.

Jane Fox : 8/15/2006 10:08:57 AM

So if the $ is falling Gold should be rising but as you can see it is not. Oh my aching head!!! Link

Marc Eckelberry : 8/15/2006 10:08:43 AM

Techs and small caps lead, no surprise. Watch SMH 31.70. There is volume this time.

Jane Fox : 8/15/2006 10:07:28 AM

VIX and TRIN are climbing making it very difficult for me go long again but the AD line and volume are so bullish that I would never try a short.

Jane Fox : 8/15/2006 10:05:46 AM

My take on the $ this morning was wrong. The $ is falling because of the the weak data prompted a drop in the odds of a September rate hike, which in turn weighed on the U.S. dollar. Link

Jeff Bailey : 8/15/2006 10:03:42 AM

10:00 Market Watch found at this Link

Jane Fox : 8/15/2006 10:00:23 AM

I was long and got stopped but I surely will not try shorting this market as long as these two are this bullish. Link

Jane Fox : 8/15/2006 9:58:37 AM

TRIN has now climbed to a neutral 1.03

Jane Fox : 8/15/2006 9:57:46 AM

I was going to try and short NQ at 1540 but it looks like 1525 is resistance. Link

Jane Fox : 8/15/2006 9:55:33 AM

ES's new daily low has been confirmed by the VIX.

Jane Fox : 8/15/2006 9:55:08 AM

The bulls seem to be losing control a lot earlier today don't they.

Jeff Bailey : 8/15/2006 9:55:06 AM

Swing trade put lower stop alert on the Deere, Co DE Sep $75 Puts (DE-UO) to $68.75 in the underlying.

DE $67.08 -2.31% Link

Jane Fox : 8/15/2006 9:54:26 AM

Ok now I am stopped.

Jane Fox : 8/15/2006 9:51:27 AM

This is so much like yesterday morning. VIX bullish but the TRIN climbing. I put on an ES long and get stopped before the market starts to climb. Well this time I put my stop far enough away that I have not been stopped.

Jeff Bailey : 8/15/2006 9:50:29 AM

Caterpillar (CAT) $65.93 -0.04% ...

Jeff Bailey : 8/15/2006 9:49:05 AM

Deere profit up but full-year forecast cut ... Reuters earnings story Link

DE $67.41 -1.83%

Jane Fox : 8/15/2006 9:47:47 AM

The New York Federal Reserve Bank's Empire State Manufacturing index fell to 10.3 in August -- the slowest growth pace since June 2005 -- from a revised 16.6 in July, while economists had been forecasting a decline to 13.9 from the initial estimate of 15.6.

The data pushed the price of the September fed fund futures contract up 0.01 to 94.73, which implies a 24% chance that the Fed will raise its target on overnight rates to 5.5% from 5.25% when it meets Sept. 20. Late Monday, the odds of a hike were 36%.

Jane Fox : 8/15/2006 9:45:42 AM



Jane Fox : 8/15/2006 9:44:08 AM


Jane Fox : 8/15/2006 9:43:17 AM

Here is how the markets are trading in relation to their PDRs. Link

Jane Fox : 8/15/2006 9:42:04 AM

I am long ER here with a stop just below daily lows. Deja vu.

Jane Fox : 8/15/2006 9:41:32 AM

AD line +2064

Jane Fox : 8/15/2006 9:36:20 AM

VIX opens right at its PDL but TRIN opens well below its PDL. Egads the TIRN is 0.52!!

Jane Fox : 8/15/2006 9:35:44 AM

AD line is a very bullish +1504 and of course the AD volume is well above 0. I am not going out on that provebial limb today and say this is a day to get long and stay long because I was really fooled yesterday and lost all the profits of a very good trade.

Jane Fox : 8/15/2006 9:24:23 AM

Due to yesterday's intraday and the overnight trading I have redrawn NQ's triangle. I don't have a lot of confidence in the triangle because the last one was not valid but I do have a lot of confidence the green downward trendline that is also the 50EMA will hold back this market. So once again I am back to shorting 1540. Link

Jane Fox : 8/15/2006 9:20:17 AM

Just got an email from Keene that he is having trouble logging on to the RightSide Website. He is working on it and will be here once he gets it all worked out.

Jane Fox : 8/15/2006 9:16:22 AM

If ER rallies back to the red down trendline and the 100EMA confluence I would get short. I think the 50EMA has a very good chance of holding back this market as well but back in early July ER broke through the 50EMA and was even able to close above it. So although the 50 is a very good marker I will be using the 100 as my line in the sand. Link

Jane Fox : 8/15/2006 9:09:34 AM

Same story for YM but with different numbers. Link

Jane Fox : 8/15/2006 9:08:29 AM

Geesh! Everything I said yesterday morning but took back yesterday afternoon is once again valid this morning. I am looking for ES to rally to its resistance zone at 1290-1304 and get myself positioned for a short. Of course the 14 point resistance zone is a wide zone and getting a short that does not stop me out will be tricky. But this market has been really tricky lately so why should a short be any different. Link

Jane Fox : 8/15/2006 8:53:51 AM

I have left the overnight high marker from my original PPI post on the charts so you can see how much more equities have rallied since 8:45. Link

Jane Fox : 8/15/2006 8:52:41 AM

TBonds reacted to the 8:30 PPI data the same way the equities did - rallied.

Oil and Natural Gas took a great big yawn to the data - to be expected.

Gold fell because the PPI data would naturally put upward pressure on the $ which in turn puts downward pressure on Gold. Link

Jane Fox : 8/15/2006 8:46:21 AM

ES has now broken its PDH. ER and NQ testing its PDH.

Jane Fox : 8/15/2006 8:45:22 AM

Market really like the 8:30 PPI data. Link

Jane Fox : 8/15/2006 8:42:21 AM

Dateline WSJ - WASHINGTON -- Wholesale core inflation fell unexpectedly in July, matching the largest drop since early 2003, as prices for light trucks and cars fell substantially. Meanwhile, wholesale prices including food and energy came in below expectations, suggesting that inflation pressures may be easing.

The producer price index for finished goods rose by 0.1% on a seasonally adjusted basis last month, after increasing 0.5% in June, the Labor Department said Tuesday. The producer price index for goods excluding food and energy costs fell 0.3% in July, matching the largest drop since April 2003. Core producer prices also fell 0.3% in October of last year. The core rate climbed 0.2% in June.

In the 12 months ending in July, overall wholesale prices climbed 4.2% on an unadjusted basis. The core rate was up 1.3%. Wall Street economists had expected the overall PPI to rise 0.4% in July and that the core PPI would go up 0.2%.

Tuesday's inflation data could bolster the Federal Reserve's argument that slowing economic growth will ease inflation pressures. Wednesday's release of the consumer price index data is also likely to be closely watched by the central bank. Economists expect the CPI to grow 0.4% in July, while the core rate is projected to be up 0.3%.

Jane Fox : 8/15/2006 8:39:25 AM


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