Option Investor
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Jeff Bailey : 9/15/2006 1:14:43 AM

My MM Trade Blotter of CLOSED Trades July-Current found at this Link

Keene Little : 9/14/2006 10:49:12 PM

Friday's pivot tables: Link and Link

Jeff Bailey : 9/15/2006 12:39:33 AM

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

Today's Activity

Bullish swing trade stopped on the 1/2 bullish position in shares of Frontier Oil (FTO) at $26.75 ($-0.69, or -2.51%)

Bearish swing trade close 1/4 position in the iShares Silver Trust (AMEX:SLV) at $107.10 ($+3.65, or +3.30%)

My Profiles: Years ago, subscribers asked for real trades like those found in the OptionInvestor.com newsletter, not just mentioning, then review of only the "winning" trades. It would be so easy for me to just say "buy this, sell this," not give a target or stop and let the trader figure things out from there.

So, I embarked on the task, but felt that account and trade management education was perhaps the most important issue to address.

With a diverse group of traders, with various sized accounts ($5,000 to $100's of thousands), that created a hurdle as to "trade size."

My Market Monitor Profile list of OPEN positions are based on a hypothetical trade account size of $10,000, or higher. Active day traders of stocks/options must abide by SEC $25,000 rule if utilizing margin (margin is required for shorting securities)

The "rules" for establishing trade size in the underlying security.

A profiled FULL position is $10,000 in the underlying stock/shares (1/2 is $5,000; 1/4 is $2,500).

One of the first lessons a trader/investor learns (educated by a seasoned advisor, or learning the hard way on their own) is that a trader/investor should not expose more that 10% of an account's capital to any one particular investment.

The "rules" for establishing trade size in an OPTION.When I profile an option trade I will either SPECIFY the exact number of contracts (with a $5,000 account trader in mind), but most often it will be based off the $10,000 = Full Position equation.


One of the first lessons an option trader will learn (either from a seasoned advisor, or learning the hard way on their own) is there is no "get rich quick" trade in the market and OVER LEVERAGING an option trade plants the seed for the "get poor quick, blow up your account quick" event.

Full Position Equation (Options)

Ask yourself what is a full position for my (subscriber) account. Take that amount and divide it by the price of the underlying security. That sum gives you the number of actual shares of the security you might buy/short in your (subscriber) account. If the number of shares equates to 100, then 1 option contract would equate to a full position. Then, review an option chain, select the appropriate strike and duration. (This is the process I, Jeff Bailey, implement when I profile the option)

Example: MSFT 1/2 position. Stock is trading $25.41.

$10,000 x 0.50 = $5,000

Then ... $5,000 / $25.41 = 196.77 shares

This would equate to roughly 2 option contracts.

My promise: I will follow for better or for worse each trade I profile until loss/profit is achieved and the trade is officially closed. I will utilize and outline stops (when profiled capital at risk sufficient enough), where the trade will be dropped from coverage. Targets will also be provided from technical analysis, so that traders may determine if the capital at risk, is worth the potential reward to defined target. I will often times review profitable and losing trades not only for educational purposes, but most likely, future profit opportunities.

Most basic rule for options is this ... If an option were to trade zero bid the second after order execution, or next morning's open, and it would cause great damage to the trader's account, then that amount of capital at risk in the option is innapropriate.

Jeff Bailey : 9/14/2006 10:08:39 PM

Closing Internals found at this Link

Jeff Bailey : 9/14/2006 10:04:16 PM

Closing U.S. Market Watch found at this Link

OI Technical Staff : 9/14/2006 9:59:59 PM

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

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Marc Eckelberry : 9/14/2006 9:51:10 PM

TRAN is not confirming the DOW theory either, still stuck below 38.2% off lows: Link

Marc Eckelberry : 9/14/2006 9:40:17 PM

I'm with you 100% on 2007 and the Vista upgrade. I am an INTC buyer on a pullback, I rode it from 16.85 to 20. Same with NVDA. If you recall, I was the only one here promoting that stock at 18 in July. That stock has climbed more than 60% since. Needs a breather.

Tab Gilles : 9/14/2006 9:06:19 PM


I've been calling for technology to lead the rally. Of course we'll get pullbacks along the way. But I see '07 especially favorable for tech with MSFT Vista as a catalyst. Intel has been working closely with Microsoft to identify and develop key hardware components for Windows Vista. Currently MSFT has introduced Zune to compete with Apple's iPod.

I highlighted several charts on the $NDX @ 8:08PM earlier.

What really got me positive this week was the news on Freescale getting a possible private buyout. Why? I noted that they have a new chip technology that will be reveolutionary called "MRAM" [see 9/11 11:52 AM post].

Another field that will have potential will be the automotive move into hydrogen powered autos. I asked where's the infrastructure? [9/12 11:26 AM post] One company is Air Products & Chemical (APD).

Even, though I'm bullish on technology, it doesn't necessarily mean I'm bearish on commodities. They've had a scorching run and have finally eased up. The world economy is still growing, according to IMF forecasts the global economies are to grow by 5.1% this year, up from an April forcast of 4.9%. In '07, growth is targeted at 4.9%, compared with previous estimates of 4.7%. The IMF also forecasts oil prices will average $69.20 this year and $75.50 next year if supplies are threatened by geopolitical disruptions.

Marc Eckelberry : 9/14/2006 8:59:44 PM

QQQQ October option chain. Not many puts above: Link I have often considered this to be short term positive upside momentum coming out of opex, so there could be a break of QQQQ 40 resistance coming. That said, I don't recall ever seeing the COMP clear the 200 dma ahead of NDX on the upside. That is very unusual and again something to be cautious about. It's the semis holding back the Q's and I just can't get too excited about that either. Just put up chart of all your sectors and the only big guns still under their respective 200 dma's are energy and semis.

Marc Eckelberry : 9/14/2006 8:35:00 PM

At least ADBE came through big time AH.

Marc Eckelberry : 9/14/2006 8:34:40 PM

I really pray that we get a +.2% increase in core CPI read tomorrow and not a +.3%. The latter is not priced in.

Marc Eckelberry : 9/14/2006 8:43:37 PM

On a contrarian basis, bulls have the bull/bear ratio going for them as an absolute number Link but note that it went lower in 10/02, after briefly bouncing right where we are now in 9/02. We have not broken below the -1.3 line since 2003, and it looks like resistance now. It's a really tough call from a sentiment perspective, and I am wrestling with this as I would normally be all over this bearishness. The low VIX is troubling. Some say it's contrarian value is erroded right now by a high pc ratio. However, some analyst say this a very dangerous sign: little or no volatility premium on large amount of puts sold, probably leveraged by hedge funds to BOJ once again. If that unravels and they have to cover, not unlike May of this year, it could start a market correction of siginificant proportions. Many big guns including Buffet have warned of the hedge fund impeding implosion and this is how it could happen. I was very bullish in early August (as you know, Tab), but I had hoped for more volatility and certainly not a VIX at 11 with the minefields ahead of us, like CPI and Feds. I have never liked big rallies before the Feds and this one qualifies. The long side is a trade, it usually is, but I would recommend extreme caution at this point, at least until SMH gives the all clear by closing above 34.90. There is nothing, I mean nothing, more painful than buying a market right before a severe correction if you are stuck with not enough cash to hedge.

Tab Gilles : 9/14/2006 8:11:47 PM

Interesting Marc.

Tab Gilles : 9/14/2006 8:10:53 PM


It would be interesting to see what T. Boone Pickens has to say about oil at current levels.

Tab Gilles : 9/14/2006 8:08:55 PM

Several charts on $NDX Link Link Link Link Link Link Link

Marc Eckelberry : 9/14/2006 8:08:12 PM

Tab, re XLE, that would line up with 20 month MA, next support (50.70). Note that 10 month MA has been closing support (it's quite amazingly precise) since 2003 on every major pullback. Link

Jim Brown : 9/14/2006 7:46:50 PM

I agree Tab. Just because oil prices are down does not mean there is less drilling or a sudden downturn in the service sector. This is a normal correction which came just as I predicted. Those LEAP Trader subscribers are setting up to profit from this dip but we are still expecting to see $60 a bbl before a rebound.

Tab Gilles : 9/14/2006 7:44:07 PM

Energy Select Spyder (XLE) Keep an eye on this sector...$50/$51 in the next few weeks could prove to be possibly a reversal. Link

Jeff Bailey : 9/14/2006 4:44:57 PM

I have a dinner meeting I've got to get ready for. I'll post internals and my current OPEN MM Profiles later this evening.

Stopped on the FTO long

Closed out a portion of the SLV, which is "catching up" to GLD.

Jeff Bailey : 9/14/2006 4:43:08 PM

Closing U.S. Market Watch found at this Link

Tab Gilles : 9/14/2006 4:06:54 PM

Exit Emisphere tech (EMIS) Dec $10 PUT (MTQXB.X). EMIS closed at $8.73, near my $8.75 PO sell. PUT trading Bid $2.10/Ask $2.30, entered $2.40/$2.70 pere 9/13 4:48PM post.

Jeff Bailey : 9/14/2006 4:05:20 PM

OSTK $20.28 -0.04% ... was that the "tell" into tomorrow's economic data?

Jeff Bailey : 9/14/2006 4:04:35 PM

What happened to OSTK?

Jeff Bailey : 9/14/2006 4:03:02 PM

We'll be busy tomorrow Jane!

Jane Fox : 9/14/2006 4:01:47 PM

Economic Reports docket is full tomorrow;

8:30a.m. Aug Consumer Price Index. Previous: +0.4%.

8:30a.m. Aug Consumer Price Index, Ex-Food & Energy. Previous: +0.2%

8:30a.m. Sept NY Fed Manufacturing Index. Previous: 10.34.

9:15a.m. Aug Industrial Production. Previous: +0.4%.

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

9:45a.m. Mid-Sept. U Of Mich Consumer Sentiment. Previous: 82.0.

Jeff Bailey : 9/14/2006 4:01:38 PM

YI06Z ... quick look, thoughts from a futures trader perspective. Link ...

Jeff Bailey : 9/14/2006 3:58:52 PM

Swing trade cover 1/2 position alert let's cover 1/2 of the 1/2 short position in the iShares Silver Trust (AMEX:SLV) here at $107.10.

That's 23 shares per risk managed MM profiles.

Jeff Bailey : 9/14/2006 3:56:18 PM

Let's do this ... ahead of tomorrow's inflation data ...

Jeff Bailey : 9/14/2006 3:49:21 PM

And it is at these times, a trader turns to account/trade management.

Jeff Bailey : 9/14/2006 3:47:54 PM

This is tough isn't ... do you're "it shouldn't settle two levels below this level" on your BLUE retracement on YI06Z.

Keene Little : 9/14/2006 3:41:55 PM

A little bounce as we head into the close sets this up for a move down tomorrow morning. After that, with a 3-wave move lower from yesterday's high we'll get to see what happens next. A sloppy sideways move would mean lower and a larger 5-wave move down (bearish) whereas a spike higher would indicate another leg up is coming (at least short term bullish).

Jeff Bailey : 9/14/2006 3:41:02 PM

Hey! BOT $121.29 ... bugger bounced right from 06/21/06 02:54:42 PM price of $110.61.

Jeff Bailey : 9/14/2006 3:37:45 PM

GG ... the recent acquisition news. That's "different" from 06/21/06 as there is all sorts of hedge arbitrage going on at this point. Need to take GG's new lows with a grain of salt if thinking .... mining stocks lead the commodity.

Jeff Bailey : 9/14/2006 3:35:00 PM

SLV has "dead stopped" at that overlapping 106.37/106.25 overlap.

Jeff Bailey : 9/14/2006 3:33:38 PM

This is crazy ... 06/22/06 MM Link ... trying to quickly review the GLD trade, thoughts at that time. FTO is at the top of the MM.

Jeff Bailey : 9/14/2006 3:26:00 PM

Yesterday's recap of NH/NL within sectors. Link

Jeff Bailey : 9/14/2006 3:19:52 PM

Or at least give a lift from the bottom!

Jeff Bailey : 9/14/2006 3:18:06 PM

03:00 Internals found at this Link

Jane Fox : 9/14/2006 3:14:32 PM

AD volume to new daily lows and the bears are getting stronger.

Jane Fox : 9/14/2006 3:12:37 PM

Look at the VIX these last few days. Too funny!! Link

Jeff Bailey : 9/14/2006 3:04:29 PM

03:00 Market Watch found at this Link

Jeff Bailey : 9/14/2006 3:00:45 PM

Hmmm ... on 06/21/06 SLV was trading $102.46-$105.00.

Keene Little : 9/14/2006 3:00:18 PM

This SPX 5-min chart shows a good example of an ascending wedge for wave-C (common pattern for C) in today's A-B-C bounce off this morning's low. We got the over-throw above the wedge, it hit the level where wave-C = wave-A and then the sharp thrust lower. Textbook pattern. We should see this continue to new daily lows before the close although with only an hour left it might take its sweet time in a bounce back up to test the bottom of the wedge before heading lower tomorrow. Link

Tab Gilles : 9/14/2006 3:01:08 PM

Technology stocks will lead rally...

Diodes (DIOD)Diodes Raises 3rd-Quarter Guidance Link Link

Xilinx (XLNX) Link

Level 3 Comm (LVLT)Cramer suggests LVLT as a way to profit from this site since it recently signed a deal to provide broadband to YouTube. Link

XM Satellite (XMSR) XM Satellite Surges on Upgrade Link Link

Quick Logic (QUIK) As with XLNX it too makes field programmable gate arrays (FPGAs). Link Link

Looking at a $COMPQ chart with Nasdaq % above 50/150/200 ma's and you can see sell and buy points. Link $COMPQ PnF chart... Link

Jeff Bailey : 9/14/2006 2:59:15 PM

Thanks Jane! That was kind'a what I was thinking myself, but looking for some confidence in that. I've always used MACD as the "coin toss" when my list of bull/bear tests come out 50/50, but I really want exposure to the trade.

AMR as an example. MACD was saying "it will go to 50-day SMA," as it had momentum, but I wasn't overly sure about RSI.

Jeff Bailey : 9/14/2006 2:54:22 PM

I should go back to the MM archives and review my commentary as to why I was bullish the GLD on 06/21/06, but I think it was purely technical and the island reversal possibility.

If it was "fundamental" then I should review, see if anything has changed since then.

Jane Fox : 9/14/2006 2:52:29 PM

Jeff I put alot more weight to the MACD and have just started using the RSI to confirm the MACD. I have found a MACD divergence to be much more powerful if confirmed by the RSI.

Jane Fox : 9/14/2006 2:50:44 PM

DAteline WSJ - Ford Motor Co. and the United Auto Workers union have agreed to offer buyouts to all of the auto maker's approximately 75,000 UAW workers in the U.S., according to local union officials.

The agreement comes one day ahead of Ford's expected announcement detailing its plans to accelerate a previous restructuring and cost cutting plan, called Way Forward.

UAW officials representing approximately 80,000 Ford hourly workers in the U.S. met Tuesday to discuss the possibility of expanded buyout and early-retirement offers under a more aggressive turnaround plan for the company's North American auto operations.

In a press release Thursday, the Dearborn, Mich., company said it will issue a news release at 7 a.m. EDT and give presentations to employees and the media starting at 9 a.m.

The accelerated restructuring announcement comes nine months after the unveiling of the initial Way Forward blueprint, which was designed to restore profitability in North American auto operations by 2008. The original plan called for 30,000 job cuts and 14 plant closures by 2012, as well as a rethinking of the company's product strategy

Jeff Bailey : 9/14/2006 2:51:17 PM

Here's my trade blotter of past GLD trades Link ... and we're right back to that 06/21/06 bull entry point.

Commodities can move fast, up and down. Trade/account management is imperative. Can go from the "right side" to the "wrong side" in a hurry.

Jeff Bailey : 9/14/2006 2:42:28 PM

Jane ... do you put more weight into MACD, or RSI?

Jeff Bailey : 9/14/2006 2:41:20 PM

I dumped a short-term trade in AMR Link at Tuesday's close ... bugger is "flying"

Jane Fox : 9/14/2006 2:38:51 PM

WSJ Alert - Ford, UAW to offer buyouts to all of the auto maker's U.S. UAW workers.

Jeff Bailey : 9/14/2006 2:38:19 PM

Airlines and Brokers up >1% and sector winners at this point.

Keene Little : 9/14/2006 2:32:20 PM

ES 1229.50 getting tagged so we've got gap closure. The choppy climb does not look bullish and is worth shorting here, stop 1231 just to keep things tight.

Jeff Bailey : 9/14/2006 2:23:09 PM

A little more than 5 cents below that 200-day SMA right now. (see yesterday's notes)

Jeff Bailey : 9/14/2006 2:22:03 PM

YI06Z alert $10.811 -3.45% ... per previously shown bar chart and retracement. "Zone of support" in here.

Jeff Bailey : 9/14/2006 2:20:09 PM

The PnF chart of GLD not all the bullish either Jane ... Link

Jeff Bailey : 9/14/2006 2:12:51 PM

Probably just some end of quarter window undressing.

Jeff Bailey : 9/14/2006 2:11:23 PM

Goldcorp (GG) $23.40 -2.01% ... did they "buy the high?"

Jeff Bailey : 9/14/2006 2:10:47 PM

Apex Silver (AMEX:SIL) $15.65 -3.39% ... probes its 50-day SMA.

Jane Fox : 9/14/2006 2:08:45 PM

I am bearish on Gold but this 240 minute chart is telling us there is not a lot more downside to go. That huge MACD divergence is confirmed by the RSI and I have learned to respect MACD divergences this glaring. Link

Jeff Bailey : 9/14/2006 2:04:30 PM

Not sure Jane, but those that bought the low on 06/23/06 and have lost contact are about to see a "round trip."

Jeff Bailey : 9/14/2006 1:59:10 PM

XBD.X Component weightings at this Link ... may have to end up going with a stock. No real "heavyweight" as this index is an equal-dollar weighted index.

Jane Fox : 9/14/2006 1:57:13 PM

What is with the selloff in the commodities these last few weeks.

Jane Fox : 9/14/2006 1:56:15 PM

I would certainly not be trying any long positions with the AD line and volume this bearish. Link

Jeff Bailey : 9/14/2006 1:46:54 PM

Broker/Dealer Index (XBD.X) 222.50 +0.66% ....

Jeff Bailey : 9/14/2006 1:41:30 PM

Can't remember if Breex was listed here in the U.S. or not. I do remember it was the biggest holding of the Canadian Teachers Pension Fund.

U.S. listings don't guarantee a thing. Enron?

Jeff Bailey : 9/14/2006 1:38:17 PM

Notes on NH/NL (AMEX and Canada) ... Link ... a lot of miners and energy up in Canada. AMEX quite a few too.

Most of the "big ones" have a listing on a U.S. exchange. Instills the look of "a real company."

Keene Little : 9/14/2006 1:32:48 PM

All is not lost yet for gold bulls even though I don't think it looks too good for them. But watch for support near 576 which is the bottom of a parallel down-channel since the July high and the June low. I think that support will break but it should be good for a bounce when it gets there. Link

Jeff Bailey : 9/14/2006 1:29:25 PM

01:15 Internals found at this Link

Keene Little : 9/14/2006 1:25:55 PM

I'm getting that sideways feeling, somewhat typical of past opex Thursdays. But after dropping into this consolidation today we should get another leg down so again this is not bullish price action on a short term basis.

Jane Fox : 9/14/2006 1:22:38 PM

Hopefully you have not been trying to trade this mess. Link

Jeff Bailey : 9/14/2006 1:17:22 PM

01:15 Market Watch found at this Link

Jane Fox : 9/14/2006 1:16:09 PM

Gold is losing its religion. New multi month lows.

Jane Fox : 9/14/2006 1:15:00 PM

Here is my take on silver. This is a bearish chart but notice how the 200EMA is supporting it for now. I think that support will hold for a while anyway because the RSI is so oversold. I have been using the RSI to get long Oil and it has not worked out. I also have seen Natural Gas very oversold as well and it continues to fall so I'm not sure the RSI has a lot of relevance here but it is should be noted.

Next thing to take note of the where resistance was today, right at a trendline I drew on this chart ages ago. Link

Jeff Bailey : 9/14/2006 1:14:40 PM

Bob Pisani mentioning rebalancing of S&P 500. I haven't covered this at all.

Jeff Bailey : 9/14/2006 1:10:44 PM

Apex Silver Mines (AMEX:SIL) 15.90 -1.85% Link ... now that's a nast and potentially HUGE head/shoulder pattern.

Jeff Bailey : 9/14/2006 1:07:09 PM

U.S. Dollar Index (dx00y) 85.55 -0.37% ... doesn't make sense to a trader that is purely dollar/precious metal trader.

Recent bond action? Then maybe I'm on the right track with this.

Jeff Bailey : 9/14/2006 1:02:32 PM

It would be incredible if silver did what natural gas has done. Wouldn't it?

Stay tuned.

Jeff Bailey : 9/14/2006 1:00:50 PM

The other night a market observer commented that it was a fact that individual investors hold far more gold than any central bank.

I'm not sure if that's true for silver.

Keene Little : 9/14/2006 1:00:42 PM

It's looking like ES is working its way higher twoards gap closure and two equal legs up at 1229.25-1229.50. Watch that level for a short play to set up.

Jeff Bailey : 9/14/2006 12:55:05 PM

iShares Silver (SLV) $109.62 -1.99% ... either side here (see 11:55:36 to 12:02:26 posts)

Jeff Bailey : 9/14/2006 12:51:58 PM

IWM PnF chart with volume turned on at this Link ... This is one feature from StockCharts.com that I really do like. With the science of ballistics a part of point and figure charts, the volume feature gives the observation of how much gun powder is behind the projectile.

Jeff Bailey : 9/14/2006 12:44:54 PM

I suppose an overleveraged trader might take some profits off the table ahead of tomorrow's economic data.

Jeff Bailey : 9/14/2006 12:43:46 PM

IWM ... 60-minute interval chart at this Link ... Note morning action and re-test of WEEKLY R1 and recently broken last downward trend.

A trader contemplates things here (selling covered call(s)).

Then contemplates the "resistance broken, becomes support" to remain bullish vs. "neutral"

Jeff Bailey : 9/14/2006 12:31:39 PM

The MSFT offering doesn't seem to be impacting AAPL $74.32 +0.16% Link , or SNDK $59.07 Link .

Good gravy!

Keene Little : 9/14/2006 12:30:59 PM

The challenge for me right here is that we may have already had the 5th wave up yesterday, one that was small and truncated as 5th waves often are (and why they're often a "no show"). So I don't want to play it long here in case it's done. The drop from yesterday's high leads me to believe we've got more downside coming, at least for today and that's the way I'm playing it.

Keene Little : 9/14/2006 12:28:34 PM

SPX 1300 is a possibility by the end of the day for its options expiration tomorrow morning. But I'm jumping ahead of myself. First we need to see this let go to the downside right here.

Another possibility, as I look at the 60-min chart, and to keep bears in check, is that we're going to do a small consolidation today and then reach for new highs tomorrow. That kind of move would give us a 5-wave move up from the low on Sept 11th. It would be a great way for the Boyz to stop out a lot of shorts on an opex Friday and pull in some longs (which would be a bull trap since a 5-wave move is always followed by a correction, or in this case would be the end of the run).

Jeff Bailey : 9/14/2006 12:25:34 PM

CBOE Internet (INX.X) 217.59 +0.61% Link ... edges above yesterday's highs and 200-day SMA just ahead.

Keene Little : 9/14/2006 12:23:01 PM

ES 1329.25 would also be a 62% retracement of the drop from yesterday's high. Again, all small stuff but trying to discern if yesterday's high was it, which is the way I'm leaning at the moment.

Jeff Bailey : 9/14/2006 12:21:54 PM

FTO $26.50 -2.03% ... I'm thinking my bullish mistake yesterday was not fully accounting for the stock's sector exposure.

Keene Little : 9/14/2006 12:21:23 PM

This is either getting ready for bombs away (to a small degree) or another leg up. If we get another leg up then two equal legs will be at 1229.50, a tick above gap close.

Jeff Bailey : 9/14/2006 12:17:56 PM

Microsoft to debut 30-GB Zune this holiday ... Reuters Story Link

Jeff Bailey : 9/14/2006 12:02:26 PM

iShares Silver (SLV) $110.50 -1.20% Link ... did anyone catch last night's trade in the YI futures? Looked like it would "bid to the moon" at one time.

Jeff Bailey : 9/14/2006 11:57:09 AM

Take a retracement on the SLV from the June low to recent relative high. Was looking to see if $110 was purely psychological, or technical.

Jane Fox : 9/14/2006 11:53:34 AM


Keene Little : 9/14/2006 11:48:37 AM

If you shorted ES at two equal legs up at 1228.25 you can now place your stop just above that last high at 1228.50. If we get a bigger 3-wave bounce then the next leg up after the current drop will exceed that 1228.50. If that happens (and I'm not watching closely with you) look for two equal legs up from this morning's low for another short entry.

Jeff Bailey : 9/14/2006 11:48:21 AM

Bear Stearns (BSC) $136.27 +0.03% Link ... battles its 50-day SMA.

For those that pefer EMA (discounts history, puts more weight on the present) Link

Earnings Press Release Link

Jane Fox : 9/14/2006 11:41:02 AM



Jeff Bailey : 9/14/2006 11:26:09 AM

QQQQ gets the "destiny" trade ... $40.02 +0.15% ...

Jeff Bailey : 9/14/2006 11:25:14 AM

11:00 Internals found at this Link

Jane Fox : 9/14/2006 11:22:18 AM

I tried an ES short but bailed on it because this market is just going anywhere.

Keene Little : 9/14/2006 11:18:50 AM

That's also a 50% retracement of the drop from yesterday's high. This is all very small stuff but as we all know, small stuff leads to big stuff.

Keene Little : 9/14/2006 11:18:01 AM

Two equal legs up in this bounce is at 1228.25 so that's the first level to watch for failure.

Keene Little : 9/14/2006 11:17:22 AM

One possibility for a bounce today would be a retest of its broken uptrend line, now at 1331.25, which would also be a double-top against yesterday's high. I have no idea if we'll see that but more negative divergences with that kind of test would have me trying it again so my stop at 1331 could be a stop out and jump right back in. I'll be playing it by ear if we get there.

Jeff Bailey : 9/14/2006 11:16:25 AM

QQQQ gets green ... SMH in the red. But those that forget about MSFT, and how the NDX/QQQQ/NQ are weighted will not fair well.

Keene Little : 9/14/2006 11:14:47 AM

Or I should say I'll add to my short position at ES 1229 and then stop out of my whole position if 1331 is tagged. I'm trying to play it close to the vest this week. Not willing to risk much.

Keene Little : 9/14/2006 11:11:58 AM

Actually Jane I'm not going to short ES until it tags gap closure so my stop will only be 2 points there.

Jeff Bailey : 9/14/2006 11:10:00 AM

Crack spread Oct between Oil and Gasoline is improving intra-day. If your a momentum energy bear, I'd look outside the refiners.

Jeff Bailey : 9/14/2006 11:08:32 AM

QM (Nov) broke to new weekly lows.

Jane Fox : 9/14/2006 11:03:36 AM

Natural-gas futures hit an over two-year low as U.S. supply swell.

Jeff Bailey : 9/14/2006 11:02:50 AM

11:00 Market Watch found at this Link

Jeff Bailey : 9/14/2006 11:00:37 AM

ruthless ... nat gas deflates further.

Jane Fox : 9/14/2006 10:58:37 AM

Keene using wide stops now-a-days :)

Jane Fox : 9/14/2006 10:57:42 AM

Here is a weekly chart of Oil. It gives you a perspective as to just how much selling there has been in this market. Link

Keene Little : 9/14/2006 10:56:09 AM

It's looking like a short term ending pattern in this morning's pullback. A bounce back up to close the gap at ES 1229.25 would be a good time to try shorting it. I would use a stop at about 1331.

Jeff Bailey : 9/14/2006 10:55:36 AM

Bullish swing trade stop alert ... for Frontier Oil Corp. (FTO) $26.75

Jeff Bailey : 9/14/2006 10:54:21 AM

IYG ... not sure "what is inside" ... I want to stick with brokers largely. These NYSE and NASDAQ volume builds are also what bulls will be able to track.

Right? Right!

Jane Fox : 9/14/2006 10:54:16 AM

You can feel the selling pressure but you can also feel the resistance to that pressure so we end up with a market that is hard to trade.

Jane Fox : 9/14/2006 10:53:03 AM

My bearishness today is also supported by the TRIN making new daily highs. So as long as the AD volume makes new daily lows and the TRIN hugs daily highs I will stay short.

Jeff Bailey : 9/14/2006 10:50:10 AM

ETF Heatmap Link

Subscriber e-mail also has me looking for any iShare-related XBD.X-type of securities.

May be able to help out with capital at risk for some.

Jane Fox : 9/14/2006 10:47:04 AM

I don't think ES's daily lows will hold based on the AD volume. Too bad I can't use the VIX. I guess I shouldn't depend on one internal that much or at least quit trading when it is not working. Darn OPEX anyway.

Jeff Bailey : 9/14/2006 10:44:46 AM

Current OPEN MM Profiles as well as currently awaiting execution trades at this Link

Jane Fox : 9/14/2006 10:40:39 AM

This weekly chart of Natural Gas gives you an idea of just how bearish this market is. Link

Jeff Bailey : 9/14/2006 10:36:29 AM

I'm not overly certain the the MSFT $26.38 +1.57% action is attributed to the dividend increase.

Jane Fox : 9/14/2006 10:36:23 AM

AD volume to new daily lows - bearish.

Jane Fox : 9/14/2006 10:36:06 AM

TRIN to new daily highs and VIX hugging its daily highs - bearish.

Jeff Bailey : 9/14/2006 10:31:40 AM

EIA Weekly Nat Gas Storage Table Link ... build of 108 bcf.

Jane Fox : 9/14/2006 10:30:47 AM

Natural Gas inventories must have come out early. Natural Gas is tanking.

Jeff Bailey : 9/14/2006 10:26:27 AM

Microsoft (MSFT) boosts quarterly dividend by a penny, to $0.10/share.

Payable 12/14/06 to holders of record 11/16/06.

Jane Fox : 9/14/2006 10:22:22 AM

Most days during OPEX the VIX is not affected at all but some, like this one, the VIX can be rendered useless.

Jane Fox : 9/14/2006 10:20:01 AM

AD line and volume are saying bearish and sell rallies today. Link

Jeff Bailey : 9/14/2006 10:18:38 AM

Miscrosoft (MSFT) $26.26 +1.07% ... waking up a bit.

Institutions build positions slowly. Not all at once.

Jane Fox : 9/14/2006 10:18:21 AM

AD line is a bearish -954

Jane Fox : 9/14/2006 10:11:22 AM

This bearishness was to be expected since the MACD was not confirming the price.

Keene Little : 9/14/2006 10:10:48 AM

SPX has now given us a clean 5-wave move down from yesterday afternoon's high. This tells us we have a trend change to down. Short the next bounce that should come shortly. A bounce back up to ES 1328 or so would be typical. A retest of its broken uptrend line would take it back up to 1330.

Jeff Bailey : 9/14/2006 10:09:40 AM

10:05 Market Watch found at this Link

Jane Fox : 9/14/2006 10:08:03 AM

All markets except NQ to new daily lows.

Jane Fox : 9/14/2006 9:39:59 AM


Jane Fox : 9/14/2006 9:37:24 AM

TRIN above its PDR but its range yesterday was very bullish so that cannot be read as bearish.

Jane Fox : 9/14/2006 9:35:40 AM

Not gonna use the VIX for a while. Too bad I have started to really rely on it and was why I took ES long a couple of days ago.

Jane Fox : 9/14/2006 9:34:45 AM

Now VIX JUMPS back into its PDR.

Jane Fox : 9/14/2006 9:33:40 AM

VIX well below its PDL - bullish

Jane Fox : 9/14/2006 9:33:09 AM

AD line is -380 and AD volume is as close to 0 as it can get. Neutral

Jane Fox : 9/14/2006 9:30:05 AM

Natural Gas is now making new yearly lows.

Jane Fox : 9/14/2006 9:24:11 AM

International Paper Co. (IP) completed the sale of its Brazilian coated papers business to Stora Enso Oyj (SEO) for $420 million.

The Memphis, Tenn., paper and forest-products company first announced the sale Aug. 22.

The business, which had 2005 sales of $230 million, includes a coated paper mill and lumber mill in Arapoti, Parana State, Brazil, as well as about 124,000 acres of forestland in Parana.

Jane Fox : 9/14/2006 9:13:50 AM

Keene your analysis of XBD would then bolster the bearish wedge theory and may be why the MACD is not confirming price.

Jane Fox : 9/14/2006 9:12:02 AM

WASHINGTON (MarketWatch) -- Prices for goods imported into the U.S. rose much more than expected in August, increasing 0.8%, the Labor Department said Thursday.

Imported petroleum prices rose 2.3% last month, and they're up 25.9% in the past five months.

According to a MarketWatch survey, economists had forecast that import prices would hold steady in August.

The report shows steady upward pressure on prices from overseas. Import prices have risen by at least 0.8% in four of the past five months.

Also, import prices in July were revised higher to show a gain of 1.0% compared with the initial estimate of 0.9%. Imported-petroleum prices were revised to a gain of 5.1% in July, higher than the initial estimate of a 4.7% gain.

The August imported-prices report shows continued inflationary pressures outside the energy sector, however.

Keene Little : 9/14/2006 9:10:36 AM

While we're on the topic of XBD, the reason for my bearish assessment is because of the internal 3-wave moves inside the consolidation since the June low. This is classic triangle stuff--all waves inside triangles are 3-wave moves. If the bounce were to be more bullish then we should see impulsive 5-wave advances. There are none. Triangles have a total of 5 waves (labeled a-b-c-d-e in my chart below) and that's why I'm calling the current leg up the last one. This is a bearish pattern if I ever saw one. The whole rally this summer is sucking in the bulls, just as these corrective waves are designed to do. Buyers beware is all I can say.

Jane Fox : 9/14/2006 9:05:29 AM

Notice the reaction TBonds had to the retail data, new ON highs then new ON lows. Bond traders were just not sure how to take the data.

Natural Gas broke its PDL overnight and continues to hug those lows. This is not a new yearly low but almost. This market is getting so oversold but the buyers are just not around to get any upside traction.

I went long Oil again yesterday and hanging on by the chinny chin chin. This is another extremely oversold market and I expect a huge pop upward when the buyers come back. I'm just not sure how long I can hold on waiting for them.

Gold tipped $600 ON but not for long. I still think this is a sell the rallies market. Link

Keene Little : 9/14/2006 9:05:31 AM

It was another relatively quiet overnight session in equities but this morning's drop now looks to be confirming a break of the uptrend line for ES from Monday's low if it opens below 1328.50. After the negative divergences since Tuesday's highs, the break of the uptrend line should be a good clue that the leg up this week is finished. Link

That should lead to at least a slightly larger pullback and then we'll get to see if there's one final push higher to finish off the rally from July or if yesterday's high was it. Betting on "one more high" is not always a good play. In fact I find it's a losing play more often. Therefore I'd batten down the hatches in case we're about to hit a storm. Just remember, we're still in opex week.

Jane Fox : 9/14/2006 8:59:17 AM

The overnight session was just about as flat as the previous ON session. There was not a lot of reaction from the Retail Sales data but new ON lows were made on all markets right after the release. Link

Jane Fox : 9/14/2006 8:56:04 AM

Here is my take on XBD. Charts are not clear. Boy that helped a lot didn't it?

XBD is either forming a bullish upward channel or a bearish wedge but I have to give the benefit of doubt to the bulls for two reasons. Firstly, price is above all major MAs and that is always bullish. Secondly, the market indices are bullish which exerts a great deal of force on this sector.

However take note, like the major indices, MACD is not confirming price although RSI is. So once again I must say the charts are not clear - from my perspective. Link

Jane Fox : 9/14/2006 8:44:05 AM

WASHINGTON (MarketWatch) - U.S. retail sales inched ahead by 0.2% in August, boosted by a surprising gain in auto sales that offset the drag from lower gasoline prices, the Commerce Department reported Thursday.

Economists had expected retail sales to fall 0.2% after rising 1.4% in July.

Auto sales increased 0.4% in August, despite reports from automakers earlier that showed declining sales. Sales excluding autos rose 0.2% in August, a bit less than the 0.3% expected by economists surveyed by MarketWatch.

Sales at gasoline stations dropped 1% in August as gasoline prices tumbled. The figures are seasonally adjusted but are not adjusted for price changes.

The decline in gas prices should be positive for real (that is, inflation-adjusted) consumer spending going forward; lower pump prices would leave more disposable income to purchase other goods and services.

The report paints a muddled picture for consumer spending two-thirds of the way through the third quarter. Spending was boosted in July by high gas prices on the one hand and by bargains at the auto lots on the other. Those factors reversed in August.

Jane Fox : 9/14/2006 8:38:09 AM


Jane Fox : 9/14/2006 8:37:38 AM


Keene Little : 9/14/2006 8:21:30 AM

Jeff, I read your "challenge" of my opinion on XBD. Sounds like you'll be the buyer of my short selling. Be sure to use appropriate stop levels and risk management. ;-)

Jeff Bailey : 9/14/2006 5:04:15 AM

I would pose the question.... Are supply/demand indications similar to those found in April-June of this year? 4, 5, 6?

I've posted several PnF charts of the major market bullish %.

Or are they more SIMILAR to that of October (A), November (B) and December (C) of 2005?

As profiled 12:28:11 AM EDT, you know where my convictions are at.

And IWM bulls already have some exposure, with "financials" being the largest industry weighting there.

Jeff Bailey : 9/14/2006 4:51:21 AM

Point and Figure Chart Note: The month's January-September will show entries of 1, 2, 3 ... 8, 9. Where each entry is placed in a PnF chart's box when demand (X), or supply (O) entry is first recorded during the month. In essence, a "1" may not always be on January 2 of that year. The first entry may not be recorded until January 8 of that year, even later.

Sometimes, a security doesn't show a meaningful move at all for a couple of months, and you will see a "skip" from 1 to say.... 4.

The months October-December are A, B, C.

A great quick tutorial from StockCharts.com on PnF charting at this Link

Point and Figure Charting by Thomas J. Dorsey is a must read by any trader/investor.

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