Option Investor
Printer friendly version
Tab Gilles : 10/11/2006 12:53:56 AM

Open Positions & Stock Watch Link

$NDX/$NAA daily Link

$NAHGH/$NALOW 10-ema weekly Link

$NDXA50 & $NDXA200 daily Link Link

Profund Ultra OTC (UOPIX) Link

Profund Ultra Small Cap (UAPIX) Link

Marc Eckelberry : 10/11/2006 12:23:52 AM

The dollar just went negative and ZB caught a bid. Mm, that's interesting. Gold kicked out of a 575 slump. Tough to say if it will last, oil is hit hard. But the dollar is what matters it seems.

Marc Eckelberry : 10/10/2006 11:46:53 PM

No second nuke test by N Korea, it seems, but Australia and Japan warn that it could be imminent. That would be a disaster for the markets. Make sure you are hedged, just in case. The dollar is a good choice.

Keene Little : 10/10/2006 10:59:10 PM

Wednesday's pivot tables: Link and Link

OI Technical Staff : 10/10/2006 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The Market Monitor has been archived.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 : 10/10/2006 8:12:26 PM

If gold loses once again 574/575 support, then I would stand aside and see if it can hold 565. You have to be on top of this one, unfortunately. Same with QM, these are almost daytrades only until they get a groove. As I mentioned before, there is that January gap between 545 and 555 which would be a pretty quick target if 560/565 is lost.

Marc Eckelberry : 10/10/2006 7:55:18 PM

Just trade it. Get out on a run to R1 , re-enter, etc... until the stop can be wide and at no cost.

Marc Eckelberry : 10/10/2006 7:54:32 PM

5 dma is support for YG at 576.20.

Marc Eckelberry : 10/10/2006 7:52:00 PM

I was off line for a bit, but I passed on through Jim my sense that gold should be picked up on dips. The problem with gold is that it is a trading vehicle, not a buy and hold, until of course it explodes, so you have to move in and out of it and watch oil pivots. There is quite a gap above us, which we have not yet touched and any hiccups with the dollar or oil and we will be there in no time. In any case, if the stagflation scenario plays out, it won't matter if you are long gold at 565 or 575, that one will be at 850.

Marc Eckelberry : 10/10/2006 7:44:46 PM

If Alcoa doesn't knock the DOW to a test of 11750, then we know the game is rigged. Today was very difficult to get a handle on things. I shorted NQ, got out, then went back in with the bear flags, but even a negative AD line and TRINNQ above 1.1 couldn't move us to s1. This relentless propping up is unnervng. In any case, I went back in short ES at 1360.25, but you have to wonder what's it going to take. I also took a gold long at 576.20, I think the Korea thing is not over.

Keene Little : 10/10/2006 5:56:21 PM

With AA currently trading in after hours below its October 3rd low (as is Legg Mason (LM)--95.50, down almost $10), it should be a pretty good drag on the DOW. A drop below today's low for the DOW would be a bearish move from an EW perspective. A drop below Friday's 11800 (cash) low, which for YM is 11886, would be a confirmation of a break of its uptrend line from Sept 22nd and a strong statement that we've seen the high, at least for now. Hopefully we'll have some answers tomorrow.

Jeff Bailey : 10/10/2006 5:19:30 PM

Alcoa (AA) $28.29 +1.07% ... $26.40 extended.

Jeff Bailey : 10/10/2006 5:18:59 PM

Genentech (DNA) $85.60 -0.78% ... $85.70 extended.

Jeff Bailey : 10/10/2006 5:17:13 PM

15 trading sessions until Halloween Link

Jeff Bailey : 10/10/2006 5:04:06 PM

Closing Internals found at this Link

Keene Little : 10/10/2006 4:48:30 PM

It's a long way from here until tomorrow's open but YM has given up nearly all of its afternoon bounce. I may retry that ES short if 1362 is tagged overnight. Me thinks I might have been spiked out on this afternoon's bounce.

Jeff Bailey : 10/10/2006 4:46:12 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/10/2006 4:41:08 PM

Genentech (DNA) alert $85.60 -0.78% ... released for trade .... $85.62 extended.

Jeff Bailey : 10/10/2006 4:39:11 PM

Alcoa (AA) alert! $28.29 +1.07% ... released for trade ... $26.00 extended.

Jeff Bailey : 10/10/2006 4:33:42 PM

Trading Halts Link

Jeff Bailey : 10/10/2006 4:33:03 PM

Legg Mason (LM) $105.31 +3.16% Link ... halted. News Pending.

Jeff Bailey : 10/10/2006 4:30:15 PM

Alcoa (AA) ... Earnings Press Release Link

Jim Brown : 10/10/2006 4:30:05 PM

I could not resist taking a QM long off the $58.50 level at the close. We typically see decent bounces off these implosions.

Jeff Bailey : 10/10/2006 4:28:46 PM

Alcoa (AA) still halted ....

Jeff Bailey : 10/10/2006 4:24:26 PM

Genentech (DNA) $85.60 -0.78% Link ... still halted. Currently no time given for resumption of trade.

Earnings Press Release at this Link

Jeff Bailey : 10/10/2006 4:17:09 PM

Alcan (AL) $40.67 +0.32% Link ... $39.86 extended. VERY THIN TRADE EXTENDED

Jeff Bailey : 10/10/2006 4:15:16 PM

Sell Program Premium ... SPY $135.25 : YM 11,919

Jeff Bailey : 10/10/2006 4:14:33 PM

Genentech (DNA) $85.60 -0.78% ... halted for trade (earnings today).

Jeff Bailey : 10/10/2006 4:13:53 PM

Alcoa (AA) ... halted for trade.

Jeff Bailey : 10/10/2006 4:12:25 PM

Alcoa (AA) $28.29 +1.07% ...

3Q Cont Ops EPS 62c

3Q Sales $7.63B Vs $6.40B, +19%

Keene Little : 10/10/2006 4:08:24 PM

With SPX testing its high around 1353-1354, and each test showing weaker breadth (as shown in the negative divergences with MACD and RSI), I don't see this as a chart I'd want to buy right here. We know money can suddenly pour into the market but without a good way to determine that, I'd say this chart is a short. Link

Jim Brown : 10/10/2006 4:05:16 PM

Reader Challenge - Now that trading has ended and the Reader Challenge for this week has closed I can tell you that the high guess was 11808 and the low guess 11650. The majority of guesses were in the 11720 range and well under the 11866 Dow close today.

Jeff Bailey : 10/10/2006 4:04:04 PM

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

Jeff Bailey : 10/10/2006 3:51:16 PM

Canada's Intl. Reserves Down $515M In Oct. 8 Week

Canada's official international reserves fell $515 million in the week ended Oct. 8, the Bank of Canada reported.

At Oct. 8, the official international reserves totaled $35.502 billion, compared with $36.017 billion at Sept. 30.

The Oct. 8 reserves included:

-U.S. dollars, $16.545 billion;

-other foreign currencies, $16.863 billion;

-gold, $61 million;

-special drawing rights, $942 million;

-reserve position in the International Monetary Fund, $1.091 billion.

All reserve figures are reported in U.S. funds.

Keene Little : 10/10/2006 3:50:23 PM

ES never tagged its Fib target of 1365 (or YM's 11970) so perhaps we will see this chop its way higher to ring those bells before we see profit taking start to take hold.

Keene Little : 10/10/2006 3:46:37 PM

Still no sellers to be found. Not much in the way of buying either but we've got more buyers than sellers and the choppy rise may not be finished yet. My ES short was stopped out at 1362. It was worth a try and I'm watching for the next setup.

Jim Brown : 10/10/2006 3:43:58 PM

Post for Marc: - Gold. I think it should be accumulated on every dip, especially regarding the inflationary comments of a fed today. Support is 575, 565 and 555. Oil could very well stabilize quite soon and gold is still the best hedge going forward, now that bonds are selling off. Yes, it's in the dog house but it is showing remarkable relative strength, considering the rise of the dollar and fall of oil. I was expecting gold to lose 565 under these conditions.

Jim Brown : 10/10/2006 3:42:57 PM

Reader Challenge - Only 20 min left to get your guess in for the Dow close on Friday. The prize for the winner is the book, "The New Options Market" Link

Send your Dow guess to Jim at OptionInvestor.com

Keene Little : 10/10/2006 3:27:53 PM

After breaking its uptrend line from October 3rd, SPX has now bounced back up to it for what looks like a retest. A failure below 1353 should be bearish. A continuation higher says we're probably in some kind of larger sideways consolidation or a choppy rise (which would be an ending pattern). Link

Jane Fox : 10/10/2006 3:25:30 PM

The only land mines we have to navigate tomorrow is the 2:00p.m. FOMC Minutes.

Jim Brown : 10/10/2006 3:17:09 PM

Marc has lost Internet access and will be back as soon as it is fixed.

Jeff Bailey : 10/10/2006 3:16:06 PM

03:00 Internals found at this Link

Keene Little : 10/10/2006 3:13:38 PM

After that last little poke higher, two ticks to a new high is at 1362 and that's still a good spot for a stop if you're short.

Keene Little : 10/10/2006 3:11:31 PM

Geopolitical concerns, maybe interest rates won't come down, perhaps the economy is slowing down, housing getting a big slowdown and VIX hanging around its record lows. Me worried? Nah, not a care in the world. This is so similar to previously over-the-top bullish times and it probably will end the same. We are priced to perfection and perfection rarely occurs.

Jeff Bailey : 10/10/2006 3:03:08 PM

03:00 Market Watch found at this Link

Jim Brown : 10/10/2006 3:02:09 PM

Reader Challenge The book link I posted earlier (2:59:47) was incorrect for "The New Options Market" Here is the correct link. Link

Email those guesses today. You only have one hour left. Jim at OptionInvestor.com

Jeff Bailey : 10/10/2006 2:59:34 PM

USO ... 60-minute interval chart with WEEKLY/MONTHLY Pivot retracement at this Link

Jeff Bailey : 10/10/2006 2:56:23 PM

U.S. Oil Fund (USO) $53.52 -1.97% ...

Keene Little : 10/10/2006 2:55:32 PM

Any rally above ES 1362 says we're probably still in a choppy rise of some kind and may not have seen the highs yet. That's why an attempt at shorting here has a tight stop. It needs to work right away or step aside.

Jeff Bailey : 10/10/2006 2:55:58 PM

Trans Alaskan Pipeline Shut Down Due To Flooding (update to 02:11:38)

Jeff Bailey : 10/10/2006 2:53:15 PM

Iran Supreme Leader: Atomic Work To Go On "Without Retreat"

Keene Little : 10/10/2006 2:51:02 PM

This should do it here--ES tagged its 62% retracement at 1360.75. Keep your stop tight (1362 or so) and try it short here at 1360.50.

Keene Little : 10/10/2006 2:45:10 PM

Another minor high for this bounce could do it. I'd watch for a short entry.

Jane Fox : 10/10/2006 2:41:06 PM

I think we have seen the daily lows and will get a listless rally or just move sideways into the close.

Jane Fox : 10/10/2006 2:39:48 PM

As you can see from my last post Gold for the longer term is quite bearish.

Jane Fox : 10/10/2006 2:38:56 PM

I painted a bullish picture from the Gold charts this morning and for the short term we may see a retracement but I keep my eye on these charts for a longer term look at Gold. These are the charts of the three markets Gold trades in unison with the closest. Oil is a direct relationship, Swiss Franc a direct relationship and the US $ an indirect relationship. The weekly MAs on the charts are the lines in the sand for each market. Link

Jeff Bailey : 10/10/2006 2:38:18 PM

ICE $86.09 +1.37% Link

Jeff Bailey : 10/10/2006 2:37:29 PM


DJ- Chicago Mercantile Exchange and CBOT shares slide after posting record highs in recent sessions. Analysts say the rally, on speculation about mergers and strong trading volume optimism may have run its course.

CME $505.35 -3.09% Link

BOT $129.68 -2.69% Link

Marc Eckelberry : 10/10/2006 2:37:15 PM

We should still close down, but it will take a jump in crude back above 59 oto get nasty. Right now, it will be dubbed by the press as a little profit taking. But I am looking at that 50 ema 60 mn reistance. We will see if it holds.

Marc Eckelberry : 10/10/2006 2:34:08 PM

Rates are up, SO is down and we keep chugging as if nothing was wrong, just because oil is down for another week. Getting old.

Jane Fox : 10/10/2006 2:33:23 PM

SAN FRANCISCO (MarketWatch) -- Gold futures closed Tuesday with a loss of more than $6 an ounce, surrendering the prior session's gains sparked by North Korea saying it had tested a nuclear weapon, as oil prices retreated and the dollar strengthened against rival currencies.

"As traders watched a surging dollar and easing crude-oil prices, the realization set in that it may perhaps become difficult to achieve even a $600 price average for 2006 in gold," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.

And "the almost complete lack of emotional reactive power to the unfolding North Korean nuclear drama casts a deep and very dark shadow on gold as a safe haven," he said, adding that "many are beginning to wonder just what it is that gold will react to anymore."

Gold for December delivery closed down $6.60 at $576.20 an ounce on the New York Mercantile Exchange, after having weakened to an intraday low of $573.

"The precious-metals complex continues to chop around with December gold well below the $600 level as all attempts to rally are met with renewed selling," said Dale Doelling, chief market technician at Trends In Commodities.

"So, as volatility dries up this choppy market action will likely result in a bigger-than-normal move, one way or the other, down the road," he said.

Jane Fox : 10/10/2006 2:31:31 PM

TICKS +800.

Jane Fox : 10/10/2006 2:31:12 PM

I see we have a some bear flags building again but I have found the 2nd one is never as reliable as the first so I will not trade it.

Jane Fox : 10/10/2006 2:29:10 PM

WASHINGTON (MarketWatch) -- U.S. households that heat with natural gas can expect to see their fuel bills fall an average of 12.5% this winter, according to the Energy Department's annual winter fuels outlook released Tuesday.

A typical household using natural gas is projected to spend $826 this winter compared with last year, or $119 less than last winter, according to the report published by the Energy Information Administration, the statistical arm of the Energy Department.

A majority of U.S. homes, about 58% according to the Energy Information Administration, heat with natural gas. Homes in the Midwest, where gas is the prevalent heating fuel, will see the steepest drop with home heating expenditures, down about 14%.

Weather plays the biggest role in determining winter heating bills. A cold snap can quickly send heating bills higher.

The National Oceanic Atmospheric Administration, which projects weather conditions, has forecasted a 5.9% colder winter for the lower-48 states compared to last winter, which was fairly mild. Colder weather translates into greater fuel consumption by households.

Jeff Bailey : 10/10/2006 2:25:24 PM


DJ- CEO Steve Ballmer says software industry is going through transition in which applications will run as easily as web sites and adds while there will still be many software projects that take years to come to fruition, there will also be other applications that have a more "click to run" characteristic.

MSFT $27.53 -0.68% Link

Jeff Bailey : 10/10/2006 2:23:23 PM


DJ- A weak El Nino under way in the Pacific Ocean should contribute to a mild winter for much of the U.S., the National Weather Service says. Drought is expected to ease in most areas of the Southwest.

Jeff Bailey : 10/10/2006 2:12:23 PM

U.S. Oil Fund (USO) $53.79 -1.48% ....

Jeff Bailey : 10/10/2006 2:11:38 PM

BP: Prudhoe Bay Production Shut Down On Electric Outage

BP $64.75 +0.66% Link

Marc Eckelberry : 10/10/2006 2:10:30 PM

Another bear flag for NQ. As usual, NQ is so much more technical and clean than ES.

Keene Little : 10/10/2006 2:08:45 PM

The bounce should find resistance in the Fib retracement zone of 38-62% of the drop from this morning's high. That gives us a resistance zone for ES at 1359.50-1360.75 to watch for weakness and to enter a short position.

Marc Eckelberry : 10/10/2006 2:07:30 PM

That should give oil some support.

Jim Brown : 10/10/2006 2:59:47 PM

Reader Challenge Alert - The reader challenge this week will be to predict the Dow close for Friday. The winner will receive the book, "The New Options Market" by Max Ansbacher. This is a $39 book on Amazon and has been claimed as the bible for option traders. It has been updated four times due to its popularity. Link

To play in this weeks challenge you must email ME, Jim at OptionInvestor.com with your guess by the close of trading today. Monitor writers are encouraged to guess but are not eligible for the book.

Don't hesitate to enter just because your guess is significantly different than those discussed in the monitor. Take a chance, send in the entry. It is confidential unless you win. To enter you MUST EMAIL ME DIRECTLY, Jim at OptionInvestor.com. I do not want to clog the mailbox at the support address. Do it NOW!

Jeff Bailey : 10/10/2006 2:04:54 PM


DJ- Philip Morris and other cigarette makers file motion with federal appellate court that seeks an overturn of the class-action certification in the Schwab case, which could seek as much as $200 billion in damages, and requests a stay of all proceedings.

MO $77.90 -1.07% Link

Jeff Bailey : 10/10/2006 2:02:54 PM


DJ- Any reduction by the group will have a limited effect on prices, the Energy Information Administration believes, saying that a decrease in oil cartel's quota will simply bring it more in line with its members' actual oil production.

Jeff Bailey : 10/10/2006 2:01:46 PM


DJ- U.S. again rejects direct talks with North Korea and says it will not be intimidated by a reported threat from Pyongyang that it could fire a nuclear-tipped missile unless the U.S. acts to resolve the standoff.

Jeff Bailey : 10/10/2006 1:51:04 PM

China Envoy: North Korea Must Face "Punitive Actions" For Test

DJ- North Korea must face "some punitive actions" for testing a nuclear device, China's U.N. ambassador said Monday, suggesting that Beijing may be willing to impose some form of Security Council sanctions against Pyongyang.

China's U.N. Ambassador Wang Guangya told reporters that the council must give a "firm, constructive, appropriate but prudent response" to North Korea.

"I think there has to be some punitive actions but also I think these actions have to be appropriate," he said.

Jeff Bailey : 10/10/2006 1:44:56 PM

U.S. 3-Month Bills Auction: 4.850%; 88.10% At High

The U.S. Treasury awarded $16.00 billion in three-month bills at Tuesday's auction at a high rate of 4.850%.

The Treasury received bids totaling $36.75 billion and accepted $16.00 billion, including $1.88 billion of noncompetitive tenders. The dollar price was 98.774028 and the investment rate, or bond-equivalent return, was 4.978%.

The Treasury also sold $160.0 million of bills to foreign and international monetary authority accounts on a noncompetitive bidding basis.

The bid-to-cover ratio, an indication of demand, was 2.30, Treasury said.

Tenders submitted at the high yield were allotted 88.10%.

The median rate was 4.830%; that is, 50% of the amount of accepted competitive bids were tendered at or below that rate.

Of the competitive bids accepted, 5% were tendered at or below the rate of 4.815%.

Jane Fox : 10/10/2006 1:40:57 PM

ES tests daily lows but the VIX does not test daily highs so I think they will hold.

Jeff Bailey : 10/10/2006 1:42:42 PM

U.S. 6-Month Bills Auction: 4.890%; 70.49% At High

DJ- The U.S. Treasury awarded $15.00 billion in six-month bills at Tuesday's auction at a high rate of 4.890%.

The Treasury received bids totaling $33.11 billion and accepted $15.00 billion, including $1.59 billion of noncompetitive tenders. The dollar price was 97.527833 and the investment rate, or bond-equivalent return, was 5.084%.

The Treasury also sold $110.0 million of bills to foreign and international monetary authority accounts on a noncompetitive bidding basis.

The bid-to-cover ratio, an indication of demand, was 2.21, Treasury said.

Tenders submitted at the high yield were allotted 70.49%.

The median rate was 4.870%; that is, 50% of the amount of accepted competitive bids were tendered at or below that rate.

Of the competitive bids accepted, 5% were tendered at or below the rate of 4.850%.

The Federal Reserve purchased $12.29 billion in bills for its own account in Tuesday's three- and six-month bill auctions. When the auction was announced, the Fed held $16.18 billion of maturing bills.

The bills awarded to the Federal Reserve are in addition to the public offering amount.

The high rate was up from 4.825% at the previous six-month bill auction.

The high rate was the highest since the rate of 4.920% at the six-month bill auction on Sept. 18, 2006.

The issue is dated Oct. 12, and matures on April 12, 2007.

The CUSIP number on the six-month bill is 912795ZB0.

Jane Fox : 10/10/2006 1:39:48 PM

All markets but ER have now tested daily lows. Don't you just love those bear flags.

Marc Eckelberry : 10/10/2006 1:38:00 PM

I think things will get worse as we get into the close. We should get two days of selling then opex support kicks in. But, heck who knows. Gotta go, short ES below 1360.25, long above.

Keene Little : 10/10/2006 1:34:04 PM

We now have a 5-wave move down from this morning's high (which should have a little lower to go yet). Once that completes we should get the bigger bounce into this afternoon (keeping today in a tight trading range). After that bounce finishes is when we'll want to test the short side.

Jane Fox : 10/10/2006 1:31:55 PM

I think this market is headed down but the darn TRIN has me worried. I saw what it did yesterday but of course that was yesterday.

Keene Little : 10/10/2006 1:31:42 PM

I can definitely see that possibility Marc. A pullback to test and bounce off both its uptrend line from July and its 20-dma would have SPX finding support above 1331. But that would be a 20-point drop from here and worth a trade.

Marc Eckelberry : 10/10/2006 1:31:30 PM

Uh, oh. There goes the 50 ema 60 mn chart.

Marc Eckelberry : 10/10/2006 1:29:02 PM

As I said, I don't like the long side today. I expect us to hit ES 1350/NQ 1685. I have been saying that for three days, I know...

Marc Eckelberry : 10/10/2006 1:27:55 PM

That's a good scenario, Keene, although I am thinking too many puts belwo to go far before the end of opex. Tough call. I think the best course is to look for a retest of breakout, DOW 11750, then take it long for the final leg up. Use confirmations with SPX and NDX.

Marc Eckelberry : 10/10/2006 1:25:56 PM

Another wasted day trading equities with low volatility. QM was much more fun. ES range today was 6 points. What a joke.

Keene Little : 10/10/2006 1:21:07 PM

I dusted off my crystal ball, plugged it in, shook it to get the snow to start falling and here's what it's telling me. The Boyz are positioning for a swoon to the downside into opex. That way the mega-banks' trading teams can do their usual raping a pillaging of Joe Investor and make their gazillions. Then run the market back up for a retest of the high as we head into the end of the month. Get past elections and then pull the plug. That's my story and I'm sticking to it (until the market tells me otherwise).

Marc Eckelberry : 10/10/2006 1:18:39 PM

Sometimes you can trade ES by looking at NQ, it gives you a heads up and you get that extra second or two.

Jeff Bailey : 10/10/2006 1:15:43 PM

01:00 Internals found at this Link

Jane Fox : 10/10/2006 1:10:06 PM

MACD is telling me we have a series of bearish flags building and that daily lows could very well be tested. Link

Jeff Bailey : 10/10/2006 1:08:30 PM

01:00 Market Watch found at this Link

Marc Eckelberry : 10/10/2006 12:57:27 PM

It is noteworthy that lower oil is ot getting much of a bid in equities. We had that bump when we went down below 59, but no one seems to care much now. Is it priced in?

Marc Eckelberry : 10/10/2006 12:58:05 PM

There is large put support at QQQQ 41 and SPY 134, so any pullback there should be bought until proven otherwise. But we are due for that test. Of course, if wehold here and do a second reversal (unlikely now but possible), then weekly R1 at NQ 1724 would be the target.

Tab Gilles : 10/10/2006 12:54:24 PM

Two stocks with court rulings today.

Altria( MO) Link Link

Qualcomm (QCOM) Link Link

Marc Eckelberry : 10/10/2006 12:53:39 PM

The contrarian of the contrarian is now thinking everyone might have shifted to thinking no October pullback. The market has a perverse way of shifting just when everyone starts getting on board, and the way this rally is fizzling with signs of distribution, we could have a suprise for bulls today and tomorrow.

Jeff Bailey : 10/10/2006 12:52:36 PM


DJ- Supreme Court dismisses an appeal from Apotex over its efforts to gain FDA approval for selling a generic version of depression and anxiety drug Zoloft before Pfizer's patent on the drug had expired.

PFE $27.32 -1.19% Link

Marc Eckelberry : 10/10/2006 12:47:01 PM

I'm not trusting the long side today anymore.

Jeff Bailey : 10/10/2006 12:45:56 PM

Broker/Dealer Index (XBD.X) 237.45 +0.12% ... back near unchanged after test of WEEKLY R1 (239.99) this morning. It was the first test of its WEEKLY R1 this week. All-time closing high just above at 241.38.

Keene Little : 10/10/2006 12:45:11 PM

If we see a small consolidation here followed by a new low that will then create a 5-wave impulsive move down off this morning's high. That would be an indication of a trend change and would put an exclamation point on today's high.

A new low after a small consolidation would then be followed by a larger bounce back up, to correct the 5-wave move down, and that's when you'll want to get short for a bigger ride down.

In the meantime, it's only a 3-wave move down and the bulls still control the ball.

Marc Eckelberry : 10/10/2006 12:39:31 PM

1701.75, if that falls, then bears win the day.

Marc Eckelberry : 10/10/2006 12:39:13 PM

Watch out for the 50 ema 60 mn chart. It has not broken for NQ and ES for quite some time and has found consistent support.

Keene Little : 10/10/2006 12:34:25 PM

ES is holding at the uptrend line from Friday's low through this morning's low (1358.25). Bulls need to hold the line here. A break of that, confirmed with a new daily low would say the EW pattern to the upside is complete. Bulls still holding though.

Jane Fox : 10/10/2006 12:30:39 PM


Keene Little : 10/10/2006 12:30:33 PM

Uh oh.

Keene Little : 10/10/2006 12:23:40 PM

In the meantime, watch ES 1359 for support for a scalp long. Upside target remains 1365 if 1359 holds.

Keene Little : 10/10/2006 12:22:51 PM

I'm expecting another leg up after this pullback but a break to a new daily low would tell me my expectation is wrong. A new daily low would say we've seen the high.

Jeff Bailey : 10/10/2006 12:22:48 PM

Yesterday's Sector Bullish % Changes

DRUGs reversed up from "bear confirmed" to "bear correction"

STEEl/Iron reversed up from "bear confirmed" to "bear correction"

Marc Eckelberry : 10/10/2006 12:20:06 PM

Mm. Looks like more distribution. Watch ES 1360.25, 50% today.

Keene Little : 10/10/2006 12:17:19 PM

It's interesting that the reason given for the latest stock market rise was because of the expectations for a rate decrease by the Fed. Now that it's becoming clearer and clearer that the Fed is at least on hold and not entertaining the thought of a decrease (and may further increase), the stock market continues to hold up and even rally a little further. Where's the disconnect? Just more proof that the market does what it does and then people try to find a reason why. Um, maybe because there's money coming into the market and stocks are being bought? Nah, too simple an explanation.

Jeff Bailey : 10/10/2006 12:13:52 PM

Google (GOOG) $431.03 +0.47% Link ... today's trade at $432.00 does achieve PnF bullish vertical count. Tough to assess further longer-term reward from here.

Marc Eckelberry : 10/10/2006 12:12:39 PM

Oct. 10 (Bloomberg) -- The dollar reached its highest this year against the yen as investors pared bets the Federal Reserve will cut interest rates in coming months as the economy shows signs of strengthening. A government report this week may show sales at U.S. retailers rose for a third consecutive month in September. The dollar had its biggest gain since July on Oct. 6 following an unexpected drop in the U.S. jobless rate. Fed officials have emphasized the risks of inflation in recent speeches. "Fed speak in the past week has delayed the expectation of an ease until the second quarter," said Mike Moran, senior currency strategist at Standard Chartered Bank in New York. "The market has gotten a little more hawkish and given the dollar some natural support."

Marc Eckelberry : 10/10/2006 12:11:25 PM

Trading range until then.

Marc Eckelberry : 10/10/2006 12:11:13 PM

DBle tops for ES and NQ. Everything on hold until we get the first volley of earnings.

Jeff Bailey : 10/10/2006 12:11:10 PM


DJ- Shares climb 6% after company reports net income of $132 million, or 61c a share, and raises fiscal year outlook to $2.18 to $2.41. Sales double to $10.67 billion. Analysts expected 53c EPS on revenue of $10.64 billion.

SVU $32.59 +5.09% Link

Marc Eckelberry : 10/10/2006 12:08:10 PM

I want to load up on oil, but I will wait for a possible retest of 57.75 with a lower low and divergence. Weekly S1 is at 57.275. A close above 59.525 negates the bearishness. Inventories due tomorrow.

Keene Little : 10/10/2006 12:07:55 PM

Watch ES 1359 for support (two equal legs down from this morning's high). We should get another stab higher after this pullback.

Jeff Bailey : 10/10/2006 12:02:53 PM


DJ- Genzyme's latest proposal of $580 million, or $13.50 a share, trumps Millennium Pharmaceuticals' recent offer of $515 million, or $12 a share. Genzyme offered $380 million in late August.

ANOR $14.05 +5.63% Link

GENZ $68.04 -2.10% Link

MLNM $10.05 +0.09% Link

Marc Eckelberry : 10/10/2006 12:02:46 PM

It's great for the consumer right now, but my feeling is it won't last past the elections. Oil will get back above 60, easily. Shoot me for saying that, but hey, I've seen it all in 20 years of trading.

Keene Little : 10/10/2006 12:01:22 PM

Fisher's speech is once again leaning towards another rate increase the way I read it. The economy is doing well, inflation is higher than we want and no recession on the horizon (cough). Sounds to me like the Fed remains in inflation-fighting mood. As well they should. With the increase in the money supply (my guess) they'll need to keep interest rates where they are, or raise them another notch, to fight the inflation they're helping to create.

Jeff Bailey : 10/10/2006 11:56:49 AM


DJ- Wholesalers' inventories rise 1.1% in August to $386.64 billion, exceeding Wall Street expectations for a 0.6% climb. July inventories advanced by 0.9% from previously reported 0.8%. Wholesale sales up 1.1% in August to $335.61 billion.

Jeff Bailey : 10/10/2006 11:51:41 AM

Fed's Fisher (Dallas President: headlines)

Correction To Housing Mkt Severe And Sharp

Housing Mkt,Auto Industry Weaker Parts Of Econ

Rest Of Economy Pumping On Full Pistons

Housing Mkt Will Slow, Not Overcome Econ

Will Do More To Curb Inflation If Needed

Current Rate Of Inflation Is Too High

Expects Previous Rate Hikes To Lower Inflation

Will Hike Again If Inflation Doesn't Ease

Decline In House Prices Won't Spark Recession

Marc Eckelberry : 10/10/2006 11:45:30 AM

I guess if you were the only family allowed to fly on 9/11, you owe some big favors.

Marc Eckelberry : 10/10/2006 11:44:31 AM

Surpsie, surpise, suprise...
Oct. 10 (Bloomberg) -- Crude oil fell as Saudi Arabia's state oil company told its customers in East Asia and the Mediterranean to expect the same quantity of oil in November as last month, undercutting OPEC efforts to cut output. "History shows that OPEC deals only work when the Saudis are on board," said Bill O'Grady, an analyst with AG Edwards & Sons in St. Louis. "Allocating the cuts is always the problem. The poor countries want the rich ones to take the hit and the rich ones will only do that if a cut is in their best interest." The plan by Saudi Arabia, the world's largest oil exporter, contrasts with OPEC President Edmund Daukoru's letter calling for a cut of 1 million barrels a day starting Nov. 1. Saudi Arabia, Kuwait, Libya and Algeria agreed to join Venezuela and Nigeria in making cuts, his spokesman said on Oct. 8. OPEC produces about 40 percent of the world's oil.

Tab Gilles : 10/10/2006 11:42:37 AM

Interesting...New Oil ETF... Link

Tab Gilles : 10/10/2006 11:40:00 AM

Qualcomm(QCOM) $37.06 +0.82 Link Link

Keene Little : 10/10/2006 11:38:55 AM

Marc, I think you're right about the shorts and why we probably won't have any kind of October crash. I don't see that as a probability at this point from an EW perspective either. I'm thinking we'll see somewhat of a choppy move lower (that eats up time) and then a retest of the high as we head towards the end of the month. That would set up November as a difficult month for the bulls. As you've rightly commented many times, that would continue this year being "counter-common", meaning we're seeing things happen in this market counter to what has commonly occurred in the past.

This morning's drop looked like part of the 4th wave pullback in the final move up from Friday's low. We've now had a spike up which should be followed by a pullback and then another rally leg to finish it off. ES 1365 and YM 11970 are still good upside targets.

Marc Eckelberry : 10/10/2006 11:38:50 AM

Just a heads up if you are thinking too bullishly about oil right now. Let it rest a little. Maye we will even get a retest of lows.

Marc Eckelberry : 10/10/2006 11:39:32 AM

Please don't attack me if I say this (it is market related!), but isn't it surprising that the Saudis, old time friends of the Bush family, are helping keeping oil prices as low as possible ahead of the elections? I hate conspiracies theories, but 2 days ago, OPEC was going to cut production. All of sudden, polls indicate Re[ublicnas are in big trouble. The only thing going for them now is lower gas and a rising stock market.
Oct. 10 (Bloomberg) -- Crude oil fell as Saudi Arabia's state oil company told its customers in East Asia and the Mediterranean to expect the same quantity of oil in November as last month, undercutting OPEC efforts to cut output.

Marc Eckelberry : 10/10/2006 11:34:41 AM

Oct. 10 (Bloomberg) -- Crude oil fell as Saudi Arabia's state oil company told its customers in East Asia and the Mediterranean to expect the same quantity of oil in November as last month, undercutting OPEC efforts to cut output.

Jane Fox : 10/10/2006 11:31:49 AM

Just want to make sure that you realize that those were not my words but a continuation from the 11:26 post.

Marc Eckelberry : 10/10/2006 11:29:49 AM

That was well put, Jane.

Jane Fox : 10/10/2006 11:28:08 AM

It is possible to improve the statistical probabilities of these two prescient indicators, by combining them into a third leading barometer. Since the end of WWII, a simultaneous yield curve inversion and a six month decline in the LEI have occurred only seven times. With the exception of an inversion forty years ago, this combination has been 100% in calling recessions The average lead time between the meeting of these two conditions has been about nine months (but with significant variations from the average). The most recent episode occurred in June of this year, suggesting that the economy should register at least below trend growth rates in 2007. All "opinions" aside, cyclical financial history points to disinflationary, sub-par growth rates over the next several quarters. Augmenting this statistical view is the present collapse of various housing indicators.

Marc Eckelberry : 10/10/2006 11:27:56 AM

Keene, the only problem is all those shorts outthere betting on an October collapse. Any other month, and this market would have taken a dive, but bears are supporting it it seems. But we have seen signs of distiribution every day at the open.

Jane Fox : 10/10/2006 11:27:10 AM

One of the LEI components--the spread between the ten year Treasury note yield and the Fed funds rate-- has, by itself, an outstanding record of signaling recessionary periods since the late 1960s.

Jane Fox : 10/10/2006 11:26:44 AM

Here is a comment from John Maudlin's last "Out of the box" newsletter. The comment comes from; Quarterly Review and Outlook
Third Quarter 2006
By Van R. Hoisington and Lacy H. Hunt, Ph.D.
Hoisington Investment Management Company
"... a body of statistical indicators exist that carry no opinion, but which have proven over an extended period of time to do a superior job of forecasting the level of economic activity. This statistical series, compiled by the Conference Board since 1960, and prior to that by the U.S. Department of Commerce, is known as the Leading Economic Index (LEI). The LEI, comprised of ten different economic indicators, has declined on a six month basis thirteen times since 1952. Nine recessions and four slowdowns followed each of these contractions. This 70% batting average is measurably better than the record of most economic pundits."

Marc Eckelberry : 10/10/2006 11:26:21 AM

ES monthly R1 1363.

Jane Fox : 10/10/2006 11:22:21 AM

Both YM and NQ are now testing their daily highs. The TRIN was internal once again that was warning us of this bullishness.

Jane Fox : 10/10/2006 11:20:21 AM

Oil to new daily lows.

Keene Little : 10/10/2006 11:17:34 AM

I'm reading some stuff on cycles and an interesting observation by George Lindsay who is noted for his superb market timing. He identified a cycle that he referred to as a "bottom-to-bottom-to-top" cycle and we may be finishing such a cycle now. Yesterday was the 8-year anniversary of the LTCM (Long Term Capital Management) panic low; today is the 4-year anniversary of the October 2002 bottom. That makes for a 4-year cycle between the two bottoms and today's high.

We're up near some major trend line resistance and I've got an EW count that is very close to finishing the upside count (as shown earlier this morning). There are a few things coming together here that could be significant in marking a high for this rally.

Jeff Bailey : 10/10/2006 11:16:38 AM

11:00 Internals found at this Link

Keene Little : 10/10/2006 11:08:43 AM

Good observation Marc. The a-d line is also negative for the broader market. This should be the case if we're into the last leg up of this advance.

Marc Eckelberry : 10/10/2006 11:05:10 AM

Some distribution going on. NQ advdec line back to negative.

Marc Eckelberry : 10/10/2006 11:03:45 AM

Oversold bounce, or csomething more? Oil dropped and that gave a kick, now bulls need to get NQ above trendline resistance at 1708.

Jeff Bailey : 10/10/2006 11:03:12 AM

11:00 Market Watch found at this Link

Jeff Bailey : 10/10/2006 11:00:33 AM

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

Jane Fox : 10/10/2006 10:59:36 AM

ER is now testing its PDH and I think it will hold for now.

Jane Fox : 10/10/2006 10:57:01 AM

However, if trading ES remember you have a zone of resistance from 1361 to 1361.75. Overnight and previous day highs.

Jeff Bailey : 10/10/2006 10:56:39 AM

U.S. Court Rejects Tobacco Case Appeal by 30 States

Reuters brief Link

Jane Fox : 10/10/2006 10:56:08 AM

The TRIN at 0.65 and below its PDR is telling you to not be short.

Keene Little : 10/10/2006 10:48:31 AM

For anniversary buffs you might like to know that today marks the 4-year anniversary of the October 2002 bottom. It's also interesting to point out that major market turning points often occur around major anniversary dates. Just thought I'd throw that in there.

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

Too many darned shorts.

Marc Eckelberry : 10/10/2006 10:40:48 AM


Jane Fox : 10/10/2006 10:40:02 AM

These two are very unclear so even if I were able to trade I would not because I need all my ducks in a row. These ducks are wondering all over the place. Link

Keene Little : 10/10/2006 10:39:47 AM

I was advised that my 10:24 post contained an oxymoron. We don't have "eager shorts" but instead we have "anxious shorts". Hence the repeated buying spikes after the dips.

Marc Eckelberry : 10/10/2006 10:38:43 AM

Here they come again. Watch 1706.25.

Jane Fox : 10/10/2006 10:36:50 AM

No matter which direction the market goes today, it will make the move without me. IB is very flaky today and I will not trade as long as I keep losing my connection.

Jeff Bailey : 10/10/2006 10:35:08 AM


DJ- Sales rise 1.3% the first week of October versus the previous month, according to Redbook Research. International Council of Shopping Centers-UBS Retail Chain Store Sales Index increases 0.5% in the week ended Oct. 7.

Jane Fox : 10/10/2006 10:34:46 AM

Marc the TRIN says we go higher.

Marc Eckelberry : 10/10/2006 10:32:18 AM

TRINNQ says we go lower. But I don't dare say that anymore.

Jeff Bailey : 10/10/2006 10:31:56 AM

Homebuilders/Construction sorted by DAILY Net% Gain with Inventory Turnover Ratio, P/E Ratio, E/Sales Growth Rate at this Link

Marc Eckelberry : 10/10/2006 10:27:21 AM

Or support.

Marc Eckelberry : 10/10/2006 10:27:11 AM

Watch for NQ 5 dma breakdown at 1700.

Marc Eckelberry : 10/10/2006 10:25:00 AM

GOld looks weak and could challenge 565 soon. If that is the case, I would wait for that January gap around 550. Watch 576 key support here.

Keene Little : 10/10/2006 10:24:35 AM

SPX is currently testing its uptrend line from Oct 3rd. If you're feeling lucky and think this is just a pullback to suck in some eager shorts, this is the place to go long.

Marc Eckelberry : 10/10/2006 10:23:02 AM

Of course, that is a macro view. We have some more bullsihness short term, so a pullback to 10 dma at 1682 will get bought.

Marc Eckelberry : 10/10/2006 10:22:21 AM

There has never been a back to back period of high growth and low inflation like the 90's cycle. That would have to wait 17 years. So either it is low growth / high inflation (stagflation) or high growth, high inflation. Either way, it is not great for equities longer term.

Marc Eckelberry : 10/10/2006 10:20:45 AM

The rising dollar is telling us rates will not drop as much as everyone thinks.

Marc Eckelberry : 10/10/2006 10:19:59 AM

Some bottom fishers coming in on dips because of lower oil, but as long as we stay below 1704 and the SOX stays red, it looks like a run lower. But we have been fooled before.

Jeff Bailey : 10/10/2006 10:18:44 AM


DJ- U.S. dollar rises to its highest level against the yen this year amid comments from a Fed official implying rates in the U.S. will remain on hold and continued concern over North Korea's nuclear weapons test.

dx00y 87.06 +0.62% Link

Jeff Bailey : 10/10/2006 10:16:39 AM


DJ- U.S. energy agency forecasts oil demand to grow by 1.7% in 2007 to 20.96 million barrels a day after staying flat this year. It sees average price of West Texas crude oil dipping by 1.4%, to $65.92 a barrel in 2007.

USO $54.13 -0.86% ... $1 box chart Link

$0.50 box chart Link

Jeff Bailey : 10/10/2006 10:14:23 AM


DJ- Home builder sees earnings of $5.25 to $5.75 for fiscal 2006, below analyst expectations of $6.09. Homes delivered for 3Q fall 11%, while new contracts drop to 571 from 1,163 a year ago.

MHO $36.30 -0.13% Link

Marc Eckelberry : 10/10/2006 10:13:11 AM

SOX is down today, unlike yesterday

Marc Eckelberry : 10/10/2006 10:12:00 AM

Remember, it's all about rates.

Jeff Bailey : 10/10/2006 10:11:56 AM


DJ- Home builder's 4Q sales orders for new homes drop to 10,430, or $2.5 billion, amid sluggish demand for housing. Cancellation rate rises 40% from 29%. Firm cites tough market causing increased use of incentives.

DHI $24.95 +4.65% Link

Marc Eckelberry : 10/10/2006 10:11:45 AM

The bond market is back and it is not happy. Rates are creeping up.

Jane Fox : 10/10/2006 10:09:36 AM

Remember the low TRIN yesterday and the bullishness that followed. TRIN is now sitting at 0.68 right at its PDL. Bears beware.

Marc Eckelberry : 10/10/2006 10:08:39 AM

For once, Qcharts is correct. NQ 1704.50, at pivot.

Marc Eckelberry : 10/10/2006 10:06:37 AM

Right now, bulls are clinging, even though once aagain the AD line is negative

Jane Fox : 10/10/2006 10:06:22 AM

Marc at least it is not just me.

Marc Eckelberry : 10/10/2006 10:06:18 AM

If we can't hold 1704, then I will get my retrace to 1685.

Jeff Bailey : 10/10/2006 10:06:10 AM


DJ- KB Home estimates 3Q earnings at $155 million, or $1.93 a share. Firm had previously reported a 6% rise in 3Q revenue to $2.67 billion. Home builder delays 3Q results while it reviews accounting of stock-option grants.

KBH $46.15 +3.03% Link

Jane Fox : 10/10/2006 10:06:03 AM

BOSTON (MarketWatch) -- D.R. Horton Inc. said Tuesday fourth-quarter net sales orders for new homes dropped 25% from a year earlier on sluggish demand for housing.

"The current selling conditions in the home-building industry continue to be challenging, with higher-than-normal cancellation rates and increased use of sales incentives in many of our markets," said Chairman Donald Horton in a statement.

The nation's largest home builder, Ft. Worth, Tex.-based D.R. Horton (DHI) said orders for the three months ended Sept. 30 fell to 10,430 homes valued at $2.5 billion, down from 13,950 and $3.8 billion in the year-ago quarter.

Its cancellation rate for the latest quarter rose to 40%, up from 29% the prior year.

D.R. Horton shares are down 32% so far in 2006.

Marc Eckelberry : 10/10/2006 10:05:57 AM

IB having problems.

Jeff Bailey : 10/10/2006 10:04:44 AM


DJ- Group ministers agree to slash crude output by 1 million barrels a day, but are still finalizing details of how the cut should be implemented -- whether it should come from its official ceiling of 28 million b/d or actual production.

Jane Fox : 10/10/2006 10:02:45 AM


Jeff Bailey : 10/10/2006 10:02:20 AM

10:00 Market Watch found at this Link

Jane Fox : 10/10/2006 9:59:56 AM

New daily lows in all markets except NQ.

Jane Fox : 10/10/2006 9:58:03 AM

Is anyone else having an issue with IB this morning? I cannot keep my connection.

Keene Little : 10/10/2006 9:51:21 AM

The current drop could be just part of the final move up so it may be a bit premature to chase this lower. We have no uptrend line breaks yet.

Keene Little : 10/10/2006 9:45:38 AM

A possibility to watch for is a retest of the October 5th high that ends this rally. Not that we haven't seen it mulitple times before but the negative divergences on the 60-min chart right now are glaring. The EW count, assuming we're into the final 5th wave up, should leave such a glaring negative divergence and the count looks very close to being complete. Longs should be pulling their stops up pretty tight I think.

Jane Fox : 10/10/2006 9:39:48 AM

AD line is a neutral +382 and AD volume above 0 and climbing.

Jane Fox : 10/10/2006 9:22:17 AM

Gold is forming a bullish wedge, which is confirmed by the MACD. I would not be short Gold here. This is the kind of development Goldbugs were watching for to say the bearishness may be coming to an end. Link

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

After a day off Tbonds continued their selloff overnight and broke their PDLs.

Gold is testing its PDL and has found support. I am seeing a bullish development on the daily ZG chart now which I will show later. Gold's ON low was 574.80

Crude has also found some support at its overnight lows and should probably take a bounce from here however, a consolidation at lows is usually a good sign that crude will see lower lows before the day is out. Crude's ON low was 59.25

Natural Gas has broken ranks with Oil and Gold again and seems to trading in its own little world. Nat Gas ON high was 6.575 Link

Jane Fox : 10/10/2006 9:08:43 AM

Good morning all. Both ER and YM tested their PDHs overnight but were not able to break through. This tells me we have found a area of resistance that could be significant today. Then you have ES's PDH at 1361.75 and its ON high at 1361 so there is another zone of resistance. The only market that does not have a clearly defined resistance is NQ.

The daily charts remain bullish and we are still in a buy the dips mode. I don't have a crystal ball so I don't know where the markets will be in the next couple of months but I do know our economy is slowing down and with that slow down will come a possible bear market. Link

Keene Little : 10/10/2006 8:59:10 AM

As mentioned near yesterday's close, I'm looking for another push higher today that I believe will finish off the rally leg from October 3rd and that in turn should complete the last of the 3-wave moves up from Sept 22nd in the ascending wedges we've seen. In the ES chart that I posted late yesterday I showed a Fib projection zone at 1364.25-1365.25 as an upside target to finish this off.

YM is looking very similar and a trend line along the two highs on August 4th and October 5th intersect its Fib projection zone of 11967-11974 on Tuesday. Therefore watch this level as a potential high that you'll want to short (assuming we get there and it's looking like it could roll back over). Link

Market Monitor Archives