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OI Technical Staff : 10/13/2006 9:59:59 PM

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Tab Gilles : 10/13/2006 7:54:57 PM

Open Positions Portfolio & Stock Watch List Link

$NDX/$NAA Weekly Link

$NAHGH/$NALOW 10-ema weekly Link

Bullish Percentage $NDX ($BPNDX) Link

Nasdaq Summation Weekly ($NASI) Link

$NDXA50 & $NDXA200 Link Link

Profund Ultra OTC (UOPIX) & Profund Ultra SmallCap (UAPIX) Link Link

Marc Eckelberry : 10/13/2006 6:01:55 PM

Last year's market bottom was on 10/13...Since the entire calendar year has been the exact opposite of last year (I have mentioned this for some time), could we have seen the highs? Maybe, but I caution that there still is a lot of pessimism out there, so a pullback might only be just that. But it's interesting to note when we made a bottom last year: on the exact same day as today.

Jim Brown : 10/13/2006 4:39:10 PM

I thought everyone in the monitor would appreciate this email from our Reader Challenge winner. It only echoes the constant emails I get from other readers about the monitor writers.

Thanks so much Jim for the book. I have learned so much from your service since I started the subscription about 5 years ago. I remember the first year, I had no clue what you were talking about, but I muddled along and never gave up. You have been a great influence to me and I want you to know how much I appreciate your services.

I love the market monitor. I feel that Keene, Jane, Marc and Jeff are my buddies. They are all great!!!

Sincerely, Frances

Thank you Frances for remaining a loyal reader!

Keene Little : 10/13/2006 4:34:29 PM

The techs have also been getting more support lately but they too look very close to finishing their run. The COMP is about to hit the top of its up-channel for price action since August. Link

Keene Little : 10/13/2006 4:21:42 PM

For the small cappers, the RUT looks close to a potential high as well. It's very close to the top of a steep up-channel for price action since the October 3rd low which intersects the top of a larger up-channel for price action since August--near 766. Link

Marc Eckelberry : 10/13/2006 4:18:28 PM

Oil prices will be important next week.

Jane Fox : 10/13/2006 4:13:34 PM

C y'all on Monday. Have a great weekend everyone.

Jane Fox : 10/13/2006 4:12:28 PM

Only report I can see for Monday is 8:30a.m. NY Fed Manufacturing Index. Previous: 13.84.

Jim Brown : 10/13/2006 4:14:56 PM

Reader Challenge Winner - Frances Pittman won this weeks reader challenge with a guess of 11913.50. Congratulations! That guess was +105 points higher than the next closest guess! What did Frances know that the rest of us didn't? (grin)

Frances won the book" The New Options Market, 4th Edition, by Max Ansbacher Link

Don't forget to make those guesses for next week's challenge.

Marc Eckelberry : 10/13/2006 4:04:40 PM

Dan, I want to add that SPY seems to have more put support here than QQQQ. We could very well see SPX 1370 next week. But expect lots of noise between ES 1372 and 1380.

Jane Fox : 10/13/2006 4:02:09 PM

Those internals were telling you this was going to happen.

Keene Little : 10/13/2006 4:01:05 PM

The DOW was the only one pushed to new highs for the day. Gee, I wonder why they'd do that.

Keene Little : 10/13/2006 3:56:35 PM

The daily candlestick for the DOW is another hanging man doji. One of these days it's going to mean something more bearish than the grouping we saw earlier this week. It's why it needs a red candle the following day in order to confirm its bearish reversal signal. That means Monday will have to be a down day in order to confirm today's candle.

Keene Little : 10/13/2006 3:54:12 PM

We've got that sky-high bullish % for advisory services, a near-record low VIX and DOW pressing the top of its long term up-channel from 2004. Betting on an upside break here is just not how I'd be trying to play it from here. RSI is now at the level that has marked previous turning points. As Marc said, is another 100 points (maybe) worth the risk here? Link

Marc Eckelberry : 10/13/2006 3:56:49 PM

Hey Marc, I'm thinking of buying the Q June 42 puts here. I'm having a little trouble pulling the trigger as I have bear call spreads at SPX 1380 for Oct. and 1410 for Nov. First of all, how do the 1380 calls look for next week? Do you think we make it up there? Also, give me your take on the Q puts. Dan.

Dan, first of all, I can't give individual investing advice, so whatever I say hereis for the benefit of everyone. I can say that many had the same thought today, 77K puts traded at 42. The ratio is still .77. not overly bullish, but not that supportive either. It's a tough call, but I would think the area between 42.50 and 43 is strong resistance. Use your judgement and above all be patient. 43 has definite call resistance and I doubt we get past that next week. Max pain is at 40, but I think they hold 41, which is where I think we wil find the lows next week (40.90/41). And always remember the rule when shorting a bull market: only short the rallies. As for ES 1380, everyone is watching that monthly R2 and waiting to short that. Cost averaging is always a good idea.

Jane Fox : 10/13/2006 3:49:19 PM

If short this market time to exit stage left. VIX to new daily lows, AD volume to new daily highs and TRIN to new daily lows.

Marc Eckelberry : 10/13/2006 3:46:10 PM

Everyone, and I mean everyone, is betting on DOW 12K. So they are all staying in at least until then. But the stock market is a game of musical chairs: you don't want to the late guy, and frankly, I would be getting out of all my longs at this point, even if it is 100 points early. Greed will always get you in trouble.

Keene Little : 10/13/2006 3:44:13 PM

I was reading an analyst who was talking about the bullish % among advisory services. I'm not sure it's at a record high but at 95% bullish, and with a VIX at record lows, should bulls be feeling just a tad nervous here?

Marc Eckelberry : 10/13/2006 3:33:20 PM

My bet is they try and close ES right at 1372, which is yesterday's high. They want that badly. But Opex Monday's often get an early pullback.

Jane Fox : 10/13/2006 3:31:15 PM

Marc I agree this is not the spot to go long Gold. It bumping up against a downward trendline and may have to revisit the bottom trendline before it take another move upward.

Marc Eckelberry : 10/13/2006 3:30:44 PM

We are seeing some bearish divergences for YG (gold) at highs. We are getting overbought on the hourly, so I would not chase it right here if you are looking for a new position. Wait for a pullback, which we should get if oil closes below 58.70. But I think the 585/588 level will hold on any pullback and we could move above 600 by next week.

Jane Fox : 10/13/2006 3:27:28 PM

GEt ready for another upward move.

Marc Eckelberry : 10/13/2006 3:24:53 PM

Money is desperate to go somewhere, anywhere. Those thousands of hedge funds taking huge complacent risks, and they could be what junk bonds were in the 80's. The other night, I saw this head trader for BNP Paribas, he could not have been more than 28, talking about how they were chasing this rally, it was going much higher. These kids never even saw a market crash, in fact, he might not have even been trading in 2001/2002, and was still in Junior high in 1987. These are the hoteheads, take no prisonner, traders of this rally. They are sure braver than I am.

Keene Little : 10/13/2006 3:22:48 PM

I would think they'll try to hold the DOW in positive territory for the close today so that the weekend papers can talk about another record high for the DOW and get those Mom and Pops to put their money into the market on Monday. Need more sheeple to take some inventory.

Jane Fox : 10/13/2006 3:22:07 PM

Egads Jim you are making this interesting. HMMM

Jim Brown : 10/13/2006 3:21:11 PM

Reader Challenge - I added this paragraph to the prize description below. I just wanted to make sure everyone understood the rules:

EACH GUESS STANDS ALONE - You do not have to guess on all three indexes but you can win all three books if you are either very good or very lucky. In fact, I will add a $1000 cash prize to anyone that successfully wins all three individual guesses.

Marc Eckelberry : 10/13/2006 3:18:17 PM

Here they come again, those phantom futures supporting hands.

Marc Eckelberry : 10/13/2006 3:13:35 PM

Jane, I would love it if they gave me another dip. Most market participants are bearish on gold and trying to short every bump. That adds to my bullishness. I have quit nickel and diming gold, it is too volatile. I just start building positions and take a deep breath. That's what Russell recommends and I agree. As traders, sometimes we "know" to much, we think, we spend hours figuring out entries, then the train leaves the station because our stops were too tight, or we look at lagging indicators. It's a risky call and I am putting myself on the line here, but that is why I'm here.

Jim Brown : 10/13/2006 3:19:29 PM

Reader Challenge Alert - Next week's challenge will be to guess the close for the week on the Dow, Nasdaq and S&P. The prizes for each are as follows:

Dow - The Options Course, By George Fontanills: Link

S&P-500 - Demark on Day Trading Options, by Tom Demark: Link

Nasdaq - The Art of the Trade, by R.E. McMaster: Link

I am going to change the time to place your guesses. You can guess anytime between NOW and the close of trading on Tuesday. All guesses must be sent to Jim@optioninvestor.com. Do not clog up the customer service mailbox. Send them directly to me.

EACH GUESS STANDS ALONE - You do not have to guess on all three indexes but you can win all three books if you are either very good or very lucky. In fact, I will add a $1000 cash prize to anyone that successfully wins all three individual guesses.

Keene Little : 10/13/2006 3:12:06 PM

Marc, I've been rethinking my take on gold's pattern, primarily based on what I see happening in the US dollar. With the dollar apparently in a longer term sideways triangle type of consolidation, it clearly looks like a continuation pattern for much lower prices next year. The sideways consolidation will probably continue into early 2007.

Gold could therefore be building the same kind of consolidation pattern and in its longer term pattern that would mean it's a continuation pattern that will lead to much higher prices. In order for this to happen in gold though it must hold above $560 and get another bounce back up to around 614, maybe even higher. It too should consolidate into the new year before breaking out to the north about the same time the dollar breaks down.

So the chart pattern for gold could be starting to reflect your fundamental bullish bias.

Jane Fox : 10/13/2006 3:09:44 PM

Also Mark YG is building a bullish wedge and has a MACD bullish divergence. Shortterm Gold is bullish.

Marc Eckelberry : 10/13/2006 3:08:33 PM

Here is the daily chart of YG. I mentioned this morning that we could breakout of the triangle, and we have, in a big way. Triangles are continuation moves and they can be powerful. Furthemore, it happened right at the 20 dma, now support: Link

Jane Fox : 10/13/2006 3:07:48 PM

Marc you may be right about Gold but the market doesn't seem to agree quite yet. I like to see the charts confirm what I believe before I put my money to work.

Marc Eckelberry : 10/13/2006 3:05:58 PM

When they drop rates next year, the dollar will fall apart and lose the only support it has right now, the Feds. Lower dollar will also mean higher oil as the producers will make sure prices stay high enough to match the devaluated currency. Think it through, be a smart money trader. That is why gold will climb to new all time highs. Don't get spooked, it is a very volatile instrument but when the train leaves, it leaves. The next time we get above 600, we will stay there.

Marc Eckelberry : 10/13/2006 3:01:15 PM

QM November contract ceases trading next Friday. This is what's going on: big players are trying to drive up November as high as possible, get out (this is the quick distribution you have been seeing), then they buy the December contract as low as they can. This happen overnight in most cases. Every week the premium narrows, but you should have both contracts up there and see the moves. It looks like so far they are holding up 60 for the December contract.

Marc Eckelberry : 10/13/2006 2:56:39 PM

I do have a fundamental disagreement with Jane and Keene on gold. I think it will be the vehicle of choice next year as stagflation hits hard. The dollar will go into a freefall, oil will climb and inflationary pressures will mount. In real dollars, 750 was a pittance. Gold should be much higher and will easily match the 80's high of 850. Just my take and if you are bullish on oil, you better start buying some metals. I think the lows were put in for both commodities, or very close. Again, I recommend the cost averaging strategy. You should have started accumulating positions between 565 and 585 and be in profit by now. This is also the real start of the gold season and traders now this. Furthermore, we are near all time highs in bearish sentiment on gold. It's time to buy every dip, I can't pound the table hard enough on this.

Marc Eckelberry : 10/13/2006 2:49:43 PM

I still think NQ has risk to 1749, it could happen on one pop higher. My strategy at this point is to cost average contracts short on every bounce.

Marc Eckelberry : 10/13/2006 2:46:47 PM

This was my comment yesterday:

10/12/2006 9:48:22 PM Next level of resistance for SPX is 1367/1368, which would be about ES 1375.50. I would patiently wait for that to book profits or go short. In fact, my guess for SPX week high is 1367.79.

I think we came close enough to start thinking short in a pretty strong way. The VIX sub 11 is going to get some attention, no one is about to forget August 2005 and April 2006.

Jim Brown : 10/13/2006 2:38:35 PM

Reader Challenge - Without a sudden implosion on the Dow the winner of the reader challenge this week with a guess of 11913.50 will be Francis Pittman. This guess was +105 points above the next closest guess at 11808. Only three readers guessed the Dow would close over 11800. The vast majority of guesses were in the 11720-11750 range with the lowest guess at 11650.

What this means to me is the majority of traders were not expecting the current rally to continue over the last week. This probably carried over into fund managers as well leaving quite a few investors chasing the market and quite a few bears faced with constant short covering as each "shortable top" turning out to be only a pause.

I am going to give away three different trading books next week and expand the challenge to include guesses for the Dow, Nasdaq and S&P. Guessing will begin Monday morning and continue through Tuesday's close. Get out your charts and sharpen those pencils.

Keene Little : 10/13/2006 2:43:19 PM

For those who like to follow EW counts, or are trying to learn, here's a little educational info on a possible count for this rally, using SPX. Refer to the following 15-min chart: Link

After an expanding triangle 4th wave correction earlier this week we got the 5th wave up started. This by the way is in wave-C of the move up from October 3rd shown in the chart I posted at 12:49 with an upside target of ES 1378.25. I've been watching how this c-wave progresses, which needs to be a 5-wave move, in order to be able to get an idea when it might end. We might be there.

Back to the 15-min chart, starting from yesterday's low we got a big spike up and the way it was progressing I thought it might be an extended 1st wave (labeled wave-(i) on the chart). If it was then typically the 3rd through 5th waves equal 62% of the extended 1st wave. I have that shown by the Fib projection at 1366.07. Also, the 3rd wave can never be the shortest and I don't show it but that means wave-(v) can't go higher than 1367.17.

This looks like a pretty good count at this point and a drop back below wave-(iv), which is this morning's 1360.50 (cash) low, would tell me this rally is finished, or at least this leg of it. And if this leg is done then the A-B-C from October 3rd is probably finished. And if the A-B-C is finished then the whole rally could be finished. In other words today's high could have been it.

Jane Fox : 10/13/2006 2:28:49 PM

Gold's bullish MACD is playing out just like it should. The neutral red triangle within the magenta bullish wedge broke to the upside; however, Gold is now bumping up against the downward trendline from September 6th but could run all the way to 603 or even a return to the 612.50 - 615 zone of resistance. I don't think it will get much past that level though. Link

Jane Fox : 10/13/2006 2:00:39 PM

This is getting just a tad overdone but as long as the VIX makes new daily lows (which it is doing) and the AD volume makes new daily highs (which it is doing) the bulls have the ball.

Keene Little : 10/13/2006 1:57:12 PM

The old VIX (VXO) should hit sub-10 very soon. It's hard to do an apples-to-apples comparison to the old VIX but back in 1998 the low for VIX was around 17 (near 18 in 2000). It has steadily worked its way lower since the spike high in 2002 (over 55) which is a strong indication of how complacent the market has become about risk. Link

Keene Little : 10/13/2006 1:41:58 PM

If you're trading the oil stocks watch for possible resistance just overhead. The longer term uptrend lines for OIX look to be influencing traders and there's a broken uptrend line just above at 601.40 and the 50-dma is just above that at 604.57. It's currently trading just under 600. Link

Keene Little : 10/13/2006 1:20:08 PM

Gold has tagged the 594 level (YG's high so far is 594.10) so between that and 596 is where I think resistance will hold. I see a shorting opportunity here for at least a scalp play.

Tab Gilles : 10/13/2006 1:09:02 PM

T Boone Pickens comments on oil... Link

Nice move on Stock Watch oil stock TXCO today... Link

Murphy +2.6% & Valero +3.14%

Peabody Energy (BTU just added to Open Position Portfolio yesterday is down with coal stocks (news)...

Coal Stocks Rise As Analyst Warms to the Sector

NEW YORK (AP) -- Shares of coal producers rose Thursday, a day after a JPMorgan analyst said coal producers will soon have better earnings visibility once an imbalance between supply and demand is alleviated. "Falling productivity ... should tighten supplies without new mine developments," analyst John Bridges wrote in a Wednesday client note.

"Once the fuel surpluses that resulted from the mild winter of 2005-2006 are consumed, the coal producers should generate more predictable earnings," he added.

Earlier this week, coal miner Consol Energy Inc. lowered its production outlook for the year, citing problems related to geological conditions at several mines.

Bridges maintains a "Neutral" rating on Consol, saying that long-term value for investors is reasonable, if coal miners stay disciplined in expansion plans.

"Continued coal producer supply discipline should tighten up the market once the weather returns to a more normal pattern," Bridges said.

Consol stock rose $1.92, or 6.1 percent, to end at $33.65 on the New York Stock Exchange. They have traded between $26.80 and $49.09 over the past year.

Shares of other coal producers were up Thursday, too. Massey Energy Co. advanced $1.76, or 7.8 percent, to finish at $24.48 on the NYSE.

Peabody Energy Corp. rose $1.77, or 4.4 percent, to close at $41.89. Shares of Arch Coal Inc. added $1.01, or 3.4 percent, to $31.04, and International Coal Group Inc. added 24 cents, or 5.4 percent, to $4.66.

Keene Little : 10/13/2006 1:00:10 PM

As ES heads for what I could easily call the completion of the rally I've been watching the pattern for the VIX since August and wondering if its bullish descending wedge is portending a run to sub-10 before calling a bottom in the VIX (and a top in the stock market). The bullish divergences on VIX support this bullish interpretation and if we do get below 10 I'd be backing up the truck and loading up on super-cheap long term put options and bear call spreads. Link

Jane Fox : 10/13/2006 12:51:21 PM

... and ES breaks its PDH. Well Ok not by much but it did break it.

Jane Fox : 10/13/2006 12:50:19 PM

TICKs chime in at +800

Keene Little : 10/13/2006 12:49:51 PM

It's looking a little more bullish now (except for the DOW which is lagging and should be a little concerning for the bulls). If ES can manage to put a rally together today, I see upside potential to the top of its channel at a Fib projection at 1278.25 by Monday morning. Link

Whether that will be the end of the rally or not is too hard to tell although the EW count supports that idea. We've actually met the minimum requirements, from an EW perspective, for a high but that doesn't mean we're done rallying yet. The negative divergences could, once again, be suggesting we're into the last leg here.

Jane Fox : 10/13/2006 12:44:33 PM

These are the two internals I need in sync and as you can see they are. VIx falling and AD volume climbing. This is bullish. Link

Jane Fox : 10/13/2006 12:36:07 PM

Es's PDH is 1372 and so far today daily highs have been 1372. STruggling here but I think it will break.

Jane Fox : 10/13/2006 12:34:07 PM

VIX to new daily lows and AD volume new daily highs. I don't have to tell you who has control do I?

Keene Little : 10/13/2006 12:31:40 PM

The bearish divergence on ES's 15-min chart doesn't inspire bullishness here. We've seen these bearish divergences ignored so many times recently so it's just one technical but it is a warning flag. All larger corrections start with small ones. Link

Jane Fox : 10/13/2006 12:24:35 PM

... VIX is telling me ES's new daily highs will have follow through so maybe the PDH will break.

Jane Fox : 10/13/2006 12:23:07 PM

ES is now struggling with its PDH and that could be a tough one to break.

Keene Little : 10/13/2006 12:21:57 PM

And 11988 is a 50% retracement of this morning's drop.

Jane Fox : 10/13/2006 12:21:55 PM


Keene Little : 10/13/2006 12:21:22 PM

YM 11990 is where this morning's bounce will have two equal legs up.

Keene Little : 10/13/2006 12:20:25 PM

Here's ES 1371.25. This is the place to try a short with a 2-pt stop (it's not worth risking more than that on a play today).

Keene Little : 10/13/2006 12:15:53 PM

Gold's bounce may be nearing an end (at least from a short term perspective). Looking at a Fib projection and retracement I get $594 as a level that could be the target and resistance. The top of a parallel up-channel (bear flag?) is closer to 596. We should get a little more upside from where it's trading currently (YG is trading 590.10 as I type) but then watch for a short play to set up. Link

Keene Little : 10/13/2006 12:02:20 PM

If we're just kind of flopping around today, watch for where this bounce will have two equal legs up. For ES I'm looking at 1371.25 as a potential high for the bounce before it rolls back over. If you'd like to scalp a short that would be where I'd look for a setup.

Keene Little : 10/13/2006 11:51:43 AM

Looks like some dipsters are back. Either that or the MPs (that would be Market Proppers) have decided that's enough of a pullback.

Jane Fox : 10/13/2006 11:28:12 AM

Ok I am bailing on my ES long. Internals are just too confusing now. VIX is testing daily lows so I think ES's daily lows will hold but now I see AD volume falling and the Ad line is still at a neutral +303. So who knows. And if you don't have the internals talking to ya it is time to exit stage left.

Keene Little : 10/13/2006 11:27:59 AM

While there's a bullish setup for bonds I don't like the fact that they're running sideways at the moment. It looks like a continuation pattern for another move lower (and therefore higher for yields). It may be a bit premature to look for a bullish play but I think we're close.

Keene Little : 10/13/2006 11:25:59 AM

For those who missed Jeff's post, he is off today. Jane and I will have to come up with our own pointy finger charts for you P&F enthusiasts.

Keene Little : 10/13/2006 11:21:51 AM

I'm trying very hard to fight my bearish bias and look for bullish signs here. (If you know you have a bias it's good to purposefully look for opposite plays.) I'm struggling to come up with something that I find bullish.

Keene Little : 10/13/2006 11:08:50 AM

The DOW is down, SPX is more sideways and the techs are up. Who's leading this show anyway?

Keene Little : 10/13/2006 11:02:20 AM

It's a mixed picture this morning. While the techs and small caps look bullish I'm not sure I like how the upside is progressing. But when I look at ES it looks like it's doing another sideways/down consolidation which should lead to another move higher. When the picture gets mixed like this I find that it's better to stand aside and wait for some clarity.

Keene Little : 10/13/2006 11:00:17 AM

If NQ can get another small push higher out of its little pullback here that might be the end of its run so be a little careful with a new high in that index.

Keene Little : 10/13/2006 10:52:46 AM

Even though NQ is more bullish this morning I don't like the way it's climbing off this morning's low. It looks choppy and that's usually a sign of an ending pattern. If you're playing this index long I'd keep pulling my stop up fairly tight. The alternative interpretation of the choppy pattern is that it's getting ready to explode to the upside. I'd believe that if the majors were looking a little better this morning.

Jane Fox : 10/13/2006 10:49:56 AM

I am kicking myself for not having the conviction to reentry the ER long this morning. I was long at 763.1!

Jane Fox : 10/13/2006 10:39:07 AM

Today could be a day of horror for superstitious people who dread the number 13.

According to a German professor, not only will the date be Friday the 13th, but all the digits in the numeric notation of the date add up to 13 as well.

Whichever way round the date is written - 13-10-2006 or 2006-10-13 - the sum of all the digits adds up to 13, notes Heinrich Hemme, who teaches physics at the University of Aachen.

The last time 13 coincided this way was Friday, January 13, 1520.

What is more, Hemme established that 2006 is the first year since 1411 where Friday the 13th occurs twice - January 13, 2006 was a Friday.

More horrors are in store: May 13, 2011 will also be a double-13 Friday

Keene Little : 10/13/2006 10:38:49 AM

It looks like more money is rotating into the techs and small caps this morning. That's either very bullish or it signifies the end to this rally as the last of the bulls jump aboard the high-beta stocks thinking the ride north will continue. If it doesn't continue north then those two indices will get hurt the most.

Jane Fox : 10/13/2006 10:35:02 AM

Any trade today will not be a slam dunk like they were yesterday. Yesterday was a gift!!

Jane Fox : 10/13/2006 10:34:17 AM

Actually the better market to try a long would be ER but I was stopped out of a long with the spike down this morning and I'm "ticked" at that market now. Also Es is the market that "trades" with the VIX.

Jane Fox : 10/13/2006 10:32:25 AM

VIX to new daily lows and it may be time to try an ES long.

Jane Fox : 10/13/2006 10:29:40 AM

Do not go short if the AD volume is making new daily highs. The probability of a successful trade is just not on your side.

Jane Fox : 10/13/2006 10:25:54 AM

Of course you have to consider the level of the AD line with the AD volume. Yesterday the AD line was well above +1000 but it is not today. Heck it is barely above 0 today.

Jane Fox : 10/13/2006 10:23:48 AM

Here is a 5 minute and 1 minute chart of the AD volume. Notice the tajectory of yesterday's chart on the 5 minute. Now notice the tajectory of the 1 mintue today. HMMM! Link

Keene Little : 10/13/2006 10:24:17 AM

The 10-year yield (TNX), at 4.81%, is close to hitting its 200-dma (4.83%) and the 30-year (TYX), at 4.94%, is hitting its broken downtrend line that still seems to be influencing price behavior (at 4.94%). This is a little above its 50 and 200-dma's that I showed Wednesday and in last night's Wrap. Link

This would be a very logical place for yields to pull back which means bonds should be getting a bounce. The short term patterns for ZN (10-year) and ZB (30-year) tell me they should be getting ready for a bounce as well. If you like playing the bonds I see a good setup here for a long play.

If money starts to rotate into bonds in the short term will it come out of equities?

Jane Fox : 10/13/2006 10:18:12 AM

Don't be getting to bearish just yet.

Jane Fox : 10/13/2006 10:17:55 AM

Oh BTW the TRIN is also making new daily lows!

Jane Fox : 10/13/2006 10:17:17 AM

VIX is falling and AD volume climbing is never bearish.

Jane Fox : 10/13/2006 10:14:37 AM

Internals are certainly not giving me that bearish feeling. Not bullish but certainly not bearish. Link

Jane Fox : 10/13/2006 10:11:12 AM

NEW YORK (MarketWatch) -- Employee-owned science and engineering firm SAIC rallied 19% in its stock market debut Friday as investors snapped up shares of the $8 billion science and engineering firm.

Only the third IPO of the year to break the billion dollar barrier, SAIC has been riding Wall Street interest in its role in the healthy U.S. defense and strategic planning sectors. SAIC (SAI) first crossed the tape as a public company on the New York Stock Exchange at a price of $17 a share, comfortably above its $15-a-share price. The stock picked up steam in the open market, rising 95 cents to $17.95 in morning trades on heavy volume of 16 million shares.

The company raised more than $1.1 billion by selling 75 million shares with lead underwriters Morgan Stanley (MS) and Bear Stearns (BSC)

SAIC bills itself as the largest employee-owned research and engineering company in the U.S., with more than 43,000 employees in more than 150 cities worldwide.

Keene Little : 10/13/2006 10:08:56 AM

I'm looking at the DOW when I say that. SPX is still OK and the techs and small caps look bullish still. But if the DOW starts leading to the downside that could change the tone of the market.

Keene Little : 10/13/2006 10:07:47 AM

The pullback, to set up another push higher, is getting too deep. Things may be changing here.

Jane Fox : 10/13/2006 10:02:51 AM

WASHINGTON (MarketWatch) - U.S. business inventories increased 0.6% in August, slightly slower than the 0.8% increase in sales, the Commerce Department reported Friday.

The inventory-to-sales ratio remained at a very low 1.26. The typical business had about 38 days of sales on hand in the back room, an extremely lean inventory.

In the retail auto sector, inventories were still growing in August even as the industry was trying to move cars and trucks with special deals.

Economists surveyed by MarketWatch were expecting inventories to rise 0.5% in August.

Jane Fox : 10/13/2006 10:04:53 AM


Jane Fox : 10/13/2006 10:05:07 AM


Jane Fox : 10/13/2006 9:59:03 AM

VIX to new daily lows so don't expect ES to make new daily lows at least a new daily low that will hold.

Jane Fox : 10/13/2006 9:57:53 AM

YM is leading the markets down today and is the first market to make new daily lows.

Jane Fox : 10/13/2006 9:56:16 AM


Keene Little : 10/13/2006 9:54:51 AM

Like the DOW, the important number for SPX's close today is 1361. Any close below that number will be bearish. In the pattern off of Wednesday's low it looks like it could use another high after this small pullback is finished. A Fib projection of 1366 (cash) would have looking it over very carefully for a short play setup. In the meantime I want to see if we form another sideways/down correction which would indicate that leg higher is coming.

Jane Fox : 10/13/2006 9:51:20 AM

NEW YORK (MarketWatch) -- Nymex Holdings Inc. members voted overwhelmingly to take their exchange public after 132 years as a commodities bourse in what will likely be one of the hottest IPOs of the year.

The corporate parent of the New York Mercantile Exchange said more than 91% of the shares voted in connection with a special meeting were voted in favor of pursuing an IPO. "This shareholder approval allows Nymex to continue on its path to an initial public offering," the company said.Exchange-related offerings have been on fire, playing off rising fortunes from electronic trading as well as industry consolidation.

The Nymex has all that going for it and more through its role in the feverish traffic surrounding commodities trading in energy and metals.

Another plus is its collaboration with the Chicago Mercantile Exchange (CME) . Just this past week, it launched a Russian oil futures contract on the CME Globex.

Nymex on Friday amended its IPO prospectus after first filing to go public on July 17 with proposed maximum proceeds of $250 million.

Marc Eckelberry : 10/13/2006 9:44:03 AM

I have to step away today, once again.

Marc Eckelberry : 10/13/2006 9:43:48 AM

Gold is now fully entering its bullish season and right on cue we are above the 20 dma. Short term bullish, long term ultra bullish. We will see 850 next year and you will wonder why you quibbled about 10 points here and there. Support is 588, 585, and 580.

Keene Little : 10/13/2006 9:39:58 AM

The bulls need to hold the line here, literally. If the DOW drops any further it will drop back below the top of its wedge. A close below 11935 (cash) is the important test and there's lots of time before that happens but that's what I'll be watching for today. In the meantime I'm watching to see if the dipsters are still active and take this morning's dip as an opportunity to suck up some more stock.

Jane Fox : 10/13/2006 9:38:13 AM

Ad line is -254 but AD volume is basically 0. Nothing too clear here.

Keene Little : 10/13/2006 9:19:21 AM

The short term pattern looks like we should get a little more rally but the longer term pattern looks like it could be called complete. It's a tough call here. At yesterday's close I felt we could see an early pop higher this morning followed by a sell off. That's the way I'm still currently leaning.

Jane Fox : 10/13/2006 9:08:25 AM

If you have been following my analysis of Gold you will know I have been bullish on this market for the short term and sure enough it has been playing out just as I thought (I love it when a market does what I think it should) however, I am still bearish on Gold for the longer term.

TBonds were not sure how to react to the 8:30 economic data. First of all they tested PDHs, then started to fall, broke their PDLs and made new overnight lows.

I keep shorting Natural Gas and then bailing when I have a little profit. This is a volatile market and I have learned that you need to take profit when you get it or you will lose it. I showed a chart of NG yesterday and it is not looking too bullish right now.

Oil has also bounced of yearly lows with a bullish MACD divergence. Thiese lows are always hard to find but I see that Marc did a good job of finding this one. Link

Jane Fox : 10/13/2006 8:53:46 AM

Consolidating at your previous day highs is usually a sure sign you will see higher highs however, .ES and YM are making new overnight lows and ER and NQ are testing those lows. This kind of action makes me wonder if indeed the usual will happen today. I will watch this action and if this overnight range holds I will probably go long. Now I have to decide which market. Lately I have been trading ES because I rely so heavily on the VIX but I just may use ER for this trade. Link

Jane Fox : 10/13/2006 8:43:21 AM

WASHINGTON (MarketWatch) - Led by a drop in the cost of imported oil, the prices of goods imported into the United States fell 2.1% in September, the first drop since March and the biggest since April 2003, the Labor Department said Friday.

Imported oil prices fell 10.3%, the largest decline since December 2004. Prices of other imports inched up 0.1%.

Export prices also fell in September, dropping 0.5%, the first decline since last November. Excluding agricultural goods, export prices also fell 0.5%.

Import prices are up 2.0% in the past 12 months. This is the smallest 12-month change since March 2003. It is down sharply from the August year-over-year change of 6.3%.

Import prices excluding all fuels rose 0.3%, the tenth consecutive monthly increase. Import prices ex-fuels are up 2.9% in the past 12 months.

The drop in import prices was greater than expected. Economists were expecting import prices to fall 1.3%, according to a survey conducted by MarketWatch. See Economic Calendar. August import prices rose 0.8%, unrevised from the previous estimate.

Lower import prices could ease inflationary pressures in the United States. The Federal Reserve has said it expects core consumer inflation to fall gradually. On Thursday, Chicago Fed president Michael Moskow said lower oil prices was a positive development in the battle to bring inflation down.

Jane Fox : 10/13/2006 8:42:00 AM

WASHINGTON (MarketWatch) - The sharp drop in gasoline prices drove the value of U.S. retail sales down by 0.4% in September, the Commerce Department reported Friday.

Sales at gasoline stations plunged by a record 9.3% in September, as the average price of a gallon fell by about 30 cents. Prices have continued to fall in October.

Auto sales were flat in September. Excluding motor vehicles, retail sales fell 0.5%, the biggest drop in three years.

Elsewhere in the retail sector, sales were modestly higher in September. Excluding gasoline, retail sales rose 0.6%. Sales excluding both autos and gas rose 0.8%, the biggest rise since January.

Sales were particularly perky at the malls in September. Clothing store sales jumped 3%, the biggest gain in a year. Sales at general merchandise stores rose 1.1%, while department store sales rose 1%.

Sales of durable goods were tepid. Furniture store and electronics store sales rose 0.2%, and sales at hardware stores rose 0.6%.

Ultimately, lower prices at the pump should free up cash for other purposes, but the effect was limited in September

Jane Fox : 10/13/2006 8:40:49 AM


Jane Fox : 10/13/2006 8:36:58 AM


Jane Fox : 10/13/2006 8:36:21 AM


Marc Eckelberry : 10/13/2006 7:36:04 AM

Gold is about to break out of the triangle. I have been stressing for weeks now to accumulate on weakness, I still feel that way.

Marc Eckelberry : 10/13/2006 7:29:38 AM

It might go higher, but we are at trendline resistance and close enough to R1. Take the money and run, it's a solid trade.

Marc Eckelberry : 10/13/2006 6:57:26 AM

Alert: QM long 57.35, sell to close now at 58.75, for + 1.4 (+$700 per contract)

Marc Eckelberry : 10/13/2006 6:47:44 AM

Alert: QM long from 57.35, raise stop to 57.65, sell to close at 58.80.

Marc Eckelberry : 10/13/2006 6:39:29 AM

OIl is on a steady bid. I have a sell toclose at 58.75, but we couldgo higher. R1 is 58.80, R2 is 59.30, resistance is 59.20. Tough call. You might cancel the sell to close and just move up the stop a little.

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