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Tab Gilles : 10/17/2006 12:31:36 AM

Open Positions & Stock Watch

Here's a chart consisting of several charts, I noted earlier today that the market was getting into overbought levels. It can stay overbought, just beware any negative news can easily start a selloff. Intel and Apple report this week...will there be selling on the news or buying? Link

What I found interesting is that the $NDX and UOPIX hardly moved today, whereas the $RUT/UAPIX had a nice move. Rotation...perhaps...but if this market was done why would there be a move into smaller cap stocks?

Definitely the momentum players are ruling now. Link

Profunds UltraOTC & Ultra SmallCap funds Link Link

Keene Little : 10/17/2006 12:30:24 AM

There are several Fib projections that I've been watching across several different indices and sectors and one thing I'm noticing is how many are getting tagged as this market inches its way higher. Laggard indices have caught up and tagged their targets while those leading the pack earlier slowed down and are also tagging their targets. This tells me the Market could be ready to top out very soon. I know, tell me something new.

The COMP is nearing major resistance, by several measures, at its April/May high at 2375; the SOX hit its 200-dma; the brokers index is pressed up against a broken uptrend line after breaking below it; and many others are hitting their own potential resistance levels. It might be too early to short but I definitely think it's too late to buy.

Using ES as an example, it tagged its Fib projection this afternoon at 1378.25, on the nose, and it's at the top of its parallel up-channel for price action since its Sept 11th low. The wave count from Sept 11th has to be a "corrective" count considering the longer term ascending wedge it's in (triangles/wedges don't have impulsive 5-wave moves) and that's what we currently have. Link

The current count from Sept 11th is a double zig-zag (two A-B-C's separated by an X-wave) so it fits the corrective category and therefore from an EW perspective the count works well here to call a top. The last A-B-C achieved equality between A and C at that 1378.25 level. Bearish divergences continue which doesn't necessarily tell us when this rally will end but it does tell us it's not likely to burst to the upside.

Because the rally has been relentless it's a more conservative approach to wait for some short term uptrend lines to be broken and retested, and get some impulsive (5-wave) moves down, which will indicate a trend change. The pullback can't be the sideways drifty kind of correction we've been getting. Once we get some of those signals then we can look for a bounce to get short. I think we're close (again).

Keene Little : 10/16/2006 11:48:07 PM

Tuesday's pivot tables: Link and Link

OI Technical Staff : 10/16/2006 9:59:59 PM

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

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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.

Jeff Bailey : 10/16/2006 5:02:57 PM

Closing Internals found at this Link

Jeff Bailey : 10/16/2006 4:33:03 PM

Closing U.S. Market Watch found at this Link

Jim Brown : 10/16/2006 4:28:53 PM

I think we can all agree that Global Warming is a highly political issue despite the fact it could be a serious problem. There are equal views on both sides of the debate with credible sources taking opposite sides. The Al Gore movie served to make it even more political. Someday our decendants will look back and say proponents were either right or wrong but it won't be us or even our grandkids. We have a responsibility to do the right thing and try to reduce emissions so that any future crisis is a long way off. In the decades after Peak Oil passes and oil consumption on the planet dwindles to a trickle the global warming causes will also cease. Only coal fired electric plants will be left as major polluters and current generation plants on the drawing boards will be much better in controlling emissions. Global warming worries will cease but it will be due to our exhaustion of fossil fuels not because we were good stewards of the planet's resources.

Jeff Bailey : 10/16/2006 4:26:15 PM

Shell USA President: Hasn't Seen Change In Saudi Oil Supplies

Sees No Saudi Volume Changes "In Month Ahead"

OPEC's 1 Million B/D Cut To Have "Very Little" Market Impact

Jeff Bailey : 10/16/2006 4:20:16 PM

Global Warming: Colorado State University's William Gray ... Denver Post Link

Jim Brown : 10/16/2006 4:20:13 PM

Reader Challenge Alert - This 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

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.

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.

Keene Little : 10/16/2006 4:15:29 PM

The SOX nearly made it up to its 200-dma at 477.36 (high today was 476.95). Just another reason bulls should be very cautious now. It has also made it to just above its broken uptrend line from Oct-Apr 2005, the same as it did in mid-Sept before pulling back. This could be the throw-over day if it drops back below 473 tomorrow.

Jane Fox : 10/16/2006 4:12:48 PM

Tomorrow the economic reports have a full docket:

8:30a.m. Sept Producer Price Index. Previous: +0.1%.

8:30a.m. Sept PPI, Ex-Food & Energy. Previous: -0.4%.

9:00a.m. Aug US Treasury Capital Flows. Previous: $32.9B / -56%.

9:15a.m. Sept Industrial Production. Previous: -0.1%.

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

1:00p.m. Oct NAHB Housing Market Index. Previous: 30.

Keene Little : 10/16/2006 3:59:57 PM

ES managed to tag its Fib projection target at 1378.25 but YM and the DOW haven't quite reached their targets yet (12074 and 12003, resp.). We're getting very close on a lot of Fibs across the board to say we could be topping here. But, obviously we need to see some selling kick in before jumping in front of this train any more. Link

Jeff Bailey : 10/16/2006 3:52:12 PM

VIX.X 11.09 +3.16% ... SPY Most Active Options ... SPY Nov $136 C, SPY Oct $137 P, SPY Oct $133 P, Oct $136 C

SPY $136.98 +0.25% Link ...

Jane Fox : 10/16/2006 3:50:25 PM

Internals were warning us all that we would see this late day bullishness .

Keene Little : 10/16/2006 3:49:48 PM

With the banks in the red and the brokers barely holding on, one wonders why the mega banks like Goldman Sachs, Lehman, and the other primary dealers (the ones with the Fed money to spend) are doing so well today. Their climb over the past month has been just about straight up. You suppose their trading teams are buying their own stock to jam it higher in order to get a better payout on stock options? Nah, that would be illegal.

Marc Eckelberry : 10/16/2006 3:49:06 PM

SPY 137 has some call resistance.

Jeff Bailey : 10/16/2006 3:46:20 PM

Russell 2000 Index (RUT.X) 769.56 +0.90% ... "Autumn winds continue to build!"

Marc Eckelberry : 10/16/2006 3:45:23 PM

Usually, this kind of slow creeping up non-confirmed by NQ pivots leads to a sharp 10 mn red candle. Let's see, although with that darn DOW 12K, anything is possible.

Jeff Bailey : 10/16/2006 3:42:50 PM

Fed's Yellen: Inflation May Decline Faster Than Expected

Steady Monetary Policy For A While Sensible

Car Industry Slowdown Likely To Slow Growth

Need Time To See Effects Of Past Rate Increases

Housing Data May Be "Behind The Curve"

Jane Fox : 10/16/2006 3:42:30 PM


Keene Little : 10/16/2006 3:38:51 PM

As the DOW nears it magical 12K number the NYSE is also at a potentially important Fib level where its 2nd leg up in its rally from June has achieved 162% (8688) of the 1st leg up. This is a very common Fib relationship so it could be interesting from here. Additionally, the Fib projection for the move up from early September is at 8695. If the market is in some kind of blow-off move it could easily zoom past this level but normally I'd be very concerned about additional upside from here. This is a 240-min chart: Link

Jim Brown : 10/16/2006 3:37:01 PM

Here it comes!

Jim Brown : 10/16/2006 3:24:51 PM

The Dow is holding close enough to its highs that we could see a final jam job at the close to hit that 12K benchmark. We saw one strong buy program at 3:12 but it could not break the log jam of sell orders right at the prior highs. They might pull off a closing spike but it is going to take some serious effort.

Jane Fox : 10/16/2006 3:20:56 PM

Dow's daily high so far has been 11986.36. Not very far to go.

Jane Fox : 10/16/2006 3:19:56 PM

Both Ad volume and the AD line have broken their PDHs.

Jeff Bailey : 10/16/2006 3:16:18 PM

QQQQ $42.51 +0.18% ... after its morning test of MONTHLY R2.

Jeff Bailey : 10/16/2006 3:15:27 PM

S&P Depository Receipts (SPY) alert $136.95 +0.25% ... gets a trade at MONTHLY R2!

Keene Little : 10/16/2006 3:13:50 PM

This is not the kind of day the Boyz are going to make big money off of cheap options during opex week. They'll have to get this market ramping big time or start a sell off in order to capitalize on a big move.

Jeff Bailey : 10/16/2006 3:13:00 PM

03:00 Internals found at this Link

Keene Little : 10/16/2006 3:06:50 PM

Just another small sideways consolidation for ES probably means more highs on the way. Talk about lack of normal ebb and flow of buying and selling! This has all the markings of a blow-off top. But obviously shorts have been scared silly (count me as one of them) to step in front of this. Can't buy it and can't sell it. At least I don't want to buy it since I'm worried I'll then see a quick spike down. Just not worth the risk in my opinion.

Jeff Bailey : 10/16/2006 3:02:44 PM

03:00 Market Watch found at this Link

Jane Fox : 10/16/2006 3:01:26 PM

Dateline WSJ - Wal-Mart Stores has agreed to acquire a Chinese hypermarket chain for about $1 billion, according to people familiar with the transaction. The deal could give the world's largest retailer the biggest food and department store network in China.

Marc Eckelberry : 10/16/2006 2:58:40 PM

INTC up only 9 cents after the big announcement. Are we going to see some sell the news this week?

Marc Eckelberry : 10/16/2006 2:57:28 PM

ER was nice and clean as well.

Marc Eckelberry : 10/16/2006 2:55:05 PM

Too much mickey mouse stuff going on with ES.

Marc Eckelberry : 10/16/2006 2:54:48 PM

I swore I would never trade ES again, and here I am. I should have only traded NQ. It is much cleaner.

Marc Eckelberry : 10/16/2006 2:53:39 PM

Why is NQ below R1?

Keene Little : 10/16/2006 2:51:27 PM

The brokers jumped up this morning and nearly tagged the 62% retracement level of the sharp decline from the high on October 10th (at 235.18), which was just above the bottom of its gap down on the 11th (at 234.66). At the same level is the broken uptrend line from May 2005. Link

So this 235 area is going to be tough resistance The bounce over the past few days is looking like it's forming a rolling top on the 30-min chart. Either that or it's consolidating just under resistance and preparing for another run higher. Shorting the index here would be a good play with a relatively tight stop just above this morning's high (235.11).

Jeff Bailey : 10/16/2006 2:47:54 PM

Fed's Poole: Sees Right Balance For FOMC Meeting Openness

Housing Correcting To More Sustainable Levels

Note Sure What Will Happen With Housing

Monetary Policy Is A Blunt Tool For Economy

Marc Eckelberry : 10/16/2006 2:45:11 PM

Lowering stop to 1377.50.

Marc Eckelberry : 10/16/2006 2:44:54 PM

A few more minutes and I'm out.

Marc Eckelberry : 10/16/2006 2:44:21 PM

I am going to go flat now.

Marc Eckelberry : 10/16/2006 2:44:12 PM

Oct. 16 (Bloomberg) -- U.S. stocks rose after Intel Corp., the world's largest maker of semiconductors, said sales this quarter will beat its expectations, fueling optimism about profit growth. The Dow Jones Industrial Average headed toward 12,000. Energy shares led the Standard & Poor's 500 Index higher as natural gas prices soared. Raw-material companies gained after shares of Alcoa Inc. were upgraded and on speculation that U.S. Steel Corp. will be acquired.

Jim Brown : 10/16/2006 2:44:00 PM

It is possible there are so many traders thinking I can't wait to short 12000 that many are trying to beat the rush and that is why we are losing traction here.

Marc Eckelberry : 10/16/2006 2:40:37 PM

The old bull is hanging on.

Marc Eckelberry : 10/16/2006 2:38:17 PM

Tight stops here, please.

Marc Eckelberry : 10/16/2006 2:38:45 PM

QM 59.95 is not even making a ripple when all the trades last week depended on QM dropping. Makes no sense and it just shows this is a major drive to get to 12K. I'm short here and I hope maybe some foreign money will pull the plug any second and force some hedgies out. But if oil drops from this resistance level, they will move ES right up to 1380/1381.

Jeff Bailey : 10/16/2006 2:37:10 PM

Dow Transportation Average (TRAN) 4,716.17 +1.25% ... bold move above its 61.8% retracement (May high close to recent August low close) Link

Jane Fox : 10/16/2006 2:38:03 PM

Jim, you could be Ok but the internals are telling me the highest probability trade is to buy the dips.

Marc Eckelberry : 10/16/2006 2:35:48 PM

NDX stalled right underthe Dec 01 high of 1734.58.

Jim Brown : 10/16/2006 2:31:05 PM

Sorry Jane, I went short the ER just under 775 just in case the Dow never makes it to 12000.

Jane Fox : 10/16/2006 2:29:39 PM

Hopefully these have kept you out of any short positions today. Link

Jeff Bailey : 10/16/2006 2:23:52 PM

United Parcel (UPS) $74.02 +0.84% ... edged above WEEKLY R1 ($74.00).

Marc Eckelberry : 10/16/2006 2:19:27 PM

Let me get this straight. The economy is slowing down, but the consumer is resilient becaus of lower gas. Now gas is rising and the economy is still slowing down, but everyone is loading up on inventory for a big Christmas season, yet the housing market is falling apart at the seam. Whatever money is chasing this, it is just as strange as the money selling the July lows. Must be hedge funds.

Keene Little : 10/16/2006 2:10:38 PM

How many people at this point are simply saying "OK, just get the DOW to 12K and let's get this over with!" The upside Fib targets for this leg up for the DOW and SPX are at 12003 and 1371.21, both cash levels.

Marc Eckelberry : 10/16/2006 2:08:26 PM

But NORMALLY, ES should pullback here.

Marc Eckelberry : 10/16/2006 2:08:08 PM

NQ loses R1, but ES stays above. I don;t know if that divergence means anything, maybe it's just rising oil affecting NQ a littel more. But of course, QM is hitting overbought, so it could pull back a little and then they will run more stops with ES.

Jeff Bailey : 10/16/2006 2:06:12 PM

US's Rice: Not Concerned About China Backing Down On North Korea

Jim Brown : 10/16/2006 2:03:59 PM

Reader Challenge - This 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

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.

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.

Marc Eckelberry : 10/16/2006 2:03:21 PM

We have rising oil, major earnings tomorrow and an almost 3 month straight up bull run. But it's as if there was not a care on the world. And you think you are not a pawn?

Marc Eckelberry : 10/16/2006 2:01:03 PM

Oct. 16 (Bloomberg) -- Natural gas rose the most since July in New York as forecasters predicted cooler weather in the Midwest will lift consumption of the furnace fuel. Demand for heat will top normal by 18 percent over the next seven days in the northern Midwest, according to researcher Weather Derivatives in Belton, Missouri. Cool temperatures this time of year cause residences and businesses to turn on furnaces left idle since last winter. "If this is a harbinger of November weather, and this cold weather persists, then we probably have seen the bottom" in prices, said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc. in St. Louis.

Marc Eckelberry : 10/16/2006 1:59:27 PM

I have never seen anything like this. This is not like the 90's where you had volatility and you could swing it both ways. This is an incessant drive with some very heavy money holding ES up on every single .25 dip.

Keene Little : 10/16/2006 1:45:42 PM

As the COMP approaches its April/May double-top at 2375 it's also pressing up against the top of its parallel up-channel for price action since July. Maybe there will be a breakout above 2375 but I think I'd be first trying to short that level. Link

Marc Eckelberry : 10/16/2006 1:42:22 PM

ES and NQ at R1

Marc Eckelberry : 10/16/2006 1:41:59 PM

The shorts keep geting clobbered and it does look like ES 1378/1380, QQQ 1749/1751.

Marc Eckelberry : 10/16/2006 1:37:06 PM

Oil at 59.75, but no one cares, it's all about giving the masses DOW 12k.

Marc Eckelberry : 10/16/2006 1:29:28 PM

Jane, ice ages and warming are always cyclical. It's jut the intensity and acceleration that matters. It's off the charts, and way past the indicators buried in geological strata of the last cycle in the middle-ages, which led to a mini- ice age and freezing of many areas of Europe. As far as "scientists" stating it is not a big deal, there are none, at least in the top 241 wordlwide climate experts. That 50% skepticism has been a propoganda feed to the press in order to thwart enviromentalists. The press is not owned by you anymore, it is owmned by GE and other conglomerates.
The Atlantic pump will slow down to dangerous levels if more fresh water from ice melting is poured into the North sea. It lowers the salination level which supports the pump by keeping it close to the surface, pushes the pump down, slows it and shuts off the mechanism that gives us the Gulf stream. The result will be a very quick freezing of Europe. So global warming will first produce intense freezing in the northern hemispheres. Another reason to buy oil.

Jeff Bailey : 10/16/2006 1:21:06 PM

Freeport McMoran (FCX) $57.92 +2.53% ... surging after being stopped out on raised stop ($56.70) earlier today!

Jane Fox : 10/16/2006 1:19:22 PM

TICKS +1000 and the 3 min CCI is above +200.

Jane Fox : 10/16/2006 1:18:58 PM

All markets to new daily highs except NQ.

Jane Fox : 10/16/2006 1:19:48 PM

ES tests its daily highs but VIX is not testing daily lows so I don't think Es has much more upside.

Jeff Bailey : 10/16/2006 1:15:26 PM

NYSE Composite Threatens New All-Time High Close

Jane Fox : 10/16/2006 1:15:13 PM

Here is how the AD line and volume compare to Friday. I wouldn't be short here. Link

Jeff Bailey : 10/16/2006 1:14:53 PM

01:00 Internals found at this Link

Keene Little : 10/16/2006 1:13:15 PM

I've been bearish INTC most of this year and back in April/May I had been looking for a leg down to complete a 5-wave move down from its December 2005 high to then be followed by a corrective bounce. We got that and now it looks like we could be very close to finishing the correction to that December-June decline. Link

There is tough resistance in the $22 area--the January and April 2005 lows just under $22, the 50% retracement of the Dec-June decline is at $22.12 and the top of a parallel up-channel for price action since the July low is also just under $22. The short term pattern supports the idea that we could see a small consolidation and another minor high but I could be tempted to lay on some longer term short positions on INTC here as the next leg down should take it to new lows below $16 next year. December 2007 put options would be a recommendation. For a shorter term play perhaps a November 22.50/25.00 bear call spread, although I don't like the risk:reward on that considering a potential earnings surprise.

Marc Eckelberry : 10/16/2006 1:12:25 PM

Anyway, watch NQ 1744, that's the key today.

Marc Eckelberry : 10/16/2006 1:11:44 PM

And why do we have to get a new car every 2 years, adding more junk and destroying more resources. It's just insane.

Jane Fox : 10/16/2006 1:11:26 PM

Unfortunately though Marc there are many still out there who believe the Global warming is just a cyclical phenomena. I don't know how much more evidence they need that it is not. But until something catastrophic happens that forces us to start worrying more about global warming than terrorists we will continue to make this poor planet suffer.

Marc Eckelberry : 10/16/2006 1:10:49 PM

In the end, that will sadly be the legacy of my country. This is not a political statement, just a fact that is getting abundantly clear. Now the Chinese are adding their emmissions to the mix, so it all look pretty sad, all in the name of ever growing consumerism backed by the extraordinay pressure on CEO's to make quarterly revenue growth beyond reason. We cannot keep on going on like this, if not for the sake of our grandchildren. After all, we are just borrowing this world from them. I know most of you don't agree , but if I can send some kind of message on this forum that would make it all worthwhile for me, it would be to beg you to do your part and dump those huge SUV's, change light bulbs to more efficient ones, walk more, and give to organizations that are fighting for your air and your rivers. How many bleeding cars, TV's and ipods does one really need.

Jeff Bailey : 10/16/2006 1:02:53 PM

01:00 Market Watch found at this Link

Marc Eckelberry : 10/16/2006 1:01:32 PM

That is another reason to be very defensive in a long term portfolio. A minor rise in sea water levels, or a hurrican season that will put Katrina to shame, and you can forget about your IRA, unless you own tons of gold and oil. And owning Florida seashore is not a good retirement plan.

Marc Eckelberry : 10/16/2006 1:16:41 PM

If I hear one more idiot tell me there is no global warming, I think I will emigrate to a saner country.
OSLO (Reuters) - Scientists said on Monday that they had found the first direct evidence linking the collapse of an ice shelf in Antarctica to global warming widely blamed on human activities. Shifts in winds whipping around the southern Ocean, tied to human emissions of greenhouse gases, had warmed the Antarctic peninsula jutting up toward South America and contributed to the break-up of the Larsen B ice shelf in 2002, they said. "This is the first time that anyone has been able to demonstrate a physical process directly linking the break-up of the Larsen Ice Shelf to human activity," said Gareth Marshall, lead author of the study at the British Antarctic Survey. The chunk that collapsed into the Weddell Sea in 2002 was 3,250 sq kms (1,255 sq miles), bigger than Luxembourg or the U.S. state of Rhode Island.
Most climate experts say greenhouse gases, mainly from fossil fuels burned in power plants, factories and cars, are warming the globe and could bring more erosion, floods or rising seas. They are wary of linking individual events -- such as a heatwave or a storm -- to warming. But the British and Belgian scientists, writing in the Journal of Climate, said there was evidence that global warming and a thinning of the ozone layer over Antarctica, caused by human chemicals, had strengthened winds blowing clockwise around Antarctica. Link

Marc Eckelberry : 10/16/2006 12:57:32 PM

Funds are desperate to put in some performance ahead of the pretty swift slowdown, even recession (always believe bonds), so we are seeing this October mark up, but bulls are just buying time before things get really rough. That's just my opinion, but timing it is another matter. Three successuive inverted yield curves has not come unnoticed by some big money, I am sure. Neverthless, as in the case of Merril Lynch, they are willing to take risks right now, because there will not be another chance next quarter.

Marc Eckelberry : 10/16/2006 12:52:29 PM

NEW YORK (MarketWatch) -- Oil down, stocks up. But oil bulls and stock bears are still standing their ground. Checking in with Dow Theory Letters' Richard Russell, I find that the octogenarian superbear, while making respectful noises about the rally's strength last week, still says he suspects that the stock market's action constitutes "a great top that has been forming since the year 2000." He even raises the possibility that "the recent breakout of the Dow (unconfirmed by the Transports) was a fake-out." Russell really irritates some readers. I regularly get e-mail asking why I'm interested in the views of someone who's always bearish. My answer: Russell isn't always bearish, otherwise he wouldn't be one of the top performing market times over the last 25 years, according to the Hulbert Financial Digest. And Russell has been particularly good at major market junctures. Above all, he did call the 1974 bear market bottom. Link

Jeff Bailey : 10/16/2006 12:47:34 PM

U.S. Oil Fund (USO) $53.93 +0.52% ... has probed WEEKLY Pivot $53.95 in recent minutes. Has not been able to hold a Tuesday close above WEEKLY Pivot for months.

Tab Gilles : 10/16/2006 12:37:59 PM

Intel (INTC) Intel reports Tomorrow. It is currently testing the $22 level, 50% retracement from Last Nov/Dec High. Link PnF P/O is for $32.50. Link

Jane Fox : 10/16/2006 12:33:58 PM

BOSTON (MarketWatch) -- As the quarterly-earnings season kicks off this week, a pair of home builders are expected to miss forecasts and could lower their outlooks, according to Banc of America Securities.

A report on September housing starts and permits will also be in focus as traders look for a floor in housing stocks.

Ryland Group Inc. (RYL) is scheduled to release third-quarter earnings on Wednesday after the markets close and will hold its conference call Thursday morning. Twelve analysts polled by Thomson First Call expect, on average, profit of $1.77 a share, down from $2.39 the previous year.

B of A analyst Daniel Oppenheim said in a research note he expects below-consensus net income of $1.60 a share on more-rapid profit-margin deterioration than had been seen in prior quarters.

"In addition, we believe orders will fall 42% year-over-year, worse than the 39% decline in the second quarter, due to more difficult comparisons and further deterioration in demand," the analyst wrote. He expects Ryland, Calabasas, Calif., to cut its 2006 outlook for a fourth time.

Keene Little : 10/16/2006 12:27:57 PM

I had pointed out on Friday that gold looked like it could be close to topping in its bounce off the October low. A Fib projection and parallel channel gave us a 595-597 upside target. It's so close to closing its gap from October 3rd at 601.30 and I wouldn't be surprised to see it make it up there. But at this point I would be looking for a short entry on gold rather than buying it here. Link

Jeff Bailey : 10/16/2006 12:27:53 PM

Labranche Net Falls; Layoffs Seen

DJ- Specialist firm's 3Q net slips to $7.8 million, or 13c a share, as revenue climbs 50% to $125.4 million. Excluding gain, LaBranche posts loss of $2.1 million. CEO says firm will probably make further cuts in trading-floor personnel.

LAB $9.45 -14.47% Link

Jeff Bailey : 10/16/2006 12:23:59 PM

China UN Envoy: China To Inspect North Korea Cargo For Weapons

China Won't Board Ships To Search For Arms

Jeff Bailey : 10/16/2006 12:22:59 PM

U.S.: Air Samples Confirm North Korea Conducted Nuclear Test

Test Was Less Than 1 Kiloton.

Tab Gilles : 10/16/2006 12:21:39 PM

Both the $NDX & $RUT continue to climb. Link Link

The 2 sector funds I've recommended in the Open Positions have been very profitable. UOPIX & UAPIX Link Link

However thing are starting to get overbought, just look at the $NDXA200... Link

Marc Eckelberry : 10/16/2006 12:21:19 PM

I guess the word toppy fits better. That little stop run push to a higher high was done with a pretty clear bearish divergence.

Marc Eckelberry : 10/16/2006 12:18:15 PM

Still looks weak to me.

Jeff Bailey : 10/16/2006 12:17:34 PM


DJ- Bank reports net income of $1.88 billion, or $1.17 a share, which includes 2c in merger-related costs, as revenue increases 5% to $7.04 billion. Analysts surveyed by Thomson First Call on average projected EPS of $1.19 on revenue of $7.28 billion. Interest-rate environment pressures results.

WB $54.82 -2.92% Link ...

Jeff Bailey : 10/16/2006 12:05:35 PM

Caterpillar (CAT) $69.90 +1.18% Link ...

Jeff Bailey : 10/16/2006 12:04:33 PM


DJ- Oshkosh Truck will acquire JLG Industries for about $3 billion, positioning the maker of fire, military, concrete and garbage trucks to take better advantage of global boom in nonresidential construction.

OSK $52.55 -5.38% Link ...

JLG $27.52 +32.62% Link ...

Jeff Bailey : 10/16/2006 11:58:06 AM


DJ- Commerce Bancorp reports 3Q earnings of $79.7 million, or 41c a share, in line with Wall Street estimates. Revenue increases 15% to $472.5 million, but expenses also increase to $343.5 million.

CBSH $49.59 -0.76% Link ...

Jeff Bailey : 10/16/2006 11:55:13 AM


DJ- Officials fanned out across Hawaii to inspect bridges and roads following the strongest earthquake to rattle the islands in more than two decades, a 6.6-magnitude quake that caused blackouts and landslides but no immediate reports of fatalities.

Jeff Bailey : 10/16/2006 11:53:57 AM


DJ- Royal Philips Electronics' net income triples to $5.25 billion amid gain from selling 80% of its semiconductor unit. Sales from continuing operations edge up 0.8% as revenue declines at consumer-electronics unit.

PHG $34.63 -1.11% Link ...

Jeff Bailey : 10/16/2006 11:52:03 AM


DJ- Programmable-chip maker announces Nathan Sarkisian retires as the company completes its options probe and finds improperly dated grants. Altera expects restatement adjustments to total $47.6 million pretax. James Callas assumes role of acting CFO.

ALTR $19.19 +0.20% Link

Marc Eckelberry : 10/16/2006 11:51:28 AM

Is there really new money coming in today or is it just opex? Feels like opex to me, but we will see how the day plays out.

Jeff Bailey : 10/16/2006 11:38:01 AM

Bullish swing trade stop alert for Freeport McMoran (FCX) $56.70

Marc Eckelberry : 10/16/2006 11:35:44 AM

Everyone wants (and expects) DOW 12K. Maybe, maybe not.

Jane Fox : 10/16/2006 11:33:56 AM

WASHINGTON (MarketWatch) -- Factory activity accelerated in the New York region in early October, according to the Empire State Index released Monday by the New York Federal Reserve Bank.

The index rose to 22.9 in October from 13.8 in September. It's the highest level since June. Readings above zero indicate most firms in the region are growing.

The report "points to decent underlying momentum in the New York factory sector," said Stephen Stanley, chief economist for RBS Greenwich Capital. It showed "decent growth" in the sector, said Phillip Neuhart, an economist for Wachovia.

Economists were expecting the index to decline to about 12.6, according to a survey conducted by MarketWatch.

The New York index is one of the first snapshots of factory activity in the current month.

Although it can be volatile from month to month, it can be a guide to national factory activity reported in the Institute for Supply Management index, which will be released on Nov. 1.

The underlying subindexes point to a reading of about 55% on the ISM, said Mike Englund, chief economist for Action Economics.

Jeff Bailey : 10/16/2006 11:33:13 AM

Bullish swing trade raise stop alert ... on the 1/2 bullish position in shares of Freeport McMoran (FCX) $56.83 +0.58% ... to $56.70.

Marc Eckelberry : 10/16/2006 11:32:11 AM

The break of this coil will be swift either way.

Jane Fox : 10/16/2006 11:29:53 AM

Well so far it looks like the AD volume is winning out and the VIX is throwing in the towel. AD volume to new daily highs and the VIX starts to fall.

Jeff Bailey : 10/16/2006 11:28:30 AM

Swing trade cancel covered call order alert ... Please cancel Thursday evening's order to sell covered the Freeport McMoran FCX Oct. $60 Call (FCX-JL) for $0.80.

FCX $56.83 +0.58% ... with FCX-JL $0.40 x $0.45

Jane Fox : 10/16/2006 11:27:31 AM

All the large caps are making nice little neutral triangles. Link

Marc Eckelberry : 10/16/2006 11:25:37 AM

Doesn't mean the futures pit will not whack shorts, of course.

Marc Eckelberry : 10/16/2006 11:25:00 AM

Bonds and the dollar are contradicting the Philly news, which means they are putting more weight on economic slowdown than anything.

Jeff Bailey : 10/16/2006 11:21:52 AM

S&P Depository Receipts (SPY) $136.64 (unch) ... Daily Interval bar chart with updated WEEKLY Pivot retracement at this Link ... DAILY Pivot also at $136.44.

Keene Little : 10/16/2006 11:21:11 AM

I get the feeling that they're going to hold this sideways with a slight bullish bias today. There may not be much to trade but longs can probably hold on a little longer. The downside risk is that a drop could catch traders by surprise and then start to drop quickly.

Jane Fox : 10/16/2006 11:18:46 AM

Both the VIX and AD volume are now making new daily highs so the push pull goes on and the markets go nowhere.

Marc Eckelberry : 10/16/2006 11:17:25 AM

11:15 is when they start the pre-lunch drive. If it doesn't happen, there will be a small rush to the exits.

Marc Eckelberry : 10/16/2006 11:15:39 AM

It happens right now for bulls, or they lose the momentum. Opex is holding us up above those SPY 136 and QQQQ 42 puts, but there is still room for early week downside.

Jeff Bailey : 10/16/2006 11:13:29 AM

11:00 Internals found at this Link

Marc Eckelberry : 10/16/2006 11:09:11 AM


Marc Eckelberry : 10/16/2006 11:04:15 AM

It can play out either way, but it's usually in the trend.

Marc Eckelberry : 10/16/2006 11:03:06 AM

Watch out for the pre-lunch stop run.

Jeff Bailey : 10/16/2006 11:02:57 AM

11:00 Market Watch found at this Link

Marc Eckelberry : 10/16/2006 11:02:02 AM

They can keep on manufacturing inventory, but if the consumer is feeling weak and cautious at Christmas because of housing, it will mean lots of discounts this year.

Jane Fox : 10/16/2006 10:59:55 AM

Ok VIx is climbing and so is the AD volume so this push pull is making the markets flat. They will remain flat until we see one or the other give in. In my experience I think it will be the volume and we will start to see more bearishness creep in.

Marc Eckelberry : 10/16/2006 10:59:13 AM

Manufacturing strength is helping the nation weather the demise of the five-year housing boom. Housing construction fell in August to the lowest level in three years as waning demand left builders with a growing number of unsold homes, a government report showed last month.
"There is currently a substantial correction going on in the housing market," Bernanke said on Oct. 4. The decline in residential housing construction is one of the "major drags that is causing the economy to slow." Link

Jeff Bailey : 10/16/2006 10:55:22 AM


DJ- Manufacturing activity in the New York Federal Reserve district rises strongly in October with the overall index increasing to a reading of 22.92 from an unrevised 13.84 in September. Economists had expected a reading of 15.0.

Keene Little : 10/16/2006 10:54:33 AM

Banking and retail are the weak sectors this morning while energy and transports top the green board.

Marc Eckelberry : 10/16/2006 10:51:16 AM

INTC has reached my upside target and the one of many brokers. These stocks will have to show it in earnings now before moving much higher. I do like CSCO if techs pullback, by the way. Just note that QQQ has built lots of put support at 42 all of a sudden today. That means NQ 1722 area could be support for the next leg up if we falter today or tomorrow.

Jane Fox : 10/16/2006 10:50:40 AM

VIX testing daily highs. Nope - new daily highs.

Marc Eckelberry : 10/16/2006 10:45:31 AM

Quick note before I leave: every trader in the world is waiting for ES 1380 and NQ 1749 to hit it short. That tells you two things: either they will be wrong when it comes, or it won't come.

Marc Eckelberry : 10/16/2006 10:39:38 AM

Stepping away.

Jeff Bailey : 10/16/2006 10:38:14 AM

Russell 2000 Index (RUT.X) 768.04 +0.70% ... Friday's NH/NL were 181:4, a significant change from the 70-90 new highs I've been seeing. Link

Marc Eckelberry : 10/16/2006 10:37:04 AM

I'm sure they could fool me, but they will have to show me their cards before I flinch.

Marc Eckelberry : 10/16/2006 10:35:27 AM

My high target until proven otherwise for today is SPX 1367.70. We came close enough.

Marc Eckelberry : 10/16/2006 10:34:18 AM

I would not be long here.

Marc Eckelberry : 10/16/2006 10:33:57 AM

Again, watch NQ, it will forwarn you of ES' next move.

Jeff Bailey : 10/16/2006 10:33:10 AM

Small caps as depicted by the RUT.X are rock'n!

Jane Fox : 10/16/2006 10:33:00 AM

If you must go short, although so far not a great idea today , I would short YM.

Keene Little : 10/16/2006 10:31:21 AM

The NYSE has reached its Fib projection at 8666.50 which is at the top of its short term parallel up-channel (and a high above its May high). In normal times this would be a good time to short the market. Link

Marc Eckelberry : 10/16/2006 10:31:11 AM

QM is bullish above 58.70.

Jane Fox : 10/16/2006 10:31:03 AM

You think ER is wild try Natural GAs!!!

Jane Fox : 10/16/2006 10:30:48 AM

Ah but fun to trade.

Marc Eckelberry : 10/16/2006 10:30:20 AM

You're right Jane, but I watch NQ more. ER is too wild.

Jane Fox : 10/16/2006 10:30:08 AM

Things are now changing. AD volume continues to climb in an almost 45 degree angle so certainly not time for a short but I see the VIX is not making new daily lows and is also starting to climb. ES's new daily high will probably not hold.

Jane Fox : 10/16/2006 10:26:31 AM

ES and Ym are bumping up against their PDHs and cannot break through.

Jane Fox : 10/16/2006 10:25:45 AM

Sorry Marc but I see ER as the leader today.

Marc Eckelberry : 10/16/2006 10:24:33 AM

Just watch NQ, the leader today. It has R at 1744 and 1746.

Marc Eckelberry : 10/16/2006 10:24:03 AM

ES R1 is 1376 on an upside break.

Marc Eckelberry : 10/16/2006 10:23:40 AM

If NQ drops 1744, then we have seen the top for ES.

Marc Eckelberry : 10/16/2006 10:23:21 AM

OPEC cut demand for 2006 ahead of their emergency meeting. That means some big production cuts ahead. hat provides support for oil. The weather forecasts can change very quickly.

Marc Eckelberry : 10/16/2006 10:22:02 AM

QM bid.

Marc Eckelberry : 10/16/2006 10:20:55 AM

NO one is really selling yet, so shorts keep covering, which is giving us this chop. But it definitely feels like there are not many new buyers. This action is very toppy, but watch NQ 1744 support.

Jeff Bailey : 10/16/2006 10:19:43 AM

Garmin Ltd. (GRMN) $51.44 +0.78% Link ... threatens to break above "left shoulder" of potential h/s top. Link

Jane Fox : 10/16/2006 10:19:15 AM


Keene Little : 10/16/2006 10:18:59 AM

NQ has a very choppy climb off Friday afternoon's pullback and yet it continues to climb higher. Very odd. It's either manipulation or an ending pattern. In either case it says caution if you're chasing this one higher.

Marc Eckelberry : 10/16/2006 10:18:20 AM

NQ hits R1.

Jane Fox : 10/16/2006 10:17:07 AM

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

Jeff Bailey : 10/16/2006 10:16:55 AM


DJ- Toy maker reports net income of $239 million, or 62c a share, as sales rise 7% to $1.79 billion, fueled by sales of Barbie and early shipments of TMX Elmo. Results include 3c charge from accounting errors on some option grants.

MAT $21.74 +5.02% Link and Link

Marc Eckelberry : 10/16/2006 10:14:58 AM

That is excatly when things canget dangerous for bulls. BUt ES could do one more push up to 1380, so careful.

Marc Eckelberry : 10/16/2006 10:13:46 AM

Shorts are scared to death.

Jeff Bailey : 10/16/2006 10:13:29 AM


DJ- Discount brokerage reports net income of $266 million, or 21c a share, 1c above analysts' estimate, as revenue rises 13% to $1.29 billion. Nontrading revenues reach record of $1.12 billion.

SCHW $17.29 -1.59% Link

Marc Eckelberry : 10/16/2006 10:11:49 AM

If oil hadn't droped this much, we would have already corrected jarer. My target for ES this week is 1365/1366.50

Marc Eckelberry : 10/16/2006 10:11:03 AM

This feels toppy.

Jane Fox : 10/16/2006 10:10:30 AM

TRIN is starting to climb here.

Jane Fox : 10/16/2006 10:10:20 AM

Interestingly though the VIX is still within its PDR and so is the TRIN. HMMMM!!

Jeff Bailey : 10/16/2006 10:09:15 AM


DJ- William McGuire agrees to leave the health insurer after internal probe finds stock-option grants that have brought him a huge fortune were likely manipulated. McGuire is the fifth CEO in past week to depart tied to options backdating.

UNH $49.33 +1.18% Link

Jane Fox : 10/16/2006 10:07:58 AM

You never ever go short of the AD volume is making new daily lows. You never ever go short if the VIX is making new daily lows. Then if the AD volume is making new daily highs AND the vix is making new daily lows, it is a get long and stay long type of day. Link

Jane Fox : 10/16/2006 10:03:59 AM

This is not the kind of day you want to be short. Link

Jeff Bailey : 10/16/2006 10:03:26 AM

10:00 Market Watch found at this Link

Keene Little : 10/16/2006 10:00:54 AM

I showed a 240-min chart of the RUT on Friday to show that it was nearing the top of a steep parallel up-channel within a larger parallel channel, the tops of which cross near a Fib projection at 767.74 (cash). This 60-min chart shows a little closer view of that. Watch for potential resistance at that level. Link

Jane Fox : 10/16/2006 9:53:15 AM

... but ER nicely breaks its PDH.

Jane Fox : 10/16/2006 9:52:29 AM

No market has broken its overnight high yet.

Jeff Bailey : 10/16/2006 9:53:30 AM

Current OPEN MM Profiles found at this Link

Friday's Activity

Swing trade bullish stopped on the two (2) Ameritrade AMTD Jan $17.50 Calls (TQA-AW) at $1.35 when the underlying shares traded $16.95. ($-0.85/contract, or -38.64%)

Jane Fox : 10/16/2006 9:49:44 AM

TRIN and VIX to new daily lows so the bulls retain possession of the ball.

Keene Little : 10/16/2006 9:49:40 AM

NQ's short term pattern looks less than bullish. The choppy late afternoon rise on Friday looks like a bear flag. It may have another leg down to match the one from Friday's high before the possibility for a continuation of the rally. If we get the drop lower then we can calculate where two equal legs down will be.

Jeff Bailey : 10/16/2006 9:40:01 AM

Evergreen Solar (ESLR) $9.37 +14.37% Link ... Gets $100 million contract from Mainstream Energy. AP Story Link

Keene Little : 10/16/2006 9:39:34 AM

We've got an early push lower in YM and ES and typically these have been snapped up by the bulls so that's what we watch for now. If that changes then we'll know we have a change in character in the market. I consider this morning a little riskier than normal until we get a clearer idea as to whether the bulls will do their usual buy the dip.

Jane Fox : 10/16/2006 9:38:18 AM

AD line +429 and AD volume above 0 and climbing. I have to give the ball to the bulls.

Keene Little : 10/16/2006 9:26:25 AM

A similar chart for YM shows an upside target of 12074.

Keene Little : 10/16/2006 9:24:55 AM

Today, the first day of opex week, we'll get to see if the bullishness continues or if instead we start to see a reversal as the Boyz start to make some profits on cheap front-month put options purchased in the last couple of days. It's all speculation since we of course have no clue.

If the bullishness remains then I see the possibility for ES to continue on up to a Fib target for the current move at 1378.25. I think that should be the end of the rally but I will admit I'm getting tired of guessing where the end of this rally will be. Link

Jane Fox : 10/16/2006 9:17:09 AM

Natural Gas did a classic support turned resistance with the MACD crossing under 0. From here I expected it to retest yearly lows at which point I would take a look at the MACD and RSI and reassess the chart to see if the yearly lows would hold or not. However, it looks like Natural Gas may just turn here and make a higher low and possibly take another run at resistance. Link

Jane Fox : 10/16/2006 9:11:36 AM

Here is a bullish wedge that has confirmed and you can see how different the MACD looks. Here the MACD has made definite crosses so you can see the divergence but on the oil chart the MACD is just meandering. Notice also how the RSI has made the bullish divergence as well confirming the MACD. Link

Jane Fox : 10/16/2006 9:12:31 AM

I decided to look at each commodity market on the daily chart this morning instead of the overnight. So I will start with Oil. It is making a bullish wedge but that wedge has just not been able to confirm even though the MACD says it should. The only problem is that RSI is not confirming the MACD and than makes me wonder if I am reading the MACD correctly. I do not like how the MACD is meandering upwards which could be a bearish upward move as price moves sideways. I was a lot more bullish on Oil last week and I have now moved to a wait and see mode. Link

Jane Fox : 10/16/2006 8:56:32 AM

Good morning. All equity markets broke their respective PDHs overnight. Although this break was not by much it does tell me they all retained the bullishness from last week.

On Friday I saw this same type of overnight action and thought we would get a move upward first thing then the bears would take over but that was not the case, the bears never had a chance on Friday. Well today I think the same thing will happen we will get a nice move upward then I think the bears will take over for the day. The bulls need a rest and when they take that rest the bears will have no problem taking over. Link

Jim Brown : 10/16/2006 5:17:53 AM

Reader Challenge - This 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

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.

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.

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