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Keene Little : 10/19/2006 12:07:43 AM

I continue to see so many examples of why the market should start selling off but unfortunately it appears many other traders are also trying to short the market. A quick buy program knocks them all back again. I'm seriously wondering how many are left still trying to short it but either the shorts are still active or it's just big money who keeps goosing the market. Regardless, selling is not taking hold yet.

But when I see the DOW and SPX up against the top of their multi-year channels, with very overbought conditions, I have to wonder how much more there can be. This SPX daily chart shows what I mean. Who wants to buy it up here? But that doesn't stop big money from goosing this to keep the bears at bay while they unload their inventory which I'm convinced they're doing. Link

I showed this closer view of the broker index after Wednesday's close because of its EW setup--if the count is correct, with a 1-2, 1-2 wave count to the downside from the high on October 10th, then we should expect a fast move to the downside on Thursday, maybe even right out of the gate. Link

Looking at this pattern in the brokers, which I think is a good proxy for the broader market, I can see the same pattern in the DOW and SPX but on a shorter time frame--the move down on Wednesday might also be a 1-2, 1-2 wave count to the downside. This interpretation requires an immediate decline Thursday so we'll know early whether the bearish EW count exists or not. Just be aware of the possibility. If it drops quickly it won't be a dip that you'll want to buy, unless it's just a quick scalp.

Keene Little : 10/18/2006 11:44:29 PM

Thursday's pivot tables: Link and Link

OI Technical Staff : 10/18/2006 9:59:59 PM

The Market Monitor has been archived.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

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Tab Gilles : 10/18/2006 7:45:40 PM

Open Positions Portfolio & Stock Watch List $NDX has been pulling back is this atop or the start of a larger decline? Link

$NAHGH/$NALOW/$NDX On this chart you can see that the indcators are entering the sell zone. How big of a sell off will it be? Note previous pullbacks highlighted. Link

$NDXA50 & $NDXA200 Even thought the 50 has been overbought for several weeks, the 200 chart has some more to go. However, it doesn't neccessarily have to break over the 70 level (Keep a close watch). Link Link

Bullish Percentage $BPNDX Same here - indicators are extended - watch for a $BPNDX reversal. Link

Nasdaq Summation $NASI Same as $BPNDX... Link

Nasdaq High/Low $NAHL daily 10-ema Link

Profunds UltraOTC (UOPIX) & Profunds Ultra SmallCap (UAPIX) Link Link

Keene Little : 10/18/2006 6:31:44 PM

I haven't been listening or reading about any of the earnings (or news for that matter) but watching the futures continue to sink lower and lower after the exuberant jump right after the close has me thinking something doesn't sit well with traders.

Keene Little : 10/18/2006 5:44:14 PM

Notice how the 1st and 2nd waves that I labeled on the brokers chart are essentially fractals of each other. This gives me a little higher confidence factor in the wave count.

Keene Little : 10/18/2006 5:41:20 PM

The brokers are leaving an interesting EW setup. We've seen two sharp moves down since the high on October 10th, each followed by a corrective bounce. This pattern leaves me with the impression that we've got a 1-2, 1-2 wave count to the downside which leaves it ready for a 3rd of a 3rd wave down. These are typically very fast hard moves, down in this case, and often start with a gap and run. If that were to happen to the brokers I don't see how the broader market could hold up. The potential is there but obviously we'll need to wait to see what happens next. Link

Jeff Bailey : 10/18/2006 5:31:41 PM

Brazil's Central Bank Cuts Key Rate To 13.75% from 14.25%

Jeff Bailey : 10/18/2006 5:23:35 PM

Wal-Mart Cuts Prices On More Than 100 Toys, Games

DJ- Wal-Mart Stores Inc. (WMT) Wednesday cut its prices on more than 100 toys and games, an early move that will pressure rivals including Target Corp. (TGT) as the holidays ramp up.

Declaring "an early start to the Christmas season," the Bentonville, Ark., retailer said the holiday price cuts - or "rollbacks," as the company calls them - will be effective immediately. They include a Hot Wheels Radar Gun from Mattel Inc. (MAT), now selling for $20 versus an original price of $29.74, and a Dora The Explorer Talking Kitchen for $65, down from $89.84. Board games including Operation, Life and Battleship will sell for $8, having previously sold for $13.26-$14.84.

The price cuts on toys are "just the start of thousands of price cuts on key gift, entertaining and holiday items," the company said in a written statement Wednesday that was reviewed by Dow Jones Newswires.

Jeff Bailey : 10/18/2006 5:20:53 PM

eBay (EBAY) $28.49 -1.00% ... ticks higher at $29.10 on headline numbers.

Earnings Press Release Link

Jeff Bailey : 10/18/2006 5:18:11 PM

Washington Mutual (WM) $43.71 -0.13% ... sharply lower at $42.00 extended on headline numbers.

Earnings Press Release Link

Jeff Bailey : 10/18/2006 5:16:03 PM

Apple Computer (AAPL) $74.53 +0.32% ... surges on headline numbers. $78.49 extended.

Earnings Press Release Link ...

Jeff Bailey : 10/18/2006 5:14:24 PM

Advanced Micro Devices (AMD) Earnings Press Release Link

Jeff Bailey : 10/18/2006 5:11:06 PM

Advanced Micro Devices (AMD) $24.23 -1.02% ... plunges on headline numbers. $21.25 extended. H/S top objective ~$20.00

Jeff Bailey : 10/18/2006 5:08:04 PM

Closing Internals found at this Link

Jeff Bailey : 10/18/2006 4:42:17 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/18/2006 4:29:01 PM

Dow Components the Day the Dow hit 12,000 at this Link

Keene Little : 10/18/2006 4:24:11 PM

Keep an eye on the daily RSI for SPX. I suspect when we see the uptrend lines for this indicator break it will be an indication that a top was put in. For now the trend remains up but RSI at 71.24 is about to touch its uptrend line so the pullback in SPX will have to hold here. Price was rejected today at the top of its longer term parallel up-channel for price action since 2004. Link

It's the same story for the DOW. Plus it's hard to see on this chart because the daily candles are scrunched together but today's candlestick is a slightly less bearish version of IBM's shooting star. Price closed right at the top of its parallel up-channel so it will be important for the bulls to maintain the upward momentum here. Any loss of momentum could start some sell signals ringing. Link

Keene Little : 10/18/2006 4:07:20 PM

IBM finished with that nasty looking shooting star with stochastics threatening to roll over. RSI is more overbought than it's been since 2000 (I haven't looked back beyond that). I could be very tempted to buy some longer term puts on that stock. Link

Keene Little : 10/18/2006 4:01:37 PM

Oops, I see we're closed. Bummer. So close and yet so far. Can't report a closing price above 12K.

Keene Little : 10/18/2006 4:00:16 PM

Come on Boyz, only 9 more points.

Keene Little : 10/18/2006 3:58:14 PM

Only 2 more minutes to get the DOW up 13 points to get it to close above 12K.

Jane Fox : 10/18/2006 3:44:31 PM

Tomorrow's Economic Report docket:

8:30a.m. Initial Jobless Claims: For Oct 7 Wk. Previous: +4K.

10:00a.m. Sept Conference Board Leading Indicators. Previous: -0.2%.

12:00p.m. Oct Philadelphia Fed Business Index. Previous: -0.4%.

Jane Fox : 10/18/2006 3:31:34 PM


Keene Little : 10/18/2006 3:30:48 PM

Here's the daily chart of IBM, zooming in a little closer to the weekly chart I showed earlier (12:56). If IBM finishes with this kind of daily candlestick, it's a nasty looking shooting star at a level I would consider resistance. My interpretation of this is a strong reversal candlestick although it needs confirmation tomorrow with a red candle. Link

Keene Little : 10/18/2006 3:25:54 PM

I have to admit I'm a little surprised this opex period. Usually we've seen some pretty good moves which have helped those who buy cheap front-month options and/or sell deep ITM options and then drive the market in their favor. Currently we're trading around the levels where we were at Friday's close (except for the techs which are lower).

Jeff Bailey : 10/18/2006 3:19:38 PM

03:00 Internals found at this Link

Keene Little : 10/18/2006 3:17:38 PM

IBM is in danger of dropping into its gap up below $90.10 (currently trading 90.00).

Keene Little : 10/18/2006 3:15:32 PM

IBM is pushing to new daily lows (but still up over $3).

Keene Little : 10/18/2006 3:05:19 PM

The broken uptrend line for ES is now at 1374.75 (+2.50 from its current price). For SPX it's a little higher (having to do with their different closing times and prices) just above 1368 (+3.3 from it's current level). That's the risk for current short positions, assuming those trend lines will continue to be resistance. Both are obviously moving higher as we consolidate here.

Jeff Bailey : 10/18/2006 3:02:13 PM

03:00 Market Watch found at this Link

Jane Fox : 10/18/2006 2:58:10 PM

TICKS +800

Jeff Bailey : 10/18/2006 2:51:53 PM


American Airlines parent reports net income of $15 million, or 6c a share. Excluding fuel-hedge write-down, EPS comes in at 45c. Revenue rises 6.6% to $5.85 billion. Analysts expected EPS of 42c on revenue of $5.9 billion.

AMR $25.11 +4.19% Link ...

Jane Fox : 10/18/2006 2:49:20 PM

Careful bears the VIX is almost to its daily lows. This is not a good time to be short.

Keene Little : 10/18/2006 2:48:38 PM

One would think there's going to be a real effort to hold the DOW above 12K for the close. It would certainly be a splash in tonights news.

Jeff Bailey : 10/18/2006 2:45:18 PM

Career Education (CECO) $22.05 -4.17% Link ...

Jeff Bailey : 10/18/2006 2:44:03 PM


DJ- Shares slump 22% as Apollo Group reports weaker-than-expected fiscal 4Q results. Net income at the education provider falls 12% to $93.5 million, or 54c a share, as revenue increases 5.5% to $624.2 million.

APOL $37.60 -22.76% Link

Keene Little : 10/18/2006 2:29:00 PM

Short term pattern here could use a minor new high and that should be the time to short it.

Keene Little : 10/18/2006 2:28:24 PM

ES bounced up to retest its steepest uptrend line again, at 1374. If you feel brave, this is the place to short it.

Jeff Bailey : 10/18/2006 2:24:28 PM

OPEC Secretary General: Consensus Building On Nature Of Output Cut

DJ- Consensus is building within the Organization of Petroleum Exporting countries on how to spread a one million barrels a day cut in oil production, acting Secretary General Mohamed Barkindo said Wednesday.

"We're looking to solidify it," he told reporters on arrival for Thursday's emergency meeting of the group in the Qatari capital.

Barkindo said the group's policy was to ensure a "fair price" for crude that's attractive for oil producers in their investment costs and oil consumers.

Asked whether OPEC would cut by more than one million barrels a day, he said only that the group would look at oil inventory numbers.

U.S. crude oil stocks rose by a whopping 5.1 million barrels in the week ended Oct. 13, well ahead of even the highest of expectations for a 2.5-million-barrel rise. Analysts surveyed by Dow Jones Newswires expected an average rise in crude oil stocks of 1 million barrels.

OPEC members remain divided on how to spread the output cut, with some favoring paring back from actual production and others supporting a cut in their nominal quotas .

Keene Little : 10/18/2006 2:24:10 PM

If this buying spike gets sold into then we'll have a good clue as to what's going on (distribution). Otherwise, big money rules and if they want to hold the market up then that's what they're going to do.

Keene Little : 10/18/2006 2:22:57 PM

The indices just got a simultaneous spike to the upside. Big money is still holding this market up.

Tab Gilles : 10/18/2006 2:21:42 PM

Weekly EIA Report Link

Keene Little : 10/18/2006 2:20:56 PM

As shown on this ES 60-min chart, the uptrend lines have become increasingly steeper, a definition of a parabolic move. Typically after the 4th new uptrend line you can expect to see exhaustion and we're on the verge of seeing that here. Link

The steepest uptrend line from yesterday has broken and now the 2nd steepest one from October 11th is being tested. If it breaks then I think we will have a pretty good idea that this run is over. Until that happens though the bulls can easily hold on here.

Jane Fox : 10/18/2006 2:17:37 PM

Here is an URL that Linda sent me for candlesticks. It is a really good reference. Link

Keene Little : 10/18/2006 2:12:28 PM

If ES manages to break down lower, other than two equal legs down today at 1365.50 it's uptrend line from September 22nd is at 1362.25.

Keene Little : 10/18/2006 2:10:47 PM

It's a battle of the trend lines and this morning's low for ES at the moment. Its uptrend line from Oct 11th through yesterday's low is where it found support (currently at 1368.75).

Jane Fox : 10/18/2006 2:07:51 PM


Jane Fox : 10/18/2006 2:04:19 PM

Tks Keene - all I knew was whatever it was called, today's candlestick was bearish.

Keene Little : 10/18/2006 2:03:08 PM

Jane, I still need to reference my "Candlestick Charting Explained" by Gregory Morris all the time. There are some good candlestick web sites too. I too don't use it enough to always remember the names of each candlestick, especially the groupings of a couple of them and what their meaning is. I recommend the above book by the way.

Jeff Bailey : 10/18/2006 2:02:03 PM

Target on the XOM-WN is $65 in the underlying.

Keene Little : 10/18/2006 2:00:16 PM

Today's downtrend lines at YM 12027 and ES 1371.75 are next resistance levels for this bounce. ES us struggling with this morning's 1370 low.

Jeff Bailey : 10/18/2006 2:00:10 PM

Swing trade put alert for one (1) of the Exxon/Mobil XOM Nov $70 Puts (XOM-WN) at the offer of $2.30

XOM $68.99 -0.61%

Jane Fox : 10/18/2006 1:59:11 PM

TKS Keene - I guess I need to bone up on my candlesticks. Don't use them too much.

Keene Little : 10/18/2006 1:57:49 PM

Jane, your chart shows a hanging man yesteday and a shooting star (so far) for today. Both are bearish when seen at resistance and both still need a down day tomorrow to confirm. For bears, that chart offers hope (bad word).

Jane Fox : 10/18/2006 1:55:31 PM

Look at that hanging man!! A revisit to May highs is becoming more and more likely now. Link

Jane Fox : 10/18/2006 1:53:09 PM

hoo eee!!! TRIN 1.54!

Jane Fox : 10/18/2006 1:52:24 PM

Oh my goodness I see the AD volume and AD line have both fallen below 0. This is getting interesting.

Jane Fox : 10/18/2006 1:51:04 PM

Es has made new daily lows but they are not confirmed by the VIX so don't get too excited about it yet.

Jeff Bailey : 10/18/2006 1:50:10 PM

Algerian Oil Minister: Concerned About 2007 Non-OPEC Supply

Will Have To Cut Like Others In OPEC

Not Looking To Defend Particular Price

Expects Much Weaker Demand In 2Q '07

Jeff Bailey : 10/18/2006 1:45:56 PM

U.S. Oil Fund (USO) alert $53.13 -1.59% ... probes Monday's lows.

Keene Little : 10/18/2006 1:45:04 PM

Now watch to see if this morning's low (ES 1370) acts as resistance. It could be a good short play.

Jeff Bailey : 10/18/2006 1:43:52 PM

OPEC Secretary-General: OPEC Defending A Fair Oil Price

Keene Little : 10/18/2006 1:41:10 PM

These selling spikes we're now getting (yesterday and today) indicate to me that we've got some serious distribution starting. That doesn't preclude more new highs but it does say smart money is probably using all rallies now to lighten up on their positions. Not a bad strategy in my opinion.

Jeff Bailey : 10/18/2006 1:40:46 PM

VIX 11.70 -0.25% ... relatively unchanged at WEEKLY R1.

Jeff Bailey : 10/18/2006 1:39:54 PM

Excellent observation from Al (see 01:15:59)

I thought same thing yesterday.

How can TRIN be that bearish, as longs obviously liquidating, yet SPY steady then higher to the close after weekly Pivot.

I think the answer is that this market is VERY, VERY, VERY short and its is BEARS that are their own enemy. Heavy in the money calls strikes may be gravitation points, but BUYERS will be firm. Not just OCTOBER either.

Keene Little : 10/18/2006 1:36:42 PM

DOW has now given up 100 points from its high and has gone red. The bulls are not going to like today if it closes in the red.

Jeff Bailey : 10/18/2006 1:30:48 PM

SPY $136.19 -0.16% ... slips under DAILY Pivot ($136.26)

Keene Little : 10/18/2006 1:29:23 PM

This 5-min chart of SPX shows how it just did a perfect little test of its broken uptrend line from yesterday's low through this morning's low before letting go with that spike down. With all the recent choppy price action it's difficult to know what this decline will lead to. If it's going to be just a 3-wave pullback that then leads to yet another push higher then watch for support at two equal legs down from this morning's high. For SPX that's at 1358.66, shown on this chart: Link

Jeff Bailey : 10/18/2006 1:27:21 PM

Baker Hughes (BHI) $70.27 -1.37% ... it's going to be "close" for naked calls sellers. 2.5 days until Oct. Option expiration!

Keene Little : 10/18/2006 1:22:57 PM

The RUT is making new daily lows and SPX is about to. If this continues to drop this afternoon then the daily candles are going to look butt ugly.

Jeff Bailey : 10/18/2006 1:21:35 PM

United Parcel Service (UPS) $72.54 -1.57% ... probes midpoint of $70-$75 strike.

Jeff Bailey : 10/18/2006 1:19:18 PM

Swing trade short cancel order alert ... for the Verizon (VZ) $36.40 -0.51% ... (12:49:38)

Keene Little : 10/18/2006 1:19:05 PM

Well, the small bull flag pullbacks are breaking down and when a pattern fails it usually fails hard. That suggests the waterfall decline as seen on the Trannies could be mirrored by the major indices next. I'm still comfortable on the sidelines to watch a little longer (call me gun shy now) but it will be a bearish statement to see new daily lows.

Jeff Bailey : 10/18/2006 1:16:12 PM

01:00 Internals found at this Link

Jane Fox : 10/18/2006 1:15:59 PM

This just in from ESPN (Al)

I watch the same internals along with you. Yesterday, just before noon there was a flag on the field however (Trin above 2.0) and as it turned out, it was an unnecessary roughness call against the bears.


Keene Little : 10/18/2006 1:15:49 PM

But I still get the impression that the major indices are in a corrective pullback and will at least get another leg higher. With the mixed signals I'm getting from the market I feel more comfortable being flat.

Keene Little : 10/18/2006 1:12:10 PM

In fact the 5-min chart of the Trannies shows a good example of what I mean when I say a waterfall decline--the rollover from the bounce to the noon high has now started to accelerate lower.

Keene Little : 10/18/2006 1:10:39 PM

After spiking higher at the open the Trannies are now in dive mode--down 46 points and still dropping. Not bullish.

Keene Little : 10/18/2006 1:09:12 PM

If we're to get a continuation higher the market needs to bounce now. If you like the long side, a long here with a stop at a new daily low is the right play. Otherwise the 5-min chart is giving me the impression that we could be at the start of a waterfall decline (where it slowly rolls over and then accelerates to the downside). Tough call right here.

Jeff Bailey : 10/18/2006 1:02:46 PM

01:00 Market Watch found at this Link

Keene Little : 10/18/2006 12:56:31 PM

With IBM so bullish today, up +4.6% (and a big reason the DOW is relatively higher) I thought it would be helpful to review its weekly chart. The wave pattern from the October 2002 low suggests a big sideways consolidation is playing out, and that it will likely continue to go sideways for another few years. Link

The move up from its April 2005 low looks like it could be completing an a-b-c move as part of this consolidation (each internal wave will be a 3-wave move, as it's been doing since October 2002). Today's high could very well be completing wave-C of an expected A-B-C-D-E sideways consolidation. For the short term this means it will start a pullback to $70-$80 area as we head into the new year.

Jeff Bailey : 10/18/2006 12:49:38 PM

Swing trade short setup alert ... for shares of Verizon (VZ) $36.56 -0.08%.

Let's look to go short a trade at $36.70, stop $37.08, target $36.07.

Keene Little : 10/18/2006 12:41:43 PM

I bailed on my short. It's just not working like it should have and I'm unwilling to hang around with it. The small pullback has a corrective look to it and suggests we could see a continuation higher. Watch for two equal legs down from the high at 11:50. That would be at ES 1372.25 and YM 12033. It could end up being a choppy day (which might continue for the rest of the week).

Jeff Bailey : 10/18/2006 12:26:15 PM


CME's CBOT Buy Could Lead To Higher Fees

CME's $8 billion acquisition of CBOT, which would create the world's largest financial market, could result in higher fees for mutual funds, pension funds and hedge funds as the powerhouse exchange drives out the competition.

Jane Fox : 10/18/2006 12:15:47 PM

TICKS +800

Keene Little : 10/18/2006 12:14:31 PM

DOW is testing its uptrend line from yesterday, shown in the DOW chart I just showed (12:00) at 11988. Obviously I'd like to see that break in order to help my short play.

Keene Little : 10/18/2006 12:12:48 PM

Once again I'm immediately lowering my stop to reduce risk--now at ES 1375, two ticks above that last little bounce. If ES rallies back above that then there's a good chance we'll see another high for this bounce. Even if it's only going to be a bounce to retest the bottom of the bear flag again I'm just not willing to take many chances in this market environment. I'm trading light and quick until I see some semblance of sanity return.

Keene Little : 10/18/2006 12:06:20 PM

ES is bouncing up to test its bear flag at 1374.50-1374.75. Trying a short again with a stop at 1376.25. Last try for now.

Keene Little : 10/18/2006 12:00:47 PM

If we throw out this morning's spike up it's interesting to see the DOW holding inside the tight up-channel from yesterday. A break below 11985, that holds below, would be bearish. The short term uptrend lines from this morning are breaking as I type. Link

Keene Little : 10/18/2006 11:57:18 AM

The short term uptrend line from this morning's low is holding. I'm thinking of waiting for a break of that line and a retest (hopefully) to try a short again. The bounce still looks corrective and makes me think we've got a bear flag here. A break down from it should be a good short.

Jeff Bailey : 10/18/2006 11:56:55 AM


DJ- Publisher posts earnings of $16 million, or 19c a share, as revenue rises 3.9% to $412.4 million. Excluding items, EPS of 11c is a penny better than expected. Company agrees to pay $160 million to Reuters to take full control of Factiva.

DJ $33.45 -2.64% Link

Jeff Bailey : 10/18/2006 11:55:14 AM


DJ- Underwriters for commodities exchange set an estimated price range for its pending initial public offering at $48 to $52 a share, but do not disclose details about the number of shares to be offered.

Jeff Bailey : 10/18/2006 11:52:36 AM


DJ- Defense contractor posts net income of $438 million, or $1.08 a share, beating expectations by 2c. Revenue rises 14.5% to $6.1 billion. Firm cites strength in IT and commercial aerospace.

GD $75.17 -1.17% Link ...

Jeff Bailey : 10/18/2006 11:50:44 AM


DJ- Energy company posts net income of $1.17 billion, or $1.36 a share. Excluding items, earnings rise 16% to $1.35 a share. Revenue increases 17% to $4.52 billion. Analysts expected EPS of $1.34 and revenue of $4.16 billion.

OXY $47.27 +1.91% Link

Keene Little : 10/18/2006 11:50:00 AM

I'm out of my ES short but watching YM carefully here--if it finds resistance at 12054 (two equal legs up) I may try it again.

Jeff Bailey : 10/18/2006 11:40:04 AM


DJ- Financial firm reports net profit of $222 million, or 54c a share, as revenue rises 13% to $1.29 billion, beating expectations of 52c a share on revenue of $1.31 billion. Assets under management rise 20% to $918 billion.

MEL $39.38 +2.76% Link ...

Keene Little : 10/18/2006 11:37:36 AM

This short has to work right away otherwise we could see a continuation of at least a choppy rise higher. I've already pulled my stop down to ES 1375.50 (2 ticks above the bounce high). I'm taking no unnecessary risks here since it's hard to trust this market. I don't want to buy it after that gap n crap and multiple non-confirmations but shorts have been extremely difficult. And scalping continues to be the name of the game right now.

Jeff Bailey : 10/18/2006 11:37:27 AM


DJ- Net rises to $3.3 billion, or 92c a share, as net revenue climbs 8% to $15.4 billion, beating estimates of 86c on revenue of $14.63 billion. Investment-banking revenue up 4.5%, offsetting weakness in mortgage business. CFO says Amaranth boosted trading results.

JPM $46.92 -2.22% Link ...

Keene Little : 10/18/2006 11:25:29 AM

Ths same projection and Fibs for YM is at 12054. I like the setup to try the short.

Keene Little : 10/18/2006 11:22:18 AM

Two equal legs up in the bounce for ES is at 1375 which is also a 50% retracement of the decline. That will be the first place I'll be looking for a shorting opportunity.

Jane Fox : 10/18/2006 11:21:38 AM

ES is now testing its PDH and may find resistance here.

Jane Fox : 10/18/2006 11:21:12 AM

Egads NQ has broken its PDL but the rescue team is out in full force now ticks +1000.

Jeff Bailey : 10/18/2006 11:20:09 AM

11:00 Internals found at this Link

Keene Little : 10/18/2006 11:15:48 AM

So far the little bounce here is looking corrective. It could make it up a little higher but it doesn't look like the start of another leg up.

Keene Little : 10/18/2006 11:04:59 AM

We'll now see what the bulls can put together here. Watch the 38-62% retracement of this morning's drop for some clues as to whether this will be just a bounce against a new decline or if the decline was just a correction to the rally from yesterday's low. The retracement zone for this morning's decline gives us potential resistance at ES 1374-1376.25 and YM 12044-12065.

Jeff Bailey : 10/18/2006 11:04:14 AM

11:00 Market Watch found at this Link

Jane Fox : 10/18/2006 10:59:30 AM

The rescue team has arrived. TICKs +800

Keene Little : 10/18/2006 10:51:07 AM

ES and YM have now broken their short term uptrend lines from yesterday morning. The important low is yesterday's. Until that low is violated it's entirely possible we're simply seeing volatility as a result of opex and the rally could easily resume. Take out yesterday's low and the bulls will be in trouble.

Keene Little : 10/18/2006 10:47:13 AM

SPX in the red. The bulls need to get it back in gear here--the car is sliding backwards down the ramp and heading for the water.

Jane Fox : 10/18/2006 10:46:34 AM

MACD has a long ways to go before it gets overdone. Link

Jane Fox : 10/18/2006 10:45:05 AM

Ok PDH was only a blip on the radar but now I will be watching for PDLs (gulp) to hold. Interestingly the VIX's daily low was right at its PDL.

Jeff Bailey : 10/18/2006 10:41:32 AM

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

Keene Little : 10/18/2006 10:39:29 AM

We've got a full day of trading ahead of us so anything can happen but one thing the bulls don't want to see happen is a negative close for the DOW and SPX after this morning's gap up and new high. A negative close would potentially give us a key reversal day which is typically a very good sign of a top, especially with it happening at the top of its long term up-channel.

Jeff Bailey : 10/18/2006 10:37:32 AM

Applied Materials (AMAT) $17.86 -4.38% ... undercuts its WEEKLY S2 ($17.91)

Tab Gilles : 10/18/2006 10:32:40 AM


Crude +5.1M

Gasoline -5.2M

Distillates -4.5M

Jeff Bailey : 10/18/2006 10:31:01 AM

Verizon's Board OKs Spinoff Of U.S. Print And Internet Yellow Pages Operations to Holders

New Public Company Called Idearc

Jane Fox : 10/18/2006 10:27:45 AM

All markets except YM have now fallen back into their respective PDRs.

Jeff Bailey : 10/18/2006 10:25:56 AM

PHLX Bank Sector Index (BKX.X) 113.69 -0.28% ... Probes May 8th relative high support (113.73). Has REFUSED to close below this level since closing above on 10/03/06.

Jeff Bailey : 10/18/2006 10:24:11 AM

Semiconductor HOLDRs (SMH) $34.18 -2.06% ... notably weak and break just under DAILY S2 ($34.23)

Jeff Bailey : 10/18/2006 10:21:04 AM

Dow Industrials (INDU) trades 12,000 !!!

Jane Fox : 10/18/2006 10:20:19 AM

ES is now tagging its PDH and should find support.

Jane Fox : 10/18/2006 10:19:38 AM

TRIN edging up to 1.34. Bulls beware.

Keene Little : 10/18/2006 10:17:36 AM

This morning's party seems to be more a big cap party (DOW and SPX) and that should be another warning sign (just one of many lately).

Jane Fox : 10/18/2006 10:10:36 AM

Should have been listening to the VIX today and shorted ES back when the VIX made a new daily high. Oh well, if I had the AD volume and line on board as well then the probability of that short would have been much higher and I like my ducks in a row before I trade.

Jane Fox : 10/18/2006 10:08:19 AM

TRIN has just tagged its PDL at 1.26. Ya yesterday's low was 1.26 - how is that for a bearish day. Like I stated earlier it was a bizarre day.

Jane Fox : 10/18/2006 10:06:23 AM

NEW YORK (MarketWatch) -- Stanley Inc., Trubion Pharma and First Mercury Financial priced their initial public offerings for their stock market debuts Wednesday as deals continued to roll out the door.

With the stock market retaining its overall strength, IPOs are faring relatively well. Stanley Inc. (SXE) priced 6.3 million shares at $13 a share in a bid to raise $82 million.

The Arlington, Va. information technology specialist for the U.S. government priced in the middle of its $12-$14 range for its stock market debut.

First Mercury Financial Corp. (FMR) priced 9.7 million shares at $17 in a bid to raise $165 million.

The Southfield, Mich. specialty insurance firm's initial public offering priced in the middle of its $16-$18 price range with underwriters J.P. Morgan and Keefe, Bruyette & Woods.

Trubion Pharmaceuticals Inc. (TRBN) priced its IPO at $13 a share, the bottom of its $13-$15 range. With 4 million shares in the offering, the Seattle drug development firm raised about $52 million in the IPO

Jane Fox : 10/18/2006 10:04:41 AM

Keep your eye on the PDHs because the markets should find support here although I see NQ did not because it is back within its PDR.

Jeff Bailey : 10/18/2006 10:02:45 AM

10:00 Market Watch found at this Link

Jane Fox : 10/18/2006 10:02:16 AM

Oh my goodness I see that ER and NQ have already made new daily lows.

Jane Fox : 10/18/2006 10:01:18 AM

ES is now tagging its daily lows and the VIX is saying those lows will not hold.

Keene Little : 10/18/2006 9:59:38 AM

Once again we're seeing a rally without the participation of the semis (they're in the red this morning). Obviously that hasn't meant much yet to the broader market rally but it continues to make me think there's something fishy smelly about all this. And I think it's not going to end well. I'm still looking for a top but not yet. We may have to get this week, or maybe this month behind us, but after that there's probably going to be a pretty big hangover after all this partying.

Jane Fox : 10/18/2006 10:00:29 AM

I would be shorting ES here but the AD volume and line are telling me don't even think about it.

Jane Fox : 10/18/2006 9:57:09 AM

Party may be over for now. VIX to new daily highs, which usually means ES is in for new daily lows. One must keep in mind though this week is OPEX and there may be some shenanigans going on with the SPX options that will affect the VIX. However I have not seen evidence of this so far.

Keene Little : 10/18/2006 9:53:24 AM

The same channels for the DOW shows price now above the top of the long term up-channel so it's in "throw-over" mode now. The top of its shorter term (unsustainably) steep up-channel is quite a bit higher at 12240. Link

Jane Fox : 10/18/2006 9:52:12 AM

WASHINGTON (MarketWatch) - U.S. home builders broke ground on more new homes in September, but took out the fewest building permits in five years, the government said Wednesday.

New construction of homes unexpectedly increased 5.9% in September to a seasonally adjusted annual rate of 1.772 million, the Commerce Department estimated.

It's the first increase in housing starts since May and the highest level since June. Starts are down 18% in the past year.

Building permits, meanwhile, fell 6.3% to a five-year low of 1.619 million annualized. Typically, permits are higher than starts. Permits have fallen eight months in a row and are off 28% in the past year. Permits are considered a leading indicator not only of housing but of the economy as a whole.

Starts were much stronger than expected, but permits were much weaker.

Economists were expecting housing starts to fall about 2% to 1.64 million annualized, according to a survey conducted by MarketWatch. They expected permits to fall about 2% to 1.70 million

Jane Fox : 10/18/2006 9:50:21 AM

SAN FRANCISCO (MarketWatch) -- Yahoo Inc. reported late Tuesday that third-quarter profit fell 37%, as higher advertising sales at its collection of Internet sites weren't enough to offset stock options costs and higher expenses.

Yahoo also said its board of directors has authorized the company to repurchase up to $3 billion worth of its common stock over the next five years. It's the second time in 19 months that the company announced a $3 billion share buyback plan.

The Sunnyvale, Calif.-based company said net income for the three months ended in September fell to $158.5 million, or 11 cents a share, from $253.8 million, or 17 cents, a year ago, when Yahoo, like most technology companies, didn't include option costs on its income statement.

The results matched the average estimate of analysts surveyed by Thomson First Call.

Net sales, which exclude the payments Yahoo makes to acquire Internet traffic, rose 20% to $1.12 billion, in line with the company's reduced forecast. U.S. sales rose 14%, while international revenue climbed 29%.

Yahoo executives had said on Sept. 19 that third-quarter sales would come in at the low end of its previous forecast, or about $1.11 billion, due to weaker-than-expected ad sales from financial services and automobile companies. Analysts expected sales of $1.14 billion.

Jane Fox : 10/18/2006 9:48:56 AM

TRIN is below its PDL which isn't saying much because its PDR was very bearish. VIX has tagged its PDL although I am surprised it has not broken it.

Keene Little : 10/18/2006 9:48:41 AM

So where's the next line of resistance? For SPX it has now rallied to the top of its long term parallel up-channel for price action since August 2004, here at 1372. The top of a shorter term up-channel for price action since July is closer to 1384 and that's what I see as potential at this point. Link

Maybe a little throw-over in the larger channel to finish this blow-off top (which is what I'm convinced it is). The bears have been handily beaten during this rally and I suspect today's rally will get most to throw in the towel. There are not many left.

Jane Fox : 10/18/2006 9:47:34 AM

This is possession of the ball AND field position. This is clarity!! Link

Jane Fox : 10/18/2006 9:45:17 AM

NEW YORK (MarketWatch) -- U.S. stocks opened higher Wednesday, with the Dow Jones Industrial Average piercing the 12,000 mark for the first time in its history, on the back of positive economic data and earnings-inspired gains for Intel Corp. and International Business Machines.

Jane Fox : 10/18/2006 9:44:41 AM

WASHINGTON (MarketWatch) -- Motorola Inc., the world's No. 2 maker of wireless phones, said late Tuesday that third-quarter profit dropped 45% from a year ago, when it had a large one-time gain, and sales rose less than expected.

The company also issued a weak sales forecast for the current quarter, sending its shares down 8% in after-hours trading.

Motorola reported a third-quarter profit of $968 million, or 39 cents a share, down from $1.75 billion, or 69 cents, a year earlier, when the company booked a $1.3 billion gain from asset sales.

Revenue rose 17% to $10.6 billion as the company shipped a record 53.7 million phones. Still, that was well below the $11.07 billion average estimate of analysts surveyed by Thomson First Call.

Shares of Motorola (MOT) , which hit a five-year high last week, plunged 8% to as low as $22.87 in after-hours trading.

Motorola Chief Executive Ed Zander blamed the sales shortfall on less than expected demand for phones designed specifically for the Nextel portion of Sprint Nextel Corp's (S) wireless-phone business.

Jane Fox : 10/18/2006 9:43:08 AM

SAN FRANCISCO (MarketWatch) -- Intel Corp. said late Tuesday that third-quarter profit plunged 35% from a year ago as the world's largest chipmaker faced stiff competition from its smaller rival, Advanced Micro Devices Inc.

But results from the world's largest maker of computer chips topped Wall Street's views, signaling Intel may be recovering from its stumbles the past few quarters. In late trading, Intel shares rose 1.4% to $21.20. Intel said net income was $1.3 billion, or 22 cents a share, down from $2 billion, or 32 cents, in last year's same period. For the three month period ended Sept. 30, sales fell 12% to $8.7 billion. The results beat Wall Street's expectations. Analysts surveyed by Thomson First Call expected the company to post earnings of 18 cents a share on revenue of $8.62 billion.

Santa Clara, Calif.-based Intel (INTC) has been shipping new PC and server chips in a bid to strengthen its product line-up, especially in the server market, where AMD has made dramatic market share gains the past two years. Intel said it shipped more than 6 million processors based on its new Core microarchitecture.

"We believe we gained some overall market share this quarter," Chief Executive Paul Otellini said in a conference call.

Jane Fox : 10/18/2006 9:41:21 AM

NEW YORK (MarketWatch) -- Treasury prices turned lower early Wednesday, sending yields up a bit, after a rebound in housing starts and a third straight monthly gain in core consumer prices suggested the Federal Reserve could still be under pressure to lift rates.

The market in general in recent sessions has benefited from widespread perception that the economy has weakened enough to keep the U.S. overnight rate unchanged for the rest of the year.

Wednesday's data did not change expectations that the Federal Reserve will not raise rates at its meeting next week. But it did undercut some of the fixed-income market's assumptions about economic weakness and slowing inflation.

Treasury prices gave up gains after the Labor Department reported that core inflation last month posted its third straight monthly gain of 0.2%.

Jane Fox : 10/18/2006 9:36:12 AM

TICKS +1000 - early for that one.

Jane Fox : 10/18/2006 9:35:40 AM

AD line +1356 and AD volume above 0 and climbing. The bulls have the ball and field position.

Jane Fox : 10/18/2006 9:31:59 AM

Dow hits a high of 12022.14

Keene Little : 10/18/2006 9:31:25 AM

Bonds have retraced yesterday's gap and run higher so with equities doing the same (they're currently running counter to each other) it'll be worth watching what bonds do today to provide some clues about how this rally does. The decline in bonds needs to continue in order to help support the rally in equities.

Jane Fox : 10/18/2006 9:21:20 AM

Overnight natural GAs tagged its PDL and found support. I think this market is getting ready to break its daily resistance at 6.85 - 6.90 and make a run for its daily 100EMA sitting at 7.40.

Gold traded within its PDR overnight and I think this market is also gearing up for another run at its resistance sitting at 615-616. I'm not sure what it will do from there but the weekly charts of the markets Gold trades in unison with are still saying Gold will not reach new yearly highs this year.

Oil broke its PDL overnight but not by much. OIl's overnight low was 58.40 Link

Jane Fox : 10/18/2006 9:13:44 AM

EQuity markets really liked the CPI data out at 8:30 and all but NQ have broken their previous day highs. THere is a very good chance the DOW will open above 12000 today. Link

Jane Fox : 10/18/2006 9:08:48 AM

Yesterday was one of your more bizarre days. Although there are other market internals that probably work equally well, I have learned to rely heavily on the AD line, Ad Volume, VIX and the TRIN to tell me what is going on behind the scenes. I have watched these four and how they interact with each other long enough that I can build a pretty accurate picture of who has control and how much control they have - sort of like watching a football game and determining which team has the football and what kind of field position they have.

Sometimes the bulls have ball but no field position (AD line may be hovering around 0 but AD volume climbing). Sometimes the bulls have the ball and definite field position - AD line above +1000, AD volume climbing, VIX and TRIN falling. Sometimes the bears have ball and field position (Ad line under -1000, AD volume falling to new daily lows, VIX and TRIN climbing). This is what I call clarity.

Well yesterday we had clarity. Yesterday was a bearish day. All the internals were telling me loud and clear the bears had the ball AND field position. It was not a mixed picture it was very clear yet the bulls were able to turn the markets around and even make new daily highs late in the day.

Like I said it was a very bizarre day. Link

Keene Little : 10/18/2006 9:05:31 AM

With the move higher this morning I would say the bearish setup has been negated. Unless it's going to be a gap n crap, which there's no reason to suspect (except that this is opex), a rally this morning should set up a continuation higher this week. We'll be due a pullback but it would appear at this point that we should be looking to buy the dips still.

Jane Fox : 10/18/2006 8:41:45 AM

WASHINGTON (MarketWatch) - U.S. inflation declined in September as energy prices had their biggest drop in almost a year.

The U.S. consumer price index decreased a seasonally adjusted 0.5%, the biggest drop since last November, the Labor Department reported Wednesday.

However, excluding food and energy prices, the core rate of inflation increased 0.2% in September, the third straight month with a 0.2% gain.

The drop in the CPI was larger than expected while the rise in core CPI matched forecasts by Wall Street economists surveyed by MarketWatch.

The core CPI is now up 2.9% in the past year, compared with a 2.8% increase in August. This is the highest level since February 1996. The core CPI is up at a 3.0% annual rate so far this year.

The headline CPI is up 2.1% in the past year, down from a 3.8% gain in the 12 months ending in August. This is the smallest increase since March 2004. So far in 2006, the CPI is running at a 3.4% annual rate.

Jim Brown : 10/18/2006 7:23:26 AM

Reader Challenge - I created a chart of the reader challenge responses for the S&P to illustrate the range of guesses. The low guess was 1322 and the high guess 1386. By far the largest number of guesses were clustered in the 1350-1365 range with 1345-1350 receiving the largest number of votes. Link

With the S&P closing on Tuesday at 1365 this would tend to suggest that the majority of traders believe 1350 will be support on any end of week selling. It is also the level I targeted for a decision point in my Sunday market commentary. I had suggested buying a dip above 1350 and shorting a break under 1345. It appears many readers agree with that analysis.

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