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Keene Little : 10/30/2006 11:58:22 PM

Continuing with the SPX chart I've been using the past couple of days, the decline today looks to have broken the uptrend line from Sept 22nd. As stated before, this is an important trend line. But did it really break it? That's debateable as price dances up and down around that line. It could easily be considered merely in "throw-under" territory. Link

The bounce on Monday looks corrective (it's only a 3-wave bounce) and normally suggests lower prices dead ahead. The trouble is we've been in a lot of these corrective moves because we're in an ending pattern. The challenge has been figuring out where that end is. It's still entirely possible we'll see this chop its way higher to new highs. That's not what I depict on the chart but it's a caution to the bears who are anxious to short this market. It might not break down yet.

But if we see an early decline Tuesday, then it looks like it would complete a 5-wave decline from last Thursday's high. That would set up another big bounce, potentially back up to retest the broken uptrend line, so perhaps back up to the 1384 area. For that bigger bounce to happen look to see if we get some bullish divergences at a new low, otherwise it might keep trucking in the southbound lane.

The bearish thing that I see on the chart is stochastics rolling over and MACD remaining below zero and potentially rolling back over. But we've seen these oscillators reverse course to the upside too many times to count. It's those buy programs coming out of nowhere. I would continue to scalp this market tightly and take quick profits (and losses). Once we get a move down started in earnest it will be a lot easier to look for a swing trade setup on the short side. Patience is a virtue (and it saves you from the current whipsaw price action).

Keene Little : 10/30/2006 11:34:17 PM

Tuesday's pivot tables: Link and Link

OI Technical Staff : 10/30/2006 9:59:59 PM

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Keene Little : 10/30/2006 4:03:50 PM

Best guess on the pattern here is that we need a small drop lower (ES 1381.50 should hold) which should then be followed by a bounce to a lower high and then an acceleration lower tomorrow.

Keene Little : 10/30/2006 4:02:32 PM

That was a wimpy finish to a wimpy day. The Boyz are probably happy to have held the market basically flat.

Jeff Bailey : 10/30/2006 3:54:26 PM

Travelzoo (TZOO) $30.97 -5.32% Link ... post-earnings release low.

Keene Little : 10/30/2006 3:48:26 PM

I'd be surprised to see ES 1381.50 broken today. It would be more typical for it to hold and get a buying spurt into the close. If that doesn't happen that would be another change in character for this market.

Jane Fox : 10/30/2006 3:37:57 PM

Economic Reports for Tuesday Oct 31st

8:30a.m. 3Q Employment Cost Index. Consensus: +0.9%. Previous: +0.9%.

10:00a.m. Oct Conf. Board Consumer Confidence Index. Consensus: 108.0. Previous: 104.5.

10:00a.m. Oct Chicago Purchasing Managers Index. Consensus: 58.0. Previous: 62.1.

Keene Little : 10/30/2006 3:34:12 PM

Jim, bite your tongue (wink).

Jeff Bailey : 10/30/2006 3:34:01 PM

Marathon Exec: Update (02:36:33)

DJ- Despite a cut in oil production announced by Saudi Arabia as part of a general cut by OPEC member countries, Marathon Oil Corp. has not seen a reduction in crude oil volumes coming from Saudi Arabia from November through January, a company executive said Monday.

"We have been able to get anything we have wanted to from" Saudi Arabia," said Gary Heminger, executive vice president at Marathon.

Heminger was speaking at a conference hosted by the National Council on U.S.-Arab Relations.

Jim Brown : 10/30/2006 3:29:08 PM

My Russell stop reversed me to a short so the market should rebound any time now. (grin)

Jane Fox : 10/30/2006 3:28:28 PM

Of course the bulls do not give up easily and the bears are going to need a lot more gun powder to overcome them.

Jane Fox : 10/30/2006 3:27:11 PM

AD volume has fallen back under 0 now. This has been an interesting day. I have seen the push/pull fight all day and for a while the bulls were able "bully" the bears and usually the bears would just cave in, however, today they have not and are trying to make a come back.

Jeff Bailey : 10/30/2006 3:20:01 PM

Industry Losers ... Coal -1.80%, Oil & Gas Operations -1.45%, Printing Services -1.39%, Textiles-Non Apparel -1.00%, Construction- Raw Materials -0.95%

Keene Little : 10/30/2006 3:19:42 PM

Starting to break down.

Jeff Bailey : 10/30/2006 3:18:39 PM

Industry Winners ... Non-Metallic Mining +2.79%, Apparel/Accessories +1.86%, Computer Networks +1.66%, Air Courier +1.58%, Trucking +1.50%, Computer Perhipherals +1.46%, Schools +1.45%, Retail (Technology) +1.40%, Retail (Apparel) +1.37%, Software & Programming +1.34%

Keene Little : 10/30/2006 3:12:24 PM

A break below below ES 1384.50 would be a break down which could accelerate lower into the close. But until that happens it's looking like it wants to chop a little higher first, and may top out in this wedge by the close of trading today (around 1388).

Keene Little : 10/30/2006 3:10:16 PM

Perhaps another small ascending wedge? If ES finds resistance at or under 1388 this pattern suggests a relatively fast retracement of today's bounce. But any rally out of this that holds would be a bullish move. Link

Jim Brown : 10/30/2006 2:59:22 PM

I have been long the Russell futures since this morning and the dead stop between 774-775 for the last 90 min has been amazing. I still think the fund window dressing for tomorrow's fiscal year end is not over but I am ready to reverse to a short at 773. The Ticks are weakening but the A/D is holding the higher ground with only a little weakness. 3:PM could be the turning point here.

Keene Little : 10/30/2006 2:55:44 PM

The first low of importance today is the dip to the low during the lunch hour. If price drops from here back below that line that would then leave today's bounce as a 3-wave correction. It doesn't say we couldn't chop higher but it would be another warning sign that the bulls might be in trouble. It takes a drop to a new daily low to prove the bears have something going.

Keene Little : 10/30/2006 2:48:52 PM

YM, which has looked relatively weaker today, is testing its uptrend line from this morning's low, currently at 12136. ES's line is at 1284.50 and NQ's is at 1737.50. This line should be the defining line for the bull/bear battle here since a break of it would suggest the corrective bounce is over. Proof obviously would be a drop to new daily lows.

Jim Brown : 10/30/2006 2:42:04 PM

Several purchasers of Saudi Oil said last week they had been notified their allotments after November 1st would be reduced. Since oil is contracted well in advance I don't expect to see any decline in shipments for several more weeks.

Jeff Bailey : 10/30/2006 2:41:13 PM

Fed Survey: U.S. Banks Report Weaker Commercial Real Estate Loans; Mortgage Demand

DJ- Domestic U.S. lenders reported softer demand in recent months for both commercial real estate loans and home mortgages, while banks also tightened their lending standards in the commercial sector, according to a Federal Reserve study released Monday.

Overall, "demand for most loan types reportedly declined somewhat," the Fed said in its latest quarterly survey of banks' senior loan officers.

The Fed survey shows a net fraction of more than 25% of domestic banks reported weaker demand for commercial real estate or CRE loans, "a larger net percentage than in the previous survey."

While CRE demand fell, banks tightened their lending standards for CRE, with nearly a net fraction of 40% reporting they had raised their credit standards.

The Fed said the increase in tightened CRE lending standards was a "notable" rise over the July survey.

Demand for home mortgages continued to weaken, according to the survey, while standards remained fairly static.

A net fraction of 60% of domestic banks reported weaker demand for residential mortgages, the Fed said, while credit standards in the residential sector remained unchanged on net.

The Fed survey was conducted in October July, and included responses from 55 domestic banks, as well as from 17 foreign banks operating in the U.S.

Standards and demand for credit-card and non-credit-card consumer loans were little changed over the past three months, the Fed said.

Domestic and foreign banks reported easing lending terms for commercial and industrial loans, with a net fraction of almost one third of respondents saying they had "trimmed spreads of loan rates over their cost of funds over the past three months."

All of the banks that eased their commercial and industrial loan standards or terms pointed to "more aggressive competition from other banks or nonbank lenders as the most important reason for having done so."

Net demand for business loans was little changed from the previous survey, the Fed said.

On the business lending outlook, a net fraction of 10% of domestic banks said "inquiries from potential business borrowers had decreased moderately over the previous three months."

The October survey also asked banks whether the recent strength in business lending reflected a "surge in loans to fund (mergers and acquisitions) activity."

According to the survey, "holdings of C&I loans originated for M&A-related purposes were generally small."

About half of the domestic banks said M&A loans accounted for less than 5% of the loans on their books, and a third said such loans comprised between 5% and 10% of their total loans.

Still, though, nearly half of domestic banks and 60% of foreign banks, on balance, said their share of M&A business loans had increased over the past 12 months.

Jeff Bailey : 10/30/2006 2:36:33 PM

Marathon Exec: Not Seen Reduced Saudi Volumes For Nov-Jan

Keene Little : 10/30/2006 2:22:12 PM

It remains to be seen what this bounce will turn into but again, if it's a 2nd wave bounce (with the decline from last Thursday being the 1st wave down), these 2nd waves tend to get the bulls all excited because they think they survived that nasty little sell off. So far that's all we've got here and I'd be reluctant to chase it to the upside. Not yet anyway.

Jane Fox : 10/30/2006 2:20:58 PM

AD line and volume are getting stronger and PDHs may be the next stop.

Jane Fox : 10/30/2006 2:16:08 PM

Oh yawn VIX to new daily lows and AD volume making new daily highs.

Jeff Bailey : 10/30/2006 2:03:14 PM

QQQQ $42.58 +0.87% ...

Jeff Bailey : 10/30/2006 2:02:44 PM

Microsoft (MSFT) $28.80 +1.62% ... notable new 52-weeker and multi-year high. Edges above its WEEKLY R1 $28.75.

Keene Little : 10/30/2006 1:55:17 PM

I'm making the assumption that the current bounce is correcting the decline from last Thursday. We could of course see this continue to chop its way higher to new highs as has been the way of this market. But the first thing to watch for is a failure of this bounce and sticking with the NQ chart that I started showing today, it's definitely an A-B-C bounce off this morning's low. Two equal legs up is at 1747.25 but resistance could come in anywhere in the 1740-1749.50 area. Then we'll get to see whether the bears are taking the reins back. Link

Keene Little : 10/30/2006 1:42:55 PM

Two equal legs up for YM is at 12170. But the first Fib target is 12148 (2nd leg up equal to 62% of the 1st leg up).

Jane Fox : 10/30/2006 1:42:28 PM

SAN FRANCISCO (MarketWatch) -- Crude-oil futures fell more than 3% Monday afternoon to trade under $59 a barrel on easing concerns about the risk of a terrorist attack on oil facilities in the Persian Gulf, doubts that key oil producers will fully follow through with a pledge to cut production and expectations that data due this week will show a rise in U.S. crude supply.

Crude for December delivery was last down $2.05, or 3.4%, at $58.70 a barrel on the New York Mercantile Exchange after touching $58.60, the contract's weakest level since Tuesday.

Petroleum-product prices also declined, with November unleaded gasoline futures last down 7.99 cents, or 5.1%, at $1.48 a gallon after a one-week low of $1.475. November heating-oil futures was down 5.94 cents at $1.635 a gallon.

Crude prices closed 39 cents higher Friday to end the week with a gain of 2.4%, after intelligence reports suggested insurgents may be planning an attack on oil facilities in the Persian Gulf.

But "support from terrorist threats tend not to have a lasting effect once disproved, so lacking an actual event, it shouldn't be surprising to see prices lower," said John Kilduff, an analyst at Fimat USA.

Dennis Gartman, editor of the Gartman Letter, said he believes concerns about the Persian Gulf oil facilities are for the moment much exaggerated.

"The activity in the Gulf is an exercise to practice the interdiction of ships in the region that might be used to carry materiel to or away from Iran, should sanctions be put into effect against Tehran at some point regarding her nuclear-power operations," he said.

"Unless there is an escalation in terrorist threats or actual attacks, prices will [remains] in a band between $59 and $62," he said, in a note to clients

Keene Little : 10/30/2006 1:40:21 PM

If this can press a little higher this afternoon, two equal legs up off this morning's low for ES is at 1388, right in between the 50% and 62% retracement of the decline from Thursday's high.

Jeff Bailey : 10/30/2006 1:38:44 PM

Sector Winners ... Disk Drive +3.75%, Airlines +1.75%, Semiconductors +1.22%, Software +1.07%, Gold Bugs +0.81%, Broker/Dealer +0.65%

Sector Losers ... Healthcare Payors -1.31%, Healthcare Providers -1.11%, Oil -0.82%, Oil Service -0.67%

Jane Fox : 10/30/2006 1:36:33 PM

These are not bullish and I certainly don't think new yearly highs are in the making today. Link

Keene Little : 10/30/2006 1:29:17 PM

It doesn't mean we can't see the market press higher but it means to me (Keene Little) that we should be looking to sell rallies rather than buy dips.

Keene Little : 10/30/2006 1:27:18 PM

And there's the selling, more so in the DOW. This is distribution going on now.

Jim Brown : 10/30/2006 1:23:25 PM

The fiscal year end for most mutual funds is tomorrow. The plan on the street for the last 24 years, since this date was adopted, has been to buy the market on or before Oct-27th and sell it on Nov 1st. Only one year out of the last 24 has seen a loss over this period. This is window dressing at its finest.

Keene Little : 10/30/2006 1:22:47 PM

Now let's see if this buying spike gets sold into. Then we'd have a pretty clear idea about what's happening.

Jane Fox : 10/30/2006 1:20:46 PM

REscue team has arrived. TICKS +1000

Jeff Bailey : 10/30/2006 1:10:07 PM

Current OPEN MM Profiles that I (Jeff Bailey) have made and Watch List at this Link

Jane Fox : 10/30/2006 12:40:52 PM

Oil is testing its daily lows and putting a lot of pressure on Gold. At least Gold has found support at is overnight highs.

Keene Little : 10/30/2006 12:35:41 PM

SPX bounced back up to its broken uptrend line from Sept 22nd and is now pulling back. That looks bearish for now and I expect to see a continuation lower. But I'm not sure if it'll continue lower from here or after some consolidation first. But once that new low is in, assuming of course that's where this is headed next, we should then be set up for a larger bounce to retest the uptrend line. At least that's how I see this pattern unfolding so far. Link

Tab Gilles : 10/30/2006 12:34:13 PM

Citrix Systems (CTXS) is starting to look interesting at current levels....oversold? Link

Two calls to look at Jan $30 XSQAF & March $30 XSQCF

Keene Little : 10/30/2006 12:22:58 PM

The other possibility is what I had mentioned first thing this morning--that we'll see a choppy consolidation between 1381 and 1385 before heading lower again. The longer it consolidates in that range the better the chances we'll see a continuation lower after it's finished.

Keene Little : 10/30/2006 12:20:23 PM

If this little pullback is going to lead to another leg higher watch for support at 1381.25 which is two equal legs down from the 1385.25 high near 11:30 AM.

Keene Little : 10/30/2006 11:58:43 AM

Entering the lunch hour it looks like it's going to be pretty quiet. After another small dip it could be easy to ramp it up higher again. But I don't have enough confidence in that scenario to recommend a long play. At this point I'm liking the short side better. Just recognize that it's going to be a challenge remaining short while they keep hitting it with buy programs to try to keep the bears out and force some buying in order to create some liquidity to sell into.

Jeff Bailey : 10/30/2006 11:56:12 AM

Nymex Crude Below $59/Bbl, Stock Build Seen

DJ- New York crude oil futures slid below $59 a barrel Monday on speculation U.S. stockpiles will build in government data due Wednesday, and as heating oil prices fell to a one-month low.

The front-month December light, sweet crude contract on the New York Mercantile Exchange fell $2.03, or 3.3%, to $58.73 a barrel. Brent crude on the ICE futures exchange $2.22 to $58.86 a barrel.

November heating oil dropped 6.28 cents to $1.6316 a gallon. It fell as low as $1.625, its lowest for October. Front month unleaded gasoline fell 7.52 cents to $1.4847 a gallon, and reformulated gasoline blendstock, or RBOB, fell 6.24 cents to $1.4939 a gallon.

"We're seeing heating oil down amid some milder weather forecasts and storms over the weekend that were milder than we thought," said Aaron Kildow, an analyst at Prudential Financial in New York. "In a nutshell, we're seeing pointers to more supply, less demand."

Some analysts are pointing to a brief closure at the Louisiana Offshore Oil Port, the U.S.'s main import point, as being responsible for a draw in stocks last week that at the time was interpreted as indicative of strong demand.

"Funds have been sellers in London, as traders are expecting another round of increases in U.S. crude stocks, which slipped in the prior week due to a temporary closure of the LOOP," said Addison Armstrong, an analyst at TFS Energy Futures.

Tanker offloadings were suspended for about a day last week, Amos Simoncelli said last week. Some reports had said the shutdown was for three days.

Also drawing down prices, there were no additional threats to Saudi Arabian oil production at the weekend.

Prices rose Friday after Saudi Arabia and Bahrain led a naval deployment to protect the world's biggest oil-loading port after getting information suggesting a "strong possibility" that insurgents might attack.

With no more threats reported over the weekend, crude gave away Friday's gains.

"The fact nothing happened over the weekend with the Saudi Arabian port combined with talk we're probably going to see a build in crude stocks" pushed prices lower, said Tony Rosado, an analyst at MW Futures in New York.

BP PLC (BP) said Monday that production at its Prudhoe Bay field in Alaska had risen above 400,000 barrels a day, and that the company has added $1 billion to the $6 billion already earmarked for upgrades to U.S. facilities.

Oil supplies from the Organization of Petroleum Exporting Countries were largely unchanged in October, tanker tracker Petrologistics said. But the 10 members of the cartel subject to quota restrictions were up 150,000 barrels to 28.2 million barrels a day as Nigerian output recovered from a wave of attacks on its production.

OPEC has said it will reduce output by 1.2 million barrels a day, starting in November, to buoy prices which are down more than 20% from their July 14 record of $78.40 a barrel.

"Just why traders would have thought OPEC would trim output retroactively, we can't say, but we suppose it's really just a fresh excuse for probing the downside," said Tim Evans, an analyst at Citigroup in New York.

Jeff Bailey : 10/30/2006 11:51:34 AM


DJ- Parent for Florida Power & Light reports 55% rise in net income to $524 million, or $1.32 a share. EPS excluding items of $1.15 top analysts' mean estimate of $1.06. Firm to focus on boosting its power-generation business.

FPL $50.74 +1.66% Link ...

Jeff Bailey : 10/30/2006 11:45:08 AM


DJ- Restaurant supplier reports net income of $189 million, or 30c a share. Excluding effect of accounting changes, EPS rises to 37c. Revenue up 8.3% to $8.67 billion. Analysts projected earnings of 36c on sales of $8.52 billion.

SYY $34.09 -0.55% Link ...

Jeff Bailey : 10/30/2006 11:39:17 AM

StreetTracks Gold (GLD) $60.23 +1.39% Link ... gaps above its trending higher 200-day SMA ($59.94) and neckline ($60.00) of h/s bottom. Also gaps above its downward trend from bar chart (05/12/06 high to 09/06/06 relative high).

Keene Little : 10/30/2006 11:34:36 AM

Looking at the NQ chart I posted earlier, it didn't make it down to 1719 before getting a bigger bounce. That "one more new low" didn't happen as is often the case. The bounce so far nailed the 50% retracement at 1739.25. That could be it for the bounce already and if so then we should see price head for new lows from here. Link

The other possibility is that this morning's bounce was just wave-A of an A-B-C that could take us up to a 62% retracement near 1743.50 later today or tomorrow. Trying a short here could work nicely but be ready to scalp it in case we're going to get a 2nd leg up in a larger correction.

Jane Fox : 10/30/2006 11:33:45 AM

I think Oil's yearly lows will not hold. Dang it and I was just getting a handle on gold.

Jane Fox : 10/30/2006 11:32:58 AM

Here is an even more bearish look at Crude. Link

Jeff Bailey : 10/30/2006 11:31:16 AM


DJ- Minimum investment requirements in hedge fund of funds should be raised to protect unsophisticated investors, and minimum of $25,000 is too low and risky, says Rep. Richard Baker.

Jane Fox : 10/30/2006 11:30:09 AM

Oil broke out of its bullish wedge but has now returned back to it. Notice MACD never made it above 0 and RSI above 70. This is not good for Goldbugs. Link

Jeff Bailey : 10/30/2006 11:30:08 AM


DJ- Auto maker plans to cut North American vehicle production by as much as 8%- 12% over the first half of 2007 from this year's levels, and it expects to see full-year output slide as much as 5%, trade publication Automotive News reports.

F $8.17 -1.44% Link ...

Jeff Bailey : 10/30/2006 11:28:06 AM


DJ- Health insurer reports net income of $159.2 million, or 95c a share, as year-earlier results hurt by legal settlement and Katrina. Revenue jumps 48% to $5.65 billion on Medicare growth. Analysts expected EPS of 97c and revenue of $5.9 billion.

HUM $62.00 -5.63% Link ...

Jeff Bailey : 10/30/2006 11:25:27 AM


DJ- BP says output at its Alaska oil field has returned to its pre-shutdown August level. Firm also intends to spend an extra $1 billion, on top of the $6 billion already earmarked, to upgrade its Alaska production facilities and U.S. refineries.

Jeff Bailey : 10/30/2006 11:24:20 AM


DJ- Richmond Fed president, who has voted for higher interest rates at each of the past three FOMC meetings, says inflation expectations are above his comfort level and expects U.S. economy to 'return to potential' sometime next year.

Tab Gilles : 10/30/2006 11:24:07 AM

$NAHGH/$NALOW/$NDX Intraday chart, note new highs reversal...granted this may change since it is an intraday look. Link

I'm watching the $NDXA200 daily and weekly, will have to wait after the close. Still believe that that 1750 level will be pivotal. Link Link

Set stop if $NDX drops below 1700 sell remaining positions in Profunds.

Jeff Bailey : 10/30/2006 11:23:08 AM


DJ- Shares drop 7.5% as hospital operator projects 3Q loss from continuing operations of 5c-7c a share. Analysts' mean estimate was for loss of 1c. Firm blames bad-debt costs topping estimates and continued softness in admissions.

THC $7.57 -8.79% Link ...

Jeff Bailey : 10/30/2006 11:21:02 AM


DJ- French electric-equipment maker agrees to pay $31 a share in cash, a 30% premium to Friday's closing price, for each share of critical power specialist American Power Conversion. Schneider will take on billions in debt to fund the takeover.

APCC $29.77 +25.29% Link ...

Jeff Bailey : 10/30/2006 11:19:00 AM


DJ- Shares drop 2.5% as retailer reports 0.5% increase in October comparable-store sales. Results show Wal-Mart's recent strategies to boost sales -- catering to more-upscale shoppers, paring its inventory and remodeling its stores -- are sputtering.

WMT $49.50 -2.42% Link ...

Jeff Bailey : 10/30/2006 11:17:02 AM


DJ- Telecommunications provider reports net income of $1.92 billion, or 66c a share, which includes 2c in pension and merger costs. Revenue jumps 26% to $23.25 billion. Analysts expected EPS of 66c on revenue of $23.03 billion. Verizon Wireless adds 1.9 million net customers, bringing total subscribership to 56.7 million. Firm sees fiber-optic project cutting earnings more than expected.

VZ $37.39 -3.73% Link ...

Keene Little : 10/30/2006 11:15:52 AM

With the continuation higher here now I'm wondering if we're getting the correction to the decline in more or less a sharper spike up. If true, watch for resistance at 1385.50 and a roll back over. But with the 30 and 60-min charts oversold it would seem we're in for at least a larger correction (in time if not price).

Keene Little : 10/30/2006 11:07:47 AM

The bounce off this morning's low now looks impulsive--a little 5-wave move. We should now get a pullback followed by another move higher. We look to have started the bounce that should correct the decline from Thursday's high. A 38-62% retracement, with a preference for 50-62%, would be normal. For ES that would give us a retracement zone of 1385-1389 with a preference for 1387-1389.

Jane Fox : 10/30/2006 11:06:57 AM

Buyers are back in full force and the bears are once again left in the dust. TICKs +800.

Jane Fox : 10/30/2006 11:02:19 AM

TKS Keene. I think then your scenario would fit with my resistance at 615-616 and a good reason to not try a long here.

Keene Little : 10/30/2006 11:00:00 AM

Jane, just to take the other side of the argument on gold, here's how I would view gold as bearish right here--it has bounced back up to the top of its down-channel while at the same time hitting its 100-dma (the 200-dma is just above at 617.50. A roll back over from here looks like a very good possibility. Obviously a break above 618 would be bullish. Link

Jane Fox : 10/30/2006 10:43:33 AM

Here are the weekly charts of the markets Gold has the cloest relationships with and the reason I am getting more bullish for the longer term. Oil is the only market that keeps me wondering Link

Keene Little : 10/30/2006 10:40:27 AM

The 10-dma has been strong support at each of the previous pullbacks, especially in October where each touch of that moving average has resulted in a strong upward reaction. SPX is again testing its 10-dma this morning just under 1374 (cash). The bulls will be trying to buy this dip based on what's been working for them.

But we have a change that could/should be very telling. Notice on this daily chart how RSI has broken its support line from early September. It's about to test its uptrend line from May. For me this is a huge heads up that we have a change in character for this market. It has suddenly gotten weaker even though the 10-dma is still unbroken. Link

Jane Fox : 10/30/2006 10:39:04 AM

Take a look at the daily chart of Gold and you tell me if you think the 615-616 resistance will break. Seriously I would really like for someone to show me the bears side because it is never good to get too bullish or bearish. Link

Jane Fox : 10/30/2006 10:32:22 AM

How silly of me to think the bears had a chance. TICKs +800.

Keene Little : 10/30/2006 10:26:15 AM

If we get it, another leg down to a minor new low should do it so if you want to scalp a long look to see if we're getting some bullish divergences at a new low. The alternative pattern interpretation is that we're getting ready for a screamer to the downside but I think that's a lower odds scenario. If we just bounce back up to this morning's highs from here then it will look like a larger sideways consolidation is playing out before we get the 5th wave down but so far I'm leaning towards the "one more new low" to set up a bigger bounce.

Jeff Bailey : 10/30/2006 10:23:52 AM

Current OPEN MM Profiles that I (Jeff Bailey) have made and Watch List at this Link

Keene Little : 10/30/2006 10:16:52 AM

Doing the same analysis on ES as I just showed for NQ I get 1377 as a downside target. But support around 1378 may hold it up. A bounce to correct the decline could then take it back up into the 1385-1386 area.

Jeff Bailey : 10/30/2006 10:14:03 AM

Wild Oats (OATS) $17.16 -5.55% Link ... notably weak after RBC Capital Markets downgrade to "sector perform" from "outperform."

RBC had upgraded shares back on 07/08/2005 at $12.59

Jane Fox : 10/30/2006 10:13:33 AM

It doesn't seem to matter how bearish the internals are the markets resist and get pushed back up.

Keene Little : 10/30/2006 10:11:07 AM

NQ is a good example of what I think will play out today. The drop this morning looks like it should be the 5th wave in the move down from last Thursday's high. A Fib projection for the 5th wave (if it's to equal the 1st wave) is at 1719 so watch for support there. That's also near last Tuesday's low. A 5-wave move should then be corrected which means a bounce back up to correct the decline. Link

Jane Fox : 10/30/2006 10:09:04 AM

The ducks are sort of in line but I would like to see the VIX making new daily highs to confirm ES's new daily lows. Link

Jane Fox : 10/30/2006 10:07:30 AM

This could turn into a get short and stay short kind of day.

Keene Little : 10/30/2006 10:05:09 AM

Last Monday and Tuesday's lows around ES 1378-1379 could provide some support and a bounce that develops from there would then potentially build the right shoulder of a H&S pattern on the 60-min chart.

Jane Fox : 10/30/2006 9:57:19 AM

AD volume to new daily lows so you certainly would not be long here. AD line is -661 and falling as well. Now we just need the VIX and all is well in bear country.

Keene Little : 10/30/2006 9:56:42 AM

So much for follow through to the upside. Certainly looks like a few buying programs to get the buying going so that the Boyz could sell into it. Now let's see if the lows hold.

Jane Fox : 10/30/2006 9:56:18 AM

Oh my goodness are the bears getting control back again? I will need to see the VIX to new daily highs before I answer that question with a yes.

Jane Fox : 10/30/2006 9:55:10 AM

The only fly in this bullish Gold onitment is Oil. There is a direct relationship between Oil and Gold and has long as Oil flounders it will put downward pressure on Gold. Although you would never know it this morning. Gold is now 612.90

Jane Fox : 10/30/2006 9:53:23 AM

Gold has taken a very nice jump to 611.20. Once again, like I have been saying for weeks now, I think the resistance at 615-616 will stop Gold but I am getting more bullish on this commodity and have less and less confidence this resistance will be able to push Gold back. In other words although I think it will pause the climb I think it will break eventually.

Jeff Bailey : 10/30/2006 9:51:36 AM

Bullish swing trade stopped alert ... on the 1/4 position in the U.S. Oil Fund (USO) $53.15 -1.57% at this morning's open of $53.14.

Keene Little : 10/30/2006 9:50:37 AM

If we chop up and down within the tight range of late Friday's trading, say between ES 1381 and 1385, up until about lunch time then I'll be looking for lower after that. In the meantime support is still barely holding for the bulls, and we know what the buy programs can do from here.

Jane Fox : 10/30/2006 9:49:44 AM

So far only YM has been able to clear its overnight high. This is pretty interesting.

Jane Fox : 10/30/2006 9:49:04 AM

WE have the VIX falling and the TRIN climbing. This is not what trades want to see because it means we will have a push/pull day and the only clear winners will be the brokers.

Keene Little : 10/30/2006 9:47:38 AM

Futures open down, drop a little further after the open and then spiked higher. Pattern look familiar? The bigger test will be to see if there's follow through after this morning's gaps get filled.

Jane Fox : 10/30/2006 9:46:05 AM

How silly to think the bears would be able to retain control!!!

Jane Fox : 10/30/2006 9:45:31 AM

VIX is falling to new daily lows confirming ES's new daily highs. So much for the bears having control.

Jeff Bailey : 10/30/2006 9:43:51 AM

SPY $137.79 -0.08% ... 60-minute interval chart with updated WEEKLY Pivot retracement at this Link

Jane Fox : 10/30/2006 9:41:12 AM

AD line is a bearish -533 and AD volume is below 0 and falling. VIX is well above its PDh so the bears have the reins this morning.

Keene Little : 10/30/2006 9:34:30 AM

YM is testing its uptrend line from Oct 3rd, make that getting a bounce off its uptrend line, at 12104.

Keene Little : 10/30/2006 9:27:58 AM

We have a setup on bonds which could be a good short play here for a swing trade. As showin on this 240-min chart of ZN (10-year), the bounce last week has taken it back up to a broken uptrend line from July and is also very close to a 62% retracement of the Sept-Oct decline just shy of 108'000. Oscillators looks ready to roll back over. Link

Jeff Bailey : 10/30/2006 9:17:14 AM

Weekly/Monthly Index Pivot Matrix found at this Link

Keene Little : 10/30/2006 9:15:41 AM

ES and YM are both hanging around Friday's lows as we approach the opening bell. I'll be waiting to see what happens in the first hour or so since a consolidation around these lows would look like a small 4th wave correction in the move down from Thursday's high. That should be followed by a drop to a new low but then reverse for a bounce back up to correct the decline (and perhaps retest broken uptrend lines. The bottom line? It could be choppy and whippy so be a little cautious this morning.

Jane Fox : 10/30/2006 9:04:16 AM

Overnight Crude Oil broke its PDH and its PDL and looks to be heading lower.

Natural Gas used its PDL as resistance and it looks to be heading lower as well.

Bonds broke their PDH and are heading higher.

Gold made a bullish move overnight night and I think it is posed to head higher and test its daily resistance at 615-616. I like Gold long here and I am even starting to get more bullish on Gold longer term. Link

Jane Fox : 10/30/2006 9:01:03 AM

All markets but NQ broke their respective PDLs overnight. YM is making a triple bottom that looks like it could hold but consolidating around lows usually means lower lows. If YM breaks its overnight highs then I that is a good indication overnight lows are in however, that is a big IF. Link

Jane Fox : 10/30/2006 8:48:00 AM

Dateline WSJ - The Securities and Exchange Commission is investigating whether UBS AG was involved in improper manipulation of Treasury-securities prices. And a Credit Suisse Group bond trader has left the firm amid broad regulatory scrutiny of the $4 trillion Treasury market, people familiar with the matters say.

The developments mark potentially important steps in a government inquiry into trading in the Treasury market that has been quietly unfolding for several weeks.

The Treasury Department is especially sensitive to trading in the huge market for its bonds, notes and bills. It depends on selling these securities to raise cash to finance the budget deficit, and the Federal Reserve uses Treasury securities to conduct monetary policy. The market is generally seen as among the most efficient in the world. But if it becomes viewed as unruly or tilted against any group of investors, it could drive away investors.

Last month, in a speech to the Bond Market Association, a Treasury official expressed concern that Treasury-securities prices were possibly being manipulated. The activity involved traders' controlling the supply of certain Treasury issues, making it hard for others to obtain them, and then profiting by lending those securities out at favorable interest rates. James Clouse, deputy assistant secretary for federal finance, said he was concerned about trading in the bonds and notes themselves, in futures markets and in other corners of the market.

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