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Keene Little : 11/1/2006 12:19:41 AM

The choppy price action the past few days leaves me guessing as to what's next. The different indices also leave me with different impressions and I could easily make the argument for either direction. Therefore I'll need additional price action to provide some more clues and it could come pretty early on Wednesday. I get the impression I should look to enter a trade in the opposite direction of the morning move. I'll show what I mean in the DOW and SPX charts.

Looking at the SPX, the break of its uptrend line from September looks bearish. An early rise Wednesday morning (as follow through to Tuesday's late day bounce) to retest the broken uptrend line near 1383 (cash) could set up a nice short. The 62% retracement of the decline from last Thursday is at 1382.86. Link

But when I look at the DOW I get the opposite impression--that we should see an immediate move down on Wednesday and then look to buy it. I've got some internal Fib projections lining up near 12K (cash) and there are several reasons to expect support at that level. Link

Adding to the confusion is the daily RSI. The DOW has broken its rising bottoms in RSI since July--that's bearish and yet price makes me think bullish after an early drop. The RSI on the SPX daily chart is still holding its uptrend line from July and yet its chart looks bearish after an early rise. Just more disagreement.

So let's see how Wednesday starts out and what sets up. Once we get the early move then we'll see if the opposite play does in fact set up.

Jeff Bailey : 11/1/2006 12:16:43 AM

Dorsey/Wright's AMEX Bull Percent reverses up to "bear correction" from "bear confirmed." Current measure is 45.03% (needed 44.00% to reverse up). It would take a reading of 58% to achieve "bull conirmed" status.

Keene Little : 10/31/2006 10:27:27 PM

Wednesday's pivot tables: Link and Link

OI Technical Staff : 10/31/2006 9:59:59 PM

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Jeff Bailey : 10/31/2006 9:46:38 PM

Tobacco (update) DJ- A Washington-based federal appeals court Tuesday stayed portions of a landmark ruling against the tobacco industry while the case is on appeal, freezing for now requirements that the industry stop marketing light cigarettes.

The court order is a significant short-term victory for several tobacco companies that are fighting a racketeering lawsuit brought by the U.S. government against the industry.

Philip Morris USA, a unit of Altria Group Inc. (MO), Reynolds American Inc. (RAI), Loews Corp.'s (LTR) Lorillard Inc. and British American Tobacco PLC (BTI) have all been fighting an August ruling by a U.S. District Court judge that labeled the companies racketeers and imposed a variety of marketing restrictions on the industry.

The tobacco case is now on appeal to the Washington, D.C.-based U.S. Circuit Court of Appeals. The stay of the appeal will remain in force while the case is on appeal, the appeals court order indicated.

U.S. District Judge Gladys Kessler, who issued a 1,653-page ruling in the case, rejected a similar stay request in September.

The companies have argued the marketing restrictions and expenses of complying with the court order would substantially harm them economically.

The appeals court's review of the tobacco ruling is just getting started. Initial briefs are due in November and deliberations in the case are likely to stretch deep into 2007.

A Justice Department spokesman declined to comment on the stay motion approval. The U.S. government had opposed staying the ruling pending the appeals.

Jeff Bailey : 10/31/2006 9:44:13 PM

MO went out at $81.33 -0.45% ...

Jeff Bailey : 10/31/2006 9:43:40 PM

YM ... 12,116

Jeff Bailey : 10/31/2006 9:43:17 PM

Alert! Appeals Court Blocks Tobacco Ruling Against Cos.

DJ- A federal appeals court blocked a landmark judgment against the tobacco industry Tuesday, clearing the way for the companies to continue selling "light" and "low tar" cigarettes until their appeals can be reviewed.

The decision by the U.S. Circuit Court of Appeals for the District of Columbia Circuit also allows the companies to continue for now the advertising campaigns that a federal judge in August ruled were misleading.

Without comment, the appeals court granted the tobacco companies' request to put Judge Gladys Kessler's order on hold. The companies have argued that her far-reaching ruling could cost them millions of dollars and lead to a loss of customers.

In mid-August, Kessler ruled that the companies had violated racketeering laws and conspired for decades to mislead the public about the health hazards of smoking.

The judge ordered the companies to publish in newspapers and on their Web sites "corrective statements" on the adverse health effects and addictiveness of smoking and nicotine.

She also ordered tobacco companies to stop labeling cigarettes as "low tar," "light," "ultra light" or "mild," since such cigarettes have been found to be no safer than others because of how people smoke them.

Jeff Bailey : 10/31/2006 9:29:45 PM

October's volume at the NYSE averaged 2.52 billion shares per day, which was down 1% from September's heavy 2.55 billion share per day average.

NASDAQ was back with a 2.0 billion share per day average, which matched September's.

Jeff Bailey : 10/31/2006 9:16:26 PM

Looks like somebody might have eaten your candy and is looking a little sick about it Jim.

Not to worry. "Popeye" is on his way over with some more! Link

Jeff Bailey : 10/31/2006 9:10:13 PM

Trade Blotter of CLOSED trades for October and current OPEN trades with targets/stops at this Link

Note: Today's plunge in AGP (Illinois court decision) now has me looking to salvage what I/we can in the AGP-KG before November expiration (see today's MM news/comments)

Jim Brown : 10/31/2006 8:41:04 PM

My neighbor just stopped by as well. He could not believe I ran out of candy. Link

Jeff Bailey : 10/31/2006 8:38:12 PM

Next door neighbor's kid just stopped by Link ... Four years old and needs a shave.

Jeff Bailey : 10/31/2006 8:25:51 PM

Weekly/Monthly Index Pivot Matrix found at this Link

Jeff Bailey : 10/31/2006 5:41:07 PM

Closing Internals found at this Link

NYSE NH/NL ratios ... The 5-day NH/NL average ratio has moved just below its 10-day NH/NL average ratio, but both remain in a column of X. It would currently take readings of 90% (3-box reversals from 96%) for either to reverse into a column of O.

NASDAQ NH/NL ratios ... the 5-day NH/NL ratio did reverse into a column of O on 10/25/06, but has come back above its 10-day NH/NL average ratio. It would currently take an 84% reading for this short-term ratio to reverse back up into a column of X. The NASDAQ's 10-day NH/NL average ratio remains in a column of X and it would take a reading of 74% to reverse lower into a column of O.

Jeff Bailey : 10/31/2006 4:40:48 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/31/2006 4:36:52 PM

For the Month of October

INDU +401, or +3.4%

DIA $+3.99, or +3.4%

SPX +42.09, or +3.2%

SPY $+4.21, or +3.2%

OEX +20.54, or +3.3%

NDX +78.41, or +4.7%

QQQQ $+1.92, or +4.7%

SMH $-0.29, or -0.80%

BIX +5.34, or +1.4%

RUT +41.25, or +5.7%

10-year Yield fell 2.7 bp

The Dollar Index fell 0.65, or -0.8%

Jeff Bailey : 10/31/2006 4:05:13 PM

Sounds good after the BBQ bear ribs bulls have been eat'n in October. Indeed ... October was a "bear killer"

Keene Little : 10/31/2006 4:01:38 PM

Looks like the selling into rallies continues. Another push higher tomorrow could be a very juicy setup for bears. Chocolate covered grubs anyone?

Jim Brown : 10/31/2006 3:56:15 PM

I shorted the Russell futures just below 772 and expect this short to last several days. Today is the last day of the Mutual Fund fiscal year end and the last day for window dressing before the year end statements. I expect tomorrow to be negative and possibly last for the rest of the week. A weaker than expected ISM, under 50, could really start a landslide. A weaker than expected Jobs report on Friday could rekindle recession fears. Lots of potholes ahead and with earnings over it is time to rest.

Keene Little : 10/31/2006 3:52:47 PM

This is what we could have playing out now--the decline to today's low from Thursday might have completed the first wave down (labeled wave-(i) on the chart) and now we're into the 2nd wave bounce. A 62% retracement would be at SPX 1382.86 (cash) which would also be a retest of its broken uptrend line from September. I will be testing the short side there if the setup looks good early tomorrow morning. Link

Jeff Bailey : 10/31/2006 3:51:58 PM

What "frustrates" me the most now is that I work my pumpkin off and make no progress. Look at a YM intra-day chart for the first time in a month and rip 30 points in about 30-minutes.

Jeff Bailey : 10/31/2006 3:46:03 PM

You're not kidding ... LEH $78.00 +0.42% ;o

Keene Little : 10/31/2006 3:43:19 PM

Good trade Jeff. Nice to add one to the win column.

Jeff Bailey : 10/31/2006 3:43:01 PM

That's also a "zone" between QCharts' WEEKLY Pivot and DAILY Pivot. (12,125-12,118)

Jeff Bailey : 10/31/2006 3:42:01 PM

I wouldn't call that a "treat," but after some of the "tricks" I've been met with of late...

Jeff Bailey : 10/31/2006 3:40:56 PM

YM 12,122

Jeff Bailey : 10/31/2006 3:40:37 PM

YM exit alert 12,120

Keene Little : 10/31/2006 3:40:22 PM

I like Jeff's target for YM at 12120. That's where its broken uptrend line (through yesterday's low) and the new downtrend line intersect. It could be tough resistance on first touch. Link

Jeff Bailey : 10/31/2006 3:33:23 PM

Finger on the button alert ... YM 12,110 and 61.8% dynamic.

Jeff Bailey : 10/31/2006 3:31:27 PM

YM long raise stop alert ... to 12,095.

YM 12,102 here ...

Keene Little : 10/31/2006 3:27:10 PM

The downtrend line from last Thursday is just under ES 1384.

Keene Little : 10/31/2006 3:26:21 PM

Now let's see if this spike up can hold or instead gets sold into again.

Keene Little : 10/31/2006 3:25:57 PM

Nothing like a couple of buy prgrams to get the bears running for cover again.

Jeff Bailey : 10/31/2006 3:23:17 PM

YM long entry alert go long the YM 12,090 here, stop 12,075, target 12,120

Jeff Bailey : 10/31/2006 3:20:57 PM


DJ- Department of Energy will give $495,000 grant to a group including GM, Pacific Ethanol and United Oil to create 15 E85 ethanol stations in California, estimated to cost $2.4 million. State now has one such station for more than 300,000 cars.

Jeff Bailey : 10/31/2006 3:20:12 PM


DJ- U.S. winter natural gas outlook is positive with healthy inventories and a mild winter forecast, says American Gas Association president Parker. But a cold snap may cause a surge in heating oil prices in the Northeast.

Jeff Bailey : 10/31/2006 3:15:13 PM

03:00 Internals found at this Link

Jeff Bailey : 10/31/2006 3:03:15 PM

03:00 Market Watch found at this Link

Keene Little : 10/31/2006 3:01:15 PM

ES has consistently found support at its 30-min 100/130-pma's during the month of October. It has broken below those averages and now looks like it's finding them to be resistance. Interesting... Link

But I still think DOW 12K will be solid support. If not then we's in trouble.

Keene Little : 10/31/2006 2:58:29 PM

Threatening to break higher. Just be careful of a head fake. Two equal legs up in the bounce off the last around 2:30 (ES 1377.50) is at 1382. That could cap any afternoon bounce. It's definitely a choppy day and tough to read/trade.

Keene Little : 10/31/2006 2:55:56 PM

A break above ES 1381 would be a higher high as well as a break of today's downtrend line. It makes for a good short here at resistance but be ready to reverse long if it breaks higher.

Jeff Bailey : 10/31/2006 2:52:26 PM

AMEX Gold Bugs ($HUI.X) 318.91 +2.31% ... stick their heads to an October high. WEEKLY R1 just ahead and "key" at 320.72. This is also an overlap of 38.2% from 05/11/06 high to 06/13/06 low.

Keene Little : 10/31/2006 2:48:08 PM

The bounces continue to be to lower highs so as long as that continues you'll want to be short. But as soon as we get a higher high it could take off to the upside.

Jeff Bailey : 10/31/2006 2:38:09 PM

S&P Insurance (IUX.X) 371.90 -1.03% ... probes last Monday morning's low.

Jeff Bailey : 10/31/2006 2:36:53 PM

SPY $137.50 -0.22% ... A close here would have November MONTHLY Pivot Levels ... $130.03, $133.77, Piv= $136.38, $140.12, $142.73.

Jeff Bailey : 10/31/2006 2:34:40 PM

It MUST be Halloween.

Jeff Bailey : 10/31/2006 2:34:22 PM

U.S. Oil Fund (USO) $52.17 +0.36% ... has reversed course and back to test WEEKLY S1 ($52.20) and MONTHLY S1 correlation.

Keene Little : 10/31/2006 2:24:04 PM

Watch for resistance at today's downtrend line for ES, currently at 1381.75. While the downside target shows 1370.75, DOW 12K would be more like ES 1375. Link

Jeff Bailey : 10/31/2006 2:00:25 PM

CMGI (CMGI) $1.40 +7.69% Link ... #20 most active. It has been a long time since I've seen CMGI among the most actives. Bar chart Link

Jane Fox : 10/31/2006 1:54:31 PM

TIcks back to +1000.

Jane Fox : 10/31/2006 1:53:44 PM

... it took me a while to figure that one out.

Jane Fox : 10/31/2006 1:53:07 PM

Last week a very good friend, who is an Oracle DBA, was at an Oracle conference in San Fran when they announced that Oracle would be ringing the closing bell. She called me and said Oracle is closing the market. What???

Jeff Bailey : 10/31/2006 1:49:59 PM

BGO $4.25

NEM $45.06

RIO $25.05

Jane Fox : 10/31/2006 1:49:44 PM

I also wonder who will ring the closing bell today.

Jane Fox : 10/31/2006 1:49:04 PM

I wonder what a Triple Witch costume would look like?

Jeff Bailey : 10/31/2006 1:48:07 PM

This is looking more like a "Triple Witch" expiration. It must be Halloween.

Jane Fox : 10/31/2006 1:42:43 PM

TICKS +1000 Big rescue team.

Jane Fox : 10/31/2006 1:42:26 PM

Ok now we get the buy programs. TICKS +800 didn't think this selling would last too long.

Jeff Bailey : 10/31/2006 1:41:49 PM

Don't know as if I've ever seen a "bad tick" on options ... SFB-WF "bad tick" of $1.45 with SPY $137.50. If I thought we could close out now and at that price, I'd do it in a heart beat.

Jane Fox : 10/31/2006 1:37:34 PM

ER and NQ have not even tested their PDLs yet.

Keene Little : 10/31/2006 1:34:39 PM

Looking a little closer at the DOW, this 60-min chart shows potential support at 12K as well, which is the bottom of the down-channel. Two equal legs down from Thursday is at 12K. The top of the previous price consolidation (I show each consolidation by the thin red horizontal lines) is at 12K. I don't think there's any doubt that we'll see strong support at DOW 12K. Link

Jeff Bailey : 10/31/2006 1:31:12 PM

Biiiiig volume today in the December Nat. Gas (ng06z) $7.54 +1.67% contract.

Keene Little : 10/31/2006 1:28:33 PM

Yesterday I had mentioned the fact that RSI had broken its uptren dline from September and that even though price hadn't broken its uptrend line yet, the break by RSI was a heads up that something has changed here. Today we can see that RSI has also broken below its uptrend line from July. This indicates to me that the run up from July very likely topped out last week. Either that or we'll get another attempt at that high which should leave a bearish divergence on RSI. Link

From a short term perspective DOW 12K could be very strong support. The obvious one of course is because it's DOW 12K. There will be lots of defenders of that level. Also, as can be seen on the daily chart, that's where the uptrend line is from July (drawn through the Sept low) and it's where the top of its long term channel from 2004 is located. It could provide support for a good sized bounce. Who knows, maybe even a run back up to the high (the Fib target at 12215 did not get tagged). But RSI is warning us not to trust any rallies from here.

Jeff Bailey : 10/31/2006 1:16:21 PM

01:00 Internals found at this Link

Jeff Bailey : 10/31/2006 1:03:28 PM

01:00 Market Watch found at this Link

Keene Little : 10/31/2006 12:58:57 PM

Because the decline looks choppy, and therefore bullish, the only way for it to turn bearish is for us to see a screamer of move to the downside now. That would indicate that we're unwinding the EW count and in the middle of a couple of 3rd waves. If that happens we'll see YM drop through 12K like a hot knife through butter. If you're short that's what you'll want to see. If you're looking for a place to buy this dip, watch that 12020 area for bullish divergences, especially if we're sneaking down to that level.

Jane Fox : 10/31/2006 12:55:31 PM

The bears have a long ways to go before they can say they have the reins on the daily chart. Link

Keene Little : 10/31/2006 12:54:39 PM

From a bearish perspective I'd prefer to see the move down from last week's high as more of an impulsive decline. The fact that it's a choppy decline has me thinking it could be just a pullback before launching another rally leg. Looking at YM it has a down-channel similar to the one I showed for ES. Link

Internal Fib projections point to the 12070 area as first support (and we're getting a bit of bounce currently) and then 12022 as the next support, which is also at the bottom of the down-channel at the end of today/beginning of tomorrow. I might be tempted to try buying it down there if it's tagged.

Jeff Bailey : 10/31/2006 12:50:25 PM

Swing trade put establish stop alert ... for the SPY Nov $136 Puts (SFB-WF) at $138.36.

SPY $137.47 -0.24%

Keene Little : 10/31/2006 12:42:54 PM

The big drop in oil today is not helping the Trannies. They're now down -1.3% and dropping, and have taken out yesterday's low. But the pattern in that one since the high on October 25th looks like a choppy mess also. It looks more bull flaggish. It would take a very fast drop in the Trannies to negate the bullish pattern there.

Keene Little : 10/31/2006 12:38:56 PM

A break of yesterday's low for ES could bring in a wave of selling. Either that or we'll get a quick under-throw to suck in the bears and then reverse it on them. Think I might be a little paranoid and untrusting of this market?

Jane Fox : 10/31/2006 12:38:52 PM

Oh my goodness not a buy program but more selling. Can this be???

Jane Fox : 10/31/2006 12:33:57 PM

Don't you think a buy program should be just around the corner.

Jane Fox : 10/31/2006 12:31:57 PM

Just like clockwork ES finds support at its PDL. Notice ER and NQ have not come anywhere near their PDLs yet. This selling has been concentrated in ES and YM. Link

Jane Fox : 10/31/2006 12:28:17 PM

SAN FRANCISCO (MarketWatch) - Apple Computer Inc. shares rose slightly Tuesday after the company said it will begin selling a previously-unveiled iPod Shuffle music player on Friday, a move that revamps part of the iPod product line in time for the holiday shopping season.

Apple (AAPL) shares rose as high as $81.68. The company had unveiled the new matchbook-sized Shuffle - a 1-gigabyte capacity music player that can hold up to 240 songs -- at a company event in September. The new iPod will cost $79, down from a previous model that cost $149.

The company had previously said it would have the new Shuffle for sale in October.

The last quarter of the year is typically Apple's busiest business period, and iPod sales will go a long way toward determining the company's year-end financial results. The company sold more than 14 million iPods in the fourth quarter of 2005.

Apple has sold almost 70 million iPods since unveling the first model in October 2001.

The company has been refreshing its entire line of iPods -- adding more storage and a sharper screen to its video-playing iPod and adding more storage and different colors to its iPod Nano player.

Jane Fox : 10/31/2006 12:29:10 PM

Did you see the comment about the 132-year old Nymex members in my 11:59 post? Boy those dudes are old aren't they?

Jeff Bailey : 10/31/2006 12:21:47 PM

10-year YIELD ($TNX.X) down 5.9 bp at 4.614% ... probes WEEKLY S1 here.

Jane Fox : 10/31/2006 12:19:40 PM

These ducks are all quacking in a straight line. Link

Jane Fox : 10/31/2006 12:17:54 PM

VIx has not made a new daily high and is confirming the new daily lows in ES and the AD volume. The bears have the reins back. Interesting.

Jeff Bailey : 10/31/2006 12:17:32 PM

Exxon/Mobil (XOM) $70.12 -1.01% ... energy prices getting "crushed" again today.

Jane Fox : 10/31/2006 11:59:15 AM

NEW YORK (MarketWatch) -- The New York Mercantile Exchange said Tuesday that it expects to issue 6 million shares, not including an additional 900,000 shares available as an overallotment to brokers.

The commodities exchange is set to go public at as much as $52 a share and plans to raise $358.8 million, according to a filing made with the Securities and Exchange Commission. Nymex said it would trade under the symbol "NMX."

Nymex said it is offering 4.89 million shares, while other stockholders are offering 1.11 million shares; the company said it would have 86.5 million total shares of outstanding common stock after the offering.

Earlier this year the 132-year-old Nymex members approved plans for the initial public offering. J.P. Morgan Chase & Co. (JPM) and Merrill Lynch & Co. (MER) are joint book runners for the IPO.

Jeff Bailey : 10/31/2006 11:57:17 AM

Bullish swing trade raise stop alert ... on Bema Gold (BGO) $4.29 +0.23% ... to $4.23.

Jane Fox : 10/31/2006 11:56:54 AM

In order for ES to make new daily lows that will stick you need to see the VIX make new daily highs. Link

Keene Little : 10/31/2006 11:56:25 AM

It's beginning to look like we're shifting into a down trend. The break of the uptrend from September would be confirmed with a break below ES 1378.75, yesterday's low. If that happens I would then look to the bottom of a potential new parallel down-channel, currently near 1374. But until that happens, this sideways chop could just as easily be preparation for a run higher again. Link

Jane Fox : 10/31/2006 11:54:47 AM

AD volume and AD line are now making new daily lows so the bears are gaining control back.

Keene Little : 10/31/2006 11:52:09 AM

The rallies to lower highs that then get sold into is more evidence of distribution and will soon start to worry the bulls. When they begin to recognize what's happening then the selling should take hold. I don't know if that's just around the corner or after pressing higher first but the evidence is there that it's coming. It's still a choppy mess right now but a little more selling could clear that up in a hurry.

Jane Fox : 10/31/2006 11:47:18 AM

I usually show a chart of zg or yg when talking about gold but today I decided to chart the big contract GC. Isn't that a classic support turned resistance. Goldbugs are waiting for it to break that resistance. Link

Keene Little : 10/31/2006 11:42:45 AM

Looking at the daily chart of the 30-year yield (TYX) shows it has pulled back to its uptrend line from June 2005, currently at 4.73%. Based on the impulsive 5-wave rally off the September low I had expected a pullback (granted it's a rather large pullback now) to be followed by new highs. This is a minority opinion when it comes to expectations for the 30-year yield and is based strictly on this pattern. Link

Daily oscillators are nearing or are in oversold so the uptrend line just might hold. If you like to trade the bonds, it could be worth a short play on ZN (10-year looks similar here) or ZB (since a bounce in yields means a drop in bonds). Assuming we get the bounce in yields we'll then get to see if the downtrend line from this past June will hold it back.

Jeff Bailey : 10/31/2006 11:42:41 AM

Swing trade salvage call alert ... Let's try $0.15 on the AGP-KG.

Jeff Bailey : 10/31/2006 11:41:20 AM

AGP $30.38 -14.20% ... offers move down on the AGP-KG at $0.20 and find 10 contracts traded (not mine).

Jeff Bailey : 10/31/2006 11:39:18 AM

Broker/Dealers (XBD.X) 236.44 +0.42% ... challenge Thursday's highs. WEEKLY R1 237.29.

LEH $77.90 +0.29% ... stuck its head above its WEEKLY R1 $78.12 earlier this morning, then came back to juuuust about trade its WEEKLY Pivot $77.26.

Jane Fox : 10/31/2006 11:39:10 AM

Tbonds are really taking off today.

Jane Fox : 10/31/2006 11:36:57 AM

And there goes Crude to new yearly lows.

Jane Fox : 10/31/2006 11:23:02 AM

CRude is hugging its daily lows which suggests to me it is heading lower. Seeing $2.54/gal gas has been really nice lately and it looks like we may see it lower yet.

Jane Fox : 10/31/2006 11:20:47 AM

HOUSTON (MarketWatch) -- Marathon Oil reported Tuesday third-quarter income increased by more than 50%, as the company capitalized on buoyant commodity prices by pumping and selling more oil.

The Houston-based oil and gas company (MRO) said quarterly earnings of $1.62 billion, or $4.52 a share, up from a year-ago profit of $770 million, or $2.09 a share.

On an adjusted basis to exclude special items, the company would have earned $1.54 billion, or $4.30 a share, in the three months ended Sept. 30, up from a year-ago equivalent profit of $797 million, or $2.16 a share.

The average estimate of analysts polled by Thomson First Call was for a profit of $3.63 per share in the September period.

Marathon generated revenue of $16.63 billion, down slightly from $17.15 billion in last year's quarter

Jeff Bailey : 10/31/2006 11:18:53 AM

11:00 Internals found at this Link

Jane Fox : 10/31/2006 11:15:24 AM

WASHINGTON (MarketWatch) -- U.S. consumer confidence dipped unexpectedly in October on growing pessimism about the job market and the economy, the Conference Board said Tuesday.

The private research group said its consumer confidence index declined marginally to 105.4 in October from a revised 105.9 in September. Economists were expecting an increase to about 107.9 from the previously reported 104.5.

The surprising dip fed a modest rally in the bond market. The yield on the benchmark 10-year note fell to 4.63%. Stocks dipped into negative territory for the session.

The market was also shaken by a surprisingly soft reading in the Chicago purchasing managers' index for October. It fell to 53.5% from 62.1%, the lowest level since August 2005.

The consumer confidence index suggests "a moderate pace of economic growth and more of the same for the first few months of 2007, said Lynn Franco, head of the Conference Board's consumer research center.

Keene Little : 10/31/2006 11:13:11 AM

The rally in bonds today is a little baffling in that I would think this morning's report on wage inflation would have sparked fears about the Fed's need to stay vigilant against inflation. Employment costs rose 1% in the 3rd quarter for an annual 4% rate, clearly higher than what the Fed wants to see. Their concern has been higher resource utilization sparking wage inflation, something they're determined to fight.

But the slowing economy as evidenced by this morning's Chicago PMI (it dropped lower than expectations to 54.1% from 62.1% in September), obviously has many thinking the slowing economy will take precedence over inflation concerns and keep the Fed at least on the sidelines. Sounds a bit like stagflation to me. But I think the Fed has made it abundantly clear that inflation is their primary concern, not a slowing economy. But maybe I'm missing something.

Jane Fox : 10/31/2006 11:12:48 AM

At least we are nicely in sync today. Link

Jeff Bailey : 10/31/2006 11:03:37 AM

11:00 Market Watch at this Link

Keene Little : 10/31/2006 10:58:59 AM

This is turning into a choppy mess. Flip a coin here. The downtrend for ES at 1385 is holding for the moment but price action is flipping around both sides of trend lines that I'm drawing and that makes me stand aside and wait for clarity.

Another push back up that achieves two equal legs up from yesterday's low would now be at ES 1388.50, just under its 62% retracement at 1389. If we get a relatively sharp spike up to that level it would look like the completion of wave-C and set up a potentially good short play.

Jeff Bailey : 10/31/2006 10:49:43 AM

Current OPEN MM Profiles found at this Link ... Currently looking to try and salvage what we can in the AGP-KG $0.05 x $0.40

Jane Fox : 10/31/2006 10:43:11 AM

Once again the bears had the reins but were not able to keep control of them. Link

Keene Little : 10/31/2006 10:42:58 AM

Ignoring this morning's spike up, the downtrend line from last Thursday is at ES 1385 so we'll see if that continues to offer resistance now.

Jane Fox : 10/31/2006 10:41:10 AM

Rescue team as arrived - TICKS +800

Jeff Bailey : 10/31/2006 10:38:35 AM

SPY $137.78 -0.02% ... 60-minute interval chart with QCharts' WEEKLY Pivot Levels turned on and pivot pattern notes Link

Jeff Bailey : 10/31/2006 10:26:47 AM

Last time we saw a double dip below a WEEKLY Pivot for the SPY was the day of 09/19, then 09/22. Then on Monday, 09/25 the SPY started out under its WEEKLY Pivot of $131.73 and it has been a "crazy train" since.

Jeff Bailey : 10/31/2006 10:24:10 AM

SPY $137.66 -0.10% ... it has been several weeks since I've seen a "double dip" below a weekly pivot. Perhaps a rest?

Keene Little : 10/31/2006 10:21:39 AM

The same Fib projection for YM is 12078 which would also be a potential double-bottom with yesterday's low at 12081.

Keene Little : 10/31/2006 10:20:11 AM

Correction to my previous post. Instead of two equal legs down from yesterday's high I'm looking for where the 2nd leg down is equal to 162% of the 1st leg down. That's at ES 1379.50.

Keene Little : 10/31/2006 10:14:28 AM

In line with my thinking that we could be seeing a larger upward correction from yesterday, if the current pullback will lead to yet another run up, watch the level where we'd have two equal legs down from yesterday's high. That would be at ES 1379.50 which would look like a double-bottom with yesterday's low. If yesterday's low (1378.75) breaks and ES holds below it then we'd have a confirmed break down from its uptrend from the end of September. That would be a significant break.

Keene Little : 10/31/2006 10:09:15 AM

With this morning's spike up and now sharp pullback the pattern from yesterday is not very clear. It looks like a lot of chop to the upside which gives the whole thing the look of a corrective bounce. My concern for scalp short trades, which I think is a wise way to trade until we get some confirmation that strong support is breaking, is that the buying spikes will keep knocking you out.

Once we have a better idea that a new downtrend is in place then you'll be able to open up your stops and try to avoid the whipsaws and stop runs that I fully expect to see. Until then we could easily see this turn right back around and head for another high (in order to create some buying so the Boyz can sell into it again).

Jeff Bailey : 10/31/2006 10:03:22 AM

10:00 Market Watch found at this Link

Keene Little : 10/31/2006 9:59:30 AM

NQ is valiantly attempting to hold onto its recaptured broken uptrend line from yesterday. It's holding on top of it at 1743.50.

Jane Fox : 10/31/2006 9:55:38 AM

This is turning into a get short and stay short kind of day. I wonder if the bears are strong enough to hold on to the reins.

Jane Fox : 10/31/2006 9:53:49 AM

VIX and AD volume are in sync (going in opposite directions) and are bearish. Link

Jeff Bailey : 10/31/2006 9:51:31 AM

Bullish swing trade call place order to sell alert ... Let's place an order to sell the two (2) AGP Nov $35 Calls (AGP-KG) for $0.40.

Jeff Bailey : 10/31/2006 9:49:29 AM

Amerigroup (AGP) update alert $32.20 -9.06% ... Today's news does not bode well for the AGP Nov. $35 Calls (AGP-KG) $0.15 x $0.50 in my opinion, as I wouldn't think any appeal could be heard, then ruled on, prior to November expiration.

Keene Little : 10/31/2006 9:48:39 AM

ES spiked above its downtrend line from last Thursday but is currently back just below it at 1385.50. If it can get back above it there's now a parallel up-channel (bear flag?) from yesterday, the top of which is near 1388.50. This is another reason why resistance could be found in the 1389-1390 area. Any break below yesterday's late-day 1382.25 low would suggest more bearish things. Link

Keene Little : 10/31/2006 9:42:38 AM

Selling into rallies continues. It doesn't mean we can't continue to chop our way higher but you can see what's being done now--rallies are being used as opportunities to unload inventory to the masses who are convinced this bull market will continue.

Jeff Bailey : 10/31/2006 9:36:43 AM

Amerigroup (AGP) $32.19 -9.09% ... To Appeal Illinois Decision Link

Jane Fox : 10/31/2006 9:36:37 AM

AD line +669 and AD volume above 0 and climbing. THe bulls have the ball this morning. Gee what a surprise.

Keene Little : 10/31/2006 9:34:31 AM

If yesterday's 3-wave bounce was just wave-A of a larger A-B-C bounce (with wave-B being the afternoon pullback, then wave-C up could be this morning's spike up. Equality between the two legs up is at ES 1390.25. A 62% retracement of the decline from last Thursday is at 1389 so I'd watch for potential resistance in the 1389-1390 area.

Keene Little : 10/31/2006 9:31:53 AM

Yesterday's broken uptrend line for ES is at 1286.25 which is its pre-market high. NQ is not being held back by its trend line though.

Keene Little : 10/31/2006 9:25:13 AM

The futures are up this morning so we'll get to see if we have a gap n crap setup or if this will continue to rally up. Any push higher than yesterday's high will tell me we could see the market continue to chop its way higher in its channel/wedge. NQ looks the most bullish pre-market but notice yesterday's broken uptrend line currently at 1742.50 which is where futures are currently hitting. That's why I'm wondering if we'll get a gap n crap. Link

Jane Fox : 10/31/2006 9:02:25 AM

Dateline CNN - China's Foreign Ministry says North Korea has agreed to rejoin six-nation nuclear disarmament talks, wire services report.

Jane Fox : 10/31/2006 9:00:55 AM

Crude broke its PDL overnight and also made a new yearly low. The bearish scenario I was looking at a couple of days ago has started to play out now.

Natural Gas also broke its PDL overnight and an important support from the daily charts although the daily charts remain bullish.

I have talked about Gold's very clear resistance at around 615-616 for weeks now and on Friday it hit 613.50 and was stopped. This looks like a textbook resistance but you have to take into consideration the other markets that have an influence over Gold like the US$ and Oil.

The healthiest market overnight was TBonds which broke its PDH. Link

Jane Fox : 10/31/2006 8:51:31 AM

Good morning. Equity markets were relatively bullish overnight with a series of higher highs and lows. ER was able to probe its PDH but did not have enough gun powder in its barrel to break it. Link

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