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Jeff Bailey : 11/3/2006 10:48:10 PM

Closing Internals found at this Link

Jeff Bailey : 11/3/2006 10:30:12 PM

Closing U.S. Market Watch found at this Link

OI Technical Staff : 11/3/2006 9:59:59 PM

The Market Monitor has been archived.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

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jim Brown : 11/3/2006 8:27:42 PM

Reader Challenge Update - I am starting to see a trend here. If you remember the prior winners had been subscribers since 1998/2000. I researched this week's winners and was not surprised to find the same history. Being a long time subscriber is educational and produces financial rewards in the market from that education.

1st Place Wendell Lowe subscribed 5/99
2nd Place David Brown subscribed 3/99
3rd Place Gary Re subscribed 8/98

Jim Brown : 11/3/2006 7:43:49 PM

Reader Challenge Update - These are the closing standings for the challenge this week. There were very few winners with the falling market benefiting the index shorts and killing the equity longs. The winners are:

1st Wendell Lowe +66.6% gain shorting QQQQ Nov-$43 calls
2nd David Brown +49.7% gain shorting Nov-SPX 1350 calls
3rd Gary Re +42% gain on SPX 1350/1390 Put spread.

I also want to congratulate everyone who submitted a play. It takes extra effort to do the research and then put your ego on the line in the monitor. Even if it was anonymous to the other readers it was still a challenge to step up and be measured. You also saw the problem with having to setup a play in advance and then be at the mercy of the market before the actual start of the play and not be able to exit for a week once it starts going bad. Contestants were locked into a week's market action whether they wanted to be or not. Fortunately in real life we can dump a loser quickly and not be locked into that week long loss.

There will not be a Reader Challenge next week because I will be out of town. When I return I think I will rerun this challenge again. I got a lot of email and answered a lot of questions from readers who were not contestants. That is what it is all about. Learning those techniques that work and then profiting from putting them into practice. Despite the large percentage of paper losses it was a learning experience.

Again, congratulations not only to the winners but to everyone who participated!

Long Google Puts from reader JK
NOV-$500 Put GOP-WO @ $29.10 Now $29.00, -$0.10, -.0%

Long SanDisk Calls from reader FP
JAN-$50 Call SWF-AJ @ $3.50 Now $2.65, -$0.85, -24%

Long Newmont Puts from reader GG
JAN-$45 Put NEM-MI @ $2.80 Now $1.75, -$1.05, -35%

Short SPX Call from reader DB
NOV-1350 Call SXY-KJ @ $33.80 Now $17.00, +16.80, +49.7%

SPX Put Spread from reader GR
Long SPX NOV 1390 Put SXY-WR @ $18.20 Now $25.70, +$7.50
Short SPX NOV 1350 Put SXY-WJ @ $3.50 Now $4.80, -$1.30
Net gain +$6.20, +42%

Long Ford calls from reader WR
NOV $9.00 Call F-KL 2 $.15 Now $0.05, -$0.10, -66%

Long OEX Calls from reader AW
NOV 660 Call OEY-KL @ $.50 Now $0.00, -$0.50, -100%

Long BOOM Call from reader WO
NOV $35 Call QCB-KG @ $.95 Now $0.10, -$0.85, -89%

Short QQQQ Calls from reader WL
NOV $43 Call QQQ-KQ @ $.45 Now $0.15, +$0.30, +66.6%

Long Sysco Calls from reader KK
NOV $35 Call SYY-KG @ $.55 Now $0.45, -$0.10, -18%

Long Amazon Puts from reader JS
NOV $40 Put ZQN-WH @ $2.25 Now $2.50, +$0.25, +11%

Long PCU Puts from reader SB
NOV $50 Put PCU-WJ @ $1.45 Now $0.60, -0.85, -58%

Long CME Puts from reader DW
NOV $480 Put CNM-WP @ $3.90 Now $2.95, -$0.95, -24%

Long TIE Calls from reader JB
NOV $30 Call TIE-KF @ $3.30 Now $0.85, -$2.45, -74%

Long US Steel Put from reader NM
DEC $55 Put X-XK @ $ $.60 Now $0.40, -$0.20, -33%

Keene Little : 11/3/2006 4:19:51 PM

We'll see how it goes on Monday. Hope everyone has a great weekend.

Keene Little : 11/3/2006 4:06:13 PM

Both SPX and the DOW closed marginally below their 20-dma's while holding onto their uptrend lines. A rally on Monday is a must otherwise we'll start getting some confirming sell signals.

Jeff Bailey : 11/3/2006 4:05:00 PM

OIX.X 621.66 +1.62% ... above its WEEKLY Pivot (617.44).

USO $52.72 +2.07% ... underneath its WEEKLY Pivot, just above WEEKLY S1 ($52.20)

GLD $62.36 +0.71% ... above its WEEKLY R2 !

SIL $16.27 -1.39% above its WEEKLY R2 !

CBR index went out right on its WEEKLY Pivot.

Keene Little : 11/3/2006 4:02:53 PM

Not a very exciting finish for the bulls. NQ's bounce looks a little stronger. So far the bounce today looks very corrective and appears to be more like a bear flag and that suggests lower on Monday. But I've seen too many of these bear flag patterns fail which causes a spike up as traders get caught leaning the wrong way. We'll just have to wait to see if the same thing happens on Monday or not.

Jeff Bailey : 11/3/2006 4:01:11 PM

DDX.X 158.06 +0.98% ... above its WEEKLY Pivot 154.62 after kiss on Monday morning.

Jeff Bailey : 11/3/2006 3:58:55 PM

GSO.X 182.00 -0.02% ... right on WEEKLY Pivot

Jeff Bailey : 11/3/2006 3:57:54 PM

BTK.X 755.52 (unch) ... looks to close above its WEEKLY Pivot.

Keene Little : 11/3/2006 3:45:07 PM

Depending on how this plays out, and how long it takes, I could see SPX bouncing its way back up for another test of its uptrend line from Sept 11th early next week. A retracement of 50-62% would give us a resistance zone of SPX 1375-1379. The bulls need to keep this afternoon's bounce alive though. It looks like they're having a tough time and the 30-min chart looks ready to roll back over. Link

If the wave count is correct then this bounce into early next week should then lead to a much stronger decline that takes out all uptrend lines. The more bullish possibility is that we'll rally on up to a new high or at least a test of the high. The DOW gives me the impression that could happen, primarily because of its very choppy pullback from last week's high. One leg at a time here while trying to figure this out.

Jeff Bailey : 11/3/2006 3:33:55 PM

Red Hat (RHAT) $16.75 +4.03% ... some chatter today that company may be looking for partner. IBM as possible buyer.

Jeff Bailey : 11/3/2006 3:15:03 PM

03:00 Internals found at this Link

Jane Fox : 11/3/2006 3:07:30 PM

McMillan's Weekly Commentary. - The broad market acts tired. After basically advancing in a straight-line fashion for weeks, the market is taking a rest. There hasn't been any serious damage, so the intermediate-term bullish case is still intact. But the overbought conditions need to be worked off -- and that's what's happening.

$SPX has pulled back, but its chart is still bullish. There are several factors offering support in the general area of 1355-1370. First is the 1360-1370 range that was one of the stairsteps to higher prices in mid-October. Then there is the 20-day moving average of $SPX, which is near 1365. Finally, the bottom of the channel that has defined this bull market since the July bottom is near 1355. As long as $SPX is within that channel, the bullish case is intact.

The equity-only put-call ratios have not even blinked on this small correction so far. They contain to drop, even more rapidly than before, and that is bullish. The weighted ratio has now dropped into the lower third of its chart, while the standard ratio is about halfway down. That means they still have a lot more room to decline. They would only relinquish their bullishness if they rolled over and began to rise, and that doesn't seem even remotely likely at the current time.

Market breadth is the only area where we have confirmed sell signals. It remains to be seen whether another few days in which declines dominate advances might produce an oversold condition. That would be especially positive if the equity-only put-call ratios remain bullish as well.

Finally, the volatility indices ($VIX and $VXO) remain overbought. They have not risen much during this small market decline. That is, there isn't any panic in this market, nor much fear either. If $VIX rises above 12, that would be a minor sell signal, and if it closes above 14 that would be an outright sell signal.

Separately, it doesn't really seem that the market has spent much time discounting the upcoming election (Tuesday) -- unless you think the October rally was doing that. The only logic for that would be that a Democratic house and a Republican Senate would be gridlocked, and that would be good for Wall Street. However, there are other scenarios as well, and a nasty surprise could cause the market to react badly.

In summary, we would only turn bearish if $SPX violated the lower end of its trend on a closing basis, and that were accompanied by $VIX rising above 14. Otherwise, there may be a bit more to go in this short- term correction, but the intermediate-term bullish outlook is still intact.

Keene Little : 11/3/2006 3:02:06 PM

The bulls are holding on but they by no means have a lock on this market. The bounce off today's low is just a 3-wave bounce so far that could easily be classified as just a bear flag. It could also be simply a larger wave-A bounce and now we'll get a wave-B pullback (could go deep) before getting another sharp rally leg out of this. It's a tough call right here and it's why I'm leaving my stop at a new daily low. Link

Jeff Bailey : 11/3/2006 3:01:55 PM

03:00 Market Watch found at this Link

Keene Little : 11/3/2006 2:54:39 PM

The bulls are holding on here. Just another buying opportunity is the way they see it. A low VIX says there's no fear of a break down and they're probably right, at least for now. If we've completed wave-1 down from last week's high and get a wave-2 bounce into next week, it'll be the 3rd wave down that then breaks the big uptrend line. At that time the warning lights will start flashing on trading screens and VIX will probably start to head skyward. At least that's the way it currently looks like it'll play out from here.

Jeff Bailey : 11/3/2006 2:44:39 PM

Swing trade put lower stop alert on the two (2) SPY Nov. $136 Puts (SFB-WF) to $137.00 in the underlying SPY.

SPY $136.67 -0.08% ... SFB-WF are currently $0.65 x $0.70.

VIX 11.19 -2.01% ...

Keene Little : 11/3/2006 2:32:04 PM

I'll be back in about 10-15 minutes. I've got my ES stop at 1365 where I intend to leave it for over the weekend if I'm still in this play at the end of the day. If price is too close for comfort as we approach the end of the day I'll probably just go home flat.

Keene Little : 11/3/2006 2:28:04 PM

Two equal legs up for NQ is at 1715.25. I expect a larger bounce into next week but it will be corrective which means a bunch of 3-wave moves can be expected. That means a 3-wave bounce off today's low (with the upside targets I just gave) could be followed by a steep pullback and then another sharp rally leg. It's why I suggested if you want to avoid potential whipsaws your stop needs to stay at a new daily low.

Keene Little : 11/3/2006 2:25:23 PM

New bounce highs. OK, if you want to aggressively chase your long higher, raise your stop to just below that last pullback. For ES the stop would now be at 1366.50 (two ticks to a new low) and for YM it would be at 11993 (3 ticks lower). As for upside resistance, in case this turns out to be just a 3-wave bounce off the bottom before turning lower, two equal legs up is at ES 1371.25 and YM 12026 (already there).

Keene Little : 11/3/2006 2:21:41 PM

We've got a 3-wave corrective pullback so we should either see new bounce highs shortly or else we're going to chop lower. In either case it should be bullish, either now or from a little lower.

Keene Little : 11/3/2006 2:16:51 PM

We have a bit of a mixed picture today--small caps are flat on the day while banks and brokers are seeing some pretty good selling. My sector list shows energy doing well today along with the gold stocks. Down at the bottom are retail, healthcare and brokers.

Keene Little : 11/3/2006 2:07:56 PM

The Halloween goblins may be catching up with us. Some have lost their IB Globex pricing (I got the same message but so far it has been giving me prices fine). Jim just emailed and said he's having trouble posting comments. If it suddenly gets quiet around here you'll know we're all having some technical difficulties.

Keene Little : 11/3/2006 1:43:48 PM

As long as the pullback that's in progress now stays above today's lows, and it then rallies to a new high for the bounce, that's when stops can safely be raised to just below the pullback low. But to really be safe from whipsaws you need to keep your stop at a new daily low until the bounce gets much further along.

Keene Little : 11/3/2006 1:38:40 PM

Jane, that bullish divergence can be seen on the 30-min chart as well. Pretty classic bullish divergence on the 5th wave. Link

Jane Fox : 11/3/2006 1:35:22 PM

Look at how MACD was warning you a bottom was in. Link

Keene Little : 11/3/2006 1:31:30 PM

The risk for long plays right here is that the sudden jump off the low could be the leg that is completing the sideways consolidation since the low before lunch (as wave-c in an expanded flat a-b-c correction). The Fib projection for that leg up is at ES 1369.50 which is basically where this stopped.

If that's the case we'll immediately head for new lows from here. Therefore a stop just below today's low is the right place. If that happens I'll watch to see what develops since a break below the uptrend lines could pick up some speed.

Jane Fox : 11/3/2006 1:30:55 PM

* NYSE volume 831.4M
* NYSE has 1,273 advancers
* NYSE has 1,884 decliners
* NYSE has 155 issues unchanged
* NYSE has 97 issues setting 52-week highs
* NYSE has 19 issues setting 52-week lows
* Nasdaq volume 1.08B
* Nasdaq has 1,381 gainers
* Nasdaq has 1,510 losers
* Nasdaq has 144 issues unchanged
* Nasdaq has 67 issues setting 52-week highs
* Nasdaq has 49 issues setting 52-week lows

Jeff Bailey : 11/3/2006 1:30:47 PM

01:19 Internals found at this Link

Jane Fox : 11/3/2006 1:26:26 PM

Now the rescue team has arrived TICK +800

Keene Little : 11/3/2006 1:25:44 PM

That's better. The techs have really launched out of this. Stop now raised on ES short to 1365.

Jim Brown : 11/3/2006 1:22:50 PM

Globex data is offline at IB

Keene Little : 11/3/2006 1:22:11 PM

I'm waiting for ES to get back above 1369 at which time I'll raise my stop on my long to 1365, two ticks to a new low.

Jeff Bailey : 11/3/2006 1:21:04 PM

01:19 Market Watch found at this Link

Tab Gilles : 11/3/2006 1:22:45 PM

Altria (MO) 90 minute chart of MO shows a Bullish Wedge developing. Looking for a reversal at $80.50, watch for a breakout of wedge. The January $80 Call/Leap (MOAP) is a way to play this move.Currently trading at Bid $3.20/Ask $3.40. Link

Jeff Bailey : 11/3/2006 1:06:20 PM

Need to shut down ... my screen capture software isn't working. Be back in about 5-10 minute interval.

Keene Little : 11/3/2006 1:03:26 PM

I'm now long at ES 1365.50 (the order's been sitting there all day and obviously I was in front of the queue) with a stop at 1363.50. If stopped out I'll watch to see if we get a spike down and quick reversal.

Jeff Bailey : 11/3/2006 1:02:46 PM

SPY $136.25 -0.49% ... that $0.25 box chart will now change and erase those X's

Jeff Bailey : 11/3/2006 1:02:05 PM

S&P Banks Index (BIX.X) 392.81 -0.29% ... slips below yesterday's low. Sets up for test of WEEKLY S2.

Keene Little : 11/3/2006 12:59:47 PM

In the sideways consolidation that we've been in since just before lunch, if we get a small bounce back up to a lower high we should then head for new lows. That's when I'd be looking for an end to today's decline. Chasing it down with a tight stop would be a good tactic otherwise ES 1365 still looks good for support (maybe a tad lower--1364.25 is so far a projection based on the internal wave structure).

Jeff Bailey : 11/3/2006 12:53:34 PM

VIX 11.36 -0.52% ... did get a "pop" after I asked where the volatility was? Session high has 11.42 and MONTHLY Pivot still not tested. Still hints to me that there's some overly NAKED call sellers trying to get squared up.

Or, some overly short cash/futures traders.

Jeff Bailey : 11/3/2006 12:47:56 PM

BGO with a $0.05 box Link

Jeff Bailey : 11/3/2006 12:47:24 PM

CDE with a $0.05 box Link

Jeff Bailey : 11/3/2006 12:44:16 PM

SPY conventional $1 box ($20 to $100) and $2 box above $100 Link

Change box size to $1 and introduce more "noise" above $100 Link

Still not getting an "O", so how about $0.50 Link

Then a $0.25 Link (need a trade at $136.25 to even see a "sell signal")

How about a $0.10 Link

Keene Little : 11/3/2006 12:42:40 PM

It's hard to trust any lunch time moves but so far it looks like a consolidation near the lows should lead to another drop lower. This type of consolidation could be telling us only one more low and then get ready to rumble to the upside. OK, that's what I'm hoping to see anyway.

Jeff Bailey : 11/3/2006 12:28:25 PM

US Oil Fund (USO) $0.50-box to tie with futures (also $0.50 boxes) Link ...

You can change box sizes by "scaling" to User Defined, then change your "Box Size" to a different value. The smaller the value, the more noise, you introduce. Very similar to looking at a bar chart on monthly, then weekly, then daily, then 60-minute, then 30-minute, then 15-minute, then 5-minute, then 2-minute.

Jeff Bailey : 11/3/2006 12:24:54 PM

XOM $72.31 +1.55% Link ...

Keene Little : 11/3/2006 12:24:32 PM

Bullish divergences are showing up in the short term charts. I've got an order in to reverse long on ES at 1365.50 (with a stop on the long at 1363.50). If I get stopped out on the long play I'll be watching closely for a stop run move that gets reversed quickly and jump right back in.

My stop on my ES short is at 1369.50 but I'm not going to go long there as I'll want to see what develops there first (we could be in a larger sideways consolidation before heading lower). I'm in profit protection mode now on my short.

Jeff Bailey : 11/3/2006 12:24:16 PM

SUN $67.43 +4.52% Link ...

Jeff Bailey : 11/3/2006 12:23:38 PM

VLO $51.91 +2.77% Link ...

Jeff Bailey : 11/3/2006 12:23:05 PM

FTO $30.79 +3.21% Link ...

Jeff Bailey : 11/3/2006 12:21:42 PM

RHAT $15.91 -1.18% Link

Jeff Bailey : 11/3/2006 12:20:47 PM

CDE $4.90 +1.03% Link ...

Jane Fox : 11/3/2006 12:20:26 PM

NEW YORK (MarketWatch) -- Orbcomm Inc., the third satellite firm this week to wade into the market for initial public offerings, fell below its discounted price Friday.

Chemical maker Innophos Holdings Inc. also priced below its range in the day's second IPO amid an overall upswing in the market on favorable jobs data.

Orbcomm (ORBC)) priced at $11 a share, raising $101.5 million, in its IPO. The stock opened at $11 and fell to $10.55 in the open market.

The company offered 9.23 million shares below its $12-to-$14 range and cut the size of the deal from 11.15 million shares.

Orbcomm is going public after Globalstar (GSAT) and RRSat (RRST) this week.

Innophos (IPHS)) priced 8.7 million shares at $12 for its IPO on Friday. The stock opened at $12.06 and edged down to $12.05.

The maker of phosphates for the food industry and other applications priced below its $14-to-$16 range and raised $104.4 million via underwriters Credit Suisse Securities, Bear Stearns, UBS Securities and CIBC World Markets.

Entities managed by private-equity firm Bain Capital own the majority of the company.

The IPO comes after Bain bought the North American specialty phosphates business from Rhodia in 2004.

Jeff Bailey : 11/3/2006 12:20:03 PM

AGP $29.76 +0.57% Link ...

Jeff Bailey : 11/3/2006 12:19:00 PM

OATS $15.95 -5.84% Link ... Stopped on 1/2 position long this morning at raised stop of $16.00.

WFMI $46.05 -23.38% Link ...

Jeff Bailey : 11/3/2006 12:16:59 PM

SPY $136.38 -0.28% Link ...

Jane Fox : 11/3/2006 12:16:31 PM

Another TICK -800

Jeff Bailey : 11/3/2006 12:16:18 PM

UPS $73.52 -0.64% Link ...

Jeff Bailey : 11/3/2006 12:15:35 PM

Goldman Sachs (GS) $186.29 -0.58% Link ...

Jeff Bailey : 11/3/2006 12:14:54 PM

Lehman (LEH) $74.66 -1.76% Link ...

Jeff Bailey : 11/3/2006 12:12:18 PM

YM 12,006

Jeff Bailey : 11/3/2006 12:13:53 PM

Dow Industrials (INDU) 11,980 -0.32% Link

Jeff Bailey : 11/3/2006 12:13:26 PM

Berkshire Hathaway (BRK.A) 105,000 +0.85% Link ... hanging tough.

Keene Little : 11/3/2006 12:08:05 PM

If ES manages to drop another 3 points from here (1368.50 as I type), and YM drops 30, that would get YM down to the trend line along its lows since last week's high, at about 11976. That's another reason to look for a bounce there. The declining pattern for YM looks very choppy and is one of the indices giving me the impression this one could rally back up to a new high. Certainly the potential is to see this rally back to its downtrend line near 12100 currently. Link

Jeff Bailey : 11/3/2006 12:04:53 PM

SPY $136.45 -0.24% ... 2-chart montage. Top is 60-minute interval with my WEEKLY/MONTHLY and bottome is a 30-minute interval with the little h/s top retracement discussed yesterday.

see the near-term $136.15 correlation between the two tools?

Montage Link

Keene Little : 11/3/2006 11:59:56 AM

If ES bounces above 1370 now I think we might have seen the low. Otherwise 1365-1366 still looks good to finish the decline.

Keene Little : 11/3/2006 11:49:45 AM

Let's see if the wave count works out for this morning's drop. If we get another small bounce now and then another low that could do it for the decline. We're getting very close to those uptrend lines now (DOW is testing its line here).

Will we see a head fake break below them? Could happen, especially if you think about how well that would work to pull in lots of shorts (and stop out longs) so that a couple of buy programs would then be very effective in getting a sharp v-bottom reversal. Just a thought, not that we've seen that kind of manipulation in the past (wink).

Jane Fox : 11/3/2006 11:49:18 AM

DOW's low so far today has been 11969.

Jane Fox : 11/3/2006 11:47:51 AM

Internals are bearish. Link

Jane Fox : 11/3/2006 11:46:34 AM

My goodness. I was doing some dishes when I heard my TICK alert go off. I took a look expecting to see the rescue team at work but lo and behold the TICKs are -800.

Jeff Bailey : 11/3/2006 11:43:49 AM

Where's the volatility? ... asks an out the money put holder.

Jeff Bailey : 11/3/2006 11:43:02 AM

SPY $136.52 -0.19%

VIX 11.30 -1.05%

SFB-WF $0.70 x $0.80

Keene Little : 11/3/2006 11:37:39 AM

The NDX/COMP were the first to break their 20-dma's and the COMP retested it from below on this morning's quick bounce. It has now also broken its uptrend line from August, and gave it a quick retest this morning. As with the others it doesn't mean we can't get a big bounce back up to retest the highs as we head into the middle of November (a cycle turn window that I discussed in last night's Wrap) but at this point that double break (20-dma followed by uptrend line break) looks bearish.

Jeff Bailey : 11/3/2006 11:36:15 AM

SPY Nov. Option Montage found at this Link

Keene Little : 11/3/2006 11:28:23 AM

Uptrend support for the DOW is currently just under 11970 and for SPX it's a little lower, relatively speaking, at 1360.

Jeff Bailey : 11/3/2006 11:27:42 AM

SPY Most actives ... Nov $137 Call, Nov $137 Put, Nov $138 Put, Nov $138 Call

Keene Little : 11/3/2006 11:26:22 AM

This is now looking like the 3rd of a 3rd wave down that I put in a request for--a sharp move down. It should be followed by small bounces and stair-stepping lower. So far so good. But any bounce back above ES 1373/YM 12055 says the bottom is probably in.

Jeff Bailey : 11/3/2006 11:26:30 AM

VIX 11.28 -1.22% ... still BELOW its MONTHLY Pivot.

Jeff Bailey : 11/3/2006 11:26:14 AM

SPY $136.50 -0.20% ... back to test MONTHLY Pivot.

Keene Little : 11/3/2006 11:21:55 AM

This is where it starts to get a little tricky though. The move down from this morning's gap up should be the 5th wave in the move down from last week's high. The 5th wave is unreliable as it can extend lower in a big move or stop short of a new low or anything in between.

I like support at the uptrend line and hope to see us get there but at this point the 5th wave has met its internal requirements to be called complete. Therefore a reversal that takes out any previous bounce high could signal we've seen the bottom. Stay on your toes if you're short. Jumping out too soon is better than jumping out too late.

Jeff Bailey : 11/3/2006 11:20:37 AM

11:00 Internals found at this Link ... Underlined 5 and 10-day NH/NL ratios represent column of "O" on PnF chart.

Keene Little : 11/3/2006 11:18:01 AM

Hmm, my request for a sharp drop may have been approved.

Tab Gilles : 11/3/2006 11:11:45 AM


We could see a bounce in a few weeks as we saw last December, reason why I recommended a 50% short position. The 1750 resistance level is important, if surpassed I'd have to re-think bearish position. Link

Keene Little : 11/3/2006 11:04:34 AM

We could chop along in a continuation of the sideways/up correction that started yesterday. That would probably keep us between this morning's high and low (oh joy). But if the move down from the gap up is a small 1-2, 1-2 wave count to the downside, the next leg down should be faster and get us close to the ES 1367 area. Then another couple of small bounces and stair-steps lower to find support closer to 1365. I put my request in for that move and I'm waiting for approval or denial of my request.

Jeff Bailey : 11/3/2006 11:02:23 AM

11:00 Market Watch found at this Link

Jane Fox : 11/3/2006 10:53:21 AM

* NYSE decliners outnumber advancers 8 to 7
* Nasdaq advancers outnumber decliners 7 to 6

Jeff Bailey : 11/3/2006 10:47:19 AM

Bullish swing trade stop alert for Wild Oats (OATS) $16.00

Keene Little : 11/3/2006 10:47:18 AM

The first support I see for ES is at 1367 which is a Fib projection off the wave count down. It would also be a retest of yesterday's low. There may be more than one trader who tries to front run the support by its uptrend line near 1365 so if you're short and want to protect profits, or try a long, start watching carefully the 1367 area (assuming of course we get there) to see if we're bottoming. The next Fib projection is at 1360.75 but I'd be surprised to see that one hit.

Jeff Bailey : 11/3/2006 10:46:26 AM

OATS' relative strength vs. $SPX Link ... reversed lower yesterday

Keene Little : 11/3/2006 10:37:58 AM

ES's uptrend line from July is currently just above 1365. By the wave count and that uptrend line I like the opportunity for a long play there. I've been planning to exit my short position there and switch long. We should get a multi-day bounce to correct the decline from last week's high, perhaps back up to the 1380 area.

Jeff Bailey : 11/3/2006 10:37:53 AM

Another "option" on OATS is to buy three (3) protective puts with the Nov $17.50 (QOQ-WW), which is a hedge over OATS' earnings (11/07/06)

Tab Gilles : 11/3/2006 10:36:32 AM

As per 11/2/06 12:02AM post to sell both Profunds UOPIX & UAPIX and enter a 50% position in both the Profund UltraShort OTC (USPIX) & UltraShort Russell 2000 (UCPIX). Overall the long trades in UOPIX & UAPIX which were entered back on June 27th produced a combined UAPIX return of +18.85% and UOPIX +24.03%. Currently entered UCPIX at $15.57 and USPIX at $14.67. Oil is rising on geopolitical tension in Nigeria as possible threats of bombing of oil production facilities. XLE is performing nicely. Link

Jeff Bailey : 11/3/2006 10:32:49 AM

WFMI $46.97 -21.87% ... notable new 52-week low.

Jeff Bailey : 11/3/2006 10:27:55 AM

I do not like this morning's reaction to Whole Foods Market's (WFMI) $47.57 -20.89% earnings and outlook.

Jeff Bailey : 11/3/2006 10:26:41 AM

Bullish swing trade raise stop alert ... for Wild Oats (OATS) $16.34 -3.54% ... to $16.00.

Keene Little : 11/3/2006 10:21:35 AM

As the rally progressed from July the uptrend lines were getting steeper, especially after the Sept 11th low. This was the definition of a parabolic rally. Now those steepening trend lines are starting to break. As shown on this SPX chart, the steepest line from Sept 22nd was broken and then retested this week. The 2nd line from Sept 11th was broken on Wednesday and is in the process of being retested (at this morning's high). Link

A failure here should have it dropping to its next trend line from July 18th (about 1361 currently). This is the big one. If that uptrend line breaks then we'll have a clear idea that the rally is finished. We could get a big rally back up to retrace a bunch of the decline but it would likely only be a correction instead of a new leg up.

Jeff Bailey : 11/3/2006 10:17:16 AM

Bema Gold (BGO) $4.71 +3.74% ... does trade my prior bullish target of $4.70.

Jeff Bailey : 11/3/2006 10:11:01 AM

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

Jane Fox : 11/3/2006 10:10:43 AM

WASHINGTON (MarketWatch) -- Activity at nonmanufacturing sectors of the U.S. economy rebounded during October, the Institute for Supply Management reported Friday. The ISM nonmanufacturing index rose to 57.1% from 52.9% in September. That was the lowest level since April 2003. The increase was sharper than forecast. Economists were looking the index to rise to 54.6%. The headline index is not a weighted average of the survey's other key components. New orders slipped to 56.5% from 57.2%. The employment index inched lower to 51.0% from 53.6%. Inflation pressures eased. The price index slipped to 51.9% from 56.7% in the previous month.

Keene Little : 11/3/2006 10:07:06 AM

Yep, selling into these manipulated buying spikes continues. Clearly distribution going on now.

Jeff Bailey : 11/3/2006 10:03:06 AM

10:00 Market Watch found at this Link

Keene Little : 11/3/2006 10:01:39 AM

So far we've had a nice little gap n crap this morning. Gap closures should provide some support. NQ has already closed its gap but ES and YM still have further to drop. Getting another bounce as I type so we'll see if they sell into it again. Shorts should have their stops at new daily highs in order to avoid whiplash.

Keene Little : 11/3/2006 9:55:38 AM

I look to the bond market to help me understand what may be happening in the economy. These are the smart traders whereas the stock market is made up a bunch of shoot from the hip emotionally driven traders. But lately I've begun to wonder about those bond traders. As I had mentioned in last night's Wrap, the bond market has been jerking up and down, pretty violently, since early September and is evidence of mass confusion over there about what the Fed will do.

These guys don't have a clue either. Yields dropped sharply in Sept, revesed up sharply in October, reversed down sharply this week and now a sharp reversal back up this morning. Talk about whiplash! This daily chart of the 30-year yield shows a bullish divergence at this week's low so if today's rally in yields (drop in bonds) holds we might see another sharp reversal of this week's drop in rates. Link

Jane Fox : 11/3/2006 9:45:15 AM

These are telling me don't even think about been short. Link

Jane Fox : 11/3/2006 9:40:53 AM

ARe you getting that feeling that the bulls are not going to be able to retain control today?

Keene Little : 11/3/2006 9:37:58 AM

ES tagged 1377.25 so that might be all there is this morning.

Jane Fox : 11/3/2006 9:37:36 AM

VIX well below its PDL confirming the bullishness.

Jane Fox : 11/3/2006 9:36:56 AM

AD line +963 and AD volume above 0 and climbing. The bulls have the ball.

Jane Fox : 11/3/2006 9:30:08 AM

Gold is making a nice comeback from its overnight lows of 619.30, now at 624.40

Keene Little : 11/3/2006 9:29:48 AM

So let's see, the market has been rallying the past couple of months supposedly because the Fed was "close to reversing their interest rate policy". Today we have rumblings that inflation is a problem and the Fed will have to raise rates. Certainly that's what the bond market is telling us today. But the stock market rallies on that news too. Do you see why I say you can't trade the news? Money is coming into the market. It's really that simple. And the Fed is behind all that money as the calculated M-3 money supply clearly shows.

Keene Little : 11/3/2006 9:23:56 AM

So much for my expectation for a pullback first thing this morning. But this early morning pop higher actually makes me more suspect of the bounce. The bounce pattern from yesterday's low is looking corrective and I'll be watching YM 12087 for resistance. That's just above a 50% retracement of the decline from Wednesday's high (12083) and it's two equal legs up from yesterday. For ES the equivalent level is 1377.25. Watch for the potential to gap n crap this morning.

Jane Fox : 11/3/2006 9:00:35 AM

NEW YORK (MarketWatch) -- The odds of an early-2007 interest rate cut fell sharply Friday after data showing that the labor market was still very strong in October. April fed funds futures fell 0.09 to 94.80, which implies a 20% chance that the Federal Reserve would lower its target for overnight rates to 5% from 5.25% by its policy setting in March.

Jane Fox : 11/3/2006 8:57:46 AM

NEW YORK (MarketWatch) -- The dollar rallied against major currencies early Friday after a government report showed the labor market is on fairly firm footing.

Nonfarm payrolls expanded by 92,000 in October, the Labor Department said. The number is below the 123,000 expected by economists surveyed by MarketWatch.

But that is only part of the picture. Job growth in August and September was revised higher by 139,000. The unemployment rate fell to 4.4% in October from 4.6% in the previous month.

Economists had expected the unemployment rate to hold steady at 4.6%.

Average hourly earnings increased 6 cents, or 0.4% to $16.91. Economists had been expecting a 0.3% gain.

"The huge revision to September jobs is the key along with the lower unemployment rate and the rise in average weekly hours and average hourly earning," said Brian Dolan, director of research at Forex.com, a division of Gain Capital.

"This is a pretty solid report and is alarming in that wage inflation pressures appear to be increasing, suggesting further potential from the Fed. The dollar is set to stage a significant reversal higher, potentially unwinding its losses over the last two weeks," he said.

Jane Fox : 11/3/2006 8:55:57 AM

TBonds and Gold traders read the 8:30 report that the inflation monster has been slayed and that we are heading for a soft landing. These two are safe havens when inflation becomes a problem.

There was little reaction in the energy markets. Link

Jane Fox : 11/3/2006 8:51:38 AM

It was kind of an odd reaction to the employment data out at 8:30 because first of all the markets sold off then they started to rally. What in that report would have made the markets sell off first?

Notice ES tagged it PDH and found resistance. ES respects its PDR more than any other market we watch here in the monitor. Link

Jane Fox : 11/3/2006 8:41:14 AM

WASHINGTON (MarketWatch) - The U.S. labor market is on firmer footing than expected, according to the latest government statistics released Friday.

Although U.S. nonfarm payrolls grew by a lower-than-expected 92,000 in October, this was not the entire picture. The unemployment rate fell to 4.4%, the lowest level in more than five years, the Labor Department reported Friday.

Economists were expecting payroll growth of about 123,000, according to a survey conducted by MarketWatch. The jobless rate was expected to remain at 4.6%.

Adding to the sense of strength, payrolls in August and September were revised higher by a cumulative 139,000.

The separate household survey showed robust job growth of 437,000 in October, and a sharp 238,000 drop in unemployment.

The job report may dispel some worries that the economy is slowing sharply. Third quarter gross domestic product fell to a 1.6% annual rate from 2.6% in the second quarter.

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