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Jeff Bailey : 11/17/2006 11:05:37 PM

Reader Question:

Hello there!

Hope this note finds you well! I have been thoroughly enjoying your newsletter....and have tracked ur recommendations....very sound!

I would like to know more about P&F charts....can you please advise direct one on how to do them...perhaps a tutorial...a website...anything?

Also, it would be so great if these newsletters came out at night when one is doing one's homework, rather than in the morning...a suggestion I think I made before.

Thank you. Yours has been the very newsletter I have eversubscribed to. Alexis

Reply:

Alexis:

I'm glad you are interested in learning more about the point and figure charts, methodoly, and interpretation of supply and demand.

StockCharts.com has a nice, easy to understand explanation Link of point and figure charts.

StockCharts.com also has an easy to follow demonstration of how a chart is constructed Link

I, as do many "point and figure-toligists" use the 3-box reversal method for charting, which is the default for many computerized, and hand-crafted point and figure charting systems.

After you read stockcharts.com's explanation/tutorial, you may want to give this system of charting the supply/demand relationship a try.

Guess what? You and I don't need a computer to make, or view a point and figure chart!

Once you have the basic understanding of how the point and figure chart is constructed, with a pencil and a piece of graph paper, you can manufacture a point and figure chart on your own! Just like Charles Dow did when he was tracking his extensive portfolio of stocks, bonds and commodities.

Hand charting a stock, or commodity you are interested in trading will have you becoming more "intimate" with that security. At the close of each day's trade, you will chart any MEANINGFUL price action that took place. After several days, weeks, months of doing this, you will find yourself trying to "predict" the next day's, week's, even month's eventual price action!

Hey, if it was good enough for Charles Dow, it might be good enough for you and I !

With the holiday's just around the corner, you might be putting together a "wish list" of items you might enjoy this holiday season.

A great book, that changed the way I looked at the equity markets is Point and Figure Charting, by Thomas J. Dorsey.

Yes, that's the same "Dorsey" as Dorsey/Wright & Associates that I refer to on a regular basis.

I feel this is REQUIRED READING as it will help any trader, or investor better understand not only the supply/demand relationship, but RISK, and how to understand it, identify it, and manage it.

Jeff Bailey

OI Technical Staff : 11/17/2006 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.

Jeff Bailey : 11/17/2006 8:36:56 PM

Closing Internals found at this Link

Jeff Bailey : 11/17/2006 8:29:24 PM

Closing U.S. Market Watch found at this Link

Keene Little : 11/17/2006 4:14:39 PM

Looking at the YM pattern I actually see the possibility that we'll chop a little higher on Monday before we start a larger pullback. The push higher since Wednesday is not the picture of health for this rally.

This YM 30-min chart is a little closer view of the parallel channels I posted earlier (12:43) and shows how today's price action is creating a small ascending wedge (filled with the requisite 3-wave moves inside the pattern) and this is an ending pattern. It should set up a good scalp trade to the short side if it follows through in this way. Link

Keene Little : 11/17/2006 4:01:20 PM

The way this has chopped higher into the close it's now taken on a bearish look. It looks like we should start off with a drop on Monday and then we'll have to see what sets up next.

Jeff Bailey : 11/17/2006 3:54:37 PM

Google (GOOG) $498.38 +0.52% Link ... so close, yet so far ($500.00)

Jeff Bailey : 11/17/2006 3:53:01 PM

ICE $100.16 +5.86% ...

Jeff Bailey : 11/17/2006 3:48:32 PM

YM's DAILY R1 12,377

Jeff Bailey : 11/17/2006 3:47:53 PM

YM 12,370 alert

Jeff Bailey : 11/17/2006 3:47:13 PM

YM 12,368 ... I think you can, I think you can

Jeff Bailey : 11/17/2006 3:46:02 PM

DIA $123.22

SPY $140.32

QQQQ $44.24

Jeff Bailey : 11/17/2006 3:45:23 PM

30-minute alert ... 30-minutes until DIA, SPY, QQQQ closes.

Jeff Bailey : 11/17/2006 3:40:58 PM

VXO.X 9.87 ... just flinched below DAILY S1 of 9.85.

Jeff Bailey : 11/17/2006 3:40:19 PM

TRIN 0.89

Jeff Bailey : 11/17/2006 3:40:07 PM

Will the 3rd time today be a charm? DIA $123.17 with DAILY Pivot $123.20.

Jeff Bailey : 11/17/2006 3:33:50 PM

Kinross Gold (KGC) $11.41 -0.60% ... buying BGO

Jeff Bailey : 11/17/2006 3:33:14 PM

Bema Gold (BGO) $4.96 -0.99% ... buyout and all.

Jeff Bailey : 11/17/2006 3:32:42 PM

Newmont Mining (NEM) $44.21 -0.06% ...

Jeff Bailey : 11/17/2006 3:32:09 PM

Barrick Gold (ABX) $28.42 -0.14% ...

Jeff Bailey : 11/17/2006 3:31:11 PM

Coeur d'Alene Mines (CDE) $5.00 +0.60% ...

Jeff Bailey : 11/17/2006 3:30:16 PM

03:00 Internals found at this Link

Keene Little : 11/17/2006 3:28:39 PM

30 minutes to get QQQQ to 44. This market is definitely stalled.

Keene Little : 11/17/2006 3:22:50 PM

Two equal legs down in this pullback is at YM 12339 and ES 1401.50. That's where I'd watch for support for a turn back up. Today's uptrend line is a couple of ticks lower for YM at 12335 but at the same ES 1401.50.

Keene Little : 11/17/2006 3:15:42 PM

With the DOW continuing to show greater relative strength it could be a good trade to try a long on it on the pullback. Today's uptrend line is near 12335 and that's where I'd test the long side if it looks like it's going to hold. We should get a 3-wave pullback and ideally we'll see two equal legs down from that last high that correlates closely with 12335. I'll decide at the time whether or not I'll want to trade it since my preference at this point is to be flat over the weekend.

Jeff Bailey : 11/17/2006 3:14:05 PM

TRIN 0.88 +15.78% ... simply refused to break back below DAILY Pivot.

DIA $123.06 +0.01% ... simply refused to break back above DAILY Pivot.

YM 12,351

Jeff Bailey : 11/17/2006 3:08:04 PM

YM long exit alert ... 12,359

Jeff Bailey : 11/17/2006 3:03:06 PM

03:00 Market Watch found at this Link

Jeff Bailey : 11/17/2006 2:59:23 PM

YM long raise stop alert ... to 12,348

YM 12,360

Keene Little : 11/17/2006 2:58:25 PM

If we get the pullback into the close that would likely pin QQQQ to 44, currently trading 44.21.

Keene Little : 11/17/2006 2:48:57 PM

Today's sideways consolidation is looking bullish. If we get a small pullback now it looks like it will lead to another move higher on Monday. That should be followed by another consolidation/pullback and another leg higher into Thanksgiving. Link

Jeff Bailey : 11/17/2006 2:48:05 PM

YM long raise stop alert ... to 12,345

YM 12,360

Keene Little : 11/17/2006 2:46:53 PM

Stopped out of my short at ES 1404.

Jeff Bailey : 11/17/2006 2:46:27 PM

YM long raise stop alert ... to 12,340

YM 12,358

Jeff Bailey : 11/17/2006 2:43:05 PM

YM 12,352 ...

Jeff Bailey : 11/17/2006 2:42:52 PM

VXO 9.92 -2.26% ... set to test morning lows and DAILY S1.

Jeff Bailey : 11/17/2006 2:36:37 PM

YM long raise stop alert ... to 12,335

YM 12,350 ...

Jeff Bailey : 11/17/2006 2:31:04 PM

YM long raise stop alert ... to break even.

YM 12,340 ...

Keene Little : 11/17/2006 2:12:39 PM

I'm lowering my stop on my ES short to 1404, two ticks above the last bounce to 1403.50. Only risking 1.25 at this point.

Jeff Bailey : 11/17/2006 2:10:51 PM

YM long entry alert 12,330 ... stop goes 12,315, target 12,370

Keene Little : 11/17/2006 2:08:17 PM

Is it true that even though options don't expire until Friday that you can't trade them on Friday, that they close for trading on Thursday? For instance the RUT? Just trying to learn. Thanks, M

This is a good question as it can be a little confusing. The thing you need to know is whether the options cease trading on the day before expiration (so on Thursday) or on expiration Friday. All expire on Saturday but the last trading day is different. Many of the European style options stop trading the Thursday before opex Friday (the 3rd Friday of the month) with a settlement price calculated after the Friday open (they calculate it based on the opening price of every component within that index. These include SPX, DJX, NDX and the RUT.

American style options such as OEX (American style S&P 100), QQQQ, and stocks can be exercised at any time prior to the expiration day and they can be traded until the end of opex Friday. Just to add to the confusion, while most all of the European style options (which can only be exercised on the last business day before expiration) stop trading on Thursday, there are some exceptions. The relatively new XEO, the European style S&P 100), still trades on Friday.

This and much more information can be found at the CBOE site: Link

Jeff Bailey : 11/17/2006 2:02:26 PM

U.S. Steel (X) options montage at this Link

Jeff Bailey : 11/17/2006 1:52:35 PM

U.S. Steel's (X) ... November "Max Pain" theory tabulated at $65.00 ($5 increments)

Jeff Bailey : 11/17/2006 1:48:59 PM

STEEl Bullish % from Dorsey/Wright & Associates did reverse lower to "bull correction" status at yesterday's close.

Jeff Bailey : 11/17/2006 1:48:12 PM

U.S. Steel (X) $69.55 +7.71% Link ... Speculation company in play ... Reuters Story Link

Jeff Bailey : 11/17/2006 1:41:50 PM

FISHER SAYS ANTI-INFLATION STANCE NECESSARY

DJ- Richard Fisher, president of the Federal Reserve Bank of Dallas, says staunch anti-inflationary stance of central banks "should not be questioned in any way or form" and says there "is not much comfort" in inflation levels above 2%.

Jeff Bailey : 11/17/2006 1:37:51 PM

UPS RAISES 2007 SHIPPING RATES 4.9%

DJ- UPS says list rates for ground shipments will go up 4.9% on average. Air express and international rates will be based on a 6.9% rise in the base rate, minus 2 percentage points in the current fuel surcharge because of oil price declines.

UPS $79.02 +0.57% Link ... (session high has been .... $79.49)

Keene Little : 11/17/2006 1:28:55 PM

Volume has just died this afternoon. That makes for the possibility that we'll get a price spike in either direction if it's hit with a buy or sell program.

Keene Little : 11/17/2006 1:24:27 PM

Any suggestions for SPX put options?? Mark

Hi Mark. The answer to your question obviously depends on your time horizon. If you want to start legging into some LEAP puts then I'd look to go far enough out of the money to make the cost reasonable and then sell bear or bull put spreads against them each month. There's a good chance you could recoup much of the cost of the option that way.

I see the possibility for SPX to drop hard into the new year and a drop to the bottom of its long term up-channel from 2004 (which is where I'd take profits no matter how far away your options are) gives us a downside potential to around 1300 sometime in the 1st quarter. You could buy SPX 1350 puts if you really wanted to get ITM by that time or buy the 1300 and have them ATM by the time you sell them.

If it takes longer to chop our way down/over to the bottom of the channel then we might only get down to the May high near 1325 so buying the 1325 puts might be a good compromise. And of course if you want to play the same levels but with cheaper options then use SPY instead of SPX.

If you're more short term oriented I might consider March/April options. The downside potential is obviously the same but you'll lose time premium, especially if you buy OTM options. I recommend much longer time frames with options because it typically takes a lot longer for a move to play out than you would anticipate and your time premium will just bleed away during that time.

But if that's the way you want to go then perhaps a SPX 1325/1350 bear put spread. If the May high near 1325 acts as support you'll be $25 ITM on the 1350 and ATM on your 1325. The closer we are to March/April when this happens the better the return on that spread. Assuming we'll drop to 1325, regardless when it happens (even if in December), I'd close that position and wait for a bounce to reposition.

Just a few ideas so hope that helps.

Jeff Bailey : 11/17/2006 1:24:18 PM

01:00 Internals found at this Link

Jeff Bailey : 11/17/2006 1:04:40 PM

01:00 Market Watch found at this Link

Jeff Bailey : 11/17/2006 12:58:37 PM

BP's Browne: "Quite Keen" To Grow In Russia

Keene Little : 11/17/2006 12:58:29 PM

Jeff, you want to take this one? You're the expert when it comes to pointy fingers (not the middle one mind you).

What does a low pole warning reversal mean on the PNF charts? Regan

Jeff Bailey : 11/17/2006 12:57:49 PM

DIA Call Open Interest ... 4,824 at $123, 4,009 at $124.

Jeff Bailey : 11/17/2006 12:55:56 PM

DIA ... $123.03 (unch) ... session high has been DAILY Pivot $123.20 to the penny.

Keene Little : 11/17/2006 12:54:47 PM

My ES short at 1402.75 survived by two ticks and I'm going to leave my stop at 1405.50 for now. I'm tempted to just exit now and pay for commissions but I'll hold on and see if this bounce is going to turn into another leg down this afternoon. It may be wishful thinking.

Jeff Bailey : 11/17/2006 12:53:33 PM

YM 12,344

Jeff Bailey : 11/17/2006 12:53:08 PM

SPY $140.15 ... session high $140.42 came to MONTHLY $140.40 retracement

Keene Little : 11/17/2006 12:52:04 PM

ES is back under the top of its bear flag after breaking above it. These very short term patterns may not have much meaning on a day like today.

Keene Little : 11/17/2006 12:46:43 PM

With daily R1 at YM 12376 at the top of its up-channel that's another reason why it could make for a good short up there. Daily pivot is 12325 so Jeff has a good idea--catch the ride up to 12375 and reverse short. I'm not sure it'll pull back that far though. The top of its broken bear flag, which often becomes support, is near 12346.

Tab Gilles : 11/17/2006 12:45:44 PM

Altria (MO)MO-mentum...Altria is taking off on the news... Link

Although MO is on my Stock Watch List. I posted back on 11/6 12:30 PM, I expected MO to join the party, it appears it has. I was tracking the Jan $80 Call (MOAP) back then at Bid $3.20/Ask $3.40, currently $6.20/$6.40. Link

Keene Little : 11/17/2006 12:43:18 PM

The top of a parallel up-channel for YM's price action since the November 3rd low is near 12372. That would be the next level I'd look to short. This is all in an effort to find that top and at least catch a pullback to the bottom of its channel. Keep probing and take profits or get out of the way if it doesn't work. Link

Jeff Bailey : 11/17/2006 12:42:18 PM

YM long setup alert ... will be looking for a long back near 12,330

YM 12,350

Jeff Bailey : 11/17/2006 12:37:54 PM

Boeing (BA) $89.09 +0.43% ... set to challenge its April all-time high.

Keene Little : 11/17/2006 12:36:02 PM

Nice little short squeeze here. I'm not sure we'll see follow through so I'm not willing to chase this higher. I'll just go flat and probably watch for a while longer, at least throught lunch.

Jeff Bailey : 11/17/2006 12:35:18 PM

SPY $140.39 (unch) ... incredible intra-day action at $140.12.

Keene Little : 11/17/2006 12:34:19 PM

Breaking out the top of the bear flag so maybe not. Worth a try and now hopefully gap close will hold.

Jeff Bailey : 11/17/2006 12:32:54 PM

YM ... short squeeze alert 12,354

Keene Little : 11/17/2006 12:31:23 PM

Now short ES 1402.75 so let's see if this bear flag really is a bear flag.

Keene Little : 11/17/2006 12:30:26 PM

I'm trying to get a short at ES 1402.75 but need it to tag 1403 in order to get it. Stop will be at 1405.50 so a little wider than usual and so a smaller position.

Jeff Bailey : 11/17/2006 12:26:29 PM

GOP PICKS BOEHNER AS HOUSE MINORITY LEADER

DJ- Republicans choose Rep. John Boehner as minority leader, succeeding Speaker Dennis Hastert in top GOP leadership post for the House come January. Rep. Roy Blunt will keep his post as whip, which will become the No. 2 spot.

Marc Eckelberry : 11/17/2006 12:26:41 PM

CBOE Equity pc ratio at .42 (11 am quote). Don't chase this market, even if Cramer screams so much he has a stroke. Link

Jeff Bailey : 11/17/2006 12:25:24 PM

Altia (MO) $85.30 +2.07% Link ... That's a new 52-weeker and all-time high.

Jeff Bailey : 11/17/2006 12:15:12 PM

Altria (MO) $84.68 +1.34% ... set to test its recent all-time high!

Keene Little : 11/17/2006 12:14:47 PM

YM also tagged the top of its bear flag at 12344. With only 5 more points to close its gap I would think it'll happen, but not if a lot of traders are front-running it.

Jeff Bailey : 11/17/2006 12:14:12 PM

Quantitative NYSE Analysis: The NYSE Bullish % would tie closely with that period of late 2004.

Here's an expanded view of the NYSE Composite ($NYA.X) where traders and investors can begin study of that time frame. Link

Remember: Months January-September are marked 1-9, October-December with letters A-C.

Keene Little : 11/17/2006 12:12:48 PM

I'm out of my ES short at 1402.50 but am thinking about reentering if it stalls at 1403, the top of a bear flag for today's price action. Small position since this is turning into a typical opex Friday with lots of chop.

Keene Little : 11/17/2006 12:09:47 PM

If YM bounces up again to touch its broken uptrend line along the lows of the past two days it should also be able to close its gap at 12349. That could be a good spot to try a short but be careful of the choppy action here.

Jeff Bailey : 11/17/2006 12:06:16 PM

Dorsey/Wright's NYSE Bullish % (BPNYSE) very broad (over 3,000 securities) achieved "bull confirmed" at 70% at the conclusion of yesterday's trade. Link

On June 30, 2006, the NYSE Composite ($NYA.X) closed at 6,169.07. Link ...

Keene Little : 11/17/2006 11:59:03 AM

Price action has slowed down and is consolidating in a tighter pattern. And now we enter the lunch period. Oh joy.

Jeff Bailey : 11/17/2006 11:49:51 AM

STARBUCKS DOWN AS 4Q NET FALLS 5.2%

DJ- Shares fall 6% a day after company posts lower profit of $117.3 million, or 15c a share. Same-store sales rise 5%. Excluding items, Starbucks earns 17c a share, matching expectations. Revenue rises 20% to $2 billion.

SBUX $36.91 -6.39% Link ...

Jeff Bailey : 11/17/2006 11:48:18 AM

H-P 4Q NET SOARS; REVENUE UP 7%

DJ- H-P's fiscal 4Q earnings more than quadruple to $1.7 billion, or 60c a share, as revenue increases 7% to $24.6 billion. Operating profit of 68c a share tops expectations of 64c on revenue of $24.1 billion.

HPQ $39.53 -1.49% Link ...

Jeff Bailey : 11/17/2006 11:46:38 AM

US HOUSING STARTS TUMBLE PAST EXPECTATIONS

DJ- Starts drop 14.6% in October to a 1.486 million annual rate, the lowest level since July 2000. Wall Street expected a 5.6% decline. Building permits drop 6.3%. September starts are revised down 1 percentage point to 4.9%.

Keene Little : 11/17/2006 11:40:53 AM

YM's pattern today looks bearish as well. Right now price is chopping higher underneath its broken uptrend line along the lows of the past two days. This looks like it should let go to the downside. Another test of the line would be around 12344. If this then lets go, downside projections are 12290 and then 12260. A 38% retracement of the rally off the November 10th low is at 12259. This is one idea of what we could see today. Link

Keene Little : 11/17/2006 11:31:17 AM

This could certainly chop its way higher but the choppy rise off this morning's low looks bearish. If stopped out I'll probably just stay flat since I don't like trading in the chop zone. That was a good reminder by Jane on the VIX but I have found it to be less meaningful during opex. There are way too many other things being done with options that have nothing to do with speculation of a move or hedging.

Jeff Bailey : 11/17/2006 11:24:23 AM

ICE $103.81 +9.47% Link ... Oh my!

Jane Fox : 11/17/2006 11:24:10 AM

Heh everyone. Just thought I would check in. I am still in Las Vegas but couldn't leave the market alone.

Make sure you check the VIX folks. It is hugging daily lows and that tells me it is not time to be short.

Jeff Bailey : 11/17/2006 11:23:17 AM

Nymex's Shaeffer: "Open For Discussions" On Mergers

Won't Rule Out Merger With ICE

Keene Little : 11/17/2006 11:19:49 AM

ES 1392.50 would be a 62% retracement of the leg up from November 14th so another reason to expect support in that area.

But another distinct possibility here is that we're going to consolidate in more of a sideways/down move and head over to the uptrend line. I had mentioned in last night's Wrap that the short term pattern would look best with a 1-2 day pullback and then another push higher. Depending on how long the pullback takes we could find support closer to 1397 which is not much lower than today's low. Link

Jeff Bailey : 11/17/2006 11:18:55 AM

11:00 Internals found at this Link

Keene Little : 11/17/2006 11:08:31 AM

Time to pull my stop down a little further--two ticks above the last bounce so ES 1402.50 which locks in 5 points. If that last bounce to 1402 is exceeded then it could continue right on up to at least close the gap and I'd rather not give that many points back.

Still in scalp mode and hoping to see this head down/sideways to its uptrend line from November 3rd, currently near 1392. And if we get two equal legs down from yesterday's high that puts us at the same 1392. I'd be out of my short and possibly a buyer if that level gets hit today.

Jeff Bailey : 11/17/2006 11:06:07 AM

11:00 Market Watch at this Link

Keene Little : 11/17/2006 10:45:19 AM

If this bounce is going to be just part of a consolidation then two equal legs up off this morning's low could stop the bounce--ES 1402.25 and YM 12336.

Tab Gilles : 11/17/2006 10:41:06 AM

Energy Select SPDR (XLE) Hit 20-ema trailing stop, exited at $56.40. Having entered @ $51.50 on 9/21 (+$4.90/+9.55%) Link Link

Keene Little : 11/17/2006 10:35:57 AM

I'm getting the feeling that we're going to see a consolidation day today. Even NQ which just dropped sharply could find a low near here and then consolidate near the lows for most of the day. QQQQ 44 might be pinned today.

Jeff Bailey : 11/17/2006 10:35:01 AM

New York Mercantile Exchange (NMX) $136.00 +130.50% ... IPO; priced 6.5 million shares at $59.00/share.

Jeff Bailey : 11/17/2006 10:23:50 AM

Session high on SPY still $140.06. DAILY Pivot is $140.18. Yesterday morning's snapshot observation of those $141 puts had one calculation showing $140.11 being a point of focus.

Jeff Bailey : 11/17/2006 10:21:50 AM

These type of a/d readings the past couple of months have been "oversold" readings on an intra-day basis.

Jeff Bailey : 11/17/2006 10:20:28 AM

NYSE a/d 969/1832

NASDAQ a/d 849/1742

Jeff Bailey : 11/17/2006 10:06:49 AM

10:05 Market Watch at this Link

Jeff Bailey : 11/17/2006 10:02:40 AM

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

UPS was close enough to target ($79.50) to close out.

Weak October housing starts impacting FNM early, stopped at $58.50.

CDE long with covered calls were closed out yesterday just prior to regular session close.

Keene Little : 11/17/2006 9:56:54 AM

A 50% retracement of ES's gap down is at 1402.75.

Keene Little : 11/17/2006 9:48:56 AM

Here come the buyers. So far it's nothing more than a bounce. First resistance that the bears want to see hold is the bottom of this morning's gap down, That's at ES 1400.50 and YM 12327. It's dropping back away after testing that level as I type. If it can climb into the gap then a 50% retracement of the gap is often typical (if this is to stay bearish). Above that and we'll probably get gap closure.

Jeff Bailey : 11/17/2006 9:39:19 AM

Swing trade bullish call exit alert ... With United Parcel (UPS) $78.88 +0.38%, let's exit the UPS Jan $75 Calls (UPS-AO) at the bid of $4.90

Jeff Bailey : 11/17/2006 9:35:59 AM

Swing trade bullish stopped alert ... on the 1/2 bullish position in shares of Fannie Mae (FNM) at $58.50

Keene Little : 11/17/2006 9:35:36 AM

Depending on what ES does today we could see an island reversal day. If it closes its gap then never mind but right now, looking at the 30-min chart, we have yesterday's gap up, a grouping of candles and then today's gap down. That group of candles suspended in air like that is the island. An island reversal is a strong reversal signal so it'll be interesting to see how it develops today.

Keene Little : 11/17/2006 9:25:50 AM

If you trade the oil contract, CL or QM, January 2007 is now the front-month contract (QM07F).

Keene Little : 11/17/2006 9:22:48 AM

Futures are down pretty hard on that housing news with ES outshining YM to the downside. My short from 1407.50 is looking relatively safe (hard to tell in this market). I've lowered my stop to 1405.50, two ticks above gap close. If you're trading multiple contracts you may want to take some money off the table if we get a quick spike down after the open. Those are the down spikes we've seen get jammed to the upside more often than not. We're still in opex and therefore it could be a volatile, even if subdued, day.

Keene Little : 11/17/2006 9:11:56 AM

Also from MarketWatch: "The National Association of Home Builders reported on Thursday that its survey of builder sentiment rose for the second time in a row in November, on the heels of eight straight declines, and said that builders may be seeing "the light at the end of the tunnel."

I had mentioned in last night's Wrap that people who were part of that survey were trying to spin the housing news as positive, that we've seen a bottom. The home builder executuves have been telling us loud and clear that we have not seen the worst yet. What boggles my mind is how people like Greenspan have been saying we're probably finished seeing a negative impact to the economy from housing. Where do these people get their information?

Unfortunately, imho, housing has a long and painful decline in front of it. Bubbles don't find cushiony-soft landings.

Keene Little : 11/17/2006 9:06:04 AM

WASHINGTON (MarketWatch) -- Home builders retreated on a massive scale in October, dashing hopes for a quick turnaround in the nation's housing market.

Starts of new homes plunged 14.6% last month to a seasonally adjusted annual rate of 1.486 million, the lowest level since July 2000, the Commerce Department estimated Friday.

Building permits fell as well, down 6.3% to a seasonally adjusted annual rate of 1.535 million, the lowest in nine years. It was the largest percentage decline in permits in seven years. Housing starts are now down 27.4% from October 2005 levels, and building permits are down 28% on a year-on-year basis. So far in 2006, starts are down 11.1% compared with the first 10 months of 2005. Read the full government report.

October's decline was much larger than expected by Wall Street economists, who had been forecasting a 4.5% drop in starts to 1.69 million as well as a marginal decline in building permits to 1.62 million. See Economic Calendar. Moreover, September's starts data were revised lower, to 1.74 million from 1.77 million. Permits were revised higher, however, to 1.638 million from 1.620 million.

The pullback in building was widespread. October's starts fell by 26.4% in the South, marking the region's largest decline in 22 years, and by 11.7% in the Midwest and by 2.1% in the West. Starts rose 31% in the comparatively small Northeast market.

Starts of single-family homes fell 15.9% to a seasonally adjusted annual rate of 1.177 million, also the lowest since July 2000 and the largest percentage decline since 1991. Starts of multifamily units fell 9.1% to 309,000.

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