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Jeff Bailey : 12/15/2006 3:00:18 AM

What do you think of the calibration you and I went through for the YM07H?

YM Pivot Levels for Friday at this Link

Do YOU see the trade setup?

In my opinion ...

A retail trader like you and I should have a bullish trade bias going into tomorrow's session. That is, a trader should be looking long. I think a BULL wants to see the YM shed about 30-35 points in the morning, (DIA dips to $123.94 and "shakes out" some DIA $125 Call holders), get the YM down to that WEEKLY R1/DAILY Pivot (YM 12,473-83), then look for the buying to take it higher to a "destiny trade" of WEEKLYR2/DAILYR1 12,555-60 to the close, which might juuuust have the DIA going out at $125.00-$125.11.

The TOUGHER bull trade is if the YM jolts higher early, and hits the DAILY R2. Tough for a YM trader at expiration as then you're measuring risk down to DAILY Pivot of 12,483.

And bears? That's the TOUGHEST trade tomorrow. No overhead supply and who knows for sure just how short/NAKED Call this market still is (DIA, SPY, QQQQ, not to mention stocks)

Was there some type of positive news on AMD $22.75 +12.5% today?

Jeff Bailey : 12/15/2006 2:14:42 AM

Daily/Weekly/Monthly Index Pivot Matrix for Friday at this Link

Sure looks like some pre-determined buying for this morning's open. That suggests to me an Op-Ex trade was in the works. SMH traded just below WEEKLY S1 on Wednesday, but nailed it at the open and a surge of buying just shy of WEEKLY Pivot. QQQQ went to WEEKLY R1 like a paper clip to a magnet. VIX.X went to MONTHLY S1 like a rock in a bucket of water, and did see some late afternoon action back at WEEKLY S2, but put sellers/call buyers outnumbers call sellers/put buyers there.

Hmmm... for a 4th-straight expiration we've seen some impressive moves higher ahead of the expiration date.

Note: I accidentally highlighted the INDU's WEEKLY R2.

Hmmmm... sounds good to me. December expiration close of DIA $125.00. What's that for the YM?

Keene Little : 12/14/2006 11:52:15 PM

Friday's pivot tables: Link and Link

OI Technical Staff : 12/14/2006 9:59:59 PM

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Jeff Bailey : 12/14/2006 6:58:33 PM

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

"A little bit of everything" today. Decided today that a trader might want to CLOSE OUT the BHI Jan. $70 Calls (BHI-AN). Still has room to run, but with option premiums "relatively low" (VIX.X), I had made note in the 11/30/06 12:06:14 AM MM Link that SLB had given a triple top buy signal and that the sector had just achieved "bull confirmed" status that very day. Now I've been following that stock, and if we'd been more profitable in BHI a couple of days ago, when SLB traded back to $66.00, I'd have added the trade then. I don't want to go "gonzo" the oils as the sector bullish seasonlity calendar hits, but I kind'a think that if a rigger like BHI is performing, then there's business down the line for SLB. I really prefer the supply/demand dynamics of SLB too.

Hey ... you bar chartists out there. See the bar chart on SLB from 12/01/06 to 12/12/06, then the "boom" yesterday? Link That supply/demand action is a SMALL representation of the point and figure "bearish signal reversed" pattern. See? $66 is what I think is the "alert" that a level of resistance was broken and demand really starts to overtake supply. OK... (pretend you're a bull and don't want to "chase", or better yet, a BEAR that was short). Where are you going to buy?

See the rather low volume pullback, then the "boom!"

The point and figure "bearish signal reversed" pattern is the most powerful and a bar chartist will look for similar bar chart pattern.

The reason I believe the point and figure "bearish signal reversed" pattern is so powerful (is that the bulls actually know where the stock/commodity is heading, but you've also got traders that see the lower highs and lower lows and can't resist the shorting opportunity of that pattern. All of a sudden, the "bearish signal" is "reversed" and bulls and bears all start buying together.

Again... the bar chart area discussed is like a mini point and figure chart's bearish signal reversed.

Jeff Bailey : 12/14/2006 5:56:05 PM

Closing Internals found at this Link

Note: The NASDAQ's 5-day NH/NL ratio is RED and underlined to represent it is below (red) its 10-day NH/NL ratio and in a column of "O" (underlined).

The NYSE's 5-day NH/NL ratio is RED as it is below its 10-day NH/NL ratio.

Jeff Bailey : 12/14/2006 5:34:53 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 12/14/2006 5:34:49 PM

Keene ... I'm wondering what the "good news" is that the market is/has already factored in. That is, I'm a firm believer that the MARKET is always forward looking.

Some do believe the MARKET is always wrong, and only right twice (at the very bottom and very top).

It has been my experience that the MARKET is RIGHT about 98% of the time, and VERY right twice (at the very high and very low), which only ONE trader ever gets.

I also know that there are some that always try to be the ONE trader.

I also know that there are traders/investors that think trading, or investing is "place all your bets at once, and take them all off the table at once."

Oh ... I also KNOW that there are GOOD brokers (like those of you that utilize OI for ideas) and BAD brokers. The good ones do what is right for their clients. The bad ones tend to be the ones that 1) ... do what is "right" for their own wallet in the form of a commission, and 2) some that do what they have to do in order to stay employed with their firm.

I KNOW that the one that does what is right for the client sleeps at night. I also know the other one eventually loses his/her clients and their job with the firm, and can't sleep at night.

Jeff Bailey : 12/14/2006 4:50:07 PM

Chuckle ... and when 80% heard the Dow hit a 52-week high and bought into it on 09/27/06 at 11,671 ...

Jane Fox : 12/14/2006 4:29:21 PM

Economic Reports out tomorrow include.

8:30a.m. Nov Consumer Price Index. Expected: +0.2%. Previous: -0.5%.

8:30a.m. Nov Consumer Price Index, Ex-Food & Energy. Expected: +0.2%. Previous: +0.1%.

8:30a.m. Dec NY Fed Manufacturing Index.. Expected: 17.5. Previous: 26.66.

9:15a.m. Nov Industrial Production. Expected: +0.1%. Previous: +0.2%.

9:15a.m Nov Capacity Utilization. Expected: 82.2%. Previous: 82.2%.

Keene Little : 12/14/2006 4:10:44 PM

Jeff, while I don't think a cut in rates is coming, what you say makes some sense. If the Fed were to cut rates, let's say by surprise, the market would probably have an uh-oh reaction, thinking that the Fed sees an economic slowdown and that would be bad for stocks. To which I say duh! and is why I wonder why the market wants a rate cut.

Jeff Bailey : 12/14/2006 4:02:35 PM

I'm going to say this now, and probably live to regret it later.

But I think the sharp declines in equities that so many seem to be long for will come when the Fed CUTS its target on Fed Funds.

Keene Little : 12/14/2006 3:59:13 PM

Golf clap for the Boyz today. Gotta give credit where credit is due. I just wish I had their billions to play with. Could be fun for a while at least.

Keene Little : 12/14/2006 3:57:42 PM

Marc, your SPX 1425.03 could be closer than even you probably thought :-)

Jeff Bailey : 12/14/2006 3:54:52 PM

VIX 9.86

Jeff Bailey : 12/14/2006 3:54:03 PM

Yeah ... I'm waiting for an Illinois court judge to make some type of ruling against BHI too. (see AGP call option trade just into Nov. expiration)

Jeff Bailey : 12/14/2006 3:51:59 PM

Hey ... add BHI-AN's high of day $8.60 to $70.... $78.60. Darned close to MONTHLY R2.

Jeff Bailey : 12/14/2006 3:50:14 PM

BHI-AN $8.10 x $8.30

Jeff Bailey : 12/14/2006 3:49:27 PM

BHI $77.30

Jeff Bailey : 12/14/2006 3:47:45 PM

Swing trade bullish call exit alert ... for the Baker Hughes BHI Jan $70 Calls (BHI-AN) at the bid of $8.00

BHI $77.17

Keene Little : 12/14/2006 3:47:25 PM

VIX is climbing higher as they push SPX higher. It could all be opex related but it's also possible that there are more players starting to get worried about tomorrow's CPI report.

Jeff Bailey : 12/14/2006 3:45:52 PM

VIX 10.04 alert .. back to WEEKLY S2

Jeff Bailey : 12/14/2006 3:39:03 PM

BHI-AN high of the day has been $8.60.

Jeff Bailey : 12/14/2006 3:38:05 PM

BHI ... "Market Maker" MWSE showing one (1) at $77.49.

Jeff Bailey : 12/14/2006 3:36:10 PM

BHI 5-minute interval chart with "dynamic" to the close Link ... still a shot for a "trend day to the close" with 38.2% having held.

Jane Fox : 12/14/2006 3:32:17 PM

* Nasdaq most active stocks: QQQQ MSFT SUNW INTC CSCO
* NYSE most active stocks: F AMD TWX GE PFE

Marc Eckelberry : 12/14/2006 3:29:46 PM

Hegde funds only trade ES for the most part because of liquidity. It shows on days like this.

Marc Eckelberry : 12/14/2006 3:28:38 PM

NQ not making new highs since this morning. Much better short at highs.

Jeff Bailey : 12/14/2006 3:28:27 PM

NASDAQ Comp ($COMPQ) 10-point box Link

20-point box Link

Add some "noise" from the 10-point with a 5-point Link

With the 10-point ($NASI) Link showing some signs of internal weakening, I (Jeff Bailey) would think BEARS hoping that BULLISH LEADERSHIP (NH/NL) NOT re-accelerate.

Nasty-looking break higher from a triangle pattern today on the NASDAQ Comp's bar chart. Link

Marc Eckelberry : 12/14/2006 3:23:33 PM

INTC, CSCO and AAPL barely up. Investors in those stocks must be wondering if they are not staying in too long. Oh yeah, let's run quickly and buy some banking stocks at all time highs right ahead of CPI.

Jane Fox : 12/14/2006 3:21:25 PM

WASHINGTON (MarketWatch) -- Manufacturing activity in the New York area slipped in December, the New York Federal Reserve Bank said Thursday. The bank's Empire State Manufacturing index fell to 23.1 in December from 26.7 in November. The decrease was not as large as expected. Economists were forecasting the index to fall sharply to 18.0. New orders rose to 25.1 in December from 22.4 in November. Shipments were little changed. The prices paid index fell to its lowest level of the year. The unfilled orders index also fell sharply. The inventories index dropped into negative territory. The index was released by mistake, the New York Fed said. The index had been scheduled to be released Friday at 8:30 a.m. Eastern.

Jeff Bailey : 12/14/2006 3:18:06 PM

On 11/17/06 (November expiration) the COMPX closed 2,449.06 (say 2,449).

That day's closing NH/NL was 136:47 with 5-day NH/NL ratio= 79.2% and 10-day NH/NL ratio= 76.3%.

Jane Fox : 12/14/2006 3:15:47 PM

It looks like the Empire State report was released at 3:00EST

Jeff Bailey : 12/14/2006 3:14:53 PM

03:00 Internals found at this Link

Marc Eckelberry : 12/14/2006 3:13:30 PM

Just add 3 cents to make sure no one thinks the market i being manipulated...

Keene Little : 12/14/2006 3:12:30 PM

What time was the report "leaked"? Is that the reason we got that spike up? If so, stronger economy means less chance for a rate cut and yet the market rallies on that news. Still a market that has its cake and is eating it too. What happens after they've eaten the entire cake. I know what would happen after I ate an entire cake and it wouldn't be pretty.

Marc Eckelberry : 12/14/2006 3:11:38 PM

I bet we close at SPX 1425.03.

Jane Fox : 12/14/2006 3:09:45 PM

* Dec. Empire State was to be released Friday at 8:30 am
* Dec. Empire State index released by accident, NY Fed
* Dec. Empire State index above expected 18.0
* Dec. Empire State index 23.1 vs 26.7 in Nov.

Marc Eckelberry : 12/14/2006 3:03:32 PM

I agree 100% Keene, in fact we could see a rate hike in 2007.

Jeff Bailey : 12/14/2006 3:02:38 PM

03:00 Market Watch at this Link

Marc Eckelberry : 12/14/2006 3:02:09 PM

Keeene, I think it also funds who are playing catch up and feel they must have these stocks before year end in their portfolio. I wonder how fast they will be dumped in January.

Keene Little : 12/14/2006 3:02:08 PM

Take a look at this M3 (calculated) chart. For all the jawboning the Fed is doing about inflation worries, blah, blah, blah, the amount of money they're creating and stuffing into the market is going through the roof, literally. They're creating money at an accelerated rate (the light blue line is rate of change) and is hyperinflationary. Link

Still think the Fed is going to cut interest rates? Don't bet on it. They're causing a major problem here in hopes of keeping the economic pump primed and they're going to fail miserably and then have a big inflation probelm to boot. This is criminal and is very upsetting to see what they're setting us up for.

Marc Eckelberry : 12/14/2006 3:00:55 PM

When 80% of the population hears DOW all time highs and broker bonuses, it wonder why the heck they aren't doing that well. That is sure to irritate a few and then take chances by buying into this market at highs. Never fails.

Jane Fox : 12/14/2006 2:59:05 PM

Didn't want to say dang.

Jane Fox : 12/14/2006 2:58:19 PM

My niece is dating the trader and yes of course she is because hell he makes a lot of money.

Jeff Bailey : 12/14/2006 2:57:34 PM

Your sister is STILL dating him Jane?

Jane Fox : 12/14/2006 2:57:34 PM

If we continue to play in this sandbox we need to know the rules and if we don't like them then we need to find other work, this will not change any time soon.

Marc Eckelberry : 12/14/2006 2:56:30 PM

All those broker upgrades of GOOG when it was at 500 last month still look very silly.

Jane Fox : 12/14/2006 2:55:21 PM

All I can say Keene is what is that guy seeing now that he didn't see a month ago. Sorry but the economy is just the same now as it was then.

Marc Eckelberry : 12/14/2006 2:55:10 PM

Unless someone knows something about tomorrow. But that could work both ways. They know, so they drive it up to sell, or they know and buy because they think it will go even higher.

Jeff Bailey : 12/14/2006 2:54:42 PM

BIX 406.01 +0.49% ... getting some margins back with recent yield rise.

Jane Fox : 12/14/2006 2:53:26 PM

But when do the masses rise up and rebel. My neice just moved to London and is dating a trader for one of the brokerage houses over there. His job in his words "Is to manipulate markets to make as much for my company as possible."

My sister, who is dipping her toe into this business, was appalled.

Jeff Bailey : 12/14/2006 2:53:02 PM

Jane! I was just wondering what the "bonus" was for that Merrill analyst that just turned bullish the other day. Wonder if that had anything to do with his decision to finally give in?

Marc Eckelberry : 12/14/2006 2:52:54 PM

To shove the financials this high when rates are climbing (and make no mistake, they will climb, we are too far away from the Feds) is pushing the envelope. I thought we would have a year end rally for sure, but I am starting to have my doubts. Unless we correct next week, I don;t see how we can keep up this pace. CPI could be very mild, maybe that would do the trick.

Keene Little : 12/14/2006 2:52:43 PM

I don't think this rally has as much to do with bulls climbing on board as it does with the Fed money coming in (they're worried about the housing market and continue to stuff money in as fast as they can, actually faster) and the usual measurements we have for a "normal" market are simply no good. It's when the Fed keeps trying to stuff the money channels vs. people wanting to start taking profits that I think we'll see the Fed, and the mega banks' trading teams, on the wrong side of the trade. Probably not until January.

Jeff Bailey : 12/14/2006 2:49:32 PM

OEX 662.00 +0.99% ... ABOVE its WEEKLY R2!

Yes ... be VERY careful if short YM futures.

Keene Little : 12/14/2006 2:48:25 PM

Jane, in a word, yes. But those bonuses pale by comparison to some hedge fund managers who are pulling down $1B, yes that's with a B, bonuses this year. The whole system is so far out of whack it's mind numbing.

Marc Eckelberry : 12/14/2006 2:48:08 PM

SPX max pain is 1400. We are a whopping 25 points above it. PC ratio at 1425 is under .1, the lowest read I have ever seen on a nearby strike. Shorts counted on a close belwo 1420, and they are paying the price. To say that the bull side is crowded is stating it mildly.

Jeff Bailey : 12/14/2006 2:46:50 PM

QQQQ $44.51 +1.43% ... had recaptured its November expiration close ($44.30)

Jane Fox : 12/14/2006 2:45:18 PM

Goldman Sachs employees will be taking home average bonuses of $600,000 this year, and while Lehman Brothers and Bear Stearns haven't yet made any announcements about employee bonuses, they figure to be substantial. To be sure, there is worry about how long the party can last. The housing market is still plunging, and the broad economy is slowing. Although a more serious malaise has avoided so far, if fears about a possible recession prove to be well-founded, investors' appetite for risk, and the ocean of liquidity sloshing around the globe, could evaporate. For now, however, as word of new deals seems to break daily, and stocks march higher, next year may look just as kind.

And congress is worried about the Oil companies profits? Does anyone else find this almost sickening?

Jeff Bailey : 12/14/2006 2:43:36 PM

Look at that TRINQ ... now that's "pinned" ... 0.36. BIIIIIG buy-side bias today for and 5-lettered stocks.

Jeff Bailey : 12/14/2006 2:42:40 PM

VIX 9.85

Keene Little : 12/14/2006 2:41:50 PM

Just when it starts to look like it's running out of steam the Boyz fire off another couple of buy programs and squeeze the shorts out of this. The SPX 1420 calls that these guys bought on the Tuesday dip for 1.30 are now going for 7.50 for a nice 5x, approaching 6x, trade. Do you think a few million in that kind of play paid off well? That's what you can do when you have "risk-free" trading on your side.

Marc Eckelberry : 12/14/2006 2:41:35 PM

ES 1450 could be in the cards now, not today but before the month ends. CPI worries for tomorrow will put on the brakes at the close. Also SPX 1425 will be a pin, or close to. I shudder to think if CPI comes in more than +.02. I wonder how they would spin that after the strong labor news.

Jeff Bailey : 12/14/2006 2:38:10 PM

Maybe a MONTHLY R2 this month? Not an S2.

Jeff Bailey : 12/14/2006 2:36:32 PM


Jeff Bailey : 12/14/2006 2:36:15 PM

DIA $124.25 +0.72% ... trades MONTHLY 19.1% retracement. WEEKLY R2 just ahead.

Careful if your short futures.

Jeff Bailey : 12/14/2006 2:34:55 PM

SPY alert $143.05

Keene Little : 12/14/2006 2:34:25 PM

We've still 90 minutes to go but at this point it's looking like they're going to try to pin SPX 1425, SPY 143, DOW 12400 and DIA 124. Those levels would certainly make sense from an options expiration standpoint.

Jeff Bailey : 12/14/2006 2:31:19 PM

BHI $76.98 +3.73% ... here's a bar chart with conventional use of retracement (blue) and my MONTHLY Pivot retracement (pink) Link

Keene Little : 12/14/2006 2:29:59 PM

Notice too on that YM 15-min chart the negative divergence on MACD. It fits the pattern for making a high here. Whether it leads only to a pullback or instead is marking a major high (which is the direction I'm currently leaning), we won't know until it pulls back. But I sure wouldn't be comfortable in a long position here.

Keene Little : 12/14/2006 2:06:00 PM

This is the current short term pattern in YM that I like for a short play to set up. I have internal Fib projections for the move up at 12497 to 12510. The upper Fib projection is based on two equal legs up from the low on Tuesday and by the end of the day would hit the trend line along the most recent highs since yesterday. YM just tagged the first Fib projection at 12497 and the small move up from 12:30 PM could count complete and therefore I'm watching closely for failure at any time. But keep an eye on that 12510 level if reached. Link

Jeff Bailey : 12/14/2006 2:01:10 PM

BHI-AN $7.50 x $7.70

Jeff Bailey : 12/14/2006 2:00:50 PM

BHI $76.65 +3.30 ... retraces 38.2% of day's range.

Jane Fox : 12/14/2006 1:57:42 PM

SAN FRANCISCO (MarketWatch) -- Gold futures fell Thursday, but closed above the $630-an-ounce level, caught between pressure from a rising dollar and support from a rally in oil prices. February gold fell $1.50 to end at $630.90 an ounce in New York. Other metals futures climbed, with March silver up 3.5 cents to end at $13.95 an ounce and March copper at $3.0575 a pound, closing up 2.45 cents.

Jeff Bailey : 12/14/2006 1:51:51 PM

Current OPEN MM Profiles that I've made and Watch List (some notes/review regarding gold equities) at this Link

Note: RAISING stop and plan to sell BHI-AN prior to today's close; roll to SLB-BN (stay within RISK Management level(s), DON'T OVERLEVERAGE)

Keene Little : 12/14/2006 1:44:43 PM

If ES drops below 1434 now there's a good chance we've seen the high for the day. Otherwise we could see the choppy move higher continue. I've been half expecting to see SPX 1425 get pinned today but I'm just not sure they can hold it up.

Keene Little : 12/14/2006 1:45:13 PM

Watching ES try to push higher here now gives me the impression it's struggling to achieve new highs. This would be typical for a 5th wave of the move up from yesterday afternoon. It just did a retest of this morning's high and is showing bearish divergences so be on guard here for a sudden drop.

Jeff Bailey : 12/14/2006 1:35:01 PM

Speaking of index futures ... remember all those "sell program premiums" of late and little budge? Now today? We've witnessed this in recent weeks too. Ka-BOOM!

Could "feel the pressure" yesterday.

Jeff Bailey : 12/14/2006 1:29:30 PM

Haven't even looked at YM today. Trying to get some things done for the MM profiles and OPTIONS with VIX.X "relatively low."

Jeff Bailey : 12/14/2006 1:23:31 PM

Testing recent commentary I've made ... CRB Index has traded its WEEKLY Pivot (314.96) at 12:00 PM EST, and first time this week.

StreeTracks Gold (GLD) $62.20 -0.44% has NOT traded its WEEKLY Pivot ($62.76) at all this week.

Dollar Index has been strong this week and has now traded WEEKLY R1.

Jane Fox : 12/14/2006 1:21:00 PM

I agree with Keene that this looks like it will resolve higher.

Jeff Bailey : 12/14/2006 1:16:03 PM

01:00 Internals found at this Link

Marc Eckelberry : 12/14/2006 1:08:37 PM

SP 1425 pin job. NDX 1800 is also in the wings tomorrow as a possible pin.

Jeff Bailey : 12/14/2006 1:04:59 PM

01:00 Market Watch found at this Link

Jeff Bailey : 12/14/2006 1:01:33 PM

Purdue Univerity Study ... Bull Market Results

Triple top buy signal profitable 87.9% of the time; average gain 28.7%; 6.8 months.

Spread triple top buy signal profitable 85.7% of the time; average gain 22.9%; 7.7 months.

Keene Little : 12/14/2006 1:00:58 PM

This continues to look like it will press higher out of the consolidation off this morning's highs. But the consolidation is going a little longer than I thought it would and it raises the question in my mind as to what it is. I've seen enough of these slow sideways/down consolidations suddenly let go to the downside that it keeps me from recommending a scalp long from here.

Not much to do but sit and wait. I've got a Fib projection for the current move up in YM at 12510 so if that level is reached and we're seeing bearish divergences then I'd look to short it. The long side from here is riskier than I like.

Jeff Bailey : 12/14/2006 12:57:07 PM

Bullish swing trade call option alert ... for one (1) of the Schlumberger SLB Feb $70 Calls (SLB-BN) $2.95 x $3.10 at the offer of $3.10.

SLB $68.21 +1.24%.

Disclosure: I currently hold bullish position in SLB.

Jeff Bailey : 12/14/2006 12:47:32 PM

On 11/29/06 when the BHI calls were purchased, the VIX.X traded between 10.67-11.43

VIX currently 9.81

Jeff Bailey : 12/14/2006 12:45:38 PM

Yes ... it is for that reason that I would prefer to roll OUT of BHI, and INTO SLB.

Jeff Bailey : 12/14/2006 12:45:04 PM

What did the Purdue University study of probabilities "say" about the triple top and spread triple top buy signal in a "bull" environment? Not just the MARKET, but the SECTOR?

Jeff Bailey : 12/14/2006 12:42:20 PM

Schlumberger (SLB) $68.27 +1.35% Link ... where that chart link is from StockCharts.com and they adjust historical price for SLB's payment of dividends.

Now here's a look at a "pure" supply/demand chart from Dorsey/Wright where regardless of dividend, true supply/demand measured Link

Jeff Bailey : 12/14/2006 12:27:02 PM

StockCharts.com's chart of BHI Link is accurate for most part. At least since the September lows.

Jeff Bailey : 12/14/2006 12:21:23 PM

Swing trade bullish call raise stop alert on the Baker Hughes BHI Jan $70 Calls (BHI-AN) to $76.45, but will CLOSE OUT prior to today's close.

BHI $77.00 +3.75% Link

My initial target is/was $79.50.

More on SLB in a minute, but I made note of unadjusted SLB point and figure chart and dynamics at play there.

Jeff Bailey : 12/14/2006 12:15:45 PM

Yes... I would agree. A little overextended near-term. Maybe supply/demand dynamics of SLB more attractive.

Jeff Bailey : 12/14/2006 12:14:28 PM

U.S. Oil Fund (USO) $53.64 +1.43% ... WEEKLY Pivot $53.88.

$54.50 still sticks in my mind, doesn't it yours? (see past MM profiles).

Jeff Bailey : 12/14/2006 12:12:16 PM

Excellent comments being made by CNBC's Rick Santelli regarding ES and option action today.

Marc Eckelberry : 12/14/2006 12:01:22 PM

Oil could hit 70 next month if we get a close above 65. Target would be 100 by the summer on such an occurrence.

Jeff Bailey : 12/14/2006 11:54:21 AM

30-day Fed Funds out to March ... all pretty much 94.78 (100 - 94.78 = 5.22%)

Marc Eckelberry : 12/14/2006 11:53:43 AM

Until there are clear signs that the Feds will ease, there will always be strong pullbacks to profit from. And that could be for six months. As for daytrading, Jane is right, the internals favor the long side, but you could get stopped out in the profit taking chop at every swing high, so trade it, don't love it.

Marc Eckelberry : 12/14/2006 11:48:56 AM

What should concern bears is that last year, we sold off the last two weeks of December. In keeping with trading the opposite, we should have a closing year rally. My question from where? Here, or lower? My guess has been weakness next week and a final push the last five trading days of the year. Today's action change things, although straight up from here seems rather excessive, but be careful and don't bet the farm, cost average and you will be rewarded medium term.

Jeff Bailey : 12/14/2006 11:52:04 AM

SPY Options Chain (from evening of 12/07/06 and spike in VIX.X yet bullish Dn/Uptick observation) Link (volume was CBOE only) ... open interest in some calls rose notably following sessions. Good word of caution Jane.

Marc Eckelberry : 12/14/2006 11:42:44 AM

Same story Keene. If SPX loses the financials (and higher rates will do it), then we should get sub 1400 next month. I much prefer techs on the long side. Not that I am chasing anything here. I think we will have a January 2005 replicate steep correction, which could very well provide some great buying opportunities in technology ahead of Vista, which will do very well in six months. But for now, patience.

Keene Little : 12/14/2006 11:41:14 AM

The little sideways consolidation we've been in since this morning's high looks like it will lead to the "one more high" so if we get it that's when I'd be watching for bearish divergences to help identify a short play setup.

Marc Eckelberry : 12/14/2006 11:36:55 AM

Jane, to the contrary, I think SPX 1425 is a great place to establish short positions going into Q1. It looks like the pin for today.

Keene Little : 12/14/2006 11:36:23 AM

Marc, your XLF financials chart looks just like the BIX which tapped the top of its trend line along the highs since May.

Keene Little : 12/14/2006 11:33:11 AM

We've typically seen a big move in the morning followed by nothing and it certainly appears that's what we might get today. The big move is over and now we might just flop around for the rest of the day. Today's close will be important, especially SPX 1420 where a lot of calls are held. Whether they're short calls or long calls I don't know but I suspect a lot of people will be battling around this level.

Jane Fox : 12/14/2006 11:32:02 AM

This is not the kind of market in which you want to be short. Link

Marc Eckelberry : 12/14/2006 11:26:49 AM

XLF, Keene: Link

Jeff Bailey : 12/14/2006 11:19:34 AM

11:00 Internals found at this Link

Marc Eckelberry : 12/14/2006 11:05:25 AM

Beware of pre-lunch push with your stops. Keep them wide or re-enter after.

Jeff Bailey : 12/14/2006 11:03:09 AM

11:00 Market Watch found at this Link

Keene Little : 12/14/2006 11:02:40 AM

I had been told a long time ago to watch Mother Merrill (MER) since it often reflected what the stock market would do next. I had forgotten it over the years and was recently reminded about it again when I heard that there are many floor traders who watch it like a hawk. If MER is not confirming the move in the broader averages they fade the move in the averages. This includes intraday moves as well. So I recently started watching MER again and right now it's telling me to fade the averages, i.e. short this rally.

As the DOW and SPX make new highs MER is not confirming. It hasn't even been able to retrace more than 38% of the decline from Tuesday's high. That decline by the way looks impulsive and suggests the current bounce in MER will be followed by more downside. This is just another reason to start shorting this market. Keep an eye on Mother and it just might help us avoid getting caught up in the emotions of the general market.

Tab Gilles : 12/14/2006 11:03:48 AM

Dawson Geophysical (DWSN) This seismic oil company is up almost 7% today, almost 50% in 10 weeks.

On this weekly chart DWSN and $WTIC traded in sync, until last June. Where DWSN fell before oil topped and DWSN has been rallying recently, is oil set to rise again? Link Daily Link

Jeff Bailey : 12/14/2006 10:56:45 AM

SPY $142.73 +0.60% ... came within 2 cents of $143 strike. Some naked call sellers a bit jittery for sure this morning.

Marc Eckelberry : 12/14/2006 10:55:59 AM

The labor market picture is inflationary and that will not change in the next months.

Jane Fox : 12/14/2006 10:55:01 AM

SAN FRANCISCO (MarketWatch) -- The Organization of the Petroleum Exporting Countries, meeting in Nigeria Thursday, agreed to cut its current production by 500,000 barrels per day starting on Feb. 1, 2007 "in order to balance supply and demand," it said in a statement. "The Conference observed that market fundamentals clearly indicate that there is more than ample crude supply, high stocks levels and increasing spare capacity." January crude was last up $1.03, or 1.7%, at $62.40 a barrel.

Jeff Bailey : 12/14/2006 10:47:49 AM

U.S. Nat. Gas Inventory ... up roughly 274 Bcf, or +9.2% from year-ago 2,964 Bcf.

Marc Eckelberry : 12/14/2006 10:55:23 AM

The gamble by bulls is that CPI tomorrow is benign and Feds lower rates. Nothing is pointing to such an occurence, including lower unemployment and high retail sales (with lower margins). OIl has also kicked up the past month, although that will not be a core read, but it will be looked at.

Marc Eckelberry : 12/14/2006 10:43:24 AM

SPX up 13% for the year. You have to keep ice in your veins on days like today and not succumb to the emotions of the minute. Step back and look at where we are in a rising rate environment with all time highs for the DOW hit multiple times the past two months. Tops are formed when bears throw in the towel, which usually takes an extreme move. Cost averaging into some puts three to four months out is a good odds trade.

Keene Little : 12/14/2006 10:42:47 AM

Could be Marc. But maybe it's going to tank the market and the Boyz are driving it higher this morning so they can unload before it does. I think it's just opex related today--the cheap December calls that were purchased last Thursday needed some help today to get the payback. Gotta keep those mega banks raking in their billions so that the traders and executives can continue getting their $50M bonuses.

Keene Little : 12/14/2006 10:39:49 AM

NQ pushing higher. If new highs are accompanied by bearish divergences I'd short it.

Marc Eckelberry : 12/14/2006 10:39:11 AM

You have to wonder if someone got a peek at tomorrow's CPI.

Jeff Bailey : 12/14/2006 10:35:07 AM

EIA Nat. Gas Table Link ... 168 Bcf draw

Jeff Bailey : 12/14/2006 10:31:45 AM

Disclosure: I currently hold VIX Feb 12.50 Calls (VIX-BV)

Jeff Bailey : 12/14/2006 10:30:28 AM

Swing trade long volatility alert ... for three (3) of the CBOE Volatility VIX 12.50 Calls (VIX-BV) for $1.75. No stop and sell them if they trade 12.50

VIX.X 9.75

Marc Eckelberry : 12/14/2006 10:26:04 AM

All time VIX low was hit on 12/22/1993 at 9.31, so we did NOT hit all time lows, but we did hit a 13 year low.

Keene Little : 12/14/2006 10:24:30 AM

I can see the possibility for the market to push slightly higher--the short term pattern would look best with "one more high" but I'm not counting on it. I expect it but wouldn't be surprised if a bounce fails to make a new high.

Keene Little : 12/14/2006 10:22:32 AM

Perfect place for a top--VIX is back down for a test of its broken downtrend line which was the top of its descending wedge, and a test of its previous low (slightly lower). This is very typical "price" action for the VIX if you go back and look at previous bottoms for the VIX. Notice MACD isi still above its rising trend line since July. Today's the day I'm legging into some more longer term put options. Link

Marc Eckelberry : 12/14/2006 10:21:45 AM

13 year low for the VIX. ES hits wedge R at 1437 along with SPX 1425. Call resistance is just too high here and we should back down. Shorts got jammed on the SPX expiration squeeze, it was like a coil building for days, but the underlying bearish picture of higher interest rates is right beneath the surface. NDX is still lagging overall as Max pain sits at 1800. If you took and ES short at 1437, well done. Traders should note that XLF (financials) right at wedge resistance as well.

Jeff Bailey : 12/14/2006 10:20:59 AM

CBOE Oil Index (OIX.X) 669.20 +0.91% Link ... new all-time high!

Jeff Bailey : 12/14/2006 10:20:54 AM

VIX.X 9.78 -3.92% Link ... all-time lows!

Keene Little : 12/14/2006 10:14:37 AM

This daily chart of SPX shows what I mean about the ascending wedge and the bearish divergences on RSI. I've got to tell you, this chart has me salivating big time for a longer term short position. Link

Jeff Bailey : 12/14/2006 10:12:52 AM

OPEC Holds Production Output Steady ... AP Story Link

Keene Little : 12/14/2006 10:12:01 AM

The top of the wedge for SPX that I mentioned is actually a trend line along the recent highs since October's high, not July. This is when we started getting the bearish divergences at new highs, including today's. RSI is back up and touching the downtrend line along the RSI highs since October. A failure to get above its downtrend line would be good confirmation that we just might be putting in the top here.

Keene Little : 12/14/2006 10:07:09 AM

Obviously for the bearish potential on SPX it can't rally much further and the bears want to see this little throw-over above the wedge followed by a price collapse back inside the pattern. That would be the first sell signal.

Jane Fox : 12/14/2006 10:06:52 AM

TICKS +1000

Keene Little : 12/14/2006 10:05:57 AM

SPX now hitting 1423 and the top of its ascending wedge from July. I have a Fib projection for the current move up at 1423.40 which which is also at the top of the wedge and potentially a good ending for the rally. Interesting possibility here. Link

Jeff Bailey : 12/14/2006 10:05:12 AM

10:00 Market Watch found at this Link

Jane Fox : 12/14/2006 10:02:50 AM

DOW to new all time highs.

Jane Fox : 12/14/2006 10:02:17 AM

S&P and DOW to new yearly highs.

Keene Little : 12/14/2006 9:57:28 AM

No selling. Looks like the day the Boyz intend to drive this higher so as to make money on their cheap call options.

Keene Little : 12/14/2006 9:56:18 AM

NQ has the look of short covering right now--straight up.

Keene Little : 12/14/2006 9:55:20 AM

Market's getting jammed higher so there's no telling when it will stop but ES is now in the heart of its pivot resistance zone of 1431-1433. It's a good place to nibble at a short and we'll see if the computers start some selling.

Keene Little : 12/14/2006 9:50:45 AM

Daily R1 for NQ is at 1817.50, close to the Fib projection at 1818 where I suggested taking profits. If it can push a little higher to its downtrend line from November 24th at 1820 I'd consider a short play from there.

Jane Fox : 12/14/2006 9:48:32 AM

NQ is the first market to test its PDH.

Keene Little : 12/14/2006 9:48:00 AM

Monthy R1 for ES is 1432.50 so by the pivots it's going to be tough resistance in the 1431-1433 area.

Jane Fox : 12/14/2006 9:47:24 AM

Although the VIX opened above its PDH it has now fallen back into its PDR and is making new daily lows supporting the bullishness.

Keene Little : 12/14/2006 9:46:37 AM

I see trend line and Fib resistance at ES 1429.50-1430 so watch for a potential short play there. If it keeps going then we might have the move to a new high underway but I'm not ready to believe that yet. I think we'll still chop around so look to scalp moves rather than hope for a big move. ES just tagged its daily pivot at 1426.75 and then we have daily R1 at 1430.75 and weekly R1 at 1433.

Jane Fox : 12/14/2006 9:46:19 AM

AD volume is making new daily highs and it is never a good idea to be short when this internal is bullish.

Jane Fox : 12/14/2006 9:37:30 AM

TRIn opens with its PDR and is neutral so I will not be taking it into consideration.

Keene Little : 12/14/2006 9:37:00 AM

If you're still long NQ from yesterday near 1796 it's looking good this morning with the jump above its downtrend line from Monday, currently at 1809.25. There's the possibility that it will do a quick pullback and close its gap but I wouldn't want to see it do much more than that. As far as an upside target I'd take profits at two equal legs up from Tuesday's low for an upside target at 1818. This is close to the downtrend line from November 24th.

Jane Fox : 12/14/2006 9:37:52 AM

VIX opens above its PDH and that should be a worry the bulls.

Jane Fox : 12/14/2006 9:34:40 AM

AD line is a very healthy +628 and AD volume above 0 and climbing.

Keene Little : 12/14/2006 9:22:16 AM

The higher import prices and tighter labor market point to more inflationary pressures ahead and that spooked the equity futures at 8:30. But after their quick dip they got pushed right back up again and I think that's going to be the way of the market for at least a little longer--keep holding it up so as not to spook the masses. The Boyz need more time to unload their inventory and if the market can be held up into the end of the year then so much the better.

With the sideways consolidation over the past week, if it's to resolve higher then it would look best with another pullback to near Tuesday's low which should then set up the next rally leg. How much it rallies or even if it rallies is a question in my mind since I've seen tops to rallies happen in a very sneaky fashion--the market chops its way slightly higher and puts in a high as distribution finally turns into outright selling. That's the reason chasing this market higher, except for day trading, is very risky in my opinion.

Jane Fox : 12/14/2006 9:07:25 AM

To see a market adhere to a trendline as well as Oil has done lately is not something you see very often.

Oil is another market you need to keep an eye on if trading Gold. A strong Oil market relates to a strong Gold market because when investors see Oil getting strong they think inflation and Gold is the first place they will park their money. I believe the weakness in Oil is one of the main reasons Gold has not done better than it has in the last few months. Link

Jane Fox : 12/14/2006 9:02:51 AM

As long as the $ stays below its resistance I think Gold will stay above its support. As you can see both have very clear lines of resistance and support. I am long Gold again and will get out of that position if Gold closes below this support and the $ above its resistance. Link

Jane Fox : 12/14/2006 8:55:09 AM

Here is the daily chart of the $ with a very clear resistance. Link

Jane Fox : 12/14/2006 8:51:44 AM

Here is all four market's overnight action. I have been using TS's Save As feature and sometimes do not click the Workspace button and only get the window. Link

Jane Fox : 12/14/2006 8:49:05 AM

NEW YORK (MarketWatch) - Treasury prices sank into negative territory early Thursday, sending yields a little higher, after news of a 0.2% increase in import prices last month, contrasting with expectations for a flat reading

Jane Fox : 12/14/2006 8:48:44 AM

NEW YORK (MarketWatch) -- The dollar rose to a fresh three-week high versus the yen and gained against the euro early Thursday, after government reports showed lower-than-expected jobless claims in the latest week and higher-than-expected import prices last month.

Jane Fox : 12/14/2006 8:47:42 AM

Here is how the futures traded overnight in relation to their PDRs. Link

Jane Fox : 12/14/2006 8:44:39 AM

Congress has been looking at the huge windfall profits of the oil companies and I truly wonder why they don't look at the these ridiculous profits made by the brokerages houses.

Jane Fox : 12/14/2006 8:42:03 AM

Bear Stearns Cos. (BSC) said its fourth quarter net income rose 38% to a record $562.8 million, or $4 a share on total revenue of $4.47 billion. A year ago, the company earned $407 million, or $2.90 a share, on $3.18 billion total revenue. Analysts on average expected the company to earn $3.36 a share on revenue of $2.20 billion.

Jane Fox : 12/14/2006 8:41:35 AM

Lehman Brothers (LEH) said fourth-quarter net income rose 22% to $1 billion, or $1.72 a share, from $823 million, or $1.38 a share in the year-ago period. Revenue rose 23% to $4.5 billion. Analysts had forecast fourth-quarter earnings of $1.68 a share and revenue of $4.4 billion, on average. Compensation and benefits as a percentage of net revenues rose to 49.3% from 48.7% in the year-ago period

Jane Fox : 12/14/2006 8:40:46 AM

WASHINGTON (MarketWatch) -- The number of Americans filing for first-time state unemployment benefits fell to its lowest level since mid-October, indicating a somewhat tighter labor market, the Labor Department reported Thursday.

Jane Fox : 12/14/2006 8:40:10 AM

WASHINGTON (MarketWatch) -- The prices of goods imported into the U.S. rose 0.2% in November, as prices for imported petroleum fell, but imported natural gas skyrocketed.

Imported natural-gas prices climbed 30.3% in November, hitting a two-year high, according to a Labor Department report on Thursday. Imported petroleum prices, meanwhile, dropped 1.6%.

The rise in overall import prices reversed a two-month-long decline and beat the expectations of Wall Street economists surveyed by MarketWatch. Analysts expected the price index to be flat in November.

Excluding petroleum import prices, import prices rose by 0.7%.

Import prices excluding all fuels rose by 0.1%. Prices for imported petroleum fell by 1.6% in November, Labor Department figures show. The relatively small decline in petroleum prices comes after two months of hefty declines. The price of imported petroleum fell by 10.1% in October and 10.9% in September.

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