Option Investor
Printer friendly version
Keene Little : 12/28/2006 11:51:27 PM

Friday's pivot tables: Link and Link

OI Technical Staff : 12/28/2006 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The Market Monitor has been archived.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 : 12/28/2006 5:17:46 PM

Closing U.S. Market Watch found at this Link

Keene Little : 12/28/2006 4:14:37 PM

Could be Marc. The drop from the high at 3:15 is only a 3-wave move and qualifies as just another corrective pullback. I don't like going with the EW pattern during after-hours so it's a tough call for me here. If we've started the larger pullback/consolidation then we should continue to chop lower tomorrow. However, that still fits my expectation that we'll rally again in early January and a move to DOW 12626 would of course mean a move in YM to about 12700.

Jane Fox : 12/28/2006 4:11:23 PM

Reports tomorrow include:

10:00a.m. Nov Help-Wanted Index. Previous: 30.

Jane Fox : 12/28/2006 4:10:37 PM

That same thing happened last week. We had bearish internals all day but the market was able to hold on and then once the cash markets closed the futures sold off.

Marc Eckelberry : 12/28/2006 4:08:04 PM

Looked plenty impulsive to me, this last drop, Keene. I bet many hedge funds had YM 12600 on the radar.

Keene Little : 12/28/2006 4:05:38 PM

I have a feeling now that we're in the middle of the larger choppy pullback, meaning the leg up from Tuesday is finished. We could see ES/SPX walk down their broken downtrend lines from December 18th. As long as it remains a very choppy pullback, as it appears so far, that will add to my confidence that we're going to see another leg up in early January. If we instead start to get a stronger impulsive decline towards Tuesday's low, then the more likely we've seen the high.

Jeff Bailey : 12/28/2006 4:04:05 PM

YM 12,576 now ...

Jeff Bailey : 12/28/2006 4:03:53 PM

YM fell from 12,591 to DAILY Pivot

Jeff Bailey : 12/28/2006 4:03:11 PM

That was a "dinger"

Jeff Bailey : 12/28/2006 4:01:38 PM

Sell program premium ... YM 12,575 : SPY $142.20

Keene Little : 12/28/2006 4:00:38 PM

Interesting...quite the sell off in futures as soon as the cash marekt closed.

Keene Little : 12/28/2006 3:58:35 PM

ES is breaking its uptrend line from Tuesday but the SPX is still holding on, testing it here at about 1424.70.

Jeff Bailey : 12/28/2006 3:51:34 PM

SPX 1,425.49 -0.09% ...

Jeff Bailey : 12/28/2006 3:50:59 PM

DIA $124.96 +0.02% ...

Jeff Bailey : 12/28/2006 3:49:03 PM

Looks like an option expiration trade more than anything. EOY benchmarking?

Keene Little : 12/28/2006 3:38:58 PM

The DOW is also testing its uptrend line from Tuesday, currently near 12507.

Jeff Bailey : 12/28/2006 3:37:12 PM

QQQQ $43.25 ... backing off session high of $43.38.

Jeff Bailey : 12/28/2006 3:35:20 PM

Somebody did some buying at 02:15 PM EDT from this YM level 12,584. 3,000 contracts.

Keene Little : 12/28/2006 3:31:36 PM

ES's uptrend line from Tuesday is currently near 1434.50 and that's the line in the sand for a scalp long play here. A break down below that level would indicate to me that we're into the corrective pullback that I expect to see over the next day or two.

Keene Little : 12/28/2006 3:28:21 PM

If you got more aggressive with your stop on the ES long, good move so far.

Keene Little : 12/28/2006 3:26:39 PM

ES is hitting today's uptrend line at 1435.75. It should hold if there's "one more high" coming. Otherwise let your stop take you out.

Jeff Bailey : 12/28/2006 3:22:39 PM

03:20 Market Watch found at this Link

Marc Eckelberry : 12/28/2006 3:21:30 PM

They pushed me around a little, but I think YM short at 12602 is still the right call. Tight stops are obviously useless in this volume. You just have to take the dive (I did).Retail sector is not impressed by the CC numbers and this Christmas was light for many retailers so far. Watch RLX 502 resistance (20 dma).

Keene Little : 12/28/2006 3:16:23 PM

Considering the hour we might see a consolidation into the close with another pullback. In that case we might have to wait until tomorrow morning for the final high at which time I'd recommend shorting it. If you don't want to carry a long trade overnight (which I don't blame you one bit), start pulling your stop up tighter now.

Jeff Bailey : 12/28/2006 3:10:24 PM

My Comcast Internet (phone and cable TV) have been shutting off and I've done something to my desktop computer, where I can't access this monitor.

Jeff Bailey : 12/28/2006 3:08:24 PM

YM short stopped alert ... YM 12,602 ... traders should be stopped at 12,576 (from 01:17:05).

Marc Eckelberry : 12/28/2006 3:07:14 PM

Just watch the ten year yield. Bulls do not want to see it get back above 4.7%.

Keene Little : 12/28/2006 3:07:08 PM

(corrected chart here) Looking at the DOW, following the same idea that I outlined earlier for SPX (12:42 PM), this is how it might look. Link

After the leg up from Tuesday is finished (and I think it's got a tad higher to go), we should see a very corrective choppy pullback over the next 1-2 days. That should then set up the final rally leg that scares the bears away and sucks in the bulls, convinced this market is heading to 13K. I show the final leg topping out around 12626.

If you follow EW and wonder why I'm using a bunch of a-b-c wave counts it's because the move up from November looks to be an ascending wedge (ending diagonal). These wedges have 5 waves but each of those is a 3-wave move. That's what identifies triangle patterns, and is a strong reason why I expect to see this price pattern play out. A break below 12337, the 12/26 low, is required to say we've already topped out.

Jane Fox : 12/28/2006 3:06:35 PM

Dow to a new all time high. Yawn!!!

Keene Little : 12/28/2006 3:05:46 PM

I've got the wrong chart for my previous post. I'll correct and re-post.

Keene Little : 12/28/2006 3:05:00 PM

The move up from today's low is getting close now. We should get one more minor pullback and then a final minor high. ES 1440 still looks like a good upside target. Today's uptrend line is now nearing 1435.50 so I'd have my stop at 1435, locking in 2.50 points.

Marc Eckelberry : 12/28/2006 3:00:01 PM

Above 12604, YM has risk to 12623/12633, so stick to tight stops. This low volume makes it really hard to pinpoint set ups. Trading oil today has been very difficult, for example.

Marc Eckelberry : 12/28/2006 2:53:20 PM

The key is that yield at 4.7%. I pointed out yesterday the bullish chart of TNX and how we would hit 47 soon. This is bearish for small caps and ultimately for the rest of equities. Same set up as late April, higher CC and higher rates.
I will be quick to add that a correction in Q1 would be a buying opportunity for some sectors. I am especially sanguine on buying techs on a QQQQ move down to 41.90/42.10. Pick your strategy: wait for a correction to buy or short the move and then buy. Conservative traders should do the latter. A QQQQ close above 43.31 would negate the bearishness and shorts should be cautious.

Marc Eckelberry : 12/28/2006 2:44:12 PM

YM should be topped out now. 12604 is the old trendline support (now R) drawn off July lows/November, hit with a solid bearish divergence. It's an easy short at 12602, stop tight at 12605. If it doesn't work, it's just a minor loss. If it does work, it would head down to 12495, gap close.

Keene Little : 12/28/2006 2:37:47 PM

If you're watching SPX instead of ES, I've got an upside Fib projection for this leg up at 1428.13. From there, if I've got the right pattern, we should start a sideways/down pullback over the next day or two. It would be fitting for a Friday before the holiday--slow, choppy, listless, untradeable, why-am-I-here kind of trading.

Keene Little : 12/28/2006 2:30:37 PM

Not surprisingly the DOW is getting more support than the other cash indices. Gotta keep those new record highs coming in. Keep those sheeple wanting to buy more. Baaaaa...

Keene Little : 12/28/2006 2:19:00 PM

Ideally we'll now see two small consolidations followed by minor new highs on the day and have ES topping out at 1440 where I'd try a short. In the meantime, draw an uptrend line from today's low and use that as your guide for pulling your stop up behind this. At a minimum I'd now have my stop at 1434.

Keene Little : 12/28/2006 1:42:02 PM

If we're into the 5th wave up in the rally leg from Tuesday I've got a Fib projection for it at 1440 (5th wave = 1st wave), so that's currently our upside potential. If that level gets tagged I'd reverse and short it.

Keene Little : 12/28/2006 1:36:38 PM

OK, got it, so now raise your stop. If we're going to remain stuck in a sideways/down correction (meaning we've already seen the high for the leg up from Tuesday) then resistance will likely be found at ES 1436.25 which is two equal legs up from today's low and happens to be weekly R1. Take some money off the table there if you're playing multiple contracts.

Jane Fox : 12/28/2006 1:35:30 PM

NEW YORK (MarketWatch) -- A second, massive snowstorm in a week headed for the Denver area Thursday just days after the local airport -- a significant base for Frontier Airlines and United Airlines -- dug out from a blizzard that paralyzed operations.

Both carriers are advising travelers to check their flight status before leaving for Denver International Airport and are offering waivers on fees to change tickets.

The National Weather Service forecasts snow for the Denver area, increasing after 2 p.m. local time. Heavy snow with accumulations of up to 9 inches is possible Thursday evening, according to the National Oceanic and Atmospheric Administration's weather forecast. The winter storm warning could last well into the weekend, the service said.

Keene Little : 12/28/2006 1:34:07 PM

If ES pushes above 1435 now I'd raise my stop to 1433.00 to pay for commissions with some left over to buy a latte and call it a day.

Jane Fox : 12/28/2006 1:33:04 PM

Internals are certainly a lot different from the last few days. Link

Keene Little : 12/28/2006 1:31:36 PM

ES has pulled back to where it has two equal legs down in its small pullback to 1433.50 (I'm looking at a 1-min chart since price action is getting real slow now) so it should be ready to continue higher. But TRIN is a bit bearish, a-d volume is bearish (a-d issues is mirroring price action) and as Jane said VIX is neutral. I think raising the stop on the ES long to breakeven at 1432.50 would be a prudent thing to do here. No sense taking more risk than that.

Jane Fox : 12/28/2006 1:29:01 PM

These charts show the NQ is the only market to break its PDL so far. Link

Jane Fox : 12/28/2006 1:24:58 PM

Vix not too helpful today. Link

Jeff Bailey : 12/28/2006 1:17:05 PM

YM short alert here at 12,563 , stop goes 12,576, target 12,540

Jeff Bailey : 12/28/2006 1:03:47 PM

01:00 Market Watch found at this Link

Jeff Bailey : 12/28/2006 12:53:35 PM

Benihana (BNHNA) $29.16 +10.49% Link ... probes its 50-day SMA after upgrade to "strong buy" from "buy" at Sanders Morris Harris

Keene Little : 12/28/2006 12:42:51 PM

The DOW has already made a new high above December 18th and I think SPX will follow, but not right away. The RUT will probably top out above its December 5th high. I'm not so sure about the techs. Using the SPX 60-min chart I'm showing an idea that I think is playing out. Link

The rally leg from Tuesday may need another minor high to finish it, which is the reason I thought trying a long at support at SPX 1422 could work. The other possibility is that the rally leg is finished and now we'll see the sideways/down pullback I had mentioned earlier this morning.

After a new high today, if we get it, we should get a little larger pullback. The intersection of the July uptrend line and the downtrend line from December 18th is just above 1418 (cash) next Wednesday, which would be between a 50% and 62% retracement of this week's rally. Then a push higher into the end of the 1st, perhaps into the 2nd, week of January could be the final move of the rally.

I've mentioned a Fib projection for the DOW at 12626 and that would equate roughly to SPX 1437. Whether price plays out as depicted or instead rallies straight up from here, and finishes earlier, or starts its decline from here, can't be known. But from an EW perspective, and thinking how the smart money will want to play this market (to hand off inventory early next month without scaring the public away), this makes the most sense to me at the moment.

In the meantime, raise your stop on the ES long now to 1431.50. We got the bounce so now it needs to work its way higher or I'd get out of the way.

Keene Little : 12/28/2006 12:10:07 PM

SPX has drpped down to 1422.05, a tick off the level for two equal legs down today (1422.04) so it's a good place to try a long. ES long at 1432.50 with a stop at 1430.50. The risk is gap closure at 1428.75 which would be the next level to try a long.

Jeff Bailey : 12/28/2006 12:08:40 PM

Dow Industrials Top Performers for 2006 with some "fundamentals" thrown in at this Link

Jane Fox : 12/28/2006 11:56:28 AM

CHICAGO (MarketWatch) -- Mortgage rates inched up over the week, following news of a jump in consumer spending in November, according to Freddie Mac's weekly survey released on Thursday.

"Financial markets were concerned that stronger spending could keep inflation elevated," Frank Nothaft, Freddie Mac chief economist, said in a news release. "These worries were further compounded by the releases of new- and existing-home sales for the same month, which both exceeded market forecasts and caused Treasury bond yields to continue to rise."

But the decrease in new- and existing-home inventories for November suggest "the excess supply of homes on the market may be normalizing towards historical trends," he added

Jane Fox : 12/28/2006 11:27:14 AM

These two have done a 180 from yesterday. Link

Marc Eckelberry : 12/28/2006 11:23:53 AM

ES has a gap to close at 1428.75/1431 if 1433 does not hold. Watch 4.7% yield on the 10 year.

Jeff Bailey : 12/28/2006 11:23:14 AM

11:00 Internals found at this Link

Keene Little : 12/28/2006 11:19:25 AM

SPX is slowly working its way down to potential support at 1422 (cash). I still like the opportunity there for a long play. ES 1432.50 looks like the place and I'd use no more than a 2-point stop.

Jeff Bailey : 12/28/2006 11:04:39 AM

11:00 Market Watch found at this Link

Jeff Bailey : 12/28/2006 10:52:56 AM

EIA Weekly Crude Oil, Gasoline, Distillate, Diesel, Jet Fuel and Heating Oil Table found at this Link

Keene Little : 12/28/2006 10:45:24 AM

In case today's pullback is just a small 4th wave correction within the move up from Tuesday's low, I'm looking for where support could be. Using SPX, two equal legs down from yesterday's high is at 1422 (cash). Its broken downtrend line from December 18th is at the same 1422 and its uptrend line from Tuesday is at 1422. If SPX drops to 1422 you might want to take a stab at a long. That would be about ES 1432.50 so just a minor new low there.

Jane Fox : 12/28/2006 10:35:18 AM

NEW YORK (MarketWatch) -- Crude inventories fell by 8.1 million barrels in the latest week, the Department of Energy said Thursday. However, at 321 million barrels, they are still above the upper end of the average range for the time of year. Gasoline inventories rose by 3 million barrels, and distillates supplies, which include heating oil and jet fuel, rose by 500,000 barrels. The crude drawdown was bigger than analysts expected. Crude futures were last trading up 31 cent at $60.65 a barrel.

Keene Little : 12/28/2006 10:27:48 AM

I suspect rising rates will squash the bounce in housing as well.

Keene Little : 12/28/2006 10:26:00 AM

The bond market did not like this morning's data and they're dropping (yields rising sharply). TNX (10-year) and TYX (30-year) have now broken their downtrend lines from July. Hmm, equities next in line to break their uptrend lines from July?

Jane Fox : 12/28/2006 10:14:31 AM

NEW YORK (MarketWatch) -- Business activity in the Chicago region recovered more than expected in December after hitting a three-year low in November, according to the Chicago purchasing managers index released Thursday. The Chicago PMI rose to 52.4 in December from 49.9 in November. Economists polled by MarketWatch were expecting the index to strengthen slightly to 50.9%. Within the index, the new orders subindex rose to 57.8 from 52 in November. The prices paid index was flat at 60.2.

Jeff Bailey : 12/28/2006 10:13:55 AM

US Chicago Purch Mgmt Adj Dec Index 52.4 Vs Nov 49.9

US Chi Pur Mgmt Dec Prices Paid Index 60.2 Vs Nov 60.2

US Chi Purch Mgmt Dec New Orders Index 57.8 Vs Nov 52.0

US Chi Pur Mgmt Dec Supplier Deliveries 48.0; Nov 43.0

US Chi Purch Mgmt Dec Employment Index 45.8 Vs Nov 49.4

Jane Fox : 12/28/2006 10:09:14 AM

WASHINGTON (MarketWatch) -- Sales of U.S. existing homes rose 0.6% in November, to a seasonally adjusted annual rate of 6.28 million, the National Association of Realtors said Wednesday.

Inventories of unsold homes fell 1%, to 3.82 million, representing a 7.3-month supply. The increase was unexpected. Economists surveyed by MarketWatch were expecting a drop to 6.20 million units.

"We've entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down," said David Lereah, chief economist for the realtors group.

Sales are down 10.7% in the past year.

The median sales price fell, year on year, by 3.1% to $218,000.

Sales of single-family homes rose 0.2% to a 5.52 million annual pace. Single-family-home sales are down 10.2% in the past year.

Jane Fox : 12/28/2006 10:07:48 AM

DAteline WSJ - Existing-home sales climbed a second straight time and inventories fell during November, in another sign the housing market might be stabilizing. Full article coming soon.

Jane Fox : 12/28/2006 10:06:43 AM

WASHINGTON (MarketWatch) - U.S. consumer confidence rose in December amid an improved job market and more optimism about the economy, the Conference Board said Thursday. The private research group said its consumer confidence index climbed to 109.0 in December from a revised 105.3 in November. Economists were expecting a decline to about 101.9 from the previously reported 102.9.

Jane Fox : 12/28/2006 10:05:09 AM

VIX is printing within its PDR but I see the TRIN above its PDR, of course, you have to consider the very low TRIN range yesteday.

Jeff Bailey : 12/28/2006 10:04:39 AM

10:00 Market Watch found at this Link

Jane Fox : 12/28/2006 10:03:58 AM

AD line is -202 and AD volume below 0. I can't say either side is winning yet.

Keene Little : 12/28/2006 10:03:36 AM

Nope, just enough to hit the stops at a new high before reversing back down. I suspect we'll see a lot of this kind of price action over the next two days. Short term trading is very risky here.

Keene Little : 12/28/2006 10:01:47 AM

That's a pretty good "scare the bears back" buying spike. Now we'll see if there's any follow through.

Keene Little : 12/28/2006 9:59:08 AM

Be careful with the 10:00 AM reports coming out in a minute.

Keene Little : 12/28/2006 9:58:35 AM

The overnight action in the futures gave a heads up for this move down this morning. There was no immediate jam higher out of the gates as we saw Tuesday and Wednesday so it would appear that the manipulation of the market higher for the week (to get the DOW over 12500 and all the associated publicity surrounding that) could be over. Now I suspect we'll see an effort to just hold the market near its highs. Getting a buying spike as I type.

Keene Little : 12/28/2006 9:53:15 AM

A little lower, at about 1432.50, ES would retest its broken downtrend line from its December 18th high. And then just below that, at 1431, is its 30-min 100 and 130-pma.

Keene Little : 12/28/2006 9:51:19 AM

At 1434.50 ES is testing the overnight low and is also at the uptrend line from Tuesday's low.

Keene Little : 12/28/2006 9:45:11 AM

Playing with some Fibs and trend lines, if we do get a pullback to DOW 12450 it would be typical to see a very choppy sideways/down correction that takes 2-3 days. In other words forget about trading for the rest of the week. The low volume could only exacerbate the small jerky moves.

Jane Fox : 12/28/2006 9:23:39 AM

NQ broke out of its upward channel in mid December and started a sideways consolidation. Last Friday, the 22nd, NQ broke out of this consolidation as well and closed below its 50EMA. I would not be long NQ now. Link

Keene Little : 12/28/2006 9:21:56 AM

While it was only minor, last night's dip in the futures was the first time this week that they weren't run higher. Whether that means anything for today or not is unknown but it could mean the major push for the week is finished. We've got several indices and sectors pushing up against strong resistance again and a pullback would be logical today. But of course a logical market is an oxymoron, especially this week.

If we do get a pullback I could see ES closing yesterday's gap at 1428.75 and then I think the market is now set up to make new highs again next week. A pullback followed by another leg up would do a nice job at finishing the ascending wedge pattern that I showed the past two days for the DOW (with an upside Fib projection of 12626). If the DOW pulls back to 12450 (38% retracement of this week's rally) then two equal legs up from Tuesday would be 12630. Just some numbers to keep in mind.

Jane Fox : 12/28/2006 9:19:29 AM

The 50 EMA support on the Russell 2000 chart is not as clear as it is on the ES and YM charts but it is still there. I see a badly formed H&S on this chart as well with an upward sloping neckline. Link

Jane Fox : 12/28/2006 9:14:16 AM

Same story for YM, a close below the 50EMA would have me bailing on any long positions. Link

Jane Fox : 12/28/2006 9:12:03 AM

It is becoming fairly obvious that ES's 50 EMA is the line in the sand and a close under this MA could mean an intermediate top has been put in. In the meantime though the bulls are in control and have been since August. Link

Jane Fox : 12/28/2006 9:04:12 AM

Using the big contract for gold you can see that support held and this market is now trading above all its major MAs. Link

Jane Fox : 12/28/2006 9:02:24 AM

Economic Reports left for today are:

10:00a.m. Nov Existing Home Sales. Expected: -1.0%. Previous: +0.5%.

10:00a.m. Dec Chicago Purchasing Managers Index. Expected: 50.2. Previous: 49.9.

10:00a.m. Conference Board Consumer Confidence Index. Expected: 102.5. Previous: 102.9.

11:00a.m. Dec Kansas City Fed Mfg Index. Previous: 6.

Jane Fox : 12/28/2006 9:00:38 AM

Good morning all. Equity markets didn't make any bullish or bearish moves overnight just a lackadaisical sideways meander. Link

Jane Fox : 12/28/2006 8:54:40 AM

WASHINGTON (MarketWatch) -- The number of U.S. workers filing new applications for state unemployment benefits rose slightly in the latest week, while continuing jobless claims climbed to their highest level in nearly a year, the Labor Department said Thursday.

Initial jobless claims rose by 1,000 in the week ended Dec. 23 to reach 317,000, the Labor Department said in a report.

But in a sign of slackening in the U.S. labor market, continuing claims, or people continuing to collect state unemployment benefits, rose by 16,000, to 2.53 million, in the week ended Dec. 16.

It's the highest level since Jan. 28.

Market Monitor Archives