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Jeff Bailey : 1/19/2007 3:26:13 AM

Did your jaw drop? ...

I want to quickly follow up on some comments that I have made in recent months regarding "the MARKET is never wrong," and give some thoughts on what will likely happen in the not-to-distant future.

If you've ever read any type of investment publication, or listened to an investment-related program, you've undoubtedly observed conflicting opinions on things, especially when it comes to FUNDAMENTAL analysis, or forecasts.

In Thursday's MM at 02:27:59 PM EST, I made a quick note of a headline story that had crossed my DowJones newsfeed. Link

In mid-September, then October, then December, you may have read, or heard that the "S&P 500 was way overvalued" and wasn't acting rational.

While just 11% of the S&P 500 constituents have reported calendar Q4 earnings, the early tally is 8.3% higher than analysts' expectations.

Do you now begin to see "why the MARKET is never wrong?"

It can happen in UP and DOWN market environments.

Do you also begin to understand that the MARKET is a FORWARD LOOKING instrument, somehow, the MARKET figures out the future before "the news" eventually crosses the wire.

So what might we expect, with some of the early S&P Q4 results now tabulated?

If you're thinking "analysts are probably going to have to nudge up numbers for Q4 and perhaps, once those FUNDAMENTAL models are adjusted, FUNDAMENTAL analysts are going to start nudging up Q1 2007 numbers," then you and I are thinking along the same lines.

Aha! Now here is where I (Jeff Bailey) get accused of "bashing" a fellow analyst, or commentator. I'm not! Follow me here, but keep in mind the belief that "the MARKET is never wrong, it is ALL KNOWING."

IF we begin to see that FUNDAMENTAL analysis was "wrong" (too high, too low) and then think an "adjustment" should be made (as any analysis, fundamental, or technical should be when recognized as WRONG), how much faith should we have in FUTURE "predictions?"

Please! Outside of being the President of the United States, taking the roll of an analyst (fundamental/technical), or economist comes a very close 2nd as one of the most highly criticized positions some would want.

You've undoubtedly heard the phrase "all the bad news comes out at the bottom," or "all the good news comes out at the top." Perhaps you've seen a stock, or market RISE from a low when another NEGATIVE news event takes place. At the time, it DOESN'T MAKE SENSE! Then, 3-months, 6-months, or 9-months later the stock, or market has risen 5%, 10%, 20% and even though the rise seemed "irrational" the first bit of POSITIVE NEWS crosses the wire.

Aha! "The MARKET was right," and somehow, the MARKET knew the change was coming! The PRICE action of the stock was RIGHT after all!

And the SAME can be true when a stock, or market begins showing signs of WEAKNESS, even though there's positive news.

Conclusion: In recent weeks, a "long time bear" analyst at Merrill Lynch turned bullish. Maybe that analyst made an ADJUSTMENT to their "model," which then explained the S&P 500's rise. That's GREAT!

And I would have to think, that somewhere, tonight, even as I type, there are computers and analysts making some ADJUSTMENTS to their Q4 and Q1 2007 projections.

I'm sure there are some economists wondering "what's going on?" and making some adjustments too. Where are energy prices going? Tax laws? Healthcare costs? Capacity restraints/excesses? It gets overwhelming for the FUNDAMENTALIST doesn't it?

Heck! I (Jeff Bailey) can't keep up with all the earnings reports, or "tidbits" of information and mention it here that I see on a day-to-day basis. But each bit of information is processed and disseminated by the MARKET.

I think that on 06/14/06 when the S&P 500 (SPX.X) traded 1,219.29, there was some type of "shift" from BEARISH to BULLISH, when the MARKET suddenly forsaw POSITIVE things in the future.

So today, when we see an early tabulation of Q4 earnings that is 8.3% higher than analysts' expectations, DO NOT think the MARKET GOT IT WRONG in September, October, November and December and that the MARKET will now have to make adjustments.

What I (Jeff Bailey) think should be the case is that "the MARKET got it right" and it should be ANALYSTS, ECONOMISTS that will make some adjustments.

Jeff Bailey : 1/19/2007 1:54:41 AM

YM currently 12,583. Down 20 from settlement.

Down 1 from close (12,584)

Jeff Bailey : 1/19/2007 1:45:24 AM

YM Pivot Matrix for Friday at this Link

CBOT's official close/settle for 01/18/07 session at this Link

Jeff Bailey : 1/19/2007 12:50:37 AM

Email Not Working: It has come to my attention that RightSide's support group has been sending me email questions (with question/comments from subscribers) and they have been "returned blocked" back to the support group.

So, I will try and figure out what I may have inadvertently done, or where those emailings have been going.

I try and answer all questions in a timely manner, most often here in the MM.

Long-time subscribers that are used to emailing me direct may also not be receiving replies (my sister said her email from work has also been returned as "blocked"; I thought it was her company's firewall blocking things) and the last time I blocked my sister on purpose was when I was in 5th grade. Mom set me straight on that one.

Keene Little : 1/19/2007 12:44:42 AM

Friday's pivot tables: Link and Link

Tab Gilles : 1/19/2007 12:39:16 AM


Jan. 18 (Bloomberg) -- Oil will resume its march toward $100 a barrel after a "correction," said Jim Rogers, who predicted the start of the commodities rally in 1999. Link

OI Technical Staff : 1/18/2007 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 : 1/18/2007 6:14:01 PM

US House Votes To End Oil, Natural Gas Subsidies

Bill Passes By 264-163 Votes

House Bill Would Create Renewable Energy Fund.

Jeff Bailey : 1/18/2007 5:57:21 PM

Standard & Poor's Announces Changes to U.S. Index

Corus Bankshares Inc. (NASD:CORS) $21.87 -8.49% will replace Digitas Inc. (NASD:DTAS) $13.43 +0.07% in the S&P SmallCap 600 index after the close of trading on Wednesday, January 24. Digitas is being acquired by S&P Global 1200 constituent Publicis Groupe SA in a deal expected to close on or about that date, pending final approvals.

S&P REIT Composite constituent Medical Properties Trust Inc. (NYSE:MPW) $15.13 -0.72% will replace Open Solutions Inc. (NASD:OPEN) $37.92 +0.02% in the S&P SmallCap 600 index after the close of trading on a date to be announced. Open Solutions is being acquired by The Carlyle Group and Providence Equity Partners in a deal that is still pending final approvals.

Jeff Bailey : 1/18/2007 5:49:21 PM

Barclays Global Investors Cuts Apple Stake To 3.74%

DJ- Barclays Global Investors reported Thursday that it has cut its stake in Apple Inc. (AAPL) to 3.74%, according to a filing with the Securities and Exchange Commission.

Barclays Global Investors currently holds about 32 million shares of the Cupertino, Calif.-based computer and consumer electronics company, the filing said.

Barclays Global was listed as Apple's second-largest shareholder as of Feb. 1, 2006, with beneficial ownership of about 50 million shares, or a 5.91% stake, according to Apple's proxy with the SEC.

Apple's shares fell more than 6% Thursday after a weaker-than-expected forecast for the second quarter and concerns over Macintosh sales outweighed the company's first-quarter surge in earnings and iPod sales.

Shares of the company closed Thursday at $89.01 each, down $5.88, or 6.19%, from Wednesday's close.

The shareholder disclosed its stake change on a form designated for passive investors - those not seeking to change or influence a company's operations. Such filers aren't required to provide a reason for any changes in stake, and they don't have to disclose any transactions with the SEC.

Jeff Bailey : 1/18/2007 5:12:58 PM

Closing Internals found at this Link

Jeff Bailey : 1/18/2007 4:48:24 PM

March Crude Oil futures (cl07h) settled down $1.32, or -2.48% at $51.81.

Jeff Bailey : 1/18/2007 4:46:38 PM

February Crude Oil futures (cl07g) settled down $1.76, or -3.37% at $50.48.

Jeff Bailey : 1/18/2007 4:32:21 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 1/18/2007 4:23:17 PM

International Business Machines (IBM) $99.45 -0.56% ... called lower at $95.62 in extended.

Earnings Press Release at this Link ...

Jeff Bailey : 1/18/2007 4:17:51 PM

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

Jeff Bailey : 1/18/2007 4:08:29 PM

Later tonight, I and other YM traders might want to reflect on the evening of 5/10/06 and AIG's earnings. Link

Jeff Bailey : 1/18/2007 3:58:31 PM

Apple Computer (AAPL) $89.36 -5.9% ... probes session low.

Jeff Bailey : 1/18/2007 3:48:17 PM

Other than the YM not coming even close to its WEEKLY Pivot and holding firm at DAILY S1, today's biggest surprise is Bema Gold (BGO) $5.47 -0.90% far above $5.00 strike.

Jeff Bailey : 1/18/2007 3:45:39 PM

I can't tell you how eager I am to get rid of those VIX.X calls.

Jeff Bailey : 1/18/2007 3:36:19 PM

International Business Machines (IBM) $99.33 -0.68% ... Earnings after the bell. Consensus is for EPS of $2.19 on Revenue of $25.67B.

WEEKLY Pivot Levels are $96.77, $98.01, Piv= $99.17, $100.41, $101.57.

Jeff Bailey : 1/18/2007 3:29:01 PM

03:00 Internals found at this Link

Keene Little : 1/18/2007 3:21:51 PM

A move down from yesterday's high for ES would have two equal legs at 1427.25. A 50% retracement of its rally from January 9th is at 1427.50 so a continuation lower tomorrow morning could find support there. The previous pullback to the 1430 area on the 11th could also act as support.

Tab Gilles : 1/18/2007 3:18:45 PM

$NDX Nasdaq 100 Followup

I've recommended the Profunds USPIX & UCPIX entering back on Nov 2nd and Nov 27, 2006, perhaps a bit early). However, all indcators were signaling overbought conditions for the NDX.

see past post 12/29/06 11:49 AM.

I was cautious on AAPL, with it topping and correcting, perhaps to its 30-ema. Link

$NDX Link

Jeff Bailey : 1/18/2007 3:18:22 PM

YM 12,606

Jeff Bailey : 1/18/2007 3:16:46 PM

YM short exit alert 12,611

Jeff Bailey : 1/18/2007 3:11:24 PM

QQQQ $44.03

Jeff Bailey : 1/18/2007 3:11:05 PM

YM 12,608 ... if we're going to see any further distribution to the close, 12,610-ish needs to hold resistance.

Keene Little : 1/18/2007 3:07:49 PM

Looking at the big index, NYSE, its pullback from this morning's high would have two equal legs down at 9102.26 which is also near its 30-min 130-pma where it found support the last time it pulled back to it on January 11th. Its 10 and 20-dma's are at 9103. Its uptrend line from July is approaching 9100. While daily stochastics (fast setting) looks to be rolling over, a slightly slower setting (10(5),3) still shows it heading up so it's too early to take away anything from that. There are bearish divergences but so what else is new for this market--they've been there since October. There's nothing bearish about price yet. Link

Jeff Bailey : 1/18/2007 3:01:59 PM

03:00 Market Watch found at this Link

Jeff Bailey : 1/18/2007 2:59:09 PM

SPX 1,424.62 ... call it 1,425

Jeff Bailey : 1/18/2007 2:58:50 PM

DIA $125.45 ... call it $125.50

Jeff Bailey : 1/18/2007 2:58:19 PM

YM short lower stop alert to break even.

YM 12,604

Jeff Bailey : 1/18/2007 2:57:13 PM

VXN 17.78

Jeff Bailey : 1/18/2007 2:57:04 PM

QQQQ $44.00

Jeff Bailey : 1/18/2007 2:56:20 PM

Intercontinental Exchange (ICE) $127.44 -4.33% ... probes yesterday morning's low. Put optioin are/were VERY expensive on this one.

Tab Gilles : 1/18/2007 2:52:19 PM

Weekly EIA Report Link

Keene Little : 1/18/2007 2:47:09 PM

NQ and ER have certainly been the more volatile indices this month. Bigger ups and now bigger downs. Compare their pullbacks to YM which is basically flat since the high on Tuesday. ES has pulled back not quite 38%, NQ 50% and ER is approaching 78.6%. Looks like rotation into the bluest of the blue chips again.

Keene Little : 1/18/2007 2:41:34 PM

A 50% retracement of the January rally for NQ is at 1803.50. Next potential Fib support would be 62% at 1790 but it's looking like it could be close to completing its pullback for now.

Keene Little : 1/18/2007 2:39:19 PM

The RUT is the one giving me the most bearish picture right now. After a 5-wave move up from the January low, it has now declined in a 5-wave move. That suggests the January high was THE high for this index. With a 5-wave move down now it should be ready soon for a correction of the decline from Tuesday's high and if that correction then turns back down for new lows we'll have confirmation that the small caps are done. But for now it's looking like a major sell signal on that one.

Jeff Bailey : 1/18/2007 2:32:21 PM

YM short stop lower stop alert ... to 12,636.

YM 12,612

Keene Little : 1/18/2007 2:32:14 PM

There are bullish divergences on the 15-min charts, even on NQ as it makes new lows for the day, so be cautious if short.

Jeff Bailey : 1/18/2007 2:30:11 PM

Sell Program Premium ... YM 12,618 : SPY $142.56 : QQQQ $44.11

Jeff Bailey : 1/18/2007 2:29:32 PM

SPY $142.65 : SPX 1,427.34 as benchmarks.

Start plugging in those early earnings results.

Jeff Bailey : 1/18/2007 2:27:59 PM

US Earnings: Q4 Results Up 15.1% Vs. 2005, Up 8.3% Vs. Views

DJ- The earnings of companies in the Standard & Poor's 500 index that have issued fourth-quarter reports are running 15.1% higher than year-earlier results, according to Thomson Financial.

Of the 500 companies, 56, or 11%, had reported earnings for the quarter as of Thursday. So far, fourth-quarter earnings have come in 8.3% higher than analysts' expectations.

Compared with a year earlier, earnings of S&P 500 companies are expected to rise 9.3% in the fourth quarter. That figure reflects actual earnings for the companies that already have reported and average estimates for the rest.

For the first quarter, analysts, on average, expect earnings of the S&P 500 companies to rise 7.4% from the year-earlier period.

(more later)

Jane Fox : 1/18/2007 2:24:45 PM

ER and NQ have both made new daily lows. Link

Keene Little : 1/18/2007 2:18:29 PM

One of the reasons I'm entertaining the thought that the current pullback in the techs is only part of a larger choppy move higher is because the pullback in SPX and the DOW don't look impulsive. With those two chopping lower from their highs it continues to look like they're not done making new highs either. It's possible we'll see a larger sideways/down correction that works off some of the short term overbought conditions. They're just not going to make this easy.

Jeff Bailey : 1/18/2007 2:16:02 PM

VXN 17.50

Jeff Bailey : 1/18/2007 2:14:57 PM

YM 12,622 ... buyers haven't given up yet.

Jeff Bailey : 1/18/2007 2:14:27 PM

QQQQ $44.17 -1.64% ...

Jeff Bailey : 1/18/2007 2:14:00 PM

Be al_rt should QQQQ trade that $44 strike (per option montage observations).

Keene Little : 1/18/2007 2:02:18 PM

The move down since the initial low this morning for NQ is either forming a small descending wedge and is about to finish it (and reverse back up) or else it's getting ready for a dump (as in waterfalling lower since the initial bounce off this morning's low).

Jeff Bailey : 1/18/2007 1:57:24 PM

Sell Program Premium ... YM 12,620 : SPY $142.67 : QQQQ $44.18

Jeff Bailey : 1/18/2007 1:56:07 PM

IBM $99.88 -0.13% ... no worse for wear in "big tech sell-off"

Keene Little : 1/18/2007 1:41:20 PM

Daily charts are rolling over and it's starting to look more bearish for the intermediate term. The BIG pullback in the techs changes the short term bullish picture I showed this morning on the NDX charts. While NDX continues to hold above 1799 and therefore hasn't violated the potential for a 5th wave up to complete its rally, it has me wondering what else could be playing out.

I was asked yesterday what alternative count I would have for NDX if it weren't finishing an impulsive wave count to the upside (hence the need for a 5th wave up) and the only one that comes to mind is a lot more bullish actually. It's possible that we only completed a 3-wave move up from January 3rd for the first wave of wave-5 up.

That interpretation says we'll form an ascending wedge and the current pullback is wave-2 of 5 and we'll see it turn around and head for new highs again as it chops its way higher to a final high. It would likely take weeks to play out. I have no idea yet if we'll get something like that but I want to mention the possibility in case you're in, or thinking of getting in, some longer term short positions. We're still in an uptrend and until that breaks, this can turn right back around and higher again.

Keene Little : 1/18/2007 1:29:39 PM

It certainly looks like NDX is trying to find support at its January 9th high of 1799.

Keene Little : 1/18/2007 1:20:20 PM

NDX is very close to taking out the 1799 level. Another drop will take it out. If it does then keep an eye on a 50% retracement of the January rally, just below 1790.

Jeff Bailey : 1/18/2007 1:19:51 PM

01:00 Internals found at this Link

Jane Fox : 1/18/2007 1:10:44 PM

NEW YORK (MarketWatch) -- AeroVironment, a maker of small drone aircraft for intelligence, reconnaissance and surveillance, may be the first high-flying initial public offering of 2007 when it makes its debut, which is expected next week.

AeroVironment plans to offer 6.7 million shares at $14 to $16 apiece in a bid to raise about $100.5 million via underwriter Goldman Sachs.

It'll trade under the symbol AVAV on the Nasdaq.

Keene Little : 1/18/2007 1:04:32 PM

Very true Jane.

Jane Fox : 1/18/2007 1:02:58 PM

Keene now if Jeff wanted to go short at 12645 YM would have most likely had to trade through it. Just not fair is it?

Jeff Bailey : 1/18/2007 1:02:11 PM

01:00 Market Watch found at this Link

Keene Little : 1/18/2007 12:58:19 PM

Jeff, are you still tracking your YM short trade? Just so readers are aware, if that was a real trade with a stop at 12645 then as soon as that level was tagged your stop was triggered at 12:06. It does not have to get one tick above it.

Jeff Bailey : 1/18/2007 12:50:49 PM

Correction to my earlier post ... QQQQ did NOT trade its WEEKLY S1 of $44.18. Session low has been $44.21.

Jeff Bailey : 1/18/2007 12:48:37 PM

YM 12,634

Jeff Bailey : 1/18/2007 12:48:24 PM

Bank Of Canada's Dodge: "Marginal" Upward Inflation Pressure

Pressure On Mfg. From C$ To Continue

Weaker Exports A Cyclical Issue

Tab Gilles : 1/18/2007 12:39:31 PM

USO/$CRB/$WTIC/XLE Oil will capitulate on a break of $50. Link

Jeff Bailey : 1/18/2007 12:37:05 PM

Blast At S. Kuwait Port (update)DJ- An explosion at Shuaiba shut part of the facility for several days last November.

Shuaiba, an aging coastal refinery in southern Kuwait, started operations in 1968 and is due to be mothballed around 2010 when a new 615,000 b/d refinery is due to be finished, although questions about surging costs have threatened to delay that new project.

The blast last November caused a one-month delay of 12,000 metric tons of diesel to international suppliers, according to Kuwait National Petroleum Co., the state-run refining company.

Jeff Bailey : 1/18/2007 12:33:11 PM

QQQQ $44.22 -1.53% ... darts to new session lows and WEEKLY S1.

Jeff Bailey : 1/18/2007 12:32:42 PM

US Oil Fund (USO) $43.13 -2.46% ...

Jeff Bailey : 1/18/2007 12:32:14 PM

YM 12,620

Keene Little : 1/18/2007 12:23:51 PM

ES wasn't able to make it up to its daily pivot at 1439 on that bounce attempt but YM jumped slightly above its pivot at 12636 and nailed Jeff's stop to the penny at 12645. NQ is dropping back down for a test of its low (if it holds). Its weekly S1 is at 1815.

Jeff Bailey : 1/18/2007 12:23:00 PM

YM 12,622

Jeff Bailey : 1/18/2007 12:22:36 PM

Schlumberger (SLB) $58.20 -0.49% ... Declares 40% Increase In Quarterly Dividend. $0.175/share.

Jeff Bailey : 1/18/2007 12:16:06 PM

US Oil Fund (USO) $43.08 -2.57% ...

Jane Fox : 1/18/2007 12:16:02 PM

Oil falls to 50.025

Jeff Bailey : 1/18/2007 12:15:43 PM

YM 12,631

Jeff Bailey : 1/18/2007 12:15:07 PM

Blast At S. Kuwait Port, Oil Exports Halted - Al-Arabiya TV

DJ- An explosion at Kuwait's Shuaiba Port on Thursday has stopped oil export and refining operations, Al Arabiya television reported.

The report didn't give further details on the cause of the explosion nor the extent of the damage.

The Shuaiba refining facility in the area has a capacity of about 190,000 barrels a day and is one of three refineries in the gulf state. Kuwait has a total refining capacity of around 900,000 b/d, according to the International Energy Agency.

Jane Fox : 1/18/2007 12:14:55 PM

WASHINGTON (MarketWatch) - The manufacturing sector in the Philadelphia region grew modestly in January, the Federal Reserve Bank of Philadelphia reported Thursday.

The Philly Fed index of manufacturing sentiment rose to 8.3 from negative 2.3 in December, the bank said. Economists expected an increase to about 2.5.

Readings over zero in the diffusion index indicate growth.

Jeff Bailey : 1/18/2007 12:06:42 PM

YM 12,639

Jeff Bailey : 1/18/2007 12:06:18 PM

US Oil Fund (USO) $43.06 -2.62% ...

Jeff Bailey : 1/18/2007 12:05:46 PM

DJ- Blast at S. Kuwait Port, Oil Exports Halted

Jeff Bailey : 1/18/2007 12:04:47 PM

YM 12,630 ... mid-point of day's range.

Jeff Bailey : 1/18/2007 12:03:56 PM

Philly Fed Jan Business Index 8.3 Vs. December's -2.3. Well above forecast of 3.0.

Jeff Bailey : 1/18/2007 12:01:49 PM

YM 12,629 ....

Jeff Bailey : 1/18/2007 12:01:19 PM

Philadelphia Fed being released.

Jane Fox : 1/18/2007 11:55:50 AM

* NYSE most active stocks: F MOT GE EMC PFE
* Nasdaq most active stocks: AAPL INTC CSCO SUNW AMAT

Jane Fox : 1/18/2007 11:55:24 AM

CHICAGO (MarketWatch) -- Mortgage rates were at their highest levels since November this week, according to Freddie Mac's weekly survey, released on Thursday.

The rate on a 30-year fixed-rate mortgage averaged 6.23% for the week ending Jan. 18, up from last week's 6.21% average. The mortgage averaged 6.10% a year ago.

The 15-year fixed-rate mortgage averaged 5.98% for the week, up from last week's 5.96% average. The mortgage averaged 5.67% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.04%, compared with last week's 6.03% average. The ARMs averaged 5.75% a year ago.

Jane Fox : 1/18/2007 11:47:19 AM

Dateline CNN - -- Art Buchwald, who took humorous jabs at Washington politicians in decades of syndicated columns, has died at his Washington home, a friend said today. He was 81.

Jane Fox : 1/18/2007 11:45:09 AM

Don't you all just hate it when Jeff goes short and I come and say time to go long. 'nugh to pull your hair out I tell ya.

Jane Fox : 1/18/2007 11:43:38 AM

We had a little blip this morning (Thank you very much Bernanke) but I think we are back on track now and the internals are once again saying long.

Jeff Bailey : 1/18/2007 11:33:07 AM

YM short alert ... short the YM here at 12,618, stop 12,645, target 12,570.

Keene Little : 1/18/2007 11:26:57 AM

The sideways/up correction in NQ looks like a bear flag. Based on this pattern I'd say we've got another leg down coming. Then we'll see if some bullish divergences are appearing. For now I would not want to be long and I'd think about trying a short here (scalp only).

Jeff Bailey : 1/18/2007 11:21:26 AM

11:00 Internals found at this Link

Jeff Bailey : 1/18/2007 11:04:25 AM

11:00 Market Watch found at this Link

Jeff Bailey : 1/18/2007 11:01:53 AM

Walgreen (WAG) $46.38 -0.27% ...

Jeff Bailey : 1/18/2007 10:59:43 AM

Wal-Mart (WMT) $48.63 +0.87% ... received favorable high court ruling late last night regarding overturn of Maryland's Fair Share Health Care Fund Act, which the U.S. Court of Appeals for the 4th Circuit said Maryland's mandated health benefits legislation clashed with Federal legislation.

Jeff Bailey : 1/18/2007 10:55:34 AM

S&P Retail Index ($RLX.X) 519.39 +1.15% ... another all-time high!

Jeff Bailey : 1/18/2007 10:53:22 AM

EIA: Weekly Percent Utilization of Refinery Operable Capacity (%) 87.92%, down from prior week's 91.45% operable capacity.

Jeff Bailey : 1/18/2007 10:51:36 AM

EIA Weekly Refinery Operable Capacity after adding 7,000 barrels per day in prior week, operable capacity unchanged at 17.397 million barrels per day.

Jeff Bailey : 1/18/2007 10:50:22 AM

EIA: Weekly Gross Inputs into Refineries down 613,000 barrels per day.

Jeff Bailey : 1/18/2007 10:46:11 AM

EIA: Weekly Heating Oil Stockpiles up 350,000 barrels.

Jeff Bailey : 1/18/2007 10:45:18 AM

EIA: Weekly Kerosene-Type Jet Fuel Stockpiles down 1.3 million barrels.

Jeff Bailey : 1/18/2007 10:44:24 AM

EIA: Weekly ULS Diesel Stockpiles up 813,000 barrels.

Jeff Bailey : 1/18/2007 10:43:25 AM

EIA: Weekly Distillate Stockpiles up 910,000 barrels.

Jeff Bailey : 1/18/2007 10:42:39 AM

EIA: Weekly Gasoline Stockpiles up 3.5 million barrels.

Jeff Bailey : 1/18/2007 10:42:10 AM

EIA: Weekly Crude Oil Stockpiles up 6.7 million barrels.

Jane Fox : 1/18/2007 10:39:57 AM

YM is the only market that has not broken its PDL so far. Link

Jane Fox : 1/18/2007 10:37:09 AM

SAN FRANCISCO (MarketWatch) -- The Energy Department said crude supplies rose for the first time in eight weeks, up 6.8 million barrels to 321.5 million for the week ended Jan. 12. Motor gasoline supplies rose 3.5 million barrels to 216.8 million, up a fifth week. Distillate stocks also rose a fifth week, up 900,000 barrels to total 141.9 million barrels. Following the news, February crude dropped $1.14 to $51.10 a barrel. February reformulated gasoline fell 2.11 cents to $1.3575 a gallon and February heating oil traded at $1.467 a gallon, down 3.28 cents.

Keene Little : 1/18/2007 10:36:17 AM

While it's always dangerous to step in front of a moving train (trend), watch for bullish divergences at new lows, or retests of lows, to try a long play. During opex week it's always tough to tell if a move has much meaning, including this morning's decline. We haven't had a volatile day yet this week so we're due.

Jeff Bailey : 1/18/2007 10:34:06 AM

Semiconductor HOLDRs (SMH) $33.33 -3.22% ... session low has been $33.18. WEEKLY S2 at $33.15.

Jeff Bailey : 1/18/2007 10:32:44 AM

S&P Banks (BIX.X) 402.12 +0.15% ... highs of session after kiss of WEEKLY S1.

Jeff Bailey : 1/18/2007 10:29:53 AM

Air Products Adds WF6 Capacity to Meet Increased Demand

DJ (partial)- Air Products (NYSE: APD) is expanding tungsten hexafluoride (WF6) capacity at its electronic specialty material manufacturing facility in Hometown, Pa. This production addition is aligned with the company's previously announced staged capacity plan. The new capacity will come onstream during the first half of this year. The expansion enables Air Products to produce 60% more WF6 for the semiconductor industry, in particular, memory chip manufacturers.

APD $70.93 -0.22% Link ...

Keene Little : 1/18/2007 10:27:23 AM

NQ broke below 1816.50 (the high on January 4th and wave-1 on the NDX 60-min chart I posted) but NDX has not broken that high at 1799.07. I always go with cash when looking at EW counts and therefore the pullback, while much deeper than I expected (and may not be over) has not yet violated that high. In an impulsive move the 4th wave can't overlap the 1st wave and that's why I'm watching that level. If NDX drops below 1799 then something else is playing out in that pattern.

Jeff Bailey : 1/18/2007 10:20:44 AM

Most Actives ... QQQQ $44.35 -1.24%, AAPL $90.09 -5.11%, INTC $20.56 -2.28%, CSCO $26.51 -1.74%, AMAT $18.27 -5.82%, SPY $142.57 -0.31%, MSFT $31.03 -0.22%, SUNW $5.83 -2.67%, SIRI $3.89 +0.77%, LVLT $6.03 -3.36%

Jane Fox : 1/18/2007 10:08:29 AM

The "Calm before the Storm" was what probably did it. I wonder if this comment will follow him like the helicopter comment has.

Keene Little : 1/18/2007 10:07:11 AM

The techs have turned more negative here than I expected (hoped) to see. ES and YM have given up their early bounce and ES is just now breaking the lows of the past two days. I'm not sure what this means yet. For ES, two equal legs down from yesterday afternoon's high is at 1433.25 so watch to see what happens there.

Jane Fox : 1/18/2007 10:07:06 AM

Market did not like Bernanke's comments one little bit.

Jeff Bailey : 1/18/2007 10:06:00 AM

10:00 Market Watch found at this Link

Jane Fox : 1/18/2007 10:05:11 AM

And once again the bears are able to turn the tables on the bulls and intercept the ball.

Jane Fox : 1/18/2007 10:04:28 AM

WASHINGTON (MarketWatch) -- Fed chief Ben Bernanke urged Congress to put the federal budget on a long-term sustainable path. "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened, with future generations bearing much of the cost," Bernanke said in testimony prepared for delivery to the Senate Budget Committee. Bernanke said that recent narrowing of the deficit was simply "the calm before the storm" as spending on entitlement programs will begin to climb quickly during the next decade.

Jane Fox : 1/18/2007 9:57:49 AM

BOSTON (MarketWatch) -- Standard & Poor's said Thursday it will calculate 22 indexes for XShares Advisors LLC that are comprised of public securities of issuers in a specific state representing every region of the U.S. The benchmarks "will be a unique, flexible tool that creates the opportunity to invest in the economies of various regions of the U.S. on a state-by-state basis," said XShares Group LLC co-founder Jeff Feldman in a statement. XShares Advisors is listed as the investment adviser for so-called lifecycle exchange-traded funds called "Independence Shares" that have been filed with regulators by online broker TD Ameritrade Holding Corp. (AMTD) .

Keene Little : 1/18/2007 9:55:29 AM

NDX has dropped a little lower than a 38% retracement of the 3rd wave (typical for a 4th wave correction) which is at 1820.49 (NQ 1834). The 30-min 100 and 130-pma's are also being tagged here so it might find a bottom here.

Jane Fox : 1/18/2007 9:54:17 AM

I must admit these have been less reliable of late but they are still good enough to tell you which kind of trade has the highest odds. Link

Jane Fox : 1/18/2007 9:51:31 AM

If I had to pick long or a short I would pick long.

Jane Fox : 1/18/2007 9:43:07 AM

Both TRIN and VIX open within their PDRs.

Jane Fox : 1/18/2007 9:41:32 AM

AD line is +323 and AD volume climbing. The bulls have the ball but do not have field position.

Jane Fox : 1/18/2007 9:32:57 AM

NEW YORK (MarketWatch) -- Treasury prices were under pressure early Thursday, sending yields higher, after a raft of new reports pointed to expansion in residential construction, tight labor market conditions and increases in consumer level inflation.

The data lower the chance that the Federal Reserve will cut rates and also diminish demand for bonds.

Jane Fox : 1/18/2007 9:31:42 AM

ES has a very clearly defined channel but notice how it has not tested the upper trendline. Now also notice the MACD and RSI's trendlines. This chart would be enough to get me out of any long positions I had in this market but not enough to get me short. For a short I will need a close below the lower trendline which is also the 50EMA. Link

Keene Little : 1/18/2007 9:18:24 AM

Right now the techs have one of the cleaner price patterns and I'm going to be watching them for some clues as to what the market is doing. It's quite possible we'll see some divergences between the indices but in case they move somewhat together I think it'll be important to keep your eye on NDX. I showed these two charts at the end of the day yesterday and believe we have only one more leg up to complete the rally from July. The 60-min: Link and daily: Link

Right now I like the Fib target and trend line resistance at NDX 1866 (about NQ 1881) but it could change if NDX drops lower today. NDX would have to drop below 1800 (NQ 1816.50) to negate this short term bullish/longer term bearish scenario. If we get the next leg up then it will be the last one of the rally and it will be time to look to get short and hold on.

Jane Fox : 1/18/2007 9:00:44 AM

Here is why I remain bearish on Gold. These weekly charts are telling me short gold but since I do not short this commodity I just remain on the sidelines. Link

Jane Fox : 1/18/2007 8:58:55 AM

Crude broke its PDH overnight but has now returned back to the safety of its PDR.

US$ broke its PDL overnight then rallied all the way back to test its PDH.

Gold had a nice rally yesterday but I am still not a buyer of Gold due to the strenght in the $ (relative strength that is) and the weakness in crude. Gold is directly related to Oil and indirectly related to the $.

Tbonds are down and that means rates are up and that puts downward pressure on the equity markets. Link

Jane Fox : 1/18/2007 8:54:07 AM

The equity marekets liked the data out at 8:30 but not enough to break overnight highs. These charts show quite clearly your strongest market (YM) down to your weakest (NQ). Link

Jane Fox : 1/18/2007 8:49:30 AM

NEW YORK (MarketWatch) -- Wall Street broker Merrill Lynch & Co. Inc. said Thursday its fourth-quarter net income jumped 68% boosted by a big gain in principal transactions and a healthy investment banking business.

The company (MER) said it earned $2.35 billion, or $2.41 a share in the fourth quarter, compared to $1.39 billion or $1.41 a share a year ago. Net revenue rose to $8.61 billion from $6.78 billion.

Analysts polled by Thomson First Call had expected the company to earn $1.92 a share.

Merrill also said it raised its quarterly dividend 40% to 35 cents a share from 25 cents a share.

Jane Fox : 1/18/2007 8:45:56 AM

WASHINGTON (MarketWatch) - First-time applications for state unemployment benefits dropped by 8,000 to a seasonally adjusted 290,000 in the week ending Jan. 13, the lowest level in 11 months, the Labor Department reported Thursday.

The four-week average of initial claims, considered a better gauge of underlying labor market strength because it smoothes out often-volatile data, dropped by 6,500 to 308,000, the lowest since October.

There were no special factors, such as severe weather events, holidays or strikes, that impacted the claims numbers, a Labor Department spokesman said, adding that there is always lots of volatility in the claims figures this time of year, as construction firms and retailers lay off seasonal employees with uncertain timing.

Jane Fox : 1/18/2007 8:45:28 AM

WASHINGTON (MarketWatch) - Led by higher gasoline, clothing and tobacco prices, U.S. consumer prices rose a seasonally adjusted 0.5% in December, the first increase since August, the Labor Department reported Thursday.

Excluding food and energy prices, the core CPI rose 0.2% in December, the biggest increase in three months.

The increases in the CPI and the core CPI were exactly as forecast by the median estimate of economists surveyed by MarketWatch.

The CPI had been flat in November and had fallen 0.5% in both September and October as energy prices plunged. Energy prices bounced higher in December, however, before turning lower again more recently. In 2006, the CPI rose 2.5% after a 3.4% gain in 2005. The core CPI rose 2.6% in 2006 after 2.2% in 2005. It was the highest core inflation since 2001's 2.7%.

Jane Fox : 1/18/2007 8:44:57 AM

WASHINGTON (MarketWatch) - New construction on homes in the United States rose for the second straight month in December on strength in apartment construction, the Commerce Department estimated Thursday.

Housing starts rose 4.5% to a seasonally adjusted annual rate of 1.64 million, the highest level since September.

Economists surveyed by MarketWatch expected December housing starts would fall to a 1.57 million pace.

Starts of multifamily housing jumped 42.1% in December to 412,000. This is the biggest gain since April 2005.

Starts rose a revised 6.4% in November to 1.57 million units, down slightly from the initial estimate of a 6.7% gain.

Building permits - a sign of future activity - rose 5.5% to an annual rate of 1.60 million in December from 1.51 million in November.

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