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Keene Little : 2/22/2007 12:52:52 AM

While Jeff is obviously feeling bullish I'll throw a little cold water on the bull-fest and show this DOW chart which calls a top as of Tuesday's high. Link

As I had pointed out in tonight's Market Wrap, we have a very good setup (price and time) to be making a major market high now. Looking at the ending diagonal pattern on the DOW, the 5th wave = 62% of the 1st wave (very common Fib relationship in an ending diagonal) at DOW 12794.40. The high on Tuesday was 12795.85. Close enough. We then got a gap down on Wednesday.

I pointed out in the Wrap that we have a potentially strong turn window on Feb 23rd (24th but that's a Saturday), +/- 4 days. We're in the window now and with the COMP making new highs on Wednesday we could see a final spurt in the techs and small caps, as we've seen many times at past market highs (the last of the public is getting in and driving their sexy stocks higher). The OEX and NYSE look like a very good setup for a major high.

We'll watch the pullback, assuming we'll get one from here, to see if it becomes impulsive. A choppy pullback would say we're not done making a high yet and that opens up the likelihood that mid March will be the turn window. But as of tonight I like the setup for a top here.

Jeff Bailey : 2/22/2007 12:13:13 AM

Want to make that SPX chart "bullish" with support at 1,447? Then drag the 0% up to 1,504. See how nicely the 61.8%, 50% and 19.1% tie in. 38.2% is sloppy.

Jeff Bailey : 2/22/2007 12:03:22 AM


Jeff Bailey : 2/22/2007 12:01:48 AM

SPX.X PnF chart at this Link ... good gravy! A 3-box reversal would only be to 1,430 and the 50-day SMA.

You could really go "wild" and drag the SPX.X 0.0% up to that bullish vertical count of 1,930 if you wanted to.

Jeff Bailey : 2/21/2007 11:54:44 PM

SPX.X with a super-duper-bull-whopper fitted retracement at this Link

Jeff Bailey : 2/21/2007 11:52:37 PM

So ... what do YOU think about SPX 1,515?

Jeff Bailey : 2/21/2007 11:49:49 PM

SPX.X Now the "same" daily interval bar chart with conventional use of retracement at this Link

Keene Little : 2/21/2007 11:36:09 PM

Thursday's pivot tables: Link and Link

Jeff Bailey : 2/21/2007 11:13:37 PM

Has anyone been hearing the "chatter" that margin levels are running at historical highs?

Then the "leap" that it is all because bulls are so bullish?

Last time I shorted a stock, my broker also required that I utilize margin.

Anyone see ANYTHIN, (or not see anything) that might hint of BEARISH complacency?

Jeff Bailey : 2/21/2007 11:09:19 PM

SPY daily interval bar chart with prior MONTHLY pivot retracement and current MONTHLY/WEEKLY Pivot retracement at this Link

Jeff Bailey : 2/21/2007 10:50:22 PM

3 Chart Montage of SPY, $PREM.X and ES (contd) ... chart Link

In the 3-chart montage, I'm using the SPY as the cash market comparison, just so I can turn on VOLUME, so you get the feel of just how much money/shares are traded in a 2-minute interval. From 02:00-02:02 PM EST, the SPY turned 1,064,600 shares. We've got some big hitters as subscribers, but not that big.

Now, to bring things on a 1-to-1 basis, the SPX.X itself CLOSED that 2-minute interval (02:02 PM EST) at PRICE of 1,455.96. The ES closed that 2-minute interval (02:02 PM EST) at PRICE of 1,458.50.

Do YOU see the difference? 1,455.96 - 1,458.50 = 2.54.

That is, at that very moment in time, the cash (SPX.X) trades at a DISCOUNT of 2.54 to futures (ES).

Make sense? See how the $PREM.X tool measure is working? All it is doing is measure the difference between cash and futures.

Relative to HL Camp & Company's buy/sell program PREMIUM levels, is 2.54 OUTSIDE, or INSIDE the $1.98 and $3.96 range? Its "inside" so at that moment in time, there is NO MEANINGFUL arbitrage.

OK ... so now you have a grasp of buy/sell program PREMIUMS, how they are "created" and what that tool is measuring.

Do you also see how a SELL PROGRAM PREMIUM could be generated from BUYING? If futures trade at a PREMIUM to cash (SPY/SPX.X) isn't it possible to generate a SELL PROGRAM PREMIUM if the cash market is purchased seconds PRIOR to futures?

How many ES futures traded from 02:00-02:02 PM? 16,191. Yes, thats a good sized trade, and boy does it have some LEVERAGE.

Now, onto the PIVOT Levels (and retracement), but YOU also have a pretty good observation today of ALL the program PREMIUM activity and the BENCHMARKS I was posting as to where (PRICE) that institutional activity was taking place.

By about the 5th Sell Program Premium post, you were probably rolling your eyes and saying ... "Let me guess, SPY $145.85-ish?"

Reader Question I had a couple of days ago regard the Pivot Levels.

The BASIC premise is this!

The PIVOT is the mid-point. A POINT of equilibrium.

The BIG picture is MONTHLY Pivot. How can a computer MANAGE INVENTORY this YEAR, if it can't at least start with a MONTH? If a computer has TOO MUCH INVENTORY is would probably SELL monthly PIVOT down to MONTHLY S1. If a computer doesn't have enough inventory, it probably BUYS monthly PIVOT to MONTHLY R1.

How does a computer manage MONTHLY inventory? A WEEK!

Same thing. Not enough INVENTORY (see MONTHLY) and a computer most likely BUYS at WEEKLY Pivot to WEEKLY R1. Too much inventory and a computer most likely SELLS at WEEKLY Pivot to WEEKLY S1.

See the managing of inventory taking place?

How does a computer manage WEEKLY Inventory?

How about each DAY?!!!!

A computer low on inventory (see MONTHLY and WEEKLY) probably buys daily pivot to DAILY R1. A computer with too much inventory probably sells daily pivot to DAILY S1.

OI Technical Staff : 2/21/2007 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 : 2/21/2007 9:55:43 PM

3 Chart Montage of SPY, $PREM.X and ES on 2-minute intervals at this Link

The above montage is as much educational as it is "real life" institutional/program trading.

It is also a review of how institutional computers play a role in how a market trades, and how those institutional computers don't really "think," but simply execute base on a line of code, constantly measuring different variables, and calculating, calculating and calculating.

For PIVOT ANALYSIS traders, this is the beginning!

It is all about INVENTORY management, and how the big guns keep from going bankrupt, as they simply try and stay on the RIGHT SIDE of a market, while providing LIQUIDITY for BUYERS and SELLERS like you can I. They're NOT just counting nuts either. How many PUT OPTIONS need to be hedged? How many CALL OPTIONS need to be hedged? At what PRICE/STRIKE?

In today's MM, I posted a lot of sell program PREMIUMS. Note the emphasis on PREMIUMS.

During any given trading session, there may be HUNDREDS of buy and sell programs, and they are important.

However, I can't, nor would I want to post EVERY buy/sell program during a session.

However, from time to time, I do take note of excessive BUY and SELL program PREMIUMS.

Yes, yes, yes. These PREMIUMS are index arbitrage. That is, when a sell/buy program PREMIUM is created, it is a BRIEF moment, where there is GREATER disparity/difference between what should be, and what is.

As we near MARCH futures expiration, what is happening to the PREMIUM, of the MARCH futures contract? It is little different than what happens to an OPTION. Each day, it loses some TIME premium.

Cash is cash. The SPY is what it is. It doesn't lose any "value" based on time.

Today we witnessed what I would consider to be a plethora of sell program premiums. Oh, from time to time we see this, both buy, sell, and sometimes both buy and sell evenly matched.

If YOU, or I think "oh, there were so many SELL programs, it must be BEARISH," do NOT be fooled, or necessarily think that way.

In the ABOVE MONTAGE I've set the cursor boxes at the 02:00-02:02 PM EST time interval.

You and I can see how the cash/SPY came down and pegged its WEEKLY 38.2% retracement. A SELL PROGRAM PREMIUM was generated ($PREM.X) fell below $1.98. For a VERY BRIEF moment, things were "out of whack," and that is what ARBITRAGE is. Usually, ONLY a COMPUTER recognizes it, or is fast enough to capture that ARBITRAGE.

Now, there are TWO (2) ways a SELL PROGRAM PREMIUM can be generated, and it IS NOT always the selling the cash MARKET.

Jeff Bailey : 2/21/2007 8:00:37 PM

Now tie that in with the 02:00-02:02 PM EST decline in the SPY to, to, to.... $145.60 and yes... that 38.2% WEEKLY Pivot retracement.

Note too that today's DAILY Pivot for the SPY was $145.69

Jeff Bailey : 2/21/2007 7:58:09 PM

There ... see your $PREM.X ? that 02:00-02:02 PM EST interval. Yes... right there.

Jeff Bailey : 2/21/2007 7:54:25 PM

OK, DAILY S1 ... that will be an important level tomorrow. For the SPY that's $0.08 below your WEEKLY 38.2% of $145.60.

Jeff Bailey : 2/21/2007 7:45:43 PM

SPX went out 1,457.63 ... Using that mid-session high (cash gapped down) tomorrow's DAILY Pivot levels are ... 1,449.26, 1,453.44, Piv= 1,456.21, 1,460.39, 1,463.16.

Jeff Bailey : 2/21/2007 7:37:12 PM

SPY went out at $145.97. Tomorrow's DAILY Pivot Levels are ... $145.08, $145.52, Piv= $145.80, $146.24, $146.52.

Jeff Bailey : 2/21/2007 7:21:06 PM

Gold really caught a bid at around 12:30 PM EST. I wasn't monitoring the news wires today to see if/what was said, and didn't see gold's burst until 01:07:52 PM EST as I was updating the 01:00 Internals.

Fed Governor Kohn was about to speak at 01:00 PM EST.

Jane Fox noted the BOJ raised its main interest rate this morning at 09:04:49 (by 25 bp to 0.50%.)

Here's ForexFactory's economic calendar/update Link

Jeff Bailey : 2/21/2007 6:18:08 PM

Closing Internals found at this Link

Jeff Bailey : 2/21/2007 5:33:11 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 2/21/2007 4:48:02 PM

QQQQ went out $45.19 ... $45.24 extended.

Jeff Bailey : 2/21/2007 4:47:16 PM

Wild Oats (OATS) $15.72 -0.38% ... jumps to $18.37 extended.

Whole Foods (WFMI) $45.70 -0.80% ... jumps to $47.89.

AP Story Link

Jeff Bailey : 2/21/2007 4:45:15 PM

Merger Alert! ... Whole Foods Market (WFMI) buys Wild Oats (OATS)

Jane Fox : 2/21/2007 4:20:49 PM

Economic Reports for Tomorrow include:

8:30a.m. Initial Jobless Claims. Previous: +44K.

10:00a.m Jan Help-Wanted Index. Previous: 33.

10:00a.m. Jan Conference Board Help-Wanted Index. Previous: 33.

11:00a.m. Feb Kansas City Fed Mfg Index. Previous: 5.

Jane Fox : 2/21/2007 4:19:32 PM

SAN FRANCISCO (MarketWatch) -- Shares of Whole Foods Market Inc. jumped in late trading Wednesday after the natural foods grocer agreed to buy its rival, Wild Oats Market Inc. in a deal valued at $565 million plus debt. Shares of Whole Foods Market (WFMI) shot up 4.7% to $47.85 after the company said it has agreed to acquire Wild Oats (OATS)for $18.50 a share. Whole Foods will also assume Wild Oats' debt totaling $106 million. ,p> Shares of Wild Oats were halted in late trading, at $15.72.

Jeff Bailey : 2/21/2007 4:18:42 PM

NASDAQ NH/NL indications were looking very similar intra-day to that found on 01/24/07.

Jeff Bailey : 2/21/2007 4:12:06 PM

MBA's Weekly Application Survey at this Link

Keene Little : 2/21/2007 4:09:28 PM

NDX was more bullish today but was it just coincidence that it closed at its Fib target of 1838.83? The wave pattern can satisfactorily count complete to the upside with the little ascending wedge over the past two days. That says down we go tomorrow. Again, we'll know very early tomorrow which pattern is playing out. Link

Jeff Bailey : 2/21/2007 4:04:11 PM

I should disclose I currently hold bullish position in CAT (per 03:57:16)

Keene Little : 2/21/2007 4:03:04 PM

Is the DOW consolidating for a run higher or for a drop lower? Stay tuned since we'll get our answer early tomorrow. Link

Jeff Bailey : 2/21/2007 4:00:46 PM

Oil Service HOLDRs (OIH) "bad tick" to my 200-day SMA al_rt.

Jeff Bailey : 2/21/2007 3:57:16 PM

Swing trade round up to full alert take another Caterpillar CAT Aug $65 Call (CAT-HM at the offer of $6.65.

CAT $68.21 +0.41%

Jeff Bailey : 2/21/2007 3:53:54 PM

Was talking to the owners of La Junta Mill & Elevator this past weekend ... "best year ever" ...

Jeff Bailey : 2/21/2007 3:53:12 PM

Deere, CO (DE) $115.99 +2.32% Link

Keene Little : 2/21/2007 3:51:58 PM

Actually, looking at a shorter term pattern I should open that Fib projection window just a tad and say the potential Fib resistance zone for NDX is 1838.83-1840.55.

Jeff Bailey : 2/21/2007 3:51:50 PM

What's yellow and green and a well-oiled machine?

Keene Little : 2/21/2007 3:50:23 PM

They're certainly liking the techs and small caps better than the large caps today. That's a risky move for those bulls. NDX is now approaching the Fib projection at 1838.83 which is the level I had mentioned this morning that could be the end of the run up from Feb 12. Any higher than 1839 would strongly suggest it's heading for new highs above January's 1847.54.

Jane Fox : 2/21/2007 3:46:44 PM

NEW YORK (MarketWatch) -- Crude-oil futures closed at their highest level in more than a week Wednesday, holding above $60 a barrel as traders eyed developments in Iran and braced themselves for weekly data on supplies for some measure of how the chilly weather of the past week has impacted higher-than-normal inventories.

Analysts are expecting a solid draw in supplies of distillates, which include heating oil. The data comes amid forecasts for a thaw and warmer-than-average temperatures across the northeastern U.S. from now until March.

"Oil markets are expecting supply drawdowns from recent cold weather and refinery shutdowns in California and Texas," said Kevin Kerr, editor of Global Resources Trader, a newsletter published by MarketWatch.

Traders are also worried that with another U.S. carrier steaming toward the Straits of Hormuz, "anything could happen," said Kerr. "The tension in the Middle East is mounting and all signs are pointing toward attack," he said.

Jeff Bailey : 2/21/2007 3:46:19 PM

Frontier (FTO) $29.38 +3.05% ... sloppy with retracement. 200-day SMA juuuust above at $29.77.

Much stronger longer-term against VLO, matched stride/stride last 20-days. (See watch list)

Jeff Bailey : 2/21/2007 3:44:08 PM

Bitten by Baker has me a little gun shy .... you?

Jeff Bailey : 2/21/2007 3:43:41 PM

CNOOC (CEO) $83.77 +0.47% ... bugger trying to get a close above its 200-day SMA. Session low marked by my 80.9% retracement of 09/11/06 low close to recent 12/29/06 high close.

Keene Little : 2/21/2007 3:43:27 PM

Still not sure if the DOW and SPX are consolidating under their downtrend lines and getting ready to blast higher, or consolidating on top of their uptrend lines getting ready to drop like a stone. Let price be your guide here as neither has broken. This late into the day makes a move even more difficult to decipher. If not in a trade I would not recommend one into the close. Honor your stops on either side of this.

Jane Fox : 2/21/2007 3:40:17 PM

NEW YORK (MarketWatch) -- U.S. stocks turned mixed in afternoon trade on Wednesday, after minutes from the Federal Reserve's last meeting on interest rates reassured investors that the central bank isn't overly concerned about inflation, somewhat easing concerns sparked by earlier news of higher-than-expected consumer prices in January.

"The minutes had a bit of a calming effect on the market," said Jay Suskind, director of trading at Ryan, Beck & Co. "They show the Fed seems to be on the fence about both inflation and a slowing economy, just like the markets are."

Jeff Bailey : 2/21/2007 3:40:05 PM

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

Jeff Bailey : 2/21/2007 3:33:45 PM

Valero (VLO) $57.81 +3.28% ... I'd say this is a "bold move" above that rounding lower 200-day SMA ($56.75)

Jeff Bailey : 2/21/2007 3:31:16 PM

April Crude Oil (cl07j) settled up $1.22, or +2.07% at $60.07.

Jane Fox : 2/21/2007 3:29:09 PM

Is Crude next? Link

Jane Fox : 2/21/2007 3:27:50 PM

EWW WEEE Gold breaks its resistance. Link

Jeff Bailey : 2/21/2007 3:25:03 PM

Hmmmm ... another item perhaps worth of note regarding all these "sell program premiums" ... those $NASI and $NYSI. Both right back at their 20-point box "sell signals"

Jeff Bailey : 2/21/2007 3:22:01 PM

GSO.X 190.33 +0.12% ... this is a 52-weeker. Enough to keep any bear on edge.

Jeff Bailey : 2/21/2007 3:16:21 PM

03:00 Internals found at this Link

Jeff Bailey : 2/21/2007 3:12:53 PM

Can really see the YM coiling around this MONTHLY R1.

Jane Fox : 2/21/2007 3:12:33 PM

VIX hovering around daily lows and TICKS trading above 0 tell me the bulls have the reins.

Jane Fox : 2/21/2007 3:11:29 PM

Here is how the markets are trading in relation to their PDRS. Link

Keene Little : 2/21/2007 3:06:13 PM

The downtrend line from yesterday is still holding price down (SPX and DOW) but the way price is chopping below this line of resistance, a breakout to a new daily high could result in quick move to a new high above yesterday's. In the meantime, looking at a 30-min chart, you can visualize a potential diamond top in the making, starting from Feb 14 and the megaphone to yesterday's high. The current price action could be "filling out" the right side of the pattern. If true then it's a bearish pattern.

Jeff Bailey : 2/21/2007 3:03:39 PM

03:00 Market Watch found at this Link

Jeff Bailey : 2/21/2007 3:02:22 PM

Sell Program Premium ... YM 12,757 : SPY $145.87

Jeff Bailey : 2/21/2007 2:56:23 PM

$HUI.X up 10.77% for 52-weeks

QQQQ up 10.72% for same time period.

Jeff Bailey : 2/21/2007 2:56:15 PM

April Crude futures have some premium in them (compared to March contract, which exired yesterday). They look to settle above $60.00, but if I were to add $1.07 to yesterday's settlement of $58.85, we'd be $59.92.

I think $60.00 has been a key psychological "bull" level in recent weeks.

Jeff Bailey : 2/21/2007 2:48:40 PM

U.S. Oil Fund (USO) $49.74 +2.19% ... up $1.07.

Stuck its head above $50.00 to $50.17 right at 02:00, but inches back.

Jeff Bailey : 2/21/2007 2:43:11 PM

QQQQ $45.04 ... down a penny. QCharts got "messed up" at last night closing print. Thus the difference between QQQQ/NDX in my U.S. Market Watch today.

Jeff Bailey : 2/21/2007 2:41:48 PM

I feel/observe great pressure.

Jeff Bailey : 2/21/2007 2:41:29 PM

Microsoft (MSFT) $29.17 +1.17% ... session high a too familiar $29.22.

Jeff Bailey : 2/21/2007 2:35:14 PM

PetroChina (PTR) $121.29 +0.23% ... testing DAILY Pivot. WEEKLY S1 just ahead at $121.46.

Jeff Bailey : 2/21/2007 2:33:28 PM

DJ- Oil Futures: Crude Gain Led By RBOB Gas On Refinery Hitches

Jeff Bailey : 2/21/2007 2:32:29 PM

Sell Program Premium ... YM 12,758 : SPY $145.81

Jeff Bailey : 2/21/2007 2:28:52 PM

Qcharts' symbols are $PREM.X, or $EPREM.X

Jeff Bailey : 2/21/2007 2:27:45 PM

For those new to the MM, these "sell/buy program premiums are brief moments of arbitrage between S&P 500 futures (ES) and cash (SPY/SPX)

Jeff Bailey : 2/21/2007 2:26:07 PM

Sell Program Premium ... YM 12,765 : SPY $145.87

Keene Little : 2/21/2007 2:21:11 PM

It's a battle of the trend lines. SPX just tagged and retreated from its downtrend line from yesterday's high. So it could be coiling between its up and down trend lines in which case I'd buy a breakout or sell a breakdown.

Jeff Bailey : 2/21/2007 2:19:43 PM

Sell Program Premium ... YM 12,765 : SPY $145.86

Jeff Bailey : 2/21/2007 2:17:12 PM

Sell Program Premium ... YM 12,766 : SPY $145.88

Jeff Bailey : 2/21/2007 2:15:41 PM

YM 12,777 and DAILY Pivot.

Jeff Bailey : 2/21/2007 2:13:21 PM

YM 12,770

Jeff Bailey : 2/21/2007 2:13:12 PM

Somebody's trying to do a "jam job," but so far it doesn't appear to be working.

Jeff Bailey : 2/21/2007 2:11:00 PM

another, and another ... Sell Program Premium ... YM 12,769 : SPY $145.92

Jeff Bailey : 2/21/2007 2:08:42 PM

Sell Program Premium ... YM 12,771 : SPY $145.93

Jeff Bailey : 2/21/2007 2:08:13 PM

YM 12,771

Jeff Bailey : 2/21/2007 2:07:30 PM

YM's DAILY Pivot at 12,777 ... went long above that, but best was 12,785 ... 8 points.

Jeff Bailey : 2/21/2007 2:06:06 PM

YM 12,766 ... sticks its head back above MONTHLY R1 ... will it get cut off?

Keene Little : 2/21/2007 2:04:05 PM

If this morning's drop was wave-1 and the bounce was wave-2 (its "personality" is to fake everyone out thinking it's just another opportunity to get long for new highs), then the next leg down will be wave-3 (or wave-C). It will be a strong leg down if this is the correct short term count for today. Otherwise a push back to a new high will likely be just the opposite--a strong advance to new highs.

Jeff Bailey : 2/21/2007 2:03:30 PM

FOMC Minutes from 01/30-01/31 Meeting at this Link

Keene Little : 2/21/2007 2:01:13 PM

While the DOW broke below its uptrend line from Feb 12, and then found it to be resistance, SPX broke it briefly but got right back on top. It's testing it again at 1455.60 (the last little poke lower). The new uptrend line off this morning's low is now near 1454.30. Oops, just broke the first one as I'm typing and about to test the new one.

Jeff Bailey : 2/21/2007 2:00:46 PM

Sell Program Premium ... YM 12,745 : SPY $145.67

Keene Little : 2/21/2007 1:58:22 PM

I agree with Jeff--ES closed its gap to the tick. If it now heads back up and gets higher than 1461.75 it could blast off to the upside. Or it could be head fake and whip you around some more (wink).

Jeff Bailey : 2/21/2007 1:56:06 PM

Sell Program Premium ... YM 12,757 : SPY $145.76

Jeff Bailey : 2/21/2007 1:55:38 PM

The "only thing" I see for generation of those multiple sell program premiums was the SPY having backfilled its morning gap. If those highs are violated, watch out.

SPY $145.83 ... DAILY Pivot $145.71 just tested.

Keene Little : 2/21/2007 1:48:25 PM

The DOW found resistance at its broken uptrend line from February 12th through yesterday's low. Now we'll see if it finds support at the new uptrend line through this morning's low, currently near 12723. Link

Jeff Bailey : 2/21/2007 1:47:04 PM

YM long stop alert 12,755

Jeff Bailey : 2/21/2007 1:46:42 PM

Sell Program Premium ... YM 12,757

Jeff Bailey : 2/21/2007 1:40:51 PM

Sell Program Premium ... YM 12,768 : SPY $145.90

Keene Little : 2/21/2007 1:41:13 PM

Watching NDX continuing to press higher makes me feel like all I'm doing is chasing it and figuring out where to put the net to catch the fall. In the meantime it's blowing raspberries and climbing higher in the tree. Sooner or later the thin branches won't be able to hold it but where that is is the big question.

Playing with some Fib projections for a potentially bearish pattern says resistance could be found just under 1839. Any rally above that and there's no question we'll see new highs for the techs. In that case I get some Fib projections up near 1860. A break below 1825 would be a heads up that something more bearish (at least short term) is happening, a break below 1810 would be worrisome for the bulls, and a break below 1774 would say the bears have the ball. In the meantime it's the bulls' show. Link

Jeff Bailey : 2/21/2007 1:29:11 PM

I feel/observe great pressure building ...

Jeff Bailey : 2/21/2007 1:28:51 PM

Sell Program Premium .... YM 12,775 : SPY $145.98

Jeff Bailey : 2/21/2007 1:25:08 PM

Sell Program Premium ... YM 12,775 : SPY $145.98

Keene Little : 2/21/2007 1:17:16 PM

The price pattern is pure ugly. The choppy mess leaves one big question mark as to which way it's going. Until yesterday's high is taken out I think we'll head lower. That and $3 will get you a Starbucks. Just understand that the short term pattern needs a lot of work at the moment to get a clearer picture about what's happening. This DOW 60-min chart shows the key levels. In between is so far nothing but chop and whipsaws. Link

Jeff Bailey : 2/21/2007 1:16:06 PM

01:00 Internals found at this Link

Jeff Bailey : 2/21/2007 1:12:22 PM

Had a "dinger" of a sell program premium right in here earlier this morning.

Jeff Bailey : 2/21/2007 1:11:54 PM

Sell Program Premium ... YM 12,777 : SPY 146.00

Jeff Bailey : 2/21/2007 1:07:52 PM

Good gravy! ... GLD $67.40 +3.20%

Keene Little : 2/21/2007 1:02:56 PM

Sorry, I said SPX in my last post but I meant DOW. SPX has already exceeded its 62% retracement and tagged its 78.6% retracement at 1458.95 (using this morning's first low)--the line in the sand for the bears.

Jeff Bailey : 2/21/2007 1:02:38 PM

01:00 Market Watch found at this Link

Keene Little : 2/21/2007 12:57:45 PM

SPX has now retraced 62% of the decline when measured from yesterday's high to this morning's first low. I'm using the first low because it's possible the current leg up is finishing the upward correction. Therefore I'd be careful about the long side right here.

Jeff Bailey : 2/21/2007 12:52:52 PM

YM Long alert here at 12,782 , stop 12,755 , target 12,850

Keene Little : 2/21/2007 12:52:15 PM

I received a question about my calling out a Hanging Man Doji on yesterday's DOW and SPX charts (in last night's Market Wrap). The reader feels I was incorrect in calling out that candlestick pattern so I thought it would be a good idea to review it so that we're all on the same page. This daily chart of the DOW (expanded a little for better clarity than in the charts I use for the Market Wraps) shows yesterday's candle: Link

Quoting from Gregory Morris' book "Candlestick Charting Explained", "Features that will enhance the signal of a...Hanging Man pattern are an extra long lower shadow [the tail below the body of the candle], no upper shadow, very small real body (almost Doji), the preceding sharp trend and a body color that reflects the opposite sentiment (previous trend). "A Hanging Man with a black [red] body is more bearish than one with a white body."

So based on this definition what we had yesterday was in fact a Hanging Man Doji but it lacked the features that enhances the candlestick pattern. And that's why I stated we need a red candle today to help confirm this potential reversal candlestick pattern. Hope that helps explain a little why I called it what it is. We've seen many of these patterns fail though and that's why it's more of a heads up signal than a signal to just get short and hold on.

Jane Fox : 2/21/2007 12:21:11 PM

It looks like once again today we should have been following the VIX and not the AD line and volume.

Jeff Bailey : 2/21/2007 12:16:13 PM

Nope ... Hang Seng ($HSI) up 83 points, or +0.41% at 20,651.42 Link ... see that spread triple bottom sell signal at 20,150?

Remember that caller into James Cramer's "Mad Money" regarding, I get stopped out and trade reverses?

Mr. Cramer advised on not using stops! Then you look at PnF-ers like NEW Link or being short the PCAR's Link and say... what if I had honored the stop?

Keene Little : 2/21/2007 12:14:30 PM

Yesterday I bought the Russel 2000 March 800 puts for $ 3.40 based on your write-up in the Market Monitor. Give me your thoughts on those options and a target and time frame. Your insight is great and I look forward to your answer.

Thanks for the question Anthony as I suspect you're not the only one trying to short this market (wink). First of all I like to buy more time than that. You're betting not only on direction but how fast it will work. I'm OK with the direction but this market has been taking its sweet time doing anything. One possibility for a decline is that we'll see more of a rolling top than a strong decline initially. That could mean it will take months before this market really rolls over. In that case the OTM RUT 800 put would lose all of its time premium by the time March expiration rolls around.

As shown in this chart, we also might not be done rallying: Link Even with a relatively strong pullback towards 800 we could see the uptrend line from July 2006 support price for either a large bounce or the start of another leg up to a final high. Based on either possibility I'd have to say I do not like a March 800 put. It's simply not enough time to work. It could work but I don't like the odds. Not what you wanted to hear but I'd play it a little differently (more time).

Marc Eckelberry : 2/21/2007 12:11:30 PM

A reversal today might fail, so be ready to re-enter short. Levels would be 12764, 12776 and 12785/12793. Above that, forget it.

Jeff Bailey : 2/21/2007 12:11:18 PM

Haven't looked to see what took place in China's markets. Were they lower?

Jeff Bailey : 2/21/2007 12:10:13 PM

My "gut feel" is that this is a bear trap-like trade in PTR today. Tomorrow's EIA data may loom large, for bulls and bears.

Marc Eckelberry : 2/21/2007 12:08:31 PM

Bak for a sec. I agree Jane, also note the bullish divergence on the lows (15 mn stochastics and RSI). By the way, what is that MACD setting you use? It's a good one.

Jane Fox : 2/21/2007 12:03:57 PM

WIth the VIX making new daily lows short don't have a chance.

Keene Little : 2/21/2007 12:00:49 PM

Here are two charts (couresy EWI) that I came across that highlights the OEX put/call ratio and how a spike up (which is normally thought of as bullish when too many are buying puts) in the past has coincided with market turns. This says it's probably smart money loading up on puts. Link

As you can see that data is 1999-early 2001. Now the chart for 2005 through the present: Link This chart shows the spike (15-day MA) coinciding with OEX at its Fib resistance level near 670. Smart money again getting ready? Looks that way to me.

But as you can see, there was a big bet last September that the market would take a dive and it didn't. Those bearish bets probably helped propel the market skyward. The same thing could happen again if that 670 level gives way to the bulls.

Marc Eckelberry : 2/21/2007 11:58:55 AM

YM 12764/12768 would be a great re-entry short if we get there. Bulls need a 15 mn candle close above 12750 first. Gotta go, watch out for fed minutes at 2.

Marc Eckelberry : 2/21/2007 11:41:29 AM

Also notice how short term MA's are turning up.

Keene Little : 2/21/2007 11:41:04 AM

The choppy rise this morning looks bearish. But we've seen enough of these choppy rises just keep rising so it's risky either way at the moment.

Marc Eckelberry : 2/21/2007 11:39:31 AM

I have to leave anyway.

Marc Eckelberry : 2/21/2007 11:37:58 AM

12736 is holding, NQ is above 1836 again and the ADVDEC lines are not that dramatic. Let's not get greedy, these days 60 points on a short is ok. Another trade is only an entry away. Take the money.

Jeff Bailey : 2/21/2007 11:37:42 AM

Caterpillar (CAT) $67.98 +0.07% ...

Jeff Bailey : 2/21/2007 11:36:40 AM

Good gravy ... JOYG Link up some more!

Marc Eckelberry : 2/21/2007 11:36:24 AM

Alert: Exit YM short now, 12745, +62

Jeff Bailey : 2/21/2007 11:35:14 AM

NASDAQ-100 Heatmap Link

Marc Eckelberry : 2/21/2007 11:33:37 AM

Feel free.

Jeff Bailey : 2/21/2007 11:33:19 AM

Can see the "low estimate" on the EPS moved up a penny, but analysts have not done anything to the revenue.

Marc Eckelberry : 2/21/2007 11:32:51 AM

I am tempted to close the trade if 12736 holds.

Jeff Bailey : 2/21/2007 11:30:38 AM

Never did find, hear, or see any revenue guidance from MSFT regarding "aggressive Vista" estimates.

Here's current Analysts Estimates Link

Screen capture of same that I took on 02/16/07 Link

Jeff Bailey : 2/21/2007 11:28:15 AM

Microsoft (MSFT) $28.99 +0.53% Link ...

Marc Eckelberry : 2/21/2007 11:31:25 AM

I consider the 10 ema on the 15 mn chart to be the most important intraday MA for traders. You can see today why. Put it up with YM and ES (especially YM). The 15 mn chart has always been a favorite of commodity traders way back even before the e-minis.

Jeff Bailey : 2/21/2007 11:27:07 AM

Cisco (CSCO) $27.42 -0.86% Link ...

Jane Fox : 2/21/2007 11:26:49 AM

I really don't like days like this. THe VIX is bullish making new daily lows as is the TRIN but yet the AD line and volume are under 0. This is just like yesterday.

Jeff Bailey : 2/21/2007 11:26:25 AM

Intel (INTC) $20.75 -2.03% Link ...

Jeff Bailey : 2/21/2007 11:25:42 AM

Google (GOOG) $476.35 +0.87% Link ...

Jeff Bailey : 2/21/2007 11:24:53 AM

Apple Inc. (AAPL) $88.59 +3.13% Link ... on the move.

Keene Little : 2/21/2007 11:22:27 AM

Relative to the put/call ratio that might indicate bullishness from a contrarian perspective (too many puts), I've seen data that shows a spike up in OEX puts just before market highs. The supposition is that smart money loads up on OEX puts when they're getting ready to dump their stock. Recently the OEX put/call ratio spiked to highs not seen since 2000. I'll find that chart and show it later.

Jeff Bailey : 2/21/2007 11:18:46 AM

11:00 Internals found at this Link

Marc Eckelberry : 2/21/2007 11:17:47 AM

From a contraian perspective, I still see too many puts out there, but maybe this time they are to be taken at face value. Hard to tell, but there does seem to be lots of short covering. Have they thrown in the towel yet?

Jane Fox : 2/21/2007 11:16:48 AM

It is not safe to be long because of the AD line and volume but it is not safe to short because of the TICKS and VIX (making new daily lows again). Like I said before it is treacherous out there.

Marc Eckelberry : 2/21/2007 11:14:10 AM

What is the link to that, Jane? I might blog it.

Marc Eckelberry : 2/21/2007 11:13:12 AM

Good post Jane. I can't find excess optimism in the options market though, unless of course we put in that high (ISEE +220) in May.

Jane Fox : 2/21/2007 11:10:42 AM

MY last two posts are a continuation of the Yamamoto Forecast.

Marc Eckelberry : 2/21/2007 11:09:56 AM

Nice trap. Are we seeing some more bear style trading? Anyone who bought NQ 1838 just got clobbered again.

Jane Fox : 2/21/2007 11:08:49 AM

With all the frenzy, mania and froth, Wall Street failed to take note of how corporate insider selling has increased to its highest pace in 20 years. Furthermore, cash levels of mutual funds are near record lows. Without money for buying support, how do equities keep moving up?

Hence, our investing strategy: cash and go short.

We started the new year with 100% in cash, earning well over 5%, risk free. On Jan.17, we deployed 10% into the Rydex Ursa Fund (RYURX) . Ursa will rise when the Standard and Poor's 500 Index heads down in price. Another 10% is earmarked for RYURX if the S&P 500 moves higher in the coming weeks. The inverse action will provide us a lower cost-average price. The total return from cash and the short position should beat the market's performance for the new year.

Jane Fox : 2/21/2007 11:06:46 AM

You need not look far for the evidence of the euphoria in today's market:

1. Fox plans to launch a new business channel. Newsweek magazine recently had a write-up on the success of the CNBC Business Channel.
2. Based on surveys by Investors Intelligence, bullish investment advisers hover between the 50% to the 60% range. These are at the high end of the spectrum.
3. The Dow Jones Industrial Average achieved an all-time record high and the other indexes reached multiyear highs.
4. Small-cap stocks outperformed the other averages by a wide margin. Case in point, the Russell 2000 skyrocketed to a record high in early 2007. In addition, it enjoyed an 18.9% gain last year.
5. Wall Street expects to pay out $23.9 billion in bonuses. A startling increase of 17% over the previous year's record. The world's largest investment banker, Goldman Sachs , reported a whopping profit of $9.4 billion -- the most ever for a Wall Street company in a given year. And it has set aside $16.5 billion for salaries, bonuses and benefits for employees. Lehman Brothers Holdings also produced record profits for the quarter and year. Bear Sterns experienced a record quarter.
6. In 2006, a combined total value of $1.6 trillion of mergers and acquisitions in the United States nearly beat the $1.7 trillion record for values in 2000 (the top of the high-tech bubble). Internationally, mergers and acquisitions of $3.8 trillion did overcome 2000's figures.
7. The utilization of derivatives surged to the quickest pace in eight years during the first half of 2006. According to the Bank for International Settlements, the face value of derivatives based on corporate bonds, currencies, interest rates, commodities and stocks leaped 24% to $370 trillion. It marked the biggest percentage increase since 1998.
8. On Feb. 9, Fortress Investment Group made history. It was the first hedge and private equity fund to go public, a $634 million initial public offering. In its first day of trading, Fortress shot up 89% in intraday trading.
9. In the United States, the number of hedge funds resumed its growth. There are in excess of 9,000 of these funds. Around the world it's 30,000 funds.

Keene Little : 2/21/2007 11:04:31 AM

Maybe just another stop run on the techs? No new high on that move and now pulling back again.

Jeff Bailey : 2/21/2007 11:03:15 AM

11:00 Market Watch found at this Link

Jane Fox : 2/21/2007 11:02:39 AM

By Irwin Yamamoto, The Yamamoto Forecast
KAHULUI, Hawaii (YF) -- Market wise, equities are in the midst of the second-longest rally since 1929. Yet there are some serious warning signs -- especially sentiment.

The odds are high that the current advance won't be able to continue. Stocks remain stretched and trade above past market multiples. What goes up must come down.

On the economic front, we are overdue for a recession. The last one occurred in 2000 and 2001. Business expansions don't last forever. The boom-and-bust pattern of an economic cycle has not been repealed.

An inverted yield curve almost always points to a deep business slowdown. The Fed publicly claims there's a 40% chance of a recession. However, a model of the Federal Reserve Bank of New York is essentially forecasting an outright recession.

Double-digit corporate earnings growth will be a thing of the past. Companies should consider themselves fortunate to experience single-digit growth.

The housing industry remains on the verge of a massive collapse. In our estimation, this real estate debacle is only in the top half of the second inning of a nine-inning ballgame.

Sentimentally speaking, our indicators are flashing major warning signals. At extremes, sentiment can indicate a peak or an important low. This contrary indicator is presently at an extreme level. Unfortunately, it's a very bearish one.

Jane Fox : 2/21/2007 11:00:35 AM

... but the AD line and volume are telling me to not even think long so at least we have that much.

Jane Fox : 2/21/2007 10:59:44 AM

Treacherous trading today.

Keene Little : 2/21/2007 10:59:31 AM

It's not a good sign for the bears with NDX pushing back up here. There's quite the divergence between the techs and everyone else so it's not exactly bullish but nor is it bearish obviously.

Jeff Bailey : 2/21/2007 10:58:01 AM

Unlike yesterday, YM/DIA finds some resistance early this morning at MONTHLY R1. If that doesn't hold today, then that "overlap" up at MONTHLY R2 certainly in play.

Marc Eckelberry : 2/21/2007 10:56:15 AM

We might have seen the lows until after lunch.

Jane Fox : 2/21/2007 10:56:01 AM

TICKs +1000.

Marc Eckelberry : 2/21/2007 10:54:58 AM

Conservative traders should lower stops. I am inclined to let it ride at even, target is in the 12715 area, 10 dma and weekly pivot, but if that doesn't hold, it could get ugly.

Jeff Bailey : 2/21/2007 10:51:38 AM

Dow Diamonds (DIA) $127.12 -0.42% ... kissed its WEEKLY Pivot yesterday, juuuust above today with session low $126.98.

Jeff Bailey : 2/21/2007 10:50:48 AM

VXO.X 10.32 +3.71% .... above its WEEKLY Pivot of 10.16.

Jane Fox : 2/21/2007 10:47:59 AM

YM finds support at its PDL but so far looks like a reactionary bounce.

Keene Little : 2/21/2007 10:46:14 AM

Even though SPX and the DOW didn't get as big a bounce as NDX, you'll want to use this morning's bounce high as your stop level. With the leg down after the bounce we now have a 3-wave decline from yesterday's high. If it should rally now and take out that bounce high then that would significantly raise the possibility that we'll see the market head higher again.

Jane Fox : 2/21/2007 10:42:51 AM

BTW TICKS hits -800. One of those days!

Jane Fox : 2/21/2007 10:42:15 AM

YM testing PDL.

Keene Little : 2/21/2007 10:41:54 AM

Tipping back over is a good sign for the bears. The stop for a short play on the techs is now obvious--new daily high. SPX has now followed the DOW in breaking its uptrend line from February 12th and that's a good signal that that rally leg is finished. Snap on some Fib retracements for that leg up and watch for potential support levels.

Jeff Bailey : 2/21/2007 10:37:16 AM

PetroChina (PTR) $120.08 -0.76% Link ... WEEKLY S2 on volume

Jeff Bailey : 2/21/2007 10:31:46 AM

Treasury's Paulsong To Visit Japan, S. Korea And China In March 5-8

DJ- U.S. Treasury Secretary Henry Paulson plans to make official visits to Japan, South Korea and China March 5-8, capping the trip with a previously announced speech in Shanghai on capital markets, a Treasury spokeswoman said Wednesday.

Paulson will meet March 5 in Tokyo with Japanese Finance Minister Koji Omi, Bank of Japan Governor Toshihiko Fukui and others, then travel to Seoul March 6 to meet with his South Korean counterparts, said Treasury spokeswoman Brookly McLaughlin.

The Treasury secretary plans to make a brief stop in Beijing on March 7 to meet with Chinese officials before traveling on to Shanghai for his speech on the morning of March 8, McLaughlin said.

Keene Little : 2/21/2007 10:28:15 AM

With NQ and NDX having closed their morning gaps, that last high this morning now needs to hold. If a pullback is followed by new highs then I think that's it--expect the techs to eventually head to new highs above January's. Otherwise this is a great setup for a short play, stop at a new daily high. It has to work or get out of the way.

Marc Eckelberry : 2/21/2007 10:26:52 AM

You can hedge shorts by buying NQ 1836 if it holds.

Marc Eckelberry : 2/21/2007 10:26:11 AM

The bounce was to close NQ gap.

Jeff Bailey : 2/21/2007 10:25:00 AM

Hanover Capital Mortgage (AMEX:HCM) $5.26 -0.18% Link ... Listed as a competitor to NEW and NFI Link

Jeff Bailey : 2/21/2007 10:20:16 AM

HSBC Holdings (HBC) $89.26 -0.42% Link ...

Jeff Bailey : 2/21/2007 10:19:32 AM

New Century Financial (NEW) $17.50 -6.76% Link ...

Jeff Bailey : 2/21/2007 10:18:32 AM

Valero Energy (VLO) alert! $56.82 +1.51% Link ... probes its rounding lower 200-day SMA.

Jane Fox : 2/21/2007 10:16:33 AM

All markets to new daily highs except YM.

Jeff Bailey : 2/21/2007 10:18:17 AM

Novastar Financial (NFI) $11.23 -36.04% Link ... subprime woes, Q4 Loss. MarketWatch Story Link

Jane Fox : 2/21/2007 10:13:37 AM

TICKs +1000

Jane Fox : 2/21/2007 10:13:25 AM

TICKS +800. I think the selling is over.

Keene Little : 2/21/2007 10:11:56 AM

NDX is holding on top of a parallel channel I have drawn for price action since the January drop. It will be bullish if it continues to hold above 1827. Watch for a gap close at 1833 (doesn't have to happen if this morning's gap down was a break away gap). The price pattern remains a sloppy mess but the setup is there for the upward correction from January to have finished yesterday. Link

The slope of the decline that I drew in red is the same slope as the two other declines so a drop below 1790 in about 4 days is the potential here. But any rally to a new high, so above 1835, would tell me new highs above January's high is on the way.

Jane Fox : 2/21/2007 10:08:48 AM

Four of the 10 leading indicators expanded in January, led by money supply and consumer expectations. Jobless claims and stock prices also pointed to growth. Six of the indicators fell: the factory workweek, building permits, capital-goods orders, the interest-rate spread, vendor performance and consumer-goods orders.

In the past six months, the index is up 0.7%, with five of the 10 indicators expanding over that time.

In January, the coincident index increased 0.1%, with three of the four indicators increasing. The lagging index fell 0.1%.

Marc Eckelberry : 2/21/2007 10:08:09 AM

Jane, I suspect the selling won't gain any real traction until then and current lows could hold.

Jane Fox : 2/21/2007 10:07:49 AM

WASHINGTON (MarketWatch) - A gauge of future economic activity points to continued modest growth in the U.S. economy.

The index of leading economic indicators rose 0.1% in January after rising 0.6% in December and falling 0.1% in November, the Conference Board reported Wednesday.

Economists expected the index to rise 0.3%, according to the median forecast of economists surveyed by MarketWatch.

"Despite the hike in energy prices and the slump in housing, the economy remains resilient--especially consumer demand," said Ken Goldstein, labor economist at the private research organization, in a press release. The latest data point to continued growth in the second quarter, "or even a little more growth."

Marc Eckelberry : 2/21/2007 10:06:56 AM

HPQ getting hammered.

Jane Fox : 2/21/2007 10:06:05 AM

Marc the FED minutes are out at 2:00EST.

Jeff Bailey : 2/21/2007 10:02:27 AM

10:00 Market Watch found at this Link

Jane Fox : 2/21/2007 10:00:42 AM

AD line is climbing.

Jane Fox : 2/21/2007 10:00:09 AM

VIX is starting to fall again.

Marc Eckelberry : 2/21/2007 9:58:24 AM

YM 12736 held on that last push and we have a slightly higher low from yesterday. Bulls know what to defend now.

Marc Eckelberry : 2/21/2007 9:57:31 AM

So far, nothing that dramatic. Awaiting the Fed minutes.

Jane Fox : 2/21/2007 9:57:10 AM

And there you go TICKS +800.

Jane Fox : 2/21/2007 9:57:32 AM

AD line at -1124 and a falling AD volume is telling you short but as you can see the market is not falling out of bed and, like yesterday, you may see buyers appear out of no where and then the TICKS start to go crazy. The TICKS have only made a low of -604 and if the sellers had their way you would see the TICKS at -800.

Keene Little : 2/21/2007 9:56:31 AM

We could be completing a small 5-wave move down this morning which would mean get ready for a bigger bounce back up soon. And that will be the bounce to short since we should get another leg down. If the bounce continues back up above a 62% retracement, and certainly above a 78.6% retracement, then we'll know new highs are probably coming.

Jane Fox : 2/21/2007 9:49:48 AM

YM is the market you may want to use to short because it is the weakest and the first to break its overnight lows.

Jane Fox : 2/21/2007 9:49:06 AM

OK VIX is climbing and I should be safe to go back in the water.

Keene Little : 2/21/2007 9:46:06 AM

Until SPX breaks below yesterday's low this 30-min chart shows what I was talking about when I mentioned we could see the market chop its way higher this week. Another push to a new high and the bullish count moves to preferred status but right now I'm leaning towards the bearish count. Now we'll let price show us which one really counts. Link

Jane Fox : 2/21/2007 9:45:55 AM

I would watch overnight lows for support.

Jane Fox : 2/21/2007 9:44:17 AM

ER and NQ making new daily highs.

Jane Fox : 2/21/2007 9:43:00 AM

These are really out of sync and telling me to be patient, a trade will come to me. Link

Marc Eckelberry : 2/21/2007 9:43:00 AM

They just sold a bounce to that level as well as an NQ bounce to 1836, ex trend R , broken upside yesterday and now R again.

Marc Eckelberry : 2/21/2007 9:42:05 AM

Let's see if they can get YM back above 1264 and hold it.

Marc Eckelberry : 2/21/2007 9:41:38 AM

ADVDDEC only -950. Bulls are not really selling anything that hard.

Jane Fox : 2/21/2007 9:41:26 AM

Not a time to be short folks.

Jane Fox : 2/21/2007 9:41:07 AM

Oh my the way don't look now but the VIX is making new daily LOWS!

Jane Fox : 2/21/2007 9:40:14 AM

AD line is a bearish -1000 and AD Volume is falling so this is a sell the rallies kind of day - so far!

Jane Fox : 2/21/2007 9:32:59 AM

TRIN has now jumped to 1.43 and AD line is -838 os the bears have grabbed the ball and are running with it.

Jane Fox : 2/21/2007 9:32:03 AM

VIX open within its PDR adn TRIN is 1.10 both neutral

Jane Fox : 2/21/2007 9:31:39 AM

AD line is a -401 and AD volume below 0. Neutral to bearish.

Marc Eckelberry : 2/21/2007 9:28:26 AM

YM did hit 12722 yesterday, which is very close to weekly pivot, so don't count bulls out yet.

Keene Little : 2/21/2007 9:27:38 AM

If the bulls manage to drive this back up to another minor new high before it rolls back over again then the pattern will be fairly clear--another small ascending wedge will be finishing the rally. In that case it would likely take another down-up sequence to finish it after getting another new high from here. So bears can hardly rejoice yet--there's still the possibility we're going to see a volatile top this week with a couple more new highs to finish it (and the bears) off.

Marc Eckelberry : 2/21/2007 9:26:11 AM

Watch that ADVDEC line. -1000 or less, bulls will have a chance at a reversal. -2000, forget it, we will see YM 12717 at a minimum.

Marc Eckelberry : 2/21/2007 9:24:56 AM

I don' want to jinx it Keene, but it does look like NYSE 9455 did the trick (and ER monthly R2). You are right about sentiment, it has not been that overly bullish, but if we start seeing a rise in calls, especially equity, when the market drops to key levels, then we will know it's over. The late comers always get burned.

Jane Fox : 2/21/2007 9:23:33 AM

LONDON (MarketWatch) -- Shares in Europe lost ground Wednesday, as commodity weakness and worries about U.S. interest rates weighed on indexes, offsetting gains among financial stocks such as Alliance & Leicester.

London's FTSE 100 index declined 0.4% to stand at 6,386.00 as mining company Anglo American weakened after reporting earnings and as oil companies were on the defensive in line with resumed pressure on light sweet crude.

The French CAC 40 index eased 0.1% at 5,705.31 and the German DAX Xetra 30 index lost 0.4% at 6,957.43 after earlier touching a high of 7,005.34 -- a level not seen since November 2000.

Keene Little : 2/21/2007 9:22:37 AM

Looks like another down opening in front of us. This time it could be different. I suspect many will believe it's just another buying opportunity and will try to buy the dip again. As opposed to yesterday's dip, which was the completion of a 3-wave pullback from last Thursday's high, this dip doesn't look like it will be finishing a part of any correction.

That says you should look to short the inevitable dip-buying bounce. A drop below yesterday's low will likely tell us the rally from February 12th is finished and then we'll watch to see how the decline unfolds (corrective or impulsive). One step at a time. After stepping through the NYSE and OEX charts in last night's Wrap, and showing the setup for a major top here, I'm just waiting for evidence in the move down to put an exclamation point on it.

Jane Fox : 2/21/2007 9:16:24 AM

The US $ just broke its overnight high so if you are scalping Gold and are long you may want to rethink your position.

Jane Fox : 2/21/2007 9:15:00 AM

NEW YORK (MarketWatch) - Gold futures rose early Wednesday to recoup some of their prior-session losses, although gains were capped by a stronger dollar and falling crude-oil prices.

Gold for April delivery was last up $1.50 at $662.50 an ounce on the New York Mercantile Exchange.

Trading exhibited a "decidedly different tone" early Wednesday, as market participants tried to lift gold prices, said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.

Jane Fox : 2/21/2007 9:14:23 AM

WASHINGTON (MarketWatch) -- AT&T Inc., the nation's largest phone company, said Wednesday it signed one of the largest commercial contracts in the company's history -- a nearly $1 billion deal with General Motors Inc.

Under the five-year contract, AT&T will provide expanded services to the auto giant and manage "all other telecom suppliers that support GM across the globe." The new arrangement builds on an expired contract.

AT&T (T) and Verizon Communications (VZ), both components of the Dow Jones Industrial Average, dominate the U.S. market for large business customers. The two companies aim to expand their corporate-service segments -- after years of flat or declining sales -- by providing more data and Internet-related services.

Jane Fox : 2/21/2007 9:12:56 AM

Gold has hit a resistance zone that dates back to July of 2006 but once it breaks this resistance the next stop is $700.00, which I think it will hit. Link

Jane Fox : 2/21/2007 9:09:01 AM

Crude is consolidating at its 100EMA which suggests it will break higher. Then you have a MACD that got above 0 and has not retreated but at the same time the RSI is not oversold. I really like this bullish setup. Link

Jane Fox : 2/21/2007 9:04:49 AM

NEW YORK (MarketWatch) -- The yen fell to a one-week low against the dollar and hovered around a record low versus the euro Wednesday, after the Bank of Japan hiked its key interest rates but indicated that further rate increases would be gradual.

The dollar extended gains after January consumer inflation came in above expectations.

The Bank of Japan's policy board voted 8-1 Wednesday to lift its overnight call rate by a quarter percentage point to 0.5%. Expectations had been nearly evenly divided between a hike and another pause.

The change marks the first time the central bank has revised monetary policy since July, when it ended its zero-interest-rate policy and set the 0.25% rate. In a statement, BoJ Governor Toshihiko Fukui stated that the bank would adjust rates gradually, depending on the pace of economic growth and prices

Jane Fox : 2/21/2007 9:03:46 AM

US $ was strong overnight putting a lot of downward pressure on Gold.

As you can see Bonds didn't like the CPI data either and even broke their PDL but has since recovered.

It is getting quite obvious that there is a major seller of crude at $60.00.bl which just happens to be its 100EMA (I will show a chart later). Link

Marc Eckelberry : 2/21/2007 8:59:21 AM

In case you missed my earlier post, lower stop on YM short to even (12807).

Marc Eckelberry : 2/21/2007 8:57:51 AM

HPQ also shows a decline in margins and a 2.5% drop in seasonal sales at a period it usually sees flat or rising a little. The stock will be under pressure. In fact, the whole market will be under pressure now that earnings are pretty much over and the CPI news is a killer.

Jane Fox : 2/21/2007 8:56:39 AM

Oh the equity markets did not like the CPI data out at 8:30 however, notice no market broke its PDL though. Now we have to see what the rescue team will do intraday. They certain came to the rescue yesterday and I have no reason to believe they won't again today. Link

Marc Eckelberry : 2/21/2007 8:55:35 AM

Resistance is now 12764, monthly pivot and if bulls can't hold on to that, we will test 12736 again. Initial target on the trade is 12710/12717.

Jane Fox : 2/21/2007 8:51:17 AM

NEW YORK (MarketWatch) -- Hewlett-Packard Co. reported a 26% increase in fiscal first-quarter profit on stronger sales of personal computers and imaging and printing devices.

H-P said it earned $1.55 billion, or 55 cents a share, compared to $1.23 billion, or 42 cents a share, a year ago.

Revenue also showed strong gains, rising 11% to $25.1 billion, up from $22.7 billion a year ago and more than the $24.3 billion expected by analysts.

Jane Fox : 2/21/2007 8:50:37 AM

NEW YORK (MarketWatch) -- Embattled JetBlue Airways Corp. on Wednesday cut its forecast for the first quarter and the year, citing service disruptions and recovery in the wake of the Feb. 14 ice storms in the New York area.

Shares were up nearly 1.5% in premarket trading.

For the first quarter, JetBlue (JBLU) now expects to report an operating margin between negative 4% and negative 2%, based on an assumed aircraft fuel cost per gallon of $1.89, net of hedges. The company's pre-tax margin is expected to be between negative 10% and negative 8% percent for the first quarter.

Jane Fox : 2/21/2007 8:48:04 AM

Dateline WSJ - WASHINGTON -- Consumer prices and core inflation both rose higher than expected during January, as food costs jumped and medical care posted the biggest increase in 15 years.

The consumer price index rose 0.2%, the Labor Department said Wednesday. The CPI increased 0.4% in December. Core inflation, which is consumer prices excluding food and energy costs, increased by 0.3%, after rising 0.1% during each of the three previous months. Unrounded, the core CPI rose 0.174% in January; it rose 0.256% in December.

The median forecasts of 24 economists surveyed by Dow Jones Newswires were a 0.1% increase in consumer prices overall and a 0.2% increase in the core index.

Federal Reserve Chairman Ben Bernanke told Congress last week that recent economic data support the view that bank policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation. The Fed has kept its federal funds rate steady at 5.25% since last summer but maintained a bias toward higher rates should inflation defy expectations and refuse to moderate. A gauge the bank keeps a keen eye on, the core PCE price index, was up 2.2% in December compared to the same month a year prior, recent data show. The Fed's comfort range for this index is 1.0% to 2.0%. Still, the year-to-year index sat at 2.4% in August, September and October.

Marc Eckelberry : 2/21/2007 8:45:56 AM

Same set up as May: BOJ raises rates (carry trade unwinds) and signs point to a Fed that will not lower rates and might even hike them.

Marc Eckelberry : 2/21/2007 8:42:14 AM

They stop us now, I will throw my keyboard out the window.

Marc Eckelberry : 2/21/2007 8:41:46 AM

Alert: Short YM 12807, lower stop to even.

Marc Eckelberry : 2/21/2007 8:43:18 AM

We could have hit the jackpot, folks. Core rate is up and feds are NOT going to lower rates. About time this market gets a cold shower.

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