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Keene Little : 2/27/2007 12:29:07 AM

Today the DOW bounced off its uptrend line from November but it was kind of whimpy. Its short term pattern would look best with another minor push lower early Tuesday in which case I think 12590-12600 could be better support. But we're close enough and I think shorts probably have a little more to worry about than longs (based on the corrective pullback or sideways consolidations in the other indices). Therefore if we do get a push lower tomorrow morning I'd look for an opportunity to buy it. Link

The upside potential, assuming we start the next rally leg from near 12600, will be near 12850-12860, perhaps even up to the 12900 level to ring the bell at the next century mark. But that bullish potential goes out the window if the DOW drops below 12536 and stays below it.

SPX could find support near Monday's low which is where the uptrend line from July through the February 12th low is now located. But the uptrend line from November, closer to 1440, should be stronger support. From a short term perspective I've got downside Fib targets around 1443-1444 which is the area I'd watch for a bottom to get put in (assuming we drop a little lower tomorrow). Link

A break below 1440 and the uptrend line would be a heads up that something is wrong with the bulls and it would be confirmed bearish if it drops below 1431. Until that happens I'm thinking the rally is not finished yet and I see upside potential first to about 1464 and then 1475 by mid March (maybe even on either side of the March 9 turn date).

The small caps have been bullish and I see the potential for the RUT to head for new highs right away but maybe no higher than about 840 before either pulling back again or topping out there. If a new high is followed by more corrective price action then it will be pointing to more new highs into the end of March so we'll have to see how this one develops further. Link

NDX has a price pattern only its mother could love. It is just a mess of 3-wave moves up and down and could literally go anywhere. Come to think of it, it has. As long as it stays trapped inside a large ascending wedge pattern from November it could remain choppy. A break below its uptrend line from Jan 3rd, currently near 1791, would be bearish, confirmed bearish with a break below 1774. I see this one chopping sideways before making a decision (or at least before making it easier to slap a higher-confidence EW count on it). Link

Keene Little : 2/26/2007 10:16:22 PM

Tuesday's pivot tables: Link and Link

OI Technical Staff : 2/26/2007 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

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Jeff Bailey : 2/26/2007 5:17:06 PM

Closing Internals found at this Link

Jeff Bailey : 2/26/2007 4:42:53 PM

April Nat. Gas futures (ng07j) settled down $0.103, or -1.32% at $7.703. Six session winning streak ends.

Jeff Bailey : 2/26/2007 4:41:21 PM

April Crude Oil futures (cl07j) settled up $0.25, or +0.41% at $61.39.

Jeff Bailey : 2/26/2007 4:40:19 PM

Closing U.S. Market Watch found at this Link

Keene Little : 2/26/2007 4:37:07 PM

Here's an update on what I think is a bull flag pattern for SPX. Ideally we'll get another leg down in the pattern after perhaps a small pop higher tomorrow morning (maybe another gap n crap). Downside Fib targets are just under 1444 and then near 1440. I still like a long play from a little lower (1444 area being the first looksee) but not from here. Link

Keene Little : 2/26/2007 4:12:16 PM

After MER led the way down the past couple of weeks the broker index (XBD) has now followed--the index broke below its 50-dma today. By the way MER is looking just like it did back last April/May right after its earnings report and then the rest of the market followed. So the break down in the brokers (the banks (BIX) tested and closed above their 50-dma) looks bearish, but that's not a bull flag is it? Link It closed right on the bottom of the flag. If it is a bullish pattern then it has to rally tomorrow.

Keene Little : 2/26/2007 3:59:01 PM

I've changed the bullish count slightly on the DOW 120-min chart (that shows both the bullish and bearish wave counts). I've got the 5th wave of the rally from July starting from the Nov 3 low and then the 5th of that 5th wave as the move up from the Jan 8 low (as a double zigzag a-b-c-x-a-b-c count). Link

This makes for a slightly extended 5th wave which is common in an extended rally. Once the current pullback is finished this bullish wave count calls for one last leg up to finish the whole thing off, and it would very likely do it in the Mar 9 turn window. The bearish wave count says the top is already in and we're nearing the completion of the 1st wave down (or it already finished and today's bounce is part of the 2nd wave correction). Key levels are 12536 to the down side and 12750 to the up side.

Jeff Bailey : 2/26/2007 3:37:58 PM

Citigroup In Talks To Take Control Of Nikko Cordial ... Forbes.com Story Link

Keene Little : 2/26/2007 3:32:47 PM

With NDX having broken below the 1823.96 high on Feb 15 that takes away the possibility for another run higher as part of an impulsive wave count from the low on Feb 12. This 120-min chart shows the two possibilities that I now see (sorry for the labels all over the place--this index is driving me crazy with the number of count possibilities): Link

The bearish wave count calls for THE high to have been made last week, with the final 5th wave as the leg up from Feb 12 to finish the rally from July. This follows a very complex 4th wave correction running from Nov 24 to Feb 12 (hard to see but labeled in red on the chart). The bullish wave count calls for a choppy correction for a week or two before it heads to what should be its final high.

The problem I'm having with the bullish wave count is reconciling it to what I see setting up for the DOW and SPX. How it can rally into April when I see exactly the opposite for the others doesn't seem logical. We'll have to let price lead the way--key levels for NDX are 1774 to the down side and 1849 to the up side.

Jeff Bailey : 2/26/2007 3:29:46 PM

CAT $67.19 -0.10% ... challenges UTX $67.21 -0.50% for #6 most heavily weight INDU/DIA/YM component.

Jeff Bailey : 2/26/2007 3:27:38 PM

Citigroup (C) $52.65 -2.08% Link ... notably active today (#13). C is #13 most heavily weighted INDU Link /DIA/YM component.

Jeff Bailey : 2/26/2007 3:15:04 PM

03:00 Internals found at this Link

Jeff Bailey : 2/26/2007 3:06:58 PM

SPY $145.17 -0.08% ...

Jeff Bailey : 2/26/2007 3:06:41 PM

SPX 1,449.47 -0.11% ...

Jeff Bailey : 2/26/2007 3:06:22 PM

BIX.X 407.17 -0.53% ... comes back to MONTHLY 38.2% retracement.

Jeff Bailey : 2/26/2007 3:05:44 PM

QQQQ $44.96 -0.66% ... I have session low as being $44.76. (not $43.15 per U.S. Market Watch)

Jeff Bailey : 2/26/2007 3:02:33 PM

03:00 Market Watch found at this Link

Keene Little : 2/26/2007 2:56:06 PM

If that last poke higher was the end of the 4th wave, as I labeled on the SPX 5-min chart (2:17), then the dowside projection for wave-5 = wave-1 is now at 1443.91, very close to 1443.74 where it would have two equal legs down from last week's high. As shown on this 60-min chart, it's also at the bottom of what looks like a bull flag from last week and the uptrend line from Jan 26. The setup looks good for trying a long from there if given the chance. Link

Jeff Bailey : 2/26/2007 2:41:58 PM

New Century Financial (NEW) $15.20 -2.06% ... off session low of, $13.97.

Jeff Bailey : 2/26/2007 2:41:10 PM

Russell 2000 Index (RUT.X) 823.78 -0.34% ... edges back above its WEEKLY Pivot. 2,000 stocks here, some NYSE/NASDAQ.

"Financials" biggest industry/sector weight. Just like S&P 500.

Jeff Bailey : 2/26/2007 2:38:00 PM

BIX.X 406.77 -0.63% ...

Jeff Bailey : 2/26/2007 2:37:40 PM

NYSE Composite (NYA.X) 9,421.23 +0.02% ... battles back to unchanged. Checks in at its WEEKLY Pivot. Over 3,000 stocks here.

Keene Little : 2/26/2007 2:23:51 PM

With the bounce extending, keep an eye on today's downtrend line for SPX near 1449.70 (ES 1452.50) for resistance.

Jeff Bailey : 2/26/2007 2:22:15 PM

AMD Shares Rise on LBO Rumors ... AP Story Link

AMD $15.60 +6.19% Link ... #6 Most Active

Keene Little : 2/26/2007 2:17:59 PM

Ideally, from an EW perspective, here's how the move down in SPX will play out--another drop lower today in a 5th wave with a downside target at 1442.11 (will change if the current bounce extends a little higher) by the end of the day. The first downside target would be 1444.34 which is where wave-5 = 62% of wave-1 (again, would change if the current bounce extends a little higher). Two equal legs down in a potential A-B-C pullback from last week's high is at 1443.74 so that's an area I'd watch carefully for support (assuming we get another leg down). Link

Jeff Bailey : 2/26/2007 2:14:51 PM

BOE's Blanchflower: Monetary Policy Committee (MPC) Assumes Pound Will "Gently Fall"

Jeff Bailey : 2/26/2007 2:13:34 PM

BOE's Blanchflower: UK CPI "Well Below" 2.0% Target By End Of 2007

Jane Fox : 2/26/2007 2:09:04 PM

I love computers but I don't like using new software because it is usually "buggy" so I was not going to upgrade to Vista for a while. I bought a new laptop on the weekend which had Vista loaded and I must admit I really like it. I usually have many IE windows open and with the new IE I can open "Tabs" and save them so the next time all my websites open for me.

Jeff Bailey : 2/26/2007 2:04:22 PM

Qatar Oil Minister: OPEC May Leave Output Policy Unchanged In March

DJ- If current oil prices, now above $60, remain in place, OPEC may continue its current oil output policy when it meets March 15, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said Monday.

"It's difficult, but if you ask me today, if the price stays like it is, I think we roll over" the current production agreement, he told Dow Jones Newswires.

Asked how long the Organization of Petroleum Exporting Countries could keep the current output agreement in place, he said, "Until our next meeting, or until something happens that we need to change it."

He said he didn't see when it was likely OPEC would change its current policy.

Attiyah, speaking after a meeting at the United Nations, said that many factors are driving up prices, including geopolitics, but that OPEC has to be "careful to follow supply and demand."

Attiyah's comments echo recent statements made by several ministers in the weeks ahead of the meeting. Oil prices have recovered in part due to colder weather, concerns over levels of non-OPEC supply, and stock drawdowns caused by OPEC oil production cuts.

Beginning in November, OPEC put in place production restraint for its 10 members with quotas. Although compliance has been estimated at around 66% of the agreed 1.7 million barrels a day of oil output cuts, the supply reduction has sharply cut the large overhang in global stocks, which caused a dramatic drop in prices in the third quarter of 2006, leading to OPEC's actions.

Keene Little : 2/26/2007 1:58:40 PM

The RUT looks similar to the others in needing another leg down today to give us a 5-wave move from this morning's high. It would then be ready for a bigger bounce. The larger pattern is a bit of a guess at the moment, like the others, primarily because we're seeing differences between the indices (common in topping formations).

But this 120-min chart shows some possibilities, keeping in mind the potentially important turn dates around February 23rd (2/20-2/28) and March 9th. I'm trying to use parallel channels to identify potential support and resistance which helps identify the potential wave count. Key levels are 799 to the downside and 830 to the upside. Link

Jeff Bailey : 2/26/2007 1:56:50 PM

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

Changes/adjustments : "Rolled" the TLT-CJ and bought it back at $1.35 (sold previously for $0.90); then SOLD Covered the $89 (TLT-CK) for $0.65. This potentially OBLIGATES us to SELL 100 shares of TLT at $89.00 if exercised on, or before March expiration.

LOWERED stop on RKH 1/2 short position to $166.01.

Jane Fox : 2/26/2007 1:22:55 PM

To heck with "Follow the Money" just "Follow the VIX" and the money will come. Link

Keene Little : 2/26/2007 1:17:39 PM

Note that SPX found support at the bottom of its parallel down-channel for price action since last week's high, shown on the chart I posted earlier (12:46). Now if we get a small consolidation (4th wave correction in the leg down today) followed by another minor low we'll probably see SPX find support near its 1443.74 Fib target (for equality in an a-b-c move down).

Again, I'd consider a long play from there. But if that level gives way then the next support is not until its uptrend line from November (bottom of its ascending wedge) currently near 1437 if it were to make it down to there today.

Jeff Bailey : 2/26/2007 1:10:52 PM

01:00 Internals found at this Link

Jane Fox : 2/26/2007 1:05:38 PM

Dateline CNN - A federal judge has dimissed a juror in the case against former White House aide I. Lewis "Scooter" Libby, The Associated Press reports.

Keene Little : 2/26/2007 1:02:47 PM

DOW is now hitting its uptrend so that may give us the little consolidation bounce. If we then get a minor new low (which would be a slight break of its uptrend line) with bullish divergences I'd try a long play. The risk now is to the shorts though since we're "close enough" so don't be bashful about taking some chips off the table.

Jeff Bailey : 2/26/2007 1:02:13 PM

01:00 Market Watch found at this Link

Jeff Bailey : 2/26/2007 12:57:57 PM

Swing trade short lower stop alert ... on the Regional Bank HOLDRs (AMEX:RKH) $163.92 -0.67% ... to break-even.

Jane Fox : 2/26/2007 12:57:12 PM

TICKs -800.

Jeff Bailey : 2/26/2007 12:54:38 PM

RKH's MONTHLY R1 and MONTHLY 19.1% retracement overlap at $163.97. (see Friday's MM)

Jeff Bailey : 2/26/2007 12:52:46 PM

ES day trader's on the al_rt in here.

Jeff Bailey : 2/26/2007 12:52:25 PM

BIX.X 406.21 -0.76% ... set to test their WEEKLY S1.

Jeff Bailey : 2/26/2007 12:51:53 PM

Regional Bank HOLDRs (AMEX:RKH) $164.01 -0.61% ... testing their WEEKLY S1.

Keene Little : 2/26/2007 12:48:43 PM

From this morning's high it looks like the current move down is a 3rd wave. If true we'll need a small consolidation (about an hour or so) followed by another new low to finish the leg down. Don't be in any hurry to buy a bottom here.

Jane Fox : 2/26/2007 12:46:28 PM

AD volume falling and finally making new daily lows AD line is -542

Keene Little : 2/26/2007 12:45:30 PM

OEX is testing its 50-dma here.

Keene Little : 2/26/2007 12:46:25 PM

If the DOW drops below Friday's low then it's possible we'll be seeing the completion of a 5-wave decline from last week's high. That might also match SPX dropping down to at least the 1444 area. But that 5-wave decline would set up a bigger bounce so don't get all bearish on a new low, especially since 12600 could be a support area. Link

Jeff Bailey : 2/26/2007 12:37:40 PM

Sirius Satellite Radio (SIRI) $3.72 -0.53% Link ...

Jeff Bailey : 2/26/2007 12:36:36 PM

XM SATELLITE RADIO 4Q LOSS NARROWS

DJ- XM's loss narrows to $256.7 million, or 90c a share, from $268.3 million a year ago. Revenue rises 45% to $257.1 million amid subscription growth. Analysts forecast loss of 71c a share and revenue of $242.8 million.

XMSR $15.03 -0.52% Link ...

Jeff Bailey : 2/26/2007 12:32:27 PM

Novastar Financial (NFI) $8.07 -4.83% ... I have a retracement bracket from its 02/20/07 close of $17.56 (100%) and "drag down" its 0% to $7.96 (today's session low). 19.1% at $9.79.

Jeff Bailey : 2/26/2007 12:30:01 PM

HSBC Holdings (HBC) $88.99 +0.27% ... holding tough.

Keene Little : 2/26/2007 12:29:20 PM

The DOW is sneaking its way lower towards potential support in the 12610-12620 area. I've got a problem reconciling support for the DOW nearby and SPX's pattern looking like it's got more downside potential than that. One of them is going to win over the other but as I show for SPX, I see the potential for it to drop down to just below 1444 if not 1440. Link

But even for the SPX I do not see anything mega-bearish here--once this pullback is finished, wherever that will be, I see this one making a run to new highs.

Jeff Bailey : 2/26/2007 12:28:37 PM

Yes ... I too "wish" I had held the Mar $17.50 puts ....

Jeff Bailey : 2/26/2007 12:27:35 PM

Continue to "drag down" 0% retracement on New Century Financial (NEW) $14.34 -7.60% to current session low of $13.97.

A "pulse stock" for financial sector psychology.

Jeff Bailey : 2/26/2007 12:22:12 PM

JETBLUE CANCELS 68 FLIGHTS AT JFK

DJ- Airline cancels 68 flights into and out of New York because of forecast for a winter storm. Earlier this month, JetBlue was heavily criticized after bad weather stranded passengers in planes at Kennedy for up to 10 1/2 hours.

JBLU $12.86 -1.68% Link ...

Jane Fox : 2/26/2007 12:19:41 PM

ER and NQ are now trading under their respective PDLs but ES and YM are still within their PDRs.

Jeff Bailey : 2/26/2007 12:18:04 PM

RKH $164.40 -0.38% ...

Jeff Bailey : 2/26/2007 12:17:45 PM

BIX.X 407.05 -0.56% ...

Jeff Bailey : 2/26/2007 12:17:32 PM

SPY $145.20 -0.06% ...

Jeff Bailey : 2/26/2007 12:17:13 PM

SPX 1,450 -0.07% ...

Jane Fox : 2/26/2007 12:17:10 PM

Once again the VIX prevails and brings the market in line. Take note of the TRIN at 0.78. Wierd TRIN.

Jeff Bailey : 2/26/2007 12:16:45 PM

VIX.X alert! 11.04 +4.34% ... testing MONTHLY Pivot.

Jeff Bailey : 2/26/2007 12:15:49 PM

ECONOMISTS SCALING BACK FED RATE-CUT ODDS

DJ- National Association for Business Economics survey shows economists now expect the Fed to maintain the federal funds rate at 5.25% through the end of the year. In November survey, economists expected two interest rate cuts this year.

Jeff Bailey : 2/26/2007 12:13:17 PM

The Cummin's diesel engine is used by Daimler Chrysler (DCX) $70.58 -0.47% for many of its brands. I would doubt Ford (F) would be able to utilize their engine.

Jane Fox : 2/26/2007 12:11:16 PM

LONDON (MarketWatch) -- Dow Chemical Co. shares surged as much as 8.7% Monday as investors reacted to a story in a British tabloid that the company could be the latest and largest firm to get a leveraged buyout offer.

In the next few weeks, Dow will get a takeover bid worth up to $54 billion from a consortium of private-equity firms, the Sunday Express reported.

The report sent Dow (DOW) shares surging to a 52-week high of $47.26 in early New York trading. Shares were recently up 5.5% to $45.82 on volume of over 20 million shares.

Investors were keenly focused Monday on mergers and acquisitions following news over the weekend that a private investment group led by Kohlberg Kravis Roberts is paying $45 billion to buy TXU Corp., the biggest power utility in Texas, in what is the biggest leveraged buyout in U.S. history.

Jeff Bailey : 2/26/2007 12:10:01 PM

Cummins (CMI) $144.13 -0.35% Link ...

Jeff Bailey : 2/26/2007 12:09:17 PM

Caterpillar (CAT) $67.55 +0.43% Link ...

Jeff Bailey : 2/26/2007 12:08:33 PM

NAVISTAR HALTS DIESEL ENGINE PRODUCTION

DJ- Firm will suspend production of a critical line of diesel engines it supplies to Ford for use in the auto maker's profitable F-Series Super Duty pickup trucks. Move is latest escalation in an ongoing dispute between Ford and Navistar.

NAVZ $43.37 -1.43% Link

F $8.21 -1.08% Link ...

Jeff Bailey : 2/26/2007 12:04:23 PM

APAX, MORGAN UNIT BUY HUB INTERNATIONAL

DJ- Apax Partners and Morgan Stanley's principal investment unit purchase Chicago insurance brokerage Hub International for about $1.8 billion, marking yet another private-equity move into the brokerage space.

HBG $39.43 +14.32% Link ...

Keene Little : 2/26/2007 12:02:35 PM

Sticking with the NDX for the moment, it looks like we had an impulsive decline off this morning's high. The current bounce may be close to finishing a 3-wave bounce which could lead to another leg down. Two equal legs up in its bounce is at 1838 (NQ 1843.50), just shy of a 50% retracement of this morning's drop, so watch that level for an opportunity to short it.

Jeff Bailey : 2/26/2007 12:01:03 PM

MICROSOFT BUYS MEDSTORY

DJ- Microsoft makes its first foray into the growing consumer health-care market with its acquisition of Medstory, a closely held company that develops Internet search technology for that market. Microsoft did not reveal the purchase price.

MSFT $28.97 +0.24% Link ...

Jeff Bailey : 2/26/2007 11:58:32 AM

TEMPLE-INLAND TO BREAK UP, SELL TIMBERLAND

DJ- Shares soar 13% as Temple-Inland plans to spin off its financial-services and real-estate operations and sell its timberland as it deals with housing slowdown. Temple will retain its manufacturing operations of corrugated packaging and building products.

TIN $62.45 +13.65% Link ...

Jeff Bailey : 2/26/2007 11:53:36 AM

STATION CASINOS ACCEPTS REVISED $5.5B OFFER

DJ- Station Casinos accepts a revised deal worth about $5.5 billion from a group led by the company's founding family and closely held real-estate firm Colony Capital.

STN $86.68 +4.05% Link ...

Jeff Bailey : 2/26/2007 11:50:37 AM

DJ Survey - Feb Consumer Confidence Seen At 108.0

Economists look for U.S. consumer confidence as measured by the Conference Board to have slipped back a bit in February.

The median estimate of 18 economists surveyed Monday by Dow Jones Newswires is for a reading of 108.0 in February, down from 110.3 in Janaury.

The Conference Board is due to release the February consumer confidence report at 10:00 a.m. EST (1500 GMT) on Tuesday.

"We look for the Conference Board measure of consumer confidence to slip in February to 108.0 from 110.3 in January," said Ethan Harris, chief economist at Lehman Brothers in New York. "The University of Michigan and (other) measures of consumer sentiment fell in February with respondents citing concerns about rising unemployment. Wage gains, although healthy on a wide scale, have not been felt across all income levels."

Jeff Bailey : 2/26/2007 11:49:23 AM

DJ Survey - Jan Durable Goods Orders Seen Down 3.2%

Manufacturers of U.S. durable goods are expected to have seen a falloff in orders in January after a couple of large increases boosted by aircraft orders.

The median estimate of 21 economists surveyed Monday by Dow Jones Newswires is for a 3.2% decline in new orders for durable goods in January, largely as a result of the reports of a falloff in orders received by Boeing Co. (BA). Durable goods orders rose by 2.9% in December.

The Commerce Department is due release the durable goods report at 8:30 a.m. EST (1330 GMT) on Tuesday.

"Durable goods orders fell sharply in January, reversing December's substantial increase," said Steve Wood, who heads up Insight Economics in Danville, Calif. "This is typical - new orders often surge during the final month of a quarter, only to plunge during the first month of the following quarter. This pattern was aggravated by huge swings in aircraft orders."

Jeff Bailey : 2/26/2007 11:42:30 AM

DJ Source- Financial Firms Interested In Bidding For TXU

TXU $67.85 +13.04% ... may become a "bidding war."

Jeff Bailey : 2/26/2007 11:41:04 AM

US Postal Panel Recommends 2 Cent Increase In Letter Rate

Jeff Bailey : 2/26/2007 11:39:53 AM

Fed's Bies: Subprime Market Very Small Section of Healthy Mortgage Market

Keene Little : 2/26/2007 11:32:12 AM

After that nasty little whipsaw in both directions this morning it has now quieted right down. Will we get a continuation lower or back up to today's highs? I'm leaning to more downside but it remains a difficult market to trade short term.

Jeff Bailey : 2/26/2007 11:27:16 AM

Swing trade 2-Execution alert

1) Buy back the covered iShare Lehman 20-year TLT Mar $88 Call (TLT-CJ) at the ISEX offer of $1.35.

2) Then ... Sell covered the TLT Mar $89 Call (TLT-CK) at the bid of $0.65.

TLT $89.21 +0.41% ...

Jane Fox : 2/26/2007 11:19:52 AM

Crude is bumping up against the 200EMA. The RSI is not overbot so there is a very good chance it will break this very important resistance level then use it as support for another push higher. Link

Jane Fox : 2/26/2007 11:17:16 AM

Next stop 730? Link

Jeff Bailey : 2/26/2007 11:17:07 AM

11:00 Internals found at this Link

Keene Little : 2/26/2007 11:13:56 AM

With NDX bouncing around and not giving us much in the way of impulsive moves (it's all corrective moves with lots of reversals) I'm left guessing as to where it's going next. This chart shows the two possibilities as I currently see them. It takes a drop all the way down through 1774 to let me know the bears are running with the ball. Otherwise the setup is there for a continuation higher after this morning's sharp pullback. Upside target in that case is near 1864. Link

Jane Fox : 2/26/2007 11:13:33 AM

These two should be enough to keep you on the sidelines. AD volume is very strong so no time to be short but AD line is quite weak. Link

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

WASHINGTON (MarketWatch) -- Moderate economic growth and steady inflation will allow the Federal Reserve to remain on the sidelines throughout 2007 as far as monetary policy goes, according to the latest National Association for Business Economics forecast released on Monday.

The new NABE outlook essentially is predicting a "Goldilocks economy," one in which neither growth nor inflation is running too hot or too cold.

Key survey findings include:
Growth in gross domestic product is now expected to average 3.1% over the four quarters of 2007.
Headline consumer-price inflation will decline to less than 2.0% in 2007, largely as a result of lower oil prices. This would be the lowest inflation rate in five years.
The "core" inflation rate, which excludes food and energy prices, is expected to hold steady at 2.3%.
The nation's unemployment rate should average 4.7% this year, only a tad higher than the 4.6% rate in January.

With moderate growth, steady inflation and stable unemployment, Fed policymakers will choose to keep the federal funds rate steady at 5.25%, the survey said.

Jane Fox : 2/26/2007 11:08:56 AM

AD volume to new daily highs and as long as this internal stays this bullish you will not be seeing much more downside.

Jeff Bailey : 2/26/2007 11:05:21 AM

Transocean (RIG) $80.00 +1.57% ...

Jeff Bailey : 2/26/2007 11:02:29 AM

11:00 Market Watch found at this Link

Jeff Bailey : 2/26/2007 10:59:24 AM

Dallas Fed's February Mfg. Production Index 18.1 Vs. Jan's 13.8

DJ- Manufacturing activity in the Federal Reserve Bank of Dallas district picked up smartly in February, with a sharp rise in both the production and business activity indexes.

The bank said Monday that its production index moved to 18.1 from 13.8 in January while the bank's general activity index rose to 26.0 from 4.7. Both indexes had been negative in December.

Readings above zero indicate positive activity, and the higher the number, the more broad-based the gains.

Hiring in the Dallas Fed district expanded sharply, with the employment index at 22.2 from 4.6 in January.

Meanwhile, inflation pressures were mixed. The bank reported that its index of prices paid for raw materials edged down to 29.3 from 30.8 in the prior month. The prices received index lifted to 15.0 from 1.5 in January.

Manufacturing in the Dallas Fed district represents a notable portion of total U.S. output and is concentrated in energy production and electronic goods.

Keene Little : 2/26/2007 10:54:10 AM

MER continues to look bearish but it might find support soon at the bottom of a small parallel down-channel for its pullback from the January high (near 87.65). Link

Its pullback leaves a question mark in my mind as to what it is--it looks somewhat corrective which would suggest another high is coming. I have my doubts about that for a few reasons but bears need to stay aware of that possibility. If MER keeps dropping then the next support level is the 38% retracement of the rally from June (it's also at the previous 4th wave as labeled in the bearish count) at 85.65.

Jeff Bailey : 2/26/2007 10:47:01 AM

Regional Bank HOLDRs (AMEX:RKH) $164.33 -0.42% ... testing Friday's intra-day low.

Keene Little : 2/26/2007 10:39:21 AM

If the DOW drops to its uptrend line from November, the bottom of its wedge, I'd still try a long there. That line is currently near 12610-12620 (near YM 12640) depending on which low you attach the trend line to. I'm sure the dipsters will want to try that support level and then we'll just have to see what kind of bounce develops (or not).

Jeff Bailey : 2/26/2007 10:32:02 AM

Dow Chemical Up on Buyout Rumor ... Reuters Story Link

DOW $46.50 +7.01% Link ... #5 Most Active

Jeff Bailey : 2/26/2007 10:27:38 AM

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

Jane Fox : 2/26/2007 10:26:52 AM

AD volume to new daily highs - don't be short here folks.

Keene Little : 2/26/2007 10:22:56 AM

I'd say the Trannies are trading their trend lines rather well. If it breaks much lower now, it'll be a break of its uptrend line from Jan 26 and potentially the completion of its rally. Otherwise you can see its pullback from last week's high is just a 3-wave move and sets up the potential for another push higher. Link

Jeff Bailey : 2/26/2007 10:15:42 AM

Regional Bank HOLDRs (AMEX:RKH) $164.89 -0.08% Link ... WEEKLY Pivot Levels are $162.80, $164.03, Piv= $165.60, $166.83, $168.40.

Keene Little : 2/26/2007 10:15:37 AM

Sorry, I should have mentioned I was looking at the NDX in my last post (10:06). I just assumed you were reading my mind.

Jane Fox : 2/26/2007 10:13:22 AM

WIth that little dip - well OK more than just a little dip - the TICKS never got below -259 another reason to not be short. As a matter of fact the TICKS have stayed mostly above 0 all morning.

Keene Little : 2/26/2007 10:06:41 AM

After this morning's flare up and collapse the whole thing still gives me the impression that the leg down this morning could be completing its 4th wave correction in the move up from Feb 12. If true it will need to turn around soon and start heading back up. In that case can you spell whipsaw? Link

Jane Fox : 2/26/2007 10:04:49 AM

I missed a very nice short this morning but only the VIX was telling me it was time to be short. I really like the VIX but it alone is not good enough for me. Even if the other internals were neutral I would have considered a short but when the AD line and volume were as bullish as they were the odds were not in my favor for a short.

Jeff Bailey : 2/26/2007 10:05:33 AM

Utilities HOLDRs (AMEX:UTH) $141.31 +4.20% Link ...

Jeff Bailey : 2/26/2007 10:05:14 AM

TXU Agrees to $32 Billion Sale to Buyout Firms ... AP Story Link

TXU $68.00 +13.29% Link

Jeff Bailey : 2/26/2007 10:02:10 AM

10:00 Market Watch found at this Link

Jane Fox : 2/26/2007 9:59:55 AM

AD line reached a high of 1037 but has now dropped to +427 but the whole time AD volume has been making new daily highs. As long as the AD volume is this bullish I will not be short. It does not mean I will try a long but it does mean I will not be short.

Jane Fox : 2/26/2007 9:56:26 AM

Markets are making new daily lows and the VIX is making new daily highs but the AD volume is making new daily highs so it is not time to be short yet. Once you see the AD volume and VIX line up then it is time to pull the trigger but not until.

Keene Little : 2/26/2007 9:53:44 AM

Gap & crap implications--I agree with your assessment about new highs, but what would be the implications if we selloff and trade BELOW Friday's close?? Irrespective of wave count, which levels (NDX, SPX and DOW) which if violated would have you turning bearish today??

If the leg up this morning is completing an a-b-c bounce off Friday's low then a move back down to new lows (below Friday's) would simply be a larger A-B-C pullback from last week's high. The move down from this morning's high would be wave-C. In that case I'd look for where we'd have two larger and equal legs down as an opportunity to buy it.

There is still the potential that the DOW has made its high. If it cracks below 12600 then that would be a sell signal. In that case I could see NDX and SPX making new highs while the DOW merely corrects its decline but that's a bit of guesswork at the moment. It would be safer for now to continue to make short term trades until we see how this flushes out (it would certainly appear at this point that many bears got flushed out of their short positions this morning and now the bulls appear to be getting flushed out).

Jane Fox : 2/26/2007 9:51:33 AM

NEW YORK (MarketWatch) -- Gold futures rose early Monday, as high crude-oil prices and Iran's continuing defiance with its nuclear program boosted the metal's safe-haven allure.

Gold for April delivery was last up $3.80 at $690.50 an ounce on the New York Mercantile Exchange. On Friday, gold closed up $3.70 at $686.70 an ounce, gaining 2.1% on the week.

"Gold has rallied again this morning as oil provides background support while Iran's nuclear program continues to draw safe-haven hedging," said James Moore, an analyst at TheBullionDesk.com.

"Those factors are likely to feature heavily in the week ahead, particularly as the United Nations may impose sanctions on the world's fourth-largest oil exporter," Moore said.

The five permanent members of the U.N. Security Council -- the U.S., Russia, China, France, and Britain -- as well as Germany, are meeting in London on Monday to discuss ways to respond to Iran's refusal to halt its nuclear-development program, the Associated Press reported. The six countries will likely discuss trade and arms sanctions against Iran, the AP reported.

Jane Fox : 2/26/2007 9:47:51 AM

Denise writes in "On cnbc this am Greenspan says we may be in recession by year end."

Keene Little : 2/26/2007 9:45:03 AM

The TRAN is dropping like a rock this morning, while the SPX, OEX, and the Dow climb. Those don't often move opposite each other for long.

Thanks for that observation Linda and you're exactly right. Something smells (dead) fishy here and manipulated. Ah, the pleasures of finding a top to this market. Let's face it, the Boyz are going to keep manipulating the indices higher so that they can distribute their inventory to the masses who are over-the-top bullish (Bernie Schaeffer can barely contain himself in his bullishness). Welcome to the chop zone and it looks like it will continue for a bit more.

Jane Fox : 2/26/2007 9:44:04 AM

PRice is not mvoing up but the internals are telling me this is not a time to be short.

Jeff Bailey : 2/26/2007 9:43:25 AM

Weekly/Monthly Index Pivot Matrix found at this Link

Keene Little : 2/26/2007 9:40:54 AM

SPX has climbed above the Thursday afternoon high, confirming the 3-wave pullback. Now it's just a question about when we'll get a new high. The rally off Friday's low is now a 3-wave bounce and if we're going to chop sideways for a while then watch for most of the bounce to be given back but don't get super bearish on it. Once again we'll have to wait to identify the next top.

Keene Little : 2/26/2007 9:33:04 AM

I'm not sure what's happening to the US dollar but I'll have to take the other side of your gold trade Jane. The bounce in gold is nearing an important resistance point as I see it--two equal legs up from October at 692.70 which has the potential to be an a-b-c corrective bounce to last year's decline. It's also right at the top of a parallel up-channel for that bounce. And it's on top of the 62% retracement of that decline. Gold could be getting ready for a swan dive. Same with silver--looking to short it very soon.

Jane Fox : 2/26/2007 9:32:58 AM

I have no VIX yet but the the TRIN is 0.87.

Jane Fox : 2/26/2007 9:32:05 AM

AD line is +586 and AD volume above 0. The bulls have the ball.

Jane Fox : 2/26/2007 9:24:37 AM

Gold is testing its PDH but I see the US $ is also climbing. One or the other will need to fall and I suspect it will be the $. IF you are so inclined I think this could be a good place to short the $. Link

Keene Little : 2/26/2007 9:23:02 AM

"We have extraordinarily low risk premiums now. Risk is no longer perceived as major risk, at least as it was in years past and that, I must say, I find disturbing. "We do not and cannot look into history without being very concerned when you see the absence of awareness and concern about risk that we see today."

Greenspan is not my favorite guy but for once he's got it right. Thanks to Dave for sending that to me.

Jane Fox : 2/26/2007 9:07:31 AM

The higher highs and lows mean the bulls ruled during the overnight session however, no market was able to break its PDH. YM did break it's PDH a tad but was not able to sustain the break. All in all I suspect the AD line and volume to open in positive territory and we will certainly have a gap up. Link

Keene Little : 2/26/2007 9:05:52 AM

Futures are up big as we near the open so there's little question at this point that Friday's low was probably the end of the pullback from last week's high. ES, at a high of 1459 so far, is very close to the 1459.75 high late Thursday. Any push back above that level would confirm its pullback as just another 3-wave correction to the rally. The only question in that case is whether or not we'll chop sideways for a little while vs. immediately head for new highs. Be careful of the whipsaws.

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